Petition for Writ of Certiorari — Vista Paint Corp. v. United States

971897 may 26198

No. 97- OFFICE OF THE CLERK

SPR REN ERAN SODA AS AER AETEUERGOTA ST:

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

VISTA PAINT CORPORATION,

Petitioner,

3

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

WILLIAM F. FAHEY CHRISTOPHER LANDAU

HANNA & MORTON * Counsel of Record

THORPE & THORPE JEFFREY BOSSERT CLARK

Wilshire-Grand Building KIRKLAND & ELLIS

17th Floor 655 Fifteenth Street, N.W.

600 Wilshire Boulevard Washington, D.C. 20005

Los Angeles, CA 90017 (202) 879-5000

Counsel for Petitioners

May 26, 1998

No

QUESTIONS PRESENTED

. Whether the lower courts erred in holding that § 307(b)(2)

of the Clean Air Act precludes a defendant in a civil

enforcement action from challenging the validity of the

regulation being enforced.

. Whether the lower courts erred in holding that the

Government does not bear the burden of proof for purposes

of penalty fact-finding under § 113(e)(1) of the Clean Air

Act.

. Whether the lower courts erred in holding that a summary

“trial by affidavit” comports with Fed. R. Civ. P. 43(a) and

due process.

li

PARTIES TO THE PROCEEDING

Petitioner, Vista Paint Company (“Vista”), was appellant-

defendant below. Respondent, the United States of America,

was appellee-plaintiff below.

Pursuant to this Court’s Rule 29.6, petitioner notes that Vista

is not the parent or subsidiary of any other corporation. Vista

has not issued any shares to the public.

ili

TABLE OF CONTENTS

Page

QUESTIONS i i

PARTIES TO THE Hit 9. ae ange Ree il

TABLE OF oy ie cei ee Vv

St let Re ee l

eee. 2

JURISDICTION . . eal ou baie am CAE erty ean 3

PERTINENT STATUTORY sivsor yh at)... Renae ee 3

STATEMENT OF THE ee 4

A. Background of the Alleged Violations ........ 4

B. The First Trial ee a ee 5

C. The Second Trial Oe 6

REASONS FOR GRANTING THE bags See OS oes 8

I. The Courts Below Erred in Precluding Vista From

hallenging the Validity of a Regulation in a

Proceeding to Enforce that Regulation...... 0. 8

A. Section 307(b)(2) Does Not

Preclude Vista’s Challenge to the

ee 9

iV

B. If Construed to Preclude Vista’s

Challenge to the California SIP, Section

307(b)(2) is Unconstitutional ........... 12

Il. The Courts Below Erred in Holding that the

Government Does Not Bear the Burden of Proof

with Regard to Penalty Factors Under the Clean

et RR iS ea ee ee ee 15

Ill. The Abbreviated Penalty Trial Afforded to

Petitioner Did Not Comport with the Federal

Rules of Civil Procedure or the Constitution ..... 17

CAPACI, wie yc ks eee eee ee eA es 20

)

+

j

TABLE OF AUTHORITIES

CASES: Pa

Abbott Labs. v. Gardner.

Sf US: TAOI9GT a ee

Adamo Wrecking Co. v. United States.

S36 US. SIRT So ee 9,11-

Armstrong v. Manzo,

PO DOR CIMNSY ioe ey ee

Ashwander v. TVA,

tS Me 66 ee eee

Atlantic States Legal Found. v. Tyson Foods,

897 F.2d 1128 (11th Cir. 1990) ............ i5,

Ball v. Interoceanica Corp.,

71 F.3d 73 (2d Cir. 1995),

cert. denied, 117 S. Ct. 169 (1996) ............

Bank of Nova Scotia v. United States,

Fes US. SLIP elke

Bellaire Gen. Hosp. v. Blue Cross Blue Shield,

vt EO See in Cle T9OR oe

Buckeye Power, Inc. v. EPA,

G0) F.20 362 (60h Cer. 1973)... 10,

Carlisle v. United States,

DET Le. SER EIOS oo Se a ee

vi

Chrysler Corp. v. EPA,

600 F.2d SUG GOS. Ce. TGIF ie er iiss 13

Dolence v. Flynn,

G26 F.2d 1260 CAO Coe, TORO) ovis ce ckeedvee: 18

Eccles v. People’s Bank of Lakewood Village,

$33 US; SOU | see cei a 20

Edward J. DeBartolo Corp. v.

Florida Gulf Coast Bldg.

& Constr. Trade Council,

495 US. SORTS sh hea eee eee 12

Engle v. Isaac,

456 US: FOF CSR) | So ide Cikeeee eee ones 15

FCC v. Beach Communications, Inc.,

FOR UE. SUF Cees a bee sak ieee ee 16

FPC v. Metropolitan Edison Co.,

904 WS. Sia Ces) | ake skew sense eee 8

Friends of the Earth v. Carey,

SS F.4G Ao COS E BO PT) os caw eee hee 10

General Motors Corp. v. Ruckelshaus,

724 F.2d 979 (D.C. Cir. 1983),

vacated on other grounds,

742 F.2d 1561 (D.C. Cir. 1984) (en banc),

cert. denied, 471 U.S. 1074 (1985) ......... 12-13

Getty E. Oil Co. v. Ruckelshaus,

467 F.2d 349 (3d Cir. 1972),

cert. denied, 409 U.S. 1125 (1973) ............ 10

.

Vii

Harrison v. PPG Indus., Inc..

stats ba Eich \ nes: TEER EE Re eee 0)

Holmes Limestone Co. v. Andrus,

655 F.2d 732 (6th Cir. 1981),

cert. denied, 456 U.S. 995 NE SS hoe ascacen: 13

Indiana & Mich. Elec. Co. v. EPA,

509 F.2d 839 (7th Cir. EWE obs hoc Rees 10

In re Adair,

965 F.2d 777 (9th Cir. SEE ee eer te) 19

In re Stevinson,

194 B.R. 509 (D. Colo. ee: Sa ere 19

Lebeck v. William A. Jarvis, Inc..,

250 F.2d 285 (3d Cir. [os tj ee Ae eee 19

Leslie Salt Co. v. U.S..

