Opposition Brief — Hoechst Celanese Corp. v. United States

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Supreme Court, U.S. |

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e MAY 26 1998

No. 97-1578 : ERK

In the Supreme Court of the Giuted States

OCTOBER TERM, 1997

HOECHST CELANESE CORPORATION, PETITIONER

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

SETH P. WAXMAN

Solicitor General

Counsel of Record

LoIs J. SCHIFFER

Assistant Attorney General

JOHN A. BRYSON

DAVID C. SHILTON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

Pursuant to Section 112 of the Clean Air Act, 42

U.S.C. 7412, the Environmental Protection Agency

(EPA) promulgated requirements for preventing

leaks of benzene from equipment, but exempted equip-

ment at plants “designed to produce or use less than

1,000 megagrams of benzene per year.” 40 C.F.R.

61.110(c)(2). Under EPA’s interpretation of “use,”

which includes all benzene employed in a process in-

cluding recycled benzene, petitioner’s Celriver Plant

is not entitled to the exemption. The court of appeals

held that EPA could seek civil penalties from peti-

tioner for its noncompliance with the regulatory re-

quirements for the period after petitioner received

direct notice of EPA’s regulatory interpretation, and

remanded for a determination of possible penalties.

The questions presented are:

1. Whether the court of appeals properly upheld

EPA’s interpretation of “use.”

2. Whether the court of appeals properly held that

petitioner was not entitled to a two-year waiver of the

requirements after the company received notice of

EPA’s regulatory interpretation.

(I)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Arkansas v. Oklahoma, 503 U.S. 91 (1992) ............ 11

Auer v. Robbins, 117 S. Ct. 905 (1997) .................... 11

Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

| ONSET ERS RE eR ar oe EES ERC RT TRE TOR ORO 10

Pauley v. BethEnergy Mines, Inc., 501 U.S. 680

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Thomas Jefferson Univ. v. Shalala, 512 U.S. 504

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Statutes and regulations:

Clean Air Act, Pub. L. No. 84-159, 69 Stat. 322,

42 U.S.C. 7401 et seq.:

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Clean Air Amendments of 1970, Pub. L. No. 91-604,

84 Stat. 1684-1685:

§ 111(b)(1)(A), 42 U.S.C. 7411(b)(1)(A) (1988)..... 2

§ 112(b)(1), 42 U.S.C. 7412(b)(1) (1988) 2.0.00... 2

§ 112(b)(1)(B)-(C), 42 U.S.C. 7412(b)(1)(B)-(C)

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§ 112(c)(1)(B)Gi), 42 U.S.C. 7412(¢)(1)(B)(ii)

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IV

Statutes and regulations—Continued:

Clean Air Act Amendments of 1977, Pub. L. No.

95-95, § 112(e), 91 Stat. 703, 42 U.S.C. 7412(e)

Ss RRR Nae aper eS Sty et sein Carus SRST Ch HES Ry MEE ee

Health Services Research, Health Statistics, and

Health Care Technology Act of 1978, Pub. L. No.

95-6238, § 112(e)(5), 92 Stat. 3458, 42 U.S.C. 7412(e)(5)

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40 C.F.R. 919:

Subpt. A (Sections 61.01-61.19):

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Subpt. J (Sections 61.110-61.112):

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Subpt. V (Sections 61.240-61.247) .............ccccccseesesees

Miscellaneous:

42 Fed. Reg. 29,332-29,333 (1977) ........ccscccccseccsscesesess

49 Fed. Reg. (1984):

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Black’s Law Dictionary (6th ed. 1990) ................0008

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In the Supreme Court of the Gnited States

OCTOBER TERM, 1997

No. 97-1578

HOECHST CELANESE CORPORATION, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

33a) is reported at 128 F.3d 216. The opinion of the

district court (Pet. App. 34a-72a) is reported at 964 F.

Supp. 967.

