Opposition Brief — Vista Paint Corp. v. United States

No. 97-1897

In the Supreme Court of the Gnited States

OcTOBER TERM, 1997

VISTA PAINT CORPORATION, PETITIONER

UNITED STATES OF AMERICA

IN FOR A WRIT OF CERTIORARI

j : TES Col R T f pf Al PE iis

Ly INTO CIRCTII7

HE NINTH CIRCUT7

BRIEF FOR THE UNITED STATES IN OPPOSITION

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QUESTIONS PRESENTED

1. Whether a defendant in a civil enforcement

action under the Clean Air Act (42 U.S.C. 7401 et seq.)

is barred from asserting as an affirmative defense

that the standards contained in a State Implementa-

tion Plan approved by the Environmental Protection

Agency are technologically or economically infeasi-

ble.

2. Whether the district court acted within its

discretion in declining to impose the burden of proof

on either party in assessing a civil penalty against

petitioner for violations of the Clean Air Act (42

U.S.C. 7401 et seq.). |

3. Whether the district court acted within its

discretion by ordering the parties to submit their

trial witnesses’ direct testimony by affidavit and to

make the witnesses available for cross-examination.

(1)

Opinions below

Jurisdiction

Statement

SEITE. Suiits iad Neiantasineseeinuiadiiadienwmmnieveanianiueaneiaine

a asl akan do sedeanons

TABLE OF CONTENTS

TABLE OF AUTHORITIES

Cases:

Action for Rational Transit v. West Side Highway

Project, 699 F.2d 614 (2d Cir. 1983) .............00.cese0s.

Adair, In re, 965 F.2d 777 (9th Cir. 1992) .............006

Adamo Wrecking Co. v. United States, 434 U.S.

Be TEE cies a linssithintheninuiinisctearenthniscnamiwsncisiniinatunn ssvcenion

Atlantic States Legal Found., Inc. v. Tyson

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

Ball v. Interoceanica Corp., 71 F.3d 73 (2d Cir.

PTE, Witsaccsntnsnintnenssninsestonsqnencuacsspuvnaseeiesseneecansshuvensaes

Buckeye Power, Inc. v. EPA, 481 F.2d 162 (6th

Rr TIED ciaicindenduiinciniveenuetesnmaiicapunmiediasabeutiaeandbusseanss

Dolence v. Flynn, 628 F.2d 1280 (10th Cir. 1980) .....

Eirhart v. Libbey-Owens-Ford Co., 996 F.2d

SE TEE JU: HEED nissicevtcsnsithsdiainesiaanstiahedecindetesrecessate

General Motors Corp. v. United States, 496 U.S.

Sa RIND \edhenisnesnieuiesiuisisenbbadeenennebviupncekassieasagtnginbannedte

Getty Oil Co. v. Ruckelshaus, 467 F.2d 349 (3d

Cir. 1972), cert. denied, 409 U.S. 1125 (1973) ..........

Indiana & Mich. Elec. Co. v. EPA, 509 F.2d 839

ER A POUT avideyinnatinbaachinsbincdsucndieesasiecasuscisenninsccsee

International Harvester Co. v. Ruckelshaus, 478

Pe ME fe: GAINS REED \icecenminldtnisheduinanetthenéausacsees

Lebeck v. William A. Jarvis, Inc., 250 F.2d 285

FOE Re NITE Semcetdtcteeensindgtininsinsanevbiainecusinehsaaneotansece

(TIT)

SPEER ETE EEE E REET E EEE EEE EEE EEE EE EEE EERE EEE EEE ERR HERE EE

SSE ERE ETHER EERE EE EE EE TEESE EEE EE EEE EERE EEE EEE O EE SEHR E EEE

IV

Cases—Continued:

Lloyd A. Fry Roofing Co. v. EPA, 554 F.2d 885

ERI Srl BC OP stsnivtnacncnnccdciciniccnantabananibbetuatneteetatianas

Lubrizol Corp. v. EPA, 562 F.2d 807 (D.C. Cir.

BEC) uxisicceiensadansassnnnsiasteesbenh olpineiceiuieubintioiiiteewhenensianias

Medina v. California, 505 U.S. 437 (1992) ......ccccs0e

Phorretele Inc. v. American Tel. & Tel. Co., 889

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

CEIDIED icccismnsintectienentnsnndbeninisbbenniahineiecie casctatbauasanbbetioes

Ross v. Franzen, 777 F.2d 1216 (7th Cir. 1985) ......

Saverson v. Levitt, 162 F.R.D. 407 (D.D.C. 1995) ...

Southern Pacific Transp. Co. v. Chabert, 973

F.2d 441 (5th Cir. 1992), cert. denied, 507 U.S.

SSE (IB) sxtincescievsccrcnntipiunssnnenstipt jeubeudeiuiecstiebinentaeess

Student Public Interest Research Group of New

Jersey, Inc. v. Monsanto Co., Civ. A. No. 88-2040,

1988 WL 156691 (D.N. J. Mar. 4, 1988) ..........cceceeees

Taylor v. Freeland & Kronz, 503 U.S. 638

CEDIA ansccsnennnven shecopinsvksseonspbeipeneneiesdabegiolapitniabesbsiniee

Train v. Natural Resources Defense Council,

SD EB AD CIDE) | se vissnssnsaccteendiciatietasatonsindienensdmiasenns

Tull v. United States, 481 U.S. 412 (1987) ..............

Union Electric Co. v. EPA:

EE Ek Re CEE ieien dahchindeddes casas ancebcabvandabinscadianitbiedeits

593 F.2d 229 (8th Cir.), cert. denied, 444 U.S.

BU CRP TTD. icccpesicpcicctimigieadeivaninasteeinodansaenineadaaaeueee

United States v. B & W Inv. Properties, 38 F.3d

362 (7th Cir. 1994), cert. denied, 514 U.S. 1126

CRIS Knipidnis dadsicnsebs racic abinisaeiadacindiaasthaskaniiobiaias

United States v. Ethyl Corp., 761 F.2d 1153

(5th Cir. 1985), cert. denied, 474 U.S. 1070

COUNED cidiscss scion nscsmscecpemsiuiaituabiponnteebeababsiualaeieasaninanes

United States v. Ford Motor Co., 814 F.2d 1099

(6th Cir.), cert. denied, 484 U.S. 822 (1987) ............