55 F.3d 1388 (9th Cir.),

cert. denied, 516 U.S. 955 CRE Se a ss eho 16

Lloyd A. Fry Roofing Co. v. EPA,

398 F.26 G65 (Oth Cir. 1977) .......2:....... 10

Lubrizol Corp. v. EPA,

ped F260 807 @C. Cir. 1977)... 25... 10

McNary v. Haitian Refugee Center, Inc.,

Gop NIE 5 ie cs 1]

Metropolitan Washington Airports Auth. v.

Citizens for the Abatement of A ircraft Noise, Inc.,

ROS Wi MOREE ese ok es ee ca ee l

Vili

New England Tel. & Tel. Co. v.

Public Util. Comm'n of Me.,

742 F.2d 1 (1st Cir. 1984),

cert. denied, 476 U.S. 1174 (1986) ............ 13

Philadelphia Newspapers, Inc. v. Hepps,

SERS FOE OON: vases hebaeeiwtceereses 17

Phonetele, Inc. v. AT&T,

889 F.2d 224 (9th Cir. 1989),

cert. denied, 503 U.S. 914 (1992) ............. 19

Public Interest Research Group v.

Powell Duffryn Terminals, Inc.,

913 F.2d 64 (3d Cir. 1990),

cert. denied, 498 U.S. 1109(1991) ............ 15

Ross v. Franzen,

(oho £ey Te, Le Be .) Renee en 18

Sierra Club v. Cedar Point Oil Co.,

73 F.3d 546 (Sth Cir.),

cert. denied, 117 S. Ct. 57 (1996) ............. 15

Speiser v. Randall,

TOT Sis TERED ok kes bk Olas ae aaa 17

Student Public Interest Research Group v.

Monsanto Co.,

18 Envtl. L. Rep. 20,999, 1988 WL 156691

Ce A Rha ee ek heehee eae 16

Sullivan v. Louisiana,

TE ALTA O TEE oo 6b 44k ee Oe a ow 17

Union Elec. Co. v. EPA,

ae Shas CRETE ao hia Ve eRe en lea es 9-10

ix

Union Elec. Co. v. EPA,

593 F.2d 299 (8th Cir. 1979),

cert. denied, 444 U.S. 839 3g 7 Be agi cits 10-1]

United States v. AT&T,

83 F.R.D. 323 (D.D.C. Co . GET poe 18,19-20

United States v. B&W Inv. Props.,

38 F.3d 362 (7th Cir. 1994),

cert. denied, 514 U.S. 1126 oh” CaaS eabl ae ee dene 16-17

United States v. Ethyl Corp.,

761 F.2d 1153 (Sth Cir. 1985),

cert. denied, 474 U.S. 1070 PEE San Ok es 10

United States v. J.B. Williams Co. :

498 F.2d 414 (2d Cir. POWER eevee tess: 18

United States v. Jin Fuey Moy,

"she has Pouiainds svi, SRO OEP OE hn 12

United States v. Marine Shale Processors,

81 F.3d 1329 (Sth Cir. oe, ORSON aOR NE ReaD 16

United States v. Midwest Suspension and Brake,

824 F. Supp. 713 (E.D. Mich. 1993),

aff'd, 49 F.3d 1197 (6th Cir. soa ET ee Tee 16

United States vy. Saade,

652 F.2d 1126 (1st Cir. NONE ce ee Oa Se oo 14

United States v. Sagner,

71 F. Supp. 52 (D. Or. 1947),

rev d on other grounds, 331 U.S. 79] i947). .... 4

United States v. Smithfield Foods, Inc. :

972 F. Supp. 338 (E.D. Va. pkg) RR CARR ye 16

X

Virginia Military Institute v. United States,

ke Seer a Pr ay renee 9

Walton v. United Consumers Club, Inc.,

» Fw & fe. fe BB, * Pen ers 19

Western Oil & Gas Ass’n v. Air Resources Bd.,

Pe Se a EEE oR 7h Ra oho cd kwh weeks )

Yakus v. United States.

RR er reer re eee re Toe 13

STATUTES, REGULATIONS AND RULES:

PRA Eo cava ceebat Veer iu ebons dead eadena 11

PE a ak oa ia end Ken Ade Ne eae ae ewes 11

Se Res OT KA 654 da pce e ke sak cen 4 COE Kun ke eae 3

42 U.S.C. § 1857h-5 (repealed and recodified) ......... 10

eae a PE, ca aa cob keue Ce ankneusceuwe “+

gk te erry es rr rr rye 3-5

a ie SEE ak Oi RES Oe hae 3,4,6,15

Ge eas PE 555 65.8 uae oes fo bas ben oe bees 6

Gee POE 66 ocak cata eetes bee hee 3,8-14

Pe Ss Ge UD i pe Go whe ea de rhe eee: 4,18-20

S. Ct. Rule 30.1

xl

50 Fed. Reg. 3338 (Jan. 24. SIND cs Os aoe ee 5

7a FOR. POG 506 GA 2 IO. Wks 5

Cal. Health & Safety Code § 40000 er OU 6 bec teeuee 5

Cal. Health & Safety Code § 40440 .................. 9

SECONDARY SOURCES:

D. Currie, Judicial Review Under Federal Pollution Laws,

Gf wes h.. Bev, 1201 4977)... Sc 14

Note, /ncreased Judicial Scrutiny of Administrative

Crime, 77 Cornell L. Rev. 612 i os Pees 14

Recommendation of the Administrative Conference. 2

Pee eerie og ee 14

C. Richey, A Modern Management

Technique for Trial Courts to Improve

the Quality of Justice: Requiring Direct

Testimony to Be Submitted in Written

Form Prior to Trial, 72 Geo. L.J. 73 ti aoa 19

R. Stern et al., Supreme Court Practice (7th ed. 1993) ....9

P. Verkuil, Congressional Limitations of Judicial

Review of Rules, 57 Tulane L. Rev. 733

Sandtecag AEE EE OE be CEE dea ape 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

VISTA PAINT CORPORATION,

Petitioner,

V.

