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

Supremes Court.

FILED |

6 MAY 26 t90, |

No. 97-1578 DEPICE oF THE Leia |

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1997

HOECHST CELANESE CORPORATION,

Petitioner

Aa

UNITED STATES OF AMERICA,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF AMICUS CURIAE OF THE

ANTIMICROBIAL TREATED ARTICLE COALITION

IN SUPPORT OF PETITIONER

JOHN B. DUBECK*

DAVID G. SARVADI

THOMAS C. BERGER

KELLER AND HECKMAN LLP

1001 G Street, N.W.

Suite 500 West

Washington, D.C. 20001

(202) 434-4100

Counsel for Amicus Curiae

*Counsel of Record

AN LN GT EN ET NET Re freer _

li

TABLE OF CONTENTS

Sens GI GAPERREINF ED 0 iiad'ee Ss hak HAE Aes ii

BSR PUTT ois a Ae. iv

REE SOU PRMEGR IS 55 ke 00S ova bk cess bdeeee een l

Fae RUSE EOD 5nd op vs io nN beu vise desas 2

PIAL! SBC ARS 66 is A EAS 2

REASONS FOR GRANTING THE PETITION ......... 2

A. Hoechst \s Not an Isolated Instance of an

Illegal Agency Tactic; Federal Administrative

Agencies Often Announce Substantive

Changes in Regulatory Meaning Through

Enforcement Proceedings Without Providing

Fair Notice or Opportunity to Come Into

I aa oe es cs ec 2

B. EPA’s Most Recent Use of This Invalid Practice .. 3

1. The FIFRA Treated Article Exemption ... . 3

2. Lifetime Hoan Is the Archetype of Illegal

Use of the Enforcement Tool ........... 8

oa EPA’s Tactic Illegally Circumve.:s the APA and

Regulatory Review Statutes .................. 12

D. EPA’s Illegal Use of the Enforcement Process

I OI oho ius c bia ke uke caes 14

ili

E. Other Federal Agencies Use This Tactic ........ 15

F. By Giving Undue Deference to Agency

Enforcement Interpretations, Courts Are

Promoting an Illegal Practice ................ 18

CAI BAMINE pnn cence Sack opens dveceetiueen 20

ag mg Ba acc

iv

TABLE OF AUTHORITIES

FEDERAL CASES:

Alaska v. Department of Transp., 868 F.2d

eee Ge OO edd foie ei eek .. 16

Bellarno Int'l Ltd. v. FDA, 678 F. Supp. 410

NU ee ey ses 8 Se cas eo och ss 16

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

I a eg 19

Central Hudson Gas & Electrical Corp. v.

Public Service Comm'n, 447 U.S. 557 (1980) .... 15

Chamber of Commerce of the United States v.

OSHA, 636 F.2d 464 (D.C. Cir. 1980) .......... 16

Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984) ..... 18

CWM Chemical Servs., Inc., No. TSCA-PCS-

91-0213 (EPA May 15, 1995) ................ 13

Homemakers North Shore, Inc. v. Bowen, 832

Pee Cr Ce AP Ak os SRA ee. 19

Jerri’s Ceramic Arts, Inc., v. Consumer Prod.

Safety Comm’n, 874 F.2d 205 (4" Cir. 1989) .... 16

Martin v. American Cyanamid Co., 5 F.3d 140

I eas 18

Vv

TABLE OF AUTHORITIES — Continued

Martin v. Occupational Safety and Health

Review Comm'n, 499 U.S. 144 (1991) .........

Prows v. United States Dept. of Justice, 704 F.

Supp. 272 (D.D.C. 1988), aff'd, 938 F.2d 274

ERGs GRR ED is es en eae

San Diego Air Sports Ctr., Inc. v. FAA, 887

F 2 9619" Cis: 1009) 5 ies iss. .

Secretary of Labor v. American Cyanamid Co.,

No. 86-681, 1992 WL 30659 at *1 (OSHRC

FOU. 0h ADRED. 0 65 oe SE ERS

Skidmore v. Swift & Co., 323 U.S. 134 (1944) ...

Southern Cal. Aerial Advertisers’ Ass'n v. FAA,

SG) F260 C729" Ce. OR. AG. Ss ace;

Texaco, Inc. v. Federal Power Comm'n, 412

Fo 790 OG Ci 198 ik See BE:

Udall v. Tallman, 380 U.S. 1 (1965) ...........

United States v. Bioclinical Sys., Inc., 666 F.

I Et CR, He NOE io he ee cee

United States v. Picciotto, 875 F.2d 345 (D.C.