United States v. J.B. Williams Co., 498 F.2d 414

OES ANG SOD acicctncicdibccctebmndciont eniticsdchacmiinkies

21

21

3, 14

19

Cases—Continued: Page

United States v. Marine Shale Processors, 81 F.3d

Be Ce Ses OE Sittin ch nibicainccainiadnaaddag tis eae 19

United States v. Midwest Suspension & Brake,

824 F. Supp. 713 (E.D. Mich. 1993), aff’d, 49

Fe TEE CE AAs ROOK ncctcidabnnisictcinsocinides 17, 18, 19-20

United States v. Smithfield Foods, Inc., 972

FC. SE Cas. Fi SE scsetisinictidotiicdaends 19

Walton v. United Consumers Club, Inc., 786 F.2d

es C TNE CAs BUD dncintiscstunistntiabinicinmaitbiemiiineiiices 22-23

Yakus v. United States, 321 U.S. 414 (1944) ........... 16

Constitution, statutes and rule:

Scie SMUNOES sssisiniaiicobabsudsdatncsuebiibihnatchiicecddaGueotaasniasaminubes 15

Administrative Procedure Act, 5 U.S.C. 706 ............. 15

Clean Air Act, 42 U.S.C. 7401 ef seq. .......ccccccsccccceeeess 2,15

SR Se hn FO sickccaccieshnsicteeinisadttacinndatninioaslindeatics 2

Ea ee Reads PONG ssctntaplcsetonsiedanndentaasancotaiticdss 5, 7

S Sa AL Ge ites: FARIA? ciccenicccintientoeon 2

§ 110(a)(2)(E), 42 U.S.C. 7410(a)(2)(E) .........ceceeeeees 15

> LIKENS), 42 USC. TAG) cosccavcsesisconsscetamtasivs 2

> RRMES, SE TBO, FOLIOS svccccissccncortcncantacscccs 2,4

F KEP D, GE UA. TRIG) senctenscecsscicnscientnanavccnien 2

D SEBO, Ge UA. PRIGEDD cvcccnstesctcsniseicticccemnamseuneads 3

SF REALE A PORES apuiuciadsnsaciececpebsisieaanmcuaibeuaaienial 19

FRA Fee Sitios CREED sicksbtencencncocnnisgdectamminhaniacs 18

§ 113(e)(1), 42 U.S.C. 7413(e)(1) ............. 6, 16, 17, 18, 20

SD Dg Ce She BE shisiiintitesnintnetinbicksacupeceiatubdiinses 4,5, 7

§ 114(a)(1)(A), 42 U.S.C. 7414(a)(1)(A) ...........0ccceeee 3

§ 114(a)(1)(B), 42 U.S.C. 7414(a)(1)(B) ..........ccseceeeee 3

§ 114(a)(1)(G), 42 U.S.C. 7414(a)(1)(G) ........... ce ee eee 3

© UI, Se UG FOO shbnsicatetis haters ciatineicdesiniin 3, 4

§ 307(b)(1), 42 U.S.C. 7607(b)(1) .......... 3, 5, 18, 14, 15, 16

§ 307(b)(2), 42 U.S.C. 7607(b)(2) .........cccceeeees 3, 13, 14, 15

Clean Water Act of 1977, 33 U.S.C. 1251 et seq. ......... 17

National Environmental Policy Act of 1969, 42 U.S.C.

PRL 06 BOG. - scinsseensicinieessiuiiiesshbuadeasventaineuciiaviaaaiaks 15

ee

Vi

Statutes and rules—Continued:

Page

Calif. Health & Safety Code (West 1996):

|) EIRENE EES nee eegeeaeraeentr (eae Tope 91 (SB ONES cr 11

HII piace tuitintik ab teecicaiietasiibiniceiiteabie tia ite acer 11

IE Gist en cntihdesbicanmniied ea tabu. eet e as tos 11 |

a i rn 21, 23 :

Rs A O'S RRR RR ee ee eed os 21,2

Miscellaneous:

DOR, BO, Se CRUD ercaendcsinccscctsceeiaeneinpmannansibinns 4

In the Supreme Court of the United States

OCTOBER TERM, 1997

No. 97-1897

VISTA PAINT CORPORATION, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The order of the court of appeals (Pet. App. la-2a)

affirming the judgment of the district court is

unpublished, but the decision is noted at 129 F.3d 129

(1997) (Table). The district court’s opinion (Pet. App.

4a-33a) setting civil penalties is unreported. An

earlier opinion of the court of appeals (Pet. App. 34a-

45a) concerning, inter alia, the district court’s dis-

missal of petitioner’s affirmative defenses is unpub-

lished, but the decision is noted at 976 F.2d 739

(Table). The district court’s order (Pet. App. 89a-92a)

concerning petitioner’s affirmative defenses is un-

reported.

JURISDICTION

The judgment of the court of appeals was entered

on November 4, 1997. A petition for rehearing was

(1)

2

denied on January 23, 1998. Pet. App. 3a. Justice

O’Connor granted petitioner an extension of time to

and including May 23, 1998, to file its petition for a

writ of certiorari. The petition was filed on May 26,

1998 (a Tuesday after a federal holiday). The juris-

diction of this Court is invoked under 28 U.S.C.

1254(1). ;

STATEMENT

The United States brought this action under the

Clean Air Act, 42 U.S.C. 7401 et seq., to enforce

provisions of California’s State Implementation Plan

(SIP) limiting the levels of volatile organic com-

pounds (VOCs) in certain paints. VOCs are a princi-

pal source of ozone in the atmosphere. The VOC

limits were approved by the federal Environmental

Protection Agency (EPA) in 1985 as part of the

California SIP. Petitioner Vista Paint Corporation,

a paint manufacturer and retailer, was still violating

the VOC limits in 1987. This civil enforcement action

seeks the imposition of monetary penalties for peti-

tioner’s continued violation of the VOC limits and for

petitioner’s related non-compliance with an EPA

information request.

