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

Bupreme Court, U.S.

FILED

MAY 22 1998

OFRCE OF JHE CLERK

No. 97-1578

In The

Supreme Court of the United States

October Term, 1997

HOECHST CELANESE CORPORATION,

Petitioner,

VS.

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

DEFENDERS OF PROPERTY RIGHTS*

IN SUPPORT OF THE PETITIONER

Nancie G. Marzulla

DEFENDERS OF

PROPERTY RIGHTS

1350 Connecticut Ave., N.W.

Suite 410

Washington, D.C. 20036

(202) 822-6770

April 22, 1998

* Amici listing continued on next page

[CONTINUED FROM COVER]

BRIEF AMICI CURIAE OF

DAVIS MOUNTAINS TRANS-PECOS HERITAGE

ASSOCIATION

EAST TEXAS HERITAGE ASSOCIATION

FRONTIERS OF FREEDOM INSTITUTE

HILL COUNTRY HERITAGE ASSOCIATION

LAND RIGHTS FOUNDATION

MAINE CONSERVATION RIGHTS INSTITUTE

PEOPLE FOR THE WEST! ACCORD CHAPTER

STOP TAKING OUR PROPERTY

TEXAS JUSTICE FOUNDATION

TRANS TEXAS HFRITAGE ASSOCIATION

TIMBER PRODUCERS

ASSOCIATION OF MICHIGAN

AND WISCONSIN

1)

QUESTIONS PRESENTED

Whether the Chevron Doctrine requires a court to

defer to the agency where the agency invokes the

power of the court to impose penalties?

Whether the imposition of penalties for the violation

of a regulation whether there has been “fair notice”

and for which there has not been a reasonable time to

comply violates the Due Process Clause?

TABLE OF CONTENTS

QUESTIONS PRESENTED oo i

AE OF AUTO iV

INDENTITY AND INTERESTS OF AMICI CURIAE ...... l

STATEMENT OF THE CAME 5 2

SUMMARY OF ARGUMENT... cccccccccsccceesseecs 6

REASONS FOR GRANTING THE boi, ee 8

I. THIS CASE PRESENTS AN EXCELLENT

OPPORTUNITY FOR THIS COURT

TO RESOLVE A SPLIT AMONG THE

CIRCUITS AS TO WHETHER THE CHE] RON

DOCTRINE REQUIRES COURTS TO DEFER

TO THE AGENCY WHERE THE AGENCY

INVOKES THE POWER OF THE COl RT TO

ree PAL CO 9

IT. THIS CASE ALSO RAISES AN IMPORTANT

CONSTITUTIONAL ISSUE THAT NEEDS

RESOLUTION BY THIS COURT — WHETHER

THE IMPOSITION OF PENALTIES BEFORE IT

IS POSSIBLE TO COMPLY - ENCOURAGES

AGENCY ENTRAPMENT OF INNOCENT

VIOLATORS CONTRARY TO THE REQUIRE-

MENTS OF THE DUE PROCESS CLAUSE OF

THE FIFTH AMENDMENT......................... 15

il

TABLE OF CONTENTS - cont.

Hf. FINALLY, THIS CASE AFFORDS THIS COURT

AN OPPORTUNITY TO PROVIDE GUIDANCE

TO FEDERAL AGENCIES REGARDING WHEN

PENALTIES CAN BE LEGITIMATELY

IMPOSED IN ORDER TO ACHIEVE

REGULATORY COMPLIANCE CONSISTENT

WITH THE OVERALL REGULATORY

OBJECTIVE AND WHEN THE IMPOSITION OF

SUCH PENALTIES CONSTITUTES NOTHING

MORE THAN AN ABUSE OF REGULATORY

bach si aca TE ERE TE 18

«baton stig gage oO NOC TE DOLD 20

ii

TABLE OF AUTHORITIES

CASES

Accord Amoco Prod. Co. v. Village of Gambell,

AS leis PP FET iscsi scabs teens een 14

Checkosky and Aldrich v. SEC, No. 97-1137, 1998 U.S. App.

ESicGeee OE FS CGE. Caan, EEE 2 Fc FUE Deckecancsccnenesiceandeess 7,9

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

EF eee APC 6 WES wescicincsnacdblacicecs suuacaioviiasesccasialans passim

City of Boerne v. Flores, _ U.S. _, 117 S. Ct. 2157,

CR IWT F sircc cits taes sith cecabenebiatinaliiscciicdds ak ads ea even aad cok 10

