Amicus Curiae Brief — Hoechst Celanese Corp. v. United States

pupreme Court, U.S.

Zi£ ED

No. 97-1578 ' APR 22 1996

In THE

Supreme Court of the United States

OCTOBER TERM, 1997

HoECHST CELANESE CORPORATION,

‘ Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF AMICI CURIAE OF

AMERICAN AUTOMOBILE

MANUFACTURERS ASSOCIATION,

AMERICAN FIBER MANUFACTURERS ASSOCIATION,

AMERICAN PETROLEUM INSTITUTE,

CHEMICAL MANUFACTURERS ASSOCIATION,

CORPORATE ENVIRONMENTAL

ENFORCEMENT COUNCIL,

NATIONAL ASSOCIATION OF MANUFACTURERS,

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA AND

TEXAS CHEMICAL COUNCIL

IN SUPPORT OF PETITIONER

PAUL G. WALLACH

Counsel of Record

WENDY E. ANDERSON

JAMES G. VOTAW

HALE AND Dorr LLP

1455 Pennsylvania Ave., N.W.

Washington, D.C. 20004

(202) 942-8400

April 22, 1998 Counsel for Amici Curiae

(Additional Counsel listed on inside cover)

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

DAvip F. ZOLL

Vice President and

General Counsel

JAMES W. CONRAD, JR.

Managing Counsel

CHEMICAL MANUFACTURERS

ASSOCIATION

1300 Wilson Boulevard

Arlington, VA 22209 y

(703) 741-5000

JAN S. AMUNDSON

General Counsel

QUENTIN RIEGEL

Deputy General Counsel

NATIONAL ASSOCIATION OF

MANUFACTURES

1331 Pennsylvania Ave., N.W.

Sixth Floor

Washington, D.C. 20004

(202) 637-3000

RUSSEL A. BANTHAM

Senior Vice President and

General Counsel

MARJORIE E. POWELL

Assistant General Counsel

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA

1100 15th Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 835-3400

G. WILLIAM FRICK

Vice President, General Counsel '

and Secretary

ALICE M. CROWE :

Senior Attorney i

AMERICAN PETROLEUM INSTITUTE

1220 L Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 682-8000

DONALD GREELEY

General Counsel

AMERICAN FIBER

MANUFACTURERS ASSOCIATION

1150 17th Street, N.W.

Suite 310

Washington, D.C. 20036

(202) 296-6508

JULIE C. BECKER

Senior Attorney

AMERICAN AUTOMOBILE

MANUFACTURERS ASSOCIATION

1401 H Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 326-5511

TABLE OF CONTENTS

Page

Ramee OR RUT sone ce ii

INTEREST OF AMICI CURIAE .00uo.--..occcececcccccsces... 1

SUMMARY OF ARGUMENT 4

it 8 pm R ASHEN DRO I leh Ue OR Stier a? AT eae 6

I. THE FOURTH CIRCUIT’S DECISION CRE-

ATES TREMENDOUS UNCERTAINTY IN

THE REGULATED COMMUNITY, UPSETS

THE UNIFORM ADMINISTRATION OF FED-

ERAL REGULATORY PROGRAMS, AND

LEADS TO CONFLICTS AMONG AND

WITHIN THE CIRCUIT COURTS OF AP-

| te OES SAAC ELS Mes Se ST Oe 6

If. THE FOURTH CIRCUIT’S DEFERENCE TO

AN EPA REGIONAL OFFICE REGULATORY

INTERPRETATION CANNOT BE RECON-

CILED WITH THE DECISIONS OF THIS

5 MERE EO RRO IA EURO ke SRE Os BOD AOEM 8

A. The Interpretation Was Not Authoritative

Because It Was Not Consistently Applied By

I ee 11

B. The Interpretation Was Not Authoritative

Because It Was Neither Published Nor

Widely Disseminated By The Agency 13

Ill, THE FOURTH CIRCUIT’S DECISION NULLI-

FIES IMPORTANT CONSTITUTIONAL DUE

PROCESS PROTECTIONS 14

A. The Fourth Circuit Erred In Concluding

That Conflicting Agency Interpretations Of

A Regulation Provide Fair Notice... 14

B. The Fourth Circuit’s Ruling Denies Peti-

tioner A Reasonable Opportunity To Comply.. 16

SOE IIR Sis onet . assseroisinuiaininn Ge ie 18

ii

TABLE OF AUTHORITIES

FEDERAL CASES Page

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204

SEED sticks hctsientcsnsscniesienscihcsek etic tiaeicbaeie ibis saadadicecee ei 10

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

CD aa i cnsinttianinenincenniciinlintaiiecaa tent et 9, 10, 12, 13

Contractors Transport Corp. v. United States, 537

Fe 22. C0 Ee, TOE Se a §

Director, Office of Workers’ Compensation Pro-

grams v. Mangifest, 826 F.2d 1318 (3d Cir.