1. The Clean Air Act, as amended, requires the

EPA to promulgate National Ambient Air Quality

Standards (NAAQS) for various air pollutants.

42 U.S.C. 7409. It also requires each State to submit

to the EPA a plan to implement, maintain, and enforce

those standards. 42 U.S.C. 7410(a)1). The EPA is

required to approve any such SIP that comports with —

the Clean Air Act. 42 U.S.C. 7410(k)(3). Once the

EPA approves a SIP or SIP revision, the EPA may

enforce its provisions as federal law. 42 U.S.C.

7413(a)(1). See Train v. Natural Resources Defense

3

Council, 421 U.S. 60, 63-67 (1975); Union Elec. Co. v.

EPA, 427 U.S. 246, 265-266 (1976).’

Section 307(b)(1) of the Clean Air Act provides for

judicial review of certain actions by the EPA, includ-

ing its promulgation of any NAAQS and its approval

of any SIP or SIP revision. 42 U.S.C. 7607(b)(1). ‘Fhe

petition for review must be filed in the court of

appeals within 60 days after the date on which notice

of the EPA’s action appeared in the Federal Register.

Ibid. The Act further provides that any “[a]ction

of the [EPA] Administrator with respect to which

review could have been obtained under [Section

307(b)(1)] shall not be subject to judicial review in

civil or criminal proceedings for enforcement.”

42 U.S.C. 7607(b)(2).

The EPA has the authority to require any person

subject to the Clean Air Act to establish and maintain

records and to provide such information as the EPA

may reasonably require to determine whether a

violation of the Act has occurred. 42 U.S.C. 7414(a)(1)

(A), (B) and (G).

A person who violates a SIP or refuses to comply

with an information request is liable for a civil

penalty of up to $25,000 for each day of violation.

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

2. The State of California delegates primary

responsibility for air pollution control to local and

regional authorities. In 1984, two such authorities,

the South Coast Air Quality Management District

1 Under the Clean Air Act, the States retain the authority

to adopt their own air pollution control standards and limita-

tions, as long as those standards and limitations are no less

stringent than those imposed by federal law. 42 U.S.C. 7416;

see Union Elec., 427 U.S. at 265.

and the San Diego County Air Pollution Control

District, adopted rules governing the VOC content of

non-flat architectural coatings, which are more

commonly known as gloss and semi-gloss paint. The

rules specify that each liter of such paint may contain

no more than 250 grams of VOC. The EPA approved

those rules as part of the California SIP on January

24, 1985. 50 Fed. Reg. 3338 (1995).

3. On June 12, 1987, petitioner admitted to the EPA

that it was still selling paint that violated the VOC

limits in the California SIP. The EPA, pursuant to

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

7413(a)(1), issued a Notice of Violation to petitioner.

The EPA also sent information requests to peti-

tioner, pursuant to Section 114 of the Clean Air Act,

42 U.S.C. 7414, seeking documentation of the quan-

tity, sales volume, and VOC content of all non-com-

pliant paint that petitioner manufactured and sold

from July to October 1987. The EPA warned peti-

tioner of the $25,000 per day penalty for not providing

the information in a timely manner. Pet. App. 8a-9a.

Petitioner continued to manufacture non-compliant

paints until June 1987 and continued to sell non-

compliant paints until October 1987. But petitioner

did not file the reports required by the EPA that

would have reflected those sales. Pet. App. 9a, 15a-

16a.

2 Both districts later adopted more lenient versions of those

rules and submitted them to the EPA for approval. But the

EPA did not approve them. The revised rules therefore have

no effect on the enforceability of the VOC limits approved by

the EPA in 1985 as part of the California SIP. 42 U.S.C. 7416;

General Motors Corp. v. United States, 496 U.S. 530, 540

(1990).

5

4. In 1990, the United States, at the request of the

EPA, brought this enforcement action against peti-

tioner under the Clean Air Act. Pet. App. 73a-79a.

The government contended that petitioner had failed

to comply with the VOC limits, in violation of 42

U.S.C. 7410, and had failed to comply with an EPA

information request, in violation of 42 U.S.C. 7414.

Ibid.

Petitioner asserted various affirmative defenses

and counterclaims alleging that the VOC limits were

invalid under federal and state law.’ The district

court dismissed all of petitioner’s so-called “invalid-

ity” defenses and counterclaims. Pet. App. 91la-92a.

The district court subsequently granted the gov-

ernment’s motion for summary judgment, concluding

that petitioner had violated the Clean Air Act by

failing to comply with the VOC limits and with the

EPA’s information request. Pet. App. 69a-72a. The

court imposed civil penalties totalling more than $3

million. Jd. at 19a.

5. The Ninth Circuit affirmed in part and reversed

in part. Pet. App. 34a-45a. The court held that the

district court had properly dismissed petitioner’s

affirmative defenses and counterclaims contesting

the validity of the VOC limits, explaining that peti-

tioner had “ample opportunity” to “challenge EPA’s

approval of the inclusion of those rules in the SIP

pursuant to section 307(b)(1) of the [Clean Air Act],”

42 U.S.C. 7607(b)(1). Pet. App. 36a. The court also

8 Petitioner contended that the VOC limits were void as con-

trary to the California Health and Safety Code, the California

Environmental Quality Act, and the state and federal constitu-

tions. See Vista C.A. Br. 17-18, United States v. Vista Paint

Corp., No. 92-55160 (9th Cir.).

held that the district court had properly granted

summary judgment on petitioner’s liability under the

Clean Air Act for selling and offering for sale non-

compliant paint and for failing to comply with the

EPA’s information request. Jd. at 37a-38a.

The court of appeals held that summary judgment

should not have been granted, however, with respect

to the amount of petitioner’s civil penalty. Pet. App.

