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

92-2026 |

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

VISTA PAINT CORPORATION,

Petitioner,

Vv.

UNITED STATES OF AMERICA, ENVIRONMENTAL PROTEC-

TION AGENCY, AIR RESOURCES BOARD, SOUTH COAST

AIR QUALITY MANAGEMENT DISTRICT, SAN DIEGO

AIR POLLUTION CONTROL DISTRICT,

Respondents.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

WILLIAM M. SMILAND

Counsel of Record

DONNELLY, CLARK, CHASE

& SMILAND

Twelfth Floor

601 West Fifth Street

Los Angeles, CA 90071

(218) 891-1010

Attorneys for Petitioner

WILSON - Epgs PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

_ Court, US

QUESTIONS PRESENTED

The government brought a civil penalty action under

the Clean Air Act against a paint company. For lack

of subject matter jurisdiction, the court granted govern-

ment pleading motions and struck the company’s defenses

relating to the invalidity under state law of the state

regulations which were being federally enforced. There-

after, the district court granted a summary judgment in

favor of the government, even though the government

had incorrectly moved to enforce a repealed version of

the Act. On rehearing, which was conducted under the

current and correct version of the Act, the court accepted

new evidence and argument submitted by the government,

and made amendments to its prior ruling, as proposed

by the government, but refused to consider the company’s

contentions on the same new issues. As a result of these

rulings, the company never had a hearing on its invalidity

defenses, nor on the issues raised under the new Act.

The questions presented here are these:

1. Does Section 307 of the Act divest a district court

of subject matter jurisdiction in a civil penalty action to

entertain the defense of invalidity of the regulations be-

ing enforced on the ground they had originally been

adopted in violation of state law?

2. Does the Due Process Clause of the Fifth Amend-

ment of the Constitution prohibit a one-sided rehearing

of a defective summary judgment in which the court

accepts evidence and arguments of the prevailing party

on new issues, and the judgment is modified in an effort

to cure the prior defects, but refuses to consider the con-

tentions of the losing party on the same issues?

(i)

RULE 29.1 LIST

Petitioner Vista Paint Corporation has no_ parent

company nor any non-wholly owned subsidiary.

TABLE OF CONTENTS

QUESTIONS PRESENTED ................................ aaeeiiele

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GEamaues Bmlsw ................-........... pie eiaasampatiatipavecki

hk 6s ty yt) rr Taian aM AALd cas cas neaptacieuinictiaale

CONSTITUTIONAL PROVISIONS, STATUTES,

AND REGULATIONS INVOLVED |...

cok ee sy WA ly iE 07

A.

B.

C.

Background .................... Pe A eR

The Earlier Repealed Regulations

The Subsequent Regulations and Pre-NOV

SS a sp Se a Or

Interim and Post-Deadline Sales

E. EPA’s Information Request And Vista’s Re-

eae a "Tea Ra car a oo

EPA’s Penalty Policy And USA’s Penalty Tar-

casino nnsnomennnenseunes

The Pleading Order ...............

The Summary Judgment And Its Amendment

Neen ck 15 sacwsbasinsksnanionte

Affirmance Of The Pleading Order ......................

Affirmance Of The Amended Summary Judg-

Page

i

il

iv

TABLE OF CONTENTS—Continued

REASONS FOR GRANTING THE WRIT ......

I.

IT.

IIT.

THE MEMORANDUM’S AFFIRMANCE OF

THE PLEADING ORDER CONFLICTS WITH

THE MAJORITY RULE OF OTHER CIR-

CUITS HOLDING THAT SECTION 307 OF

THE ACT IS NO BAR TO INVALIDITY DE-

FENSES IN ENFORCEMENT ACTIONS .......

THE MEMORANDUM’S AFFIRMANCE OF

THE AMENDED SUMMARY JUDGMENT

CONFLICTS WITH THIS COURT’S' DE-

CISIONS HOLDING THAT WHERE A RE-

HEARING IS HELD ON NEW ISSUES BOTH

PARTIES ARE ENTITLED TO A HEARING

THEREON

THE MEMORANDUM DECIDES IMPOR-

TANT QUESTIONS OF FEDERAL LAW

WHICH SHOULD BE DECIDED BY THIS

COURT ......

ete i.) ot, nee

Page

18

18

Vv

TABLE OF AUTHORITIES

Cases Page

Adickes v. Kress & Co., 398 U.S. 144 (1970) _..... 13

Amevican Cyanamid Co. v. EPA, 810 F.2d 493

RO Se ID cs 7

Armstrong v. Manzo, 380 U.S. 545 (1965) ...._... 21, 23

Bell v. Burson, 402 U.S. 535 (1971) Ww. 22

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

ey ee eee sae emnerente cee eee 18

Colusa Air Pollution Control District v. Superior

Court, 226 Cal. App. 3d 880 (1991) 6

Delaney v. EPA, 898 F.2d 687, (9th Cir. 1990) _. 12

Dunn-Edwards Corp. v. Bay Area Air Quality

Management District, 9 Cal.App. 4th 644

EU stitutions snendsicadious tba candadagimcaniie kettle cece 11

Gaspard & Co., Inc. v. Government of Guam, 427

Fae ore Cee Gat, FOTO) ne a 15

General Motors Corp. v. U.S., 496 U.S. 5380 7

Getty Oil Co. (Eastern Operations) v. Ruckel-

shaus, 467 F.2d 349 (3d Cir. 1972) ........02000000.. 19

Goleta Valley Community Hospital v. Department

of Health Services, 149 Cal. App. 3d 1124

(1983) ot ania Se eeeeiee aan 11

Indiana & Michigan Electric Co. v. EPA, 509 F.2d

ee We A Gee ee el 18

Landy v. Federal Aviation Administration, 635

ae wee Gee Gar. Ree? 22 13

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

Be RE «> § SEMANA SRS AURORE A IN ES em 18

New Mexico Environmental Imp. Div. v. Thomas,

700 F.20 S26 (10th Cir. 1966) ............................. 19

People v. Cellotex Corp., 516 F. Supp. 716 (C.D.