ED csr ciechccsncasiasnidenbadtnignlvicodehaa tithe te een aaa 13

Federal Labor Relations Auth. v. United States

Dept. of Navy, 966 F.2d 747 (3d Cir. 1992) ........ 13

Ford Motor Credit Co. v. Milhollin, 444 U.S. 555

AED onics-sacntensbiccesnaiutaie- eintlansanidpcumiaaa taille he en! 8, 9,13

General Electric Co. v. EPA, 58 F.3d 1324 (D.C.

gs: |. Sekine ER Re erates So a! os SaaS D 16

Grayned v. City of Rockford, 408 U.S. 104 (1972).. 16

Homemakers North Shore, Inc. v. Bowen, 832 F.2d

GOS Cyan CRE Se he 7,8,13

Martin v. Occupational Health & Safety Comm’n,

GP ST FR teint pitches ae 8,9

McElroy Electronics Corp. v. FCC, 990 F.2d 1351

tage + A: Baba eh aries Minotvek ne: SAO ee ah eae 17

Miner v. FCC, 663 F.2d 152 (D.C. Cir. 1980) ........ 7

Morton v. Ruiz, 415 U.S. 199 (1974) -.....0. 13

Mullins Coal Co., Inc. v. Director, Office of Work-

ers’ Compensation Programs, 484 U.S. 135

CROW) iii Oe Ses Bie ere 9

National Family Planning and Reproductive Health

Ass’n v. Sullivan, 979 F.2d 227 (D.C. Cir. 1992) .. 14

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

PUNE wince sass sepcbdccan tnmsanticsis Nia ean cbdmsidinieg aie Naneeta a 9

Rollins Envtl. Serv. (NJ), Inc. v. EPA, 987 F.2d

COP Ca Cie SI ak ee a 15

Satellite Broadcasting Co. v. FCC, 824 F.2d 1 (D.C.

ee nc 17

Thomas Jefferson University v. Shalala, 114 S.Ct.

IE ED goes hen ass hcsisch oceptarnceedlaas ckdobdccendaetios 9

Udall v. Tallman, 380 U.S. 1 (1965) -.....0...2....... 9,13

:

i

i

:

i

.

i

;

iii

TABLE OF AUTHORITIES—Continued

Page

United States v. Trident Seafoods Corp., 60 F.3d

I I 13

Western States Petroleum Ass’n v. EPA, 87 F.3d

I i 8 7

FEDERAL ADMINISTRATIVE DECISIONS

CWM Chemical Serv., Inc., TSCA Appeal No. 93-1,

6 E.A.D. 1 (E.A.B. May 15, 1995) 10

FEDERAL STATUTES AND REGULATIONS

Clean Air Act, 42 U.S.C. § 7401, et seg... 7

eee ee ees Ce 16

Oe re 17

Ur ae eee) 1) 6

FEDERAL LEGISLATIVE MATERIALS

H.R. Conf. Rep. No. 91-1783, reprinted in 1970

Wat sly Bete (1970) 17

LAW REVIEWS

Manning, J., Constitutional Structure and Judicial

Deference To Agency Interpretations of Agency

Rules, 96 Colum. L. Rev. 612 (April 1996) _......... 13

vio aback ann ARONA RTL OED Se

IN THE

Supreme Court of the United States

OcTOBER TERM, 1997

No. 97-1578

HoEcHST CELANESE CORPORATION,

. Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF AMICI CURIAE OF

AMERICAN AUTOMOBILE

MANUFACTURERS ASSOCIATION,

AMERICAN FIBER MANUFACTURERS ASSOCIATION,

AMERICAN PETROLEUM INSTITUTE,

CHEMICAL MANUFACTURERS ASSOCIATION,

CORPORATE ENVIRONMENTAL

ENFORCEMENT COUNCIL,

NATIONAL ASSOCIATION OF MANUFACTURERS,

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA AND

TEXAS CHEMICAL COUNCIL

IN SUPPORT OF PETITIONER

INTEREST OF AMICI CURIAE '

The American Automobile Manufacturers Association

(“AAMA”), American Fiber Manufacturers Association

1 This brief is filed with the written consent of the parties, pur-

suant to Rule 37.2(a) of the Rules of this Court. Letters of consent

are on file with the Clerk of the Court. Pursuant to Rule 37.6,

eT

2

(“AFMA”), American Petroleum Institute (“API”), Chem-

ical Manufacturers Association (“CMA”), Corporate En-

vironmental Enforcement Council (“CEEC”), National

Association of Manufacturers (“NAM”), Pharmaceutical

Research and Manufacturers of America (“PhRMA”)

and Texas Chemical Council (“TCC”) file this brief as

amici curiae in support of Hoechst Celanese Corporation’s

(“HCC”) Petition for A Writ of Certiorari to review the

judgment of the United States Court of Appeals for the

Fourth Circuit.

