Opposition Brief — Virginia v. Browner

Supreme Court, U.S.

[ ss. B&D

DEC 12 199%

No. 96-567

In the Supreme Court of the United States

OCTOBER TERM, 1996

COMMONWEALTH OF VIRGINIA, PETITIONER

v.

CAROL M. BROWNER, ADMINISTRATOR OF THE

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, AND UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

~BRIEF FOR THE RESPONDENTS IN OPPOSITION

WALTER DELLINGER

Acting Solicitor General

Lois J. SCHIFFER

JONATHAN Z, CANNON Assistant Attorney General

General Counsel

MICHAEL W. THRIFT DAVID J. KAPLAN

JAN M. TIERNEY RONALD SPRITZER a

CECIL A. RODRIGUES ROBIN M. RICHARDSON

Attorneys Attorneys

U.S. Environmental Department of Justice

Protection Agency Washington, D.C. 20530-0001

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

ee

5 tle? &

QUESTIONS PRESENTED

1. Whether the Environmental Protection Agency’s

disapproval of Virginia’s Title V operating permit pro-

gram was contrary to law, where the Clean Air Act

requires that an approvable state permit program provide

“an opportunity for judicial review in State court of the

final [state] permit action by * * * any person who parti-

cipated in the [state] public comment process,” 42 U.S.C.

7661a(b)(6), but Virginia’s permit program provides for ju-

dicial review only on a much more restricted basis.

2. Whether Clean Air Act incentive provisions that

encourage state participation in Clean Air Act programs,

by (a) conditioning the availability of certain federal high-

way funds and (b) requiring additional pollution reduc-

tions before certain major new stationary sources of air

pollution may be constructed, if Virginia does not adopt a

minimally acceptable Title V permit program, violate the

Tenth Amendment and related constitutional principles of

federalism.

3. Whether Clean Air Act incentive provisions that

condition the availability of certain federal highway funds

to Virginia on the State’s adoption of a minimally accept-

able Title V permit program violate the Spending Clause

of the United States Constitution.

TABLE OF CONTENTS

{ Jpinion below

Jurisdiction pelabidelindbe tes aet St l

Statement ... 8 Oe ephehanisieliods and 2

Argument

74

ee SOPH EOS 55606406 96905606000000050060006608666 000000 i‘?

gt aa 29

TABLE O} AUTHORITIES

(Clases:

Brown v. EPA, 521 F.2d 827 Yth Cir. 1975

vacated and remanded for consideration

mootness, 431 U.S. 99 (1977) ......... }

Chevron U.S.A. J) . Vv. Natural Resource Det

faa neil Tne lth; US 1 19 j 1]

Citizens for Clea) lr oy monwmeailt 12S Z

715 (Va. Ct. App. 1991) 1O

City of Columb V. Costle, 710 F 2d 1009 (4th ¢

| fe Ym

i) vare Valley ¢ ens’ Con or Cl, |

Pe) LAR ORIEL OHiS8 F.2d 170 (3d ¢ (" c r

159 U.S. 969 (1982 |

District of Columbia j p21 F.2d 971 (1D

Ci 1975 acated and 17 | inded for COl ra NN)

of mootness suh non : BPA . Brow) 13] | s. 99

(iG |

EB Onmenta ay f ¢ F ' { STAT

Water Control Bd., 404 S.E.2d 728 (Va. Ct. Ap

: | re ()

Be) onmental Defense | ad, ly MPA

F.3d 451, amended, 92 F.3d 1209 (D.C Cir. 1996) .. 5

Cases—Continued:

Hodel v. Virginia Surface Mining & Reclamation

Fy Me UB ety. ) ey a ae

lvanhoe Irrigation Dist. v. MeCracken, 357 U.S.

Eee CID nhictacnxccaescinecencpiscesiiuinbeaheduatadearseiaioabaahanie 25

Lau v. Nichols, 414 U.S. 563 (1974) ...........c.ccceses. 29 25

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

vacated and remanded for consideration of moot-

ness sub nom. EPA v. Brown, 431 U.S. 99

Middlesex Cou nty Utilties Auth. v. Borough of

Sayreville, 690 F.2d 358 (3d Cir. 1982) .................... 22

Missouri v. United States, 918 F. Supp. 1320 (E.D.

Mo. 1996), appeal pending, No. 96-2244 (8th Cir.) ... 14, 24

Natural Resources Defense Council, Inc. v. EPA,

902 F.2d 962 (1990), vacated in part, 921 F.2d 326

(D.C, Cir. 1991), cert. dismissed, 498 U.S. 1075

cert. denied, 498 U.S. 1082 (1991)

Nebraska v. Tiemann, 510 F.2d 446 (8th Cir.

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

cert. denied, 493 U.S. 1070 (19QO) .....c.ccccccsncssccsccesss

New Mexico Envtl. Improv ment Div. v. Thomas.

789 F.2d 825 (10th Cir. 1986)

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

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

1) err

}.] yp ’ oe. oY ,

Oklahoma Y. [ nifed States ¢ ivpil Service Comm'n.

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

Pla nv for Arcadia, Ine. \ Anita Assoces.. 379 |

Supp. 311 (C.D. Cal. 1973), aff'd, 501 F.2d 390

(9th Cir.), cert. denied, 419 U.S. 1084 (1974) ... 2]

V

Cases—Continued: Page

Sierra Club v. Indiana-Kentucky Elec. Corp., 716

Ee BAe UTR CORN DUNOO? vccloussaccsimidtidcuibicecuibczan, 21

Sierra Club v. Morton, 405 U.S. 727 (1972) ............. 1]

South Dakota v. Dole, 483 U.S. 203 (1987) ........... 12, 22.

23, 25, 27

Steward Machine Co. v. Davis, 301 U.S. 548

| (NEE inc a areiteaduatcete ees oc 12, 22, 23

| United States v. Students Challenging Regulatory

Agency Procedures (SCRAP), 412 U.S. 669 (1973) . ll

Walker Field, Colorado, Pub. Airport Auth. v.

Adams, 606 F.2d 290 (10th Cir. 1979) oo. 24

| Constitution, statutes and regulations:

U.S. Const.:

Art. I, § &:

Cl. 1 (Spending Clause) .....:.........c....ccs0000e 11, 12, 25

Cl. 3 (Commerce Clause) .............cccceeeeeeees 18, 19, 27

WATE. TER saccackwinsasenmteteainanaeneblinlcioal isbn 7, 10, 17

PRE. th cas i emuetiadaiens 11, 13, 14, 18, 26, 28

Age Discrimination in Employment Act of 1967,

ae Shane atc SUE WOE DUE, vives Scikespsenahtciaieginiedienebintindeut ance eee 14

Civil Rights Act of 1964, 42 U.S.C. 2000 et seq. .......... 25

Clean Air Act, 42 U.S.C. 7401 ef s¢9. .......c..cccecesessscees 2

Tit. I, 42 U.S.C. 7401-7515:

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Se Sits PRPOUEE withensidadieditcieineiease, 2

Se SARA: FEREE CP BOUT cedlinssincrseietsinceecas 12, 21

42 U.S.C. T41MaN2) (§ 11B(aM2)) .........cccsesseeceres 21

42 U.S.C. 7413(a)(3) ($ 113(a)(3)) .......... ce eeceee eee 21

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Statutes and regulations—Continued: Page

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Se Sees . SOR EEL EE: scinckuravdokandtacuiascaeniavainaees 6

Tit. 111, 42 U.S.C. 7601-7627:

