Reply Brief — Virginia v. Browner

os

Buprerte Cour ue

6) FILE D

No. 96-567

DEC 23 1996

In The | CLERK

Supreme Court of the United States

October Term, 1996

7

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.

7

On Petition For A Writ Of Certiorari To The United

| States Court Of Appeals For The Fourth Circuit

.

REPLY BRIEF FOR THE PETITIONER

°

James S. Grimore, II

Attorney General of Virginia

Davip E. ANDERSON Joun P. Scuorrz, Esquire

Chief Deputy Attorney General Grecory S. Wavpen, Esquire

THomas Divence, Esquire

as ace oom J Mara Brown & Pus

aii y 2000 Pennsylvania

Rocer L. CHAFFE Avenue, N.W.

Senior Asst. Attorney General Suite 6500

Washington, D.C. 20006-1882

(202) 463-2000

Assistant Attorney General

(Counsel of Record) Of Counsel

900 East Main Street

Richmond, Virginia 23219

(804) 786-2444

Mary Jo LeuGers

TABLE OF CONTENTS

I. EPA’S BRIEF DEMONSTRATES THAT

§ 502(b)(6) OF THE CAA IS AMBIGUOUS

AND THAT CONGRESS HAS NOT INDI-

CATED IN PLAIN TERMS A DESIRE TO

REPLACE STATE STANDING LAWS IN THE

MANNER EPA CLAIMS................6.5: 1

Il. EPA MISCONSTRUES VIRGINIA’S CON-

STRUCTION OF § 502(b)(6)................. 2

Ill. EPA UNDERSTATES THE COERCIVE

NATURE OF THE SANCTIONS AND OTHER

MEASURES EMPLOYED IN THE CHAL-

LENGED STATUTORY SCHEME TO

UNCONSTITUTIONALLY FORCE COMPLI-

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TABLE OF AUTHORITIES

Page

Cases

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

725 C¥a. Ape. WORE) io iisas cccvcvdiveseeebeuxnce ends 4

Environmental Defense Fund v. State Water Control

Bd., 404 S.E.2d 728 (Va. App. 1991) ................ 4

Environmental Protection Agency v. Brown, 431 U.S.

DD (IGT) « < osicesvanns kduuctia ss eee eter ees 6

Fries v. Virginia State Water Control Board, 409

S.B.2d 634: (Va: App. TORI). ook visa seenevsivsicuns 4

Fullilove v. Klutznick, 448 U.S. 448 (1980) ............. 7

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

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

UES. BOG CHOBE) so iks cincn cc ckcceuteueeeercetasesars 6

New York v. United States, 505 U.S. 144 (1992) ........ 9

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

South Dakota v. Dole, 483 U.S. 203 (1987) ........... 7,9

Virginia Department of Education v. Riley, 86 F.3d

1337 (4th Cir.), reh’g granted (October 11, 1996)..... 2

Unrtep States CONSTITUTION

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TABLE OF AUTHORITIES - Continued

Page

FEDERAL STATUTES

Oe Grice BS POLO CAA © LID). cc ccceccccevccecess 6, 7

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

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42 U.S.C. § 7509(b)(1) (CAA § 179(b)(1)) ............. 5

42 U.S.C. § 7661a(b)(6) (CAA § 502(b)(6)) ..... 1, 2, 3, 4

Title V of the CAA (42 U.S.C. §§ 7661-7661f)....... passim

Cope OF VIRGINIA

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OTHER

Chafee-Baucus Statement of Senate Managers, S.

1630, THE CLEAN AIR ACT AMENDMENTS

OF 1990, reprinted in 136 Cong. Rec. $16,941

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1

REPLY BRIEF OF THE PETITIONER

The Commonwealth of Virginia (“Commonwealth”)

hereby files this reply brief in response to Respondents’

Brief in Opposition (“EPA Br.”) and the briefs filed by the

Intervenors.

I.