Mahe ROME oc CR See CO Ree aio hs eee ee

en ee

Vi

TABLE OF AUTHORITIES -- Continued

FEDERAL STATUTES AND REGULATIONS:

29 C.F.R. § 1910.1200(£(1) (1997) ............. 17

SUC PR STSZIA OI) ooo os RR passim

Administrative Procedure Act, 5 U.S.C. §§ 551-

SPO LIFO®) oo i odd iss PRE. passim

Administrative Procedure Act, 5 U.S.C.

ree 8) reas ees i ects -. 14

; Clean Air Act, 42 U.S.C. §§ 7401-7671q

CRSOUD 68 ert biel ee ica 3

Federal Insecticide, Fungicide, and Rodenticide

Act, 7 U.S.C. §§ 136-136y (1994) ......... passim

Federal Insecticide, Fungicide, and Rodenticide

Act § 13(a), 7 U.S.C. § 136k(a) (1994) .......... 6

Federal Insecticide, Fungicide, and Rodenticide

Act § 25(b), 7 U.S.C. § 136w(b) (1994) ......... 4

| Federal Insecticide, Fungicide, and Rodenticide

Act § 12(aX(1)(A), 7 U.S.C. § 136j(a)(1)(A)

(WORD: sstscsshés Jos adobe tated as 2d 10

Paperwork Reduction Act , 44 U.S.C. §§ 3501-

PO RIA TONE 66 ve ois ooh ecbk ek ke ekcs 14

Vii

TABLE OF AUTHORITIES — Continued

Small Business Regulatory Enforcement

Fairness Act of 1996, Pub. L. No. 104-121, 111

ee” SU ES Se aria prea Ea ee tsa UR ay

FEDERAL REGISTER:

63 Fed. Reg. 19,256 (April 17, 1998) ..... 7,

OTHER AUTHORITIES:

Charles M. Chadd & Jerome K. Bowman,

Agencies’ Enforcement of Ambiguous

Regulations Don’t Deserve Judicial Deference

(Washington Legal Found., Critical Legal

Studies, Working Papers Series No. 84, 1988) ...

Exec. Order No. 12,866, 58 Fed. Reg. 51,735

Greer 4 199 ee VR A

In re Hasbro, Inc., No. FIFRA 97-H-06,

Consent Agreement and Consent Order (EPA

ta 7 ee ee.

In re Lifetime Hoan Corp., No. FIFRA 98-H-04,

Consent Agreement and Consent Order (EPA

POM a Bee ia RS i teuk Weng

In re Minnesota Mining and Manufacturing

Company, No. 5-FIFRA-97-027, Consent

Agreement and Consent Order (EPA Sept. 29,

TOWER cucewidinh HM bwrh nie wave CRORE be

14, 15

19

10, 11

Vili

TABLE OF AUTHORITIES — Continued

OSHA Compliance Instruction (CPL), CPL 2-

2.38C, Inspection Procedures for the Hazard

Communication Standard, 29 C.F.R. 1910.1200,

1915.99, 1917.28, 1918.90, 1926.59, 1928.2]

kB, PRO RRS ay SRP Meee nk ee pe

Robert A. Anthony, Jnterpretive Rules, Policy

Statements, Guidances, Manuals, and the Like--

Should Federal Agencies Use Them to Bind the

Public?, 41 Duke L.J. 1311 (1992) .........

U.S. Environmental Protection Agency, Press

Release, EPA Acts to Prevent Playschool Toy

Manufacturer Hasbro, Inc., From False Claims

About Protecting Children from Microbial

Sepectiees CAGE: 8S TFST) 6 os 0 RS

13,15

l

The Antimicrobial Treated Article Coalition (Coalition)

respectfully submits this brief amicus curiae in support of

petitioner.’ The written consents of all parties have been filed

with the Clerk of the Court, pursuant to Rule 37.2.(a).

INTEREST OF AMICUS CURIAE

The Coalition is an unincorporated consortium of ten

companies that (1) produce finished goods containing

preservatives registered as pesticides by the U.S. Environmental

Protection Agency (EPA) under the Federal Insecticide,

Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. §§ 136-

136y (1994); or (2) produce the pesticides used as preservatives

in such finished goods. As described below, a new Agency

interpretation of an exemption applicable to antimicrobial

treated articles announced through a series of enforcement

actions has put members of the Coalition at risk of stop sale

orders and civil penalties despite their best efforts to obtain

guidance from the Agency and to conform their behavior to the

requirements of the exemption.

The tactic of using enforcement actions to change the

scope of a published legislative rule is being used by EPA and

other federal administrative agencies with increasing frequency

and audacity. It is not an issue unique to reducing air emissions

of a hazardous substance such as benzene, as in Hoechst2’ The

y Pursuant to Rule 37.6, Amicus represents that this brief was not

authored in whole or in part by counsel for any party, and that no entity

other than Amicus, its members, or its counsel, made a monetary

contribution to the preparation or submission of this brief.