Mag | Yate RE Relea SDN GUNA RMD te ely LEA 19

Saunders v. Shaw, 244 U.S. 317 (1917) ............ 20, 22, 23

Sierra Club v. Indiana-Kentucky Electric Corp,

716 F.2d 1145 (7th Cir. 1983) _..... nati es rb net 19

Southern Railway Co. v. Miller, 285 F.2d 202 (6th

(NE Fete a been taal UR Re ES eR 13

Union Electric Co. v. EPA, 427 U.S. 246 ................ 19

Union Electric Co. v. EPA, 593 F.2d 299 (8th Cir.

vi

TABLE OF AUTHORITIES—Continued

Page

U.S. v. Chevron U.S.A... Inc., 639 F. Supp. 770

Sa es asc cocees ee ena naman eae 13,14

U.S. v. Ford Motor Co., 814 F.2d 1099 (6th Cir.

AR GPE nee es OD MPa t a Pr ARE OS: ROT AEN 19

U.S. v. Louisiana-Pacific Corp., 682 F. Supp. 1122

Cy ee er 14

U.S. v. Reserve Mining Co., 412 F. Supp. 705 (D.

SUN UPN 0s caus cc uncalleeuniventre causa eezaaeenmacee aioe 15

U.S. v. SCM Corp., 667 F. Supp. 1110 (D. Md.

1987) ... x . 18,14

U.S. v. CPS Chemical Co., Ine., ‘179 F. ‘Supp. 437

SRG ARs CUIIEE, Sc, (5 3eois ae cotactecexniagtin etcenateceaee 18

U.S. v. Interlake, Inc., 429 F. Supp. 193 (N.D.

Eg RPO OOP ene OR Mai cme cme sha trl Ze NRE 18

U.S. v. Zimmer Paper Products, Inc., 733 F. Supp.

ee NR, WN I cious dace cence ecaasaaaaen 18

Western Oil & Gas Assn. v. ARB, 37 Cal. 3d 502

0 RI IAS INE A ee SO EOP Py BOT RO Ne SIP ERE EPL a 11

Western Oil & Gas Assn. v. Orange County Air

Pollution Control District, 14 Cal.3d 411

(1975) ...... DIRE Dione betel ie? ste BE Ba nantes mee 11

Statutes

28 U.S.C. § 1254(1) PIER DN ERT AOS OT OTA T CE 2

I I a cas chaadesccaminaekcameeceaan 5

42 U.S.C. § 7413 (e) ...... esennsanoaeae vancnvsitthy Mate UB, 24, 16, 16

I Tr oc rcananro vncnccedoan vente eautostileee 5

I I seas satsaneumsussiccnvuvenens 2, 3, 18, 19, 24

Clean Air Act, 42 U.S.C. § 7607 (b) ..................0022.... 2, 40, a0

Permer 46 3.0. § 101 (a) (8) ...............-..............2600 5

I cu ananenpednnmnepaundanse 3, 20

I I ccscaknnbininusinineacanenenneniee 2, 16, 20

United States Constitution

SEL LIE ALT LO TE TT 2

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

No, —————

VISTA PAINT CORPORATION,

. Petitioner,

UNITED STATES OF AMERICA. ENVIRONMENTAL PROTEC-

TION AGENCY, AIR RESOURCES BOARD, SouTH COoAsT

AIR QUALITY MANAGEMENT District, SAN D1EGo

AIR POLLUTION CONTROL DISTRICT,

Respondents.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner Vista Paint Corporation (“Vista”) prays that

a writ of certiorari issue to review the judgment of the

United States Court of Appeals for the Ninth Circuit

entered in this case.

OPINIONS BELOW

The memorandum opinion of the United States Court

of Appeals for the Ninth Circuit (the “Memorandum” ),

reproduced as Appendix A, was not reported. The Order

denying the appellees’ petition for rehearing on penalty

issues is reproduced as Appendix G. The Order denying

Vista’s petition for rehearing on liability issues and re-

jecting its suggestion for rehearing en banc is reproduced

2

as Appendx H. The rulings of the United States District

Court for the Central District of California, reproduced

as Appendices B through F, were not reported.

JURISDICTION

The Opinion was filed and judgment entered on Sep-

tember 24, 1992. The Order denying Vista’s petition and

suggestion was filed on March 22, 1993. The jurisdic-

tion of this Court is invoked pursuant to 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL PROVISIONS, STATUTES,

AND REGULATIONS INVOLVED

The Fifth Amendment of the United States Constitu-

tion provides, in relevant part, as follows: “No person

Shall . . . be deprived of . . . property without due

process of law.”

Section 307(b)(1) of the Clean Air Act (the “Act’),

42 U.S.C. § 7607(b) (as amended November 15, 1980),

provides, in relevant part, as follows:

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

action in approving or promulgating any implemen-

tation 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 appro-

priate circuit . . . Any petition for review under this

subsection shall be filed within sixty days from the

date notice of such promulgation, approval or action

appears in the Federal Register . . .

“(2) Action of the Administrator with respect to

which review could have been obtained under para-

graph (1) shall not be subject to judicial review in

civil proceedings for enforcement... .”

Section 307(d)(1)(B) of the Act, 42 U.S.C. § 7607

(d)(1)(B), provides, in relevant part, as follows:

“This subsection applies to . . . the promulgation

or revision of an implementation plan by the Ad-

a

ministrator under section 7410(c) of this title...

The provisions of . . . section 706 of Title 5 shall

not, except as expressly provided in this subsection.

apply to actions to which this subsection applies...”

Section 307(d)(8) of the Act, 42 U.S.C. § 7607

(d)(8), provides, in relevant part, as follows:

3

“The sole forum for challenging procedural deter-

minations made by the Administrator under this sub-

section shall be in the United States court of appeals

for the appropriate circuit (as provided in subsec-

tion (b) of this section) at the time of the sub-

stantive review of the rule.”

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

amended November 15, 1990), provides, in relevant part,

as follows:

“(1) In determining the amount of any penalty

to be assessed under this section . . . the Admin-

istrator or the court, as appropriate, 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 evi-

dence other than the applicable test method). pay-

ment by the violator of penalties previously assessed

for the same violation, the economic benefit of non-

compliance, and the seriousness of the violation. The

court shall not assess penalties for noncompliance

with . . . actions under section 7414 of this title.

where the violator had sufficient cause to violate or

fail or refuse to comply with such subpoena or

action.

