Opposition Brief — Ho v. United States

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Seprone Coed, 05.

FILED

MAY 2 2003

No. 02-1308

In the Supreme Court of the nites States—

ERIC KUNG-SHOU HO, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

THOMAS L. SANSONETTI

Assistant Attorney General

JOHN SMELTZER

ROBERT H. OAKLEY

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether petitioner was precluded from raising a

procedural challenge to a Clean Air Act regulation by

virtue of 42 U.S.C. 7607(b)(2), which prohibits any chal-

lenge to such a regulation in a civil or criminal enforce-

ment proceeding, and requires that any such challenge

be brought within 60 days after the regulation is prom-

ulgated and in the United States Court of Appeals for

the District of Columbia Circuit.

2. Whether application of the Clean Air Act’s crimi-

nal provision to petitioner’s asbestos-removal activities

was a permissible exercise of Congress’s authority

under the Commerce Clause.

(1)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

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

STITT cist scdineneisindesenigiiandiidionapionmmendnetindlemimmmennuasinnnnss 7,8

Jones v. United States, 529 U.S. 848 (2000) .........csccsseees 10

Solid Waste Agency of N. Cook County v.

United States Army Corps of Eng’rs, 531 U.S.

ED chiviccinsnistnnnonintieneteapeenmnsssininnnnremmanmvenemersenies 10-11

United States v. Alexander, 938 F.2d 942 (9th Cir.

1991) Iie ecincipaisbeniailapiaeenidnninnninncanicaines 9

United States v. Lopez, 514 U.S. 549 (1995).......ssscssseees 10

United States v. Morrison, 529 U.S. 598 (2000) ............... 10

Wickard v. Filburn, 317 U.S. 111 (1942) ........eessssesseees 10

Yakus v. United States, 321 U.S. 414 (1944) oes 9

Constitution, statutes, regulations and rules:

USS. Const. Art. I, § 8, C1. 3 (Commerce Clause) ..... 9,10, 12

Clean Air Act 42 U.S.C. 7401 et seq.:

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(IID)

Regulations and rules—Continued:

40 C.F.R.:

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Section 61.05(b)-(c) .. me

Sections 61.140-61.157 (Subpt. M) .........sssssssesesseesesseees

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ED i cicivsinisiceisionesticscealesiasicnihsbieaicteinaitaaeicatbintilla

ee seats cttinsnicinsitrieenatinnncisinesiticniinasibiniiilin

United States Sentencing Guidelines:

§ 2Q1.2(b)(1)(A) ... siieaihintiieiclaielassaactsand

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Miscellaneous:

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Wow wor wWatw iw Ww

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Jn the Supreme Court of the Gnited States

No. 02-1308

ERIC KUNG-SHOU HO, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. 1-44) is

reported at 311 F.3d 589.

JURISDICTION

The judgment of the court of appeals was entered on

October 31, 2002. A petition for rehearing was denied

on December 4, 2002 (Pet. App. 45). The petition for a

writ of certiorari was filed on February 28, 2003. The

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

1254(1).

STATEMENT

After a jury trial, petitioner was found guilty on one

count of failing to give notice of intent to renovate a

facility involving the removal of asbestos, in violation of

(1)

42 U.S.C. 7413(c)(2)(B), and one count of failing to

comply with asbestos work practice standards, in viola-

tion of 42 U.S.C. 7413(c)(1). He was sentenced to two

months of community confinement, six months of home

confinement, and a $20,000 fine. The court of appeals

affirmed petitioner’s convictions but reversed the sen-

tence imposed by the district court and remanded for

resentencing. Pet. App. 1-44.

1. The Clean Air Act, 42 U.S.C. 7401 et seq., estab-

lishes criminal penalties for any person who knowingly

violates Section 112 of the Act (42 U.S.C. 7412), or any

rule promulgated under that Section. 42 U.S.C.

7413(c)(1). The Clean Air Act also establishes criminal

penalties for any person who “knowingly * * * fails to

notify or report as required under [the Act].” 42 U.S.C.