Clinton v. Jones, US. , 117 S.Ct. 1636 (1997)....... LO

Daniels v. Williams, 474 U.S. 327 (1986)............c..ccccececceceses S

Dico, Inc. v. Diamond, 35 F 3d 348 (8th Cir. 1994) ............ 14

General Electric Co. v. EPA, 53 F.3d 1324

PED Ang Seay 1h Wee snaciivacsentaenuisasaniua times lanh lives nks hides 15

Grayned v. City of Rockford, 408 U.S. 104 (1972).......... 8, 16

Kelley v. EPA, 15 F.3d 1100 (D.C. Cir. 1994), cert. denied,

DES Whiche DA ieg Be ke FO PB ivcisnccscs codecs ssdanst 13

Kolendar v. Lawson, 461 U.S. 352 (1983)...........cccccceseeseeeceees 7

Marbury v. Madison, 5 U.S. 137, 1 Cranch 137 (1803)......... 9

Martin v. OSHRC, 499 U.S. 144 (1991) .....ccccccccsssecesssceeees 16

iV

TABLE OF AUTHORITIES - cont.

Mullane v. Central Hanover Bank & Trust Co..

Soe Gin PUP aE PPD ekkicvssssierscicsuiabsiscdedolousaccbaccausdteenels seas

Papachristou v. City of Jacksonville, 405 U.S. 156

ASO Fi F satikapirtintiviscuiyss tosncdacrencssabiovanicadinen sin bc himaneasnasesiie 8

Pfaff v. HUD, 88 F.3d 739 (9th Cir. 1996)............... 14, 18, 20

Porter v. Warner Holding Co., 328 U.S. 395 (1946)........... 14

Redwing Carriers v. Saraland Apartments, 94 F 3d 1489

a ar I ies a iia enamine: 13

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

CHRP) icici ice ligkttcacnbdisvenisbaevieoaonsbeaibiaasagupndads 6, 11

United States v. Celanese Eng'g Resins, Inc., No. H95-0619

Sida 208. ree Ween 2: TONS ais ee 3

United States v. Hoechst Celanese Corp., No. 0-92-1879-17

CARES TAP SUM Wie Tiers chit detrscatedscandhcocacec succeeds 3

United States v. Hoechst Celanese Corp., No. 93-0864-R

(W.D. Va. filed November 17, 1993)...........ccccccccsscccccescese. 3

United States v. Ottati & Goss, Inc., 900 F.2d 429

CEE a ic ance wa iia acess ei ab bo a 13

Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982)......... 14

TABLE OF AUTHORITIES - cont.

CONSTITUTIONAL PROVISIONS

fhe & > 4 Sp: RRR ears mn CharT ree RR eet 9)

Sa MEE IN NE a sy a ae Ne 1S

STATUTES

Ps Pe A Dliiatinitindctisvandaevntciabhemdigbiokeic knee ae

ear ae OD a ea ee a |7

he a Re oh 3 ky.) Seen Cain Mary 3

OTHER AUTHORITIES

Marianne Lavelle, “Environmental Vise: Law Compliance,”

PE TOEN Cds BR CUPRA iachceriaidcsenatetaAcchaiieroscdse nue. 20

Richard Lazarus, “Meeting the Demands of Integration in the

Evolution of Environmental Law: Reforming

Environmental Criminal Law,” 83 Geo. L.J. 2536

LEDS sovrrcsidacsiinstsienbcesonsistticldh ede ee ee 19

TREATISES

Montesquieu, Zhe Spirit of the Laws, 15\-2 (Nugent trans.

RED idiscscvsainijiissvukjuhsbinabecks retcabetbluetacaiiuaieiemamaninmmanetns 10

Pursuant to Rule 37.2 of the Rules of this Court, amici

curiae submit this brief in support of the Petitioner.

IDENTITY AND INTERESTS OF AMICI CURIAE

Defenders of Property Rights is the only national legal

defense foundation devoted exclusively to protecting private

property rights.

Davis Mountains Trans-Pecos Heritage Association

(Alpine, TX) is an association of Texas citizens formed in

response to the abridgment of private property rights in the

Davis Mountains and Trans-Pecos areas.

East Texas Heritage Association (Pecan Gap, TX) has

actively challenged the erosion of private property rights.

Frontiers of Freedom Institute (Arlington, VA) seeks

through its research and educational activities to defend the

constitutional rights of all Americans and to restore

constitutional limits on federal, state, and local governments.

Hill Country Heritage Association (London. TX) was

formed in response to the proposed dedication of twelve

Texas counties as habitat for an endangered species.

Land Rights Foundation (Gloversville, NY) is dedicated to

private property rights and private conservation, through

education and research.

No counsel for either party authored this brief amici curiae, either in

whole or in part. Furthermore, no persons other than amici curiae (their

members or counsel) contributed financially to the preparation of this

brief.

Maine Conservation Rights Institute (Lubec, ME) is a

research and educational institute serving the land-owning

public of Maine.

People for the West! ACCORD Chapter (Scottsdale, AZ)

iS a grassroots organization created to support western

communities against the overreaching hand of government.

