Reply Brief — W.R. Grace & Co. v. United States (No. 07-1287)

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No. 07-1286 iccust ie

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IN THE

Supreme Court of the United States

W.R. GRACE & Co.,

Petitioner,

v.

UNITED STATES OF AMERICA,

Responcent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

REPLY TO BRIEF IN OPPOSITION

LAURENCE A. URGENSON

CHRISTOPHER LANDAU, P.C.

Counsel of Record

TYLER D. MACE

MICHAEL D. SHUMSKY

KIRKLAND & ELLIS LLP

655 Fifteenth St., N.W.

Washington, DC 20005

(202) 879-5000

June 2, 2008

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

TABLE OF CONTENTS

Page

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ESSER ec 1

ill

TABLE OF AUTHORITIES 3

Page(s)

Cases

A.B. Small Co. v. American Sugar Refining Co.,

i 2,3

Barapind v. Enomoto,

400 F.3d 744 (9th Cir. 2005) (en banc) ............ 8

Begay v. United States,

Be es Ne OD once caccnsassvocovcvccscscnncesse 10

Carter v. Carter Coal Co.,

Be oe so vcrocaviccnsneccscnvcsvacesechgecote 2

Chevron, U.S.A., Inc. v. NRDC, Inc.,

Oe te na ss ccce cio cndvecadecesoce 5

National Lime Ass’n v. EPA,

Zon fee Geo G).C, Cir. 2006)...........cccccciccececsee 5

New Jersey v. EPA,

Bhd Boe ore (OC, Cir; 2008).............ccccccococcssee 4

Sabri v. United States,

Re Be, IN CIID oo ca scniscnanccensecedscesecsseccacoccece 10

United States v. National Dairy Prods. Corp.,

I en I ons cvenhchaesaccsaceoncrvenrecece 2.3

United States v. W.R. Grace,

No. 06-30192,

__ F.3d __, 2008 WL 2052204

(9th Cir. May 15, 2008) (en banc)................... 11

Statutes and Regulations

46: U.S.C. § 3781 ..........:. Scabies beadiithaiuaieticaanin deca dais 9

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BETTS PAD inves secciccaenccecccncacccatecsneecteouns 1, 7

Other Authorities

Gressman, Eugene et al.,

Supreme Court Practice (9th ed. 2007).......... 10

Male mi

INTRODUCTION

The central theme of the Government’s opposition

brief is that there are two completely separate and

distinct definitions of “Asbestos” under the Clean Air

Act: the “statutory definition” in 42 U.S.C. § 7412(b),

and the “regulatory definition” in 40 C.F.R. § 61.141.

Opp. 3. That argument is manifestly incorrect.

There is no “statutory definition” of the term

“Asbestos” in the Clean Air Act, and the EPA has

defined that statutory term by regulation. As the

district court recognized, in a justice system that

recognizes the rule of lenity, it would be completely

anomalous and inappropriate to apply a broader

definition of “Asbestos” in a criminal prosecution

under the Clean Air Act than the EPA’s own

definition of that statutory term. Put simply, the

Government may not’ criminally prosecute

defendants under the Clean Air Act for releasing

substances that the Government itself has excluded

from the definition of a hazardous air pollutant

under the Clean Air Act. Because, as highlighted by

amici the National Association of Criminal Defense

Lawyers, the National Association of Manufacturers,

and the American Chemistry Council, the decision

below is. both indefensible and enormously

destabilizing, this Court’s review is warranted.

ARGUMENT

The Government concedes, as it must, that the

Clean Air Act’s “knowing endangerment” provision,

42 U.S.C. § 7413(c)(5)(A), neither lists nor defines

the substances within its scope, but instead cross-

references the list of substances subject to regulation

by the EPA under § 7412(b). See Opp. 15. The

Government insists, however, that § 7412() defines

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the listed substances to the extent it identifies them

by reference to numbers assigned to them in a

Registry published by a private entity, the Chemical

Abstract Service (CAS). See id. Under this view,

“the straightforward text of the statute” defines the

substances listed in § 7412(b) in whatever manner

the CAS Registry defines those substances at any

given moment in time. Id.

