Petition for Writ of Certiorari — Virginia v. Browner

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[) FILED

In The

Supreme Court of the United States

October Term, 1996

COMMONWEALTH OF VIRGINIA,

Petitioner,

CAROL M. BROWNER, Administrator of the

United States Environmental Protection Agency,

and UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY,

Respondents,

and

AMERICAN LUNG ASSOCIATION OF

NORTHERN VIRGINIA, ET AL.,

Intervenors.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

James S. Giimore, III

Attorney General of Virginia

Davip E. ANDERSON Joun P. Scumrrz, Esquire

Chief Deputy Attorney Grecory S. Wavpen, Esquire

General Tuomas Dicence, Esquire

Mayer, Brown & Ptatt

Joun Paut Woontey, Jr. 2000 Pennsylvania Avenue,

Deputy Attorney General N.W.

Rocer L. CHAFFE Suite 6500

Senior Assistant Attorney Washington, D.C. 20006-1882

General (202) 463-2000

Mary Jo LeuGers Of Counsel

Assistant Attorney General

(Counsel of Record)

900 East Main Street

Richmond, Virginia 23219

(804) 786-2444

oooolh"_e=Seeeeeeeeee——

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Whether the Court of Appeals incorrectly deferred to

EPA in accepting that agency's interpretation of

§ 502(b)(6) of the Clean Air Act, thus requiring Vir-

ginia to change its standing law and upsetting a core

function of state sovereignty despite the lack of clear

Congressional intent to do so.

Whether the Title V mandates, sanctions, and enforce-

ment provisions of the Clean Air Act, when viewed

together as a statutory scheme, unconstitutionally

commandeer the legislative processes of the States by

compelling them to enact and administer a federal

regulatory program that, inter alia, requires the States

to waive their sovereign immunity from challenges to

state permitting decisions, in violation of the Tenth

Amendment and the principles embodied in New York

v. United States, 505 U.S. 144 (1992).

Whether the Clean Air Act’s draconian sanction pro-

visions, which continue even after a federal permit

program is imposed, are unconstitutional exercises of

Congress’ Spending Clause and/or Commerce Clause

powers because (a) their sole purpose and effect is to

coerce States into administering a federal regulatory

program, and (b) they are “so coercive as to pass the

point at which pressure turns into compulsion,” South

Dakota v. Dole, 438 U.S. 203 (1987).

LIST OF PARTIES BELOW

In accordance with Rule 14(b) of the Rules of the

United States Supreme Court, the following is a list of the

parties to the proceeding below:

The Petitioner was the Commonwealth of Virginia.

The Respondents were the Administrator of the Envi-

ronmental Protection Agency and the Environmental Pro-

tection Agency itself.

Intervenors were the American Lung Association of

Northern Virginia; the American Lung Association of Vir-

ginia; Audubon Naturalist Society; Clean Water Action;

Friends of the Rivers of Virginia; James River Association;

Mountain Heritage Alliance; Valley Concerned Citizens;

Virginia Chapter of the Sierra Club; Virginia Consortium

for Clean Air; Virginia Council, Trout Unlimited; Envi-

ronmental Defense Fund; Kathleen F. Derricott; Clifton E.

Derricott; Andre L. Brown; Caleata Johnson; and Gwen

Hedgepath.

Amici Curiae were Virginia Manufacturers Associa-

tion; Washington Legal Foundation; Ogden Martin Sys-

tems of Lancaster, Incorporated; Ogden Martin Systems

of Alexandria, Incorporated; National Independent

Energy Producers; Ogden Martin Systems of Fairfax,

Incorporated; and Chesapeake Bay Foundation.

— a

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TABLE OF CONTENTS

Page

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POPC EEE oS cuvivecenccces Srey erery. eer rerey 1

CONSTITUTIONAL PROVISIONS AND STATUTES

i ie trka we eh ess) kaha b hon sie ube huhss ie 1

DEALEMENE OF THE CASE ........cccccceccccccss 3

REASONS FOR GRANTING THE WRIT ........... 9

I. The Court of Appeals Improperly Deferred to

EPA’s Interpretation of § 502(b)(6) Even Though

Congressional Intent Is Unclear and That Inter-

pretation Intrudes Upon State Sovereignty In

Violation of Gregory v. Ashcroft................ 10

A. EPA's Interpretation Is an Acknowledged

Administrative Invention ................. 12

B. Gregory Precludes Automatic Deference to EPA

When State Sovereignty Is Threatened....... 12

C. If the Court of Appeals Had Correctly

Applied Gregory to EPA’s Interpretation of

§ 502 (b) (6), the Latter Would Necessarily

ee SS PO MED 0 66 bie ence waaseuensss 15

[l. The Court of Appeals Improperly Applied New

York v. United States by Failing To Analyze the

Mandatory Language of Title V and the Overall

Impact of the Statutory Scheme............... 16

TABLE OF CONTENTS - Continued

Page

A. The Challenged Statutory Scheme Com-

mandeers the Legislative Processes of the

ogres PEETEST ELC ee ee ny a ae 17

B. The Sanctions and Other Coercive Measures

Used To Force State Compliance Violate the

Tenth Amendment and Are Impermissible

Exercises of Congress’ Spending and Com-

merce Clause Powers ..................... 19

Ill. The Court of Appeals Failed to Apply This

Court’s Ruling in South Dakota v. Dole in any

ete atin AER eT Ts ene 23

A. The Highway Sanction as Employed in the

Title V Context Is Coercive............... 24

B. The Condition Imposed on Highway Fund-

ing Under the CAA Is Not Reasonably

Reiated To its Purpose.................... 27

AMEE oy se thcxr cs elaadueihs ee 30

FES OIG 8S SERS CERCA aa ra eee App. 1

TABLE OF AUTHORITIES

Page

Cases

Association of Community Orgs. for Reform Now v.

Edwards, 81 F.3d 1387 (5th Cir. 1996), petition for

cert. filed, 65 U.S.L.W. 3110 (U.S. July 22, 1996)

PO PEFR krlestcaciveuse igen 18

Atascadero State Hosp. v. Scanlon, 473 U.S. 234

NOE 50s SAN ho wb ks hE Vo nw ndd Hea ta cas 13

Board of Natural Resources v. Brown, 992 F.2d 937

GO eM COMPS Hicks. 4 5 Sane id shoe sabe ceeds es. 18

Chevron, U.S.A. v. Natural Resource Defense Council,

FF SP MT SOME CAs 88 Hon Ck eT AKG aK OR 10, 12

Commonwealth v. Browner, 80 F.3d 869 (4th Cir.

SPP Me Kcektheadenbidévebarkicotweneevbine passim

Commonwealth v. Browner, No. 95-1052, slip op.

a Gs TU SE POO ais. isc peta hak chs 1

Commonwealth of Virginia v. United States, 74 F.3d

WaP N SaA MPPDL eV bps 4k vi das sda kado ed cunkh 20

FERC v. Mississippi, 456 U.S. 742 (1982) ........... 7, 22

Frank v. United States, 78 F.3d 815 (2d Cir. 1996),

petition for cert. filed, 65 U.S.L.W. 3053 (U.S. June

AG, ROO ARO PEE + 5c 9N5 Vices ecbaeRTs dak oks 18

Garcia v. San Antonio Metro. Transit Auth., 469 U.S.

amply ect PEE EEE TET ET ET EPR PROT PRO Su aD revue ae

Gregory v. Ashcroft, 501 U.S. 452 (1991)............. passim

Hodel v. Virginia Surface Min. & Reclam. Ass'n, 452

Sate I SOME 955 8 srk vee ranerivevassenries 17, 20

Koog v. United States, 79 F.3d 452 (5th Cir. 1996),

petition for cert. filed, U.S. v. Gonzalez, 65

U.S.L.W. 3001 (U.S. June 19, 1996) (No. 95-2052) .... 18

TABLE OF AUTHORITIES —- Continued

Page

Nevada v. Skinner, 884 F.2d 445 (9th Cir. 1989), cert.

denied, 493 U.S. 1070 (1990)................ 24, 26, 28

New York v. United States, 505 U.S. 144 (1992) ... passim

Oklahoma v. Schweiker, 655 F.2d 401 (D.C. Cir. 1981) .... 24

Pennsylvania v. EPA, 500 F.2d 246 (3d Cir. 1974)...... 6

Printz v. United States, 66 F.3d 1025 (9th Cir. 1995),

cert. granted, __U.S.__, 116 S.Ct. 2521 (1996)..... 18

South Dakota v. Dole, 483 U.S. 203 (1987) ........ passim

Steward Machine Co. v. Davis, 301 U.S. 548 (1937) .... 24

United States v. Butler, 297 U.S. 1 (1936).......... 26, 28

United States v. Lopez, __U.S.__, 115 S.Ct. 1624

LESOOP sas cn 8WAds ces vaduiee aba keeexe ssn 26, 29

Virginia Dep't of Educ. v. Riley, 86 F.3d 1337 (4th

Cir.), reh'g requested (August 5, 1996)........... 26, 27

UnNiTep STATES CONSTIYUTION

i MMP EOEEEOTEPETT Te TUT ree et ee 4, 12, 14

COMME GARG onc k ci eee inks eks Concise Camas passim

SI GAMUDE. 5560s satis Sones eenbeadestewes passim

FUERTE CT ETE EY PELE ere passim

DOUPORE. ARAINGOR . ~ «ss 90 <a kinnd ccaga st aaenee caer 13

Vii

TABLE OF AUTHORITIES - Continued

Page

FEDERAL STATUTES

42 USC. § 7413 (CAA § 113)............... 3, 6, 20, 21

42 US.C. § 7413(a) (CAA § 113fa))................... 6

42 U.S.C. § 7413(a)(3) (CAA § 113(a)(3)).............. 6

42 U.S.C. § 7413(b) (CAA § 113(b)) .................. 6

42 US.C. § 7509(b) (CAA § 179(b)) .................. 9

42 U.S.C. § 7509(b)(1) (CAA § 179(b)(1)) ........... 4,8

42 U.S.C. § 7509(b)(2) (CAA § 179(b)(2)) ............. 5

42 U.S.C. § 7602(e) (CAA § 302(e))................. 3, 6

42 U.S.C. § 7607(b)(1) (CAA § 307(b){1)) ............. 8

42 U.S.C. § 7661a(b)(6) (CAA § 502(b)(6)) ....... passim

42 U.S.C. § 7661a(d) (CAA § 502(d))................. 3

42 U.S.C. § 7661a(d)(3) (CAA § 502(d)(3))............ 6

Title V of the CAA

(Re UR. BB FOC FOGED ok ccc cceccaceues passim

Cope OF VIRGINIA

i MEME Gaby suva ses ic es bane nadscevi ei cheinkl ya

FEDERAL REGULATIONS

ESR ARR nays aaa

I WO he Lien Pek k Cc ew Kee ee ih cbc Kaus 9

Pe ee ee SUN Uk ks Wa Kehis Abad Feb ckka le Seas 7

nS tet tn cal

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The Commonwealth of Virginia (“Commonwealth”)

hereby petitions this Court for a writ of certiorari to

review the judgment of the United States Court of

Appeals for the Fourth Circuit in this matter.

OPINION BELOW

The opinion of the United States Court of Appeals for

the Fourth Circuit, dated March 26, 1996, is reported at 80

F.3d 869 and is also set forth in the Appendix at App. 1.

The July 12, 1996 order of the Court of Appeals denying

the Commonwealth’s Petition for Rehearing and Sugges-

tion for Rehearing In Banc, with five judges voting to hear

the case in banc, is set forth in the Appendix at App. 33.

Commonwealth of Virginia v. Browner, No. 95-1052, slip op.

(4th Cir. July 12, 1996).

JURISDICTION

The jurisdiction of this Court to issue a writ of cer-

tiorari in this case is grounded upon 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISIONS

AND STATUTES INVOLVED

This case involves the Spending and Commerce

Clauses of and the Tenth Amendment to the United Siates

Constitution, various provisions of the federal Clean Air

Act (“CAA”), and § 10.1-1318 of the Code of Virginia

(1950), as amended.

The Spending Clause, Article I § 8 of the United

States Constitution, provides:

The Congress shall have power to lay and col-

lect taxes, duties, imposts and excises, to pay the

debts and provide for the common defense and

general welfare of the United States... .

The Commerce Clause, Article I § 8 of the United

States Constitution, provides:

The Congress shall have power . . . [t]o regulate

commerce with foreign nations, and among the

several states, and with the Indian Tribes .. . .

The Tenth Amendment to the United States Constitu-

tion provides:

The powers not delegated to the United States

by the Constitution, nor prohibited by it to the

states, are reserved to the states respectively, or

to the people.

Title V of the CAA is found at 42 U.S.C. § 7661

through § 7661f, and is set forth in the Appendix at App.

35-67. Section 502(b)(6) of Title V, 42 U.S.C. §& 7661a(b)(6),

is of particular importance here. It requires the Adminis-

trator of the Environmental Protection Agency (“EPA”) to

promulgate regulations establishing the minimum ele-

ments for an approvable state operating permit program,

including:

Adequate, streamlined, and reasonable pro-

cedures . . . for expeditious review of permit

actions . . . including an opportunity for judicial

review in State court of the final permit action

by the applicant, any person who participated in

the public comment process, and any other per-

son who could obtain judicial review of that

action under applicable law.

The other CAA provisions involved in this case are

42 US.C. § 7413, 42 U.S.C. § 7509(b), and 42 U.S.C.

§ 7602(e), all of which are set forth in the Appendix at

App. 68-76.

Section 10.1-1318(B) of the Code of Virginia is the

Commonwealth's judicial review law for appeals of state

air pollution permit decisions, which is set forth in the

Appendix at App. 77.

STATEMENT OF THE CASE

As amended by the addition of Title V in 1990, the

CAA mandates a national operating permit program for

facilities that emit air pollution, and requires each State to

run such a program within its borders. CAA § 502(d) (42

U.S.C. § 7661a(d)) (App. 43-45). To this end, Title V orders

States, in no uncertain terms, to legislate and regulate

according to Congressional and EPA directives: Each

State “shall” enact and administer a Title V program. Id.

Title V and its implementing regulations found at 40

C.F.R. Part 70 set forth specific and detailed criteria that

the State programs must meet, and each program must

gain EPA’s approval before it can be implemented. For

approval, § 502(b)(6) of Title V provides that each State

must enact legislation that affords judicial review in state

court of state-issued operating permits to any person who

participated in the public comment period. CAA

§ 502(b)(6) (42 U.S.C. § 7661a(b)(6)) (App. 41-42); 80 F.3d

at 876 (App. 13). Acknowledging that § 502(b)(6) could

not mean literally what it says, EPA interpreted it to

mean that States must, at a minimum, afford standing

consistent with Article III jurisprudence of this Court.

That this direct Congressional command is manda-

tory and intended to commandeer the legislative and

regulatory processes of the States is further evidenced by

the means provided to force compliance. These means

comprise the remainder of the statutory scheme chal-

lenged by the Commonwealth.

Noncomplying States are subjected to coercive pres-

sures and are punished severely and continuously until

they succumb. Specifically, Congress directed EPA to use

several punitive sanctions and authorized it to initiate

civil and criminal enforcement proceedings against the

States and their officials. First, in areas deemed not in

attainment for ozone, non-complying States will lose the

majority of their federal highway construction funds and

be denied federal approvals needed for highway con-

struction projects, even those funded solely with state

monies. CAA § 179(b)(1) (42 U.S.C. § 7509(b)(1)) (App.

74-75). Thus, even if a State wished to forego federal

funding, it could not expend its own funds for any proj-

ect needing federal approval. The Commonwealth esti-

mates that the highway funding ban would result in a

loss of approximately one billion dollars in federal funds

over a three-year period in its three nonattainment areas.'

1 This estimate was made at the time the Commonwealth

filed its Petition for Review with the Court of Appeals.

The highway funding and approval sanctions would crip-

ple the Commonwealth’s highway construction program

in the three most populated areas of Virginia: the North-

ern Virginia, Richmond Metropolitan, and Hampton

Roads areas.

Second, the States would suffer an “offset” sanction

that would require them to impose a 2-for-1 pollution

reduction condition on construction permits (as opposed

to operating permits), which would effectively end indus-

trial development in nonattainment areas.2 CAA

§ 179(b)(2) (42 U.S.C. § 7509(B)(2)) (App. 76). While the

2-for-1 offset requirement would be imposed on industry

and not on the non-complying State, the sanction none-

theless is leveled at the State. For example, if the offset

sanction were imposed in Virginia, it would be done so as

a direct result of the Commonwealth's refusal to conform.

The sanction would coerce the Commonwealth through

economic disruption and pressure exerted on it by those

citizens and industry affected.

In addition, Title V instructs EPA to develop and

enforce a federally run program within the non-comply-

ing State as a temporary measure to fill the “gap” in time

until the overwhelming impact of the sanctions forces the

? For example, for each ton of pollutant a permit applicant

plans to emit, the applicant would have to provide a

corresponding two ton reduction through some other means as

an “offset.” The State would have to include this offset sanction

“condition” in all construction permits issued prior to the

commencement of construction initiated pursuant to other state

regulations. The “condition” would later be memorialized in

each facility’s operating permit that would be issued after

construction is completed.

State to run the program itself. CAA § 502(d)(3) (42 U.S.C.

§ 7661a(d)(3)) (App. 45). In order to keep the pressure on

- for the dual purpose of coercion and punishment — the

highway funding and approval sanctions and the offset

sanction remain in full force even after the federally run

program is in place.