7 Hoechst Celanese Corp. v. United States, 964 F. Supp. 967

(D.S.C. 1996), aff'd in part, rev'd in part, 128 F.3d 216 (4" Cir. 1997),

petition for cert. filed, (U.S. Mar. 23, 1998) (No. 97-1578).

2

situations described in this brief demonstrate that the

enforcement practices of various federal agencies require

judicial oversight and that the applicable standard of deference

to agency interpretations in some circumstances should be

reexamined.

QUESTION PRESENTED

The issue presented is whether and to what degree

federal administrative agencies can properly adopt and enforce

regulatory interpretations that are materially inconsistent with

those announced when a rule is first promulgated, without

formal amendment of the original rule.

STATEMENT OF THE CASE

Amicus adopts the statement of the case provided in

petitioner’s petition for a writ of certiorari.

REASONS FOR GRANTING THE PETITION

A. Hoechst \s Not an Isolated Instance of

an Illegal Agency Tactic; Federal

Administrative Agencies Often

Announce Substantive Changes in

Regulatory Meaning Through

Enforcement Proceedings Without

Providing Fair Notice or Opportunity

to Come Into Compliance

ret ae ae ke ee a ee

eh ee een ee uae

3

Hoechst is only one example of a pervasive, illegal

practice used by federal administrative agencies to avoid the

strictures of the Administrative Procedure Act (APA), 5 U.S.C.

§§ 551-596 (1994) and other statutory authority in developing

legislative rules governing citizen behavior. As the scope of

regulated behaviors has grown, federal administrative agencies

have struggled to develop appropriate rules. Rather than

formally amending rules to address new developments or policy

decisions, however, administrative agencies are increasingly

“reinterpreting” the meaning of existing regulations, often for

the first time in an enforcement proceeding, in ways that impose

new substantive obligations on regulated entities. An integral

part of this practice of reinterpretation is the assertion that the

agency’s posture represents nothing more than implementation

of long-standing agency policy.

When used in the manner described in Hoechst, this

approach illegally circumvents established APA public

participation and regulatory review procedures to the detriment

of the regulated community.

B. EPA’s Most Recent Use of This Invalid

Practice

1. The FIFRA _ Treated Article

Exemption

Pesticides distributed or sold in the United States are

regulated primarily under FIFRA. Like the Clean Air Act, 42

U.S.C. §§ 7401-7671q (1994), a regulatory provision of which

is at issue in Hoechst, FIFRA is administered by EPA. Central

to FIFRA's statutory scheme is the concept of a pesticide

registration (required under section 3 of FIFRA), which

essentially is a license granted to a named registrant to sell or

distribute a specific product for specified uses.

4

Under section 25(b) of FIFRA, EPA can by regulation

exempt from FIFRA pesticides that the Agency determines are

either adequately regulated by another federal agency or are of

a character not requiring regulation under FIFRA.2 Mixtures

and articles treated with registered pesticides to protect the

formulation or article itself currently are covered by such an

exemption at 40 C.F.R. § 152.25(a), which was promulgated in

1988.4 This provision, known as the “treated article”

exemption, reads as follows:

The pesticides or classes of pesticides listed in

this section have been determined to be of a

character not requiring regulation under FIFRA,

and are therefore exempt from all provisions of

FIFRA when intended for use, and used, only in

the manner specified.

(a) Treated articles or substances. An

article or substance treated with, or

containing, a pesticide to protect the

article or substance itself (for example,

paint treated with a pesticide to protect

the paint coating, or wood products

treated to protect the wood against insect

or fungus infestation), if the pesticide is

registered for such use.

tes

FIFRA § 25(b), 7 U.S.C. § 136w(b) (1994).

4/

ad The predecessor to 40 C.F.R. § 152.25(a) was promulgated in

1975 and was codified at 40 C.F.R. § 162.4(c) (1975). 40 Fed. Reg.

28,242 (July 3, 1975).

5

40 C.F.R. § 152.25(a) (1997).2

Critical to the issue the Coalition wishes to highlight is

the recognition that neither the exemption, its preamble, nor

any publicly distributed guidance since the promulgation of the

exemption in 1988 place any restrictions on label statements

describing the presence of an antibacterial or any other

pesticide incorporated into a formulation or article, or on the

claims related to the benefits of protecting the article itself.

The exemption simply states that an article or substance treated

with or containitig a pesticide to protect the article or substance

itself is exempt from all requirements of FIFRA if the pesticide

is registered for such use.