AAMA is the trade association comprised of the major

United States-based automobile manufacturing companies

— Chrysler Corporation, Ford Motor Company and Gen-

eral Motors Corporation. AAMA’s member companies

own and operate 276 assembly and component manufac-

turing facilities nationally.

AFMaA represents U.S. companies that manufacture and

sell synthetic and cellulosic fibers. AFMA member com-

panies produce more than 90% of the total U.S. output

of these fibers.

API is a national trade association representing moré

than 400 member companies involved in all aspects of the

oil and gas industry, including exploration, production,

refining, transportation, distribution and marketing of pe-

troleum and petroleum products.

CMA is a non-profit trade association whose member

companies represent more than 90% of the productive

capacity for basic industrial chemicals in the United

States. Many CMA members, including HCC, are subject

to the benzene NESHAP at issue in this case,

Amici state that this brief was authored in its entirety by counsel

for Amici. Amici CMA, CEEC, NAM and PhRMA also participated

as amici curiae in the proceedings before the Fourth Circuit Court

of Appeals.

3

CEEC is a nonprofit organization of 18 diverse com-

panies with strong environmental programs and commit-

ments. CEEC focuses exclusively on environmental en-

forcement policy issues, in an attempt to ensure that en-

vironmental enforcement is consistent with and advances

the goal of our environmental laws.

The NAM is the nation’s oldest and largest broad-based

industrial trade association. Its nearly 14,000 member

companies and subsidiaries, including 10,000 small manu-

facturers, employ approximately 85% of all manufac-

turing workers and produce over 80% of the nation’s

manufactured goods. More than 158,000 additional busi-

nesses are affiliated with the NAM through its Associa-

tions Council and National Industrial Council.

PhRMA represents the country’s leading research-based

pharmaceutical and biotechnology companies. Central to

PhRMA’s purposes as an organization is the representa-

tion and protection of the interests of companies that dis-

cover, develop, and bring prescription drugs to market.

This industry depends on the ability to rapidly adapt pro-

duction to introduce new, life-saving medicines to meet

the demand for these drugs.

TCC is a non-profit association representing chemical

manufacturers in the State of Texas. Its 97 member com-

panies represent about 25% of the State’s manufacturine

economy. TCC members have over $40 billion invested

in Texas facilities and result in the employment of over

450,000 Texans with a total annual payroll of over $15

billion. As a trade association in a state that had cor-

responded with EPA on this subject, TCC is vitally inter-

ested in the outcome of this action.

All of Amici’s members are heavily regulated by EPA

and other agencies, and are committed to complying with

the law. Amici have tens of thousands of members. ranc-

ing from small businesses to large multinational corpora-

tions, who collectively have facilties in each of the fifty

|

4

States. Amici have a vital interest in seeing that regula-

tory requirements are clear, well-publicized and consist-

ently applied across the country. Amici similarly believe

that regulatory enforcement must be fair and that enforce-

ment actions should focus on clear cases of non-compli-

ance, rather than on cases involving the application of

non-authoritative or inconsistent interpretations of national

regulations.*

SUMMARY OF ARGUMENT

Nominally, the Petition for Certiorari concerns the

ruling of the Fourth Circuit on the meaning of an exemp-

tion set forth in a rule promulgated by the United States

Environmental Protection Agency (“EPA”) on June 6,

1984, as part of benzene emission standards known as the

National Emisssion Standard for Equipment Leaks (Fugi-

tive Emission Sources) of Benzene (the “benzene NE-

SHAP”). In reality, the impact of the Fourth Circuit’s

decision is unfortunately much broader. At the heart of

Amici's interests is their concern that the judgment of the

Fourth Circuit will create uncertainty and disrupt environ-

mental and other federal regulatory programs that impact

almost every aspect of the operations of Amici’s members.’

Of principal concern to Amici is the Fourth Circuit’s

ruling that the interpretation of a nationally applicable

regulation by one of EPA’s regional offices binds persons

within that office’s geographic jurisdiction, regardless of

whether its interpretation conflicts with interpretations of

other regional offices, or even if it conflicts with other

interpretations from within the same office. (See Pet.

? As Amici’s members include literally tens of thousands of busi-

nesses across the country, this brief should not necessarily be re-

garded as the view of any one organization or company.

3’ Although Amici often refer to environmental impacts as exam-

ples in this brief, as noted above, the opinion of the Fourth Circuit

has broad ramifications that extend well beyond the environmental

law contect.

5

App. at 23a-24a.) If left to stand, the Fourth Circuit's

opinion means that every regional office of a federal

administrative agency can establish its own binding inter-

pretation of a national regulation. For environmental pro-

grams, this could result in the creation of ten sets of

rules, as EPA has ten regional offices. As a result, Amici’s

embers would find that a federal regulation in one state

means something different in another state, even as ap-

plied to identical facilities and processes. Indeed, that is

precisely what happened to the Petitioner in this case.