Civil and criminal enforcement under § 113 of the

CAA is the final coercive component of the challenged

statutory scheme that EPA has at its disposal to force

State cooperation. 42 U.S.C. § 7413 (App. 69-70). The CAA

authorizes EPA to issue enforcement orders and to bring

suit for injunctive and penalty relief against “any person”

for any violation of Title V. CAA § 113(a)(3) and § 113(b)

(42 U.S.C. § 7413(a)(3) and § 7413(b)) (App. 69-70). “Per-

son” is defined in the CAA to include States and their

officials. CAA § 302(e) (42 U.S.C. § 7602(e)) (App. 77).

Thus, § 113 would cover any violation by a State of the

requirement to enact an operating permit program. EPA

also can employ § 113(b) to compel a non-complying

State to enforce the federally imposed Title V plan.°

3 The Court of Appeals misapprehended the

Commonwealth’s argument regarding § 113 of the CAA. That

court focused only on subsections (1) and (2) of § 113(a), and did

not consider EPA’s enforcement power found in subsections

(a)(3) and (b) of § 113, 80 F.3d at 881 (App. 25). Furthermore,

neither the Court of Appeals nor EPA ever addressed the

Commonwealth’s additional argument that § 113 can be, and

has been, used to force States to enforce a federally imposed

program. Cf. Pennsylvania v. EPA, 500 F.2d 246, 261 (3d Cir. 1974)

(EPA “acted within the federal commerce power in requiring the

Commonwealth to enforce [EPA's] transportation plan”).

Ait PRAM be ARAL: Beaty Soy sels AP

As a result of the passage of Title V, the Commonwealth

has had to adopt and amend statutes, to promulgate regula-

tions, as well as to spend millions of dollars preparing to

implement the federal Title V program. The Commonwealth

~— along with most other States — has in essence given in to

most of this compulsory federal micromanagement in order

to retain its ability to regulate Virginia industry and protect

its air quality. It has worked hard and in good faith to obtain

EPA approval and to avoid the onerous sanctions awaiting

those States who fail to secure EPA’s approval or who dare to

defy the federal mandates.

The Commonwealth, however, drew the line at the Con-

gressional mandate that it expand the jurisdiction of its

courts to hear challenges to state air permit decisions by any

person who participated in the public comment process.

Primarily because of this refusal, EPA rejected the Common-

wealth’s Title V program on December 5, 1994. 59 Fed. Reg.

62,324.4 In order to obtain its approval, EPA continues to

demand that the Virginia General Assembly alter its stand-

ing statute to open Virginia courts to persons who currently

do not satisfy the state standard.®

4 EPA listed a total of five reasons for disapproving

Virginia’s operating permit program. 59 Fed. Reg. 62,324.

Pursuant to discussions with EPA, all of the remaining

“deficiencies” have been corrected and the Commonwealth

resubmitted its program to EPA for a third time on September

10, 1996.

5 Any such expansion necessarily involves an expanded

waiver of the Commonwealth’s sovereign immunity to allow a

broader range of suits against state agencies in state courts. This

case, therefore, presents the question raised by Justice Powell in his

dissent in FERC v. Mississippi, 456 U.S. 742, 772 (1982) and avoided

by the majority in that case. Id. at 769, n.31 and at 770, n.33 and n.34.

On January 9, 1995, the Commonwealth filed a peti-

tion for review in the Court of Appeals for the Fourth

Circuit, pursuant to § 307(b)(1) of the CAA, 42 U.S.C.

§ 7607(b)(1). The petition challenged EPA’s disapproval

based on its conclusion that the Commonwealth must

expand the jurisdiction of its courts, arguing that EPA's

interpretation of the Title V standing provision was erro-

neous. The Commonwealth also challenged all of the

disapproval reasons on the basis that Title V’s substantive

mandates and the severe sanctions - when viewed

together as a single statutory scheme - unconstitutionally

commandeer the legislative processes of the Common-

wealth to enact and administer a federal regulatory pro-

gram, in violation of the Tenth Amendment to the United

States Constitution and in conflict with this Court's rul-

ing in New York v. United States, 505 U.S. 144 (1992). The

Commonwealth also argued that the highway sanction

itself, as applied in the Title V context, violates the

Spending Clause because it passes the point where finan-

cial inducement turns into compulsion, as prohibited by

this Court in South Dakota v. Dole, 483 U.S. 203, 211 (1987).

On March 26, 1996, the Court of Appeals denied the

Commonwealth's petition, holding that each of the Title

V sanction provisions, standing alone, were constitutional

exercises of Congress’ Spending and Commerce Clause

powers. App. 28-29. On July 12, 1996, the Court of

Appeals denied the Commonwealth’s Petition for Rehear-

ing and Suggestion for Rehearing In Banc, although five

judges - Judges Russell, Widener, Wilkins, Luttig, and

Williams - voted to hear the case in banc. App. 34.

Because the Commonwealth has failed to bend to the

federal will, EPA is now preparing to implement a

= | ere tT

federally run permit program in Virginia.6 Such imple-

mentation, however, will do nothing to alter or delay the

application of the sanctions described above.”

REASONS FOR GRANTING THE WRIT

Rule 10(c) of the Rules of this Court provides that a

writ of certiorari will be granted only when there are

compelling reasons for doing so. These include situations

in which a federal court of appeals has decided an impor-

tant federal question (1) which has not been, but should

be, decided by this Court, (2) in a way that conflicts with

relevant decisions of this Court, or (3) in a way that

conflicts with other federal circuit courts.

This case presents several such questions, any one of

which meets the foregoing criteria. Title V represents a

shift in Congress’ approach to regulating air pollution,

and depicts a not-so-subtle move towards outright fed-

eral dictation to and coercion of the States.

In New York v. United States, this Court struck down a

federal statute as violative of the Tenth Amendment and

drew a line beyond which Congress could not go in

“commandeering” state governments to carry out federal

delegation agreement under 40 C.F.R. Part 71 whereby the

Commonwealth would serve as an EPA “contractor” and

operate the federal program for EPA.

? Before imposing sanctions, EPA must issue a rule to

determine which sanction to impose first. CAA § 179(b) (42

U.S.C. § 7509(b)) (App. 74-76). Thus, no sanctions have been

imposed in Virginia yet.

programs. The Court of Appeals in the present case has

eliminated and rejected any meaningful application of the

New York decision. By examining the sanctions faced by

the Commonwealth piecemeal instead of stacked together

as they are actually imposed, the Court of Appeals erro-

neously minimized their impact and thereby failed to

apply New York correctly. 80 F.3d at 881 (App. 28-29). By

characterizing the sanctions as “inducements” rather than

coercion, the Court of Appeals also discarded this Court's

most recent Spending Clause jurisprudence reflected in

South Dakota v. Dole. 80 F.3d at 882 (App. 28).

This case squarely presents critical issues regarding

the nature of the federal system. It tests the extent of

constitutional limitations placed by New York and Dole on

the power of the federal government to dictate to the

sovereign States and to force them — under pain of multi-

ple and severe sanctions - to implement federal pro-

grams. This Court’s answer to these questions will

provide pivotal guidance for both Congress and the

States who must work together within the federal frame-

work.

The Court of Appeals Improperly Deferred to EPA’s

Interpretation of § 502(b)(6) Even Though Congres-

sional Intent Is Unclear and That Interpretation

Intrudes Upon State Sovereignty In Violation of Gre-

gory v. Ashcroft

The Court of Appeals treated the statutory issue in

this case as though it were merely a matter of interpreting

§ 502(b)(6) of the CAA and nothing more. Following this

Court’s ruling in Chevron, U.S.A. v. Natural Resources

Defense Council, 467 U.S. 837 (1984), it simply deferred to

EPA’s interpretation. 80 F.3d at 878 (App. at 17-18). It thus

overlooked the constitutional ramifications of EPA’s

interpretation and its impact on state sovereignty.

In so doing, the Court of Appeals erroneously deter-

mined that this Court’s more recent and controlling deci-

sion in Gregory v. Ashcroft, 501 U.S. 452 (1991), did not

apply in this case. Where Congressional intent is unclear,

Gregory requires that courts not defer to an agency’s

interpretation if that interpretation would intrude on a

state sovereign prerogative. Because Congressional intent

in this case is not clear and EPA’s interpretation intrudes

on a fundamental state prerogative, the agency's inter-

pretation is not entitled to deference.®

8 In Gregory, this Court was asked to decide whether,

pursuant to the federal Age Discrimination in Employment Act

(“ADEA”), state-appointed judges were protected from a

Missouri State requirement for mandatory retirement at age 70.

Missouri argued that the judges were not included under the

ADEA because they fall with an exception for “appointee[s] on

the policymaking level.” The Court found that the extension of

the ADEA to state employees was a valid exercise of Congress’

Commerce Clause powers, and that all state employees were

covered by the Act except those who fell within one of the

exceptions. 501 U.S. at 467. The Court determined, however,

that the ADEA was ambiguous regarding whether state judges

fell within the exception of an “appointee on the policymaking

level.” Id. Thus, this Court concluded Congress’ intent to cover

state judges in the ADEA was ambiguous. Id. at 470. The Court

held that, “[iJn the face of such ambiguity, we will not attribute

to Congress an intent to intrude on state governmental

functions regardless of whether Congress acted pursuant to its

Commerce Clause powers or § 5 of the Fourteenth

Amendment.” Id.

EPA’s Interpretation Is an Acknowledged Administra-

tive Invention

At the outset of this dispute, both EPA and the Com-

monwealth agreed on at least one thing: The words in

§ 502(b)(6) should not be read literally. Under its plain

meaning, the provision requires States to afford standing,

regardless of injury to any person who participated in

any way in the public comment process for the issuance

of a state permit. EPA recognized that even federal judi-

cial standing cannot go so far and is limited by the

requirements of Article III of the United States Constitu-

tion, as interpreted by this Court.

Nonetheless, EPA decided to interpret § 502(b)(6) as

requiring the equivalent of Article III standing without

any basis in either the law itself or its legislative history.

Having done so, EPA determined to force States such as

the Commonwealth to provide such standing for their

Title V programs or face disapproval of those programs.

The Court of Appeals mechanically declared this inter-

pretation reasonable and a “safe harbor,” affording it

Chevron deference. Id.

Gregory Precludes Automatic Deference to EPA When

State Sovereignty Is Threatened

Under different circumstances, EPA’s action might be

entitled to Chevron deference. In many cases involving the

interpretation of a federal statute, there are no implica-

tions for the balance of federal-state power. In those

situations, judicial review is appropriately deferential to

the interpretation of the agency charged with implement-

ing the statute. By contrast, where - as here - an inter-

pretation would displace or intrude into some essential

core function of state sovereignty, this Court requires a

clear statement of legislative intent before accepting such

an interpretation. Ambiguity will not do. Gregory, 501

U.S. at 464.9

In Gregory v. Ashcroft, this Court recognized that an

essential component of a healthy federal structure is a

balance of power between federal and state sovereigns. In

addressing issues affecting fundamental aspects of state

sovereignty, therefore, “ ‘it is incumbent upon the federal

courts to be certain of Congress’ intent before finding that

federal law overrides” that balance. 501 U.S. at 460 (quot-

ing Atascadero State Hospital, 473 U.S. at 243). “[I]f Con-

gress intends to alter the usual constitutional balance

between the States and the Federal Government, it must

do so unmistakably clear in the language of the statute.”

501 U.S. at 460 (internal quotations omitted). Where Con-

gressional intent is ambiguous, this Court has instructed

the courts “not [to] attribute to Congress an intent to

intrude on state governmental functions.” 501 U.S. at 470.

° At the time Gregory was decided, this Court in Garcia v.

San Antonio Metro. Transit Auth., 469 U.S. 528 (1985) had

relegated the States’ Tenth Amendment protections essentially

to the political process. The “plain statement rule” was derived

from this Court’s Eleventh Amendment jurisprudence typified

by Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985), and was

prevent circumvention of the political process through judicial

(and certainly through administrative) interpretation of

ambiguous legislation.

Below, the Court of Appeals addressed the Common-

wealth’s Gregory argument only briefly. It determined

that Gregory did not apply to this case because, unlike the

facts in Gregory, there is no question that the “plain

meaning” of § 502(b)(6) shows that it applies to state

courts. That statement of the obvious begs the question:

Did Congress intend, through the application of

§ 502(b)(6), that States waive their sovereign immunity

and expand their standing laws to hear a broader range

of challenges to state-issued permits in state court than

may be currently authorized by state law?!°

The Commonwealth has never disputed that

§ 502(b)(6) applies to state courts. The provision is undis-

putedly ambiguous, however, regarding Congress’ intent

to force states to adopt a different judicial review stan-

dard, and it is altogether silent on whether the federal

Article III standard should apply.

Furthermore, access to state courts is a core element

of a State’s sovereignty. The Court of Appeals conceded

as much. 80 F.3d at 879 (App. at 19-29). Any expansion of

standing to sue a sovereign in its own courts constitutes a

waiver of that sovereign’s immunity. It is -difficult to

imagine a more essential element of sovereignty than the

ability to control the acts for which the sovereign itself

10 The Court of Appeals’ perfunctory acknowledgment of

Gregory produces an absurd result. Since the plain statement

requirement of Gregory applies only when a federal law

threatens to impact a function of state sovereignty, any statute

examined in light of that ruling must of necessity apply to a

state. The Court of Appeals chose not to apply Gregory to the

very type of situation for which it was designed.

a) yee

can be held judicially accountable in its own courts. In

Gregory, the state governmental function at issue

involved the qualifications of state court judges, which

the Court described as “a decision of the most fundamen-

tal sort for a sovereign entity. Through the structure of its

government, and the character of those who exercise

government authority, a State defines itself as a sover-

eign.” 501 U.S. at 460. In the present case, the issue

involves equally fundamental aspects of state sover-

eignty: the jurisdiction of state courts and the States’ right

to decide by whom they may be sued.

Despite this, the Court of Appeals brushed aside

Gregory. In so doing, it allowed EPA, in clear contraven-

tion of Gregory, to administratively interpret § 502(b)(6) in

such a way as to intrude into the core sovereignty of the

Commonwealth.

If the Court of Appeals Had Correctly Applied Gregory

to EPA’s Interpretation of § 502(b)(6), the Latter Would

Necessarily Have Been Set Aside

Had the Court of Appeals applied the clear statement

requirement of Gregory correctly, it would have declined

to defer to EPA’s interpretation of § 502(b)(6). Instead it

would have looked for a clear statement of whether the

statute was intended by Congress to apply in the particu-

lar manner claimed by EPA. See Gregory, 501 U.S. at

460-70. Had it done so, it would necessarily have con-

cluded that no such statement of Congressional intent

exists. The Court of Appeals should have ruled that EPA’s

interpretation of the statute improperly attributes to Con-

gress the intent to interfere with the usual constitutional

balance by dictating to the Commonwealth who must be

provided access to state courts. Furthermore, the Court of

Appeals should have directed EPA to interpret § 502(b)(6)

consistently with state law. The Commonwealth sug-

gested such a solution, but the Court of Appeals rejected

it. 80 F.3d at 877-78 (App. at 17-18).

EPA’s interpretation improperly creates a constitu-

tional issue rather than avoiding one and thereby violates

the guiding principle of Gregory. Because Congress has

not spoken in unmistakably clear terms on this issue,

EPA’s interpretation is unquestionably arbitrary, capri-

cious, and not in accordance with law. It should have

been and must be set aside.

The Court of Appeals Improperly Applied New York v.

United States by Failing To Analyze the Mandatory

Language of Title V and the Overall) Impact of the

Statutory Scheme

The Court of Appeals evaded the Tenth Amendment

issue in this case by ignoring the mandatory language of

Title V, by divicing the challenged statutory scheme into

discrete provisions, and by examining each without

analyzing the workings of the whole. While other consti-

tutional flaws exist, it is the combined force of these

provisions, which are cumulative and applied simul-

taneously, that most offends the Tenth Amendment. The

Title V mandates and the sanctions and enforcement pro-

visions of the CAA together form an increasingly common

Fle alte te ap a lll mia a i

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Statutory scheme that unconstitutionally coerces States

into enacting and administering a federal regulatory pro-

gram. As such, it violates the Tenth Amendment and the

principles embraced by this Court in New York.

The Challenged Statutory Scheme Commandeers the

Legislative Processes of the States

This Court in New York sent a clear message to Con-

gress that its power to require the States to do its bidding

has limits: Congress simply cannot “ ‘commandee[r] the

legislative processes of the States by directly compelling

them to enact and enforce a federal regulatory program.’ ”

New York, 505 U.S. at 161 (quoting Hodel v. Virginia Surface

Min. & Reclam. Ass'n, 452 U.S. 264, 288 (1981)). “{T]he

Constitution has never been understood to confer upon

Congress the ability to require the States to govern accord-

ing to Congress’ instructions.” 505 U.S. at 162.

The Title V scheme of direct commands backed by

severe penalties is exactly the type of Congressional over-

reaching this Court rejected in New York. Title V’s clear

intent is to commandeer the legislative process of the

States to enact and administer a federal operating permit

program. The Court of Appeals, however, failed to recog-

nize this fact because it engaged in virtually no Tenth

Amendment analysis.