7413(c)(2)(B). Regulations promulgated under the Act

by the Environmental Protection Agency (EPA) are

subject to judicial review in the United States Court of

Appeals for the District of Columbia Circuit, by way of

a petition for review filed within 60 days after prom-

ulgation. 42 U.S.C. 7607(b)(1). The Act further pro-

vides that “[a]ction of the Administrator with respect to

which review could have been obtained under [Section

7607(b)(1)] shall not be subject to judicial review in civil

or criminal proceedings for enforcement.” 42 U.S.C.

7607(b)(2).

Section 112 of the Act authorizes the EPA to publish

a list of air pollutants that are determined to be hazard-

ous, and to promulgate national emission standards for

such designated hazardous air pollutants. 42 U.S.C.

7412. EPA may issue the standards in the form of

“work practice” standards—as opposed to numerical

emission limits—if the agency determines that numeri-

cal limits are not feasible for the control of hazardous

air pollutants from a particular “source.” 42 U.S.C.

7412(h)(1). Once standards are issued for a pollutant

source, the standards are binding on any “owner or

operator” of the source. See 40 C.F.R. 61.05(b)-(c).

Asbestos is classified as a “hazardous air pollutant”

under the Act. 42 U.S.C. 7412(b)(1); 40 C.F.R. 61.01(a).

Recognizing that the renovation or demolition of build-

ings containing asbestos is a major source of airborne

asbestos (38 Fed. Reg. 8821 (1973)), EPA has sought to

control emissions by promulgating work practice stan-

dards that govern demolition or renovation activities at

such buildings. See 40 C.F.R. 61.140-61.157 (Subpt. M).

The regulations require, inter alia, that asbestos-

containing materials be wetted during removal; that

the removed or stripped asbestos-containing materials

be kept adequately wet to prevent the release of fibers;

and that the asbestos-containing materials be sealed in

leak-tight containers while wet and stored in such

containers until collected for proper disposal. 40 C.F.R.

61.145(c). Additionally, asbestos-containing material

cannot be removed, disturbed, or otherwise handled

unless a foreman or management-level individual who

has been trained in complying with the standards is

present on-site. 40 C.F.R. 61.145(c)(8). The regulations

mandate that all friable asbestos (material containing

more than 1% asbestos that, when dry, can be crum-

bled, pulverized, or reduced to powder by hand pres-

sure, 40 C.F.R. 61.141) be removed from a building

before the commencement of any activity that would

break up or dislodge the askestos-containing material.

40 C.F.R. 61.145(c)(1). The federal work practice stan-

dards for asbestos apply to facilities that contain at

least 160 square feet or 260 linear feet of regulated

asbestos-containing material. 40 C.F.R. 61.145(a)(4).

Section 114(a) of the Clean Air Act authorizes EPA

to establish reporting requirements applicable to

owners and operators of emission sources that are

subject to regulations promulgated under Section 112.

42 U.S.C. 7414(a). EPA’s regulations require that, for

any demolition or renovation activity subject to the

asbestos work practice standards, the owner or

operator must provide EPA with timely written notice

of its intent to demolish or renovate the facility. See 40

C.F.R. 61.145(b).

2. In October 1997, petitioner purchased the aban-

doned Alief General Hospital and the Professional

Building in Houston, Texas. Pet. App. 2. In the course

of negotiations, petitioner was told by the owner’s

agent that the property contained significant amounts

of asbestos, and that its removal could cost as much as

$400,000. Jbid. When petitioner purchased the build-

ings for $700,000, he signed a statement acknowledging

that he knew that the property contained asbestos.

Ibid.

Petitioner consulted a licensed asbestos contractor,

who offered to remove and dispose of the asbestos for

$325,000. Pet. App. 2. Petitioner rejected that bid as

too high and instead hired Manuel Escobedo, who had

previously worked for him as a handyman, to hire and

supervise a group of workers to perform the asbestos

removal. Jd. at 2-3. Those workers were ultimately

paid a total of slightly more than $20,000. Jd. at 28.