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Eas. Hs Ge Wis, WHI SCUMEET sccdstoccndansevedsoctednintiakeisaks )

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42 U.S.C. 7661a(b)(6) (8 502(b)(6)) 0... eee. passim

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Ge SFE FRED sasteincertaverttinntssdieanaee mi 3

Ge Ci rots: "CORTE cdedccdejarntadeetiebnesAcedeaeuh 4,5

12 U.S.C. 766la(d)2)(C) ........... Kaen keh cavtetadeeneante 6

SE: 55 tia, PUR IUIED - snd untnesndasuccuecivedaxebebuanvarienans 6

122 U.S.C. 7661a(i) (§ 5020)) ..... ‘nighblasdhcukedbihedean 1s

Se SC Ease STUMELTEIED eivicadenccencksssuaesdateaaaene 1,5

eS) es | CORMRIRGED - Ken cubbiccévinacsakestartinvdenbeatinns 6

i2 U.S.C. 766la(i)(4) ....... seohvevbnbuevenneconane deiectehe 6

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IS UBL. TOBIN E) cccocccsrcecss veieeabied cla aa\iielsh Gslahin 6

Low Level Radioactive Waste Policy Amendments

Act of 1985, 42 U.S.C. 202 1c(a)(1)(A) .......cccccceeesseess 20

Va. Code Ann.:

DF BE Rada CORED RUUD cccconeckccksaseavnccacsvectiacsuces 7,9

BD BG De EBES MOSS COICO BOG) ccoccccccccecavcschscotoncess ra

§ 10.1-1318(B) (Michie 1993) ............cccccescsssssevceess 7

SO WR, FO Ca. Bis “Gtkc Oe cacaukcsuccanvdsisoceusaccbeiehatense s

10 C.F.R.:

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PERG CNONS TURES nkkces viaccikstecsentdtwcdcecstunsakeuesteedidbeat 7

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Miscellaneous:

156 Cong. Rec. (daily ed. |

Dy CERNE wesikencesensnacases

p. | IER oe epee

59 Fed. Reg. (1994)

p. 31,185 WTTTTtTriirriT Tt

SRR Cee

pp. 62,324-62,326

Vil

et. 27, 1990):

H.R. Conf. Rep. No. 952, 101st Cong., 2d Sess.

(1990) ..

H.R. Rep. No. 490. 101st C

Jn the Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-567

COMMONWEALTH OF VIRGINIA, PETITIONER

Vv.

CAROL M. BROWNER, ADMINISTRATOR OF THE

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, AND UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. 1-32) is

reported at 80 F.3d 869.

JURISDICTION

The judgment of the court of appeals was entered on

March 26, 1996. A petition for rehearing was denied on

July 12, 1996. Pet. App. 33-34. The petition for a writ of

certiorari was filed on October 10, 1996. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

(1)

STATEMENT

1. The Clean Air Act (CAA), 42 U.S.C. 7401 et seq.,

enacted in 1970 and extensively amended in 1977 and 19990,

establishes a joint state and federal program to control the

Nation’s air pollution. Section 109 of the CAA, 42 U.S.C,

7409, requires the Environmental Protection Agency

(EPA) to establish primary and secondary national ambi-

ent air quality standards (NAAQS) for certain pollutants,

such as carbon monoxide, nitrogen dioxide, and ozone, that

are necessary to protect public health and welfare. Sec-

tion 110, first enacted in 1970, contemplates that States

will apply the measures necessary to attain the NAAQS to

individual sources of air pollution through a State Im-

plementation Plan (SIP) prepared by each State, subject to

EPA review and approval. 42 U.S.C. 7410. A SIP must

specify emission limitations and other measures neces-

sary to attain and maintain the NAAQS for each pollutant

for each “air quality control region” within the State. 42

U.S.C, 7410(a)(2)(A)-(M). If a State fails to submit a SIP,

or if EPA disapproves a SIP, and that failure is not reme-

died within the time period set by the Act, then EPA must

promulgate and implement a federal implementation plan

(FIP) for the air quality control region in lieu of the state

plan. 42 U.S.C. 7410(c). Beginning with the CAA Amend

ments of 1977, air quality control regions were designated

as either “attainment” or “nonattainment” areas, depend-

ing upon whether they met the NAAQS for a particular

pollutant. 42 U.S.C. 7407.'

' The 19909 CAA Amendments classified nonattainment area ac-

cording to the severity of air pollution. Ozone nonattainment areas

were classified as marginal, moderate, serious, severe, and extreme.

42 U.S.C. T5lla. For each type of pollutant and area classification, the

Act specifies a number of different programs for States to adopt in

their SIPs to achieve attainment with the NAAQS. See generally

3

As part of the 1990 CAA Amendments, Congress added a

new Title V, establishing an operating permit program. 42

U.S.C. 7661-7661f. In order to improve stationary source

compliance with the CAA requirements, Title V requires

that all applicable requirements for certain stationary

sources of air pollution, including those contained in an

approved SIP, be included in a single comprehensive per-

mit document for each source. See, e.g., 1386 Cong. Rec.

$16,983 (daily ed. Oct. 27, 1990); H.R. Conf. Rep. No. 952,

101st Cong., 2d Sess. 345 (1990). Sources subject to the

Title V program are prohibited from operating without, or

in violation of, an operating permit containing all of the

applicable CAA requirements. 42 U.S.C. 7661a(a).

Title V contemplates that States will develop, under

their own state statutes and/or local laws or regulations,

operating permit programs to be implemented within their

borders, and submit those programs to EPA for approval.

42 U.S.C. 7661a(d)(1). Generally, EPA reviews a submitted

state Title V permit program, and after notice and com-

ment rulemaking procedures, EPA either approves or dis-

approves the program. Jbid. Section 502(b) of the CAA

requires that approvable state permit programs include

certain “minimum elements,” which EPA is charged to

codify and further refine by regulation. That provision

requires that

[t}hese elements shall include each of the following:

* * * (6) Adequate, streamlined, and reasonable proce -

dures * * * for public notice, including offering an

opportunity for public comment and a hearing, and for

expeditious review of permit actions, * * * including

an opportunity for judicial review in State court of

42 U.S.C. 7502, 75lla(a)-(e). Virginia has four areas that are out of

attainment with the ozone NAAQS and one area out of attainment

with the carbon monoxide NAAQS.

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.

42 U.S.C. 7661a(b)(6) (emphasis added).

2. Influenced in part by a suggestion in District of

Columbia v. Train, 521 F.2d 971, 992-998 (D.C. Cir. 1975),

vacated and remanded for consideration of mootness sub

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

gress first adopted incentives in 1977 to encourage state

participation in CAA programs.” In the 1990 CAA Amend-

ments, Congress built upon the Act’s existing system of

incentives to encourage state participation in the CAA’s

joint regulatory scheme. The Act now provides for so-

called “sanctions” that apply if States fail to adopt within

the statutory time frame various CAA programs, includ-

ing the Title V Operating Permit Program, that meet

minimum federal standards.

The mandatory sanction provisions operate by an 18-

month sanction “clock,” which is triggered if a State fails

to submit a Title V permit program by the required date,

42 U.S.C. 766la(d)(2)(B), if a program submittal is dis-

approved by EPA, ibid., or if the State fails to administer

and enforce an approved program adequately, 42 U.S.C.