“(2) A penalty may be assessed for each day of

violation. For purposes of determining the number

of days of violation for which a penalty may be

assessed under subsection (b) . .. of this section. . .

where the Administrator . . . has notified the source

of the violation, and the plaintiff makes a prima

4

facie showing that the conduct or events giving rise

to the violation are likely to have continued or re-

curred past the date of notice, the days of violation

shall be presumed to include the date of such notice

and each and every day thereafter until the violator

establishes that continuous compliance has _ been

achieved, except to the extent that the violator can

prove by a preponderance of the evidence that there

were intervening days during which no violation

occurred or that the violation was not continuing

in nature.”

STATEMENT OF THE CASE

A. Background

Gloss and semi-gloss oil-based enamel house paints

contain paint thinner, or mineral spirits. Paint thinner

is one of thousands of compounds known to air pollu-

tion control regulators as a volatile organic compound

(“VOC”). Regulators call such enamels “non-fiat” coat-

ings. WOCs, including those from non-flat paints, can

contribute to the formation of ground-level ozone in cer-

tain urban areas on hot summer days. The control of

emissions of VOC and other ozone precursors has been a

central focus under the Act. Traditional enamels contain

380 or more grams per liter (“g/l”) of VOC.

This case arises out of a jurisdictional dispute between

California clean air regulators, on the one hand, and

federal regulators, on the other, over the wisdom of reg-

ulations imposing a 250 g1 limit on VOCs in non-flat

coatings, and over the proper time to implement any

such limit in California’s urban areas. Such a limit ef-

fectively outlaws traditional oil-based enamels. State and

local officials had fixed an effective date at September 1,

1985, but later extended that deadline several years. The

California paint industry, including Vista complied with

the amended deadline. Federal officials, however, later

contended that the earlier deadline, although it had been

5

repealed at the state level, remained federally enforce-

able.

The Act, as in effect in the 1980s, provided that con-

trol of air pollution was the primary responsibility of

state and local government. Former 42 U.S.C. § 101

(a)(3). It also provided that nothing in the Act shall

preclude or deny the right of state and local government

to adopt or enforce any requirement respecting control

or abatement of air pollution. /d. at § 116... Under the

California Health and Safety Code (the “Code”) regu-

lating certain non-vehicular sources of air pollution was

the primary responsibility of local and regional districts,

including respondents South Coast Air Quality Manage-

ment District (“SCAQMD”) and San Diego Pollution

Control District (“SDAPCD”). Code §§ 39002, 40001.

Phe Act directed each state to adopt a state implementa-

tion plarge SIP") consisting, in part, of current district

rules. 42 U.S.C. § 7410. Respondent California Air Re-

sources Board (“ARB”) approved local rules as SIP re-

visions. Code $$ 39602, 40460-46469.5, 41500-41507.

41600-41652. The Act required respondent Environ-

mental Protection Agency (“EPA”) to approve any

SIP revision meeting certain requirements. Former 42

U.S.C. $§ 7410(a)(3)(A).

B. The Earlier Repealed Regulations

On March 16, 1984 SCAQMD adopted the ninth ver-

sion (in seven ) of its Rule 1113. Section (a)(1)

thereof provided, in relevant part, as follows:

A person shall not sell, offer for sale, or apply

any architectural coating . . . which:

“(A) contains more than 250 grams of volatile

organic compounds per liter of coating . .

or

1 These provisions substantially survived the November 15, 1990

amendments to the Act. But now EPA, in addition, has certain

direct responsibility over paints and other consumer or commercial

products. 42 U.S.C. § 751lb(e).

6

“(B) contains more than 380 grams of volatile

organic compounds per liter of coating . . .,

is defined as non-flat coating, and is manu-

factured prior to September 2, 1985... .”

At the same time SDAPCD adopted a revised version

of its similar Rule 67.0. Section (d)(2) thereof provided,

in pertinent part, as follows:

‘“. . . [A] person shall not sell, offer for sale, or

apply any nonflat architectural coating having, at

the time of sale or manufacture, a volatile organic

compound content . . . in excess of the following:

(1) 380 grams of volatile organic compounds

per liter of coating if manufactured .. . prior

to September 1, 1985.

(ii) 250 grams of volatile organic compounds

per liter of coating if manufactured on or after

September 1, 1985... .”

Each of SCAQMD and SDAPCD submitted its 1984

rule version to ARB as a SIP revision, and ARB approved

each.” EPA approved both, along with those of numerous

other districts, as SIP revisions on January 24, 1985.

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

C. The Subsequent Regulations and Pre-NOV Sales

In August, 1985 SCAQMD once more amended Rule

1113 by extending the September, 1985 effective date oi

the anticipated 380-to-250 g/l limit reduction to Septem-

ber, 1989. SDAPCD also took actions extending its

September, 1985 deadline permitting sales of non-flat

coatings through August 31, 1987. These and other dis-

trict deadline extensions were submitted to, and approved

by, ARB. They were then submitted to EPA. At all

times during 1985, 1986, and 1987, however, EPA de-

layed taking action thereon.

2 As shown below, there were substantial doubts as to the validity

of these district adoptions and state approvals under California

law. See Colusa Air Pollution Control District v. Superior Court,

226 Cal. App. 3d 880, 883-84 (1991).

——E—E——rrvOE—— ee ©

7

At various unspecified times between December 3, 1985

and June 24, 1989 Vista and at least 39 other leading

California paint manufacturers and retailers offered and

sold traditional enamels in SCAQMD, SDAPCD. and

throughout California. These products met the 380 ¢1

limit required in California. No sales were made by

Vista on any holidays or Sundays.

At all times during December 1985, 1986. and the

first eight months of 1987, SCAQMD and SDAPCD

permitted the sale of such enamels. The California

paint industry sold such coatings openly and in the belief

that such actions were fully proper. At all such times air

quality regulators at the local, state. and federal levels

were aware of this widespread understanding and practice,

and never expressed to members of the paint industry.

including Vista, any opinion that the understanding was

wrong or that the practice should stop. At all such times

the paint industry, based on the advice of counsel. un-

derstood that EPA was without authority to enforce the

locally superseded, but federally approved, SIP revisions."

D. Interim and Post-Deadline Sales

On June 24, 1987 EPA sent a notice of violation

(“NOV”) to the 40 leading California paint companies,

including Vista, charging violation of one or more of

20 federally approved local district rules. The Vista NOV

issued under former Section 113 of the Act. charged

that Vista had failed to comply with the superceded ver-

sions of SDAPCD Rule 67.0 and SCAQMD Rule BE53,

and alleged that Vista was in violation of the applicable

SIP.