Petitioner did not give EPA notice that he was

conducting asbestos-removal activities, as required by

40 C.F.R. 61.145(b). Pet. App. 2-8. None of the work-

ers was trained in the proper removal of asbestos, and

they were neither told that the fireproofing material

being removed contained asbestos nor provided with

proper safety equipment. Jd. at 3. The workers did not

wet the asbestos to prevent its spread through the air,

as required by the Clean Air Act’s work practice

standards for asbestos renovation. Jbid. No effort was

made to seal the hospital to prevent asbestos from

being blown outside; several doors and windows re-

mained open for months, and a large hole to the outside

was present in the second floor. Jd. at 3-4.

On February 12, 1998, a City of Houston building in-

spector discovered petitioner’s illegal asbestos-removal

operation and issued a stop-work order. Pet. App. 4.

Petitioner halted the removal activities for a short

period of time and solicited a bid for removal of the

remaining asbestos from a licensed contractor. bid.

Petitioner rejected that bid as too high, however, and

he renewed the renovation operation with the un-

trained workers previously hired by Escobedo, who

completed the asbestos removal on March 10, 1998. Jd.

at 4-5. In attempting to tap a waterline to clean out the

hospital, workers opened a gas line that exploded and

created another hole in the second floor of the hospital.

Id. at 5.

As a result of the explosion, Texas Department of

Health inspectors investigated the site, where they

found floors and shelves covered by fireproofing dust

and the hospital unsealed, with open doors and win-

dows, as well as the hole blown in the hospital by the

explosion. Pet. App. 5. The fireproofing dust was later

subjected to chemical analysis and found to contain 2%-

20% asbestos; any material containing more than 1%

asbestos is subject to federal and state regulation. /bid.

Months went by before petitioner finally hired a li-

censed contractor that sealed the hospital and removed

the remaining asbestos. Jd. at 5-6.

3. In October 2000, petitioner and Escobedo were

indicted by a federal grand jury for violations of, inter

alia, the Clean Air Act. Pet. App. 6. The jury ulti-

mately found petitioner guilty on one count of failing to

give EPA notice of the asbestos renovation at a facility,

and one count of failing to comply with the asbestos

work-practice rules. Jd. at 7. The district court sen-

tenced petitioner to two months of community confine-

ment, six months of home confinement, and a $20,000

fine. Pet. 6.

4. The court of appeals affirmed petitioner’s con-

victions.’

a. The court of appeals held that the application of

the Clean Air Act to petitioner’s conduct was a valid

exercise of congressional authority under the Com-

merce Clause. Pet. App. 24-30. The court assumed,

arguendo, that no asbestos had escaped from the

hospital to the outside air as a result of petitioner’s

removal activities. Jd. at 24. The court recognized,

however, that under this Court’s decisions, “Congress

may regulate wholly intrastate activities that substan-

tially affect interstate commerce.” Ibid. The court

observed that asbestos removal “is very much a

commercial activity in today’s economy,” id. at 25, and

that “[petitioner’s] activities were driven by commer-

cial considerations,” id. at 26. The court concluded that

intrastate asbestos-removal activities are legitimate

subjects of federal regulation because Congress could

rationally find that there is a national market for

1 The United States cross-appealed the district court’s denial of

a six-level enhancement for repetitive discharge of asbestos into

the environment under Sentencing Guidelines § 2Q1.2(b)(1)(A) and

a four-level enhancement for petitioner’s actions as an organizer or

leader of an extensive criminal scheme under Sentencing Guide-

lines § 3B1.1(a) (the district court allowed a two-level enhancement

instead). Pet. App. 7. The court of appeals reversed the district

court’s rulings on those enhancements and remanded for

resentencing. Id. at 37-44. Petitioner does not seek this Court’s

review of any sentencing issue.

asbestos-removal services and that conduct like peti-

tioner’s—which circumvents licensed removal compa-

nies that bear the expenses of safe removal—under-

mines that market and thereby threatens to drive up

the costs of proper asbestos removal. Jd. at 28. The

court also observed that activities such as petitioner’s

could undermine the interstate commercial real estate

market by giving unscrupulous property owners a

competitive advantage over conscientious owners who

accept the added expense of safe asbestos removal. Id.

at 28-29.

b. The asbestos work practice standards that peti-

tioner was convicted of violating apply only to a

“facility” as that term is defined in 40 C.F.R. 61.141.