45a. The court remanded the case for trial on various

disputed factual issues relating to the appropriate

amount of the penalty. Those issues included the

economic impact of the penalty on _ petitioner’s

business, whether petitioner had made good faith

efforts to comply with the VOC limits, the serious-

ness of petitioner’s violations, and whether the pen-

alty should be reduced as a result of the EPA’s

inaction on the proposed revisions to the VOC limits

sub- mitted by the two regional pollution-control dis-

tricts (see note 2, supra). Id. at 39a-43a; see 42 U.S.C.

7413(e)(1) (non-exclusive list of factors to be con-

sidered by courts in imposing penalties under Clean

Air Act).

This Court denied certiorari. 510 U.S. 826 (1993).

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

7413(e)(1), provides, in pertinent part, that

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 busi-

ness, the violator’s full compliance history and good faith

efforts-to comply, the duration of the violation as estab-

lished by any credible evidence * * * , payment by the

violator of penalties previously assessed for the same

violation, the economic benefit of noncompliance, and the

seriousness of the violation.

6. On remand, the district court held that neither

party would bear the burden of proof at the bench trial

on issues relating to the amount of the penalty. Pet.

App. 87a. The court explained that the determination

of an appropriate penalty involved the “weighing and

balancing [of] the proper statutory factors and com-

mon law factors against the facts which [the court]

finds from all the evidence admitted at trial.” Jhid.

The court directed the parties to submit the trial

testimony of all direct witnesses by affidavit and to

make those witnesses available during trial for cross-

examination. Jd. at 80a-81la.

In April 1996, the district court entered findings of

fact and conclusions of law, which determined that

petitioner should be assessed a civil penalty of

$1,111,250—$559,000 for petitioner’s continued sale of

non-compliant paint, in violation of 42 U.S.C. 7410, and

$552,250 for petitioner’s failure to respond to the

EPA’s information request, in violation of 42 U.S.C.

7414. Pet. App. 4a-33a. The district court separately

addressed each of the penalty factors on which the

court of appeals had ordered a trial. Jd. at 24a-32a.

First, the district court concluded that petitioner,

as “an expanding business with increasing annual

gross sales revenues in the range of 45 to 47 million

dollars annually,” was fully capable of paying the

$1,111,250 penalty. Pet. App. 25a. The court con-

cluded that a penalty of that size would neither “un-

dermine [petitioner’s] financial structure” nor “place

[petitioner] in jeopardy of ‘going-out-of-business.’”

Ibid.

Second, as for whether petitioner had made good

faith efforts to comply with the Clean Air Act, the

district court concluded that petitioner had “know-

ingly and intentionally violated federal law from at

8

least December 3, 1985, to October 12, 1987” by con-

tinuing to sell non-compliant paints, “ignoring during

that period repeated warnings by EPA and the June

1987 Notice of Violation.” Pet. App. 26a. The court

also found that petitioner had made “no real good faith

effort” to respond to the EPA’s information request.

Ibid. The court observed that petitioner’s “corporate

state of mind was to engage in a pattern of continued

non-cooperation with [EPA’s] enforcement efforts by

withholding the documentation of its violations or by

providing incomplete information regarding such

while it continued to sell and offer to sell non-com-

pliant coatings.” Jd. at 27a.

Third, the district court held that petitioner’s

violations of the VOC limits were sufficiently serious

to warrant a “moderate penalty.” Pet. App. 28a. The

court explained that “a major reduction in atmos-

pheric pollutants” would have occurred in the affected

regions if petitioner had promptly complied with the

VOC limits. Jd. at 27a. But the court declined to find

that petitioner’s failure to do so had a “measurable

negative impact on human health and the environ-

ment.” Jd. at 28a. The court also concluded that peti-

tioner’s failure to comply with EPA’s information

request warranted a “moderate to substantial pen-

alty,” because the effectiveness of the EPA’s en-

forcement of the Clean Air Act depends in large part

on the provision of information from regulated indus-

tries such as petitioner. Jbid.

Fourth, the district court held that EPA had not

engaged in unreasonable delay in reviewing the pro-

posed modifications of the VOC limits submitted by

the regional pollution-control districts. Pet. App.

28a-29a. “In any event,” the court added, “even if

there were unreasonable delays in acting on the

proposed rule revisions, Vista was not prejudiced by

them because Vista violated federal law before and

after the rule revisions were submitted to EPA.” 7d.

at 29a. The court did, however, conclude that the gov-

ernment should have filed suit against petitioner

more promptly for non-compliance with the EPA’s

information request. Jd. at 30a-3la. The court held

that “[s]uch delay supports a moderate reduction in

penalty for the period June 21, 1989 to January 18,

1991.” Id. at 3la.

Finally, as for the statutory penalty factors on

which the court of appeals had found no dispute of fact,

the district court observed that three of those factors

supported a “substantial penalty.” Pet. App. 3la-32a.

The court stated that petitioner had “a history of non-

full compliance,” as demonstrated by “the extent and

degree” of the violations at issue; that petitioner’s

violations were of an extended duration, “spann[ing] a

period of almost six years”; and that petitioner had

“obtained significant economic benefit” from its viola-

tions. Jhid. As for the final factor, whether peti-

tioner had previously paid penalties for the same

violations, the court found that petitioner’s prior

payments totaled only $500. Jbid.

7. The Ninth Circuit affirmed in an unpublished

order “for the reasons stated in the district court’s

Findings of Fact and Conclusions of Law.” Pet. App.

2a.

ARGUMENT

The court of appeals’ unpublished decisions in this

case are correct and do not conflict with any decision

of this Court or any other court of appeals. This

Court’s review is therefore not warranted.

10

1. a. Petitioner principally contends (Pet. 8) that

the court of appeals erred in its initial decision in this

case by holding that a defendant in a civil enforcement

proceeding under the Clean Air Act cannot assert as

a defense to liability that compliance with a SIP is

“economic[ally] or technological[ly] infeasib[le].” But

the court of appeals did not so hold. Nor did petitioner

ask the court of appeals to rule on whether such a

defense is cognizable in a civil enforcement proceed-

ing. This Court does not grant certiorari to “decide

questions not raised or resolved in the lower courts.”