3See American Cyanamid Co. v. EPA, 810 F.2d, 498, 500 (5th

Cir. 1987); but also see General Motors Corp. v. U.S., 496 U.S.

530, 541 (1990).

8

EPA advised the paint industry that it would pursue

enforcement action against any company which did not

comply with the following schedule:

“1) Manufacture of non-compliant (>250 g/1)

coatings is ceased on or before June 30, 1987, and

“2) Sales of non-compliant coatings is ceased on

or before August 31, 1987.”

In order to meet the terms of the first part of EPA’s

“amnesty,” Vista totally stopped manufacturing all tradi-

tional enamels by July 1, 1987. Between June 24 and

August 31, 1987 Vista attempted to sell off its obsolete

inventory of such coatings. Vista totally stopped all sales

in SCAQMD by September |, 1987.

Based on discussions with EPA and SDAPCD Vista

filed a variance application with SDAPCD on August 31,

1987, and attempted to liquidate its obsolete inventory of

traditional enamels in SDAPCD during September, 1987,

believing that such conduct was permitted as a result of

the variance proceeding. Approximately 70 gallons of

traditional enamel were sold by Vista in SDAPCD during

the post-deadline period.‘

At all times during 1987 and thereafter the SIP revi-

sions adopted by various districts and approved by ARB

in 1985 remained pending before EPA. EPA did not act

thereon until February 2, 1989, when they were disap-

proved. 54 Fed. Reg. 5236 (Feb. 2, 1989).

E. EPA’s Information Request And Vista’s Response.

On June 19, 1987 EPA had sent to Vista and the 39

other paint companies letters asking for certain future

sales data about non-flat coatings, including the volume

USA contends, and the judgment holds, that these few post-

deadline sales in SDAPCD justify massive penalties with respect

to the pre-deadline sales and sales in SCAQMD as well.

—— ee

9

which will have been sold in each day of August, Septem-

ber, and October 1987. A report was due on each of

six different dates between August 28, 1987 and Novem-

ber 16, 1987. EPA’s letter stated that, in the event Vista

failed to adequately respond, it intended to pursue “im-

mediate” action in court.

On July 22, 1987, by which time Vista had stopped

manufacturing non-flat coatings, EPA sent a second letter

containing certain “modifications” to its June 19 informa-

tion request. That letter, among other things, provided

that the August 1987 data could be given by stipulation.

It further said:

“

- The stipulation must also verify that by

July 1, 1987, your company ceased manufacture of

these coatings for sale in the 20 districts and that

your company intends to cease all sales and offers

for sale of these coatings in the 20 districts by Sep-

tember 1, 1987.”

On August 4, 1987 Vista sent a letter to EPA making

the latter stipulations.

Vista understood that, if manufacturing and selling

Stopped, no further reporting was required. For these

reasons, Vista delivered no sales data to EPA on the six

dates. At all times it believed that it had complied with

what EPA finally wanted, and it never willfully withheld

anything. EPA pursued no “immediate” court action

pursuant to EPA’s June 19 letter.

Indeed, at no time prior to May 11, 1989 did EPA

say anything to Vista about the 1987 information re-

quest. On that date, however, respondent United States

of America (“USA”) wrote to Vista asserting for the

first time that Vista had failed to provide the information

requested in 1987. Promptly after receipt of that letter

Vista took extraordinary steps to provide the sales data.

Three Vista employees spent six days reviewing sales

tickets in order to determine the estimated sales in

10

SDAPCD in September 1987. The information was de-

livered to USA on June 19, 21, and 23, 1989.

On June 23, 1989 USA wrote a letter to Vista. It

stated that USA had received from Vista “enough infor-

mation” to permit it to resolve the matter. At no time

thereafter did EPA request more information.

F. EPA’s Penalty Policy And USA’s Penalty Target

EPA had promulgated and published its Civil Penalty

Policy. BNA Environmental Reporter (Federal Laws)

41:2991 (June 1, 1984). This policy set forth in detail

the criteria and methodology to be followed by USA in

fixing its penalty “target” in a civil enforcement action.

In its June 23, 1989 letter USA also revealed to Vista

that it had “calculated a proposed civil penalty of $192,000

based on EPA’s Clean Air Act penalty policy.” USA

calculated its penalty target for paint sales during the

pre-NOV interim, and post-deadline periods at $162,000.

The major factor in that calculation was the following:

‘Assuming a sale price of $15 a gallon, and a 2% profit

margin, the economic benefit of the unlawful sales was

$72,000.” USA’s June 23, 1989 letter also calculated

its proposed penalty target of $30,000 for its informa-

tion request claim based on the following: “Importance

($114 violation): $15,000,” to which USA added:

“100% upward adjustment for knowing violation and

lack of cooperation.”

G. The Pleading Order

On December 3, 1990, more than two weeks after the

new amendments to the Act took effect, USA, at the

request of the EPA, filed a complaint for civil penalties

against Vista for alleged violations of the Act relating

to the paint sales and to the requests for information.

Vista filed its answer to the complaint on March 28,

1991 asserting various affirmative defenses. As one de-

ll

1]

fense, Vista alleged that in promulgating the 1984 ver-

sions of Rule 67.0 and Rule 1113, SDAPCD anc

SCAQMD had violated, among other things, the pro-

visions of the Code relating to rulemaking,’ and appli-

cable California statutes mandating environmental im-

pact analysis." As a result of these and other state law

violations. Vista alleged. each rule was void ab initio?

and could not be approved by EPA nor enforced by

MSA. Vista also alleged as affirmative defenses that. in

approving the 1984 versions of Rule 67.0 and Rule

1113. ARB violated the above provisions, as well as

California’s administrative procedure act.* As a result.

ARB's inclusion of each of Rule 67.0 and Rule 1113 in

the SIP was void ab initio and EPA could not have ap-

proved nor enforced either.®

* Under the Code, as in effect in 1984, each district was required

to assess and duly consider the economic impacts of the rules.

Western Oil & Gas Assn. v. ARB, 37 Cal. 3d 502, 507 (1984). Also,

a district had no authority to regulate sources not within its statu-

tory jurisdiction. Western Oil & Gas Assn. v. Orange County Air

Pollution Control District, 14 Cal.38d 411, 415-17 (1975). (The Code

was silent about paint until 1988, and even now it is unclear what

district authority to regulate paint may be. Code § 41712.)