7661a(i)(2). If the 18-month “clock” expires without the

deficiency -hhaving been remedied, one of two sanctions

2 See H.R. Rep. No. 294, 95th Cong., Ist Sess. 290 (1977) (citing

Train). Specifically, Congress conditioned the availability of certain

federal highway funds and placed certain limitations on the ability to

construct or modify certain air pollution sources upon whether a State

chooses to adopt or implement certain substantive provisions of the Act,

including state adoption of SIPs that conform with certain minimum

federal requirements. See 42 U.S.C. 7503, 7506 (1988). See also, eg.,

New Mexico Envtl. Improvement Div. v. Thomas, 789 F.2d 825 (10th

Cir. 1986).

5 _

must be applied. 42 U.S.C. 7661a(d)(2\(B) (incorporating

sanctions provided for in 42 U.S.C. 7509(b)), 7661a(i)(2)

(same). A second sanction must be imposed six months

after the first sanction if the deficiency still has not been

corrected. See 42 U.S.C. 7509(a).3

The two sanctions available under Title V are set forth

in Section 179(b) of the CAA, 42 U.S.C. 7T50%b). First, the

EPA Administrator may direct the Secretary of Trans-

portation not to approve certain projects or to provide

certain federal highway funds under Title 28. 42 U.S.C.

7509(b)(1). That highway funding sanction applies only to

projects in nonattainment areas in the State. Jhid. In

addition, the highway funds sanction is subject to a num-

ber of exemptions for specific types of projects, such as

those that promote safety, capital grants for public

transit, certain types of programs that improve traffic

flow and achieve a net reduction in emissions of air pol-

lutants, and programs that the EPA Administrator and the

Secretary of Transportation determine would improve air

quality and would not encourage single occupancy vehicle

capacity. /bid. Thus, even where the highway funds sanc-

tion is imposed under Title V, a State may obtain all avail-

able federal highway funds by submitting projects that fall

within one or more of the exemptions or that would be

undertaken solely within attainment areas of the State.

The second available sanction is the “offset” sanction.

42 U.S.C. 7509(b)(2). When that sanction applies, a major

* Before any sanction may be imposed under Title V. EPA must

select which of the two available sanctions would apply first. That

determination would be made pursuant to notice and comment rule.

making procedures, and the Agency's determination would be review.

able in the courts of appeals. 42 U.S.C. 7607(bW1). To date, EPA has

not taken such regulatory action with respect to Title V, and thus the

sanctions under Title V have not been applied to Virginia or to any

other State.

6

new or modified stationary source of air pollution subject

to the nonattainment new source review program under

Section 173 must show, in order to obtain a permit to con-

struct or modify the source, that certain emissions from

other sources will be reduced by at least twice as much as

the amount of the increased emissions from the new or

modified source. That 2:1 ratio is an increase from the

1.15:1 ratio that would otherwise apply in a moderate ozone

nonattainment area (see 42 U.S.C. 751la(b)(5)) and the 1.2:1

ratio that would otherwise apply in a serious ozone non-

attainment area (see 42 U.S.C. 7511a(c)(10)).*

Finally, if a State’s Title V program has not been

approved within two years from the date by which the

State should have submitted it, EPA must promulgate,

administer, and enforce a federal Title V program for the

State. 42 U.S.C. 7661a(d)(3) and (i)(4).

3. EPA’s final disapproval of Virginia’s Title V permit

program, 59 Fed. Reg. 62,324 (1994) (C.A. App. 85), was

based upon the failure of that program to satisfy five

requirements. Of particular relevance here, EPA con-

cluded that the Virginia scheme did not provide adequate

opportunity for judicial review at the behest of “any

person who participated in the public comment process”

under Section 502(b)(6), 42 U.S.C. 766la(b)(6).° Although

‘ In applying the offset sanction under Title V, the increased

emission reductions ratio applies only to designated nonattainment

areas, and then only to the pollutants for which the area has been

designated nonattainment. Thus, new or modified major stationary

sources located in attainment areas, or sources in nonattainment areas

that only emit other pollutants, would-not be affected. See 42 U.S.C.

7661a(d2C) and (iX(3).

® The other four deficiencies noted by EPA were: First, Virginia’s

program failed to prevent the default issuance of permits, as required

by 42 U.S.C. 7661d(b\(3); see 42 U.S.C. 766la(b\5)F) and 40 C.F.R.

70.8(e). Second, Virginia's submitted regulations necessary to imple-

7

that provision could be read to require States to dispense

with standing requirements altogether for participants in

the public comment process seeking to obtain judicial re-

view, EPA adopted an interpretation more favorable to

petitioner. It interpreted Section 502(b)(6) to require that,

for a state permit program to be approvable, the program

must at a minimum extend judicial review rights to those

who could obtain judicial review if EPA administered the

program—namely, participants in the state public com-

ment process who would satisfy the standard for standing

in federal court under Article III of the United States

Constitution. Nonetheless, EPA concluded that Vir-

ginia’s scheme remained inadequate because it offers judi-

cial review of final permit decisions to public commenters

only if they demonstrate an “immediate, * * * pecuniary

and substantial interest,” Va. Code Ann. § 10.1-1318(B)

(Michie 1993).° See 59 Fed. Reg. 62,325-62,326 (1994) (C-A.

App. 86-87).

4.a. Petitioner filed a petition for review in the court of

appeals, challenging EPA’s final disapproval of petitioner’s

ment the permit program failed to meet the requirements of 40 C.F.R.

70.4(b)(3) because the state regulations were due to expire on June 28,

1994, and had not been renewed. Third, Virginia’s program exempted

from the permit requirement certain sources that are required to be

covered by the Title V regulations. See 40 C.F.R. 70.3(a) and (b).

Fourth, Virginia's permit program failed to assure that permits would

contain all applicable CAA requirements and incorrectly delineated the

terms of permits that are enforceable only by Virginia. 59 Fed. Reg.

31,185 (1994) (C.A. App. 83).

® Virginia’s Title V permit program judicial review provision, Va.

Code Ann. § 10.1-1318 (Michie 1993), is reproduced at Pet. App. 77. The

portions relevant here limit judicial review to persons “who partici-

pated * * * in the public comment process,” if such persons have

“suffered an actual, threatened or imminent injury” where “such injury

is an invasion of an immediate, legally protected, pecuniary and sub-

stantial interest which is concrete and particularized.”

Title V permit program. Petitioner did not contest or

challenge the merits of four of the five independent

deficiency findings upon which EPA based its disapproval

of petitioner’s Title V permit program. See note 5, supra.

Accordingly, the court of appeals properly concluded that

it could affirm EPA’s disapproval on the basis of those four

findings alone, provided that the statute is constitutional.

Pet. App. 11.

b. Petitioner argued that the remaining, fifth basis for

EPA’s disapproval, regarding the limited judicial review

rights petitioner established for its permit program, was

contrary to Section 502(b)(6). Petitioner asserted that its

permit program judicial review provision satisfies Section

502(b)(6). ’

Section 502(b)(6) establishes three categories of persons

who must be entitled to judicial review in state court, if a

state permit program is to be approvable: “[1] the appli-

cant, [2] any person who participated in-tke public com-

ment process, and [3] any other person who could obtain

judicial review of that action under applicable law.” The

parties agreed that the phrase “applicable law” in Section

502(b)(6) refers to state law. See 40 C.F.R. 70.4(b)(3)(x).