EPA’S BRIEF DEMONSTRATES THAT § 502(b)(6) OF

THE CAA IS AMBIGUOUS AND THAT CONGRESS

HAS NOT INDICATED IN PLAIN TERMS A DESIRE

TOC REPLACE STATE STANDING LAWS IN THE MAN-

NER EPA CLAIMS

If this Court harbors any doubts that the Common-

wealth has correctly characterized § 502(b)(6) of the fed-

eral Clean Air Act (“CAA”) as ambiguous, EPA’s Brief

should lay such concerns to rest. EPA’s conflicting posi-

tions on this issue are interspersed throughout its Brief.

On page 15, in an effort to fend off any application of the

“plain statement” rule of Gregory v. Ashcroft, 501 U.S. 452

(1991), EPA claims that § 502(b)(6) already contains a

“plain statement” which automatically renders the Com-

monwealth’s standing laws inadequate for Title V pro-

gram approval.

If that assertion were correct, no interpretation of the

statute by EPA would have been needed. But elsewhere

in its Brief, EPA concedes — as it must - that § 502(b)(6)

“could be read to require States to dispense with standing

requirements altogether.” EPA Br. at 7. EPA then points

out that it interpreted the statute by administratively

adopting Article III standing requirements and then mea-

sured state programs, including the Commonwealth’s,

against its standard and not by any “plain statement” set

out by Congress.

Such inconsistent arguments readily expose the

ambiguity inherent in the statute, as well as the extraordi-

nary efforts of EPA to support the Court of Appeals’

unwillingness to apply Gregory as this Court intended. A

2

correct application of that decision would have required

EPA to adopt an interpretation of the statute which

would not intrude into a core element of state sover-

eignty — in this case, the jurisdiction of Virginia courts

and the Commonwealth’s right to decide for itself

whether and to what extent to waive its immunity from

suit in its own courts.!

Il.

EPA MISCONSTRUES VIRGINIA’S CONSTRUCTION

OF § 502(b)(6)

EPA could have avoided a constitutional confronta-

tion by accepting the Commonwealth’s reasonable con-

struction of § 502(b)(6) (Petition, App. at 77).2 That

construction gives meaning to all three elements of the

judicial review provision of § 502(b)(6), recognizing that

each focuses on a different type of person: the applicant,

a participant in the comment process, and a nonpartici-

pant. EPA misunderstands this important distinction

(EPA Br. at 8-9, 15 n.11), as did the Court of Appeals.*

1 Judge Luttig of the Court of Appeals, one of the five

judges who voted to grant rehearing of this case (Petition, App.

at 34), has articulated the appropriate application of the “plain

meaning” rule in his dissent in Virginia Dep’t of Educ. v. Riley, 86

F.3d 1337, 1353 ( 4th Cir.), reh’g granted (Oct. 11, 1996).

2 EPA claims that its interpretation “accommodates”

concerns of state sovereignty by permitting States to deny

judicial review to participants not meeting (EPA’s) Article III

standard. EPA Br. at 17. Yet even EPA’s interpretation intrudes

into state sovereignty. Thus, EPA ignores the question whether

Congress intended to do so.

3 Contrary to EPA’s claim, Virginia has never read the

words “under applicable law” in the third phrase of § 502(b)(6)

to modify the first two phrases, which would be grammatically

incorrect. All parties must agree, however, that the entire

§ 502(b)(6) concerns only laws that are applicable in the States,

which can only mean state standing laws.

3

The legislative history of § 502(b)(6) shows that Con-

gress constructed the statute as it did because it wanted

to ensure that Title V did not unintentionally eliminate

existing avenues of judicial review. Its intent was not to

establish three mutually exclusive categories of persons

with different standing rights.* Initially, the House

Amendment to § 502(b)(6) included language only to

provide an opportunity for judicial review to applicants

and to persons who participated in the comment process.

136 Cong. Rec. $16,941. Later, the Conference Agreement

added the third category, explaining that it did so “to

ensure that existing provisions of law governing the

availability of such review are in no way limited by this

title [Title V].”