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

INTRODUCTION

The ultimate purpose of the separation of powers, this Court

has often stated, is “to protect the liberty and security of the

governed.” Metropolitan Washington Airports Auth. y.

Citizens for the Abatement of Aircraft Noise, Inc., 501 U.S.

252, 272 (1991). This case presents the question whether this

statement is true as a practical matter or simply rhetoric. The

Legislative, Executive, and Judicial Branches of the Federal

Government have come together in this case to impose a

penalty of more than a million dollars on the owner of a small.

family-run business. Congress enacted a statute, the Clean Air

Act, that authorizes such crushing penalties and limits citizens’

ability to contest them in judicial proceedings. The

Environmental Protection Agency (“EPA”) deployed the full

brunt of its enforcement powers against petitioner. And, most

disturbing of all, the lower courts gave petitioner the back of

the hand, limiting its ability to contest the penalty by denying

2

traditional and fundamental procedural protections. The lower

courts in this case essentially abdicated their role as guardians

of liberty, and instead operated as a claims-processing arm of

the administrative state. This Court should not allow a

perceived need for administrative efficiency to override the

core protections of the judicial system.

In particular, the courts below stacked the deck against

petitioner in three ways. First, the lower courts precluded

petitioner from challenging the validity of the very

environmental standard being enforced, on the ground that only

a pre-enforcement challenge could be entertained. Second, the

lower courts refused to impose on the Government the burden

of proof with respect to the appropriate penalty, and essentially

required petitioner to carry the burden of proving why the

maximum possible penalty should not be imposed. Third, the

lower courts subjected petitioner to a “trial by affidavit,”

requiring petitioner to present its case in the form of written

affidavits submitted simultaneously with affidavits from the

Government. Each of these three rulings is incorrect and

unfair, and each conflicts with rulings from other federal

courts. For these reasons, and to underscore that the federal

courts are more than rubber-stamps for administrative

enforcement decisions, this Court’s review is warranted.

OPINIONS BELOW

The Ninth Circuit’s decision below can be found at 129 F.3d

129 (1997) (Table), 1997 WL 697295, and is reprinted in the

Appendix (“App.”) at la-2a. The order denying a petition for

rehearing and suggestion for rehearing en banc is reprinted at

App. 3a. The District Court’s unreported opinion below can be

found at 1996 WL 477053, and is reprinted at App. 4a-33a.

The Ninth Circuit’s decision in the first round of this

litigation can be found at 976 F.2d 739 (1992) (Table), 1992

WL 236898, and is reprinted at App. 34a-45a. This Court

denied a petition for writ of certiorari from that decision on

October 4, 1993. See 510 U.S. 826 (1993).

3

JURISDICTION

The Ninth Circuit entered the judgment below on November

4, 1997, see App. la, and denied petitioner’s timely petition for

rehearing and suggestion for rehearing en banc on January 23,

1998, see id. at 3a. Justice O’Connor granted an extension of

time for filing this petition to and including May 23, 1998.

Because that day is a Saturday, and May 25, 1998, is a federal

holiday, this petition is timely filed on May 26, 1998.

See S. Ct. Rule 30.1. This Court has jurisdiction pursuant to 28

U.S.C. § 1254(1).

PERTINENT STATUTORY PROVISIONS

Section 113(e)(1) of the Clean Air Act, 42 U.S.C. § 7413(e),

provides, in relevant part, as follows:

In determining the amount of any penalty to be assessed

under this section . . . the court . . . shall take into

consideration (in addition to such other factors as justice

may require) the size of the business, the economic

impact of the penalty on the business, the violator’s full

compliance history and good faith efforts to comply, the

duration of the violation as established by any credible

evidence (including evidence other than the applicable

test method), payment by the violator of penalties

previously assessed for the same violation, the economic

benefit of non-compliance, and the seriousness of the

violation .. . .

Section 307(b) of the Clean Air Act, 42 U.S.C. § 7607(b),

provides, in relevant part, as follows:

(1) A petition for review of the Administrator’s action in

approving or promulgating any implementation plan

under section 7410 of this title . . . which is locally or

regionally applicable may be filed only in the United

States Court of Appeals for the appropriate circuit... .

Any petition for review under this subsection shall be

filed within sixty days from the date notice of such

ee

4

promulgation, approval or action appears in the Federal

Register ....

(2) Action of the Administrator with respect to which

review could have been obtained under paragraph (1)

shall not be subject to judicial review in civil or criminal

proceedings for enforcement... .

The version of Fed. R. Civ. P. 43(a) applicable to the tral

below provides as follows:

In all trials the testimony of witnesses shall be taken _

orally in open court, unless otherwise provided by an Act

of Congress or by these rules, the Federal Rules of

Evidence, or other rules adopted by the Supreme Court.

STATEMENT OF THE CASE

A. Background of the Alleged Violations

Vista is a small, family-run paint business founded in 1957

by its owner and president, Eddie Fischer. See App. 46a. At

the time of trial, Fischer operated a single factory in Fullerton,

California, maintained 28 retail stores in Southern California,

and manufactured and sold about 300,000 gallons of paint each

year. See id. at 17a-18a. Prior to this case, Vista had a perfect

record of compliance with all applicable laws. See id. at 16a,

40a.

The Clean Air Act, 42 U.S.C. § 7401 et seg., gives the States

primary responsibility for regulating air pollution. A State

must develop a State Implementation Plan (“SIP”) for

enforcing the Act within its borders, and then submit that SIP

to the EPA for approval. See 42 U.S.C. § 7410. Once the SIP

is approved by the EPA, it becomes federal law. See 42 U.S.C.

§ 7413. A State can modify a federally approved SIP by

submitting a revision, which the EPA can either deny,

conditionally approve, or fully approve. See 42 U.S.C.

§ 7410(k)-(1).

WS

The State of California, in turn, has delegated primary

responsibility for enforcing the Clean Air Act to local “air

quality districts,” which have the authority under state law to

promulgate their own rules. See Cal. Health & Safety Code

§ 40000 et seg. In 1984, two local air quality districts in which

Vista sells paint adopted rules mandating a drastic reduction in

the volatile organic compound (“VOC”) content of certain

paints. See App. at 5a, 7la. In practical effect, these new

standards required Vista and other manufacturers to reduce the

amount of thinners and solvents in their paint. See id. at 48a-

49a. These standards were approved by the EPA as part of the

California SIP in early 1985. See 50 Fed. Reg. 3338 (Jan. 24,

1985).