Until recently, the treated article exemption was an

obscure and noncontroversial regulatory provision. In recent

years, however, consumer concern regarding hygienic practices

and safety has produced significant demand for products that

contain antimicrobial protection, resulting in an abundance of

these products in the U.S. marketplace. According to EPA,

these products include toothbrushes, juvenile toys and related

items, kitchen accessories (e.g., cutting boards), sponges, mops,

shower curtains, cat litter, vacuum cleaner bags, pillows,

mattresses, wrist bands, and tablecloths. For the most part,

these products were developed and marketed under the good

faith belief that they were in full compliance with FIFRA and

the treated article exemption. EPA has been aware of these

specific uses for a decade or more, and on several occasions has

specifically acknowledged the appropriateness of promotional

statements regarding aesthetic benefits that result, for example,

when paints and shower curtains are treated to resist mildew,

and when cat litter is treated to reduce odors. However, as

shown by the following chronology, EPA evolved a new

= Section 25(b) of FIFRA provides clear authority for EPA to

reach this conclusion.

6

interpretation of the treated article exemption over the last year

and a half as the Agency brought enforcement actions against

various manufacturers.

May 16, 1988. EPA promulgates the current version of

the treated article exemption.

Early 1997. In public stakeholders meetings, in

response to questions EPA acknowledges that it has some

concerns about treated articles, and promises to issue guidance

outlining the Agency’s concerns and the limits of the

exemption, and to provide manufacturers with time to comply.

March 1997. Without publishing its promised

clarifications, EPA issues Stop Sale, Use, or Removal Orders

(SSURO)* against several manufacturers and distributors of

treated articles, including some who consulted with EPA’s

Office of Pesticide Program (OPP) staff prior to marketing their

products.

May 1997. EPA releases for comment a draft of a

proposal to, inter alia, amend section 152.25(a). The draft

would modify and expand the treated article exemption to

address newly identified concerns, and explicitly recognizes

that modification of the published rule is needed. This draft is

subsequently abandoned by EPA in favor of adopting a new

interpretation of the existing rule.

June-July 1997. EPA issues press releases announcing

settlements in several enforcement cases and releases language

negotiated in the consent orders for labels of affected products.

September-October 1997. Additional settlements are

reached, with different language accepted for the revised labels.

g FIFRA § 13(a), 7 U.S.C. § 136k(a) (1996). A SSURO has the

immediate effect of impounding all products subject to the order,

wherever located, and prohibits sale or distribution until the order is

lifted. It is an enforcement tool that is coercive in extremis.

A i a i

LP tank pki.

CaaS DARHT inant Oa ele thet realities outa,

sai aa

7

November-December 1997. EPA inspectors visit at

least one manufacturer, Lifetime Hoan Corporation, to

investigate a possible violation of FIFRA due to the sale of

unregistered cutting boards with antimicrobial claims. No

problems are noted.

January 14, 1998. EPA issues SSURO’s to seven

companies, including Lifetime Hoan, that are participating in

the International Housewares Show at Chicago’s McCormick

Place. The SSURO’s allege that the companies are marketing

unregistered pesticides.

February-April 1998. Extended negotiations over label

language by Lifetime results in yet different statements for new

labels compared with that required for re-labeling existing

stock, and different from labels authorized by earlier

settlements.

April 17, 1998. EPA publishes a Federal Register

notice in which it memorializes a new interpretation of the

exemption that it had developed through enforcement actions

during 1997. The notice also officially announces the

availability of a draft Pesticide Registration (PR) notice

intended to “clarify” EPA’s interpretation of the exemption.”

The Federal Register notice reveals the full extent of the

substantive modification of the treated article exemption that

Z 63 Fed. Reg. 19,256 (Apr. 17, 1998).

¥ PR notices are policy statements made available by EPA to

pesticide manufacturers, formulators, producers, and registrants, and are

intended to clarify specific aspects of FIFRA and its implementing

regulations and to set forth Agency policy. PR notices are made available

to the public for comment. However, other than a notice announcing

their availability, PR notices are not published in the Federal Register nor

are they subject to a formal proceeding. Under the PR notice rubric, the

agency is freed from the burden of disclosing the basis for its decision,

and review is not possible unless and until an enforcement action is

initiated.

Se ne

8

had occurred during 1997 and itself notes that the PR notice

contains “new elements” of the exemption.”

ye Lifetime Hoan Is the Archetype of

Illegal Use of the Enforcement Tool

EPA’s enforcement action against Lifetime Hoan shows

that the process of reinterpretation continues and that the

offending method used in Hoechst is widespread. Indeed,

because a FIFRA stop sale order causes an immediate

marketing interruption (in addition to the monetary penalties

that usually accompany settlement), Lifetime’s case is in some |

respects more troubling than Hoechst.