Likewise, the Commonwealth’s construction of

§ 502(b)(6) recognizes that all three categories overlap in

their coverage. Certainly, the applicant is a person who

# Congress had three concerns: (1) that appeals be had in

state courts under state laws; (2) that Title V not limit avenues of

appeal already provided by state law; and (3) that some degree

of injury be required to appeal. Chafee-Baucus Statement of

Senate Managers, S. 1630, THE CLEAN AIR AMENDMENTS

OF 1990, reprinted in 136 Cong. Rec. $16,941 (daily ed. Oct. 27,

1990). The Statement (id. (emphasis added)) indicates

§ 502(b)(6) was intended to:

make clear that judicial review of final actions by the

permitting authority to issue or deny permits shall be

available in State court to anyone who could obtain such

review under any applicable 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

parties who arguably are affected by permit decisions are

guaranteed their day in court.

4

also could obtain judicial review of that action as a partic-

ipant in the comment process (second category) and

under applicable law (third category). That fact does not

make nullities of the first and second categories. Sim-

ilarly, the second category does not become a nullity

because the person identified there, under the Common-

wealth’s construction, is a “person who could obtain

judicial review of that action under applicable law.” The

judicial review provision was simply written as it is in

order not to preclude existing avenues of appeal.®

Ill.

EPA UNDERSTATES THE COERCIVE NATURE OF

THE SANCTIONS AND OTHER MEASURES

EMPLOYED IN THE CHALLENGED STATUTORY

SCHEME TO UNCONSTITUTIONALLY FORCE COM-

PLIANCE BY THE STATES

In its Brief, EPA gives the mistaken impression that

the penalty provisions of the challenged CAA scheme are

of slight consequence.® It does so by ignoring certain

5 EPA and Intervenors join the Court of Appeals (Petition,

App. at 21-22) in supporting their own incorrect interpretations

of Virginia’s standing statute (Va. Code § 10.1-1318(B)) by citing

old and inapposite cases. EPA Br. at 10 n.8; EDF Br. at4n.4&5

n.5; Int. Br. at 5 n.5. For example, Citizens for Clean Air v.

Commonwealth, 412 S.E.2d 715 (Va. App. 1991) was decided

under the predecessor of § 10.1-1318(B). As the Commonwealth

pointed out below, that statute was amended extensively in 1993

in an effort to accommodate § 502(b)(6). Fries v. Virginia State

Water Control Bd., 409 S.E. 2d 634 (Va. App. 1991) and EDF v.

State Water Control Bd., 404 S.E.2d 728 (Va. App. 1991) were

decided under a different substantive law, the Virginia Water

Control Act, which contained a judicial review provision similar

to the earlier version of § 10.1-1318(B) and thus unlike the one at

issue here.

6 EPA does so, for example, by calling the CAA sanctions

an”

“so-called ‘sanctions’.” However, it was Congress, not Virginia,

~ — mer

5

salient factors that are crucial to the Tenth Amendment

and Spending Clause analyses, and by incorrectly analyz-

ing the sanctions separately and not cumulatively.

A.

In addressing the constitutionality of the highway

funding and approval sanctions under the Tenth Amend-

ment, EPA ignores the “federal approval” component

which punishes noncomplying States by denying them

needed federal approvals — not just funds — for highway

construction projects, even those solely state financed.

CAA § 179(b)(1) (42 U.S.C. § 7509(b)(1)) (Petition, App. at

74-75). Thus, not only would the Commonwealth lose

federal highway construction funds, it would be pre-

cluded from undertaking significant state projects that

require federal approvals. Petition at 4-5.

EPA also inappropriately makes light of the absolute

block on federal funds for building roads in nonattain-

ment areas. EPA Br. at 5, 23. If sanctioned, the Common-

wealth could not, as EPA suggests, receive all of the

federal funds earmarked for Virginia simply by taking on

exempt projects or by shifting funds for use in other areas

of Virginia. First, the endangered federal highway funds

are designated for road-building projects — projects

planned years in advance and approved by the federal

government for those purposes alone. Restructuring Vir-

ginia’s highway construction program to include only

exempt projects would require additional years of plan-

ning and approvals.

Second, even if possible, restructuring would be

impractical because it would not address the Common-

wealth’s needs. Virginia plans for and the federal govern-

ment approves the Commonwealth’s projects because

they are essential to meeting the ever increasing demand

on Virginia’s highway system. Shifting funds to pay for

that labeled these penalties “sanctions.” 42 U.S.C. § 7509

(Petition, App. at 74-75).