The opinion below will also likely result in conflicts

among the circuits. If a particular regional office interpreta-

tion is upheld by a Federal Court of Appeals, it becomes

the law of that circuit. However, another regional office

may interpret a regulatory requirement differently, and its

interpretation could become the law in a different circuit.

In addition, the opinion of the Fourth Circuit could lead

to intra-circuit conflicts, because the jurisdictions of EPA’s

regional offices do not parallel those of the federal circuits.

Amici have other substantial concerns with the Fourth

Circuit’s decision. HCC’s Petition describes a now all too

common occurrence for Amici’s members—enforcement

actions alleging regulatory violations based solely on non-

authoritative and non-published agency interpretations of

the meaning of regulatory requirements. Citizens and reg-

ulated entities were previously able to rely on the courts

to remedy the situation. No such meaningful review can

occur, however, when agencies revise regulations through

unpublished, nonauthoritative interpretations and courts

incorrectly apply this Court’s decisions by deferring to

such interpretations.

Amici are also concerned about the due process impli-

cations of the Fourth Circuit’s opinion. Although the

Fourth Circuit determined that EP had not initially pro-

vided fair notice of the interpretation Region IV applied

**9

it did not allow HCC a meaningful opportunity to achieve

ey

6

compliance once it learned of the Region IV interpreta-

tion. HCC was also denied the opportunity to utilize the

two-year compliance waiver available to every member

of the regulated community to whom the regulation ap-

plied. Instead the court required HCC to fully comply

within ninety days of its receipt of the EPA Region IV

interpretation. Thus, the Fourth Circuit failed to rectify

the very due process violations it had identified. Amici

believe that elemental notions of due process require that

individuals and firms in HCC’s position must be allowed

as much time to comply with a regulatory requirement as

they would have had if an agency had provided proper

notice ab initio.

ARGUMENT

I. THE FOURTH CIRCUIT’S DECISION CREATES

TREMENDOUS UNCERTAINTY IN THE REGU-

LATED COMMUNITY, UPSETS THE UNIFORM

ADMINISTRATION OF FEDERAL REGULATORY

PROGRAMS, AND LEADS TO CONFLICTS AMONG

AND WITHIN THE CIRCUIT COURTS OF APPEALS

The Fourth Circuit concluded that regional offices of

an administrative agency can establish authoritative inter-

pretations of regulations that bind affected parties within

their regions, notwithstanding that other regions have

adopted contrary interpretations. If allowed to stand,

that holding has the potential to upset any federal pro-

gram requiring the application of uniform standards.

The Fourth Circuit deferred to EPA Region IV’s inter-

pretation of the benzene NESHAP exemption, (Pet. App.

at 12a), even though other EPA regions had interpreted

the exemption differently. The Fourth Circuit also held

* Facilities that “use” less than 1,000 Mg/yr of benzene are

exempt from the regulation. 40 C.F.R. § 61.110(c). The 1989 Re

zion IV “multiple counting” interpretation of the term “use” re-

quires facilities to measure the same benzene again and again as

it is recycled through the equipment. That interpretation was

“based on,” (Pet. App. at 66a), an unpublished 1984 EPA internal |

7

that HCC was bound to comply with the interpretation

“from the EPA Regional Office responsible for the State

of South Carolina where the plant in question is located—

regardless of any conflict with previous guidance received

. . . from an [authorized] agency with no authority in

South Carolina,” (Pet. App. at 24a), because only that

office had enforcement authority over HCC. (See Pet.

App. at 23a.)

This means that, as in HCC’s case, similar facilities

engaged in the same activities under the same nationally

applicable regulation can be subject to different regula-

tory requirements in different agency regional office juris-

dictions. Such a result is simply not acceptable. See, e.g.,

Miner v. FCC, 663 F.2d 152, 157 (D.C. Cir. 1980)

(“[T]he Rule of Law requires that agencies apply the same

basic standard of conduct-to all parties appearing before

them”); Contractors Transport Corp. v. United States,

537 F.2d 1160, 1162 (4th Cir. 1976) (“Patently incon-

sistent application of agency standards to similar situa-

tions lacks rationality and is arbitrary”).

Where federal administrative agencies develop and im-

plement uniform national standards pursuant to national

legislation, such as under the Clean Air Act, 42 U.S.C.

§ 7401, et seq., agencies must assure that those standards

are fairly and evenly applied. When the agency fails, the

courts must protect the public from arbitrary agency action

by deferring only to consistently applied and authoritative

interpretations. See, e.g., Western States Petroleum Ass’n

v. EPA, 87 F.3d 280, 285 (9th Cir. 1996); Homemakers

North Shore, Inc. v. Bowen, 832 F.2d 408, 412 (7th Cir.