In 1997, Lifetime Hoan began developing a line of

houseware products containing an antimicrobial ingredient. i

Lifetime was well aware of the treated article exemption, and

took extraordinary efforts to ensure compliance with its :

requirements. Microban® Plastic Additive “B,” the

antimicrobial used by Lifetime in the manufacture of the subject

products, is specifically registered by EPA for use in the

manufacture of the types of products distributed by Lifetime, i

and, in its registration, EPA acknowledged that the purpose of

Microban® “B” was to provide a hygienic surface. Lifetime

consulted the language of the regulation itself, the preamble to

2 63 Fed. Reg. at 19,257. Despite its assertion that the policy

statement is a "clarification" of the existing rule, some of the new }

elements include: (1) terms such as “antibacterial,” “antimicrobial,”

“germicidal,” and “germs,” are prohibited from appearing in the product

name and on other labeling and advertising materials; (2) claims,

formerly permitted, that the protection of the article provided by the

applied pesticide treatment has an aesthetic benefit (prevention of stains

and odor) are prohibited; and (3) a proposal to prohibit the use of the

phrase “mildew proof” on paint and a limitation of claims solely to in-can

preservation.

9

the 1988 final rule, and the 1975 rule that preceded it. As noted

above, neither the regulation nor the preamble to the 1988 rule

prohibits or limits promotional statements regarding the

benefits for the article itself of such protection, and no other

formal guidance on the exemption with regard to these issues

had been published by EPA.

Lifetime also was aware that EPA had taken

enforcement actions against manufacturers of treated articles

and carefully reviewed the settlements in these cases for

additional guidance on acceptable claims. For example,

Lifetime reviewed the settlement between EPA and the

Minnesota Mining and Manufacturing Company (3M),

regarding a treated sponge product. In 3M, EPA agreed to the

use of placards stating “Inhibits Odor-Causing Germs in the

Sponge,” and “Does not disinfect or kill germs on surfaces.”12

Moreover, Lifetime Hoan used language that was consistent

with language deemed acceptable by EPA in official public

documents released as part of the Agency’s enforcement action

against certain Hasbro plastic toys that were manufactured

using Microban® “B.”1!

On November 19, 1997, and November 26, 1997, EPA

Region II officials inspected Lifetime Hoan’s Westbury, New

York, and Dayton, New Jersey, warehouse facilities, to

investigate a possible violation of FIFRA due to the sale of

10 In re Minnesota Mining and Manuf. turing Company, No. 5-

FIFRA-97-027, Consent Agreement and Consent Order (EPA Sept. 29,

1997).

~ In an April 22, 1997 consent order, EPA and Hasbro agreed to

corrective advertisements that named the affected toys and that

conspicuously stated “Microban Antibacterial Protection Built in to

Protect the Toy! Inhibits the Growth of Bacteria!” Jn re Hasbro, Inc., No.

FIFRA 97-H-06, Consent Agreement and Consent Order (EPA Apr. 22,

1997).

3

‘

10

cutting boards bearing antimicrobial claims. In Dayton, EPA

inspectors obtained a packaged, labeled, cutting board, verbally

affirmed, when asked, that no violations were observed, and

took no other action.

At the January 1998 Chicago housewares show,

Lifetime Hoan discovered for the first time that its conclusions

regarding the exemption were incorrect and that EPA believed |

that Lifetime was distributing unregistered pesticides in |

violation of section 12(a)(1)(A) of FIFRA.” EPA alleged that 2

the following claims took the affected products out of the

exemption, making them pesticides requiring registration:

“Microban Antibacterial Protection built in to

inhibit the growth of bacteria on the product”;

“Built-in protection, engineered to last the life of

the product”; “This Farberware gadget

incorporates built-in Microban antimicrobial

protection”; “Microban protection inhibits the ;

growth of bacteria, mold, and mildew on the :

product.”

i

Lifetime was compelled to settle the matter quickly so

that it could resume shipment of these products. In the Consent

Agreement and Consent Order (CACO) that Lifetime Hoan

signed, Lifetime agreed to affix stickers to all allegedly

violative products before resuming shipments. The stickers

contained the following language:

12 7 U.S.C. § 136j(z)(1)(A) (1996).

aa In re Lifetime Hoan Corp., No. FIFRA 98-H-04, Consent

Agreement and Consent Order (EPA Feb. 13, 1998).

1]

Microban antibacterial protection is built in to

inhibit the growth of bacteria that may affect the

plastic in the product and does not protect users

or others against food-borne bacteria. Always

clean and wash the product thoroughly before

and after each use.’

In the CACO, EPA also dictated the specific size of the sticker,

mandated the font size and style, and limited its placement and

prominence on the packaging itself.