Petitioner argued that the statute should be read to

require judicial review at the behest of individuals in the

second category—participants in the public comment

process—only if they could show that they “could obtain

7 Since the court of appeals’ decision, Virginia has conditionally

amended the judicial review provision in order to correct the defli-

ciency. Virginia’s new provision, however, will not become effective

“uniess and until a final and unappealable decision of a court of

competent jurisdiction has declared that [Virginia’s permit program

judicial review provision] as it is currently effective does not meet the

requirements for state program approval under Title V.” 1996 Va.

Acts Ch. 1032, Cl. 3 (see Va. Code Ann. § 10.1-1318 note (Michie Supp.

1996)).

9

judicial review * * * under applicable [?.e., state] law”

pursuant to the third category. Petitioner thus argued

that its judicial review provision for its air permit

program, Va. Code Ann. § 10.1-1318 (Michie 1993)—and

presumably each of the other potentially differing and

narrower judicial review provisions in each of the other

States—must be approved by EPA, no matter how they

restrict standing of public comment participants to obtain

judicial review.

ce. The court of appeals rejected petitioner’s argument

as an impermissible reading of the statute, contrary to the

plain meaning of Section 502(b)(6). Pet. App. 15-16. Ap

plying the “last antecedent” rule, the court of appeals

concluded that the phrase “under applicable [state] law”

contained in the third category of Section 502(b)(6) modi-

fies only that category of persons (“any other person who

could obtain judicial review of that action under applicable

law”), not the second category (“any person who partici-

pated in the public comment process”). The court further

reasoned that petitioner’s interpretation would render

“mere surplusage” the plain language of Section 502(b)(6),

since “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.” Pet. App. 16. Therefore, the court interpreted the

first two categories in Section 502(b)(6) to establish a

minimum, nationwide level of judicial review that all

federally approvable state Title V permit programs must

satisfy. The court concluded that the third category

serves as a catch-all provision, allowing States to “grant

broader standing rights than those otherwise required

under federal law” and “ensur[ing] that the CAA does not

inadvertently diminish standing rights previously granted

under state laws.” Pet. App. 16.

10

The court of appeals further stated that EPA’s inter-

pretation of the rights of public comment participants

to obtain judicial review under Section 502(b)(6) is “both

authorized by Congress and reasonable.” Pet. App. 21.

Specifically, the court approved EPA’s determination that

a state program can be approved even if it does not grant

standing to all participants in the public comment process,

so long as the State “grants standing * * * to those

participants * * * who would have Article III standing to

sue in federal court.” Jd. at 17. The court stated that

EPA’s interpretation harmonized the three categories of

the judicial review provision in Section 502(b)(6) “with the

portion that requires states to provide ‘[a]dequate, stream-

lined, and reasonable procedures.’” Pet. App. 18 (quoting

Section 502(b)(6)). The court also noted that the EPA

interpretation is practical to apply, Pet. App. 18, best

preserves the uniform and minimum judicial review rights

Congress intended to preserve in Section 502(b)(6), and

best satisfies the policy goals of that provision, Pet. App.

22-23. The court of appeals further held that petitioner’s

permit program judicial review provision is more restric-

tive than that minimum standard.*

8 The court of appeals reviewed state case law establishing that

Virginia courts apply a “pecuniary interest” test—the same test

embodied in Virginia’s Title V statute—and other restrictive rules to

defeat judicial review rights of persons who would have met Article

III's standing requirement. Among those denied judicial review rights

were participants in the public comment process who were located

downwind from permitted air pollution sources and downstream from

permitted water pollution sources. Pet. App. 21-22 (discussing Fries v.

State Water Control Bd., 409 S.E.2d 634, 637 (Va. Ct. App. 1991)

(holding that “an anticipated public injury” was not “an immediate,

pecuniary, and substantial interest”); Citizens for Clean Air v. Com-

monwealth, 412 S.E.2d 715, 719-721 (Va. Ct. App. 1991); Environmental

Defense Fund vy. Virginia State Water Control Bd., 404 S.E.2d 728,

731-.32 (Va. Ct. App. 1991)). The court of appeals noted that a “plain-

11

d. The court of appeals also rejected petitioner’s ar-

gument that the “plain statement” rule enunciated in

Gregory v. Ashcroft, 501 U.S. 452, 461 (1991), should ap-

ply to preclude deference under Chevron U.S.A. Ine. v.

Natural Resources Defense Council, Inc., 467 US. 837,

844 (1984), to EPA’s interpretation of Section 502(b)(6).

The court did not decide whether state judicial standing

rules fall within the core of state sovereignty identified in

Gregory, federal intrusion upon which triggers the plain

statement rule. Pet. App. 20, 24-25. Instead, the court held

that, even if the fundamental state sovereignty concerns

in Gregory were invoked, “(t]hat principle has no rele-

vance in this case because here it is manifestly clear that

Congress specifically intended that the states conform

their judicial standing rules to meet the § 502(b)(6)

standard.” Jd. at 19. Moreover, the court distinguished

Gregory because “the CAA does not compel the states to

modify their standing rules, it merely induces them to do

so.” Id. at 25. The statute at issue in Gregory, by con-

trast, would have directly applied certain qualifications for

state law judges, absent application of the plain statement

rule.

5. The court of appeals rejected petitioner’s arguments

that the “sanction” provisions (the highway funds and off-

set sanctions) violate the Tenth Amendment, the Spending

Clause, and related constitutional principles of federalism.

a. The court of appeals rejected petitioner’s contention

that the CAA violates the Tenth Amendment by ordering

the state legislature to adopt an approvable Title V_per-

tiff need not show ‘pecuniary’ harm to have Article III standing; injury

to health or to aesthetic, environmental, or recreational interests will

suffice.” Pet. App. 21 (citing United States v. Students Challenging

Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 686-687 (1973),

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

12

mit program through direct compulsion. The court held

that, although the CAA’s “sanctions provisions potentially

burden the states, those sanctions amount to inducement

rather than ‘outright coercion.’” Pet. App. 25 (quoting

New York vy. United States, 505 U.S. 144, 166 (1992)). See

also Pet. App. 30-31. The court also held that Section 113

of the CAA, 42 U.S.C. 7413, which sets out EPA’s enforce-

ment authority under the CAA, “may not be used to force

Virginia to promulgate any state permit program, and

EPA has not proposed invoking § 113 in this case.” Pet.

App. 25 n.6,

b. As an alternative to its express mandate argument,

petitioner asserted in the court of appeals that the addi-

tional limitations imposed on highway funding under the

CAA highway funds sanction provision exceed Congress’s

constitutional authority under the Spending Clause. Peti-

tioner argued that the impact on the Commonwealth if the

highway funds sanction were applied would be so severe

that, under South Dakota v. Dole, 483 U.S. 208 (1987), the

incentive would “pass the point at which ‘pressure turns

into compulsion,’” id. at 211 (quoting Steward Machine

Co. v. Davis, 301 U.S. 548, 590 (1937)). Petitioner also

argued that the relationship between the condition im-

posed on the use of federal highway funds (submittal of an

approvable Title V permit program) and the purpose of fed-

eral highway funding is constitutionally inadequate under

the Spending Power.

Rejecting petitioner’s first argument, the court of ap

peals noted that “[nJo court * * * has ever struck down a

federal statute on grounds that it exceeded the Spending

Power.” Pet. App. 27. The court of appeals also concluded

that any financial impacts on Virginia’s economy would

not be so severe that, under Dole, they would rise to

the level of “outright coercion.” Jbid. The court of ap-

peals correctly noted that federal funding would not be

13

limited in certain areas of Virginia, that federal funding

would remain available in all areas for certain safety-

related and pollution-reducing projects, and that petitioner

could shift federal highway funds around in order to take

advantage of those provisions. J/bid.