In sidestepping the central issue in this case, the

Court of Appeals chose to analyze the sanctions provi-

sions individually and solely under the Spending and

Commerce Clauses - without regard for the CAA’s direct

mandates or for the operation of the statute as a whole -

to determine whether the CAA was constitutional. 80 F.3d

at 880-81. (App. 25-26) (“The CAA is constitutional

because, although its sanctions provisions potentially

burden the states, those sanctions amount to inducement

rather than ‘outright coercion.’ ”). In doing so, the Court

of Appeals erroneously assumed that the direct mandates

would be constitutional so long as each sanction, individ-

ually, was a constitutional exercise of Congress’ powers.

This assumption, however, disregards this Court’s hold-

ing in New York that Congress simply may not order the

States to enact or enforce a federal regulatory program.

See New York, 505 U.S. at 169-70. Several courts of appeals

have relied on New York to strike down federal statutes |

that direct States to adopt and administer federal pro- )

grams. Association of Community Orgs. for Reform Now v. :

Edwards, 81 F.3d 1387 (5th Cir. 1996), petition for cert. filed, |

65 U.S.L.W. 3110 (U.S. July 22, 1996) (No. 96-174) (striking |

down a portion of the Lead Contamination Control Act of .

1988 under the Tenth:Amendment); Koog v. United States, |

79 F.3d 452 (Sth Cir. 1996), petition for cert. filed, United

States v. Gonzalez, 65 U.S.L.W. 3001 (U.S. June 19, 1996) :

(No. 95-2052) (striking down a portion of the Brady Act

under the Tenth Amendment);!! Board of Natural Resources

v. Brown, 992 F.2d 937 (9th Cir. 1993) (striking down a ;

'! This Court has granted certiorari in two cases

consolidated below in the Ninth Circuit Court of Appeals that

address the constitutionality of the Brady Act. Printz v. United

States, 66 F.3d 1025 (9th Cir. 1995), cert. granted, ___ U.S. __, 116

S. Ct. 2521 (1996). A third petition dealing with this issue was

also filed in 1996. Frank v. United States, 78 F.3d 815 (2d Cir.

1996), petition for cert. filed, 65 U.S.L.W. 3053 (U.S. June 23, 1996)

(No. 95-2006).

portion of the Forest Resources Conservation and Short-

age Relief Act under the Tenth Amendment).

As discussed below, the only plausible construction

of the Title V mandates is that it was Congress’ plan to

make the States, and not the federal government, enact

and enforce the federal Title V program. The sanctions

and other coercive measures are the means Congress uses

to force States to do so. Because the Court of Appeals’

decision is inconsistent with this Court’s decision in New

York and the decisions of other federal Circuits in closely

related contexts, the Court should grant certiorari.

The Sanctions and Other Coercive Measures Used To

Force State Compliance Violate the Tenth Amendment

and Are Impermissible Exercises of Congress’ Spending

and Commerce Clause Powers

The Court of Appeals’ analysis was fundamentally

flawed in another way. The court ignored the cumulative

and continuing nature of the CAA sanctions and the

extremely coercive force generated collectively by them.

As a result, the court entirely missed one of the Common-

wealth’s central claims: that the unprecedented stacking

of different sanctions, the effect caused by the interaction

among them, and EPA’s authority to proceed civilly and

criminally against a State - together - inflict impermissi-

bly coercive pressure on the States with the sole purpose

of commandeering State governmental processes, in vio-

lation of the rule of New York.

This Court has identified two “methods . . . by which

Congress may urge a State to adopt a legislative program

sae

consistent with federal interests.” See New York, 505 U.S.

at 166. First, the federal government may induce state

action by placing conditions on the State’s receipt of

federal funds, so long as the condition imposed has a

reasonable relationship to the purpose of the expenditure,

and the financial pressure induces rather than coerces.

See, e.g., Dole, 483 U.S. at 211. Second, the federal govern-

ment may offer States the choice between enacting the

federal regulatory scheme or being preempted by federal

regulation. See, e.g., Hodel, 452 U.S. at 282.

In Title V, however, Congress went far beyond these

methods. The CAA mandates State regulation and then

brings all of its various pressures to bear simultaneously

in a finely orchestrated assault designed solely to compel

State compliance. The highway construction funding and

approval sanctions, the offset sanction, and the imposi-

tion of a federally run operating permit program are

mandatory. EPA must impose these sanctions on non-

complying States within certain deadlines, although it

may do so earlier. 80 F.3d at 873, n.2 (App. 6, n.2);

Commonwealth of Virginia v. United States, 74 F.3d 517,

520-21 (4th Cir. 1996). These sanctions operate

cumulatively and, for all practical purposes, simul-

taneously. See id. All are imposed within a matter of a few

months — one being added on top of another. As provided

in § 113 of the CAA, EPA also has the option at the same

time the sanctions are in place to take administrative,

civil, and criminal action against a non-complying State

and its officials.

The layering on of sanctions with federal preemption

creates pressures far more coercive than any of these

measures considered alone, a fact the Court of Appeals

failed to recognize. Because of their coordinated and

cumulative coercive effect, a State exercising its Tenth

Amendment right not to enact a federal program is struck

several different ways at once: the simultaneous loss of

federal highway construction funds and the ability to

expend state highway funds, the stagnation of industrial

and economic growth and the dislocation of its citizens’

economic livelihood through the offset sanction, and the

intrusion of a federal regulatory program.!?

The Court of Appeals also grossly underestimated

the coercive nature of the challenged statutory scheme by

dismissing out-of-hand the Commonwealth’s arguments

regarding the offset sanction and § 113. As noted above,

the court analyzed each component of the scheme indi-

vidually, and not as part of the whole. It therefore com-

pletely missed the point that, in concert with the other

sanctions, the offset sanction and § 113 are intended to

coerce States into compliance, thus intensifying the pres-

sure on those States. See Part IV, supra.

Furthermore, the continuation of sanctions after a

federally run program is in place serves only one pur-

pose, which is an illegitimate one: to coerce the States

into foregoing their right not to regulate. This Court in

Hodel and other similar cases has recognized Congress’

12 For example, for failing to enact the federal program, the

Commonwealth will be stopped from building or repairing the

majority of its roads in its three most populated areas. At the

same time, the Commonwealth will itself be required to impose

a permit condition on industry that will greatly inhibit

economic growth in the same areas. Concurrently, EPA will

impose an operating permit program in Virginia.

authority to pursue substantive federal regulatory inter-

ests through preemption while honoring States’ Tenth

Amendment right to “abandon{] regulation of the field

altogether,” FERC v. Mississippi, 456 U.S. at 766. That

situation does not exist here, however. Assuming

arguendo that the CAA sanctions are needed to control the

increase in pollution caused by a State’s failure to enact a

Title V program, that need would vanish once the federal

government operates a Title V program in that State

because presumably EPA’s program would then control

the increased pollution. At that point, any legitimate fed-

eral interest in controlling air pollution is wholly

exhausted. The only possible interest served by the con-

tinuation of the highway funding and approval sanctions

and the offset sanction is to punish States for not having

themselves enacted the federally dictated scheme - an

interest that the Tenth Amendment condemns as illegiti-

mate and that is an impermissible use of Congress’

Spending and Commerce Clause powers.

Because of the serious impact on federal-state rela-

tions, the principles underlying the New York anti-

coercion rule must apply with heightened force where

sanctions are stackéd and are used to coerce States to

enact and administer a federal program. The coercive

measures used to force State compliance with Title V

violate the Tenth Amendment, and are impermissible

exercises of Congress’ Spending and Commerce Clause

powers. For these reasons, the Court should grant cer-

tiorari.

———-

PP Oe rae eee

Ill.

The Court of Appeals Failed to Apply This Court's

Ruling in South Dakota v. Dole in any Meaningful Way

Consistent with the overall pattern that emerges from

the opinion below is the determination not to give signifi-

cant effect to this Court’s most recent ruling on Congress’

exercise of its Spending Clause power. In doing so, the

Court of Appeals avoided any principled analysis of the

limiting language set forth by this Court in Dole. Such

judicial reluctance has resulted in Congress and federal

agencies finding it easier to use the Spending Clause to

circumvent constitutional limitations imposed by the

Tenth Amendment, such as those established in New York.

Congress simply uses its Spending Clause power and, by

threatening to reduce federal funding, coerces States into

doing the federal bidding, thereby accomplishing indi-

rectly what this Court has forbidden to be done directly.

In this case, the cutting off of highway construction

funds is the most draconian element of the challenged

scheme. As used in the Title V context, the funding sanc-

tion serves the sole purpose of forcing States, such as the

Commonwealth, to implement a Title V program

designed and approved by Congress and EPA. This par-

ticular sanction violates two of the Dole requirements: (1)

that the financial penalty for non-compliance not be so

coercive as to turn pressure into compulsion and (2) that

the condition imposed be reasonably related to the pur-

pose of the federal expenditure.

The Highway Sanction as Employed in the Title V Con-

text Is Coercive

In Dole, this Court indicated that Congress’ spending

power is not without limit.

[I]n some circumstances the financial induce-

ment offered by Congress might be so coercive

as to pass the point at which “pressure turns

into compulsion.”

483 U.S. at 211 (quoting Steward Machine Co. v. Davis, 301

U.S. 548, 590 (1937)). The Court of Appeals recognized

and even quoted this rule. 80 F.3d at 881 (App. 26). But it

performed only a superficial analysis of the impact of the

highway construction funding sanction on the Common-

wealth, quickly pronouncing it non-coercive. Whatever

standard the court applied is not stated. In essence, it

concluded that because some other courts have upheld

funding restrictions that were “more severe,” the Com-

monwealth’s situation is not serious enough to warrant

further review.!3 80 F.3d at 881-82 (App. 27-28).

13 Dole itself and Nevada v. Skinner, 884 F.2d 445 (9th Cir.

1989), cert. denied, 493 U.S. 1070 (1990), both cited by the Court

of Appeals, involved Congress’ use of the Spending Power to

cut off highway funds to States which refused to change their

laws related to the minimum drinking age and to speed limits,

respectively. Dole itself involved only a small percentage of

highway funds. Oklahoma v. Schweiker, 655 F.2d 401 (D.C. Cir.

1981), another case cited by the Court of Appeals, involved

Medicaid funding. The former two cases are distinguishable

from the present one on their facts and in that they at least deal

with a subject reasonably related to the purpose of the spending

~ highway construction. The last case is totally inapposite.

Participation in the Medicaid program is a voluntary decision

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The highway sanction should not have been dis-

missed so lightly. Without placing an exact number on the

potential loss to the Commonwealth and its citizens, the

Court of Appeals could and should have done more. As it

acknowledged, the Commonwealth faces, inter alia, the

loss of major highway funding for non-attainment areas.

While there are exemptions for certain types of projects,

building highways is a long-term, difficult and expensive

process. Loss of highway funding - which means loss of

money paid in the form of federal taxes by citizens of the

Commonwealth - deals a blow to Virginia from which it

may not recover. Highway construction delayed or lost

runs into untold millions of dollars with each passing

year. Plans unmade potentially cannot be remade, cer-

tainly not without increased expense and inordinate ~

delay. Threats to highway safety and inconvenience of

citizens in growing areas of the Commonwealth - those

most directly affected - can reasonably be expected to

result. Moreover, the impact on the economy of the

affected area cannot be readily measured. Such losses

almost certainly are irreparable.

The Court of Appeals disregarded all of these

impacts and justified its conclusion that the highway

sanction is not coercive by stating that the Common-

wealth should have planned better for its anticipated

noncompliance with Title V. 80 F.3d at 882 (App. 27). This

cavalier attitude overlooks the fact that Virginia has been

on the part of each State and failure to do so carries no federal

sanctions. Moreover, Medicaid is a grant program, and the

Commonwealth does not challenge any of the CAA grant

programs.

working in good faith for many years with EPA in order

to produce a mutually acceptable Title V program.

Unfortunately, the approach of the Court of Appeals

is not unlike that taken by a number of federal courts

since Nevada v. Skinner that have refused to apply Dole in

any meaningful way. In Skinner, the Ninth Circuit effec-

tively declared that judicial efforts to fashion a test for

coercion as defined in Dole are fruitless.’

It apparently has become somewhat acceptable for

lower federal courts to dismiss a challenge under Dole by

using as partial justification the argument that no federal

court has struck down a federal statute under the Spend-

ing Clause since this Court did so in United States v.

Butler, 297 U.S. 1 (1936). 80 F.3d at 881 (App. 26-27);

Skinner, 884 F.2d at 448; see Virginia Dep't of Educ. v. Riley,

86 F.3d 1337 (4th Cir., 1996), reh’g requested (Aug. 5, 1996).

Where the constitutional balance between federal and

state power is at issue, however, the judiciary must take

on this difficult task. See United States v. Lopez, __ U.S.

__, 115 S.Ct. 1624, 1639 (1995) (Kennedy, J., concurring)

(“[T]he federal balance is too essential a part of. our

14 Because Skinner pre-dates New York, its continuing

validity is questionable. There the Ninth Circuit reasoned that if

Congress has the constitutional authority to force States directly

to comply with a federal directive it should be able to do so

indirectly by withholding funds for failing to comply. 884 F.2d

at 449. Since New York, Congress clearly does not have such

authority.

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constitutional structure and plays too vital a role in secur-

ing freedom for [the judiciary] to admit inability to inter-

vene when one or the other level of Government has

tipped the scale too far.”)

At least one judge of the Court of Appeals below had

no trouble concluding in another recent case that loss of a

$60 million federal special education grant because of a

dispute involving a handful of students presented a Tenth

Amendment claim of the highest order and met the Dole

test for coercion. See Circuit Judge Luttig dissenting opin-

ion in Riley, 86 F.3d at 1347. Judge Luttig joined the

dissent from the Court of Appeals’ 8-5 refusal to rehear

the present case in banc. App. 34.

The Commonwealth respectfully urges this Court to

revisit the coercion test of Dole and its relation to New

York. If Dole means what it says, then the lower courts

must be directed to apply it consistent with, rather than

in circumvention of, this Court’s other rulings on issues

having implications for relationships among sovereigns

within the federal system. To allow the lower courts, as in

this case, to pay mere lip service to the decision deprives

it of all force and effect and does nothing to guide the

respective sovereigns in attempting to adjust their rela-

tionships within the bounds of the law.

The Condition Imposed on Highway Funding Under the

CAA Is Not Reasonably Related To its Purpose

The Court of Appeals also erred in dismissing out-of-

hand the Commonwealth’s argument that the Spending

Clause is violated where the condition placed on the

receipt of federal funds is not related to the federal inter-

est served by the federal spending. See Dole, 483 U.S. at

208. In the Title V context, Congress has directed the

States to enact and enforce a non-voluntary federal regu-

latory program as a condition for receiving federal

monies routinely granted for a purpose unrelated to that

federal program, that purpose being highway construc-

tion.

The condition imposed by the CAA - that States

implement a Title V program for stationary sources of air

pollution — is not reasonably related to the purpose of

highway construction. See Butler, 297 U.S. at 73 (“There is

an obvious difference between a statute stating the condi-

tions upon which moneys shall be expended and one

effective only upon assumption of a contractual obliga-

tion to submit to a regulation which otherwise could not

be enforced.”); Dole, 483 U.S. at 212, 215-18 (O’Connor, J.,

dissenting).

The Court of Appeals simply stated that air quality is

a problem of federal interest and therefore any federal

spending may be conditioned so as not to exacerbate air

pollution. 80 F.3d at 882 (App. 28). As a result, the Court

of Appeals characterized it as “of no consequence that a

highway sanction, which will have the effect of reducing

emissions from mobile pollution sources, is being used to

induce compliance with a portion of the Act designed to

reduce emissions from stationary sources.” Id.15 But it is

1S The Court of Appeals was wrong on all fronts. Factually,

a decrease in highway spending can be demonstrated to increase

emissions from automobiles by reason of increased traffic

congestion. Moreover, Title V is a purely administrative

axiomatic that highway construction and the regulation

of industrial air pollution are different program with

different purposes. The pollutants addressed by each are

distinct, with distinct health and environmental conse-

quences, and cannot be interchanged.

More significant, the Court of Appeals ignored the

fact that other portions of the CAA and federal transpor-

tation statutes require that federal highway funds be used

only in conformity with EPA-approved State Implementa-

tion Plans governing mobile pollution sources. Thus, any

federal highway funds returned to the Commonwealth

can be used only on those projects that have received

federal approval from both a transportation and environ-

mental perspective. In short, Congress has tied federal

highway funds to State-adoption of Title V not to further

any federal environmental interest, and not because there

is any relationship between the two programs, but solely

because highway funds represent one of the biggest

weapons in Congress’ arsenal to coerce States into com-

pliance with federal dictates. This approach is even more

troublesome where Congress has the direct power to

implement a federal Title V program in those States that

wish to exercise their Tenth Amendment right not to

regulate on behalf of another sovereign, and, in particu-

lar, not to expand the jurisdiction of their own courts.

The analysis performed by the Court of Appeals

stands in stark contrast to that employed by the

majority of this Court in Lopez, another recent test of

provision of the CAA and will not in itself do anything to reduce

industrial pollution.

Congressional power. There this Court rejected the idea

that Congress may assert apparently limitless power

based on sweeping assertions about causal relationships.

Broad assumptions such as these defy careful analysis of

the matter at hand and render the protections afforded to

the States by the Constitution and by decisions such as

Dole and New York illusory.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

COMMONWEALTH OF VIRGINIA

James S. Grimore, III

Attorney General of

Virginia

Davio E. ANDERSON Joun P. Scumrrz, Esquire

Chief Seiad Attorney Grecory S. Wapen, Esquire

Genera THomas Ditence, Esquire

Joun Pau. W , Jn Mayer, Brown & Piatt

Deputy Attorney General 2000 Pennsylvania Avenue,

N.W.