Lifetime was provided with no notice that its course of

conduct and its exercise of commercial speech was anything but

in full compliance with the treated article exemption, and had

no opportunity to conform its conduct to EPA’s hidden,

evolving interpretation of the exemption. As in Hoechst,

Lifetime’s deficiency was simply its failure to conform its

conduct (i.e., use of specific wording) to a binding, secret,

changing Agency position, which continued to develop even as

negotiations in its case with EPA proceeded.1/

a The origin of this “acceptable” treated article language, and its

placement and prominence, was not then and is not now published or

known. It is also important to note that, even with the corrective

stickers applied, EPA still considers these articles to be illegal

unregistered pesticides. While the Agency is allowing the stickered

products to be sold, it is EPA’s position that the use of the word

"antibacterial" in describing the treatment applied to an article violates

the exemption.

a In its April 17, 1998, Federal Register notice, EPA cites the

series of CACO’s as public notice of its interpretation. Unfortunately

for Lifetime, the CACO it signed did not exist when it developed its

product lines. In any event, CACO’s coerced from parties desperate to

be freed from the extraordinary burden of a SSURO cannot be viewed

as legal precedent for additional extra-regulatory requirements.

12

In the case of the treated articles at issue, there is no

imminent danger; EPA Administrator Carol Browner has

publicly acknowledged that products manufactured using

Microban® “B” pose no safety risk even in a situation where

children would have potential intimate and frequent exposure.”

C. —_ EPA’s Tactic Illegally Circumvents the APA

and Regulatory Review Statutes

The Coalition believes that the heart of the issue in

Hoechst, use of enforcement proceedings to announce and

impose new, inconsistent policies regarding substantive rules,

and the undue deference the courts have given to such agency

action, are amply illustrated by EPA’s recent handling of

treated articles. The connection between cause and effect is

succinctly made by the following passage describing EPA’s

pattern of enforcement practices:

Where an agency can nonlegislatively impose standards

and obligations that as a practical matter are mandatory,

it eases its work greatly [when following these

practices] in several undesirable ways. It escapes the

delay and the challenge of allowing public participation

in the development of its rule. It probably escapes the

toil and the discipline of building a strong rulemaking

record. It escapes the discipline of preparing a

statement of the basis and purpose justifying the rule.

It may also escape APA publication requirements and

Office of Management and Budget regulatory review.

ae U.S. Environmental Protection Agency, Press Release, EPA

Acts to Prevent Playschool Toy Manufacturer Hasbro, Inc., From False

Claims About Protecting Children from Microbial Infections (Apr. 18, |

1997). :

13

And if the agency can show that its informal document

is not final or ripe, it will escape immediate judicial

review. Indeed, for practical reasons it may escape

judicial review altogether . . . One can readily

understand how a government instrument so quick,

cheap, largely unchecked and low in risk, and yet so

effectual, may tempt some agencies to slight the APA’s

mandates.

Robert A. Anthony, Interpretive Rules, Policy Statements,

Guidances, Manuals, and the Like--Should Federal Agencies

Use Them to Bind the Public?, 41 Duke L.J. 131 1, 1317-18

(1992).

EPA’s actions in Hoechst and Lifetime, and its

announcei enforcement policy regarding treated articles,

illustrate a legally deficient and impermissible vehicle for

substantively amending the scope and effect of a published

legislative rule. A federal agency cannot attach additional

binding obligations to a substantive regulation without adhering

to the legislative process mandated by the APA” The

= EPA’s own Environmental Appeals Board (EAB) has

recognized the problems that occur when the regulated community is not

provided with fair notice. See CWM Chemical Servs., Inc., No. TSCA-

PCS-91-0213 (EPA May 15, 1995). In dismissing EPA’s complaint on

the basis that the Agency failed to provide adequate notice to the

regulated community, the court stated

Basically we are holding the Agency to a standard of notice that

requires the Agency to express the intent of its regulations with

sufficient clarity that those who may be subject to penalties for

violating the regulations have fair warning of conduct prohibited

or required by the regulations.

The Coalition believes that this decision, which the EAB specifically

applied to all of EPA’s regulatory programs, correctly requires EPA to

14

Coalition believes that EPA’s proposed approach also sidesteps

compliance with other statutes such as the Paperwork

Reduction Act , 44 U.S.C. §§ 3501-3520 (1994) and the Small

Business Regulatory Enforcement Fairness Act of 1996

(SBREFA), Pub. L. No. 104-121, 111 Stat. 2592, and

improperly circumvents the checks and balances within the

Executive Branch provided Executive Order 12,866.12

D. EPA’s Illegal Use of the Enforcement Process

Continues Today

Having coerced several manufacturers into entering into

consent agreements, EPA has now publicly announced that it

intends to proceed in amending the exemption without

rulemaking. According to the April 1998 Federal Register

notice, EPA will maintain and enforce a policy for treated

articles that is extracted from its then recent enforcement

proceedings. Significantly, according to the Federal Register

notice, EPA will bring enforcement actions against products

that use the terms antibacterial, antimicrobial, or germicidal in

product literature unless the term appears only in a specific

context that EPA apparently has determined is the only possible

clarify its substantive interpretations prospectively through iegislative

rulemaking.

18 Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993).