JURISDICTION

The judgment of the court of appeals was entered on

October 27, 1997. A petition for rehearing was denied

on December 23, 1997 (Pet. App. 74a-75a). The peti-

tion for a writ of certiorari was filed on March 23,

1998. The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

STATEMENT

1, The Clean Air Act (Act) authorizes the Envi-

ronmental Protection Agency (EPA) to identify haz-

ardous air pollutants and their sources, and to prom-

(1)

RRL a ee ee vn ee

ulgate emission controls for those sources.' Prior to

1990, Section 112(b)(1)(B) and (C) of the Act (42 U.S.C.

7412(b)(1)(B) & (C) (1988)) instructed EPA to set Na-

tional Emission Standards for Hazardous Air Pollut-

ants (NESHAPs) “at the level which in [the Admin-

istrator’s] judgment provides an ample margin of

safety to protect the public health from such haz-

ardous air pollutant,” and specified that such stan-

dards “shall become effective upon promulgation.”

Pet. App. 78a.

EPA listed benzene as a hazardous air pollutant in

1977, based on evidence that benzene is a human

carcinogen. 42 Fed. Reg. 29,332-29,333. EPA promul-

gated the final NESHAP for benzene equipment leaks

on June 6, 1984. 49 Fed. Reg. 23,479 (Pet. App. 85a).

The Benzene Leaks NESHAP applies to specified

equipment, such as pumps, valves, and flanges (40

C.F.R. 61.110(a)), and requires regular monitoring

and maintenance of leaking equipment, installation of

equipment designed to reduce emissions, record

keeping and reporting (40 C.F.R. 61.112(a), 61.240-

61.247 (Subpt. V)). Violators of the regulations are

subject to civil penalties pursuant to Section 113(b) of

the Act (42 U.S.C. 7413(b)).

The dispute in this case concerns 40 C.F.R.

61.110(c)(2), which provides that “equipment in ben-

zene service that is located at a plant site designed to

produce or use less than 1,000 megagrams of ben-

1 Clean Air Amendments of 1970, Pub. L. No. 91-604, §§

111(b)(1)(A), 112(b)), 84 Stat. 1684-1685; Clean Air Act

Amendments of 1977, Pub. L. No. 95-95, § 112(e), 91 Stat. 703;

Health Services Research, Health Statistics, and Health Care

Technology Act of 1978, Pub. L. No. 95-623, § 112(e)(5), 92 Stat.

3458 (currently codified at 42 U.S.C. 7411-7412). Section 112

before the 1990 amendments is reproduced at Pet. App. 77a.

zene per year is exempt from the requirements of

§ 61.112.” Pet. App. 124a.° Thus, an exempted plant

does not have to follow the equipment and monitoring

requirements imposed by Section 61.112 and Subpart

V, though other requirements, such as reporting, re-

main applicable. 40 C.F.R. 61.10(a), 61.110(¢)(1). EPA

explained this exemption in a section of the preamble

to the final rule entitled “[iJmpacts on smal] plants.”

49 Fed. Reg. 23,510 (1984); Pet. App. 112a. The ex-

emption reflected EPA’s conclusion that the benefits

achievable by regulating small volume users such as

“research facilities, pilot plants, and intermittent

users of benzene” did not justify the costs of compli-

ance. Id. at 113a. The preamble referenced a “Back-

ground Information Document” which found that a

plant with a design production capacity of about 1000

megagrams per year would typically contain around

87 pieces of equipment in benzene service and would

be expected to emit only about six megagrams of

benzene per year. Jd. at 8a-9a. Applying the proposed

regulations to such a small plant would result in a

reduction of only four megagrams per year, which

was not considered cost effective. Jd. at 9a. The rule

became effective June 6, 1984. Jd. at 85a.

2. This case concerns the Celriver plant owned by

petitioner Hoechst Celanese Corporation in Rock

Hill, South Carolina. During the period at issue, Cel-

river used benzene to cool hot ketene gases and to

help separate water and other compounds from acetic

anhydride and acetic acid; after each use, the benzene

was cooled, purified and reused in these processes.