STOP Taking Our Property (Chesterton, IN) is comprised

of 300 farm families who live along the Salt Creek and Little

Calumet Rivers in Porter County, Indiana.

Texas Justice Foundation (San Antonio, TX) seeks to

protect, through litigation and education, those fundamental

freedoms and rights essential to the preservation of American

society. To reinvigorate public education, strengthen the

family, and promote the private sector business climate we

must limit government to its traditional and appropriately

limited role.

Trans Texas Heritage Association (Alpine, TX) is a

statewide organization dedicated to the pre’ ction of

landowner rights. Its members collectively »wn over fifteen

million acres of land in Texas and other states.

STATEMENT OF THE CASE

Petitioner, Hoechst Celanese Corporation (“HCC”), is

a chemical manufacturing company and in 1984 had four

plants that used benzene as part of their manufacturing

process. Beginning in 1992, respondent United States tiled

three, virtually identical, enforcement actions against HCC

seeking millions of dollars in penalties, for an alleged

violation of an EPA regulation that petitioner had essentially

complied with by the time the lawsuits were filed. United

States v. Celanese Eng'g Resins, Inc., No. H95-0619 (S.D.

)

Tex. filed March 2, 1995)(“the Bishop case”); United States

v. Hoechst Celanese Corp., No. 93-0864-R (W.D. Va. filed

November 17, 1993)(“the Celco case”); and, the instant case.

United States v. Hoechst Celanese Corp., No. 0-92-1879-17

(D.S.C. filed July 1, 1992)(“the Celriver case”).

Each of these lawsuits alleges the same violation of a

Clean Air Act regulation promulgated by the Environmental

Protection Agency (“EPA”) on June 6, 1984, as part of

benzene emission standards (National Emission Standard for

Equipment Leaks of Benzene)(“benzene regulations”). The

regulations expressly exempt any equipment in a plant that

used up to 1,000 megagrams (1,000 metric tons) of benzene

per year:

Any equipment in benzene service that is

located at a plant site designed to

produce or use less than 1,000

megagrams of benzene per year is

exempt from the requirements of [this

regulation].

40 C.F.R. § 61.110 (c)(2)(1997).

There is no question that in this case petitioner

reasonably believed that the exemption applied to its Celriver

plant operations (as well as the use of benzene at the other

two plants). App. 41a-42a. Both the preamble to the rule and

other documents used in the rulemaking interpret the

exemption to apply to the amount of benzene “consumed” or

the amount of benzene “in inventory” at a plant site. App.

50a-51a; 62a. By either measure petitioner’s Celriver plant

was exempt, since it annually consumed and had in inventory

a combined total of far less than 1,000 megagrams of

benzene. App. 42a. In addition, between 1984 until 1989,

state and federal regulators told petitioner, both orally and in

writing, that its use of benzene in the Bishop plant in Texas

3

was exempt. /d. For example, in 1984, Texas regulators —

following consultation with EPA Region VI — formally

contirmed that the Bishop Plant was exempt from the

benzene regulations. Petitioner reasonably relied on this

confirmation. A copy of the letter confirming the exemption

was sent to EPA Region VI by the then-Texas Air Control

Board. App. 56a. Petitioner’s use of benzene was exactly the

same in the Celriver plant, which is the subject of this

lawsuit, as it was in the Bishop plant. App. 42a, 62a, 65a.

Nevertheless, in 1990, respondent informed petitioner

that its earlier interpretation of the regulation was not the

proper interpretation of the rule, and that the agency in some

unpublished, internal documents had defined the term “use”

to mean “multiple counting.” App. 30a-33a. Upon

notification of respondent’s shift in policy, petitioner

immediately provided respondent with a compliance plan,

consistent with the terms of respondent’s compliance rules

which allowed a company two years to comply. App. 78a-

79a; 83a. By September 1991, petitioner was fully in

compliance with respondent’s new interpretation of its rule.

Pet. 6.

Despite the lack of any environmental benefit to be

achieved by an enforcement action and despite the fact that

petitioner at all times has made a good faith effort to comply

with the rule, on July 1, 1992, respondent filed the instant

enforcement action against HCC. On May 10, 1996, Judge

Anderson for the district court of South Carolina found that

respondent’s current interpretation of the regulation, which

was neither published nor communicated to the state of

Texas which had the delegated authority to enforce the Clean

Air Act, did not provide petitioner fair notice. App. 72a.

The district court further concluded that the government’s

interpretation of the benzene exemption did not comply with

constitutionally based principles of due process. App. 71a.

Accordingly, the district court held that petitioner could not

4

be found liable or penalized for having violating the rule

when it was published, and that petitioner had “acted

responsibly to meet -- and far exceed -- the terms of the

[benzene regulation]” within the regulatory time for

compliance. App. 69a-70a.