Regardless of how they are styled by the Agency, EPA’s Federal

Register and draft PR notices fall squarely within the SBREFA and APA

definition of “rule,” and the term “regulations or rules” as it is defined

under 5 U.S.C. § 551(4) (1994) and Exec. Order No. 12,866 § 3(d). The

burden falls on the regulated community to call EPA to task for avoiding

its responsibilities to the public.

15

Statement that will not be misleading to consumers.!2 The

requirements specified in the Federal Register notice constitute

requirements that are not at all apparent on the face of the rule

(or any other guidance previously published by EPA) and, as in

Hoechst, these substantive limitations have evolved only in the

course of enforcement actions brought on the basis of the

silently and secretly amended rule.

This approach offends any reasonable notion of due

process, and amounts to a deprivation of the right to

commercial free speech.“ EPA’s new enforcement policy is

just that — new. Although the Agency insists that the policy is

merely the formalization of longstanding and unchanging

Agency positions, it plainly is not.

E. Other Federal Agencies Use This Tactic

From time to time, other federal agencies’ actions that

parallel EPA’s evasion of the APA’s prescriptions are properly

recognized and redressed by federal courts.2/ The Court has

12 The Coalition is not aware that EPA is known to have expertise

in predicting consumer perceptions.

- See Central Hudson Gas & Electrical Corp. v. Public Service

Comm'n, 447 U.S. 557 (1980).

a Anthony, supra, cites many examples of federal agencies using

nonlegislative rules to bind the public. Anthony, supra, at 1333-39; San

Diego Air Sports Ctr., Inc. v. FAA, 887 F.2d 966 (9" Cir. 1989) (FAA

letter prohibiting parachuting in terminal control area is rule subject to

APA rulemaking requirements); Southern Cal. Aerial Advertisers’ Ass'n

v. FAA, 881 F.2d 672 (9" Cir. 1989) (FAA letter closing airspace to

fixed-wing aircraft not adopted through APA rulemaking procedures

represents change in FAA policy and is invalid); United States v.

Picciotto, 875 F.2d 345 (D.C. Cir. 1989) (additional U.S. Park Service

restrictions on demonstrations and events in park not adopted through

16

previously recognized the key role of the courts in supervising

federal administrative agencies and the varying degrees of

deference owed to agency interpretations. In Martin v.

Occupational Safety and Health Review Commission, Justice

Marshall noted that

[a}]lthough not entitled to the same deference as norms

that derive from the exercise of the Secretary’s

delegated lawmaking powers . . . informal

interpretations are still entitled to some weight on

judicial review . . . the decision to use [an enforcement

action] as the initial means for announcing a particular

APA rulemaking procedures invalid); Jerri’s Ceramic Arts, Inc., v.

Consumer Prod. Safety Comm'n, 874 F.2d 205 (4 Cir. 1989)

(‘interpretive statement’ regarding removal of exemption from rule

banning small childrens’ toys and providing CPSC with power to enforce

violations set aside for failure to comply with rulemaking requirements);

Alaska v. Department of Transp., 868 F.2d 441 (D.C. Cir. 1989) (FAA

orders regarding unfair and deceptive advertising subject to APA

rulemaking requirements); Chamber of Commerce of the United States v.

OSHA, 636 F.2d 464 (D.C. Cir. 1980) (Secretary of Labor “interpretive

rule and general statement of policy’ regarding employee pay for

accompanying inspectors vacated for failing *o comply with APA

rulemaking requirements); Texaco, Inc. v. Federal Power Comm 'n, 412

F.2d 740 (3d. Cir. 1969) (Federal Power Commission order amending

regulations under the Natural Gas Act to provide for compound interest

rates set aside for lack of adequate notice under the APA); Prows v.

United States Dept. of Justice, 704 F. Supp. 272 (D.D.C. 1988), aff'd,

938 F.2d 274 (D.C. Cir. 1991) (Bureau of Prisons’ statement requiring

allocation of pay to certain financial obligations illegally promulgated);

United States v. Bioclinical Sys., Inc., 666 F. Supp. 82 (D. Md. 1987)

(draft FDA inspection guidelines cannot be used to establish enforceable

current good manufacturing practices); Bellarno Int’! Ltd. v. FDA, 678 F.

Supp. 410 (E.D.N.Y. 1988) (FDA’s failure to conduct notice-and

comment rulemaking procedures prior to issuance of ‘import alert’

violates the APA).

tii ia

17

interpretation may bear on the adequacy of notice to

regulated parties... .

499 U.S. 144 (1991) (citations omitted).

Despite the Court’s admonition in Martin, the U.S.

Occupational Safety and Health Administration (OSHA)

recently pursued such “non-regulation regulations” and brought

enforcement actions based upon new, substantive

interpretations, in a case involving OSHA’s Hazard

Communication Standard (HCS).