The State of California, however, postponed the effective

dates of the stringent VOC standards, and twice petitioned the

EPA to revise the federally approved SIP to postpone their

effective dates as a matter of federal law as well. See id at

20a. The EPA never acted on one petition, and ultimately

denied the other some four years later, in early 1989, shortly

before the requested postponement would have expired in any

event. See id.; see also 54 Fed. Reg. 5236 (Feb. 2, 1989).

Meanwhile, in May 1987, the EPA sent information requests

under the Clean Air Act to Vista and many other

manufacturers. See App. at 7a-8a, 50a-5la. The EPA

thereafter issued Vista notices of violation with regard to the

VOC standards, including standards that had never been

implemented under California law. See id. at 8a, 20a-21a, 52a.

57a.

B. The First Trial and Appeal

In December 1990, the EPA filed this civil penalty action

against Vista. See id. at 73-79a. In particular, the agency

contended that the company had violated the Clean Air Act by

(1) selling paint that did not meet the stringent VOC standards

incorporated in the California SIP, see 42 U.S.C. § 7410, and

6

(2) failing to comply with the statutory reporting provisions,

see 42 U.S.C. § 7414. See also App. at 76a-77a.

Vista sought to defend itself on the ground, among others,

that the VOC standards contained in the federally approved SIP

were invalid because they had been promulgated in violation

of California law. This argument was based on a number of

irregularities, including the fact that the VOC standards were

technologically and economically infeasible, at least as applied

to a small business like Vista.

The District Court (Real, J.) rejected this defense, holding

that a federally approved SIP could not be challenged in an

enforcement proceeding, but only in a pre-enforcement

challenge to the adoption of the SIP. See App. 91la-92a.

Without changing a word in the EPA’s proposed findings of

fact and conclusions of law, Judge Real entered summary

judgment against Vista, ordering the company to pay over $3

million in penalties. See App. 69a-72a. The Judge provided no

analysis of conflicting evidence relating to the mandatory

penalty factors set forth in the Clean Air Act. See 42 U.S.C.

7413(e).

Visia appealed to the Ninth Circuit, claiming, inter alia, that

the Distnct Court had erred by (1) precluding the company

from challenging the validity of the very standards being

enforced, and (2) summarily awarding a penalty without

consideration of the statutory penalty factors. The Court of

Appeals affirmed the District Court’s refusal to entertain a

challenge to the validity of the VOC standards, see id. at 36a,

but reversed the summary penalty ard remanded for a new trial

on the appropriate penalty (if any), see id. at 45a. Vista then

filed an unsuccessful interlocutory petition for certiorari on the

first issue. See 510 U.S. 826.

C. The Second Trial and Appeal

The case on remand was assigned first to Judge Tashima,

and then (after Judge Tashima’s elevation to the Ninth Circuit)

to Judge Timlin. Two pretrial rulings are critical here. First,

7

the District Court rejected Vista’s argument that the

Government bore the burden of proof with respect to any facts

underlying the application of the statutory penalty factors. See

App. at 86a-88a. Ruling from the bench, Judge Timlin asserted

that “there’s no burden of proof in this particular trial,” id. at

87a, and later amplified on this ruling by holding that “[t]his

Court will first determine the maximum penalty allowable and

then consider any mitigating circumstances,” id. at 22a.

Second, the District Court ordered the trial to be structured

in a most unorthodox manner. The court required both parties

to present their case-in-chief solely through written affidavits

submitted simultaneously, and precluded either party from

relying on live testimony as part of its case-in-chief. See id. at

66a, 80a-84a. Judge Timlin acknowledged the novelty of these

procedures (which originally had been ordered by Judge

Tashima), but refused to revisit the prior procedural rulings.

“[T]his is my first experience with evidence on declarations

simultaneously filed. This is a classic pilot program for

reconsideration of allowing testimony by declarations. But

that’s the way it is.” /d. at 83a.

Pursuant to these procedures, Vista and the EPA presented

their cases-in-chief by exchanging written affidavits in May

1994. See id. at 8la. A year later, in May 1995, Judge Timlin

held a “trial” to allow limited cross-examination by both sides.

See id. at 82a, 85a. Almost another year later, in April 1996,

the Court issued an order imposing a penalty of $1,111,250.

See id. at 33a.

Vista appealed to the Ninth Circuit for a second time,

challenging (1) the District Court’s failure to impose the

burden of proof on the Government, and (2) the District

Court’s novel procedures. The Ninth Circuit, however,

affirmed in a one sentence order. See id at la-2a. This

petition follows.

8

REASONS FOR GRANTING THE WRIT

I. The Courts Below Erred in Precluding Vista From

Challenging the Validity of a Regulation in a Proceeding

to Enforce that Regulation.

Prior to this Court’s decision in Abbott Labs. v. Gardner,

387 U.S. 136 (1967), it was settled that a regulated party

generally could not challenge a regulation prior to

enforcement, on the ground that such a challenge was not yet

“ripe.” See, e.g, FPC v. Metropolitan Edison Co., 304 U.S.

375, 383-85 (1938). Abbott Labs lifted that absolute barrier,

holding that pre-enforcement review may be appropriate where

the issues are sufficiently concrete for judicial resolution and

the challenged regulation would have a direct and immediate

pre-enforcement effect on the regulated party. See 387 U.S. at

148-56. Over the ensuing decade, Congress moved swiftly to

transform this limited exception into the rule. Important new

statutes required regulated parties to challenge a regulation

prior to its enforcement, and precluded them from raising such

a challenge when the regulation was actually enforced against

them.

The Clean Air Act is one such statute. Section 307(b)(1) of

the Act authorizes regulated parties to challenge the EPA’s

adoption of a SIP within 60 days after the appearance of notice

in the Federal Register. See 42 U.S.C. § 7607(b)\(1). Section

307(b)(2), in turn, provides that “[a]ction of the Administrator

with respect to which review could have been obtained under

paragraph (1) shall not be subject to judicial review in civil or

criminal proceedings for enforcement.” 42 US.C.