Taylor v. Freeland & Kronz, 503 U.S. 638, 646 (1992).

Petitioner, in its answer to the government’s com-

plaint, asserted as defenses to liability that the VOC

limits in the California SIP were invalid as contrary

to federal and state law, including the California

Health and Safety Code.° Petitioner’s invalidity

* Petitioner asserted six defenses arguing that the VOC

limits were invalid. The first and second invalidity defenses

contended that the local pollution-control agencies, in promul-

gating the VOC limits, “violated the provisions of the California

Health and Safety Code relating to rulemaking, the provisions

of the California Public Resources Code relating to environ-

mental impact analysis, and the Contract Clauses, the Due Pro-

cess Clauses, the Takings Clauses, and the Delegation Doctrine

under the California and United States Constitutions.” Vista

Answer 4§ 22-25. The third and fourth invalidity defenses con-

tended that the California Air Resources Board, in incorporat-

ing the VOC limits into the California SIP, “violated the

provisions of the California Health and Safety Code relating to

approval or disapproval of local rules as plan portions, the pro-

visions of the California Public Resources Code relating to -

environmental analysis, and the Contract Clauses, the Due

Process Clauses, the Takings Clauses, and the Delegation Doc-

trine under the California and United States Constitutions.”

Id. ¥§¥ 26-29. The fifth and sixth invalidity defenses asserted

that the EPA, in approving the VOC limits as part of the

11

defenses did not, however, refer to infeasibility in any

way, much less cite the specific sections of the

California Health and Safety Code on which peti-

tioner now relies. The invalidity defenses thus did

not fairly raise any issue of technological or economic

feasibility. And petitioner did not suggest to the

court of appeals in its briefs that the invalidity

defenses were predicated on the technological or

economic infeasibility of the VOC limits.® There is

California SIP, “violated the provisions of the [Clean Air] Act

relating to federal approval or disapproval of state plans, the

provisions of the National Environmental Policy Act relating

to environmental impact analyses, relevant portions of the

Administrative Procedure Act and other applicable laws gov-

erning the decision-making of federal administrative agencies,

and the Due Process and Takings Clauses of the Fifth

Amendment and the Delegation Doctrine under the United

States Constitution.” /d. 44 30-33.

® Petitioner informed the court of appeals that its “affirma-

tive defenses alleged that both 1984 [VOC] rules had ‘violated’

the [California Health and Safety] Code, the California Envi-

ronmental Quality Act (‘CEQA’), and the state and federal

constitutions and were, therefore, ‘void ab initio.” Pet. C.A.

Br. 17, United States v. Vista Paint Corp., No. 92-55160 (9th

Cir.). In elaborating on those defenses (id. at 28-30), petitioner

contended that the local pollution-control agencies (1) did not

prepare environmental impact reports with respect to the VOC

limits, as required by the CEQA, (2) did not “assess and duly

consider the economic impacts [of the VOC limits], as required

by law,” (3) did not have statutory rulemaking authority over

paints sold as consumer products, (4) did not comply with state

law requirements that such rules reflect “best available tech-

nological and administrative practices,” apply “reasonably

“available” control measures, and be “necessary and proper”

(quoting Cal. Health & Safety Code §§ 40440(a), 40462, 40702)

(West 1996)); (5) violated the due process clauses of the federal

and state constitutions by basing the VOC rules on “crystal-ball

gazing” (quoting /nternational Harvester Co. v. Ruckelshaus,

12

thus no reason to suppose that the Ninth Circuit’s

single-sentence holding that “the district court

lacked subject matter jurisdiction over * * * the

affirmative defenses dealing with invalidity” (Pet.

App. 36a) was directed at defenses based on techno-

logical or economic infeasibility.

Similarly, in its earlier petition for a writ of certio-

rari in this case challenging the dismissal of the

invalidity defenses, petitioner did not contend that

those defenses involved feasibility issues. See Pet.

10-11, 18-20, Vista Paint Corp. v. United States, No.

92-2026 (9th Cir.) (discussing invalidity defenses).

And, in refuting petitioner’s assertion of a circuit

conflict as to which defenses may be raised in a civil

enforcement proceeding under the Clean Air Act, the

United States explained that the allegedly conflicting

cases involved “claims of economic or technological

infeasibility,” whereas “the claim in this case is not

one of technological or economic infeasibility, but

rather of the invalidity of the VOC regulations under

state law.” U.S. Supp. Br. 18-14, Vista Paint Corp. v.

United States, No. 92-2026. Petitioner did not take

issue at that time with the government’s characteri-

zation of its invalidity defenses as not being based on

technological or economic feasibility. The petition

for certiorari was denied. 510 U.S. 826 (1993).

b. The only issue fairly raised by petitioner’s inva-

lidity defenses, therefore, is whether the VOC limits

were promulgated in accordance with the require-

478 F.2d 615, 623 (D.C. Cir. 1973)); (6) violated the contract

clauses of the federal and state constitutions by “severely

impairling] Vista’s contract rights” for no “important public

purpose,” and (7) did not comply with the state Administrative

Procedure Act.

13

ments of state law (e.g., any requirement that an

environmental impact report be prepared, see note 6,

supra).' The court of appeals’ decision that such

defenses cannot be asserted in a civil enforcement

proceeding under the Clean Air Act is correct and

consistent with the decisions of other circuits.

Section 307(b)(1) of the Clean Air Act, 42 U.S.C.