Pet. App. 4a-5a. Because petitioner never applied for

an exemption for Celriver or filed reports as to its

2 A megagram equals about 2200 pounds. Pet. App. 4a n.1.

ee

benzene usage, EPA did not become aware until 1989

that this plant was not complying with the ben-

zene leak regulations and was emitting substantial

amounts of fugitive benzene. Jd. at 5a. While Celriver

had nearly 17,000 individual sources of benzene leaks

and was one of the largest sources of fugitive benzene

emissions in the nation at that time (id. at Qa),

petitioner claimed that it believed the plant was

exempt because it “consum[ed]” less than 1,000 mega-

grams of benzene yearly. Jd. at 5a.

EPA issued a notice of violation for Celriver on

February 20, 1990. In April 1990, petitioner submitted

a plan to bring Celriver into compliance with the

regulations (Pet. App. 21a), and eventually achieved

compliance in August 1992. Jd. at 26a.

3. The United States brought this action in July

1992, seeking civil penalties against petitioner for the

period between 1984 and 1992 when Celriver was not

in compliance with the regulations. The parties filed

motions for summary judgment on the issue of liabil-

ity. The district court sustained EPA’s interpreta-

tion that “use” for purposes of the exemption provi-

sion included the total amount of benzene utilized or

employed in a process, including recycled benzene.

Pet. App. 38a-52a. However, the district court found

that EPA did not provide petitioner with fair notice of

this interpretation, even after EPA’s Region 4, which

has jurisdiction over Célriver, informed petitioner by

letter dated June 13, 1989, that when benzene is recy-

cled, “‘use’ for purposes of the exemption must be cal-

culated on the basis ‘of total cumulative flow through

the process rather than net benzene consumption or

usage.’” Jd. at 20a. Region 4 reiterated this position

in August 1989, in a letter that set out an example of

how petitioner should calculate the amount of benzene

ae See mM MR or Senna ARN NT eM TEEN ro PP

“useld]” for purposes of the exemption (id. at 21a), and

in September 1989 petitioner carried out the re-

quested calculation and determined that its annual

use of benzene far exceeded the threshold for the ex-

emption. Jbid. The district court nevertheless con-

cluded that petitioner still did not receive fair notice

because petitioner allegedly had a “legitimate basis

for believing” that the letters from Region 4 did not

“speak[]| for the Administrator” of EPA. Jd. at 68a.

The district court also concluded that petitioner

should not be liable for penalties because EPA did not

object to a compliance plan submitted by petitioner in

1990 and because petitioner purportedly would have

been entitled to a two-year waiver if it had applied for

such a waiver. Jd. at 69a-70a.

On cross-appeals, the court of appeals first upheld

the district court’s ruling that EPA’s interpretation

of the exemption provision was entitled to deference.

The court found that EPA’s interpretation is in

accord with the ordinary meaning of the word “use,”

and consistent with both the overall purposes of the

statute and the stated purpose of the provision to

exempt only small plants from the leak detection and

repair requirements. Pet App. 7a-10a. The court of

appeals upheld the district court’s ruling that peti-

tioner did not have fair notice of EPA’s interpretation

for the period before the 1989 letters to petitioner

from Region 4. Critical in this regard was the fact

that the Texas Air Control Board, which had been

delegated authority to administer the NESHAP pro-

gram in that State, applied the exemption provision to

petitioner’s plants in Texas in a manner that could

have led petitioner to believe that petitioner’s inter-

pretation was accurate. Jd. at 16a-18a.

6

“he court of appeals reversed the district court’s

holding that the 1989 letters from Region 4 regarding

Celriver did not provide adequate notice of how EPA

interpreted the exemption. The majority found that

Region 4’s letters provided petitioner with direct

notice of EPA’s interpretation, and cited minutes of a

meeting of senior Celriver officials showing that they

understood EPA’s interpretation. Pet. App. 20a-21a.

The majority found that the regulations required

compliance within 90 days, unless EPA issued a

discretionary waiver, and rejected petitioner’s argu-

ment that it should presume that a waiver would have

been granted if it had been sought. Jd. at 26a. The

court ruled that petitioner’s efforts in achieving

compliance, while not relevant to liability, could be

considered in determining “if, and in what amount,

penalties should be imposed for the post-August 1989

violations of [petitioner’s] Celriver plant.” Jd. at 25a,

27a.’ Petitioner’s petition for rehearing and sugges-

tion for rehearing en banc was denied on December

23,1997. Id. at 74a-75a.