§ 7607(b)(2).

This case presents the questions (1) whether these provisions

preclude a challenge to a federally approved SIP based on

economic or technological infeasibility, and, if so, (2) whether

these provisions are constitutional. Both these questions have

vexed and divided courts and commentators. The first question

was expressly noted, but left unresolved, by this Court in

9

Union Elec. Co. v. EPA, 427 U.S. 246, 268 n.18 (1976). The

second question was raised, but left unresolved, in

concurrences by Justice Powell in Harrison v. PPG Indus.,

Inc., 446 U.S. 578, 594-95 (1980), and Adamo Wrecking Co. v.

United States, 434 U.S. 275, 289-91 (1978), and has been the

subject of great interest among the lower courts and

commentators. This Court should grant review here to resolve

these important and unsettled issues of federal law.'

A. Section 307(b)(2) Does Not Preclude Vista’s

Challenge to the California SIP.

Vista argued below that the VOC standards included in the

California SIP — the very standards on which the EPA bases

this enforcement action — are invalid on several grounds under

California law. Among these grounds are claims relating to

economic and/or technological infeasibility, which are factors

that local air quality districts in California must consider under

state law when promulgating standards. Thus, for example, the

“control measures” imposed by a local air quality district must

be “efficient and cost-effective.” Cal. Health & Safety Code

§ 40440. In addition, a local air quality district must assess and

duly consider the economic impact of its standards. See

Western Oil & Gas Ass'n v. Air Resources Bd., 691 P.2d 606,

608 (Cal. 1984). Vista was precluded from raising either of

these two challenges to the VOC standards below, even though

it could not have raised such challenges involving economic

and/or technological feasibility in a direct challenge to the

EPA’s adoption of the California SIP. See Union Elec. Co.,

427 U.S. at 256 (“[C]laims of economic and technological

No significance can be attached to the fact that Vista’s interlocutory

petition for certiorari raising these issues was denied in 1993. This.Court

“generally await[s] final judgment in the lower courts before exercising [its]

certiorari jurisdiction.” Virginia Military Institute v. United States, 508

U.S. 946 (1993) (statement of Scalia, J., respecting denial of certiorari)

(collecting cases); see generally R. Stern et al., Supreme Court Practice

§ 4.18 at pp. 195-98 (7th ed. 1993).

10

infeasibility [are] wholly foreign to the Administrator’s

consideration of a state implementation plan.”).

Both the District Court and the Ninth Circuit, however, held

that Vista was precluded from challenging the validity of the

VOC standards in this enforcement proceeding on the ground

that it had not mounted a pre-enforcement challenge to those

standards. See App. at 36a. Vista had “ample opportunity,”

the Ninth Circuit asserted (without citation), to challenge those

standards when the EPA adopted the California SIP. /d. The

Ninth Circuit thus joined the Third Circuit in broadly

construing § 307(b)(2) of the Clean Air Act to preclude all

challenges to the validity of a SIP, even where (as here) those

challenges involve economic and/or technological infeasibility.

See Getty E. Oil Co. v. Ruckelshaus, 467 F.2d 349, 355-56 (3d

Cir. 1972), cert. denied, 409 U.S. 1125 (1973); see also United

States v. Ethyl Corp., 761 F.2d 1153, 1155-58 (Sth Cir. 1985)

(broadly holding that § 307(b)(2) precludes all enforcement

challenges to a federally approved SIP), cert. denied, 474 U.S.

1070 (1986); Lubrizol Corp. v. EPA, 562 F.2d 807, 813-15

(D.C. Cir. 1977) (same); Friends of the Earth v. Carey, 552

F.2d 25, 34-35 (2d Cir. 1977) (same).’

Three other circuits, in contrast, have recognized that

challenges based on economic and/or technological

infeasibility cannot be raised in a petition for direct review, and

hence may properly be raised as a defense to an enforcement

proceeding. See Lloyd A. Fry Roofing Co. v. EPA, 554 F.2d

885, 891 (8th Cir. 1977); Indiana & Mich. Elec. Co. v. EPA,

509 F.2d 839, 845 (7th Cir. 1975); Buckeye Power, Inc. v.

EPA, 481 F.2d 162, 172-73 (6th Cir. 1973); cf Union Elec. Co.

v. EPA, 593 F.2d 299, 304 (8th Cir. 1979) (“[A] company

seeking to have these issues reviewed . . . could present its

* Some of these cases refer to the previous codification of § 307(b)(2) in 42

U.S.C. § 1857h-5(b)(2). Although the time period for filing petitions for

review under this provision has increased, the substance of the provision has

otherwise remained unchanged.

11

cause as a defense to any enforcement proceedings initiated by

the EPA in federal district court.”’), cert. denied, 444 U.S. 839

(1979). These courts recognize that claims of economic and

technological infeasibility are beyond the EPA’s authority to

consider in the SIP approval process, and thus are outside of

the preclusive scope of § 307(b)(2) by that provision’s very

terms.

To determine whether a SIP was technologically and/or

economically feasible, the Sixth Circuit explained, would

require a hearing “on the record” within the meaning of the

Administrative Procedure Act, 5 U.S.C. § 553(c), whereas the

SIP review process is not a formal, “on the record” rulemaking.

Buckeye Power, 481 F.2d at 172-73. In addition, the Sixth

Circuit noted, the judicial review provisions of the

Administrative Procedure Act expressly authorize judicial

review of agency action “in civil or criminal proceedings for

enforcement” except “to the extent that prior, adequate, and

exclusive opportunity for judicial review is provided by law.”

5 U.S.C. § 703 (emphasis added). “Since we have determined

that there could not have been an adequate hearing on

individual claims such as those presented by petitioners herein

prior to approval of the state plans, the claims can be asserted

as a defense in either federal or state enforcement

proceedings.” Buckeye Power, 481 F.2d at 173.