Rocer L. CHAFre Suite 6500

Senior Assistant Attorney Washington, D.C. 20006-1882

General (202) 463-2000

Mary Jo Leucers Of Counsel

Assistant Attorney

General

(Counsel of Record)

900 East Main Street

Richmond, Virginia 23219

(804) 786-2444

App. 1

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

COMMONWEALTH OF VIRGINIA,

Petitioner,

CAROL M. BROWNER,

Administrator, U. S. Environmental

Protection Agency;

ENVIRONMENTAL PROTECTION

AGENCY,

Respondents,

AMERICAN LUNG ASSOCIATION

OF NORTHERN VIRGINIA, AND

AMERICAN LUNG ASSOCIATION

OF VIRGINIA; CLEAN WATER

ACTION; FRIENDS OF THE

RIVERS OF VIRGINIA;

THE JAMES RIVER No. 95-1052

ASSOCIATION; MOUNTAIN

HERITAGE ALLIANCE; VALLEY

CONCERNED CITIZENS;

VIRGINIA CHAPTER OF THE

SIERRA CLUB; VIRGINIA

CITIZEN ACTION; VIRGINIA

CONSORTIUM FOR CLEAN AIR;

VIRGINIA COUNCIL, TROUT

UNLIMITED; ENVIRONMENTAL

DEFENSE FUND,

INCORPORATED; KATHLEEN F.

DERRICOTT; CLIFTON E.

DERRICOTT; ANDRE L. BROWN;

CALEATA JOHNSON; GWEN

HEDGEPATH; AUDUBON

NATURALIST SOCIETY,

Intervenors,

App. 2

VIRGINIA MANUFACTURERS

ASSOCIATION; WASHINGTON

LEGAL FOUNDATION; OGDEN

MARTIN SYSTEMS OF

LANCASTER, INCORPORATED;

OGDEN MARTIN SYSTEMS OF

ALEXANDRIA, INCORPORATED;

NATIONAL INDEPENDENT

ENERGY PRODUCERS; OGDEN

MARTIN SYSTEMS OF

MONTGOMERY, INCORPORATED;

OGDEN MARTIN SYSTEMS OF

FAIRFAX, INCORPORATED;

CHESAPEAKE BAY

FOUNDATION,

Amici Curiae.

On Petition for Review of an Order

of the United States Environmental Protection Agency.

Argued: December 4, 1995

Decided: March 26, 1996

Before MURNAGHAN and MICHAEL, Circuit Judges,

and MICHAEL, Senior United States District Judge for

the Western District of Virginia, sitting by designation.

Petition for review denied by published opinion.

Circuit Judge Michael wrote the opinion, in which

Judge Murnaghan and Senior District Judge Michael

joined.

COUNSEL

ARGUED: Mary Jo Leugers, Assistant Attorney

General, Richmond, Virginia, for Petitioner. David Jay

Kaplan, Environmental Defense Section, Environment

& Natural Resources Division, UNITED STATES

App. 3

DEPARTMENT OF JUSTICE, Washington, D.C., for

Respondents. Katherine E. Slaughter, SOUTHERN

ENVIRONMENTAL LAW CENTER, Charlottesville,

Virginia, for Intervenors. ON BRIEF: James S. Gilmore,

Ill, Attorney General, John Paul Woodley, Jr., Deputy

Attorney General, Roger L. Chaffe, Senior Assistant

Attorney General, John R. Butcher, Assistant Attorney

General, Richmond, Virginia; John P. Schmitz, Thomas

Dilenge, MAYER, BROWN & PLATT, Washington,

D.C., for Petitioner. Lois J. Schiffer, Assistant Attorney

General, Ronald Spritzer, Robin M. Richardson,

Environmental Defense Section, Environment &

Natural Resources Division, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C.;

Michael W. Thrift, Office of General Counsel, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

Washington, D.C.; Cecil A. Rodrigues, Office of

Regional Counsel, UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY,

Philadelphia, Pennsylvania, for Respondents. Deborah

Murray Wassenaar, SOUTHERN ENVIRONMENTAL

LAW CENTER, Charlottesville, Virginia; David S.

Bailey, LAWYERS COMMITTEE FOR CIVIL RIGHTS

UNDER LAW, Washington, D.C., for Intervenors. Carol

C. Raper, Vice President and General Counsel,

VIRGINIA MANUFACTURERS ASSOCIATION,

Richmond, Virginia; George A. Somerville, MAYS &

VALENTINE, Richmond, Virginia, for Amicus Curiae

Virginia Manufacturers Association. Daniel J. Popeo,

David A. Price, WASHINGTON LEGAL

FOUNDATION, Washington, D.C., for Amicus Curiae

Washington Legal Foundation. Deborah E. Jennings,

Michael C. Carter, Norman L. Rave, PIPER &

MARBURY, Baltimore, Maryland, for Amici Curiae

National Independent Energy Producers, et al. Roy A.

Hoagland, Virginia Assistant Director/Staff Attorney,

App. 4

CHESAPEAKE BAY FOUNDATION, INC., Richmond,

Virginia, for Amicus Curiae Chesapeake Bay

Foundation.

OPINION

MICHAEL, Circuit Judge:

The Commonwealth of Virginia petitions for review of

the Environmental Protection Agency’s final action disap-

proving Virginia’s proposed program for issuing air pol-

lution permits. Specifically, Virginia challenges EPA’s

finding that Virginia has failed to comply with Title V of

the 1990 Amendments to the Clean Air Act (sometimes

“CAA” or the “Act”), CAA §§ 501-507, 42 U.S.C.

§§ 7661-7661f, because Virginia’s proposal lacks adequate

provisions for judicial review of the Commonwealth’s

permitting decisions. Virginia also challenges the consti-

tutionality of Title V and its sanctions provisions, CAA

§§ 179(b) & 502(d), 42 U.S.C. §§ 7509(b) & 7661a(d).

According to Virginia, these provisions improperly com-

mandeer the legislative processes of the states, in viola-

tion of the Tenth Amendment and the Spending Clause,

U.S. Const. art. 1 § 8, cl. 1. We have jurisdiction over all of

Virginia’s claims, see CAA § 307(b)(1), 42 U.S.C.

§ 7607(b)(1), and we find them to be without merit.

Because Virginia claims that the EPA has misinterpreted

Title V and that Title V is unconstitutional as well, a brief

discussion of the statute’s structure and purposes is in

order.

App. 5

Title V’s key provision, CAA § 502, 42 U.S.C. § 7661a,

prohibits major stationary sources of air pollution from

operating either without a valid permit or in violation of

the terms of a permit.! The permit is crucial to the imple-

mentation of the Act: it contains, in a single, comprehen-

sive set of documents, all CAA requirements relevant to

the particular polluting source. Clean Air Act Amendments

of 1990: Chafee-Baucus Statement of Senate Managers (Conf.

Rep. No. 952, 101st Cong., 2d Sess.) (“Chafee-Baucus State-

ment”), reprinted in 136 Cong. Rec. $16933, $16983 (daily

ed. Oct. 27, 1990). In a sense, a permit is a source-specific

bible for Clean Air Act compliance.

Title V of the Act contemplates that states will administer

and enforce the permitting program:

[T]he permit program is predicated on the prin-

ciple that the primary responsibility for its day-

to-day administration will rest squarely with

state and local air pollution agencies. While EPA

has an important role of providing guidance and

general oversight, the agency should not unduly

interfere with states’ implementation of the per-

mit program.

Chafee-Baucus Statement at S16983.

States are directed to submit for EPA approval their own

programs for issuing permits. CAA § 502(d)(1), 42 U.S.C.

§ 7661a(d)(1). EPA may not approve a proposed permit

1 A “stationary source” is defined in CAA §§ 112(a)(1),

182(b)(1)(A)(ii)(1), 182(c), 182(d), 182(e), 302(j), & 501(2); 42

U.S.C. §§ 7412(a)(1), 7511a(b)(1)(A)(ii)(), 751 1a(c), 7511a(d),

751la(e), 7602(j), & 7661(2). Stationary sources, such as power

plants and factories, are distinguished from mobile sources,

such as automobiles.

App. 6

program unless it meets certain minimum criteria set out

in CAA § 502(b), 42 U.S.C. § 7661a(b). Among other

things, states must design a standard permit application

form (§ 502(b)(1)), adequately staff and fund the permit

program (§ 502(b)(4)), develop a plan to ensure permit

compliance (§ 502(b)(5)), provide public access to docu-

ments submitted in support of permit applications

(§ 502(b)(8)), and provide for review in state courts of

permitting decisions (§ 502(b)(6)).

If a state fails to submit a permit program, or submits a

permit program that EPA disapproves for failure to com-

ply with CAA § 502(b), the state becomes subject to

sanctions designed to encourage compliance. CAA

§ 502(d), 42 U.S.C. § 7661a(d).2

One sanction deprives states of certain federal highway

funds. CAA § 179(b)(1), 42 U.S.C. § 7509(b)(1). However,

the state loses no funds that would be spent in regions

that are in “attainment” within the meaning of the Act.$

? We discuss the timing of sanctions in greater detail in our

opinion in a related case, Virginia v. United States (Virginia I), No.

95-2229 (4th Cir. Feb. 2, 1996). Sanctions are mandatory, but they

may be imposed earlier than mandated by the statute if EPA

finds, after holding a notice-and-comment rulemaking

proceeding, that early imposition of sanctions is necessary to

encourage compliance. See CAA §§ 502(d) & (i), 42 U.S.C.

§§ 7661a(d) & (i).

° We explain the concepts ot “attainment” and

“nonattainment” in greater detail in Virginia I. In brief, an area is

in nonattainment with respect to a pollutant if levels of that

pollutant in the ambient (breathable) air exceed a threshold

level set by EPA. An ozone nonattainment area, for example, has

what EPA has determined to be a sufficient amount of ozone in

the air to cause health problems.

App. 7

CAA § 179(b)(1)(A), 42 U.S.C. § 7509(b)(1)(A). And, even

within “nonattainment” areas, funds remain available for

highway projects that “resolve a demonstrated safety

problem and likely will result in a significant reduction

in, or avoidance of, accidents.” Id. Finally, federal funds

may be spent on many other types of transportation

projects within nonattainment areas, including:

(i) capital programs for public transit;

(ii) construction or restriction of certain roads

or lanes solely for the use of passenger buses or

high occupancy vehicles;

(iii) planning for requirements for employers

to reduce employee work-trip-related vehicle

emissions;

(iv) highway ramp metering, traffic signaliza-

tion, and related programs that improve traffic

.flow and achieve a net emission reduction;

(v) fringe and transportation corridor parking

facilities serving multiple occupancy vehicle

programs or transit operations;

(vi) programs to limit or restrict vehicle use in

downtown areas or other areas of emission con-

centration particularly during periods of peak

use, through road use charges, tolls, parking

surcharges, or other pricing mechanisms, vehi-

cle restricted zones or periods, or vehicle regis-

tration programs;

(vii) programs for breakdown and accident

scene management, nonrecurring congestion,

and vehicle information systems, to reduce con-

gestion and emissions; and

App. 8

(viii) such other transportation-related pro-

grams as the [EPA] Administrator, in consulta-

tion with the Secretary of Transportation, finds

would improve air quality and would not

encourage single occupancy vehicle capacity. In

considering such measures, the State should

seek to ensure adequate access to downtown,

other commercial, and residential areas, and

avoid increasing or relocating emissions and

congestion rather than reducing them.

CAA § 179(b)(1)(B), 42 U.S.C. § 7509(b)(1)(B).

A second sanction increases the pollution offset require-

ments already imposed on private polluters within ozone

nonattainment areas. Normally, new major stationary

sources of pollution may not be operated within non-

attainment areas (and existing stationary sources may not

be modified if the modification would increase emissions)

unless pollution from other sources is reduced to offset

increased pollution from the new or modified source. In

regions of “marginal” nonattainment with respect to

ozone, 110 tons of old pollution must be eliminated for

every 100 additional tons of new pollution (a ratio of

1.1:1). CAA § 182(a)(4), 42 U.S.C. § 7511a(a)(4). In regions

of “moderate” nonattainment, 115 tons of old pollution

must be eliminated for every additional 100 tons of new

pollution (a ratio of 1.15:1). CAA § 182(b)(5), 42 U.S.C.

§ 751la(b)(5). In regions of “serious,” “severe,” or

“extreme” nonattainment with respect to ozone, 120 tons

of old pollution must be eliminated for every additional

100 tons of new pollution (a ratio of_1.2:1). CAA

§§ 182(c)(10), (d), & (e); 42 U.S.C. § 7511a(c)(10), (d), &

(e). In regions of “severe” and “extreme” nonattainment,

higher ratios are mandated for certain pollutants. See

App. 9

CAA §§ 182(d)(2) & (e)(1); 42 U.S.C. §§ 751la(d)(2) &

(e)(1). The sanction supersedes these normal ratios by

increasing the ratio in all ozone nonattainment areas to

2:1, requiring 200 tons of old pollutants to be eliminated

for every 100 tons of new pollutants allowed. CAA

§ 179(b)(2), 42 U.S.C. § 7509(b)(2). The offset sanction,

therefore, could slow the rate of industrial development

within a noncomplying state.

A third sanction eliminates the state’s ability to manage

its own pollution control regime. If the state does not

gain approval for its permit program, EPA develops and

implements its own Title V permitting program, within

the noncomplying state. CAA § 502(d)(3), 42 U.S.C.

§ 7661a(d)(3). The state is not required to do anything to

assist EPA in this effort; the federal government becomes

wholly responsible.

Virginia submitted a proposed Title V permit program to

EPA on November 12, 1993, and January 14, 1994. EPA

then opened a notice and comment period. EPA pub-

lished notice of its intent to disapprove Virginia’s pro-

posal on June 17, 1994, 59 Fed.Reg. 31183, and Virginia

responded to EPA’s notice. After considering Virginia’s

comments, as well as the comments of others, EPA took

final action disapproving Virginia’s proposed Title V pro-

gram on December 5, 1994. 59 Fed.Reg. 62324.

EPA based its disapproval on five grounds:

(1) the proposed program contained inade-

quate judicial review provisions, in violation of

App. 10

CAA § 502(b)(6) (42 U.S.C. § 7661a(b)(6)) and 40

C.F.R. § 70.4(b)(3)(x) & 70.7(h);

(2) the proposed program would have allowed

certain permits to be issued by default, in viola-

tion of § 505(b)(3) (42 U.S.C. § 7661d(b)(3)) and

40 C.F.R. § 70.8(e);

(3) the regulations that would have imple-

mented the proposed program had expired

without being re-promulgated;

(4) the proposed program did not “require

issuance of permits to the proper universe of

sources required by 40 CFR part 70”; and

(5) the proposed program did not “contain reg-

ulations meeting the requirements of 40 CFR

part 70 to ensure issuance of permits that con-

tain all applicable Federal requirements,” and

did not “correctly delineate provisions only

enforceable by” Virginia.

See id. at 62324-25.

Virginia filed a petition for review in this Court on Janu-

ary 9, 1995.4 Since that date Virginia has revised portions

of its original proposal and now claims that it has cor-

rected defects (2) through (5). EPA has not yet deter-

mined whether those defects have actually been

corrected.

* Virginia simultaneously filed suit, Virginia I, in the district

court for the Eastern District of Virginia. In Virginia I we

affirmed the district court’s decision to dismiss for lack of

subject matter jurisdiction.

App. 11

The claims in Virginia’s petition to us fall into three broad

categories. First, Virginia argues that because it has cor-

rected defects (2) through (5) in its proposed permit

program, we should remand the case to EPA for a new

determination of whether the corrected version complies

with the Act. Second, Virginia argues that EPA’s disap-

proval of the originally proposed permit program was

arbitrary and capricious. Third, Virginia argues that Title

V of the CAA and its sanctions provisions are unconstitu-

tional because the Act represents an attempt by Congress

to coerce Virginia into exercising its sovereign legislative

power. We consider each claim in turn.

Il.

Virginia suggests that we must remand this case to EPA

because four of the five defects in its originally proposed

Title V state permit program have been corrected. We

believe, however, that a remand would be inappropriate.

First, Virginia concedes that EPA properly disapproved

its original submission on the basis of defects (2) through

(5). We may affirm the agency on this basis, and this basis

alone, if the CAA passes constitutional muster. Although

the EPA “Administrator may approve a program [just] to

the extent that the program meets the requirements of”

the Act, she is not required to do so, and she has the

authority to disapprove the entire program on the basis

of one defect. CAA § 502(d)(1), 42 U.S.C. § 7661a(d)(1).

Second, EPA has not yet determined whether Virginia’s

new submission is adequate, because EPA has not com-

pleted the notice and comment rulemaking proceeding

required by CAA § 502(d)(1). And absent any agency

~ App. 12

record, we have no way of knowing whether the new

submission in fact complies with the CAA, as Virginia

claims. See Federal Power Comm'n v. Transcontinental Gas

Pipe Line Corp., 423 U.S. 326, 331-34 (1976) (per curiam);

cf. Virginia Agric. Growers Ass'n v. Donovan, 774 F.2d 89, 92

(4th Cir. 1985) (“the focal point for judicial review should

be the administrative record already in existence, not

some new record made initially in the reviewing court”)

(quoting Camp v. Pitts, 411 U.S. 138, 143 (1973)); Deukme-

jian v. Nuclear Regulatory Comm'n, 751 F.2d 1287, 1325

(D.C. Cir. 1984) (“judicial reliance on an agency’s stated

rationale and findings is central to a harmonious relation-

ship between agency and court”), aff'd in pertinent part

sub. nom. San Luis Obispo Mothers for Peace v. U.S. Nuclear

Regulatory Comm'n, 789 F.2d 26 (D.C. Cir. 1986) (en banc),

cert. denied, 479 U.S. 923 (1986).