1987).

staff memorandum that interpreted the term “use” to mean benzene

“throughput,” not just consumption. (Pet. App. at 12a: 30a-31a.)

This internal memorandum was in turn distributed to EPA regional

offices and subsequently became the basis for a number of conflict-

ing “interpretations” of the scope by the exemption by different

EPA regions and States. (Pet. App. at lla-12a; 62a; 65a.)

8

In addition to causing conflicts within agencies, the

Fourth Circuit’s decision will inevitably lead to conflicts

among the Federal Courts of Appeals. When those courts

rule on a regional office’s interpretation of a regulation,

that decision becomes the law of a circuit. Rulings on

inconsistent regional office interpretations of the same reg-

ulation in different circuits will create conflicting prece-

dent. See Homemakers, 832 F.2d at 412 (7th Cir. 1987).

This result, like the regional inconsistencies themselves,

would cause uneven administration of national rules, cre-

ate tremendous uncertainty and make compliance Gifficult.

Indeed, for many of Amici’s members compliance may be

impossible because EPA’s ten administrative regions do

not geographically parallel the jurisdictions of the Federal

Courts of Appeals.

The regulated community devotes substantial resources

to understanding and complying with environmental regu-

lations and in many cases exceeding compliance with them.

Compliance becomes problematic at best, however, if it

is not possible to rely upon agency regulations or if a regu-

lated entity is forced to choose between competing re-

gional office interpretations. Sound business planning re-

quires certainty, but the Fourth Circuit’s decision would,

if not reversed, lead to multiple and inconsistent agency

interpretations of the same regulatory requirement. This

Court should not allow this result to occur.

Il. THE FOURTH CIRCUITS DEFERENCE TO AN

EPA REGIONAL OFFICE REGULATORY INTER-

PRETATION CANNOT BE RECONCILED WITH

THE DECISIONS OF THIS COURT

This Court has repeatedly indicated that deference

should be given to interpretations by an agency of its

own rules.° This Court’s rule of deference to agency inter-

pretations is based on at least three related considerations:

5 E.g., Martin v. Occupational Health & Safety Comm’n, 499 U.S.

144, 150 (1991); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555,

9

* Agency interpretations involve the application of

agency-wide expertise and judgment grounded in

policy concerns conducted under authority dele-

gated to the agency by Congress; °

* Agencies are presumed to have greater familiarity

* expertise with the policy issues implicated by

an interpretation than courts;’ and

An agency is in the best position to know what it

meant when it issued its regulations.®

Each of these considerations presumes that the inter-

pretation at issue represents the official, considered and

authoritative interpretation of the agency, and this Court

has looked for and noted the indicia of an “authoritative”

agency interpretation as support for giving deference.

One such indicator is publication or wide dissemination

of the interpretation. See, e.g., Ford Motor Credit Co. v.

Milhollin, 444 U.S. 555, 566 (1980); Udall v. Tallman,

380 U.S. 1, 4 (1965); Bowles v. Seminole Rock & Sand

Co., 325 U.S. 410, 417 (1945). Another indicator of an

“authoritative” interpretation is whether it reflects a con-

sistently held view of the agency. See, e.g., Martin v.

Occupational Health & Safety Comm'n, 499 U.S. 144,

157 (1991); Pauley v. BethEnergy Mines, Inc., 501 U.S.

680, 698-99 (1991); Ford Motor Credit, 444 U.S. at 557:

566 (1980); Udall v. Tallman, 380 U.S. 1, 4, 16 (1965): Bowles v.

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

® See, e.g., Martin, 499 U.S. at 151; Ford Motor Credit, 444 U.S.

at 566, 568.

7 See, e.g., Thomas Jefferson University v. Shalala, 114 S.Ct. 2381,

2387 (1994); Martin, 499 U.S. at 152-53; Pauley v. BethEnergy

Mines, Inc., 501 U.S. 680, 697 (1991); Ford Motor Credit, 444 U.S.

at 566 n.9.

8 See, e.g., Martin, 499 U.S. at 152-53; Mullins Coal Co., Inc. v.

Director, Office of Workers’ Compensation Programs, 484 U.S. 135,

159 (1987); Ford Motor Credit, 444 U.S. at 566; Seminole Rock,

410 U.S. at 417.

DN ——EEeEEeEeEeEeEeEeEeEeEeEeEeeeeeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeeeeEeEe=eG5_<5Q i

10

Tallman, 380 U.S. at 4; Seminole Rock, 325 US. at

417-18.

That an interpretation is an authoritative interpreta-

tion of the agency is the foundation on which the defer-

ence principle rests. If the interpretation at issue is not

authoritative—if it does not reflect the final view of the

agency, as an agency, applying its considered expertise

and judgment—there is no basis for giving deference.”

See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,

212 (1988).