The interpretation of § 307(b)(2) advanced by the Sixth,

Seventh, and Eighth Circuits comports with traditional

principles of statutory construction. Because judicial review is

vital to the legitimacy of administrative action, this Court

traditionally has given a very narrow reading to provisions

limiting such review. See, e.g., McNary v. Haitian Refugee

Center, Inc., 498 U.S. 479, 496 (1991). Indeed, in Adamo

Wrecking Co. v. United States, 434 U.S. 275 (1978), this Court

went out of its way to avoid construing § 307(b)(2) to preclude

a challenge to an EPA-approved emission standard in an

enforcement proceeding. Invoking the rule of lenity, the Court

concluded that the standard at issue was not, in fact, an

12

—

“emission standard” within the meaning of the Clean Air Act

and thus was outside the scope of § 307(b)(2). /d. at 278-89.

The Court should now resolve this division in the lower

courts and clarify the circumstances, if any, under which

§ 307(b)(2) of the Clean Air Act allows regulated parties to

challenge the validity of an EPA-approved SIP in an

enforcement proceeding.

B. If Construed to Preclude Vista’s Challenge to the

California SIP, Section 307(b)(2) is

Unconstitutional.

A cardinal reason to construe § 307(b)(2) to authorize

Vista’s challenge to the validity of the VOC standards in this

enforcement proceeding is that a contrary construction of that

provision would be unconstitutional — or, at the very least,

raise very serious constitutional doubts. See, e.g., Edward J.

DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trade

Council, 485 U.S. 568, 575 (1988); United States v. Jin Fuey

Moy, 241 U.S. 394, 401 (1916); see also Ashwander v. TVA,

297 U.S. 288, 348 (1936) (Brandeis, J., concurring).

The constitutional issue presented by § 307(b)(2) is stark:

can a defendant in a regulatory enforcement proceeding be

denied the opportunity to present a defense? The “fundamental

requirement of due process is the opportunity to heard .. . ina

meaningful time and in a meaningful manner.” Armstrong v.

Manzo, 380 U.S. 545, 552 (1965). For a defendant in a civil

(or criminal) enforcement proceeding, the most meaningful

time to be heard is obviously during the course of such a

proceeding, not at the earlier time when the regulation is first

included in a SIP, when the precise interests of all who might

be affected are hypothetical and unfocused. Absent

extraordinary circumstances, to preclude a defendant in an

enforcement proceeding from challenging the validity of the

very regulation being enforced is to deny due process. Cf

General Motors Corp. v. Ruckelshaus, 724 F.2d 979, 984 n.30

(D.C. Cir. 1983) (Section 307(b)(2) presents constitutional

a

A

al

a

13

problems that have not yet been resolved), vacated on other

grounds, 742 F.2d 1561 (D.C. Cir. 1984) (en banc), cert.

denied, 471 U.S. 1074 (1985); Chrysler Corp. v. EPA, 600 F.2d

904, 912 (D.C. Cir. 1979) (noting “[t]he nagging presence of

a substantial due process question” presented by § 307(b)(2)).

It is no answer to say that the regulated party could have

mounted a pre-enforcement challenge. Pre-enforcement

challenges, as noted above, have always been the exception,

rather than the rule, in our legal system. See, e.g, New

England Tel. & Tel. Co. v. Public Util. Comm'n of Me., 742

F.2d 1, 7 (1st Cir. 1984) (Breyer, J.), cert. denied, 476 U.S.

1174 (1986). The opportunity to challenge a regulation at the

time the EPA adopts a SIP is no opportunity at all, as most

potential targets of that regulation are unaware that it may

eventually be enforced against them. Vista, for one, does not

(and cannot afford to) pay a staff of lawyers to comb through

the Federal Register every day to see if any of its interests

might be affected by revisions to a SIP. As Justice Powell has

explained, it “is totally unrealistic to assume that more than a

fraction of the persons and entities affected by a regulation —

especially small contractors scattered across the country —

would have knowledge of [a regulation’s] promulgation, or

familiarity with or access to the Federal Register.” Adamo

Wrecking, 434 U.S. at 289-91 (concurring opinion); see also

Holmes Limestone Co. v. Andrus, 655 F.2d 732, 740-41 (6th

Cir. 1981) (Merritt, J., concurring) (echoing Justice Powell’s

notice concerns), cert. denied, 456 U.S. 995 (1982). Vista, like

any other regulated party, should be allowed to defend itself

when its interests in the validity of a regulation become

concrete: when the regulation is enforced against it.

Only once has this Court upheld a limitation on the right to

present an effective defense as substantial as the limitation set

forth in § 307(b)(2) of the Clean Air Act. In Yakus v. United

States, 321 U.S. 414 (1944), this Court upheld the validity of

the Emergency Price Control Act enacted during the Second

World War, which limited judicial review of price controls to

14

pre-enforcement challenges, and precluded any challenge to the

validity of a price control during an enforcement proceeding.

It remains an open question, however, whether Yakus applies

outside the unique factual context of wartime price controls.

See Adamo Wrecking, 434 U.S. at 289-90 (Powell, J.,

concurring); United States v. Saade, 652 F.2d 1126, 1133 n.9

(Ist Cir. 1981); Note, IJncreased Judicial Scrutiny of

Administrative Crime, 77 Comell L. Rev. 612, 633 (1992)

(characterizing Adamo Wrecking as an example of judicial

“sleight of hand” to avoid addressing Yakus’ continuing

validity or scope). There is simply no basis for extending the

extraordinary wartime holding in Yakus to uphold the validity

of a provision like § 307(b)(2) precluding enforcement

challenges of peacetime environmental regulation. See, e.zg.,

United States v. Sagner, 71 F. Supp. 52, 53 (D. Or. 1947)

(predicting that “solid part of the bar” will eventually request

reconsideration of Yakus), rev'd on other grounds, 331 U.S.

791 (1947); Recommendation of the Administrative

Conference, 4! Fed. Reg. 56768 (1976) (“The express

preclusion of review at the enforcement stage creates a highly

unusual and unnecessarily harsh restriction on the right to

challenge the validity of a regulation to which one is subject.”);

D. Currie, Judicial Review Under Federal Pollution Laws, 62

Iowa L. Rev. 1221, 1258-60 (1977) (cniticizing

constitutionality and policy basis of § 307(b)(2)).