The district court specifically and strongly renounced

the practice of agency staff changing regulatory meaning

through unpublished internal guidance documents. The court

below stated that agencies must publish clarifying guidance

in order to ensure that they clearly communicate to the

regulated community the meaning of a regulation as it will be

enforced:

During the past 12 years, the

government has _ provided _ several

different, inconsistent articulations and

applications of [the regulation] . . .

Awarding penalties where the problem is

the language chosen by the agency,

rather than any unwillingness to comply

would only “delay the day when .

regulations will be written in clear and

concise language” so that regulated

parties “will better be able to understand

and observe them.”

App. 58a n.12, 60a.

On appeal, the Fourth Circuit held that it was required

by this Court’s seminal decision in Chevron U.S.A.. Inc. vy.

NRDC, 467 U.S. 837 (1984), to defer to EPA’s present

interpretation of the rule so long as EPA’s interpretation was

not “nonsensical.” App. 8a. However, the court below held

that petitioner had not received fair notice of respondent’s

interpretation of the rule and as a result held that petitioner

could not be penalized for failure to comply with the benzene

5

regulations from 1984 until 1989. But, the court below held

that petitioner could be held liable 90 days following actual

notice of the new regulatory interpretation, even if

compliance within such a short time frame would have been

impossible. App. 8a.

SUMMARY OF ARGUMENT

In 1994 Justice Thomas, in dissent, joined by three

other justices, issued a strong criticism of agency rulemaking

that could have been written with the instant case in mind:

It is perfectly understandable, of course,

for an agency to issue vague regulations

because to do so maximized agency

power and allows the agency greater

latitude to make laws __ through

adjudication rather than through the

more cumbersome rulemaking process.

Nonetheless, agency rules should be

clear and definite so that affected parties

might have adequate notice concerning

the agency’s understanding of the law.

An agency whose powers are not

limited either through meaningful

statutory standards or . . . rules poses a

serious potential threat to liberty and

democracy.

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994).°

Moreover, EPA’s tendency to promulgate ambiguous regulations, rather

than give them specificity through the formal rulemaking process, stands

on its head the rule-making process established by the Administrative

Procedure Act, 5 U.S.C.§ 553. It deprives the public of a meaningful

opportunity to comment, while evading congressional mandates of OMB

review, analysis under the Paperwork Reduction Act, 44 U.S.C. § 3501

and Regulatory Flexibility Act, 5 U.S.C. § 601, avoids the necessity of

6

The failure of federal agencies to promulgate clear

standards in regulations is a problem of increasing concern as

reflected in a recent decision by the U.S. Court of Appeals

for the D.C. Circuit in Checkosky and Aldrich v. SEC, No.

97-1137, 1998 U.S. App. LEXIS 6179 (D.C. Cir. Mar. 27,

1998). In Checkosky, the court gave a stinging criticism of

the agency’ ambiguous rulemaking to which severe penalties

for violation were attached:

It is simple impossible to know in

advance what sorts of negligent errors

will meet this “standard”, we can

imagine both narrow and potentially all-

embracing constructions. There is no

justification for the government

depriving citizens of the opportunity to

practice their profession without

revealing the stand and they have been

found to violate.

ld. at 4.

Chere would be seem to be little question that such

agency rulemaking runs afoul of the Due Process Clause of

the Fifth Amendment, see, e.g., Kolendar v. Lawson, 461

U.S. 352 (1983)(holding state penal statute void for

vagueness on Due Process grounds); Grayned v. City of

reporting significant rules to Congress under the Small Business

Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, 110

Stat. 857 (codified as amended in scaitered sections of 5 U.S.C. and 15

U.S.C.), and relieves the EPA of compliance with various Executive

Orders (e.¢., “Governmental Actions and Interference With

Constitutionally Protected Property Rights”, Exec. Order No. 12,630, 53

Fed. Reg. 8859 (1988)). It 1s clear from the administrative record in this

case that EPA‘s 1989 interpretation would not have passed muster under

many of these requirements, possibly explaining why the agency did not

put forward its “multiple counting” interpretation until after the rule-

making process had been concluded.

-

Rockford, 408 U.S. 104 (1972)(“It is a basic principle of due

process that an enactment is void for vagueness if its

prohibitions are not clearly defined”); Papachristou v. City of

Jacksonville, 405 U.S. 156 (1972)(holding vagrancy

ordinance void for vagueness). As this Court explained in

Daniels v. Williams, 474 U.S. 327, 331 (1986), the purpose

of the Due Process Clause is to prevent government from

abusing its power or employing it for purposes of oppression.