The court of appeals also rejected petitioner’s argument

that there is an inadequate relationship between the high-

way funds sanction and petitioner’s failure to submit an

approvable Title V permit program. The court explained

that Title V of the CAA directly addresses air pollution

from stationary sources, while the highway funds sanction

pertains to many of the same pollutants from mobile

sources. It concluded that “(t]he CAA as a whole is a com-

prehensive scheme to cope with the problem of air pollu-

tion from all sources. Congress may ensure that. funds it

allocates are not used to exacerbate the overall problem of

air pollution.” Pet. App. 28.

c. The court of appeals also rejected petitioner’s argu-

ments that the offset sanction violates the Tenth Amend-

ment and related principles of federalism. The court

concluded that the sanction does not directly compel the

States to enact and enforce a federal regulatory program,

in violation of New York, 505 U.S. at 161, 188. The court

rejected petitioner’s argument that the alleged impacts of

this sanction are germane to the constitutional issues

raised, holding that as allowed under New York the offsets

involve direct regulation of private parties under the

Commerce Clause and do not affect the “State as a sov-

reign,” id. at 174. The court concluded that “[t]he burden

of the offset sanction falls on private parties. * * * [I]t

does not burden Virginia as a governmental unit. For

this reason, the sanction does not violate the principles of

federalism embodied in the Tenth Amendment.” Pet. App.

28.

14

ARGUMENT

The court of appeals correctly held that Congress in-

tended that state permit programs not be federally ap-

proved unless they conform to the nationwide standards

for judicial review that Congress established in Section

502(b)(6) of the Clean Air Act (CAA), 42 U.S.C. 7661a(b)(6).

The court of appeals also correctly held that Congress’s

determination to use its Spending and Commerce Powers

to induce the States to establish Title V permit programs

does not violate the Tenth Amendment. Neither ruling

conflicts with any decision of this Court or any other

court of appeals, and neither ruling warrants further

review.”

1. In Gregory v. Ashcroft, 501 U.S. 452 (1991), this

Court held that Congress must provide a “plain state-

ment” of its intent if it wishes directly to constrain fun-

damental state decisions in a core area of state sover-

eignty.” Petitioner’s contention (Pet. 10-16) that the

court of appeals improperly applied that rule while inter-

preting Section 502(b)(6) lacks merit.

9 The constitutionality of the CAA sanction provisions has been

raised in at least two other cases pending in the courts of appeals. See

Missouri v. United States, 918 F. Supp. 1820 (E.D. Mo. 1996), appeal

pending, No. 96-2244 (8th Cir.); Commonwealth of Virginia v. EPA,

Nos. 95-1150, 95-1163 & 95-1177 (D.C. Cir.). If and when a court of ap-

peals decision in those cases or in some other case creates a conflict in

the circuits, review by this Court could be sought to resolve it.

0 The specific question in Gregory was whether a statutory excep-

tion to the mandatory retirement provision of the Age Discrimination

in Employment Act of 1967, 29 U.S.C. 621 et seq., applied to state

judges, even though the statute contained no express reference to state

courts or judges. Given the obvious ambiguity in the statute. this

Court applied the plain statement rule in Gregory to avoid a poten-

tially difficult constitutional question under the Tenth Amendment and

related principles of federalism. See 501 U.S. at 464.

15

a. This case provides no occasion for further delin-

eation of the types of “fundamental” state decisions or

circumstances in which the “plain statement” rule in

Gregory should apply. That is because Section 502(b)(6)

already contains an entirely plain statement that restric-

tive standing requirements such as those embodied in peti-

tioner’s proposed scheme are insufficient to satisfy the

federal statutory standard.

As noted above, Section 502(b)(6) provides for judicial

review at the behest of three classes of individuals: “{1]

the applicant, [2] any person who participated in the public

comment process, and [3] any other person who could

obtain judicial review of that action under applicable law.”

Under the plain language of that provision, all permit

applicants and those who “participated in the public

comment process” are entitled to judicial review; other

individuals (i.e., nonparticipants) are entitled to judicial

review only if they can show that they “could obtain

judicial review * * * under applicable [i.e., state] law.”

Although the statute thus permits States to require non-

participants to show that they satisfy state law standing

requirements, the statute is unequivocal that States may

not use state law standing restrictions applicable to non-

participants to eliminate the opportunity for participants

to obtain judicial review." It is difficult to imagine how

'! Petitioner asserts (Pet. 14) that Section 502(b)(6) “is undisputedly

ambiguous * * * regarding Congress’ intent to force states to adopt

a different judicial review standard [from that ordinarily applicable

under state law].” The text of the statute, however, makes clear that

that was precisely Congress’s intent. Moreover, as the court of appeals

recognized, that intent is also clear from the legislative history of the

statute, see Pet. App. 16 (quoting 136 Cong. Rec. $16,941 (daily ed. Oct.

27, 1990)), and from the application of the “last antecedent” rule of

statutory construction, see Pet. App. 15. In addition, petitioner’s theory

of the meaning of Section 502(b)(6) does not give independent meaning

16

Congress could have stated that intent more plainly. As

the court of appeals stated, “[tJh[e] principle [of Gregory]

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.” Pet. App. 19,

Petitioner does not dispute before this Court that peti-

tioner’s permit program judicial review provision fails to

satisfy the plain language of Section 502(b)(6). Nor does

petitioner offer any other interpretation of the language of

Section 502(b)(6) under which petitioner’s restrictions on

judicial standing for those who participated in the public

comment process could possibly be found to satisfy Section

502(b\(6). Instead, petitioner notes (Pet. 12) that EPA

has interpreted the second prong of Section 502(b)\6) to

broaden slightly the scope of permissible state standing

requirements for participants in the public comment pro-

cess. Petitioner then argues (Pet. 13) that Gregory has

some relevance to this case because the EPA’s “interpre-

to each of the statute’s terms. See Pet. App. 16. Under petitioner's

theory, a state permit program would satisfy Section 502(b\6) by

simply providing for judicial review at the behest of the third category

of persons listed in Section 502(b)(6)}—persons “who could obtain judi-

cial review * * * under applicable [..e., state] law.” The other two

categories—“the applicant” and “any person who participated in the

public comment process”—would be superfluous, since persons in those

categories could obtain judicial review, under petitioner's theory, only

if they also fell within the third category. Indeed, under petitioner's

theory, Congress could have accomplished the same result by eliminat-

ing the references to all three categories of individuals in Section

502(b\(6). That would have had the effect of leaving the question of

standing to obtain judicial review entirely up to state law—which is

exactly the result of the interpretation for which petitioner contends

and exactly the result that Congress expressly precluded in Section

502(b 6).

FD SOSSSSN SSS "=="

17

tation would displace or intrude into some essential core

function of state sovereignty.”

Petitioner’s argument is mistaken. EPA’s interpreta-

tion of the statute does not “displace or intrude into some -

essential core function of state sovereignty.” To the con-

trary, EPA’s interpretation of the statute accommodates

concerns of state sovereignty (insofar as they are im-

plicated at all here) by permitting States to deny judicial

review to participants in the public comment process who

would not satisfy Article III standing requirements.