A remand would serve no useful purpose here, and

accordingly we reject Virginia’s suggestion.

Il.

Virginia claims that EPA erroneously determined that

Virginia’s permit program contained inadequate judicial

review provisions (defect (1)). EPA’s finding that Virginia

submitted a deficient permit program must be upheld

unless that finding is “arbitrary, capricious, or otherwise

not in accordance with law.” 5 U.S.C. § 706(2)(A). We find

that EPA correctly determined that Virginia’s proposed

judicial review provisions do not comply with the Act.

Therefore, even if EPA had based its disapproval solely

on defect (1), such disapproval would not have been

arbitrary and capricious.

App. 13

CAA § 502(b)(6), 42 U.S.C. § 7661a(b)(6), provides that a

state permit program must contain:

Adequate, streamlined, and reasonable pro-

cedures for expeditiously determining when

applications are complete, for processing such

applications, for public notice, including offer-

ing an opportunity for public comment and a

hearing, and for expeditious review of permit

actions, including applications, renewals, or

revisions, and including an opportunity for judi-

cial review in State court of the final permit action

by the applicant, any person who participated in the

public comment process, and any other person who

could obtain judicial review of that action under

applicable law.

(Emphasis supplied.)

The emphasized portion of this provision is a* ‘ssue here.

A state permit program will be disapproved unless the

state submits a legal opinion stating that the proposed

Title V program allows state court review of permitting

decisions upon the request of “the [permit] applicant, any

person who participated in the public participation pro-

cess ... and any other person who could obtain judicial

review of such actions under State laws.” 40 C.F.R.

§ 70.4(b)(3)(x). EPA interprets the statute and regulation

to require, at a minimum, that states provide judicial

review of permitting decisions to any person who would

have standing under Article III of the United States Con-

stitution. Notice of Proposed Disapproval, 59 Fed. Reg.

31183, 31184 (June 17, 1994).

App. 14

Virginia law grants standing to seek judicial review of

permitting decisions to “[a]ny owner aggrieved by” such

decisions. Va. Code § 10.1-1318(A). This provision satis-

fies CAA § 502(b)(6)’s requirement that the permit “appli-

cant” be allowed to seek judicial review. But § 502(b)(6)

also requires that states grant certain standing rights to

members of the public, and here is where Virginia’s judi-

cial review provision falls short of the mark. Under Vir-

ginia’s provision, a member of the public “who is

aggrieved by a final [permitting decision] who partici-

pated, in person or by submittal of written comments, in

the public comment process” may only seek judicial

review of a permitting decision if he can establish that

(i) [he] has suffered an actual, threatened, or

imminent injury; (ii) such injury is an invasion

of an immediate, legally protected, pecuniary and

substantial interest which is concrete and partic-

ularized; (iii) such injury is fairly traceable to

the [permitting decision] and not the result of

the action of some third party not before the

court; and (iv) such injury will likely be

redressed by a favorable decision of the court.

Va. Code § 10.1-1318(B) (emphasis supplied).

According to EPA, this provision is too restrictive: limit-

ing availability of review to those persons with “pecuni-

ary and substantial” interests violates CAA § 502(b)(6).

We agree with EPA.

App. 15

Virginia argues that the text of CAA § 502(b)(6) does not

require states to slacken their rules of judicial standing at

all.

The critical language to be examined is: “an opportunity

for judicial review in State court of the final permit action

by the applicant, any person who participated in the

public comment process, and any other person who could

obtain judicial review of that action under applicable

law.”

As Virginia reads the statute, the final clause, “who could

obtain judicial review of that action under applicable

[state] law,” modifies all three categories of persons ear-

lier described as being allowed to seek judicial review:

“the applicant,” “any person who participated in the

public comment process,” and “any other person.” Thus,

according to Virginia, § 506(b)(6) requires states to grant

standing to participants in the public comment process

only if those persons would otherwise have standing

under existing state law.

Virginia’s proposed reading is contrary to ordinary prin-

ciples of statutory construction and to the rules of English

usage. The clause, “who could obtain judicial review of

that action under applicable law,” modifies only the

immediately preceding category, “any other person.” An

elementary principle of statutory construction is the “last

antecedent” rule, which holds that ordinarily a clause

modifies only its nearest antecedent. In re Grewe, 4 F.3d

299, 302 (4th Cir. 1993), cert. denied, 114 S. Ct. 1056 (1994).

App. 16

Furthermore, if the last antecedent rule does not apply,

and the clause modifies all three categories, then there

would have been no need for Congress to have included

the first two categories. The statute could have been

written simply to say that standing should be given to

“any person” who complied with state standing rules. A

court should not - and we will not - construe a statute in

a manner that reduces some of its terms to mere sur-

plusage. See Arkansas Best Corp. v. Commissioner, 485 U.S.

212, 218 (1988).

Properly read, the final clause simply allows the states to ,

grant broader standing rights than those otherwise

required under federal law.

This provision ensures that existing provisions

of law governing the availability of review of

final actions on permit applications are in no

way limited, and that interested persons who

arguably are affected by permit decisions are

guaranteed their day in court.

Chafee-Baucus Statement, 136 Cong. Rec. at $169941. In

other words, the clause “who could obtain judicial review

of that action under applicable law” creates a floor of

rights, rather than a ceiling, and ensures that the CAA

does not inadvertently diminish standing rights previ-

ously granted under state laws.

A literal reading of the latter part of § 502(b)(6), then,

would require that a state allow “any person who partici-

pated in the public comment process” to seek judicial

review of permitting decisions. EPA, however, does not

App. 17

require that states go that far in providing for judicial

review. EPA has determined that § 502(b)(6) is satisfied

(and that therefore a state permit program may be

approved) if a state grants standing only to those partici-

pants in the public comment process who would have

Article III standing to sue in federal court.5

This determination is justified by analysis of the opening

portion of § 502(b)(6), which requires that states provide

“[a]dequate, streamlined, and reasonable procedures for

expeditiously” making permitting decisions. The two

parts of the section must be harmonized, and EPA has

done that by creating a safe harbor keyed to Article III

standing.

But Virginia claims that because EPA agrees that

§ 502(b)(6), when read in its entirety, is ambiguous, the

states may propose any Title V program that reasonably

accommodates the statute’s disharmonious provisions.

Virginia claims that because its “pecuniary and substan-

tial interest” requirement is a reasonabie way to resolve

the tension inherent in § 502(b)(6), EPA was arbitrary and

capricious in its decision to reject Virginia’s proposal.

We disagree. EPA’s interpretation, if reasonable, must

take precedence over any interpretation Virginia could

offer or, indeed, even over any alternative interpretation

we could formulate. Chevron, U.S.A., Inc. v. Natural

> For Article III standing purposes, a potential litigant must

show (1) actual or imminent injury that is concrete and

particularized, (2) causal connection between the challenged

conduct and the injury, and (3) likelihood that the injury would

be redressed by favorable judicial action. Lujan v. Defenders of

Wildlife, 112 S. Ct. 2130, 2136 (1992).

App. 18

Resources Defense Council, 467 U.S. 837, 844 (1984). We

defer to EPA’s definition of the bounds of the § 502(b)(6)

safe harbor because “[t]he power of an administrative

agency to administer a congressionally created .. .

program necessarily requires the formulation of policy

and the making of rules to fill any gap left, implicitly or

explicitly, by Congress.” Id. at 843 (quoting Morton v.

Ruiz, 415 U.S. 199, 231 (1974)).

EPA’s interpretation of the judicial review portion of

CAA § 502(b)(6) harmonizes it with the portion that

requires states to provide “[a]dequate, streamlined, and

reasonable procedures.” We find EPA’s importation of

Article III principles to resolve the slight tension within

CAA § 502(b)(6) to be reasonable. The Article III test is

convenient to apply, primarily because a body of national

caselaw interpreting Article III standing requirements

already exists. See, e.g., Sammon v. New Jersey Bd. of Medi-

cal Examiners, 66 F.3d 639, 642 (3d Cir. 1995); Chambers

Medical Technologies v. Bryant, 52 F.3d 1252, 1265 (4th Cir.

1995); Williams v. Lambert, 46 F.3d 1275, 1278 (2d Cir.

1995); Ass’n for Retarded Citizens v. Dallas County Mental

Health & Mental Retardation Ctr. Bd. of Trustees, 19 F.3d

241, 243 (5th Cir. 1994); Adams v. Watson, 10 F.3d 915, 918

(1st Cir. 1993); Banks v. Secretary of Indiana Family and

Social Servs. Admin., 997 F.2d 231, 238 (7th Cir. 1993);

Central Ariz. Water Conservation Dist. v. United States EPA,

990 F.2d 1531, 1537-38 (9th Cir.), cert. denied, 114 S. Ct. 94

(1993). Because EPA’s “answer is based upon a permiss-

ible construction of the statute,” we will follow EPA’s

choice of interpretation. Chevron, 467 U.S. at 843; accord

Monongahela Power Co. v. Reilly, 980 F.2d 272, 278-79 (4th

Cir. 1992).

App. 19

Virginia argues that Chevron deference is inappropriate

because EPA’s area of expertise is the environment, not

jurisdictional rules. See Hi-Craft Clothing Co. v. NLRB, 660

F.2d 910, 914-15 (3d Cir. 1981). Again, we disagree.

“(Cjonsiderable weight should be accorded to an execu-

tive department’s construction of a statutory scheme it is

entrusted to administer.” Chevron, 467 U.S. at 844. Con-

gress has charged EPA with inducing the states to imple-

ment a permitting program that satisfies certain judicial

review requirements, and if Congress has decided that

EPA has sufficient expertise in the area, it is not our place

to say otherwise. See Cass R. Sunstein, Law and Adminis-

tration After Chevron, 90 Colum. L. Rev. 2071, 2097 (1990)

(“an ad hoc inquiry into administrative competence

would be an exceptionally poor way to handle the ques-

tion whether Chevron applies”).

Virginia also claims that Gregory v. Ashcroft, 501 U.S. 452

(1991), mandates a different result. Virginia is again mis-

taken. Gregory simply stands for the proposition that

when congressional intent is unclear, a statute should be

construed to avoid a constitutional question. That princi-

ple has no relevance in this case because here it is mani-

festly clear that Congress specifically intended that the

states conform their judicial standing rules to meet the

§ 502(b)(6) standard. See Association of Community Orgs.

for Reform Now (ACORN) v. Edgar, 56 F.3d 791, 796 (7th

Cir. 1995); United States v. Lot 5, 23 F.3d 359, 362 (11th Cir.

1994), cert. denied, 115 S. Ct. 722 (1995); EEOC v. Massa-

chusetts, 987 F.2d 64, 69 (1st Cir. 1993).

In Gregory the Supreme Court faced the question whether

the Age Discrirnination in Employment Act (ADEA), 29

U.S.C. §§ 621-34, applied to state judges. The ADEA

App. 20

contained no express reference to state courts or judges,

and therefore the Court concluded that the statute did not

apply. If the statute did apply to state judges, the Court

reasoned, then an inquiry into key federalism concerns

would be required. Specifically, could Congress, under

the guise of an antidiscrimination statute, alter the quali-

fications for state judges, or would doing so violate the

Tenth Amendment? The Court held that it would con-

strue the ADEA in a manner that would allow it to avoid

the constitutional question. Because the statute did not

expressly say that it applied to state judges, and because

a difficult constitutional question would have been pre-

sented if the statute did in fact apply to state judges, the

statute was interpreted as not applying to state judges.

The Clean Air Act contains no ambiguity of the kind

present in Gregory. Even if EPA’s interpretation of CAA

§ 502(b)(6) can be said to implicate Tenth Amendment

concerns by intruding upon what Virginia claims to be a

core element of its sovereignty, see IV.A, infra, that inter-

pretation is specifically authorized by the “plain state-

ment” of Congress. Gregory, 501 U.S. at 461. In Gregory,

the question was whether the ADEA applied to the state

judiciary at all. Here, by contrast, Congress intended

CAA § 502(b)(6) to apply to state courts, and Congress

made “its intention unmistakably clear in the language of

the statute.” Atascadero State Hosp. v. Scanlon, 473 U.S. 234,

242 (1985). By its terms, § 502(b)(6) could apply to nothing

but state courts.

Here, EPA resolved the slight tension within § 502(b)(6)

by interpreting the section to require that states, at a

minimum, extend judicial review rights to participants in

App. 21

the state public comment process who satisfy the stan-

dard for Article III standing. This resolution is both

authorized by Congress and reasonable, and therefore we

must reject Virginia’s alternative interpretation.

Virginia also argues that even if the Article III test is

proper, Virginia’s “pecuniary and substantial interest”

requirement satisfies it. Again, we disagree.

A plaintiff need not show “pecuniary” harm to have

Article III standing; injury to health or to aesthetic, envi-

ronmental, or recreational interests will suffice. See, e.g.,

United States v. Students Challenging Regulatory Agency

Procedures (SCRAP), 412 U.S. 669, 686-87 (1973); Sierra

Club v. Morton, 405 U.S. 727, 734 (1972).

In recent cases, Virginia courts have denied standing to

plaintiffs who would have met Article III’s standing

requirements. For example, in Fries v. State Water Control

Bd., 409 S.E.2d 634, 637 (Va. Ct. App. 1991), it was held

that a town lacked standing to seek judicial review of the

decision of the State Water Control Board to grant a

permit, even though the permit allowed a sewage treat-

ment plant to discharge waste directly upstream of the

town. Standing also was denied to individual riparian

landowners. The court held that “an anticipated public

injury” was not “an immediate, pecuniary, and substan-

tial interest” such that standing should be allowed. Id.; see

also Citizens for Clean Air v. Commonwealth, 412 S.E.2d 715,

719-21 (Va. Ct. App. 1991) (because unincorporated asso-

ciation was not an “owner aggrieved” under Virginia law,

association was denied standing to challenge permitting

App. 22

decision of State Air Pollution Control Board, even

though association members owned real estate near plant

granted permit, were bothered by foul odors emitted by

plant, and alleged decline in property values); Environ-

mental Defense Fund v. Virginia State Water Control Bd., 404

S.E.2d 728, 731-32 (Va. Ct. App. 1991) (standing denied to

association seeking review of water pollution permit

decision, even though association represented both recre-

ational users of a river and riparian landowners).

Virginia caselaw makes it clear that the “pecuniary and

substantial interest” requirement is more stringent than

Article III’s requirement of concrete and particularized

injury.

Section 502(b)(6)’s requirement of broad availability of

judicial review is necessary to ensure that the required

public comment period serves its proper purpose. The

comment of an ordinary citizen carries more weight if

officials know that the citizen has the power to seek

judicial review of any administrative decision harming

him. EPA recently recognized this principle in another

context:

When citizens are denied the opportunity to

challenge executive decisions in court, their

ability to influence permitting decisions through

other required elements of public participation,

such as through public comments and public

hearings on proposed permits, may be seriously

compromised. If citizens perceive that a state is

not addressing their concerns about [ ] permits

because the citizens have no recourse to an

App. 23

impartial judiciary, that perception also has a

chilling effect on all the remaining- forms of

public participation in the permitting process.

Amendment to Requirements for Authorized State Permit Pro-

grams Under Section 402 of the Clean Water Act, 60 Fed.

Reg. 14588, 14589 (March 17, 1995) (notice of proposed

rulemaking).

Because Virginia’s permit program did not provide the

minimum judicial review rights required under

§ 506(b)(6), it was not arbitrary and capricious for EPA to

disapprove Virginia’s submission.

IV.

Having determined that EPA had a valid reason to disap-

prove Virginia’s permit program, we now examine

whether Title V and its sanctions provisions are constitu-

tional. Virginia claims that Title V and its sanctions provi-

sions are unconstitutional because they impinge upon a

fundamental element of state sovereignty, the state’s right

to articulate its own rules of judicial standing. Even

assuming arguendo the accuracy of Virginia’s assertion

that its standing rules are within the core of its sover-

eignty, we find no constitutional violation because federal

law “may, indeed, be designed to induce state action in

areas that otherwise would be beyond Congress’ regula-

tory authority.” FERC v. Mississippi, 456 U.S. 742, 766

(1982). As we explain below, we believe that if Virginia

chooses to change its rules of judicial standing, it will

App. 24

make the change only because the CAA’s sanctions provi-

sions induce it to do so, not because they coerce it.

We agree that Congress lacks power to impinge upon

“the core of sovereignty retained by the States.” New York

v. United States, 112 S. Ct. 2408, 2419 (1992). We also agree

that an important aspect of a state’s sovereignty is the

administration of its judicial system. See Gregory, 501 U.S.

at 460. Thus, a state cannot be required to create a court

with power to decide federal claims, if no court otherwise

exists. Howlett v. Rose, 496 U.S. 356, 372 (1990). Similarly, a

state may apply neutral venue rules to require that fed-

eral claims be brought in a particular state court. Herb v.

Pitcairn, 324 U.S. 117, 123 (1945), overruled in part on other

grounds by Michigan v. Long, 463 U.S. 1032 (1983). But the

Supremacy Clause compels state judges to apply federal

law, if such law is applicable. U.S. Const. art. VI, cl. 2.