ARGUMENT

The court of appeals’ decision is correct and does

not conflict with any decision of this Court or with

any decision of another court of appeals. Accordingly,

further review is not warranted.

1. Petitioner first argues (Pet. 9-18) that the court

of appeals misapplied this Court’s decisions on the

proper scope of deference to agency interpretations of

* Judge Niemeyer, dissenting from the judgment insofar as

it found that petitioner could be liable for penalties after

August 1989, found that Region 4’s letters did not “constitute a

definitive agency-wide EPA notice such that penalties could be

imposed” (Pet. App. 33a).

7

their own regulations. Alternatively, petitioner sug-

gests (Pet. 22-23) that this Court should “abandon the

‘deference’ principle and direct the reviewing court to

determine the single correct meaning of the [regu-

lation].” Neither claim has merit.

a. Petitioner’s first argument is based on a misin-

terpretation of the decision below. The court of ap-

peals did not defer to EPA’s interpretation of the

exemption provision “as a matter of course” (Pet. 10),

or on the sole basis that the interpretation was “not

‘nonsensical’” (Pet. 9, quoting Pet. App. 8a). The

court analyzed the language and purpose of the regu-

latory provision and the statute, and concluded that

EPA’s interpretation in this case is consistent with

both. The court found EPA’s interpretation of “use”

to be “consistent with the ordinary meaning” of that

term, that is “to make use of, to employ” (Pet. App. 7a,

quoting Black’s Law Dictionary 1541 (6th ed. 1990)).

The court found that “EPA’s interpretation of its own

regulatory exemption harmonizes with the purpose of

the authorizing statute,” which is to achieve “the

maximum degree in reduction in emissions of the

hazardous air pollutants” subject to the Clean Air

Act (Pet. App. 8a, quoting 42 U.S.C. 7412(d)(2)). The

court then found that “EPA’s interpretation of its

exemption accords with the purpose of the exemption

itself” which was to exclude only small plants from

the leak-prevention requirements (Pet. App. 8a-9a).

Petitioner thus errs in arguing (Pet. i, 8, 9-13, 23)

that the sole test the court of appeals applied was

whether the agency’s interpretation was not

“nonsensical.” The court used that phrase in the

course of explaining why EPA’s interpretation har-

monized with the statute. Pet. App. 8a. But the main

thrust of the decision below is that “EPA’s inter-

ES ee a CR RL Te een Ee

8

pretation accords with the plain language of the

NESHAP, as well as the purposes of the Clean Air

Act and of the exemption itself.” Jd. at 10a. Peti-

tioner’s warning (Pet. 22) that “the prospect that

EPA should be able to read a rule any way EPA

pleases so long as that reading is not ‘nonsensical’

should ring alarm bells in the judiciary,” is, accord-

ingly, a false alarm.*

Arguing against a straw man, petitioner fails to

come to grips with the actual reasoning of the court

below. Petitioner instead urges (Pet. 15) that “it is

not appropriate for federal courts to defer to agency

interpretations that defy the very language of a

* Amici American Automobile Manufacturers Ass’n, et al.

similarly misread the majority opinion as concluding that an

agency regional office can establish a binding interpretation of

a regulation “notwithstanding that other regions have adopted

contrary interpretations.” Br. 6. In fact, the majority did not

accept petitioner’s allegations that Region 4’s interpretation

was contrary to that of other EPA regional offices. It simply

noted that petitioner had presented no evidence that it knew of

or relied on any “asserted contrary interpretation of ‘use’ by

other EPA offices or state agencies.” Pet. App. 23a (emphasis

added). While petitioner claimed that EPA Region 6 had ap-

proved an interpretation contrary to that of Region 4, the

evidence consisted, at most, only of acquiescence by Region 6 in

the Texas Air Control Board’s largely unexplained grant of

exemptions to two plants. Jd. at 56a-57a. That acquiescence

hardly amounted to a contrary interpretation. In any event, it

was Region 4’s interpretation that followed the consistent |

guidance provided by EPA headquarters that “use” meant

“processing rates rather than net consumption.” Jd. at 1la-12a

(quoting October 5, 1984 EPA letter). Contrary to amici’s

claim (Br. 10), Region 4’s interpretation was “authoritative”

because it was clearly explained and consistent with the rule-

making itself and with EPA headquarters’ interpretations

thereof. Pet. App. 7a-12a.