7607(b)(1), authorizes judicial review in the courts of

appeals of certain actions by the EPA, including its

approval of a SIP, and requires that any petition for

review be filed within 60 days after notice of the

EPA’s action appears in the Federal Register. Sec-

tion 307(b)(2), 42 U.S.C. 7607(b)(2), then provides that

any “[a]etion of the [EPA] Administrator with re-

spect to which review could have been obtained under

[Section 307(b)(1)] shall not be subject to judicial

review in civil or criminal proceedings for enforce-

ment.” This Court has recognized that Section

307(b)\(2) bars a defendant in a criminal enforcement

proceeding for violation of a regulation promulgated

under the Clean Air Act from raising various chal-

lenges to the validity of that regulation, including

“whether the [EPA] Administrator has complied with

appropriate procedures in promulgating the regula-

tion in question, or whether the particular regulation

is arbitrary, capricious, or supported by the admin-

7 Petitioner appears to have abandoned the portions of its

invalidity defenses arguing that the EPA’s approval of the

VOC limits violated various federal constitutional and statutory

provisions. See Pet. 6 (describing affirmative defenses as as-

serting that “the VOC standards contained in the federally

approved SIP were invalid because they had been promulgated

in violation of California law”); Pet. 9 (noting that “Vista

argued below that the VOC standards * * * are invalid on

several grounds under California law”).

14

istrative record.” Adamo Wrecking Co. v. United

States, 484 U.S. 275, 285 (1978). And the courts of

appeals have uniformly held that Section 307(b)(2)

bars a party from challenging the validity of an EPA

action in a civil enforcement proceeding—or any

other sort of proceeding—on any ground that could

have been considered by the EPA in deciding whether

to take the action in the first place and by the court of

appeals in reviewing the EPA’s action under Section

307(b) (1). See, e.g., United States v. Ford Motor Co.,

814 F.2d 1099, 1103 (6th Cir.), cert. denied, 484 U.S.

822 (1987); United States v. Ethyl Corp., 761 F.2d 1153,

1155-1157 (Sth Cir. 1985), cert. denied, 474 U.S. 1070

(1986); Action for Rational Transit v. West Side

Highway Project, 699 F.2d 614, 616 (2d Cir. 1983); ef.

Lubrizol Corp. v. EPA, 562 F.2d 807, 813-815 (D.C.

Cir. 1977).

* Several circuits agree that issues of technological and

economic infeasibility may be raised in a civil enforcement ac-

tion, because those issues are not properly considered by the

EPA in evaluating a SIP. See, e.g., Union Elec. Co. v. EPA, 593

F.2d 299, 307 (8th Cir.), cert. denied, 444 U.S. 839 (1979);

Indiana & Mich. Elec. Co. v. EPA, 509 F.2d 839, 845 (7th Cir.

1975); Buckeye Power, Inc. v. EPA, 481 F.2d 162, 173 (6th Cir.

1973), cert. denied, 409 U.S. 1125 (1973). The Third Circuit,

however, has held that a defendant cannot raise “economic

hardship” as a defense in an enforcement action because it

could have raised the issue “in a section 307 hearing.” Getty Oil

Co. v. Ruckelshaus, 467 F.2d 349, 357 (8d Cir. 1972). But this

_Court has recognized since Getty Oil that the EPA cannot con-

sider such issues in Section 307(b)(1) proceedings. See Union

Elec., 427 U.S. at 265-266. To the extent that any inconsistency

ever existed between Getty Oil and the decisions of the Sixth,

Seventh, and Eighth Circuits, it was over whether economic

hardship could be raised in a Section 307(b)(1) proceeding.

There was no disagreement over the basic principle that a

party is barred from raising in a civil enforcement action any

15

The Ninth Circuit’s decision that the district court

lacked jurisdiction over petitioner’s invalidity de

fenses is consistent with those decisions. In deter-

mining whether to approve the California SIP, the

EPA could have considered petitioner’s arguments

that the VOC limits were promulgated in violation of

state law, because States must provide the EPA with

assurances that they have the authority under state

law to carry out a SIP. 42 U.S.C. 7410(a) (2)(E). And

the court of appeals could then have considered that

issue on a petition for review under Section 307(b)(1)

challenging the EPA’s approval of the California SIP.

Accordingly, because petitioner could have raised its

claim that the VOC limits are contrary to state law

on a petition for review under Section 307(b)(1), the

district court was without jurisdiction to consider

such a claim in a civil enforcement proceeding.°

c. Petitioner also argues (Pet. 12-14) that defen-

dants in civil enforcement proceedings under the

Clean Air Act cannot constitutionally be precluded

from challenging the validity of a SIP requirement.

But no such constitutional challenge to Section

307(b)(2) was presented to or addressed by the courts

question that a court of appeals could have considered in a

Section 307(b)(1) proceeding. In any event, this case does not

implicate any conflict over when issues of economic or

technological feasibility may be raised, because, as explained

above, petitioner did not argue below that its invalidity

defenses were based on such issues.

* Petitioner could likewise have raised in a Section 307(b)(1)

proceeding its arguments that the EPA, in approving the VOC

limits, violated the Clean Air Act, the National Environmental

Policy Act, the Administrative Procedure Act, and various

provisions of the United States Constitution. See Lloyd A. Fry

Roofing Co. v. EPA, 554 F.2d 885, 892 (8th Cir. 1977).

16

below. Nor has petitioner identified any decision of

any court holding Section 307(b)(2) (or any similar

statutory provision) to be unconstitutional. See

generally Yakus v. United States, 321 U.S. 414 (1944)

(upholding constitutionality of statute precluding

challenges to validity of price controls in enforcement

proceedings); Lloyd A. Fry Roofing Co. v. EPA, 554

F.2d 885, 892-893 (8th Cir. 1977) (rejecting argument

that precluding challenges to validity of EPA regula-

tions outside time period allowed by Section 307(b)(1)

violates due process).

Moreover, to the extent that petitioner’s challenge

to the VOC limits was actually based (as petitioner

now contends) on issues of technological and eco-

nomic feasibility, petitioner was free to raise such is-

sues during the penalty phase of the case in an effort

to show “good faith efforts to comply” with the VOC

limits. See 42 U.S.C. 7413(e)(1) (listing penalty fac-

tors); see also Ford Motor Co., 814 F.2d at 1104

(“technical infeasibility coupled with good faith

efforts can be considered by the district court as a

factor mitigating against the imposition of monetary

penalties in the enforcement action’). The Ninth

Circuit’s initial opinion in this case addressed only

the defenses that petitioner could raise to liability.