“A district rule regulating the VOC content of house paint is

invalid where the district fails to analyze the adverse environmental

effects of the use of substitute products in place of the outlawed

coatings. Dunn-Edwards Corp. v. Bay Area Air Quality Manage-

ment District, 9 Cal.App. 4th 644, 653-58 (1992).

* Dunn-Edwards, 9 Cal. App. 4th at 655.

* California Government Code § 11340 et seq.; see, e.g., Goleta

Valley Community Hospital v. Department of Health Services, 149

Cal. App. 3d 1124, 1128-29 (1983).

® Vista further alleged that, in approving the superseded version

of Rule 67.0 and Rule 1113 as part of the federally approved SIP,

EPA violated various provisions of federal law, including the Act,

as a result of which EPA’s approvals were also void and unen-

forceable.

12

Vista concurrently filed a counterclaim for declaratory

and injunctive relief against USA raising the same de-

fenses. It also filed a third-party complaint against

SCAQMD, SCAPCD, ARB, and EPA alleging, inter

alia, that the rules USA sought to enforce in the main

action had been illegally adopted or approved by SCAQMD,

SDAPCD and ARB and were therefore void ab initio,

as a matter of state law, and unapprovable and un-

enforceable at the federal level.

On July 24, 1991 the district court granted the third-

party defendants’ motion to dismiss the third-party com-

plaint, and USA’s motion to dismiss Vista’s counterclaim

and to strike Vista’s affirmative defenses challenging the

underlying validity of the rules. The court’s order stated,

among other things, that it lacked subject matter juris-

diction to review the claims raised in the counterclaim

and third-party complaint.

H. The Summary Judgment And Its Amendment on

Rehearing

On October 25, 1991 USA moved for summary judg-

ment.’? USA’s summary judgment motion was _ based

exclusively. and improperly, on former Section 113(b) of

the Act. Former 42 U.S.C. § 7413(b). USA totally

ignored the dispositive provision, new Section 113(e) of

the Act. 42 U.S.C. § 7413(e).

For example, as to liability for paint sales, USA’s brief

cited Sections “7413(b)(1)” and “7413(b)(2)” of the

former Act. USA presented no evidence nor argument

relating to new Section 113(e)(2). That section es-

tablishes, first, that the days of violation should only

include the day of the NOV and days “thereafter.” Sec-

ond, it provides that, as to the post-NOV period, there

10USA sought a civil penalty of $6,040,000. Neither USA nor

EPA has ever purported to explain why it departed from its

$192,000 “target” fixed under EPA’s civil penalty policy. See De-

laney v. EPA, 898 F.2d 687, 693 (9th Cir. 1990).

13

was no liability for “intervening days” during which no

sales occurred."

As another example, USA’s summary judgment papers,

as to liability for information request responses, cited

sections “7414(a)(1)” and “7413(b) . . . (4)” of the

former Act. EPA offered no evidence nor briefing relat-

ing to the second sentence of new Section 113(e)(1) of

the Act, in effect since November 1990, which provides

that the court shall not assess penalties where the re-

sponding party had “sufficient cause” to fail to comply

with the requirement.

As a final example, insofar as penalty factors are con-

cerned, EPA incorrectly cited former Section “7413(b).”

It attempted no factual nor legal showing under the rele-

vant provision, the first sentence of new Section 113(e)

(1), which mandates that “the court . . . shall take into

consideration” various factors, including “the economic

benefit of non-compliance.”’

USA submitted to the court proposed findings of fact

and conclusions of law. They contained no references to

the above new statutory provisions and elements.”

The district curt granted summary judgment and signed

verbatim USA’s proposed findings and conclusions on

November 18, 1991. The court ruled that Vista had

sold traditional enamels unlawfully each and every day

between December 3, 1985 and October 12, 1987. in-

cluding during the pre-NOV period and on every Sunday

11 USA bore the burden of proving at trial each day of viola-

tion. U.S. v. Chevron U.S.A., Inc., 639 F. Supp. 770, 777 (W.D. Tex.

1985) ; U.S. v. SCM Corp., 667 F. Supp. 1110, 1124-25 (D. Md

1987) ; Landy v. Federal Aviation Administration, 635 F.2d 143, 147

(2nd Cir. 1981). Section 113(e) imposes certain modifications as

to post-NOV violations. But those modifications do not apply retro-

actively to the sales here. Southern Railway Co. v. Miller, 285 F.2d

202, 204-05 (6th Cir. 1960).

'? Because USA’s showing was wholly deficient, Vista was not

bound to make a counter-showing on the unaddressed issues.

Adickes v. Kress & Co., 398 U.S. 144, 155-56 (1970).

14

and holiday. The court further ruled that Vista had un-

lawfully failed to respond to EPA’s request for infor-

mation on each and every day between August 26, 1987

and November 18, 1991 (the day of the summary judg-

ment hearing), including all days after June 23, 1989

when USA had written that it had received from Vista

“enough information.” ™

In subsequent proceedings both parties asked the dis-

trict court to amend the ruling, in one way or another,

based on consideration of the new but previously un-

heard sections of the Act. On rehearing, both sides pre-

sented evidence and argument on these issues for the

first time, and both sides asked the court for amended,

although differing, findings of fact and conclusions of

law with respect thereto. See Federal Rules of Civil

Procedure, Rules 52, 59, 60.

On the paint sale liability issue, for example, Vista

argued that there is no such liability for pre-NOV sales

under new Section 113(e)(2) of the new Act. and asked

the court for a conclusion of law stating that “[n]o lia-

bility exists for paint sales prior to the notice of violation.”

Vista also put in evidence showing that no sales occurred

on Sundays or holidays, and asked for a finding to that

effect.