The regulatory definition encompasses “any institu-

tional, commercial, public, industrial, or residential

structure, installation, or building.” Jbid. As amended

in 1990, the definition further provides that “/a]ny

structure, installation or building that was previously

subject to this subpart is not excluded, regardless of its

current use or function.” Ibid. (emphasis added). Peti-

tioner contended in the court of appeals that the regula-

tory provision had been amended through procedurally

invalid means because the italicized language had not

been included in the proposed rule submitted for public

comment. See Pet. App. 35-36.

The court of appeals rejected that contention. Pet.

App. 35-37. The court explained that under the Clean

Air Act, the 1990 amendment could have been chal-

lenged immediately in the District of Columbia Circuit,

but “the amended definition is ‘not subject to judicial

review in civil or criminal proceedings.” Id. at 36

(quoting 42 U.S.C. 7607(b)(2)). The court also noted

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

275 (1978), this Court had barred consideration of a

comparable procedural challenge in the course of a

criminal prosecution. Pet. App. 37. The court observed

as well that, in any event, “the hospital satisfies the

pre-1990 definition of ‘facility’ because [petitioner] pur-

chased it and removed the asbestos for commercial

purposes, and the definition did not exclude previously

abandoned buildings.” Jd. at 37 n.22.

ARGUMENT

1. Petitioner contends (Pet. 8-12) that the 1990

amendment to the regulatory definition of the term

“facility” was adopted in violation of applicable notice-

and-comment requirements, and that the alleged

procedural error requires reversal of his convictions.

That argument lacks merit.

Under 42 U.S.C. 7607(b)(1), direct judicial review of

the 1990 regulatory amendment was available if peti-

tioner had filed a petition for review in the District of

Columbia Circuit within 60 days after the rule was

promulgated. Section 7607(b)(2) provides that “[a]ction

of the Administrator with respect to which review

could have been obtained under [Section 7607(b)(1)]

shall not be subject to judicial review in civil or criminal

proceedings for enforcement.” 42 U.S.C. 7607(b)(2). In

Adamo Wrecking, this Court held that, while a criminal

defendant could contend that a particular regulation

was not an “emission standard” subject to the preclu-

sion provision, the statutory predecessor to Section

7607(b)(2) foreclosed judicial inquiry in a criminal

prosecution into “whether the Administrator has com-

plied with appropriate procedures in promulgating the

regulation in question.” 434 U.S. at 285. That holding

controls this case.

Petitioner argues (Pet. 9) that a different preclusion

rule should govern in this case because he has raised an

as-applied Commerce Clause challenge to the regula-

tory definition of the term “facility.” Petitioner con-

tends (ibid.) that “[fJundamental principles of fair play

and due process are offended when a defendant is held

not to have a right to challenge an invalid law that is

being used to criminally punish him or her.” This Court

has held, however, that Congress may require chal-

lenges to particular agency regulations to be brought in

a specified court within 60 days after promulgation, and

may preclude coilateral challenges to the regulations in

any subsequent criminal prosecution, without denying

the defendant due process of law. See Yakus v. United

States, 321 U.S. 414, 483-434 (1944)?

In any event, the court of appeals did not hold that

Section 7607(b)(2) barred petitioner from arguing that

application of the Clean Air Act to his own intrastate

conduct exceeded Congress’s powers under the Com-

merce Clause. Rather, the court held only that Section

7607(b)(2) precluded consideration of petitioner’s claim

that the 1990 regulatory amendment was adopted in a

procedurally defective manner. That holding is clearly

correct under Adamo Wrecking. The fact that peti-

tioner has asserted a separate constitutional challenge

2 In light of Section 7607(b)(2)’s unambiguous preclusion of

petitioner’s current procedural challenge to the regulatory defini-

tion of “facility,” petitioner’s reliance (Pet. 10) on United States v.