9

published rule,” ignoring the ruling below that EPA’s

interpretation is in fact consistent with the plain

language of the regulation. Pet. App. 7a. Petitioner

nowhere explains why the phrase “designed to* * *

use” (id. at 124a, quoting 40 C.F.R. 61.110(c)(2)) must

mean only “designed to consume” and cannot, as the

court of appeals found, mean designed to “utiliz[e]” or

“employ[].” Jd. at lla. Nor does petitioner suggest

how limiting “use” to “consumption” can be recon-

ciled with the statute, since that interpretation would

allow plants that are designed to re-use benzene to

escape regulation, even though (as was the case with

the Celriver Plant) they represent some of the

largest sources of benzene leaks. See id. at 5a.

Petitioner similarly fails to deal with the court of

appeals’ analysis of the preamble to the regulation and

the rulemaking record, which showed that the

exemption was intended to apply to a “small plant”

(id. at 8a, quoting 49 Fed. Reg. 23,510 (1984)) which

emits about six megagrams of fugitive benzene per

year, not a huge plant like Celriver with annual

emissions reaching 226 megagrams per year. /d. at 9a.

As the court’s analysis of the preamble and rule-

making record indicates, petitioner’s charge (Pet. 14)

that “agency staffers change[d] their minds about

what they wish[{ed] the law to be” is incorrect; the

exemption was never intended to limit “use” to “con-

sumption” so as to exempt a facility like Celriver.’ In

® Similarly, since an interpretation that counts all benzene

utilized in a process, including recycled benzene, as “used” is

consistent with the language and purpose of the rule, there was

no need for a new rulemaking, and (contrary to petitioner’s

submission at Pet. 17 & n.16) no inconsistency with the

directive of Section 301(a) of the Clean Air Act, 42 U.S.C.

re

10

sum, the decision below rests not on an unthinking

deference to any agency construction that is not non-

sensical, but on a careful and considered application of

this Court’s oft-stated rule that an agency’s inter-

pretation of its own regulations should be sustained

unless “plainly erroneous or inconsistent” with the

regulation. Thomas Jefferson Univ. v. Shalala, 512

U.S. 504, 512 (1994); see also Bowles v. Seminole Rock

& Sand Co., 325 U.S. 410, 414 (1945).

b. Petitioner seeks to overturn decades of this

Court’s rulings on deference by urging that “defer-

ence is not appropriate where an agency’s post-

promulgation interpretation of a regulation is con-

cerned,” and that courts should determine which is

the “single correct” or “best” interpretation of a

regulation without deferring to the interpretation of

the agency. Pet. 22-23. However, this Court has

7601(a); Pet. App. 84a, that the Administrator may delegate his

powers and duties “except the making of regulations.”

Petitioner’s complaints of a “secret interpretation” of the

regulations (Pet. i), and of interpretations that “were pre-

sented, for the first time, in the government’s briefs” (Pet. 17

n.15), were also properly rejected by the court of appeals. The

court pointed to numerous instances where sources contacted

EPA regarding their eligibility for an exemption and were

explicitly informed that “the 1,000 megagrams per year cut off

limit is applicable to total processing rates, rather than net

consumption (usage) or net production.” Pet. App. lla-

12a (quoting EPA responses to letters from companies). Thus,

the interpretation was hardly “secret.” Moreover, petitioner

found out only a few months after the regulations had been

promulgated that EPA had rejected the use-equals-consump-

tion interpretation in responding to an inquiry from a Texaco

facility. Jd. at 16a. Indeed, petitioner no longer disputes that

it received direct notice of this interpretation in the summer of

1989. See Pet. 25-26.

11

recently reaffirmed the doctrine of deference to

agency interpretations of regulations, Auer v. Rob-

bins, 117 S.Ct. 905, 911 (1997), and has consistently

rejected attempts by courts to substitute their own

view of the “best” interpretation of agency regu-

lations. E.g., Arkansas v. Oklahoma, 503 U.S. 91, 112

(1992).