With all due _ respect, that argument is

preposterous. Nothing in the text of § 7412(b)

purports to define any of the listed substances, or

suggests that the CAS Registry definition at any

given moment in time is the “statutory definition” of

any of those substances. The Government has cited

no case in the history of American law, and Grace is

aware of none, in which Congress gave a private

entity the power to define the scope of a criminal

statute.

Indeed, as Grace pointed out in its petition, such

a delegation would raise constitutional concerns of

the first order. See Pet. 14 (citing Carter v. Carter

Coal Co., 298 U.S. 238, 311-12 (1936)). The

Government responds that “there is no constitutional

problem in Congress’s definition of ‘asbestos’ by

reference to the CAS number” because “Congress and

federal agencies may adopt commercial standards,

like those in the CAS Registry, that are ‘accepted

and fairly stable.” Opp. 20 n.8 (quoting United

States v. National Dairy Prods. Corp., 372 U.S. 29,

36 - (1963)) (in turn quoting A.B. Small Co. v.

American Sugar Refining Co., 267 U.S. 233, 240-41

(1925)). But that response is a non sequitur. The

cases cited by the Government stand only for the

unremarkable proposition that a term employed by

3

Congress or a_ federal agency’ is_ not

unconstitutionally vague if it has an accepted

meaning. See National Dairy Prods., 372 US. at 36;

Small, 267 U.S. at 240-41. Those cases in no way

suggest that Congress or a federal agency may

delegate to a private party the authority to define

statutory terms (particularly in a statute with

criminal applications) at whim.

Perhaps for that reason, not even the Ninth

Circuit held that the “statutory definition” of the

substances listed in § 7412(b) is the CAS Registry

definition at any given moment in time. To the

contrary, the Ninth Circuit invoked its own

definition of “asbestos.” After explaining that

“[w]hen Congress does not define a term in a statute,

we construe that term according to its ordinary,

contemporary, common meaning,” Pet. App. 16a

(internal quotation and brackets omitted), the Ninth

Circuit declared that “[i]t is well known that asbestos

has a common meaning; it is a fibrous, non-

combustible compound that can be composed of

several substances, typically including magnesium,”

id. at 16-17a (emphasis added). The Ninth Circuit

asserted that this definition “has been established

for decades,” although the court’s only support for

that assertion was a statement by a putative

Government expert that “asbestos was first defined

in 1920.” Id. at 17a. To be sure, the Ninth Circuit

further stated that this “well known ... common

meaning’ of “asbestos” was consistent with the CAS

definition, see Pet. App. 17a, but it is simply not true

that “the opinion clearly relied on the CAS registry

definition.” Opp. 15 n.6 (emphasis added). Indeed, if

that were so, the Ninth Circuit would have had to

pe |

4

confront the serious constitutional issues presented

by the Government’s interpretation of the statute.

For good reason, the Government conspicuously

declines to defend the Ninth Circuit's “well known ...

common meaning” of “asbestos”: that definition has —

no basis whatsoever in either science or law. Indeed,

that definition is not even limited to minerals, and

would sweep in such everyday substances as talc and

fiberglass. The Government does not deny this

point, but simply asserts that “whether the statute

could in some cases reach” substances such as talc

and fiberglass is “a question that is not implicated on

the facts alleged in this case.” Opp. 15 n.6. If ever

there were a tacit admission that a case has gone off

the rails, this is it. In a circuit covering nine States

in the western third of this Nation, the Government

now can prosecute someone for releasing talc into the

ambient air.

The Government insists, however, that the

definition of “Asbestos” in § 7412(b) has nothing to do

with the EPA’s definition of “Asbestos” in 40 C.F.R.

§ 61.141. See Opp. 16-18. That is most obviously so,

according to the Government, because the EPA’s

definition of “Asbestos” dates back to the 1970s,

whereas Congress did not add the word “Asbestos” to

§ 7412(b) until 1990. Opp. 17. That argument is

disingenuous at best.