Alexander, 938 F.2d 942 (9th Cir. 1991), is misplaced. In holding

that criminal defendants could contest the validity of the state

regulations under which they were prosecuted in that case, not-

withstanding their failure to challenge the regulations at the time

of promulgation, the court in Alexander relied on the absence of

any express statutory bar to consideration of the issue within the

context of a criminal prosecution. See zd. at 947-948. The court

distinguished Adamo Wrecking and Yakus on that basis. See id.

at 947 n.9.

does not entitle him to raise his procedural claim in an

untimely fashion, and in a court other than the District

of Columbia Circuit.

In addition, petitioner does not contest the court of

appeals’ determination that “the hospital satisfies the

pre-1990 definition of ‘facility’ because [petitioner] pur-

chased it and removed the asbestos for commercial

purposes, and the definition did not exclude previously

abandoned buildings.” Pet. App. 37 n.22. Petitioner

therefore would not be entitled to reversal of his

criminal convictions even if his procedural challenge to

the 1990 regulatory amendment could properly be

raised within this prosecution, and even if that chal-

lenge were ultimately found to have merit. For that

reason as well, the court of appeals’ application of

Section 7607(b)(2) to the facts of this case does not

warrant this Court’s review.

2. Petitioner contends (Pet. 12-15) that application of

the Clean Air Act and implementing regulations to his

own conduct exceeds Congress’s authority under the

Commerce Clause. That claim lacks merit. Since Wick-

ard v. Filburn, 317 U.S. 111 (1942), this Court has

recognized that purely intrastate commercial activity

can be regulated under the Commerce Clause if, when

aggregated with similar activity by others, the intra-

state conduct has a substantial effect on interstate com-

merce. Wickard’s holding was reaffirmed in United

States v. Lopez, 514 U.S. 549, 560-561 (1995), and in

United States v. Morrison, 529 U.S. 598, 610-613

(2000).°

3 Petitioner’s reliance (Pet. 12-13) on Jones v. United States,

529 U.S. 848 (2000), is misplaced. That case considered the reach of

the federal arson statute, 18 U.S.C. 844(i), not of the Commerce

Clause. Nor is petitioner assisted (see Pet. 14-15) by Solid Waste

Petitioner’s activities here were clearly commercial.

Petitioner paid untrained workers approximately

$20,000 to remove the asbestos from the hospital after

rejecting bids from licensed contractors of $325,000 and

$159,876. See Pet. App. 2-4, 28. Asbestos removal is a

legitimate business. It is unlike the criminal, non-

economic activities at issue in Lopez (gun possession in

or near a school) and Morrison (violence against wo-

men). As the size of the bids received and rejected by

petitioner demonstrates, asbestos-removal activities

can be expected to have a significant aggregate impact

on interstate commerce. In addition, petitioner’s

asbestos-removal efforts were prompted by his desire

to use the recently acquired property for commercial

purposes. Jd. at 26.

As the court of appeals recognized (Pet. App. 28-29),

conduct of the sort in which petitioner engaged can be

expected to have a significant aggregate impact on

interstate commerce. Widespread violations of the

asbestos work practice regulations could drive reputa-

ble asbestos-removal contractors out of business

because they could not compete with the prices charged

by untrained workers. That, in turn, would reduce the

availability of contractors who are trained to remove

asbestos safely. See id. at 28. In addition, activities of

the sort at issue here “pose[] a threat to the interstate

commercial real estate market” (ibid.) because peti-

tioner and others who violate the asbestos work

Agency of Northern Cook County v. United States Army Corps of

Engineers, 531 U.S. 159 (2001). There is no question that the

regulations at issue here are well within congressional authority to

regulate and protect interstate commercial activity. Cf. id. at 172-

174 (finding that isolated wetlands regulation “invoke[d] the outer

limits of Congress’ power,” thus requiring a clear statement of

congressional intent).

practice regulations gain a commercial advantage over

competitors who hire licensed contractors at a higher

cost than is charged by itinerant workers. See id. at 28-

29. The likely harms to both the asbestos-removal

industry and the commercial real estate market amply

support the court of appeals’ holding that petitioner’s

conduct is within the scope of federal regulatory

authority under the Commerce Clause.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.