On the issue of liability for failure to respond to in-

formation requests, Vista presented evidence showing, that.

as a result of Vista’s earlier document production, USA

had written on June 23, 1989 that it had “enough infor-

mation” to meet its enforcement needs. Vista’s brief

argued that Vista had sufficient cause thereafter to re-

frain from any further production efforts. Vista sub-

13The Court cut USA’s request in half and awarded a civil

penalty of $3,020,000. The penalty below was unprecedented among

reported civil penalty cases under the Act, both in the summary

manner of its rendition, and in the severity of its confiscatory

impact on the defendant’s business. Compare, U.S. v. Chevron

U.S.A., Inc., 689 F. Supp. 770 (W.D. Tex. 1985); U.S. v. SCM

Corp., 667 F. Supp. 1110 (D. Md. 1987); U.S. v. Louisiana-Pacific

Corp., 682 F. Supp. 1122 (D. Colo. 1987).

ee

15

mitted to the court five proposed findings of fact and one

proposed conclusion of law relating to the sufficient cause

issue.

On the issue relating to the economic benefit of non-

compliance, Vista submitted the above letter in which

USA estimated that benefit from the paint sales was

72,000.” “* USA submitted no evidence on rehearing

relating to economic benefit. In briefs, its lawyers simply

offered an estimate—many times higher than $72,000—

based on an assumption, which they conceded was “not

precise,” that 55% of Vista’s income was due to sales

of traditional enamels. Vista submitted declarations of

its chief executive and chief financial officers showing

that USA’s lawyers’ assumptions were “false,” as less

than 3% of Vista’s income was due to such sales, and

that accordingly this estimate was “erroneous,” and fur-

ther showing that both of USA’s widely divergent esti-

mates mistakenly failed to account for the offsetting bene-

fits of compliance due to increased sales of substitute

products. Vista proposed a new finding of fact to such

effect, and another to the effect that it had gained no

economic benefit by any delay in providing requested in-

formation.

In its brief on rehearing, USA conceded, as follows:

“. . . Vista correctly states that new Section 113

(e)(1) . . . replaced former Section 113(b) and

Should apply to this case... . [Nlew Section 113

(e)(1) requires consideration of . . . the economic

benefit of noncompliance.

“. . . [T]he Court’s Findings of Fact and Conclu-

sions of Law should be amended to make a specific

conclusion of Law on each additional issue.

USA argued, and the district court found, that the letter was

inadmissible because it contained a settlement proposal. But USA’s

factual admissions in the letter were admissible. Gaspard & Co.,

Inc. v. Government of Guam, 427 F.2d 276, 278 (9th Cir. 1970);

U.S. v. Reserve Mining Co., 412 F. Supp. 705, 712 (D. Minn. 1976).

16

Accordingly, the United States will submit under

separate cover an amended proposed Findings of

Fact and Conclusions of Law for the Court’s

consideration.”

USA did submit such proposed amended conclusions

of law on certain of the new issues. They read, in rele-

vant part, as follows:

“The CAA was amended in November 1990, in part,

to add new CAA Section 113(e)(1). ... In as-

sessing civil penalties, CAA Section 113(e)(1) pro-

vides that the Court shall consider . . . the economic

benefit of noncompliance. .. .

“The seventh factor, the economic benefit of non-

compliance, also supports a substantial penalty

against Vista. By its failure to properly respond to

EPA’s Section 114 requests for information .

Vista has improperly failed to disclose information

which it has or had in its exclusive possession to

assess the precise economic benefit to it due to its

illegal offer for sale and sale of noncompliant coat-

ings. . . . Vista obtained a significant economic

benefit from its illegal offer for sale and sales of

non-compliant coatings. . . . Vista has failed to

submit admissible evidence to controvert the United

States’ showing of Vista’s_ significant economic

benefit.”

On rehearing, the court ruled that Vista’s motion was

“denied in its entirety with prejudice, except as explicitly

set forth below.” This followed: “The Court approves

and enters amended findings of fact and conclusions of

law in the form submitted by the United States.”

I. Affirmance Of The Pleading Order

The Ninth Circuit affirmed the pleading order. The

Memorandum states (A3), as follows: “As Vista had

ample opportunity to submit comments on the inclusion

of the local rules in the California state implementation

plan (“SIP”) pursuant to section 307(d) of the CAA,

and to challenge EPA’s approval of the inclusion of those

Hida eeeneenereneneeeeneeea aerate eel

17

rules in the SIP pursuant to section 307(b)(1) of the

CAA, the district court lacked subject matter jurisdic-

tion over the third party complaint, the counterclaim,

and the affirmative defenses dealing with invalidity.”

J. Affirmance Of The Amended Summary Judgment

The Ninth Circuit also upheld the amended summary

judgment rendered on rehearing.’» However, the Memo-

randum acknowledges (A6) as follows: “The 1990

Amendments became effective on November 15, 1990.

USA filed its complaint on December 3, 1990. Accord-

ingly, the Amendments apply to this case.” The Memo-

randum further states (A7) that Vista’s failure to make

certain arguments during the summary judgment proceed-

ing was “likely due to the failure of the USA to bring its

complaint under the 1990 CAA Amendments.”

Nevertheless, the Memorandum rules (All) that one

of the issues “raised for the first time in Vista's post-

judgment motion” was “Vista’s liability for pre-notice of

violation sales,” and that, “[a]ccordingly, we refuse to

consider” Vista’s argument on appeal with respect to that

issue. It further states (A4): “Vista did not raise the

issue that the dates of the sales were not proven for

Sundays and holidays until after summary judgment had

been entered.”

The Memorandum states ( A8) that Vista’s contention

that USA told Vista that USA had “enough information”

on June 23, 1989 “was not raised until the post-judgment

action.” It states (A5) that Vista’s argument that it had

“sufficient cause” to act as it did thereafter was “only

raised in its post-judgment motion.” Again, the Memo-

randum concludes (A11) that, “[a]ecordingly, we refuse

to consider these arguments.”

As to any economic benefit of noncompliance, the

Memorandum acknowledges (A8-9) that “there may have

been a factual dispute as to this issue.” But it nonetheless

‘It reversed the amended summary judgment on penalty and

remanded to the district court for trial thereon.

rer er

18

upheld the district court’s conclusion that “Vista failed to

submit admissible evidence to controvert USA’s showing

of Vista’s significant economic benefit.” “

REASONS FOR GRANTING THE WRIT

I. THE MEMORANDUM’S AFFIRMANCE OF THE

PLEADING ORDER CONFLICTS WITH THE MA-

JORITY RULE OF OTHER CIRCUITS HOLDING

THAT SECTION 307 OF THE ACT IS NO BAR TO

INVALIDITY DEFENSES IN ENFORCEMENT

ACTIONS.