Section 7412 has been part of the Clean Air Act

since the statute’s enactment in 1970, and has

always required the EPA to regulate “hazardous air

pollutants.” See New Jersey v. EPA, 517 F.3d 574,

578 (D.C. Cir. 2008). Originally, Congress did not

specify any hazardous air pollutants, but left it up to

the agency to devise the list. See id. After almost

5

twenty years, however, the agency had listed only

eight such pollutants. Accordingly, Congress grew

impatient, and amended the statute in 1990 by

listing almost two hundred hazardous air pollutants,

including “Asbestos,” that the agency was required to

regulate. See id.; see also National Lime Ass’n v.

EPA, 233 F.3d 625, 633-34 (D.C. Cir. 2000).

The key point here, which the Government

conveniently omits from its brief, is that “Asbestos”

is one of the eight hazardous air pollutants that the

EPA has regulated under § 7412 since the 1970s.

Thus, the Government’s suggestion that the EPA’s

definition of “Asbestos” has nothing to do with § 7412

because that definition “predated Congress’s addition

of [“Asbestos”] to the statute by more than fifteen

years, Opp. 17, makes no sense. Section 7412 is,

and always has been, a statutory source of authority

for the EPA to regulate hazardous air pollutants,

including asbestos. See 40 C.F.R. § 61.141 (citing

§ 7412 as a source of authority). Far from being

independent of the term “Asbestos” in § 7412, the

EPA’s definition gives meaning to that term.

Indeed, if the Government were correct that the

CAS Registry definition of “Asbestos” at any given

moment in time is the “statutory definition” of

“Asbestos” in § 7412(b), then the EPA’s definition

would be invalid. Under basic principles of

administrative law, after all, an agency has no

discretion where “Congress has directly spoken to

the precise question at issue.” Chevron, U.S.A., Inc.

vu. NRDC, Inc., 467 U.S. 837, 843-44 (1984). Thus,

where there is a “statutory definition” of a particular

statutory term, an agency may not define that term

differently. That simple point refutes the central

6

theme of both the Government’s brief and the

decision below that the “regulatory definition” of

“Asbestos” is separate and distinct from the

“statutory definition” of that term. As a matter of

law and logic, there cannot be a “regulatory

definition” of a statutory term different than, and

unmoored from, a “statutory definition” of that term.

The Government argues, however, that the EPA’s

definition of “Asbestos” in § 7412(b) is irrelevant here

because the Grace operations in Libby were not a

regulated source of asbestos. See Opp. 16-17. That

argument misses the point. The issue here is the

meaning of the term “Asbestos” in § 7412(b).

Needless to say, the EPA’s definition of “Asbestos” in

§ 7412(b) provides the most obvious source of that

meaning. Certainly, in a legal regime that still

purports to follow the rule of lenity, the Government

should not be allowed to prosecute defendants for

releasing “Asbestos” under the Clean Air Act when

the Government itself has excluded the substances at

issue from the definition of “Asbestos” under the

Clean Air Act. Whether the EPA has chosen to

regulate a particular source of “Asbestos” is

immaterial; what matters is that individuals and

businesses are entitled to rely on the EPA’s

definition of “Asbestos” in § 7412 in ordering their

conduct. And that point is particularly compelling

where, as here, Congress itself and every other

governmental agency to define asbestos has done so

in a way that excludes winchite and richterite (which

account for approximately 95% of the amphibole

impurities in Libby vermiculite). See Pet. 11-12.