EPA itself has recognized the difference between au-

thoritative agency interpretations and non-authoritative

interpretations of a regional office. For example, in CWM

Chemical Serv., Inc., TSCA Appeal No. 93-1, 6 E.A.D. 1

(E.A.B. May 15, 1995), EPA’s Environmental Appeals

Board (“EAB”)* rejected an EPA regional office’s inter-

pretation of a regulation where there was no agency-wide

written embodiment of that interpretation of which the

respondent could have had notice—only the beliefs and

opinions of individuals within the agency. The EAB rea-

soned that where the agency had not taken a formal posi-

tion on the issue, there was no authoritative interpretation,

or as the EAB succinctly stated: “[One simply] cannot

have ‘notice’ of a non-existent rule.” CWM Chemical

Serv., 6 E.A.D. at 15.

In this case, the court err. i by not evaluating whether

the regional office interpretation it applied met the stand-

ard for an authoritative agency interpretation to which

®In addition, Amici believe that it was not appropriate for the

Fourth Circuit to have utilized a standard so deferential that it

effectively forecloses meaningful judicial review of agency inerpre-

tations. Amici share HCC’s concern regardig the lower courts’

abdication of judicial review (Pet. at 11), and believe it is an

important independent basis justifying review by this Court.

10 The EAB, established in 1992, is the final agency decision

maker in administrative appeals arising under environmental stat-

utes administered by the EPA.

11

deference is owed.” It also erred because, looking to

the criteria identified by this Court, the Region IV inter-

pretation is not an authoritative agency interpretation.

A. The Interpretation Was Not Authoritative Because

It Was Not Consistently Applied By The Agency

The Fourth Circuit recognized that there were a series

of contradictory interpretations of the term “use” in the

benzene NESHAP by EPA regional offices and state agen-

cies. (Pet. App. at 23a.) In his dissent, Judge Niemeyer

emphasized that, in fact, there was no agency-wide, con-

sistently held interpretation of the proper way to measure

“use” under the regulation.” The States of Virginia and

Texas (where Petitioner has plants similar to the one in

South Carolina at issue in this case) each filed an amicus

curiae brief below explaining, among other things, that

Region IV’s interpretation represented a change from what

had been communicated to those states as the appropriate

interpretation of the regulation.”

When Region IV notified HCC of its interpretation in

June 1989, “EPA” had endorsed at least three different

11 As a result, deference was given to an interpretation that

simply mak :s no sense. The common sense example HCC uses best

illustrates the irrationality of Region IV’s position, i.e., by analogy

to the “use” of motor oil in an automobile, instead of four, five or

six quarts, Region IV would have us believe that an automobile

“uses” thousands of quarts of oil a year because of the constant

recirculation of the same oil in an engine. (Pet. at 4.)

12 The District Court also found that “EPA’s regional offices were

inconsistent as to how the regulation should be applied, and on

various occasions from 1984 through at least 1990, told inquiring

companies that the exemption was to be based on a single counting

of recycled benzene.” (Pet. App. at 65a.)

18 See Brief of Amicus Curiae Texas Natural Resources Conser-

vation Commission at 2; Brief of Amici Curiae Commonwealth of

Virginia and Virginia Department of Environmental Quality at 4,

United States v. Hoechst Celanese Corporation, 128 F.3d 216 (4th

Cir. 1987) (Nos. 96-2003, 96-2051).

ee

12

methods of measuring “use,” and had not issued any

national guidance to clarify which approach, if any, rep-

resented agency policy. (Pet. App. at 32a.) In fact, there

were even different interpretations within Region IV. At

the same time Region IV was sending its letter to Peti- :

tioner and interpreting the appropriate measure of “use”

as “throughput,” Region IV also sent a letter to another

facility indicating that the appropriate measurement was

“consumption.” (Pet. App. at 68a & n.22. See also Pet.

App. at 69a n.23.) Thus, it cannot be said that the

regional office—much less the Agency, as an agency—

had made an authoritative interpretation entitled to defer-

ence from the Fourth Circuit. Cf. Seminole Rock, 325

U.S. at 417-18 (deference was appropriate where the

agency had maintained a uniform interpretation “in...

countless explanations given to inquirers affected” by the

regulation ).

SO Pectin Se eS RE IE NIE RE a OTE Be

Seren eres

Rather, as the District Court and Judge Niemeyer rec-

ognized, no authoritative agency interpretation of the reg-

ulation existed in June of 1989:

[Region IV’s] notice should not, against the back-

ground of inconsistent EPA interpretations over time

and throughout different regions, constitute a defini-

tive agency-wide EPA notice such that penalties could

be imposed for non-compliance with one interpreta-

tion. For these reasons, I firmly believe . . . that the

1989 Region IV notice should not be considered the

‘authoritative interpretation’ of the EPA.

(Pet. App. at 33a (dissent); See also Pet. App. at 68a.)