The majority of circuits which have considered the

question have held or suggested that the prescriptions of

Section 307 of the Act establishing judicial review of

actions by the EPA in approval of a SIP do not prevent

a party from raising as a defense in an enforcement action

premised on a violation of the SIP matters which were

not within the ambit of the EPA Administrator’s review.

Union Electric Co. v. EPA, 593 F.2d 299, 304 (8th Cir.

1979) (“. . . [A] company seeking to have these issues

reviewed . . . could present its cause as a defense to any

enforcement proceedings initiated by the EPA in federal

district court.”); Lloyd A. Fry Roofing Co. v. EPA, 554

F.2d 885, 891 (8th Cir. 1977); U.S. v. CPS Chemical

Co., Inc., 779 F. Supp. 437, 454 (E.D. Ark. 1991);

U.S. v. Zimmer Paper Products, Inc., 733 F. Supp. 1265,

1270 (S.D. Ind. 1989); U.S. v. Interlake, Inc., 429 F.

Supp. 193, 197 (N.D. Ill. 1977) (“Thus Section 307

(b)(1) permits a court of appeals to consider only those

matters which the Administrator could consider when it

was determined whether to adopt a plan pursuant to Sec-

tion 110(a)(2)”); Buckeye Power, Inc. v. EPA, 481

F.2d 162, 173 (6th Cir. 1973); Indiana & Michigan Elec-

'6 For the reasons stated at footnote 14 above, any factual ad-

mission in USA’s letter was admissible. In any case, USA intro-

duced no evidence of benefit, but Vista put in two detailed declara-

tions of its officers rebutting the unsubstantiated assertions of

USA’s lawyers.

19

tric Co. v. EPA, 509 F.2d 839, 845 (7th Cir. 1975).

Indeed, without addressing the question, this Court has

recognized certain such rulings. Union Electric Co. v.

EPA, 427 U.S. 246, 268 n.18 (1976).

Furthermore, the majority of circuits has concluded

that a state or local regulation adopted in violation of

state law is void ab initio and therefore unapprovable

by EPA and unenforceable by USA in an enforcement

action. New Mexico Environmental Imp. Div. v. Thomas,

789 F.2d 825, 833 (10th Cir. 1986) (“When the ap-

proved SIP contains an element that is invalidated by

virtue of state law, adoption by the EPA is also invali-

dated”’); Sierra Club v. Indiana-Kentucky Electric Corp.,

716 F.2d 1145, 1151 (7th Cir. 1983); People v. Celo-

tex Corp., 516 F. Supp. 716, 718 (C.D. Til. 1981).%

Conversely, the minority of circuits has suggested that

the language of Section 307 bars the raising of the in-

validity defense in a federal enforcement action. Getty

Oil Co. (Eastern Operations) v. Ruckelshaus, 467 F.2d

349, 355-56 (3rd Cir. 1972) (“Getty was posing a di-

rect challenge to the regulation . . . Getty was in the

wrong court by virtue of section 307 of the Act”).

Further, the minority of circuits has held that a pro-

vision included in a state implementation plan which was

void and unenforceable under state law may still be en-

forced in a federal action. U.S. v. Ford Motor Co., 814

F.2d 1099, 1103 (6th Cir. 1987) (“. . . [S]uch invali-

dation cannot be given effect, because invalidation of an

EPA-approved SIP may only occur in the federal ap-

17“Tt would be an anomaly, if not a denial of defendant’s due

process rights, to allow, at this point, full enforcement of those

invalid regulations ....” 516 F. Supp. at 718.

18Tn discussing the availability of judicial review, however, the

court in Getty acknowledged: “The Constitution requires an op-

portunity at a meaningful time and in a meaningful manner for a

hearing appropriate to the nature of the case.” 467 F.2d at 356.

Vista never got a hearing on its invalidity defenses.

20

pellate courts on direct appeal from the Administrator’s

decision under § 7607(b)(1)...’’).

The Memorandum of the Ninth Circuit here follows,

although without specific reference thereto, the minority

rule as to both the effect of Section 307 and the federal

enforceability of an invalid state regulation.” This Court

should take this opportunity to resolve the above conflict

among the circuits and, Vista would argue, resolve it in

favor of the majority view.

II. THE MEMORANDUM’S AFFIRMANCE OF THE

AMENDED SUMMARY JUDGMENT CONFLICTS

WITH THIS COURT'S DECISIONS HOLDING THAT

WHERE A REHEARING IS HELD ON NEW

ISSUES BOTH PARTIES ARE ENTITLED TO A

HEARING THEREON.

In Saunders v. Shaw, 244 U.S. 317 (1917), a land-

owner sued a drainage district in state court to énjoin

collection of a tax. A holder of the district’s bonds,

which were to be paid out of the proceeds of the tax,

intervened to oppose the injunction. At trial the land-

owner offered evidence to show that his land was out-

side of the area benefitted by the drainage system. The

evidence was excluded, however, as being outside the

scope of the landowner’s pleadings. Accordingly, the

bondholder did not introduce rebuttal evidence. The

bondholder prevailed in the trial court. The state appel-

19 The references in the Memorandum to Section 307(b) (1) and

307(d) are misplaced. Section 307(b)(1) relates to review of

“action of the Administrator,” and Section 307(d) also refers to

certain types of action “by the Administrator.” Here, the thrust of

Vista’s defenses relates to the unlawful actions of SCAQMD,

SDAPCD, and ARB under state law in adopting and approving the

two regulations, rather than to the later actions of EPA in approv-

ing them under the Act. Thus, the Memorandum fails to address

Vista’s central contention when it alludes to Vista’s “challenge [to]

EPA’s approval,” as opposed to its challenges to the state action of

the state actors.

21

late court initially affirmed, but on rehearing, reversed

and granted the injunction based upon the landowner’s

offered, but neither admitted nor rebutted, evidence. The

bondholder’s petition for another rehearing was denied

under a state procedural rule forbidding a second rehear-

ing. This Court, in an opinion authored by Justice

Holmes, reversed, saying:

“. . . [The bondholder] has been deprived of due

process of law, . . . because the case has been de-

cided against him without his ever having had the

proper opportunity to present his evidence.

[When the trial court ruled that it was not open to

the plaintiff to show that his land was not benefitted,

the defendant was not bound to go on and offer

evidence that he contended was inadmissible, in

order to rebut the testimony already ruled to be

inadmissible in accordance with his view .. . [W]e

. cannot be sure that the defendant’s rights are

protected without giving him a chance to put his

evidence in.” 244 U.S. at 319.