Where severe penalties attach to agency interpreted

regulations that begin the instant that notice is given, then

clearly the Due Process Clause is implicated. The Due

Process Clause, quite simply, forbids all deprivations of

property by government action that is arbitrary, unreasonable

or violative of fundamental principles of fairness. /d

Thus, the issue of substantial constitutional

importance in this case is not whether the agency had the

power to interpret its regulations, but whether it was entitled

to Impose severe monetary penalties for failure to comply

with an interpretation of which petitioner had not received

“fair notice.”

The other related question is whether an agency can

legitimately pursue an enforcement action where it has failed

to communicate clearly to the regulated community the

standards contained in a regulatory program? When

environmental laws and regulations are overly complex and

ambiguous, it prevents the regulated community from

understanding what conduct is permissible or prohibited.

This case presents an opportunity for this Court to require

agencies to promulgate regulations consistent with the

requirements of the Due Process Clause and that further the

legitimate purposes of environmental rules and regulations.

In addition, this case affords this Court the

opportunity to revisit the Chevron doctrine and its

application in the context of agency enforcement actions in

8

which the power of the court is invoked to “rubber stamp”

agency decisions of penalty awards.

Without guidance from this Court with respect to

these important constitutional issues on which the courts

below are split, the door remains wide open for federal

agencies to continue to promulgate and interpret regulations

which the D.C. Circuit Court of Appeals recently described

in One case as “almost deliberately obscurantist.” Checkosky

and Aldrich, 1998 U.S. App. LEXIS 6179. at *1] (D.C. Cir.

March 27, 1998). Accordingly, amici curiae strongly urge

this Court to grant petitioner a writ of certiorari.

REASONS FOR GRANTING THE PETITION

I. This case presents an excellent opportunity for this

Court to resolve a split among the circuits as to

whether the Chevron doctrine requires courts to

defer to the agency where the agency invokes the

power of the court to impose penalties.

It is a bedrock principle of our system of

jurisprudence, premised on a separation of powers among the

three branches of government, that courts are the final

arbiters of what the law is:

It is emphatically the province and duty

of the judicial department to say what

the law is. Those who can apply the rule

to particular cases, must of necessity

expound and interpret that rule.

Marbury v. Madison, 5 U.S. 137, 1 Cranch 137 (1803). See

also Article [1], U.S. Const.

The notion that powers be split among the three

branches of government reflects the framers’ historical

understanding that dates back to Montesquieu who argued

that any combination of the judicial, legislative or executive

powers would create a system with an inherent tendency

towards tyrannical actions. Montesquieu, The Spirit of the

Laws, 151-2 (Nugent trans. 1949).

That historical understanding of the importance of a

governmental system of “checks and balances” upon which

this country was founded is reflected in modern decisions of

this Court. See, e.g., Clinton v. Jones, US. __, 117

S.Ct. 1636, 1649 (1997)(“[We] have long held that when the

President takes official action, the Court has the authority to

determine whether he has acted within the law.”), City of

Boerne v. Flores, U.S. ___ , 117 S. Ct. 2157, 2162 (1997)

(“judicial authority to determine the constitutionality laws”

rests squarely on the judiciary branch as recognized in

Marbury v. Madison.) \ndeed, in 1994 Justice Thomas in

dissent, joined by three other justices, explained the dangers

of ignoring the separation of powers principle in agency

decision making:

It is perfectly understandable, of course,

for an agency to issue vague regulations

because to do so maximized agency

power and allows the agency greater

latitude to make laws _ through

adjudication rather than through the

more cumbersome rulemaking process.

Nonetheless, agency rules should be

clear and definite so that affected parties

might have adequate notice concerning

the agency’s understanding of the law. .

. An agency whose powers are not

limited either through meaningful

Statutory standards or . . . rules poses a

10

serious potential threat to liberty and

democracy.

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994).

Hence, this Court has carefully carved out an

exception where the primacy of the judicial branch yields to

agency decision making. Specifically, the court will defer to

an agency rule validly interpreting a statute where Congress

expressly grants the agency that authority. Chevron U.S.A.,

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

(1984)(holding that where a statute is ambiguous the

judiciary must defer to a reasonable interpretation of the

statute offered by the agency charged with administering the

statute). More recently, the Chevron exception was extended

in Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994),

to allow judicial deference to an agency’s interpretation of its

own programmatic regulation where such authority has been

granted by Congress. Although this Court has thus allowed

the fusion of quasi-legislative rulemaking authority with

quasi-judicial interpretative authority, it has never approved

wholesale transfer of judicial power of executive branch

agency in the guise of “deference.”