That ruling had no legal or practical effect on pe

titioner’s ability to attempt to persuade the district

court on remand that little or no penalty should be

imposed because its compliance with the SIP was

technologically or economically infeasible. And nei-

ther the district court nor the Ninth Circuit subse-

quently held that feasibility issues could not be con-

sidered in mitigation of any penalty.

2. Petitioner next urges (Pet. 17) the Court to re-

solve a “conflict of authority” as to the allocation of

ee ee eee

17

the burden of proof on the various factors that Section

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

directs the district courts to consider in determining

the amount of a penalty. But no such conflict exists.

In this case, the district court held (Pet. App. 87a),

and the couri of appeals agreed (id. at 2a), that neither

party bore the burden of proof on the Section 113(e)(1)

penalty factors. Instead, the district court con-

cluded (id. at 87a) that it should “receive[] admissible

evidence from both sides,” “weigh[] and balanc[e] the

proper statutory and common law factors against the

facts which it finds from all the evidence admitted at

trial,” and then “exercise[] its discretion in determin-

ing the amount, if any, of the penalty.” Cf. Tull v.

United States, 481 U.S. 412, 427 (1987) (recognizing

that district courts must engage in “highly discre-

tionary calculations that take into account multiple

factors” in setting civil penalties under the Clean

Water Act).

Petitioner has identified no decision that adopts a

position contrary to that of the courts below on the

allocation of the burden of proof under Section

113(e)(1). None of the appellate decisions cited by

petitioner even addresses the burden of proof. Peti-

tioner does cite two district court decisions that

declined to require a defendant to bear the burden of

proving that its penalty should be less than the

statutory maximum." But those decisions are

10 Because the district court held that “there is ne burden of

proof on either party” with respect to the Section 113(e)(1)

penalty factors (Pet. App. 87a), petitioner was not, as it con-

tends (Pet. 16), “saddled with the burden of proving facts to

rebut the maximum penalty requested by the Government.”

'! See United States v. Midwest Suspension & Brake, 824

F. Supp. 713, 735 n.30 (E.D. Mich. 1993), aff’d, 49 F.3d 1197

18

entirely consistent with the decision in this case,

which likewise held that petitioner did not bear the

burden of proof on the amount of its penalty.” In

short, petitioner has offered no authority under

Section 113(e)(1) of the Clean Air Act, or any parallel

provision of any other environmental statute,

adopting its view that the courts below should have

“place[d] squarely on the Government the burden of

proving the facts underlying the penalty factors”

(Pet. 17). ;

Petitioner also seizes on the district court’s state-

ment that “[t]his Court will first determine the maxi-

mum penalty allowable and then consider any mitigat-

ing circumstances” (Pet. App. 22a), asserting that the

district court thereby “presumptively appllied] the

maximum penalty and require[d] [petitioner] to prove

facts in mitigation” (Pet. 16). But petitioner is read-

ing more into the district court’s statement than its

words or their context can bear. It is evident from

the entirety of the district court’s opinion, and from

its holding, that no presumption was made that the

statutory maximum penalty should apply. The court

found that most of the Section 113(e)(1) factors

favored a “substantial” penalty. See Pet. App. 25a-

(6th Cir. 1995); Student Public Interest Research Group of New

Jersey, Inc. v. Monsanto Co., Civ. A. No. 83-2040, 1988 WL

156691, at *16 (D.N. J. Mar. 24, 1988) (citizen suit not involving

Section 113(e)\(1) penalty factors).

~ Indeed, the district court in one of those cases, in words

strikingly similar to those of the district court here, explained

that “the inquiry mandated under [42 U.S.C.] § 7413(e) is for

this Court to evaluate the penalty assessment criteria in light of

all of the evidence introduced at trial, not merely the evidence

a defendant introduces at trial.” Midwest Suspension, 824 F.

Supp. at 735 n.30.

19

28a, 31a-32a. Yet, the court imposed penalties ranging

from $250 to $2500 per day of violation— i.e., from one

percent to ten percent of the statutory maximum of

$25,000 per day of violation. Jd. at 39a; 42 U.S.C.

7413(d)(1).

Nor would the district court’s statement, even if

read in the manner that petitioner suggests, create a

conflict among the circuits. The courts of appeals are

in agreement that “[iJn considering fines under the

Act, courts generally presume that the maximum

penalty should be imposed.” United States v.B & W

Inv. Properties, 38 F.3d 362, 368 (7th Cir. 1994), cert.

denied, 514 U.S. 1126 (1995); accord United States v.

Marine Shale Processors, 81 F.3d 1329, 1337 (5th Cir.

1996) (“when imposing penalties under the environ-

mental laws, courts often begin by calculating the

maximum possible penalty, then-reducing the penalty

only if mitigating circumstances are found to exist”):

Atlantic States Legal Found., Inc. v. Tyson Foods,

Inc., 897 F.2d 1128, 1137 (11th Cir. 1990). None of the

district court decisions that petitioner cites as con-

flicting holds that such an approach is impermissi-

ble.” And one of those decisions itself adopts such an

8 For example, the court in United States v. Smithfield

Foods, Inc., 972 F. Supp. 338, 353 (E.D. Va. 1997), noted that

some courts, including the Eleventh Circuit in Tyson Foods,

have used “the ‘top down’ method of penalty calculation, in

which the court begins the penalty calculation at the statutory

maximum, and adjusts downward considering the [statutory]

factors,” whereas some district courts have used “the ‘bottom-

up’ method of penalty calculation, in which the court begins

the penalty calculation using defendants’ economic benefit of

noncompliance, and adjusts upward or downward considering

the [statutory] factors.” After concluding that “the statute

does not require either the ‘top-down’ or the ‘bottom-up’

20

approach. See United States v. Midwest Suspension

& Brake, 824 F. Supp. 713, 735 (E.D. Mich. 1993) (“in

calculating the amount of civil penalties to be imposed

on defendant [under the Clean Air Act], this Court

must start with the statutory maximum and make

any downward adjustments based on the evidence

adduced at trial”), aff'd, 49 F.3d 1197 (6th Cir. 1995).