The Government tellingly makes no effort to

defend the Ninth Circuit’s conclusion that the

7

“knowing endangerment” provision of the Clean Air

Act, 42 U.S.C. § 7413(c)(5)(A), “pulls its definitions

from a separate provision than does the regulatory

provision.” Pet. App. 19a (emphasis added). Both

the knowing endangerment provision and the EPA’s

regulations draw on the same list of hazardous air

pollutants in § 7412(b). There is not one “criminal”

definition .of “Asbestos” and another distinct

“regulatory” definition. Indeed, the Government

concedes that the Ninth Circuit misunderstood the

statutory scheme by characterizing the EPA’s

regulatory program as “civil” in nature, because

that “regulatory program may be enforced either

civilly or criminally.” Opp. 17 n.7 (emphasis added;

quoting Pet. App. 19a). In other words, the

Government disavows the very premise of the Ninth

Circuit’s decision that the Clean Air Act establishes

“two oversight structures—a civil regulatory

structure and a criminal enforcement provision—

that use different definitions of the term ‘asbestos.”

Pet. App. 18a (emphasis added).

The Government also disavows the Ninth

Circuit's reliance on “defendants’ knowledge of the

industrial chemicals field,” Pet. App. 17a, as a

justification for holding they either knew or should

have known of the “well known ... common meaning”

of “asbestos” announced by the Ninth Circuit, id. at

16-17a. As the Government acknowledges, there is

not a shred of evidence to support the Ninth Circuit’s

assertion that “defendants had actual knowledge in

this case of the risks from the fibrous content of the

asbestiform minerals in their products” because

“[t]hey are all familiar with asbestos.” Jd. at 17a.

Rather, there are only “allegations in the indictment

about petitioners’ knowledge,” and “[w]hether the

8

government can prove petitioners’ knowledge of the

risks from the fibrous content of asbestiform

minerals in their products beyond a reasonable doubt

is, of course, plainly a matter for proof at the trial.”

Opp. 21 & n.10 (internal quotation omitted).

The Government nonetheless tries to dismiss the

Ninth Circuit’s reasoning with respect to petitioners’

alleged knowledge as a mere “passing reference” that

“was at most dictum.” Opp. 22. But the Ninth

Circuit itself treats such reasoning as binding circuit

law “regardless of whether it was in some technical

sense ‘necessary to our disposition of the case.”

Barapind v. Enomoto, 400 F.3d 744, 750-51 & n.8

(9th Cir. 2005) (en banc). Thus, unless reviewed by

this Court, the law in nine States in the western

third of this Nation is that the rule of lenity does not

apply where a criminal indictment makes allegations

about a defendant’s knowledge, see Pet App. 17a—a

proposition that not even the Government can or will

defend.

The Government, however, insists that this

Court’s review is unwarranted on the theory that it

does not matter whether the term “Asbestos” in

§ 7412(b) is defined by reference to the CAS Registry

definition or the EPA regulatory definition. See Opp.

14-15. According to the Government, “even if the

[regulatory] definition governed, the asbestiform

minerals found in Libby that geologists identify as

winchite and richterite would be classified as forms

of tremolite or actinolite-tremolite that fall squarely

within the ... regulatory definition.” Jd. at 14. That

statement is manifestly incorrect, as the Government

itself underscored by certifying, in order to take this

interlocutory criminal appeal, that the district

9

court's order excluded evidence that was “a

substantial proof of a fact material in the

proceeding.” 18 U.S.C. § 3731. Because the district

_ court here only excluded evidence relating to releases

of minerals that are not covered by the EPA’s

definition of “Asbestos,” see Pet. App. 64a, the

Government is essentially arguing that its

certification was false, and that it was never entitled

to appeal in the first place.

In any event, it is all fine and good for “the

government's expert geologist,” Opp. 14 (emphasis

added), to opine that winchite and richterite are

forms of tremolite or actinolite-tremolite, but that

does not make it so. Defendants vigorously dispute

that point, and neither the district court nor the

Ninth Circuit accepted it. Certainly, the

Government cannot avoid this Court’s review of the

Ninth Circuit’s erroneous and open-ended definition

of “Asbestos” in § 7412(b) by simply asking this

Court to accept on faith that the result here would be

the same under the EPA’s narrower definition of

“Asbestos” in § 7412(b). Indeed, if the Government

really believed this argument, then the Government

should not care if this Court summarily reversed the

Ninth Circuit’s decision, since (as noted above) the

district court did not exclude any evidence relating to

releases of “Asbestos” as defined by the EPA. See

Pet. App. 64a.