Under the only other plausible reading of Section

502(b)(6), the States would have to go still further in

granting standing to anyone who participated in the state

public comment process. EPA cannot be said to have

“displace[d] or intrude[d] into some essential core function

of state sovereignty” by relieving States of that burden,”

Nor does the fact that Section 502(b)(6) is sufficiently

ambiguous in its precise application to warrant deference

to EPA’s interpretation Support petitioner’s argument

that the statute could Support its theory that States may

impose whatever standing requirements they wish on

those seeking judicial review. There is nothing excep-

tional in the court of appeals’ holding that the meaning of

a statutory provision is plain enough to render certain

constructions (such as petitioner’s) plainly impermissible,

while remaining sufficiently ambiguous as to other con-

structions to make deference to the agency’s interpreta-

tion appropriate.

® We note that petitioner also asserts in its petition that apart from

its contest over the judicial review provision, it has corrected the other

four (of the five) deficiencies in its program. Pet. 7n.4. At the present

time, however, EPA has not yet concluded a rulemaking as to the

adequacy of those new submissions. Thus, those other four deficiencies

alone remain a valid basis for EPA’s disapproval of petitioner's permit

program. See Pet. App. 9-12.

18

b. Additional review of the court of appeals’ application

of Gregory is not warranted for another, independent rea-

son. The plain statement rule in Gregory was adopted to

avoid difficult constitutional problems posed by inter-

pretations of federal statutes that would directly impose

mandatory federal requirements that infringe upon a

fundamental state sovereign function (i.e., the qualifica-

tions of state judges). See, e.g., 501 U.S. at 455, 460. As

discussed below, the Title V state permit program pro-

visions, including Section 502(b)(6), do not apply hy direct

mandate, but rather through a system of incentives. Thus,

even if state law control over permit program judicial

review provisions were considered to be a fundamental ele-

ment of state sovereignty, the Clean Air Act structure

nonetheless ensures that these Tenth Amendment and

related principles of federalism are not transgressed.

2. Petitioner also contends (Pet. 17) that the CAA

statutory scheme unconstitutionally “commandeer[s] the

legislative process of the States to enact and administer

a federal operating permit program.” That contention is

mistaken.

a. The Tenth Amendment prohibits the federal govern-

ment from “commandeer[ing] the legislative processes of

the States by directly compelling them to enact and en-

force a federal regulatory program.” New York, 505 U.S.

at 161, 188 (quoting Hodel v. Virginia Surface Mining &

Reclamation Ass’n, 452 U.S. 264, 288 (1981)). On the other

hand, Congress may “encourage a State to regulate in a

particular way,” and may “hold out incentives to the |

States as a method of influencing a State’s policy choices.”

505 U.S. at 166. That is what Congress has done in Sec-

tions 179(b) and 502(d) and (i) of the CAA, 42 U.S.C. 7509(b),

7661a(d) and (i). The offset sanction is a conditional fed-

eral regulation, under the Commerce Clause, of private

activity over which Congress possesses unquestioned au-

19

thority. Thus, like the conditional exercise of Commerce

Clause authority upheld in New York, the offset sanc-

tion’s burden falls on private parties, not States as sover-

eigns. 505 U.S. at 174.° In such circumstances, “{t]he af-

fected States are not compelled by Congress to regulate.”

Ibid. ,

Similarly, Congress may attach conditions to a State’s

receipt of public funds without violating the Tenth Amend-

ment, as Congress has done with the CAA’s highway funds

sanction.

By either of these methods [conditional funding or

conditional federal preemption], as by any other per-

missible method of encouraging a State to conform to

federal policy choices, the residents of the State retain

the ultimate decision as to whether or not the State

will comply.

New York, 505 U.S. at 168. As the court of appeals

correctly stated, “we find no constitutional violation be

cause federal law ‘may, indeed, be designed to induce state

action in areas that otherwise would be beyond Congress’

regulatory authority.’” Pet. App. 23 (quoting FERC v.

Mississippi, 456 U.S. 742, 766 (1982)).

b. Petitioner argues (Pet. 16) that the CAA should be

read as imposing a direct, enforceable mandate that States

13 The two sets of incentives upheld in New York establish a num-

ber of different inducements to encourage state participation. 505 U.S.

at 152-154 (describing the incentives). The second set of incentives

upheld in New York included federal regulations similar to the CAA

offset sanction. They authorized the imposition of increased costs, as

well as certain restrictions on private persons, if States do not regu-

late according to certain federal standards. The Court held that it was

constitutional for Congress to exercise its Commerce Clause power by

directly regulating private persons on a conditional basis. Jd. at 173-

174.

20

adopt and submit Title V permit programs to EPA. This

Court’s decision in New York, however, rejected a pre-

cisely parallel argument, applying the long-standing rule

that “where an otherwise acceptable construction of a

statute would raise serious constitutional problems, the

Court will construe the statute to avoid such problems

unless such construction is plainly contrary to the intent

of Congress.” 505 U.S. at 169-170 (citation omitted).

Petitioners in New York argued that the provision in

the Low-Level Radioactive Waste Policy Amendments Act

that “felach State shall be responsible for providing

* * * for the disposal of * * * low-level radioactive

waste,” 42 U.S.C. 2021c(a)(1)(A) (emphasis added), imposed

a “direct command” that States “shall” adopt a program

for low-level radioactive waste disposal. 505 U.S. at 169.

However, because the Act also contained incentive pro-

visions, the Court construed the statute as operating

through those incentives rather than as a direct command

to regulate. Jd. at 169-170.

Consistent with New York, the court of appeals in this

case correctly concluded that the CAA does not impose an

independent mandate requiring States to adopt and submit

to EPA approvable Title V permit programs, but rather

works through the incentives in the Act to induce state

cooperation. Pet. App. 25. “Virginia is not commanded

to regulate; the Commonwealth may choose to do nothing

and let the federal government promulgate and enforce its

own permit program within Virginia.” Jd. at 29. Other

courts of appeals have uniformly declined to interpret :

similar use of the term “shall” in the CAA as imposing a |

direct mandate, and petitioner cites no authority to the

contrary.“

4 “Although the terms ‘shall submit’ could be construed to impose a

mandatory duty upon the states to formulate a plan, judicial construc-

iil cia il

21

The court of appeals also correctly rejected petitioner’s

argument (Pet. 6, 20-21) that it will be subject to civil and

criminal enforcement under Section 113 of the CAA, 42

U.S.C. 7413, if it fails to comply with the alleged direct

mandate to adopt a permit program. See Pet. App. 25 n.6.

With respect to Title V, Section 113(a)(2) establishes en-

forcement authority only to redress “violations of * * *

an approved permit program,” 42 U.S.C. 7413(a)(2), not

authority to compel States to adopt a permit program.

Furthermore, Sections 113(a)(3) and (b) authorize enforce-

ment by EPA if certain CAA “requirements” and “prohi-

bitions” are violated. For the same reasons that the CAA

should not be interpreted to establish a direct mandate

that States adopt approvable permit programs, state adop-

tion of a permit program is not an enforceable “require-

ment” under Section 113."

tion of the Act has established that the Act merely gives the States

the first opportunity to draft and submit a plan. A state may not be

compelled to formulate or submit an implementation plan.” Sierra

Club v. Indiana-Kentucky Elec. Corp., 716 F.2d 1145, 1148 (7th Cir.

1983). See also, e.g., District of Columbia v. Train, 521 F.2d 971, 983-

985 (D.C. Cir. 1975), vacated and remanded for consideration of moot-

ness sub nom. EPA v. Brown, 431 U.S. 99 (1977) (per curiam); Plan for

Arcadia, Inc. vy. Anita Assocs., 379 F. Supp. 311, 314 (C.D. Cal. 1973)

(“{T}here is no judicial remedy provided in the Act or elsewhere for the

failure of the state to adopt and submit a plan.”), aff’d, 501 F.2d 390

(9th Cir.), cert. denied, 419 U.S. 1034 (1974).