The instant case takes the Chevron doctrine of

deference beyond any decision of this Court and holds that

not only is an executive branch agency entitled to make the

law (via promulgation of a regulation) and to interpret the

law that it has made, it is entitled to usurp the court’s role in

also assigning liability for the regulation. Hence, the court

below has accomplished in one fell swoop the consolidation

of power into the executive branch to make the law, interpret

the law, and exercise the prerogative of the court to assign

liability for violating the law: EPA promulgated the benzene

regulations, EPA then interpreted the regulation at issue in

this case, then assigned liability and penalties to HCC by

convincing the court below that the dual doctrines of

1]

deference and strict liability effectively eliminated any

meaningful defense to EPA’s claim.

A court’s review of regulations under

Section 112 of the Clean Air Act, such

as the Benzene Leaks NESHAP, is

particularly limited because of the broad

discretion congress gave EPA to control

hazardous air pollutants. Under the

Clean Air Act in effect when EPA

promulgated the Benzene Leaks

NESHAP, Congress delegated authority

to EPA to identify hazardous air

pollutants and their sources, to determine

methods of controlling emissions from

these sources, and to determine the level

of control necessary to protect public

health. Through its exercise of these

powers, EPA has developed

considerable scientific and __ policy

expertise in the regulation of hazardous

air pollutants. This court treads lightly

when construing the scope of exemption

that allows a source of hazardous air

pollutants to go unregulated. The court

will no substitute its own judgment on

the scope of the exemption unless EPA’s

_interpretation is plainly erroneous or

inconsistent with the regulation.

App. 39a.

The decision of the Fourth Circuit in this case is also

in sharp contrast to decisions of other circuit courts of

appeals which have rejected such an expansive grant of

deference when the power of the court is invoked to award

penalties for violating an agency created and interpreted rule.

12

Justice Breyer writing for the Court of Appeals for the First

Circuit flatly rejected EPA’s argument that the Chevron

doctrine required the court simply to grant EPA’s requested

injunctive relief without any independent judicial review in

United States v. Ottati & Goss, Inc., 900 F.2d 429 (Ast Cir.

1990), explaining:

Precisely what, in the ordinary case,

would be a court be expected to review?

EPA’s decision to ask the Attorney

General to bring the action? The

Attorney General’s decision to file suit?

Is the EPA supposed to win

automatically as long as its decision to

bring the action was reasonable?

Id. at 434.

Similarly, the Court of Appeals for the D.C. Circuit

held in Kelley v. EPA, 15 F.3d 1100 (D.C. Cir. 1994), cert.

denied, 513 U.S. 1110, 115 S.Ct. 900 (1995). held that EPA

could not promulgate binding regulations setting forth the

circumstances under which a court of law would hold parties

liable or not liable, stating that it could not “be argued that

Congress intended EPA, one of many potential plaintiffs, to

have authority to, by regulation, define liability for a class of

potential defendants.” Kelley v. EPA, 15 F.3d at 1107.

Likewise, in Redwing Carriers v. Saraland Apartments, 94

F.3d 1489 (11th Cir. 1996), the Eleventh Circuit refused to

defer to the EPA’s determination of who was liable for a

superfund site clean-up. The court distinguished an agency’s

legislative powers, which were entitled to deference, and its

prosecutorial powers, which were not: “Although the EPA’s

view of who is liable for cleaning up the Saraland Site may

support Redwing’s case, neither the district court nor this

court are obliged to defer to the agency’s conclusions on this

issue. Courts, not the EPA, are the adjudicators of the scope

13

oO

of CERCLA liability.” /d. at 1507 n.24. In Pfaff v. HUD, 88

F.3d 739 (9th Cir. 1996), the Ninth Circuit refused to defer

the agency’s interpretation of the Fair Housing Act in an

enforcement action stating, “Justice dictates, however, that

our general rule of deference to announcements of law by

adjudication has its exceptions. ...” /d. at 748.

Finally, in Dico, Inc. v. Diamond, 35 F.3d 348 (8th

Cir. 1994), the court of appeals for the Eighth Circuit

specifically rejected EPA’s claim that it possessed the

ultimate authority to resolve liability issues under CERCLA

and that it decisions were thus entitled to Chevron deference.

The court held that while EPA has most of the responsibility

for administering CERCLA, EPA does not the ultimate

authority to resolve issues of liability under the statute. Id. at

350. Accord Amoco Prod. Co. v. Village ef Gambell, 480

U.S. 531, 541-46 (1987)(stating that under Alaska National

Interest Lands Conservation Act, district court has equitable

discretion to determine what is in “public interest’);

Weinberger v. Romero-Barcelo, 456 U.S. 305, 319-20 (1982)

(construing Federal Water Pollution Control Act as leaving

courts their traditional equitable discretionary powers to

balance competing claims); Porter v. Warner Holding Co.,

328 U.S. 395, 397-98 (1946)(stating that in enforcement

proceeding under Emergency Price Control Act district court

has broad and flexible equitable powers unless statute clearly

restricts court’s equitable jurisdiction).