Finally, the Government cannot avoid this

Court’s review by arguing that this case is in an

“interlocutory posture,” Opp. 12, and noting that

defendants may be acquitted on remand even under

the Ninth Circuit’s definition of “Asbestos,” see id.

As the Government itself has explained, this Court

10

often has granted certiorari “in federal criminal

cases where a court of appeals has remanded for

further proceedings, but where a controlling legal

issue that will govern further proceedings warrants

the Court’s attention.” Reply Br. for the U.S. in

Support of Pet. fer Cert., United States v. Ressam,

No. 07-455, 2007 WL 4142601, at *7-8 (filed Nov. 20,

2007) (citing cases); see generally Eugene Gressman

et al., Supreme Court Practice § 4.18, at 281 (9th ed.

2007); Begay v. United States, 128 S. Ct. 1581 (2008)

(deciding criminal case in this posture over the

Government's opposition); Sabri v. United States,

541 U.S. 600 (2004) (same). Because the

Government does not explain how “a full trial

record,” Opp. 12, would shed any light on the

correctness of the Ninth Circuit’s definition of

“Asbestos,” or what “unresolved factual issues” on

this score remain for trial, id. at 13, there is no

reason for this Court to postpone its review until

after the Government has put Grace and the six

individual defendants through a criminal trial under

the Ninth Circuit’s erroneous definition.

And the Government’s further suggestion that

this Court’s review of the Ninth Circuit’s decision

would foster “unnecessary delays in the trial

process,” Opp. 12, is the epitome of irony. The

Government itself delayed the trial by filing this

interlocutory appeal in the first place. Having taken

that step, the Government cannot now invoke trial

delay as a reason to immunize the Ninth Circuit's

decision from this Court’s review. Indeed, as three

Judges of the Ninth Circuit recently noted in yet

another interlocutory appeal by the Government

arising out of this prosecution, the trial in this case

has been delayed by the Government’s indict-first-

1]

investigate-later approach. See United States w. W.R.

Grace, No. 06-30192, __ F.3d __, 2008 WL 2052204,

at “23 (9th Cir. May 15, 2008) (en banc) (opinion

concurring in the judgment) (“The Government’s

litigation strategy has effectively derailed the

criminal trial, while it no doubt continues its search

for more witnesses and victims. The trial date

remains in limbo, and the defendants’ right to a

speedy trial has been completely frustrated.”).

In the final analysis, the Government is trying to

rewrite, not defenc, the decision below. The

Government does not defend the Ninth Circuit’s

conclusion that the Clean Air Act establishes “two

oversight structures—a civil regulatory structure

and a criminal enforcement provision.” Pet. App.

18a; see Opp. 17 n.7. The Government does not

defend the Ninth Circuit’s conclusion that “[i]t is well

known that asbestos has a common meaning: it is a

fibrous, non-combustible compound that can be

composed of several substances, typically including

magnesium.” Pet. App. 16-17a; see Opp. 15 & n.6.

The Government does not defend the Ninth Circuit’s

_ conclusion that “defendants had actual notice in this

case of the risks from the fibrous content of the

asbestiform minerals in their products.” Pet. App.

17a; see Opp. 21-22 & n.10. Stripped of these

undefended (and indefensible) points, there is really

nothing left of the decision below. Because that

decision leaves the scope of the Clean Air Act’s

knowing endangerment provision indeterminate and

potentially boundless, and (as amici have

underscored) deprives individuals and businesses of

fair warning about what substances they may and

may not release under the Act, this Court should

grant review.

12

CONCLUSION

For the foregoing reasons, this Court should

either summarily reverse the decision below or set

the case for plenary review.

June 2, 2008 Respectfully submitted,

LAURENCE A. URGENSON

CHRISTOPHER LANDAU, P.C.

Counsel of Record

TYLER D. MACE

MICHAEL D. SHUMSKY

KIRKLAND & ELLIS LLP

655 Fifteenth St., N.W.

Washington, DC 20005

(202) 879-5000