In 1983, OSHA adopted language requiring

manufacturers of hazardous chemicals to develop “appropriate

hazard warnings” to be placed on shipping containers of such

products. Nearly three years later, OSHA interpreted this

provision in a “Compliance Instruction,” ostensibly a

document instructing its inspectors how to apply and enforce

the regulation, to require the identification of “target organs” as

part of the appropriate hazard warning. The specific regulatory

provision did not mention target organs, nor was it clear that

manufacturers should look beyond this plain language to

determine that something more than what was generally

accepted as good practice was required. The Compliance

Instruction, in a most circuitous logic, stated that manufacturers

should have followed the following path: (1) “health hazards”

were defined in the regulation; (2) Appendix A, characterized

as a “mandatory” appendix, was referenced in that regulatory

definition; (3) manufacturers should have known to look to

a 29 C.F.R. § 1910.1200(£(1) (1997).

i OSHA Compliance Instruction (CPL), CPL 2-2.38C, Inspection

Procedures for the Hazard Communication Standard 29 C.F.R

1910.1200, 1915.99, 1917.28, 1918.90, 1926.59, 1928.21 (Oct. 1990).

18

Appendix A; (4) “target organs” were discussed in Appendix A

in one of seven examples of “health hazards”; and (5)

manufacturers should have known to further infer that such

target organs were a mandatory component of an appropriate

hazard warning.

OSHA aggressively enforced its new target organ

requirement and cited American Cyanamid Company for failing

to include target organs on labels of one of its products. On

appeal, the Occupational Safety and Health Review

Commission (OSHRC) rejected OSHA’s citation on the

grounds that it was a “departure from the original policy under

the HCS . . . [and] because the departure was inadequately

explained."* The Court of Appeals for the Sixth Circuit, in a

most extraordinary example of deference to an executive

agency, concluded, essentially, that because OSHA’s logic

could be istlowed — however convoluted the path to the result

— that the agency’s interpretation was not unreasonable and the

court had no reason or basis to reject it. Cyanamid is now

invariably cited by OSHA counsel in administrative

adjudicatory proceedings for the proposition that deference is

warranted.

F. By Giving Undue Deference to Agency

Enforcement Interpretations, Courts Are

Promoting an Illegal Practice

As pointed out by petitioner, because courts have

misinterpreted and misapplied the standard set forth by this

Court in non-enforcement cases such as Chevron, U.S.A., Inc.

= Secretary of Labor v. American Cyanamid Co., No. 86-681,

1992 WL 30659 at *1 (OSHRC Feb. 7, 1992).

22 Martin v. American Cyanamid Co., 5 F.3d 140 (6* Cir. 1993).

19

v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984) and its predecessor cases, Udall v. Tallman, 380 U.S. 1

(1965), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

(1945), agencies cortinue to act illegally knowing that even

if their actions are challenged, a reviewing court will likely

“rubber stamp” the agency action unless it is clearly ridiculous.

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

408, 411 (7" Cir. 1987) (citing Skidmore v. Swift & Co., 323

U.S. 134 (1944) (courts will defer to agency interpretations in

all but extraordinary cases)). Knowing that reviewing courts

will grant virtually unbridled deference, EPA and other federal

agencies are encouraged to become more aggressive in their

actions.

It appears from Hoechst, recent enforcement cases

involving treated articles, and from the cases cited above, that

this Court should accept this case for review to reemphasize the

important role of the judiciary in supervising the administrative

process.

- Other commentators have characterized the practice of

ambiguous interpretation by agencies as unfair and inappropriate. A

recent Working Paper published by the Washington Legal Foundation

identified the problem as one based on an incorrect presumption. Chadd

and Bowman argue that whatever deference is warranted to agencies’

expertise in rulemaking is not justified when enforcement is the context,

and challenge the rationale in Bowles that “the ultimate criterion is the

administrative interpretation, which becomes of controlling weight unless

it is plainly erroneous or inconsistent with the regulation.” 325 U.S. at

414. The authors argue that the result is patently unfair, giving

administrative agencies license to adopt vague regulations and to interpret

them capriciously to suit their immediate needs. Charles M. Chadd &

Jerome K. Bowman, Agencies’ Enforcement of Ambiguous Regulations

Don't Deserve Judicial Deference (Washington Legal Found., Critical

Legal Studies, Working Papers Series No. 84, 1988).

20

CONCLUSION

For the foregoing reasons, amicus respectfully submits

that the petition for a writ of certiorari should be granted.

Respectfully submitted,

JOHN B. DUBECK*

DAVID G. SARVADI

THOMAS C. BERGER

KELLER AND HECKMAN LLP

1001 G Street, N.W.

Suite 500 West

Washington, D.C. 20001

(202) 434-4100

Counsel for Amicus Curiae

*Counsel of Record

May 22, 1998