6

buses, to build commuter parking lots, or to build roads

in less travelled areas outside nonattainment areas would

not address Virginia’s highway needs. For these reasons,

EPA's characterization of the sanctions’ impact is incon-

sistent with the realities of transportation planning and

funding.

In addition, EPA has misconstrued Virginia’s argu-

ment regarding the economic impact of the highway

sanctions. EPA Br. at 27. Unlike Hodel v. Virginia Surface

Mining & Reclamation Association, 452 U.S. 264 (1981), the

impact from the sanctions would be felt by the States as

States: the States directly suffer an economic impact from

the loss of millions of federal dollars. Hodel is neither

relevant nor controlling here because it involved a claim

of an indirect economic impact on a State from a direct

impact on private entities within that State.

In response to the Commonwealth’s assertion that

the CAA’s civil and criminal enforcement authority in

§ 113 is an important component of the Act’s coercive

scheme, EPA addresses §§ 113(a){3) and (b) for the first

time. EPA Br. at 21 & n.15. Citing two decisions holding

that the CAA did not provide EPA with authority directly

to compel States to adopt certain CAA programs, EPA

claims that State implementation and/or enforcement of a

federal Title V permit program is not an “enforceable

‘requirement’ under Section 113.” But those cases - nei-

ther of which were decided on constitutional grounds -

were later vacated by the Supreme Court, in light of

EPA’s unwillingness to argue that it indeed had that

authority. EPA v. Brown, 431 U.S. 99 (1977). But, at EPA’s

urging, Congress subsequently amended the Act in 1977

expressly to ensure that EPA could use § 113 to require

States to implement federal programs. See Petitioners’

Reply Brief filed below, at 10-11.

Elsewhere EPA quotes from Pennsylvania v. EPA, 500

F.2d 246, 261 (3d Cir. 1974), to the effect that States “can

be required [by EPA] to take affirmative actions” to

address air pollution within their borders. EPA Br. at 24

n.17. The dispute in that case was whether EPA could

7

constitutionally apply § 113 enforcement mechanisms to

the State. After first reviewing the legislative history and

concluding that “Congress clearly contemplated that

states could be required to implement a transportation

control plan” (id. at 259), the Third Circuit held that the

Commerce Clause (and, implicitly, the Tenth Amend-

ment) did not prohibit EPA’s use of § 113 to “require the

Commonwealth to enforce [EPA’s] transportation control

plan.” Id. at 257. The 1977 amendments simply codify the

Third Circuit’s holding and overrule the two cases cited

by EPA.

Thus, EPA’s assurances regarding the use of § 113 to

coerce States into enforcing a federal regulatory program

ring hollow.

In opposing the Commonwealth’s Spending Clause

argument, EPA - like the Court of Appeals below — places

mistaken emphasis on a line of Spending Clause deci-

sions standing for the unremarkable and uncontested

proposition that Congress may condition the receipt of

federal grant funds on the recipient’s compliance with

federal directives. EPA Br. at 22-26 & n.16 (citing, e.g.,

Fullilove v. Klutznick, 448 U.S. 448 (1980)).” Instead, the

relevant cases here concern Congressional attempts to

deny federal funding to States unless they legislate,

implement, and enforce certain other public policy objec-

tives. See, e.g., South Dakota v. Dole, 483 U.S. 203 (1987)

(enacting mandatory drinking age requirement as a con-

dition on federal highway funds). In such cases, the

Court has expressed two primary concerns, both of which

are implicated here: First, there must be some reasonable

relationship between the condition imposed and the pur-

pose of the federal monies; and second, the result of non-

compliance cannot be so draconian as to leave States

without any real choice.