Furthermore, to require an existing state administrative

body to adjudicate a dispute arising under federal law

does not unreasonably interfere with state sovereignty.

FERC, 456 U.S. at 760; see also Testa v. Katt, 330 U.S. 386

(1947) (state court must entertain civil action arising

under federal Emergency Price Control Act); E.A. v. State,

623 P.2d 1210, 1215 n.13 (Alaska, 1981) (state court must

exercise jurisdiction over actions brought pursuant to

federal Indian Child Welfare Act); cf. Mack v. United

States, 66 F.3d 1025, 1029-30 (9th Cir. 1995) (state law

enforcement officials may be required to assist in opera-

tion of federal law enforcement scheme).

App. 25

We need not decide whether judicial standing rules fall

within the core of sovereignty identified in Gregory and

Howlett, supra, because we find that the CAA does not

compel the states to modify their standing rules, it merely

induces them to do so. The CAA is constitutional

because although its sanctions provisions potentially bur-

den the states, those sanctions amount to inducement

rather than “outright coercion.” See New York, 112 S. Ct. at

2423. We examine each sanction separately to explain

how we reach this conclusion. See id. at 2425.

that CAA § 113, 42 U.S.C. § 7413, exposes the state and its

elected officials to civil and criminal liability for failure to

promulgate a valid state permit program. A careful reading of

this section, however, discloses that it provides for enforcement

of an approved state permit program. Sanctions under § 113 may

not be used to force Virginia to promulgate any state permit

program, and EPA has not proposed invoking § 113 in this case.

Sanctions under this section are available only to redress

“violations of . . . approved permit program under subchapter

[Title] V.” CAA § 113(a)(2), 42 U.S.C. § 7413(a)(2). EPA has not

approved Virginia’s proposed Title V program, so no “approved

permit program” yet exists to trigger any § 113 sanctions against

any Virginia official. In addition, EPA has expressed no

intention to seek § 113 sanctions against Virginia officials in the

future. For these reasons, a constitutional challenge to § 113 is

unripe. Renne v. Geary, 501 U.S. 312, 321-22 (1991). The threat of

such sanctions has not been “felt in a concrete way by” any

Virginia official. Reno v. Catholic Social Servs., Inc., 113 S. Ct.

2485, 2495 (1993) (quoting Abbott Labs. v. Gardner, 387 U.S. 136,

148 (1967)); accord Lujan v. National Wildlife Fed’n, 497 U.S. 871,

891 (1990).

App. 26

Two sources of Congressional power allow use of the

highway sanction. Because the elimination of air pollu-

tion promotes the general welfare, Congress may tie the

award of federal funds to the states’ efforts to eliminate

air pollution. “The Congress shall have Power to lay and

collect Taxes, Duties, Imposts and Excises, to pay the

Debts and provide for the common Defence and general

Welfare of the United States.” U.S. Const. art. I § 8, cl. 1.

Furthermore, the Commerce Clause, U.S. Const. art. I, § 8,

cl. 3, gives Congress the power to regulate “activities

causing air or water pollution, or other environmental

hazards that may have effects in more than one State.”

Hodel v. Virginia Surface Mining & Reclamation Ass’n, 452

U.S. 264, 282 (1981).

Generally, Congress may use the power of the purse to

encourage states to enact particular legislation. New York,

112 S. Ct. at 2423. This power, however, is not limitless.

Exercise of the power to the point of “outright coercion”

violates the Constitution. Id. “[I]n some circumstances the

financial inducement offered by Congress might be so

coercive as to pass the point at which ‘pressure turns into

compulsion.’ ” South Dakota v. Dole, 483 U.S. 203, 211

(1987) (quoting Steward Machine Co. v. Davis, 301 U.S. 548,

590 (1937)).7 Also, it has been suggested that federal

funds may be subject to conditions “only in ways reason-

ably related to the purpose for which the funds are

expended.” South Dakota, 483 U.S. at 213 (O’Connor, J.,

7 In South Dakota the Supreme Court upheld an Act of

Congress that denied a percentage of highway funds to states

that refused to enact a minimum drinking age of 21.

App. 27

dissenting); see also New York, 112 S. Ct. at 2426. No court,

however, has ever struck down a federal statute on

grounds that it exceeded the Spending Power. See Nevada

v. Skinner, 884 F.2d 445, 448 (9th Cir. 1989), cert. denied, 493

U.S. 1070 (1990).

The highway sanction here does not rise to the level of

“outright coercion.” First, a state does not lose any high-

way funds that would be spent in areas of the state that

are in attainment. CAA § 179(b)(1)(A), 42 U.S.C.

§ 7509(b)(1)(A). Second, even within nonattainment areas,

federal highway funds may be spent on projects designed

to promote safety or designed to reduce air pollution.

CAA § 179(b)(1), 42 U.S.C. § 7509(b)(1). More severe

funding restrictions than those at issue here have been

upheld. See, e.g., New York, 112 S. Ct. at 2426-27; Skinner,

supra (virtually all highway funds); Oklahoma v. Schweiker,

655 F.2d 401 (D.C. Cir. 1981) (all Medicaid funds);

Nebraska, Dep’t of Roads v. Tiemann, 510 F.2d 446 (8th Cir.

1975) (broad category of highway funds).

Virginia concedes that it is allowed to spend federal

money on safety projects, on projects that will reduce

pollution, and on projects within areas that are in attain-

ment. The Commonwealth contends, however, that

because it is difficult to shift funds from one transporta-

tion project to another, these exemptions do not reduce

the sanction’s coercive effect. According to Virginia, it

simply lacks the time to reallocate funds away from high-

way projects it has already planned for nonattainment

areas. To this argument we can only say that Title V was

enacted in 1990, and the states have had more than five

years either to comply or to prepare themselves for the

consequences of noncompliance.

App. 28

And contrary to what Virginia claims, the conditions on

spending are reasonably related to the goal of reducing

air pollution. The CAA as a whole is a comprehensive

scheme to cope with the problem of air pollution from all

sources. Congress may ensure that funds it allocates are

not used to exacerbate the overall problem cf air pollu-

tion. It is therefore of no consequence that a highway

sanction, which will have the effect of reducing emissions

from mobile pollution sources, is being used to induce

compliance with a portion of the Act designed to reduce

emissions from stationary sources.

We hold that the highway sanction, CAA § 179(b)(1), is a

valid exercise of the Spending Power. As a valid exercise

of that power, it also comports with the requirements of

the Tenth Amendment. New York, 112 S. Ct. at 2427.

Congress has not overstepped its bounds here.

The offset sanction, CAA § 179(b)(2), 42 U.S.C.

§ 7509(b)(2), which iimits new construction or modifica-

tion of major stationary sources of air pollution, is consti-

tutional because it regulates private pollution sources,

not states.

The burden of the offset sanction falls on private parties.

The more stringent offset requirements will likely make it

more difficult for individual pollution sources (manufac-

turers, utilities, and the like) to upgrade or modify exis-

ting plants and equipment or to open new plants. Thus,

although the sanction may burden some Virginia citizens,

it does not burden Virginia as a governmental unit. For this

reason, the sanction does not violate the principles of

App. 29

federalism embodied in the Tenth Amendment. New York,

112 S. Ct. at 2427 (upholding a sanction because “any

burden caused by a state’s refusal to regulate will fall on”

private citizens); Hodel, 452 U.S. at 288 (harm to citizens

of states does not create Tenth Amendment violation,

absent direct harm to state governmental entities). The

offset sanction is constitutional.

The final sanction, Federal permit program implementa-

tion, CAA § 502(d)(3), 42 U.S.C. § 7661a(d)(3), also is

constitutional. The essence of a Tenth Amendment viola-

tion is that the state is commanded to regulate. Here,

Virginia is not commanded to regulate; the Common-

wealth may choose to do nothing and let the federal

government promulgate and enforce its own permit pro-

gram within Virginia. Because “the full regulatory burden

will be borne by the Federal Government,” the sanction is

constitutional. Hodel, 452 U.S. at 288.

Hodel, in fact, is the mirror image of this case and controls

our decision. In Hodel the federal government first imple-

mented an environmental regulatory regime within each

state but then gave each state the ability to end the

federal program by implementing its own state environ-

mental regulations that met certain criteria. In the present

situation, the federal government gives the states the

chance to enact their own regulations before the federal

plan is imposed. For purposes of constitutional analysis,

we cannot see how it makes a difference whether the

federal plan is imposed first, or whether the states are

given the chance to avoid imposition of the federal plan

App. 30

first. If anything, the CAA’s method - to give the states a

chance first to avoid imposition of any federal plan by

promulgating satisfactory regulations — seems less coer-

cive than the program upheld in Hodel. The CAA simply

“establishes a program of cooperative federalism that

allows the States, within limits established by federal

minimum standards, to enact and administer their own

regulatory programs, structured to meet their own partic-

ular needs.” Id. at 289.

Because Congress may choose to preempt state law com-

pletely, it may also take the less drastic step of allowing

the states the ability to avoid preemption by adopting

and implementing their own plans that sufficiently

address congressional concerns. Id. at 290; Mack, 66 F.3d

at 1029 (“The federal government may offer to preempt

regulation in a given area and permit the states to avoid

preemption if they regulate in a manner acceptable to

Congress.”).

In Maryland v. EPA, 530 F.2d 215 (4th Cir. 1975), vacated

and remanded for consideration of mootness sub nom. EPA v.

Brown, 431 U.S. 99 (1977) (per curiam), this court exam-

ined regulations promulgated under the CAA that on

their face would have directly required Maryland to enact

statutes and to administer an EPA plan. See also District of

Columbia v. Train, 521 F.2d 971, 983 (D.C. Cir. 1975),

vacated and remanded for consideration of mootness sub nom.

EPA v. Brown, 431 U.S. 99 (1977) (per curiam).

The regulations in Maryland provided that “the state of

Maryland shall” establish and implement certain pollu-

tion control programs. 530 F.2d at 219. EPA argued that

the regulations’ use of the word, “shall,” meant that if

a ee eee Se ee

Ie aS ae

PIO ae nee ee

App. 31

Maryland did not comply, EPA could seek to impose civil

and criminal penalties on the state for noncompliance. Id.

at 224. We rejected that proposed interpretation as “aston-

ishing,” id., and said it “would reduce the states to the

puppets of a ventriloquist Congress.” Id. at 226 (quoting

Brown v. EPA, 521 F.2d 827, 839 (9th Cir. 1975), vacated and

remanded for consideration of mootness, 431 U.S. 99 (1977)

(per curiam)). Had we accepted EPA’s proposed inter-

pretation, Maryland’s legislature would have been

directly compelled to regulate, a result that would have

offended the Tenth Amendment. Maryland, 530 F.2d at

224. Instead, we interpreted the regulations as authoriz-

ing EPA to implement a federal pollution control program

directly. Id. at 227-28. This interpretation of the regula-

tions did not offend the Tenth Amendment, even though

Maryland was put under some pressure to pass laws

satisfying federal criteria in order to avoid the Federal

implementation. “Congress may induce a state to act by

offering favors or exacting financial penalties.” Id. at 226.

See also Train, 521 F.2d at 984-85 (this procedure is “quite

unremarkable”). In Maryland we sent Congress and EPA a

signal that they could constitutionally use sanctions such

as those at issue here.

Finally, the CAA’s sanctions provisions maintain unity

between regulation and political accountability. If sanc-

tions are imposed, it will be “the Federal Government

that makes the decision in full view of the public, and it

will be federal officials that suffer the consequences if the

decision turns out to be detrimental or unpopular.” New

York, 112 S. Ct. at 2424. The sanctions provisions are

constitutional.

App. 32

In sum, we conclude (1) that EPA correctly disapproved

Virginia’s proposed State permit program because it did

not satisfy the provisions of the Clean Air Act and (2) that

the sanctions Virginia faces are constitutional. The peti-

tion for review is denied.

DENIED.

App. 33

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

FILED

July 12, 1996

No. 95-1052

COMMONWEALTH OF VIRGINIA

Petitioner

Vv.

CAROL M. BROWNER, Administrator,

U. S. Environmental Protection Agency;

ENVIRONMENTAL PROTECTION AGENCY;

Respondents

AMERICAN LUNG ASSOCIATION OF NORTHERN

VIRGINIA, AND AMERICAN LUNG ASSOCIATION

OF VIRGINIA; CLEAN WATER ACTION; FRIENDS

OF THE RIVERS OF VIRGINIA; THE JAMES RIVER

ASSOCIATION; MOUNTAIN HERITAGE ALLIANCE;

VALLEY CONCERNED CITIZENS; VIRGINIA CHAPTER

OF THE SIERRA CLUB; VIRGINIA CITIZEN ACTION;

VIRGINIA CONSORTIUM FOR CLEAN AIR; VIRGINIA

COUNCIL, TROUT UNLIMITED; ENVIRONMENTAL

DEFENSE FUND, INCORPORATED; KATHLEEN F.

, DERRICOTT; CLIFTON E. DERRICOTT; ANDRE L.

BROWN; CALEATA JOHNSON; GWEN HEDGEPATH;

AUDUBON NATURALIST SOCIETY

Intervenors

VIRGINIA MANUFACTURERS ASSOCIATION;

WASHINGTON LEGAL FOUNDATION; OGDEN

MARTIN SYSTEMS OF LANCASTER, INCORPORATED;

OGDEN MARTIN SYSTEMS OF ALEXANDRIA,

App. 34

INCORPORATED; NATIONAL INDEPENDENT

ENERGY PRODUCERS; OGDEN MARTIN SYSTEMS

OF MONTGOMERY, INCORPORATED; OGDEN

MARTIN SYSTEMS OF FAIRFAX, INCORPORATED;

CHESAPEAKE BAY FOUNDATION

Amici Curiae

On Petition for Rehearing with Suggestion

for Rehearing In Banc

Petitioner filed a petition for rehearing with sugges-

tion for rehearing in banc.

Judge Murnaghan, Judge Michael, and Judge James

H. Michael, Jr., Senior U. S. District Judge, sitting by

designation, voted to deny the petition for rehearing.

A member of the Court requested a poll on the sug-

gestion for rehearing in banc, and a majority of the judges

voted to deny rehearing in banc. Judges Russell, Widener,

Wilkins, Luttig and Williams voted to rehear the case in

banc, and Chief Judge Wilkinson and Judges Hall, Mur-

naghan, Ervin, Niemeyer, Hamilton, Motz and Michael

voted against rehearing in banc.

The Court denies the petition for rehearing with sug-

gestion for rehearing in banc.

Entered at the direction of Judge Michael for the

Court.

For the Court,

/s/ Bert M. Montague

CLERK

App. 35

TITLE V

42 U.S.C. § 7661 [CAA § 501]

§ 7661. Definitions [CAA § 501]

As used in this subchapter -

(1) Affected source

The term “affected source” shall have the meaning

given such term in subchapter IV-A of this chapter.

(2) Major source

The term “major source” means any stationary source

(or any group of stationary sources located within a

contiguous area and under common control) that is either

of the following:

(A) A major source as defined in section

7412 of this title.

(B) A major stationary source as defined in

section 7602 of this title or part D of subchapter

I of this chapter.

(3) Schedule of compliance

The term “schedule of compliance” means a schedule

of remedial measures, including an enforceable sequence

of actions or operations, leading to compliance with an

applicable implementation plan, emission standard, emis-

sion limitation, or emission prohibition.

App. 36

(4) Permitting authority

The term “permitting authority” means the Adminis-

trator or the air pollution control agency authorized by

the Administrator to carry out a permit program under

this subchapter.

§ 7661a. Permit programs [CAA § 502]

(a) Violations

After the effective date of any permit program

approved or promulgated under this subchapter, it shall

be unlawful for any person to violate any requirement of

a permit issued under this subchapter, or to operate an

affected source (as provided in subchapter IV-A of this

chapter), a major source, any other source (including an

area source) subject to standards or regulations under

section 7411 or 7412 of this title, any other source

required to have a permit under parts C or D of subchap-

ter I of this chapter, or any other stationary source in a

category designated (in whole or in part) by regulations

promulgated by the Administrator (after notice and pub-

lic comment) which shall include a finding setting forth

the basis for such designation, except in compliance with

a permit issued by a permitting authority under this

subchapter. (Nothing in this subsection shall be construed

to alter the applicable requirements of this chapter that a

permit be obtained before construction or modification.)

The Administrator may, in the Administrator’s discretion

and consistent with the applicable provisions of this

RRR MARL BAe: Fae E40

ate

LS AOR OTOL LES ANP ITM SG PRONE Ti

App. 37

chapter, promulgate regulations to exempt one or more

source categories (in whole or in part) from the require-

ments of this subsection if the Administrator finds that

compliance with such requirements is impracticable,

infeasible, or unnecessarily burdensome on such catego-

ries, except that the Administrator may not exempt any

major source from such requirements.

(b) Regulations

The Administrator shall promulgate within 12

months after November 15, 1990 regulations establishing

the minimum elements of a permit program to be admin-

istered by any air pollution control agency. These ele-

ments shall include each of the following:

(1) Requirements for permit applications,

including a standard application form and crite-

ria for determining in a timely fashion the com-

pleteness of applications.

(2) Monitoring and reporting require-

ments.