There was no single construction of the regulation that

was consistently applied, and no construction that was

published or widely disseminated. These circumstances

indicate that EPA, as an agency, had not formulated or

articulated an authoritative interpretation of the term

“use.” Accordingly, the Fourth Circuit erred when it de-

ferred to the voice of Region IV alone above the other

competing voices.

13

B. The Interpretation Was Not Authoritative Because

It Was Neither Published Nor Widely Dissemi-

nated By The Agency

Although this Court has not expressly held that only

published agency interpretations are entitled to deference,

various opinions reflect the importance of publication as

an indication that the interpretation is authoritative; /.e.,

that it represents the final and considered view of the

agency, and not the views of individuals. See, e.g., Ford

Motor Credit, 444 U.S. at 566-67; Tallman, 380 U.S. at

4; Seminole Rock, 325 U.S. at 417."

There are strong policy reasons why this Court has

looked to publication before giving deference. Publica-

tion provides some assurance that interpretations are

authoritative agency interpretations, and that they are

created with care and deliberateness. Moreover, the regu-

lated community must be able to identify and to rely on

the plain meaning of the regulations and authoritative,

published constructions of those regulations when neces-

sary. This is critical, because the community cannci com-

ply with unknown requirements. Similarly, publication

informs agency staff of agency interpretations and aids

them in applying rules consistently, uniformly and fairly.

Cf. Morton v. Ruiz, 415 U.S. 199, 232 (1974) (the pub-

lication requirement of the Administrative Procedure Act

was designed to “avoid the inherently arbitrary nature of

unpublished ad hoc determinations.”)” See generally, Man-

14 Consistent with due process, certain lower courts have held that

it is simply not proper to defer to unpublished agency interpreta-

tions of regulations. See, e.g., Federal Labor Relations Auth. v.

United States Dept. of Navy, 966 F.2d 747, 762 (3d Cir. 1992).

15 Amici are also concerned that the Region IV interpretation

affects a substantive change to the meaning of the regulation.

Agencies cannot rewrite regulations through reinterpretation. See,

e.g., United States v. Trident Seafoods Corp., 60 F.3d 556, 559 (9th

Cir. 1995) ; Director, Office of Workers’ Compensation Programs v.

Mangifest, 826 F.2d 1318, 1824 (3d Cir. 1987) ; Homemakers North

14

ning, J., Constitutional Structure and Judicial Deference

To Agency Interpretations of Agency Rules, 96 Colum.

L. Rev. 612, 654-68 (April 1996).

Ill. THE FOURTH CIRCUITS DECISION NULLIFIES

IMPORTANT CONSTITUTIONAL DUE PROCESS

PROTECTIONS

The Due Process Clause of the Fifth Amendment re-

quires that the Federal Government provide regulated

entities with fair notice of regulatory interpretations affect-

ing them. The Fourth Circuit erred in concluding that

HCC received fair notice when it received a letter from

EPA Region IV that conflicted with prior interpretations

from EPA Region VI. The Fourth Circuit compounded

this error when it allowed HCC only ninety days to

comply with Region IV’s interpretation, while regulated

entities who had timely notice that they were subject to the

regulation had the opportunity to obtain a two-year com-

pliance waiver.

A. The Fourth Circuit Erred In Concluding That Con-

flicting Agency Interpretations Of A Regulation

Provide Fair Notice

The Fourth Circuit correctly concluded that, prior to

1989, HCC had not received “fair notice” of Region

I'V’s interpretation of the benzene NESHAP. The court

found that HCC’s understanding of the exemption was

reasonable, that five years earlier, HCC had received a

different interpretation of the exemption with respect to

its similar plants in Texas (located in EPA Region VI)

from Region VI and the Texas Air Control Board

Shore, Inc. v. Bowen, 832 F.2d 408, 412-13 (7th Cir. 1987). Stated

another way, if EPA wants to change its benzene NESHAP regula-

tion, it must follow notice and comment rulemaking. See National

Family Planning and Reproductive Health Ass’n, Inc. v. Sullivan,

979 F.2d 227, 234 (D.C. Cir. 1992). |

erarereierenetaenanaianiiteiiaieaiaiaiiiiintnes tial

15

(“TACB”),”* and that Region VI had not objected to an

exemption and waiver granted to HCC’s Texas plants by

the TACB based on the Region VI and TACB interpre-

tations. (Pet. App. at 17a-18a.)

But, the Fourth Circuit erroneously concluded that the

1989 Region IV letter provided HCC with “actual notice”

of the EPA’s interpretation of the exemption. The Fourth

Circuit reasoned that, notwithstanding that HCC had re-

ceived conflicting interpretations of the exemption, because

Region IV had enforcement authority over the Celriver

Plant, Region IV’s interpretation was the “authoritative

interpretation” for Celriver. (Pet. App. at 23a-24a.)