® Cf. Maryland v. EPA, 530 F.2d 215 (4th Cir. 1975) (finding that

the CAA does not provide EPA the authority to directly compel States

to adopt certain CAA programs, and recognizing that Congress may

use incentives to attain the same objective), vacated and remanded for

consideration of mootness sub nom. EPA v. Brown, 431 U.S. 99 (1977)

(per curiam); District of Columbia v. Train, supra; Brown v. EPA, 521

F.2d 827 (9th Cir. 1975), vacated and remanded for consideration of

mootness, 431 U.S. 99 (1977) (per curiam).

22

3. Petitioner claims (Pet. 23-30) that Congress exceed-

ed its Spending Power authority by increasing limitations

on federal highway funds in nonattainment areas when a

State fails to submit an approvable Title V permit pro-

gram. This case does not present any novel question con-

cerning Congress’s Spending Power.

a. “Congress has frequently employed the Spending

Power to further broad policy objectives by conditioning

receipt of federal moneys upon compliance by the recipient

with federal statutory and administrative directives.”

Fullilove v. Klutznick, 448 U.S. 448, 474 (1980) (opinion of

Burger, C.J.). This Court “has repeatedly upheld against

constitutional challenge the use of this technique to in-

duce governments and private parties to cooperate volun-

tarily with federal policy.” Jbid.; see New York, 505 U.S.

at 167, 171-173; Massachusetts v. United States, 485 U.S.

444, 461-462 (1978) (opinion of Brennan, J.); Lau v. Nichols,

414 U.S. 563, 569 (1974); Oklahoma v. United States Civil

Service Comm’n, 330 U.S. 127, 143-144 (1947).

b. Petitioner asserts that the highway fund sanction

passes “the point at which ‘pressure turns into compul-

sion.’” Pet. 24, quoting South Dakota v. Dole, 483 U.S.

203, 211 (1987) (quoting Steward Machine Co. v. Davis,

301 U.S. 548, 590 (1937)). The court of appeals fully consid-

ered that issue in light of this Court’s decisions and cor-

rectly concluded that “[t]he highway sanction here does

not rise to the level of ‘outright coercion.’” Pet. App. 27.

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

upheld a restriction on federal highway funding which .

South Dakota characterized as overly coercive. In so

doing, the Court cited previous decisions such as Fulli-

love and Lau, in which the Court had upheld exercises of

the Spending Power even though Congress had imposed a

complete cut-off of substantial federal funding if Con-

gress’s requirements were not met. /d. at 206. The Court

iil

ee Se a ey ae

23

also noted that previous cases had mentioned that some

conditional federal expenditures “might be so coercive as

to pass the point at which ‘pressure turns into compul-

sion,’” id. at 211 (quoting Steward Machine, 301 U.S. at

590). On the other hand, the Court also quoted Justice

Cardozo’s warning in Steward Machine, which noted the

difficulty in equating an incentive to compulsion:

(To hold that motive or temptation is equivalent to

coercion is to plunge the law in endless difficulties.

The outcome of such a doctrine is the acceptance of a

philosophical determinism by which choice becomes

impossible.

483 U.S. at 211 (quoting 301 U.S. at 589-590).

This case does not test the outer limits of the Spending

Power. As the court of appeals recognized, the highway

funds sanction does not cut off all federal highway funding,

or even require that a State lose any federal highway

funds. Pet. App. 27. Rather, Congress provided that, even

if a State fails to submit an approvable Title V permit

program, federal highway funds say still be used for

projects not located in nonattainment areas, and those

funds may still be used even in nonattainment areas for

safety projects, mass transit, and other projects that will

improve air quality and not encourage single occupancy

vehicle use. Not only has this Court upheld more signifi-

cant restrictions in such cases as Fullilove and Lau, but

the courts of appeals have also upheld conditions that

exert substantially greater pressure upon States.

16 E.g., Nevada v. Skinner, 884 F.2d 445, 446 (9th Cir. 1989)

(withdrawal of virtually all federal highway funds), cert. denied, 4938

U.S. 1070 (1990); City of Columbia v. Costle, 710 F.2d 1009, 1013

n.3 (4th Cir. 1983) (loss of construction grants for sewage treatment

plants); Middiesex County Utilties Auth. v. Borough of Sayreville, 690

F.2d 358 (8d Cir. 1982) (same), cert. denied, 460 U.S. 1023 (1983);

24

c. The condition that Congress has imposed, adoption

of an approvable Title V permit program, also meets this

Court’s requirement that the condition “bear some re-

lationship to the purpose of the federal spending.” New

York, 505 U.S. at 167 (emphasis added); see id. at 172

(upholding specific funding condition that was found to be

“reasonably related to the purposes of the expenditure”);

see also Missouri v. United States, 918 F. Supp. 1320, 1332-

1335 & nn.14-16 (E.D. Mo. 1996) (rejecting constitutional

attack on the highway funds sanction as applied to CAA

Title I programs), appeal pending, No. 96-2244 (8th Cir.).

Through the highway funds sanction, Congress ensured

that, if States fail to implement an approved Title V permit

program to help control emissions in their most polluted

areas, federal funding for transportation projects in those

areas will be restricted to projects that will be consistent

with improving air quality.” As the court of appeals ob-

served in this case, Congress surely possesses authority

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

medicaid funds); Walker Field, Colorado, Pub. Airport Auth. v. Adams,

606 F.2d 290, 297 (10th Cir. 1979) (withdrawal of grants for airport

construction); Nebraska v. Tiemann, 510 F.2d 446, 448 (8th Cir. 1975)

(withdrawal of an entire category of federal highway funds).

17 The Third Circuit has also noted the connection between highway

construction and the deterioration of air quality. See Delaware Valley

Citizens’ Council for Clean Air v. Pennsylvania, 678 F.2d 470, 478

(“Congress has itself suggested the relationship between a failure

to implement programs required by the Clean Air Act and a cut-off

of Title 23 funds [as provided] in 42 U.S.C. § 7506(a). Such a cut-off

serves both to induce implementation of the [vehicle inspection and

maintenance] program and to inhibit highway building, which itself

contributes to the problems which the Clean Air Act is designed to

remedy.”), cert. denied, 459 U.S. 969 (1982); Pennsylvania v. EPA, 500

F.2d 246, 261 (1974) (“The states have, by their transportation policies,

contributed to the problem of air pollution from automobile emissions,

and they can be required to take affirmative actions to correct it.”).

eee

oe

25

under the Spending Clause to “ensure that funds it allo-

cates are not used to exacerbate the overall problem of air

pollution.”*” Pet. App. 28; see also Ivanhoe Irrigation

Dist. v. McCracken, 357 U.S. 275, 295 (1958) (“[TJhe

Federal Government may establish and impose reasonable

conditions relevant to federal interest in the project and

to the over-all objectives thereof.”) (emphasis added).