(3)(A) A requirement under State or local

law or interstate compact that the owner or

operator of all sources subject to the require-

ment to obtain a permit under this subchapter

pay an annual fee, or the equivalent over some

other period, sufficient to cover all reasonable

(direct and indirect) costs required to develop

and administer the permit program require-

ments of this subchapter, including section 7661f

of this title, including the reasonable costs of —

(i) reviewing and acting upon any

application for such a permit,

App. 38

(ii) if the owner or operator receives a

permit for such source, whether before or

after November 15, 1990, implementing and

enforcing the terms and conditions of any

such permit (not including any court costs

or other costs associated with any enforce-

ment action),

(iii) emissions and ambient monitor-

ing,

(iv) preparing generally applicable

regulations, or guidance,

(v) modeling, analyses, and demon-

strations, and

(vi) preparing inventories and _ track-

ing emissions.

(B) The total amount of fees collected by the permit-

ting authority shall conform to the following require-

ments:

(i) The Administrator shall not

approve a program as meeting the require-

ments of this paragraph unless the State

demonstrates that, except as otherwise pro-

vided in subparagraphs (ii) through (v) of

this subparagraph, the program will result

in the collection, in the aggregate, from all

sources subject to subparagraph (A), of an

amount not less than $25 per ton of each

regulated pollutant, or such other amount

as the Administrator may determine ade-

quately reflects the reasonable costs of the

permit program.

(ii) As used in this subparagraph, the

term “regulated pollutant” shall mean (I) a

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Ne RT Oa So es ee "

SCAT» Sacese Salt ht nthe Sl

App. 39

volatile organic compound; (II) each pollu-

tant regulated under section 7411 or 7412 of

this title; and (III) each pollutant for which a

national primary ambient air quality stan-

dard has been promulgated (except that car-

bon monoxide shall be excluded from this

reference).

(iii) In determining the amiount under

clause (i), the permitting authority is not

required to include any amount of regulated

pollutant emitted by any source in excess of

4,000 tons per year of that regulated pollu-

tant.

(iv) The requirements of clause (i)

shall not apply if the permitting authority

demonstrates that collecting an amount less

than the amount specified under clause (i)

will meet the requirements of subparagraph

(A).

(v) The fee calculated under clause (i)

shall be increased (consistent with the need

to cover the reasonable costs authorized by

subparagraph (A)) in each year beginning

after 1990 by the percentage, if any, by

which the Consumer Price Index for the

most recent calendar year ending before the

beginning of such year exceeds the Con-

sumer Price Index for the calendar year

1989. For purposes of this clause -

(I) the Consumer Price Index for

any calendar year is the average of the

Consumer Price Index for all-urban

consumers published by the Depart-

ment of Labor, as of the close of the 12-

month period ending on August 31 of

each calendar year, and

App. 40

(II) the revision of the Consumer

Price Index which is most consistent

with the Consumer Price Index for cal-

endar year 1989 shall be used.

(C)(i) If the Administrator determines, under sub-

section (d) of this section, that the fee provisions of the

operating permit program do not meet the requirements

of this paragraph, or if the Administrator makes a deter-

mination, under subsection (i) of this section, that the

permitting authority is not adequately administering or

enforcing an approved fee program, the Administrator

may, in addition to taking any other action authorized

under this subchapter, collect reasonable fees from the

sources identified under subparagraph (A). Such fees

shall be designed solely to cover the Administrator’s

costs of administering the provisions of the permit pro-

gram promulgated by the Administrator.

(ii) Any source that fails to pay fees lawfully

imposed by the Administrator under this subparagraph

shall pay a penalty of 50 percent of the fee amount, plus

interest on the fee amount computed in accordance with

section 6621(a)(2) of Title 26 (relating to computation of

interest on underpayment of Federal taxes).

(iii) Any fees, penalties, and interest collected

under this subparagraph shall be deposited in a special

fund in the United States Treasury for licensing and other

services, which thereafter shall be available for appro-

priation, to remain available until expended, subject to

appropriation, to carry out the Agency’s activities for

which the fees were collected. Any fee required to be

collected by a State, local, or interstate agency under this

subsection shall be utilized solely to cover all reasonable

App. 41

(direct and indirect) costs required to support the permit

program as set forth in subparagraph (A).

(4) Requirements for adequate personnel and fund-

ing to administer the program.

(5) A requirement that the permitting authority

have adequate authority to:

(A) issue permits and assure compliance

by all sources required to have a permit under

this title with each applicable standard, regula-

tion or requirement under this Act;

(B) issue permits for a fixed term, not to

exceed 5 years;

permits incorporate emission limitations and

other requirements in an applicable implemen-

tation plan;

(D) terminate, modify, or revoke and reis-

sue permits for cause;

(E) enforce permits, permit fee require-

ments, and the requirement to obtain a permit,

including authority to recover civil penalties in

a maximum amount of not less than $10,000 per

day for each violation, and provide appropriate

criminal penalties; and

(F) assure that no permit will be issued if

the Administrator objects to its issuance in a

timely manner under this subchapter.

£ (6) Adequate, streamlined, and reasonable pro-

i cedures for expeditiously determining when applications

are complete, for processing such applications, for public

é notice, including offering an opportunity for public com-

E ment and a hearing, and for expeditious review or permit

App. 42

actions, including applications, renewals, or revisions,

and including an opportunity for judicial review in State

court of the final permit action by the applicant, any

person who participated in the public comment process,

and any other person who could obtain judicial review of

that action under applicable law.

(7) To ensure against unreasonable delay by the

permitting authority, adequate authority and procedures

to provide that a failure of such permitting authority to

act on a permit application or permit renewal application

(in accordance with the time periods specified in section

7661b of this title or, as appropriate, subchapter IV-A of

this chapter) shall be treated as a final permit action

solely for purposes of obtaining judicial review in State

court of an action brought by any person referred to in

paragraph (6) to require that action be taken by the

permitting authority on such application without addi-

tional delay. .

(8) Authority, and reasonable procedures consistent

with the need for expeditious action by the permitting

authority on permit applications and related matters, to

make available to the public any permit application, com-

pliance plan, permit, and monitoring or compliance

report under section 7661b(e) of this title, subject to the

provisions of section 7414(c) of this title.

(9) A requirement that the permitting authority, in

the case of permits with a term of 3 or more years for

raajor sources, shall require revisions to the permit to

incorporate applicable standards and regulations promul-

gated under this chapter after the issuance of such per-

mit. Such revisions shall occur as expeditiously as

App. 43

practicable and consistent with the procedures estab-

lished under paragraph (6) but not later than 18 months

after the promulgation of such standards and regulations.

No such revision shall be required if the effective date of

the standards or regulations is a date after the expiration

of the permit term. Such permit revision shall be treated

as a permit renewal if it complies with the requirements

of this subchapter regarding renewals.

(10) Provisions to allow changes within a permitted

facility (or one operating pursuant to section 7661b(d) of

this title) without requiring a permit revision, if the

changes are not modifications under any provision of

subchapter I of this chapter and the changes do not

exceed the emissions allowable under the permit

(whether expressed therein as a rate of emissions or in

terms of total emission: Provided, That the facility pro-

vides the Administrator and the permitting authority

with written notification in advance of the proposed

changes which shall be a minimum of 7 days, unless the

permitting authority provides in its regulations a differ-

ent timeframe for emergencies.

{c) Single permit

A single permit may be issued for a facility with

multiple sources.

(d) Submission and approval

(1) Not later than 3 years after November 15, 1990,

the Governor of each State shall develop and submit to

the Administrator a permit program under State or local

App. 44

law or under an interstate compact meeting the require-

ments of this subchapter. In addition, the Governor shall

submit a legal opinion from the attorney general (or the

attorney for those State air pollution control agencies that

have independent legal counsel), or from the chief legal

officer of an interstate agency, that the laws of the State,

locality, or the interstate compact provide adequate

authority to carry out the program. Not later than 1 year

after receiving a program, and after notice and oppor-

tunity for public comment, the Administrator shall

approve or disapprove such program, in whole or in part.

The Administrator may approve a program to the extent

that the program meets the requirements of this chapter,

including the regulations issued under subsection (b) of

this section. If the program is disapproved, in whole or in

part, the Administrator shall notify the Governor of any

revisions or modifications necessary to obtain approval.

The Governor shall revise and resubmit the program for

review under this section within 180 days after receiving

notification.

(2)(A) If the Governor does not submit a program as

required under paragraph (1) or if the Administrator

disapproves a program submitted by the Governor under

paragraph (1), in whole or in part, the Administrator may,

prior to the expiration of the 18-month period referred to

in subparagraph (B), in the Administrator’s discretion,

apply any of the sanctions specified in section 7509(b) of

this title.

(B) If the Governor does not submit a program as

required under paragraph (1), or if the Administrator

disapproves any such program submitted by the Gover-

nor under paragraph (1), in whole or in part, 18 months

App. 45

after the date required for such submittal or the date of

such disapproval, as the case may be, the Administrator

shall apply sanctions under section 7509(b) of this title in

the same manner and subject to the same deadlines and

other conditions as are applicable in the case of a deter-

mination, disapproval, or finding under section 7509(a) of

this title.

title shall not apply pursuant to this paragraph in any

area unless the failure to submit or the disapproval

referred to in subparagraph (A) or (B) relates to an air

pollutant for which such area has been designated a

nonattainment area (as defined in part D of subchapter |

of this chapter).

(3) If a program meeting the requirements of this

subchapter has not been approved in whole for any State,

the Administrator shall, 2 years after the date required

for submission of such a program under paragraph (1),

promulgate, administer, and enforce a program under

this subchapter for that State.

(e) Suspension

The Administrator shall suspend the issuance of per-

mits promptly upon publication of notice of approval of a

permit program under this section, but may, in such

notice, retain jurisdiction over permits that have been

federally issued, but for which the administrative or judi-

cial review process is not complete. The Administrator

shall continue to administer and enforce federally issued

permits under this subchapter until they are replaced by

a permit issued by a permitting program. Nothing in this

App. 46

subsection should be construed to limit the Administra-

tor’s ability to enforce permits issued by a State.

(f) Prohibition

No partial permit program shall be approved unless,

at a minimum, it applies, and ensures compliance with,

this subchapter and each of the following:

(1) All requirements established under

subchapter IV-A of this chapter applicable to

“affected sources”.

(2) All requirements established under

section 7412 of this title applicable to “major

sources”, “area sources”, and “new sources”.

(3) All requirements of subchapter I of this

chapter (other than section 7412 of this title)

applicable to sources required to have a permit

under this subchapter. Approval of a partial

program shall not relieve the State of its obliga-

tion to submit a complete program, nor from the

application of any sanctions under this chapter

for failure to submit an approvalable permit

program.

Approval of a partial program shall not relieve the State

of its obligation to submit a complete program, nor from

the application of any sanctions under this chapter for

failure to submit an approvable permit program.

(g) Interim approval

If a program (including a partial permit program)

submitted under this subchapter substantially meets the

App. 47

requirements of this subchapter, but is not fully approv-

able, the Administrator may by rule grant the program

interim approval. In the notice of final rulemaking, the

Administrator shall specify the changes that must be

made before the program can receive full approval. An

interim approval under this subsection shall expire on a

date set by the Administrator not later than 2 years after

such approval, and may not be renewed. For the period

of any such interim approval, the provisions of subsec-

tion (d)(2) of this section, and the obligation of the

Administrator to promulgate a program under this sub-

chapter for the State pursuant to subsection (d)(3) of this

section, shall be suspended. Such provisions and such

obligation of the Administrator shall apply after the expi-

ration of such interim approval.

(h) Effective date

The effective date of a permit program, or partial or

interim program, approved under this subchapter, shall

be the effective date of approval by the Administrator.

The effective date of a permit program, or partial permit

program, promulgated by the Administrator shall be the

date of promulgation.

(i) Administration and enforcement

(1) Whenever the Administrator makes a deter-

mination that a permitting authority is not adequately

administering and enforcing a program, or portion

thereof, in accordance with the requirements of this sub-

chapter, the Administrator shall provide notice to the

State and may, prior to the expiration of the 18-month

App. 48

period referred to in paragraph (2), in the Administra-

tor’s discretion, apply any of the sanctions specified in

section 7509(b) of this title.

(2) Whenever the Administrator makes a determina-

tion that a permitting authority is not adequately adminis-

tering and enforcing a program, or portion thereof, in

accordance with the requirements of this subchapter, 18

months after the date of the notice under paragraph (1),

the Administrator shall apply the sanctions under section

7509(b) of this title in the same manner and subject to the

same deadlines and other conditions as are applicable in

the case of a determination, disapproval, or finding under

section 7509(a) of this title.

(3) The sanctions under section 7509(b)(2) of this

title shall not apply pursuant to this subsection in any

area unless the failure to adequately enforce and adminis-

ter the program relates to an air pollutant for which such

area has been designated a nonattainment area.

(4) Whenever the Administrator has made a finding

under paragraph (1) with respect to any State, unless the

State has corrected such deficiency within 18 months

after the date of such finding, the Administrator shall, 2

years after the date of such finding, promulgate, adminis-

ter, and enforce a program under this subchapter for that

State. Nothing in this paragraph shall be construed to

affect the validity of a program which has been approved

under this subchapter or the authority of any permitting

authority acting under such program until such time as

such program is promulgated by the Administrator under

this paragraph.

App. 49

§ 7661b. Permit applications [CAA § 503]

(a) Applicable date

Any source specified in section 7661a(a) of this title

shall become subject to a permit program, and required to

have a permit, on the later of the following dates -

(1) the effective date of a permit program

or partial or interim permit program applicable

to the source; or

(2) the date such source becomes subject to

section 7661a(a) of this title.

(b) Compliance plan

(1) The regulations required by section 7661a(b) of

this title shall include a requirement that the applicant

submit with the permit application a compliance plan

describing how the source will comply with all applicable

requixcments under this chapter. The compliance plan

shall include a schedule of compliance, and a schedule

under which the permittee will submit progress reports

to the permitting authority no less frequently than every

6 months.

(2) The regulations shall further require the permit-

tee to periodically (but no less frequently than annually)

certify that the facility is in compliance with any applica-

ble requirements of the permit, and to promptly report

any deviations from permit requirements to the permit-

ting authority.

App. 50

Any person required to have a permit shall, not later

than 12 months after the date on which the source

becomes subject to a permit program approved or pro-

mulgated under this subchapter, or such earlier date as

the permitting authority may establish, submit to the

permitting authority a compliance plan and an applica-

tion for a permit signed by a responsible official, who

shall certify the accuracy of the information submitted.

The permitting authority shall approve or disapprove a

completed application (consistent with the procedures

established under this subchapter for consideration of

such applications), and shall issue or deny the permit,

within 18 months after the date of receipt thereof, except

that the permitting authority shall establish a phased

schedule for acting on permit applications submitted

within the first full year after the effective date of a

permit program (or a partial or interim program). Any

such schedule shall assure that at least one-third of such

permits will be acted on by such authority annually over

a period of not to exceed 3 years after such effective date.

Such authority shall establish reasonable procedures to

prioritize such approval or disapproval actions in the

case of applications for construction or modification

under the applicable requirements of this chapter.

(d) Timely and complete applications

Except for sources required to have a permit before

construction or modification under the applicable

requirements of this chapter, if an applicant has submit-

ted a timely and complete application for a permit

App. 51

required by this subchapter (including renewals), but

final action has not been taken on such application, the

source’s failure to have a permit shall not be a violation

of this chapter, unless the delay in final action was due to

the failure of the applicant timely to submit information

required or requested to process the application. No

source required to have a permit under this subchapter

shall be in violation of section 7661a(a) of this title before

the date on which the source is required to submit an

application under subsection (c) of this section.

(e) Copies; availability

A copy of each permit application, compliance plan

(including the schedule of compliance), emissions or

compliance monitoring report, certification, and each per-

mit issued under this subchapter, shall be available to the

public. If an applicant or permittee is required to submit

information entitled to protection from disclosure under

section 7414(c) of this title, the applicant or permittee

may submit such information separately. The require-

ments of section 7414(c) of this title shall apply to such

information. The contents of a permit shall not be entitled

to protection under section 7414(c) of this title.

App. 52

§ 7661c. Permit requirements and conditions [CAA

§ 504]

(a) Conditions

Each permit issued under this subchapter shall

include enforceable emission limitations and standards, a

schedule of compliance, a requirement that the permittee

submit to the permitting authority, no less often than

every 6 months, the results of any required monitoring,

and such other conditions as are necessary to assure

compliance with applicable requirements of this chapter,

including the requirements of the applicable implementa-

tion plan.

(b) Monitoring and analysis

The Administrator may by rule prescribe procedures

and methods for determining compliance and for mon-

itoring and analysis of pollutants regulated under this

Act, but continuous emissions monitoring need not be

required if alternative methods are available that provide

sufficiently reliable and timely information for determin-

ing compliance. Nothing in this subsection shall be con-

strued to affect any continuous emissions monitoring

requirement of subchapter IV-A of this chapter, or where

required elsewhere in this chapter.

reporting

Each permit issued under this subchapter shall set

forth inspection, entry, monitoring, compliance certifica-

tion, and reporting requirements to assure compliance

App. 53

with the permit terms and conditions. Such monitoring

and reporting requirements shall conform to any applica-

ble regulation under subsection (b) of this section. Any

report required to be submitted by a permit issued to a

corporation under this subchapter shall be signed by a

responsible corporate official, who shall certify its accu-

racy.

(d) General permits

The permitting authority may, after notice and

opportunity for public hearing, issue a general permit

covering numerous similar sources. Any general permit

shall comply with all requirements applicable to permits

under this subchapter. No source covered by a general

permit shall thereby be relieved from the obligation to

file an application under section 7661b of this title.