In any event, even if one assumes arguendo that

the lower courts erred in not requiring the gover-

nment to bear the burden of proof on all of the Section

113(e)(1) penalty factors, petitioner has not even at-

tempted to demonstrate that any such error was

prejudicial in this case. The burden of proof is dis-

positive in a civil case only in those relatively rare

circumstances where the parties’ evidence is in

equipoise. Cf. Medina v. California, 505 U.S. 437,

449 (1992). Nothing in the district court’s decision

suggests that the evidence was in equipoise on any of

the Section 113(e)(1) penalty factors. It thus appears

that the district court would have reached the same

conclusion on the amount of petitioner’s penalty re-

gardless of whether the burden of proof was placed on

the government, on petitioner, or on neither party.

3. Finally, petitioner complains (Pet. 15-20) that

the district court abused its discretion in its conduct

of the trial on the Section 113(e)(1) penalty factors,

because the court required the parties to submit the

testimony of their direct witnesses by affidavit rather

than in person. The court also required, however,

that those witnesses be made available at trial for

cross-examination. See Pet. App. 80a-8la. As the

courts of appeals have recognized, “[a] district court’s

method,” the court chose, as an exercise of its “discretion,” to

use the “bottom-up” method. /d. at 353-354.

21

requirement that parties submit direct evidence in

written form, while permitting parties to cross-

examine adverse witnesses orally,” is “an accepted

and encouraged technique for shortening bench

trials.” Ball v. Interoceanica Corp., 71 F.3d 73, 77 (2d

Cir. 1995) (quoting Phonetele Inc. v. American Tel. &

Tel. Co., 889 F.2d 224, 232 (9th Cir. 1989), cert. denied,

503 U.S. 914 (1992)); see also Eirhart v. Libbey-

Owens-Ford Co., 996 F.2d 837, 840 (7th Cir. 1993)

(district courts may conduct bench trials on “a writ-

ten record”).

Petitioner nonetheless contends (Pet. 17-20) that

such a procedure is inconsistent with Rule 43(a) of

the Federal Rules of Civil Procedure, which provides

that “[iJn every trial, the testimony of witnesses shall

be taken in open court, unless a federal law, these

rules, the Federal Rules of Evidence, or other rules

adopted by the Supreme Court provide otherwise.”

Rule 43(a), by its terms, thus gives way in the face of

inconsistency with, inter alia, the Federal Rules of

Evidence. The courts have construed Federal Rule of

Evidence 611(a), which gives trial courts broad

authority over “the mode and order of interrogating

witnesses” in order to “avoid needless consumption of

time,” as permitting the introduction of direct

testimony in the form of affidavits at bench trials.

See, ¢.g., In re Adair, 965 F.2d 777, 779-780 (9th Cir.

1992); Saverson v. Levitt, 162 F.R.D. 407, 408-409

(D.D.C. 1995).

Petitioner claims (Pet. 19-20) that several cases

are in conflict with Adair, Ball, and the decision

below. But there is no true circuit conflict. None of

the appellate cases relied on by petitioner concerned a

district court’s order that the parties submit their

witnesses’ direct evidence by affidavit at a bench trial

22

while making the witnesses available in person for

cross-examination. Two of those cases reversed a dis-

trict court’s grant of summary judgment, based on

affidavits or other evidence, where various genuine

disputes of material fact appeared to exist. See Ross

v. Franzen, 777 F.2d 1216, 1220-1221 (7th Cir. 1985);

United States v. J.B. Williams Co., 498 F.2d 414, 430-

434 (2d Cir. 1974)." Those cases are obviously not on

point. Both the Second Circuit and the Seventh Cir-

cuit have since approved of trial procedures similar to

those used in this case. See Ball, 71 F.3d at 76;

Errhart, 996 F.2d at 840.

A third case held that a district court could not

conduct the trial of a prisoner’s civil-rights suit

“solely on affidavits,” especially in circumstances

where the prisoner was entitled to a trial by jury.

See Dolence v. Flynn, 628 F.2d 1280, 1281-1282 (10th

Cir. 1980). Dolence is distinguishable from the pres-

ent case in at least two respects. The trial of this

case was not conducted “solely on affidavits,” because

the witnesses were subject to live cross-examination.

And the issues in this case were triable to the court

rather than to a jury. A district court is allowed

more latitude over the manner in which evidence will

be introduced at a bench trial as opposed to a jury

trial. See, eg., Southern Pacific Transp. Co. v.

Chabert, 973 F.2d 441, 448 (5th Cir. 1992), cert. denied,

507 U.S. 987 (1993). Similar reasons distinguish the

present case from Lebeck v. William A. Jarvis, Inc.,

250 F.2d 285, 294-295 (3d Cir. 1957), which held that a

district court should not have read an edited tran-

script of a witness’s testimony to the jury, but in-

4 Petitioner relies on a footnote in J.B. Williams, 498 F.2d

at 430 n.19, that consists essentially of dicta.

23

stead should have required the witness to testify in

person.

The case most analogous to this one is Walton v.

United Consumers Club, Inc., 786 F.2d 303, 312-313

(7th Cir. 1986), which concluded that a district court

should not have admitted the plaintiffs’ interrogatory

answers at a bench trial in lieu of live testimony, even

though the plaintiffs were subject to cross-examina-

tion about those answers. But the court of appeals in

that case did not consider the relationship between

Rule 43(a) of the Federal Rules of Civil Procedure

and Rule 611(a) of the Federal Rules of Evidence.

And, in any event, the court of appeals ultimately held

that the admission of the affidavits was harmless and

consequently did not require reversal. 786 F.2d at

313. There is thus no tension in the outcomes of

Walton and the present case. Petitioner has not even

attempted to demonstrate any prejudice resulting

from the district court’s mode of obtaining witnesses’

testimony.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

SETH P. WAXMAN

Solicitor General

PETER S. COPPELMAN

Acting Assistant Attorney

General

GREER 8S. GOLDMAN

MARTIN W. MATZEN

Attorneys

AUGUST 1998