By transforming the narrow Yakus exception of limited

judicial review of enforcement proceedings into the rule,

Congress has unconstitutionally stacked the deck against

regulated parties like Vista. It is high time for this Court to

underscore the limited scope of Yakus, or overrule that decision

altogether. As Professor Verkuil has noted, failure to resolve

definitively the constitutional vitality and scope of Yakus

merely “causes an unnecessary loss of time and a waste of

decision resources for all three branches of government.” P.

Verkuil, Congressional Limitations of Judicial Review of

Rules, 57 Tulane L. Rev. 733, 772 (1982-83).

15

iI. The Courts Below Erred in Holding that the

Government Does Not Bear the Burden of Proof

with Regard to Penalty Factors Under the Clean Air

Act.

On remand from the Ninth Circuit to reconsider the

appropriate penalty (if any) to be assessed against Vista, the

District Court refused to place on the Government the burden

of proving the facts underlying the various statutory penalty

factors. According to the District Court, “there’s no burden of

proof in this particular trial.” App. 87a (emphasis added). The

Court then proceeded, if anything, to put the burden on Vista

to prove that any penalty less than the maximum was

warranted. “This Court will first determine the maximum

penalty allowable and then consider any mitigating

circumstances.” App. 22a. These holdings are plainly

erroneous: there is a burden of proof with regard to proof of

penalty factors in Clean Air Act enforcement actions, and that

burden rests squarely on the Government. The District Court’s

improper allocation of the burden of proof infected the entire

proceeding.

Section 113(e)(1) of the Act, 42 U.S.C. § 7413(e)(1),

requires a court assessing the amount of a statutory penalty to

consider various factors, including the size of the defendant’s

business, the economic impact of the penalty on that business,

and the defendant’s compliance history. In order to assess

these factors, of course, the court first must find the underlying

facts. See Atlantic States Legal Found. v. Tyson Foods, 897

F.2d 1128, 1142 (11th Cir. 1990) (district court must “clearly

indicat[e] the weight it gives to each of the factors in the statute

and the factual findings that support its conclusions”); see also

Sierra Club v. Cedar Point Oil Co., 73 F.3d 546. 573 (Sth Cir.),

cert. denied, 117 S. Ct. 57 (1996); Public Interest Research

Group v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 79 (3d

Cir. 1990), cert. denied, 498 U.S. 1109 (1991). And, to find

facts, the district court must allocate a burden of proof. See,

e.g., Engle v. Isaac, 456 U.S. 107, 118 (1982). There is no

16

basis in law or logic for the District Court’s conclusion that

“there’s no burden of proof” in a proceeding to determine the

appropriate penalty (if any) for a violation of the Clean Air

Act.

Where, as here, the Government seeks to exact a penalty, it

must carry the burden of proving that the penalty is justified.

Our legal system rests on a “presumption in favor of freedom.”

FCC v. Beach Communications, Inc., 508 U.S. 307, 320 (1993)

(Stevens, J., concurring in judgment). Absent explicit statutory

command (and there is none in the Clean Air Act), the

Government should bear the burden of proving facts to justify

the appropriate penalty (if any); the defendant should not be

saddled with the burden of proving facts to rebut the maximum

penalty requested by the Government. See, e.g., United States

v. Midwest Suspension and Brake, 824 F. Supp. 713, 735 n. 30

(E.D. Mich. 1993), aff'd, 49 F.3d 1197 (6th Cir. 1995); United

States v. Smithfield Foods, Inc., 972 F. Supp. 338 (E.D. Va.

1997); Student Public Interest Research Group v. Monsanto

Co., 18 Envtl. L. Rep. 20,999, 1988 WL 156691 (D.N.J. 1988).

As the Monsanto court explained:

I expressly reject [the Government’s] argument that, in

setting a penalty, the court should place the burden on the

on the defendant to establish facts that justify some

amount less than the maximum allowed by law. That

would, in my view, be a novel and wholly untenable

principle to apply to any civil penalty statute.

Monsanto, 18 Envtl. L. Rep. 20,999, 1988 WL 156691, at *16.

Other courts, however, agree with the lower courts in this

case that a district court should presumptively apply the

maximum penalty and require a defendant to prove facts in

mitigation. See, e.g, United States v. Marine Shale

Processors, 81 F.3d 1329, 1337 (Sth Cir. 1996); Leslie Salt

Co. v. U.S., 55 F.3d 1388 (9th Cir.), cert. denied, 516 U.S. 955

(1995); United States v. B&W Inv. Props., 38 F.3d 362, 368

17

(7th Cir. 1994), cert. denied, 514 U.S. 1126 (1995); Atlantic

States Legal Found., 897 F.2d at 1142 (same).

The Court should resolve this conflict of authority on such

an important issue of federal law. By refusing to place

squarely on the Government the burden of proving the facts

underlying the penalty factors, and by requiring the defendant

to prove facts in mitigation of the maximum penalty, the

District Court improperly stacked the deck against Vista. The

allocation of the burden of proof is no technicality; it

influences the entire fact-finding process. “In all kinds of

litigation it is plain that where the burden of proof lies may be

decisive of the outcome.” Speiser v. Randall, 357 U.S. 513,

525 (1958); see also Philadelphia Newspapers, Inc. v. Hepps,

475 U.S. 767 (1986) (“burden of proof is dispositive” when

fact-finder cannot otherwise resolve an issue conclusively).

Indeed, as this Court has explained, a misallocation of the

burden of proof can “vitiat[e]” all factual findings. Sullivan v.

Louisiana, 508 U.S. 275, 281 (1993).

ill. The Abbreviated Penalty Trial Afforded to

Petitioner Did Not Comport with the Federal Rules

of Civil Procedure or the Constitution.

The “trial” held on remand below was nothing of the sort.