(e) Temporary sources

The permitting authority may issue a single permit

authorizing emissions from similar operations at multiple

temporary locations. No such permit shall be issued

unless it includes conditions that will assure compliance

with all the requirements of this chapter at all authorized

locations, including, but not limited to, ambient stan-

dards and compliance with any applicable increment or

visibility requirements under part C of subchapter I of

this chapter. Any such permit shall in addition require

the owner or operator to notify the permitting authority

in advance of each change in location. The permitting

authority may require a separate permit fee for opera-

tions at each location.

App. 54

(f) Permit shield

Compliance with a permit issued in accordance with

this subchapter shall be deemed compliance with section

7661a of this title. Except as otherwise provided by the

Administrator by rule, the permit may also provide the

compliance with the permit shall be deemed compliance

with other applicable provisions of this chapter that

relate to the permittee if -

(1) the permit includes the applicable

requirements of such provisions, or

(2) the permitting authority in acting on

the permit application makes a determination

relating to the permittee that such other provi-

sions (which shall be referred to in such deter-

mination) are not applicable and the permit

includes the determination or a concise sum-

mary thereof.

-—_

Nothing in the preceding sentence shall alter or affect the

provisions of section 7603 of this title, including the

authority of the Administrator under that section.

§ 7661d. Notification to administrator and contiguous

States [CAA § 505]

(a) Transmission and notice

(1) Each permitting authority -

(A) shall transmit to the Administrator a

copy of each permit application (and any appli-

cation for a permit modification or renewal) or

App. 55

such portion thereof, including any compliance

plan, as the Administrator may require to effec-

tively review the application and otherwise to

carry out the Administrator’s responsibilities

under this chapter, and

(B) shall provide to the Administrator a

copy of each permit proposed to be issued and

issued as a final permit.

(2) The permitting authority shall notify all States —

(A) whose air quality may be affected and

that are contiguous to the State in which the

emission originates, or

(B) that are within 50 miles of the source,

of each permit application or proposed permit

forwarded to the Administrator under this sec-

tion, and shall provide an opportunity for such

States to submit written recommendations

respecting the issuance of the permit and its

terms and conditions. If any part of those rec-

ommendations are not accepted by the permit-

ting authority, such authority shall notify the

State submitting the recommendations and the

Administrator in writing of its failure to accept

those recommendations and the reasons there-

for.

(b) Objection by EPA

(1) If any permit contains provisions that are deter-

mined by the administrator as not in compliance with the

applicable requirements of this chapter, including the

requirements of an applicable implementation plan, the

Administrator shall, in accordance with this subsection,

object to its issuance. The permitting authority shall

App. 56

respond in writing if the Administrator (A) within 45

days after receiving a copy of the proposed permit under

subsection (a)(1), or (B) of this section within 45 days

after receiving notification under subsection (a)(2) of this

section, objects in writing to its issuance as not in compli-

ance with such requirements. With the objection, the

Administrator shall provide a statement of the reasons

for the objection. A copy of the objection and statement

shall be provided to the applicant.

(2) If the Administrator does not object in writing to

the issuance of a permit pursuant to paragraph (1), any

person may petition the Administrator within 60 days

after the expiration of the 45-day review period specified

in paragraph (1) to take such action. A copy of such

petition sha!l be provided to the permitting authority and

the applicant by the petitioner. The petition shall be

based only on objections to the permit that were raised

with reasonable specificity during the public comment

period provided by the permitting agency (unless the

petitioner demonstrates in the petition to the Administra-

tor that it was impracticable to raise such objections

within such period or unless the grounds for such objec-

tion arose after such period). The petition shall identify

all such objections. If the permit has been issued by the

permitting agency, such petition shall not postpone the

effectiveness of the permit. The Administrator shall grant

or deny such petition within 60 days after the petition is

filed. The Administrator shall issue an objection within

such period if the petitioner demonstrates to the Admin-

istrator that the permit is not in compliance with the

requirements of this chapter, including the requirements

of the applicable implementation plan. Any denial of

App. 57

such petition shall be subject to judicial review under

section 7607 of this title. The administrator shall include

in regulations under this subchapter provisions to imple-

ment this paragraph. The Administrator may not delegate

the requirements of this paragraph.

(3) Upon receipt of an objection by the Administra-

tor under this subsection, the permitting authority may

not issue the permit unless it is revised and issued in

accordance with subsection (c) of this section. If the per-

mitting authority has issued a permit prior to receipt of

an objection by the Administrator under paragraph (2) of

this subsection, the Administrator shall modify, termi-

nate, or revoke such permit and the permitting authority

may thereafter only issue a revised permit in accordance

with subsection (c) of this section.

If the permitting authority fails, within 90 days after

the date of an objection under subsection (b) of this

section, to submit a permit revised to meet the objection,

the Administrator shall issue or deny the permit in accor-

dance with the requirements of this subchapter. No objec-

tion shall be subject to judicial review until the

Administrator takes final action to issue or deny a permit

under this subsection.

(d) Waiver of notification requirements

(1) The Administrator may waive the requirements

of subsections (a) and (b) of this section at the time of

approval of a permit program under this subchapter for

App. 58

any category (including any class, type, or size within

such category) of sources covered by the program other

than major sources.

(2) The Administrator may, by regulation, establish

categories of sources (including any class, type, or size

within such category) to which the requirements of sub-

sections (a) and (b) of this section shall not apply. The

preceding sentence shall not apply to major sources.

(3) The Administrator may exclude from any

waiver under this subsection notification under subsec-

tion (a)(2) of this section. Any waiver granted under this

subsection may be revoked or modified by the Adminis-

trator by rule.

(e) Refusal of permitting authority to terminate, mod-

ify, or revoke and reissue

If the Administrator finds that cause exists to termi-

nate, modify, or revoke and reissue a permit under this

subchapter, the Administrator shall notify the permitting

authority and the source of the Administrator’s finding.

The permitting authority shall, within 90 days after

receipt of such notification, forward to the Administrator

under this section a proposed determination of termina-

tion, modification, or revocation and reissuance, as

appropriate. The Administrator may extend such 90 day

period for an additional 90 days if the Administrator

finds that a new or revised permit application is neces-

sary, or that the permitting authority must require the

permittee to submit additional information. The Adminis-

trator may review such proposed determination under

the provisions of subsections (a) and (b) of this section. If

App. 59

the permitting authority fails to submit the required pro-

posed determination, or if the Administrator objects and

the permitting authority fails to resolve the objection

within 90 days, the administrator may, after notice and in

accordance with fair and reasonable procedures, termi-

nate, modify, or revoke and reissue the permit.

§ 7661e. Other authorities [CAA § 506]

(a) In general

Nothing in this subchapter shall prevent a State, or

interstate permitting authority, from establishing addi-

tional permitting requirements not inconsistent with this

chapter.

(b) Permits implementing acid rain provisions

The provisions of this subchapter, including provi-

sions regarding schedules for submission and approval or

disapproval of permit applications, shall apply to permits

implementing the requirements of subchapter IV-A of this

chapter except as modified by that subchapter.

App. 60

§ 7661f. Small business stationary source technical and

environmental compliance assistance program

[CAA § 507]

(a) Plan revisions

Consistent with sections 7410 and 7412 of this title,

each State shall, after reasonable notice and public hear-

ings, adopt and submit to the Administrator as part of the

State implementation plan for such State or as a revision

to such State implementation plan under section 7410 of

this title, plans for establishing a small business station-

ary source technical and environmental compliance assis-

tance program. Such submission shall be made within 24

months after November 15, 1990. The Administrator shall

approve such program if it includes each of the following:

(1) Adequate mechanisms for developing,

collecting, and coordinating information con-

cerning compliance methods and technologies

for small business stationary sources, and pro-

grams to encourage lawful cooperation among

such sources and other persons to further com-

pliance with this chapter.

(2) Adequate mechanisms for assisting

small business stationary sources with pollution

prevention and accidental release detection and

prevention, including providing information

concerning alternative technologies, process

changes, products, and methods of operation

that help reduce air pollution.

(3) A designated State office within the

relevant State agency to serve as ombudsman

for small business stationary sources in connec-

tion with the implementation of this chapter.

App. 61

(4) A compliance assistance program for

smail business stationary sources which assists

small business stationary sources in determining

applicable requirements and in receiving per-

mits under this chapter in a timely and efficient

manner.

(5) Adequate mechanisms to assure that

small business stationary sources receive notice

of their rights under this Act in such manner

and form as to assure reasonably adequate time

for such sources to evaluate compliance

methods and any relevant or applicable pro-

posed or final regulation or standard issued

under this chapter. -

(6) Adequate mechanisms for informing

small business stationary sources of their obliga-

tions under this chapter, including mechanisms

for referring such sources to qualified auditors

or, at the option of the State, for providing

audits of the operations of such sources to deter-

mine compliance with this chapter.

(7) Procedures for consideration of

requests from a small business stationary source

for modification of -

(A) any work practice or technological

method of compliance, or

(B) the schedule of milestones for

implementing such work practice: or

method of compliance preceding any appli-

cable compliance date,

based on the technological and financial capa-

bility of any such small business stationary

source. No such modification may be granted

unless it is in compliance with the applicable

requirements of this chapter, including the

App. 62

requirements of the applicable implementation

plan. Where such applicable requirements are

set forth in Federal regulations, only modifica-

tions authorized in such regulations may be

allowed.

(b) Program

The Administrator shall establish within 9 months

after November 15, 1990 a small business stationary

source technical and environmental compliance assis-

tance program. Such program shall -

(1) assist the States in the development of

the program required under subsection (a) of

this section (relating to assistance for small busi-

ness stationary sources);

(2) issue guidance for the use of the States

in the implementation of these programs that

includes alternative control technologies and

pollution prevention methods applicable to

small business stationary sources; and

(3) provide for implementation of the pro-

gram provisions required under subsection

(a)(4) of this section in any State that fails to

submit such a program under that subsection.

(1) Except as provided in paragraphs (2) and (3), for

purposes of this section, the term “small business station-

ary source” means a stationary source that -

(A) is owned or operated by a person that

employs 100 or fewer individuals,

App. 63

(B) is a small business concern as defined

in the Small Business Act [42 U.S.C.A. § 631 et

seq.];

(D) does not emit 50 tons or more per year

of any regulated pollutant; and

(E) emits less than 75 tons per year of all

regulated pollutants.

(2) Upon petition by a source, the State may, after

notice and opportunity for public comment, include as a

small business stationary source for Purposes of this sec-

tion any stationary source which does not meet the crite-

ria of subparagraphs (C), (D), or (E) of paragraph (1) but

which does not emit more than 100 tons per year of all

regulated pollutants.

(3)(A) The administrator, in consultation with the

Administrator of the Small Business Administration and

after providing notice and Opportunity for public com-

ment, may exclude from the small business stationary

source definition under this section any category or sub-

category of sources that the Administrator determines to

have sufficient technical and financial capabilities to meet

the requirements of this chapter without the application

of this subsection.

(B) The State, in consultation with the Administra-

tor and the Administrator of the Small Business Adminis-

tration and after providing notice and opportunity for

public hearing, may exclude from the small business

Stationary source definition under this section any cate-

gory or subcategory of sources that the State determines

to have sufficient technical and financial capabilities to

App. 64

meet the requirements of this chapter without the appli-

cation of this subsection.

(d) Monitoring

The Administrator shall direct the Agency’s Office of

Small and Disadvantaged Business Utilization through

the Small Business Ombudsman (hereinafter in this sec-

tion referred to as the “Ombudsman”) to monitor the

small business stationary source technical and environ-

mental compliance assistance program under this section.

In carrying out such monitoring activities, the Ombuds-

man shall -

(1) render advisory opinions on the overall

effectiveness of the Small Business Stationary

Source Technical and Environmental Compli-

ance Assistance Program, difficulties encoun-

tered, and degree and severity of enforcement;

(2) make periodic reports to the Congress

on the compliance of the Small Business Station-

ary Source Technical and Environmental Com-

pliance Assistance Program with the

requirements of the Paperwork Reduction Act

[44 U.S.C.A. § 3501 et seq.], the Regulatory Flex-

ibility Act [5 U.S.C.A. § 601 et seq.], and the

Equal Access to Justice Act;

(3) review information to be issued by the

Small Business Stationary Source Technical and

Environmental Compliance Assistance Program

for small business stationary sources to ensure

that the information is understandable by the

layperson; and

App. 65

(4) have the Small Business Stationary

Source Technical and Environmental Compli-

ance Assistance Program serve as the secretariat

for the development and dissemination of such

reports and advisory opinions.

(e) Compliance advisory panel

(1) There shall be created a Compliance Advisory

Panel (hereinafter referred to as the “Panel”) on the State

level of not less than 7 individuals. This Panel shall -

(A) render advisory opinions concerning

the effectiveness of the small business stationary

source technical and environmental compliance

assistance program, difficulties encountered,

and degree and severity of enforcement;

(B) make periodic reports to the Adminis-

trator concerning the compliance of the State

Small Business Stationary Source Technical and

Environmental Compliance Assistance Program

with the requirements of the Paperwork Reduc-

tion Act [44 U.S.C.A. § 3501 et seq.], the Regula-

tory Flexibility Act [5 U.S.C.A. § 601 et seq.],

and the Equal Access to Justice Act;

stationary sources to assure such information is

understandable by the layperson; and

(D) have the Small Business Stationary

Source Technical and Environmental Compli-

ance Assistance Program serve as the secretariat

for the development and dissemination of such

reports and advisory opinions.

App. 66

(2) The Panel shall consist of -

(A) 2 members, who are not owners, or

representatives of owners, of small business sta-

tionary sources, selected by the Governor to

represent the general public;

(B) 2 members selected by the State legis-

lature who are owners, or who represent

owners, of small business stationary sources (1

member each by the majority and minority lead-

ership of the lower house, or in the case of a

unicameral State legislature, 2 members each

shall be selected by the majority leadership and

the minority leadership, respectively, of such

legislature, and subparagraph (C) shall not

apply);

lature who are owners, or who represent

owners, of small business stationary sources (1

member each by the majority and minority lead-

ership of the upper house, or the equivalent

State entity); and

(D) 1 member selected by the head of the

department or agency of the State responsible

for air pollution permit programs to represent

that agency.

(f) Fees

The State (or the Administrator) may reduce any fee

required under this chapter to take into account the

financial resources of small business stationary sources.

App. 67

(g) Continuous emission monitors

In developing regulations and CTGs under this chap-

ter that contain continuous emission monitoring require-

ments, the Administrator, consistent with the

requirements of this chapter, before applying such

requirements to small business stationary sources, shall

consider the necessity and appropriateness of such

requirements for such sources. Nothing in this subsection

shall affect the applicability of subchapter IV-A of this

chapter provisions relating to continuous emissions mon-

itoring.

(h) Control technique guidelines

The Administrator shall consider, consistent with the

requirements of this chapter, the size, type, and technical

capabilities of small business stationary sources (and

sources which are eligible under subsection (c)(2) of this

section to be treated as small business stationary sources)

in developing CTGs applicable to such sources under this

chapter.

App. 68

§ 7413. Federal enforcement [CAA § 113]

(a) In general

(1) Order to comply with SIP

Whenever, on the basis of any information available

to the Administrator, the Administrator finds that any

person has violated or is in violation of any requirement

or prohibition of an applicable implementation plan or

permit, the Administrator shall notify the person and the

State in which the plan applies of such finding. At any

time after the expiration of 30 days following the date on

which such notice of a violation is issued, the Adminis-

trator may, without regard to the period of violation

(subject to section 2462 of Title 28) -

(A) issue an order requiring such person

to comply with the requirements of prohibitions

of such plan or permit,

(B) issue an administrative penalty order

in accordance with subsection (d) of this section,

subsection (b) of this section.

(2) State failure to enforce SIP or permit program

Whenever, on the basis of information available to

the Administrator, the Administrator finds that violations

of an applicable implementation plan or an approved

permit program under subchapter V of this chapter are so

widespread that such violations appear to result from a

failure of the State in which the plan or permit program

applies to enforce the plan or permit program effectively,

the Administrator shall so notify the State. In the case of a

_ App. 69

permit program, the notice shall be made in accordance

with subchapter V of this chapter. If the Administrator

finds such failure extends beyond the 30th day after such

notice (90 days in the case of such permit program), the

Administrator shall give public notice of such finding.

During the period beginning with such public notice and

ending when such State satisfies the Administrator that it

will enforce such plan or permit program (hereafter

referred to in this section as “period of federally assumed

enforcement”), the Administrator may enforce any

requirement or prohibition of such plan or permit pro-

gram with respect to any person by -

(A) issuing an order requiring such person

to comply with such requirement or prohibition,

(B) issuing an administrative penalty

order in accordance with subsection (d) of this

section, or

with subsection (b) of this section.

(3) EPA enforcement of other requirements

Except for a requirement or prohibition enforceable

under the preceding provisions of this subsection, when-

ever, on the basis of any information available to the

Administrator, the Administrator finds that any person

has violated, or is in violation of, any other requirement

or prohibition of this subchapter, section 7603 of this title,

subchapter IV-A of this chapter, subchapter V of this

chapter, or subchapter VI of this chapter, including, but

not limited to, a requirement or prohibition of any rule,

plan, order, waiver, or permit promulgated, issued, or

App. 70

approved under those provisions or titles, or for the

payment of any fee owed to the United States under this

chapter (other than subchapter II of this chapter), the

Administrator may -

(A) issue an administrative penalty order

in accordance with subsectio

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