This Court has explained that deference is particu-

larly warranted when a regulation concerns “a com-

plex and highly technical regulatory program,” in

which applications of the regulation “necessarily re-

quire significant expertise and entail the exercise of

judgment grounded in policy concerns.” Pauley v.

BethEnergy Mines, Inc., 501 U.S. 680, 697 (1991).

That is precisely the situation here, where determin-

ing the appropriate scope of an exemption to leak-

prevention rules applicable to a great variety of manu-

facturing operations requires significant technical

expertise joined with an appreciation of the statutory

policy. See Pet. App. 39a (“A court’s review of regu-

lations under Section 112 of the Clean Air Act * * *

is particularly limited because of the broad discretion

Congress gave EPA to control hazardous air pollut-

ants. * * * This court treads lightly when constru-

ing the scope of an exemption that allows a source of

hazardous air pollutants to go unregulated.”). Peti-

tioner provides no convincing reason for the radical

departure it advocates from existing precedent—a

departure that would encourage litigation and prolong

uncertainty concerning the meaning of regulations.

2. Petitioner does not take issue with the court of

appeals’ rulings that the company received actual

notice of EPA’s interpretation of the exemption in the

summer of 1989 (Pet. App. 24a), and that the Celriver

Plant continued to violate the regulations at least

SEee ea eee ee

12

until August 1992. Jd. at 26a. Instead, petitioner

maintains (Pet. 25-26) that the court of appeals should

not have remanded for a determination of possible

penalties because the company allegedly was entitled

to a waiver of the leak-prevention requirements for

two years after receiving EPA’s letters in the sum-

mer of 1989.

Petitioner does not suggest that the court of ap-

peals’ rejection of its waiver theory conflicts with any

decision of this Court or any lower court. Moreover,

the ruling below (Pet. App. 26a) is plainly correct.

Contrary to petitioner’s assumption (Pet. 25), a

waiver would not have been automatic. Section 112(c)

(1)(B)@i) of the Act (42 U.S.C. 7412(c)(1)(B)Gi) (1988)),

provided that “the Administrator may grant a waiver

permitting such source a period of up to two years

after the effective date of a standard to comply,” but

only “if he finds that such period is necessary for the

installation of controls and that steps will be taken

during the period of the waiver to assure that the

health of persons will be protected from imminent

endangerment.” Pet. App. 78a-79a (emphasis added).*

Petitioner’s argument (Pet. 25 n. 21) that EPA “must

grant a waiver when a source makes a showing that

satisfies the statutory test,” overlooks the dis-

cretionary language of the provision.

In any event, petitioner has made no showing that

the requirements for a waiver were met for Celriver.

° EPA’s implementing regulations provide that “the Admin-

istrator may grant a waiver of compliance with a standard for

a period not exceeding 2 years” and set out in detail the re-

quirements for a waiver application, including a description of

controls, compliance schedules, and interim emission control

steps to be taken during the waiver period. 40 C.F.R. 61.11.

13

Petitioner suggests (Pet. 25 n. 21) that since its

Pampa, Texas, facility was granted a waiver by the

Texas Air Control Board in 1985, the Celriver Plant

would have qualified for one as well. However, peti-

tioner does not explain why the public health and

technological feasibility criteria that govern waivers

would apply in exactly the same way at two different

plants in different States during different time peri-

ods. Had EPA been presented with a waiver applica-

tion for the South Carolina plant, it would not have

been bound by the waiver determination made by the

Texas agency.

In sum, petitioner has failed to show any error in

the court of appeals’ holding that it was not required

to assume that petitioner was entitled to a two-year

waiver of the benzene leak requirements after it

received actual notice of EPA’s interpretation of the

exemption provision.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

SETH P. WAXMAN

Solicitor General

LOIS J. SCHIFFER

Assistant Attorney General

JOHN A. BRYSON

DAVID C. SHILTON

Attorneys

MAY 1998