Rather than (1) requiring the EPA to put on its case first,

present its witnesses, and subject those witnesses to cross-

examination, and then (2) allowing Vista to put on its own

case, the District Court ruled both the Government and Vista

should simultaneously submit their cases-in-chief in the form

of written affidavits. The Court then gave a nod toward

traditional practice by allowing the parties to cross-examine

adverse witnesses in open court. This peculiar procedure,

which even the District Court characterized as novel, App. at

83a, bears no resemblance to the procedure required by the

Federal Rules of Civil Procedure or the Constitution. Although

district courts surely enjoy a measure of discretion in

structuring their proceedings, they do not have discretion to

dispense with bedrock procedural rules. The District Court

18

here raised concerns of administrative efficiency above

concerns for fundamental fairness. This Court should not

tolerate this assembly-line approach to justice.

In particular, the District Court’s novel procedure violated

Rule 43(a) of the Federal Rules of Civil Procedure, which, at

the time of trial, provided that “[i]n a// trials the testimony of

witnesses shall be taken orally in open court, unless otherwise

provided by an Act of Congress or by these rules, the Federal

Rules of Evidence, or other rules adopted by the Supreme

Court.” Fed. R. Civ. P. 43(a) (emphasis added).’ The text of

the Rule could not be clearer. The “testimony of witnesses”

must be delivered “in open court.” Trials by affidavit are not

permissible.

Indeed, previous attempts to dispense with the testimony by

witnesses in open court have been rebuffed by courts sensitive

to the command of Rule 43(a) and the Constitution. “It is not

within the province of the court to resolve issues of disputed

fact in a trial by affidavit.” Ross v. Franzen, 777 F.2d 1216,

1220 (7th Cir. 1985); see also Dolence v. Flynn, 628 F.2d

1280, 1281 (10th Cir. 1980) (per curiam); United States v. J.B.

Williams Co., 498 F.2d 414, 430 n.19 (2d Cir. 1974). Judicial

convenience cannot justify a contrary result. Thus, in United

States v. AT&T, 83 F.R.D. 323, 339 & n.46 (D.D.C. 1979) —

surely a complicated case if ever there was one — Judge

Greene rejected a proposal to proceed by affidavits rather than

live testimony. As the Judge explained, Rule 43(a) authorized

no such departure from “the historic practice of courts of this

’ The word “orally” was deleted as part of a series of technical amendments

effective April 23, 1996, but those amendments were not intended to have

any substantive effect. As explained by the Advisory Committee notes

accompanying the amended Rule, the word “orally” was deleted to

accommodate witnesses who are “not able to communicate orally,” and

therefore need to communicate through other means, such as “writing or

sign language.” The amendment in no way purported to dispense with the

requirement to present the “the testimony of witnesses . . . in open’court” or

otherwise authorize trials by affidavit.

Pe, Pe ee oe eS

ae errs ree

19

nation” absent an unequivocal command. /d. at 339. Neither

the statute at issue there, nor the Clean Air Act at issue here,

provides any such command.

In light of the plain text of Rule 43(a), it goes without saying

that courts have no “inherent power” to dispense with the

“testimony of witnesses” presented “in open court” in favor of

trial by affidavit. Whatever the scope of such power, it plainly

cannot trump the clear limitation established by the Rule. See,

e.g., Carlisle v. United States, 517 U.S. 416, 426 (1996).

“[FJederal courts have no more discretion to disregard the

Rule’s mandate than they do to disregard constitutional or

statutory provisions.” Bank of Nova Scotia v. United States,

487 U.S. 250, 254-255 (1988).

Despite the clarity of Rule 43(a), many courts (like the

courts below) have held that it is permissible to receive

evidence in written form as long as it is later subject to cross-

examination. See, e.g., Bellaire Gen. Hosp. v. Blue Cross Blue

Shield, 97 F.3d 822, 826-28 (Sth Cir. 1996); Ball vy.

Interoceanica Corp., 71 F.3d 73, 77 (2d Cir. 1995), cert.

denied, 117 S. Ct. 169 (1996); In re Adair, 965 F.2d 777, 779-

80 (9th Cir. 1992) (per curiam); Phonetele, Inc. v. AT&T, 889

F.2d 224, 232 (9th Cir. 1989), cert. denied, 503 U.S. 914

(1992); In re Stevinson, 194 B.R. 509, 511-12 (D. Colo. 1996);

see also Hon. Charles Richey, A Modern Management

Technique for Trial Courts to Improve the Quality of Justice:

Requiring Direct Testimony to Be Submitted in Written Form

Prior to Trial, 72 Geo. L.J. 73 (1983). The Ninth Circuit has

succinctly summarized the reasoning of these courts in

authorizing departures from traditional procedures: “The use of

written testimony is an accepted and encouraged technique for

shortening bench trials.” Phonetele, 889 F.2d at 232.

Other courts, however, have neither “accepted” nor

“encouraged” this aberrant approach. See Walton v. United

Consumers Club, Inc., 786 F.2d 303, 313 (7th Cir. 1986)

(Easterbrook, J.); Lebeck v. William A. Jarvis, Inc., 250 F.2d

285, 294-95 (3d Cir. 1957); AT&T, 83 F.R.D. at 339 & n.46

20

(“The Court has found no provision in the Rules to contradict

the express mandate of Rule 43(a).”); see also Eccles v.

People’s Bank of Lakewood Village, 333 U.S. 426, 434 (1948)

(Frankfurter, J.) (‘Modern equity practice has tended away

from a procedure based on affidavits and interrogatories,

because of its proven insufficiencies.”).

This Court should grant review here to resolve this split of

authority and to reaffirm the traditional nght, codified in Rule

43(a), to have factual disputes tried on the basis of “the

testimony of witnesses . . . in open court.”

CONCLUSION

For the foregoing reasons, this Court should grant the

petition for a writ of certiorari.

Respectfully submitted,

WILLIAM F. FAHEY CHRISTOPHER LANDAU

HANNA & MORTON * Counsel of Record

THORPE & THORPE JEFFREY BOSSERT CLARK

Wilshire-Grand Building KIRKLAND & ELLIS

17th Floor 655 Fifteenth Street, N.W.

600 Wilshire Boulevard Washington, D.C. 20005

Los Angeles, CA 90017 (202) 879-5000

Counsel for Petitioner