In Armstrong v. Manzo, 380 U.S. 545 (1965) a

woman’s second husband petitioned to adopt her daughter.

A state statute dispensed with the need for notice to the

natural father when he was in arrears for child support.

Relying on this statute, the step-father alleged such de-

fault, and the hearing proceeded to judgment in his

absence. Upon learning of the adoption decree, the nat-

ural father moved to set it aside. At the second hearing,

he introduced evidence attempting to show that he had

not defaulted in his child support obligations. But the

court denied his motion and confirmed its prior adoption

decree. This Court reversed. It held that the first hear-

ing violated the due process clause for lack of the re-

quired notice and that the second failed to cure that

constitutional infirmity. The Court said:

“Had the petitioner been given the timely notice

which the Constitution requires, . . . the moving

parties would have had the burden of proving their

22

case .. . [citation]. It would have been incumbent

upon them .. . to prove why the petitioner’s consent

to the adoption was not required. Had neither side

offered any evidence, those who initiated the adop-

tion proceedings could have prevailed.

“Instead, the petitioner was faced on his first

appearance in the courtroom with the task of over-

coming an adverse decree entered by one judge,

based upon a finding of non-support made by another

judge. .. . [TJhere was placed upon the petitioner

the burden of affirmatively showing that he had

contributed to the support of his daughter.

The burdens thus placed upon the petitioner were

real, not purely theoretical. For “it is plain that

where the burden of proof lies may be decisive of

the outcome.” [citation] Yet these burdens would

not have been imposed upon him had he been given

timely notice in accord with the Constitution.

“A fundamental requirement of due process is

‘the opportunity to be heard.’ [citation] It is an

opportunity which must be granted at a meaningful

time and in a meaningful manner. The trial court

could have fully accorded this right to the petitioner

only by granting his motion to set aside the decree

and consider the case anew. Only that would have

wiped the slate clean. Only that would have restored

the petitioner to the position he would have occu-

pied had due process of law been accorded to him in

the first place.” 38 U.S. at 66-67.”

In Saunders, the defendant could not argue the loca-

tion issue at the first hearing, because it had been ruled

20 When a statutory scheme makes an element an important

factor, the determination “. . . may not, consistently with due

process, eliminate consideration of that factor in [the] hearing.

The hearing required by the Due Process Clause must be ‘meaning-

ful’ [citation] and ‘appropriate to the nature of the case’ [citation].

It is a proposition which hardly seems to need explication that a

hearing which excludes consideration of an element essential to

the decision . . . does not meet this standard.” Bell v. Burson, 402

U.S. 535, 541-42 (1971).

23

immaterial. In Armstrong, defendant could not meet the

default issue, because he was not there. Here, similarly,

Vista was not heard on the Section 113(e) issues at the

initial summary judgment hearing, because USA had

erroneously attempted to litigate issues under the repealed

Act and had ignored the real issues raised under the new

Act.

In Saunders, the defendant was denied any hearing in

which to cure the earlier defect. In Armstrong, a rehear-

ing was held, but the harm inflicted on the defendant

could not be cured, as the burden of proof had in the

meantime effectively shifted. In much the same way, in

this case, Vista was denied any real opportunity to liti-

gate the new Section 113(e) issues on rehearing, because

the proceeding below was wholly one-sided and the Ninth

Circuit “refuse[d] to consider” Vista’s evidence and ar-

guments relating to those issues on review.

Ill. THE MEMORANDUM DECIDES IMPORTANT

QUESTIONS OF FEDERAL LAW WHICH SHOULD

BE DECIDED BY THIS COURT

The civil penalty provisions of the Act hold out “dra-

conian” possibilities. Union Electric, 427 U.S. at 272

(Powell, J., concurring). The standards imposed under

the Act are complex and controversial, and ever more so.

Civil liability is fixed pursuant to prosecution which is

quasi-criminal in essence, but lacks the normal safe-

guards afforded to a criminal defendant. The per day

maxima are high, and a clean air violation, by its nature,

is usually a multiday event. The threat is especially se-

vere, of course, to a small business.”

It is essential that a litigant have its day in court on

all dispositive issues. Wihout that, its due process right

to a fair hearing has been extinguished.

21 Vista had sales of $28,900,000 in its 1986-1987 fiscal year. Its

profit during 1990-1991 was $304,567. It employs 400 persons in

Southern California.

iii

24

The pleading order upheld on appeal gutted an essen-

tial part of Vista’s defense. By it, Vista was denied a

hearing on the validity of the very rules USA was so

zealously attempting to enforce against it. Mootness, as

well as inefficiency, generally render repeated state law

challenges to an endless series of local “ghost” rules fu-

tile. Further, EPA cannot adjudicate the state law validity

issues in the SIP revision approval process, and thus a

Section 307 challenge in the Court of Appeals on state

law grounds would be similarly useless. The only real

opportunity a defendant has to challenge the underlying

validity of a superseded, but federally-approved, local rule

is when USA attempts to enforce it in a federal enforce-

ment action. This is the only practical rule from the

standpoint of judicial economy. The existing split among

the circuits relating to the effect of Section 307 on state

invalidity defenses in federal enforcement actions should

be resolved by this Court. The minority rule applied

sub silentio in the Memorandum below conflicts directly

with the great weigh of authority.

Similarly, USA sought and won a summary judgment

in the first motion proceeding which was admittedly de-

fective due to USA’s own fundamental error of law. USA

acknowledged that the judgment was in need, if possible,

of being cured and that necessitated a second hearing.

USA attempted the showings required under new Sec-

tion 113(e) for the first time on rehearing. But because

the rehearing conducted in the district court on the new

issues, and the review on appeal, was wholly a one-way

affair, Vista was effectively denied a hearing on those

crucial issues, too.

25

CONCLUSION

For these reasons, a writ of certiorari should be issued.

Respectfully submitted,

WILLIAM M. SMILAND

Counsel of Record

DONNELLY, CLARK, CHASE

& SMILAND

Twelfth Floor

601 West Fifth Street

Los Angeles, CA 90071

(213) 891-1010

Dated: June 21, 1993 Attorneys for Petitioner

SE a TOES eee © ae er Core 7” eee ee es

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