Petitioner claims (Pet. 28) that the court of appeals gave

insufficient weight to the fact that a Title V permit pro-

gram regulates stationary sources of air pollution (pri-

marily industrial point sources), while the highway funds

sanction aims to reduce pollution from mobile sources (i.e.,

motor vehicles).”” However, as the court of appeals recog-

8 See, e.g., South Dakota, 483 U.S. at 208-209 & n3 (upholding

requirement that States establish 21 as the minimum drinking age

in order to receive their full allocation of federal highway funds);

Fullilove, 448 U.S. at 474-475, 478-480 (opinion of Burger, C.J.) (up-

holding minority set-asides requirements as a condition on federal

public works grants); Lau, 414 U.S. at 566-569 (upholding conditions

imposed under the Civil Rights Act of 1964 on States that accept

federal education funds); Oklahoma v. United States Civil Service

Comm’n, 330 U.S. at 143-144 (upholding Hatch Act requirement that

States restrict the political activities of state officials who oversee

expenditures of federal grants). See also Oklahoma v. Schweiker, 655

F.2d at 406-407 (restrictions on federal grants have never been subject

to a “rigid nexus” test requiring that those conditions be “precisely

related to the purpose of the federal funds whose receipt is conditioned”)

(discussing cases).

9 Petitioner also asserts (Pet. 29) that the highway funds sanction

is irrational because federal highway funds can be used only for pro-

jects that have been shown to be in conformity with an applicable

SIP, as required by 42 U.S.C. 7506(c). The court of appeals did not

discuss that argument because petitioner failed to present it below. In

any event, petitioner is mistaken regarding the effect of a conformity

determination.

The CAA conformity provision requires that all federally supported

transportation projects be part of a transportation plan and transporta-

26

nized, “(t]he CAA as a whole is a comprehensive scheme to

cope with the problem of air pollution from all sources.”

Pet. App. 28. Mobile sources and stationary sources both

contribute significantly to the overall air pollution prob-

lem; in fact, both produce many of the same regulated air

pollutants.”

4. Petitioner argues (Pet. 19-22) that the economic im-

pact of the highway funds sanction, a conditional exercise

of the Spending Power, in combination with the economic

impact of the offset sanction, a conditional exercise of the

Commerce Power, results in a violation of the Tenth

Amendment. That argument is mistaken.

a. Under New York, the Tenth Amendment is not vio-

lated merely because Congress uses several entirely con-

stitutional sources of authority to induce States to act,

even if the combination of the various sources of authority

tion improvement program which are in conformity with the applicable

SIP. 42 U.S.C. 7506(c); see generally Environmental Defense Fund,

Inc. v. EPA, 82 F.3d 451, amended, 92 F.3d 1209 (D.C. Cir. 1996). The

approval of a project under the conformity process is not, however, a

blanket environmental endorsement of a project, but simply a deter-

ination that, under the particular set of conditions assumed in the

control strategy, the project may proceed with federal funding. The

success of any control strategy necessarily depends not just upon the

conformity status of particular transportation projects but upon the

State’s adoption and implementation of all the measures needed to

adequately control emissions of the relevant pollutants, including an

effective Title V permit program.

2 With respect to ozone, for example, “(t]he two major sources of

the ozone precursors * * * are motor vehicles and industry.” H.R.

Rep. No. 490, 101st Cong., 2d Sess. 202 (1990). Similarly, “[pJarticulate

matter originates from stationary and mobile sources, both natural and

man-made.” Natural Resources Defense Council, Inc. v. EPA, 902

F.2d 962, 965 (1990), vacated in part on other grounds, 921 F.2d 326

(D.C. Cir. 1991), cert. dismissed, 498 U.S. 1075, cert. denied, 498 U.S.

1082 (1991).

27

would have an economic impact on the State. 505 U.S. at

171-174. Rather, the Tenth Amendment issue turns on

whether Congress has “commandeer[ed] the legislative

processes of the States by directly compelling them to

enact and enforce a federal regulatory program.” Jd. at

161, 188 (quoting Hodel, 452 U.S. at 288).

Petitioner’s argument is also inconsistent with Hodel,

in which the Court concluded that the economic impact of

a federal regulatory program on Virginia’s economy is

insufficient to establish a violation of the Tenth Amend-

ment. 452 U.S. at 292 n.33. Rather, the controlling fac-

tor is “the nature of the federal action, not the ultimate

economic impact on the States.” Jbid. See also FERC v.

Mississippi, 456 U.S. 742, 766 (1982) (Congress does not

exceed its authority because the choice it presents to a

State “may be a difficult one”).

The economic impact of the offset sanction is likewise

unrelated to the inquiry in Dole regarding whether an

exercise of Congress’s Spending Power would “pass the

point at which ‘pressure turns into compulsion.’” 483 U.S.

at 211 (citation omitted). In contrast to the highway funds

sanction, the offset sanction directly regulates private

parties under the Commerce Clause. As explained in New

York, under such direct regulation

[t]he affected States are not compelled by Congress to

regulate, because any burden caused by a State’s

“1 In New York, the Court noted that the two constitutional

incentives-—-a funding incentive parallel to the highway funding

incentive in this case, see 505 U.S. at 171-172, and the imposition of

substantive federal regulations parallel to the CAA offset sanction, see

id. at 173-174—applied “considerable internal pressure” to States and

“coax[ed]” the States into regulating in the manner Congress desired.

Id. at 187. The Court nonetheless found no constitutional flaw in the

two sets of incentives invoked by Congress or in their combined effect.

Id. at 171-174.

28

refusal to regulate will fall on those who generate

waste and find no outlet for its disposal, rather than on

the State as a sovereign.

505 U.S. at 174. Accordingly, the court of appeals cor-

rectly concluded that “[t]he burden of the offset sanction

falls on private parties. * * * [I]t does not burden

Virginia as a governmental unit.” Pet. App. 28. There-

fore, the simultaneous application of the offset sanction

and highway funds sanction would not result in a constitu-

tional violation.

b. Petitioner argues (Pet. 21-22) that the highway

funds and offset sanctions are unnecessary once EPA

promulgates a federal Title V program for Virginia, and

that the fact that those sanctions would nonetheless

remain in effect establishes that the scheme is unduly

coercive in violation of the Tenth Amendment.

Petitioner’s argument is mistaken. The federal sanc-

tions at issue here leave petitioner with the option of re-

fusing to enact a scheme that complies with Title V’s re-

quirements. They therefore do not implicate New York’s

anti-commandeering principle, regardless of whether they

are considered singly or together. See Pet. App. 29-30.

Moreover, the need for incentives for state cooperation

continues well after promulgation of a federal Title V pro-

gram. As the court of appeals recognized (Pet. App. 5

(quoting applicable legislative history)), Congress believed

that the nationwide CAA program works best, and the

goals of the CAA are best achieved, when EPA serves in

an oversight role and the States, with their greater fa-

miliarity with local problems and conditions, adopt and im-

plement the various programs. Thus, as long as a State

chooses not to adopt an approvable Title V permit pro-

gram, the rationale for the sanctions—to encourage state

29

cooperation and therefore to ensure the effectiveness of

the CAA program—remains.2

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WALTER DELLINGER

JONATHAN Z. CANNON Acting Solicitor General

General Counsel Lois J. SCHIFFER

MICHAEL W. THRIFT Assistant Attorney General

Attorneys ROBIN M. RICHARDSON

U.S. Environmental

; Attorneys

Protection Agency Y

DECEMBER 1996

“In addition, the court of appeals recognized that the sanctions

reduce air pollution by requiring greater offsets for certain Stationary

sources and reducing emissions from mobile pollution sources. Pet,

App. 28. Because the sanctions affect only areas within the State that

are out of attainment with the NAAQS, they continue to serve the

statutory purpose of achieving attainment even after adoption of a

federal Title V permit program.