7 Virginia has challenged none of the CAA grant programs.

8

The issue here is whether the condition imposed by

the CAA - that States implement a Title V program for

stationary sources of air pollution - is reasonably related

to the purpose of highway construction. As the Com-

monwealth explained in its Petition at 27-30, there is no

reasonable relationship. Furthermore, the effect of high-

way construction on air quality is of no consequence to

this analysis: The Commonwealth has already explained,

in the Petition and in section III.A above, why its attempt

to minimize the coerciveness of the highway funding

sanction ultimately fails. And EPA never addresses how

the denial of such funds - even if reasonably related to

achieving Title V’s goals - is reasonably related to a

State’s adoption of a Title V permit program once a

federal program is imposed in that State (which presuma-

bly would satisfy Congress’ lawful objectives).°

8 EPA also misses the point in footnote 19 (EPA Br. at 25-26)

regarding the federal government's approval of state highway

construction projects. In deciding to fund state highway

construction projects, the federal government approves projects

only if it determines that they conform to federally approved

state air pollution control plans (called State Implementation

Plans (SIPs)), i.e., that they will not increase pollution beyond

that allowed in the SIPs. Thus, there is no need to withhold

federal funding to control air pollution because the conformity

process already deals with that issue. This is especially true

given that Title V operating permit programs are not SIPs and

they are not designed to impose additional limitations on

emissions (Petition at 28 n.15).

° EPA attempts to address this argument in the context of

the Tenth Amendment claim, but ends up simply agreeing with

the Commonwealth’s assertion that the only remaining purpose

for the continuation of these sanctions is to force the States to

take over for EPA by adopting their own State program. To the

extent EPA argues that continuation of sanctions is necessary to

ensure State “cooperation” in implementing a federal program,

they ignore the essential point that, under the statutory scheme,

no amount of cooperation — except for adoption of a State plan -

would end the imposition of sanctions on that State.

9

Thus, this Petition raises a novel issue not addressed

by Dole or, as far as can be determined, any subsequent

cases. In Dole, Congress used its authority under the

Spending Clause to implement a public policy it did not

have the authority to implement directly. But here, there

is no doubt Congress could impose a federal permit pro-

gram identical to a state Title V program. This Court must

now decide whether Congress can use its Spending

Clause power to coerce States into regulating on its

behalf. Dole, in light of New York v. United States, 505 U.S.

144 (1992), must be read to proscribe these coercive sanc-

tions. 1°

IV.

CONCLUSION

This case presents a question of critical national

importance: whether Congress, frustrated by the nature

and pace of air quality improvements, can force the States

to implement a burdensome federal program under pain

of severe and disproportional sanctions that remain in

place until the States comply. The severity of the sanc-

tions and other enforcement measures makes it indisputa-

ble that Congress designed the challenged statutory

scheme to ensure that States, not EPA, run the federal

10 EPA also misconstrues the Commonwealth's argument

regarding the offset sanction. At page 27 of its Brief, EPA

incorrectly analyzes the offset sanction under Dole and the

Spending Clause. As the Commonwealth explained, the offset

sanction violates the Tenth Amendment (not the Spending

Clause) because, in concert with the other components of the

challenged statutory scheme, its overriding and unlawful

purpose is to coerce States into compliance, thus magnifying the

pressure on those States. Petition at 21. Furthermore, EPA

ignores the critical fact that it is the Commonwealth - not EPA -

who must impose the offset sanction on regulated entities

seeking construction permits. Petition at 5 n.2.

10

program. The sanctions go beyond inducement, and pun-

ish States rather than improve air quality. This Court

must decide whether Congress can simply avoid the cost

and inconvenience of establishing another federal pro-

gram by forcing States to become mere instrumentalities

of the federal government.

James S. Gr_more, III

Attorney General of Virginia

Davip E. ANDERSON

Chief Deputy Attorney

General

JoHN Paut Woop ey, Jr.

Deputy Attorney General

Rocer L. CHAFFE

Senior Asst. Attorney

General

Mary Jo LeuGERs

Assistant Attorney General

(Counsel of Record)

900 East Main Street

Richmond, Virginia 23219

(804) 786-6957

Respectfully submitted,

COMMONWEALTH OF

VIRGINIA

JouN P. Scumitz, Esquire

Grecory S. WALDEN, Esquire

THomas DtLence, Esquire

Mayer, Brown & Ptatt

2000 Pennsylvania

Avenue, N.W.

Suite 6500

Washington, D.C. 20006-1882

(202) 463-2000

Of Counsel