Although Region IV’s 1989 letter made HCC aware

that Regions IV and VI interpreted the NESHAP exemp-

tion requirement differently, those letters did not resolve

which of these two interpretations was authoritative. From

HCC’s perspective, there was no reason to believe that

Region IV’s interpretation was more authoritative than the

longstanding interpretation of Region VI. In fact, the Re-

gion IV letter indicated that its interpretation was “based

upon” agency memoranda from the same period as the in-

terpretations Petitioner previously received from Region VI

and the TACB. (Pet. App. at 66a.)

Where different EPA regional offices disagree as to the

proper interpretation of a regulation, it would be unfair to

conclude that HCC or any other member of the regulated

community could reasonably ascertain which interpretation

is authoritative. Cf. Rollins Envtl. Serv. (NJ), Inc. v.

EPA, 937 F.2d 649, 653 (D.C. Cir. 1991). Stated an-

other way, the law cannot require the regulated commun-

ity to reach a conclusion as to which regional interpretation

is correct.

16 The TACB was authorized by EPA to administer the benzene

NESHAP in Texas, and had consulted with Region VI before pro-

viding its interpretation of the NESHAP exemption to HCC. (Pet.

App. at 64a n.19.)

16

Indeed, it is contrary to EPA policy to interpret na-

tionally applicable rules, such as the benzene NESHAP

(a National Emission Standard for Hazardous Air Pol-

lutants), differently in different EPA regions. EPA has

promulgated regulations to avoid just this result:

It is EPA’s policy to. . . [a]ssure fair and uniform

application by all Regional Offices of the criteria,

procedures and policies employed in implementing

and enforcing the [Clean Air AJct.

40 C.F.R. § 56.3(a) (1997).

Accordingly, HCC’s knowledge of conflicting “authori-

tative” interpretations from other regions, and states with

delegated federal programs, effectively precluded HCC

from knowing with “ascertainable certainty” what its ob-

ligations were under the benzene NESHAP. See General

Electric Co. v. EPA, 53 F.3d 1324, 1329 (D.C. Cir.

1995).

B. The Fourth Circuit’s Ruling Denies Petitioner A

Reasonable Opportunity To Comply

Inherent in the idea of requiring fair notice before im-

posing sanctions is the principle that the person must be

given a reasonable opportunity to meet the requirement.

It is not enough that it receive absolution from any liability

for relevant pre-notice conduct. As this Court explained

in Grayned v. City of Rockford, 408 U.S. 104 (1972),

because we assume that man is free to steer clear be-

tween lawful and unlawful conduct, we insist that

laws give persons of ordinary intelligence a reason-

able opportunity to know what is prohibited so that

he may act accordingly.

Id. at 108 (emphasis added).

The Fourth Circuit did not give HCC a reasonable op-

portunity to “steer clear of unlawful conduct” once it re-

ceived notice of the Region IV interpretation. HCC was

ee eee eee

17

neither allowed a meaningful c»portunity to comply, nor

given the opportunity to obtain the two-year compliance

waiver available to other regulated entities.

If HCC had received timely notice of the agency inter-

pretation of the NESHAP exemption, it would have had

the opportunity that all other regulated entities had to ob-

tain a two-year compliance waiver for purposes of install-

ing the necessary equipment and undertaking the other

actions necessary to meet the varied requirements of the

benzene NESHAP.” But, by the time HCC received the

Region IV letter in 1989, the period to apply for a waiver

had been closed for nearly five years. See 40 C.F.R.

§ 61.11 (affected sources had 90 days from the effective

date of the rule, June 6, 1984, to apply).

If it had received timely notice, HCC contends, and the

District Court concluded, it would likely have received such

a waiver for its Celriver plant. (Pet. at 25 & n.21: Pet.

App. at 70a.) Because the Agency’s serious due process

violation caused HCC to lose its opportunity to obtain a

waiver, HCC must be given at least the same opportunity

—1.e., two years—as other similarly situated persons."

17 Congress intended that existing facilities should have up to two

years to come into compliance where necessary. See H.R. Conf. Rep.

No. 91-1783, reprinted in 1970 U.S.C.C.A.N. 5374, at 5879 (1970).

18 See, e.g., Satellite Broadcasting Co., Inc. v. FCC, 824 F.2d 1, 4

(D.C, Cir. 1987) ; McElroy Electronics Corp. v. FCC, 990 F.2d 1351,

1364 (D.C. Cir. 1993).

18

CONCLUSION

For the reasons set forth above, and for the reasons set

forth in HCC’s Petition, Amici respectfully request that a

Writ of Certiorari issue to review the judgment of the

United States Court of Appeals for the Fourth Circuit.

Respectfully submitted,

PAUL G. WALLACH

Counsel of Record

WENDY E. ANDERSON

JAMES G. VOTAW

HALE AND Dorr LLP

1455 Pennsylvania Ave., N.W.

Washington, D.C. 20004

(202) 942-8400

April 22, 1998 Counsel for Amici Curiae