By stretching the Chevron doctrine to apply to

instances where the power of the court is invoked to impose a

penalty for violation of an agency created and interpreted

rule, the court below has created a rule that requires courts to

abdicate their responsibility as the ultimate arbiter of what

the law is thereby destroying the balance of power intended

by the framers of our Constitution. Hence, review by this

court is necessary to review this decision and provide

guidance to the lower courts which are currently split on

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whether deference in cases where the agency is enforcing its

own unpublished interpretation under a strict liability statute

is warranted,

il. This case also raises an important constitutional

issue that needs resolution by this Court — whether

the imposition of penalties before it is possible to

comply -- encourages agency entrapment of

innocent violators contrary to the requirements of

the Due Process Clause of the Fifth Amendment.

The fact that the courts below felt bound by the

Chevron doctrine to “rubber stamp” the EPA’s strict liability

decision in this case also meant that the court below failed to

test adequately the agency’s decision to impose liability and

asses monetary penalties under the Due Process Clause of the

Fifth Amendment. The Due Process Clause of the Fifth

Amendment demands that persons not be deprived of life,

liberty or property without receiving fair notice. U.S. CONST.

amend. V. See Mullane v. Central Hanover Bank & Trust

Co., 339 U.S. 306, 313 (1950)(holding that the Due Process

Clause of the Fourteenth Amendment requires that a

deprivation of life, liberty, or property be preceded by fair

notice). Although this Court has not set forth what

constitutes “fair notice” in the context of regulatory

enforcement actions, lower courts have largely agreed that

agencies are required to give “fair notice” of these

interpretations before civil sanctions may be imposed for

violations based upon the interpretations. See, e.g., General

Electric Co. v. EPA, 53 F.3d 1324, 1328-29 (D.C. Cir.

1995)(“In the absence of notice—for example, where the

regulation is not sufficiently clear to warn a party about what

is expected of it—an agency may not deprive a party of

property by imposing civil or criminal liability.”’).

In the present case, the both the trial court and the

Fourth Circuit held that HCC did not have fair notice until

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August, 1989 of EPA’s interpretation of the term “use”

pursuant to the benzene NESHAP to include multiple

counting of the same benzene quantity when recycled

through plant equipment, rather than the total volume of

benzene actually consumed by the plant. Pet. App 20a, 65a.

The result of EPA’s interpretation of the rule was to

drastically increase the amount of benzene that HCC was

required to report as “used”, thus effectively eliminating the

1000 megagram exemption. The courts below, however,

held that the lack of fair notice between 1984 and 1989

prevented HCC from being held liable for penalties during

that period based on EPA’s multiple counting interpretation.

The Fourth Circuit, however, held that HCC could be

held liable for violating NESHAP standards a mere 90 days

after HCC gained actual notice of EPA’s interpretation in

August 1989. Pet. App. 25a. This raises the question of

whether a 90- day period between notice of prohibited

conduct and ensuing penalties can be considered “fair” notice

in satisfaction of the Due Process Clause.

This Court has held that ‘fair’ notice under the Due

Process Clause must also be ‘timely’ notice. In Grayned v.

City of Rockford, 408 U.S. 104 (1972), the Court held that

“because we assume that man is free to steer between lawful

and unlawful conduct, we insist that laws give the person of

ordinary intelligence a reasonable opportunity to know what

is prohibited, so that he may act accordingly.” Id. at 108

(emphasis added).

Within the context of agency regulatory

interpretation, the Court emphasized that agencies must

provide the regulated public adequate time after notification

of regulatory interpretations to bring their conduct into line

with the interpretation. Martin v. OSHRC, 499 U.S. 144, 158

(1991)(“[t]he decision to use a citation as the initial means

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RA LEE NL TN Om |

for announcing a particular interpretation may bear on the

adequacy of notice to regulated parties . . .”’).

In the present case, the Fourth Circuit held that HCC

was liable for noncompliance with the NESHAP regulation

beginning 90 days after receiving actual notice of EPA’s

interpretation of what constituted “use” of benzene because

the regulation itself provided for a 90-day period after the

effective date of the rule for existing plants to come into

compliance with the standard. Pet. App. 25a. The Fourth

Circuit, however, completely fails to address the issue of how

such a 90-day period could constitute ‘timely’ notice of the

EPA interpretation sufficient to allow HCC to bring its plants

into conformance with the interpretation. Indeed, it seems

likely that the court below would have allowed for a shorter

period between HCC’s notification of the EPA interpretation

and HCC’s resulting liability for noncompliance had the

NESHAP regulation so provided.

The 90-day compliance period in the benzene

regulations, however, is tied to the effective date of the

regulation, not from the date that the public was given notice

of the regulation. 40 C.F.R § 61.05(c)(1997). In this case,

the regulation was first proposed in 1981, three years before

the final rule became effective. Pet. App. 85a. Accordingly,

attected industries had at least three years notice of the

EPA’s proposed regulation of benzene. Indeed, the

Administrative Procedure Act itself requires that the public

be given notice of a proposed regulation before the regulation

can become effective. 5 U.S.C. 553 (b). Therefore, it seems

reasonable to believe that the 90-day provision was inserted

into the benzene regulations with the understanding that the

affected industries had already been on notice of the

proposed regulation for three years with sufficient time to

prepare their plants to comply with the regulation. It is

wholly unrealistic that EPA expected factories to be entirely

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ee

overhauled to meet drastically different air pollution

standards in only 90 days.

By holding Petitioner knowing that it would have

been impossible to have complied with the most recent

agency interpretation, the Fourth Circuit is essentially

holding that penalties for prohibited conduct can be assessed

simultaneously with notification of the prohibition.

Providing untimely notice for the public to bring its conduct

into compliance with the law is functionally the same as

providing no notice whatsoever because either way the public

is left with no option to avoid being penalized for

noncompliance. This brings the Fourth Circuit squarely into

conflict with the requirements of Due Process Clause set

forth above. The practical effect of this case will be to tell

agencies that they can play “hide the ball” with their

regulatory interpretations, and successfully seek sanctions

anytime they wish without even giving the regulated public

an opportunity to come into compliance with the

interpretations. Accordingly, there is a substantial

constitutional issue raised in this case that needs resolution

by this Court.

Ill. Finally, this case affords this Court an opportunity

to provide guidance to federal agencies regarding

when penalties can be legitimately imposed in

order to achieve regulatory compliance consistent

with the overall regulatory objective and when the

imposition of such penalties constitutes nothing

more than an abuse of regulatory power.

In Pfaff v. HUD, 88 F.3d 739 (9th Cir. 1996), the

Ninth Circuit Court of Appeals struck down HUD’s

interpretation of the Fair Housing Act as “arbitrary and

capricious” and in so doing, expressed the collective

frustration of the regulated community regarding vague

enforcement standards:

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We are most troubled that in this especially

complex area of the law, in which private

individuals may be subject to heavy-handed

enforcement proceedings, the Secretary has

done so little to enlighten the public as to what

he expects of them. HUD should spare a

thought for the law-abiding property owner,

because the familial status amendment

presents particularly difficult questions of

compliance. ... It is one of HUD’s functions

to develop expertise on the problem of

housing discrimination. . . . and, on the basis

of this expertise, to exercise its broad powers

of enforcement and regulation. If HUD finds

the line-drawing question difficult, imagine

the position of Karl and Elizabeth Pfaff.

Id. at 749 (citations omitted).

In the area of environmental policy, the subject of the

instant lawsuit, enforcement of and compliance with agency

regulations is the chief means of achieving environmental

policy. Yet, given the thousands of pages of environmental

regulations on the books, there are abundant areas of

complexity and confusion, and hence, plenty of opportunities

for agencies to “catch” American businesses in violation of

environmental regulations. There are, for example,

approximately 1,000 pages of RCRA regulations, 4,000

pages of Clean Air Act regulations, 2,400 pages of Clean

Water Act regulations. Richard Lazarus, “Meeting the

Demands of Integration in the Evolution of Environmental

Law: Reforming Environmental Criminal Law,” 83 Geo. L.J.

2536 (1995). Indeed, in a recent survey of the general

counsels for major American corporations, seventy percent of

the respondents stated that full compliance with all federal

and state environmental laws was impossible, largely because

19

of complexity. Marianne Lavelle, “Environmental Vise: Law

Compliance,” 30 Nat’! L.J. S1 (1993).

The Ninth Circuit held in Pfaff, that this type of

enforcement scheme did not serve a legitimate purpose and

was arbitrary and capricious. Pfaff, 88 F.3d at 748. Ata

minimum, if environmental regulations are so complex or

inconsistent that they cannot be easily understood or

complied with, plainly fails to protect the environment

because the regulated community cannot figure out what it

must do — and therefore does not do it. This case well

illustrates that regulations promulgated to protect the

environment are effective only to the extent that their

requirements are known and understood. Hence, this case

affords this Court an opportunity to require federal agencies

to communicate clearly its interpretations of federal

regulations in order to enhance environmental compliance

across the board.

CONCLUSION

Accordingly, for all the foregoing reasons, amici

curiae strongly urge this Court to grant the requested Petition

for Writ of Certiorari.

Respectfully submitted,

Nancie G. Marzulla

DEFENDERS OF

PROPERTY RIGHTS

1350 Connecticut Ave..,

N.W.

Suite 410

Washington, D.C. 20036

April 22, 1998 (202) 822-6770

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