Koons Buick Pontiac GMC v. Nigh (03-377), Kowalski v. Tesmer (03-407) and Alaska Dept. of Environmental Conservation v. EPA (02-658)

January 22, 2004 Supreme Court Update

Greetings Court fans!

One opinion and two cert grants this week. I'll start with the grants, the first two grants for October Term 2004.

1. Koons Buick Pontiac GMC v. Nigh (03-377): In what promises to be a blockbuster for the Term (!), the Court will consider the applicability of a statutory damages cap in the Truth in Lending Act. The question presented is: Has the $1,000 statutory limit originally adopted in 1968 as a cap on TILA recoveries under 15 USC 1604(a)(2)(A)(i) been rendered inapplicable to that subpart by subsequent amendments to Section 1640(a)(2)(A) so that parties who suffer no actual damages may now recover far in excess of the previous $1,000 cap? I just can't wait to hear how this one turns out.

2. Kowalski v. Tesmer (03-407): In this case, the Court will decide whether the Fourteenth Amendment guarantees a right to an appointed appellate attorney in a discretionary first appeal of indigent criminal defendants convicted by guilty plea. The Court will also consider whether attorneys have third party standing to pursue this claim on behalf of potential future indigent criminal defendants.

Back to news from this Term, the Court issued its opinion in Alaska Dept. of Environmental Conservation v. EPA (02-658), the latest battleground in the Court's federalism wars. This time, the feds won. At issue is EPA oversight of enforcement of the Clean Air Act. The statute and facts are exceedingly complicated, so I'll simplify. To increase zinc production at its "Red Dog Mine," Cominco applied for a CAA permit. (The Red Dog Mine is in northwest Alaska, a cool 100 miles north of the Arctic Circle. And we think we've been cold lately!!!) Under the CAA, Alaska (the permitting authority) could only issue the permit if the facility adopted the "best available control technology," or "BACT." A BACT is a technology that maximizes pollution reduction, taking into account "energy, environmental, and economic impacts and other costs." Originally, Alaska told Cominco that Technology 1 (maximum reductions in pollution) was the BACT, finding specifically that it was technically and economically feasible. But after considering comments from Cominco, Alaska approved Technology 2 as the BACT for the plant, concluding -- with no new data -- that Technology 1 imposed a "disproportionate cost" on Cominco. EPA found Alaska's permit decision unreasonable and so stepped in to stop the process. The question in this case is whether the CAA authorizes the EPA to oversee permitting decisions to ensure that the BACT decisions are "reasonable." Today, the Court answered that question in the affirmative.

According to the Court (Ginsburg for herself, O'Connor, Stevens, Souter and Breyer), the CAA gives EPA broad supervisory power. EPA may issue orders stopping construction when a state "is not acting in compliance with any [CAA] requirement or prohibition . . . relating to the construction of new sources or the modification of existing sources" or when "construction or modification of a major emitting facility . . .does not conform to the requirements of the [CAA]." Because the statute requires a BACT limitation in a permit, the EPA may issue a stop work order if the permit does not contain such a limitation. Moreover, because the statute identifies the factors that must be used to evaluate BACT (cost, feasibility, etc.), the state's decision on BACT must be reasonable. This is fully consistent with the CAA's legislative history and with EPA interpretive guidance, a guidance entitled to "respect," even if not the full Chevron deference. (Digression: I stand corrected. Just when I announced that legislative history as an interpretive tool was effectively dead (as I did in a CLE class a few weeks ago), Ginsburg quotes and relies on a House Report.) Ginsburg next recites and rejects the state's counter-arguments. For example, the state argues that the statute only allows EPA to determine whether the permit contains a BACT limitation. Ginsburg rejects this argument noting that the fact that the statute does not mandate any particular "correct" BACT determination, does not mean that there can be no unreasonable determinations. She carefully explains, however, that EPA's review is limited to a review for reasonableness. The primary responsibility for making the discretionary BACT decisions lies with the states. Ginsburg also rejects the state's argument that EPA must enforce the "reasonableness" requirement through the state administrative and judicial processes. According to Ginsburg, it "would be unusual, to say the least, for Congress to remit a federal agency enforcing federal law solely to state court," and so she refuses to find such a regime in the statute. To avoid any suggestion that EPA could gain a tactical advantage by avoiding the state processes, the Court makes clear that regardless of how EPA chooses to proceed, EPA bears the burden of production and persuasion. Moreover, the state court process isn't necessary to ensure timely action by the EPA. EPA believes in acting quickly on permitting decisions, and almost always does. Finally, Ginsburg concludes the opinion by upholding EPA's decision in this case under the familiar arbitrary/capricious standard. After all, the state approved Technology 2 primarily in reliance on cost concerns, but it had no data to support those concerns. EPA properly found that this was unreasonable.

Kennedy wrote the dissent for himself, the Chief, Scalia and Thomas. What do you need to know about the dissent? Well, it's all about federalism. The CAA gives permitting authority to the states and they are the ones that should make these decisions. EPA may not set aside such decisions when the CAA has not been violated. According to Kennedy, the statute contains safeguards to correct arbitrary and capricious BACT decisions: interested parties (including EPA) may comment on the permitting process and may sue in state court if not satisfied with the result. The majority's opinion -- by rejecting these safeguards and substituting EPA's judgment for the states' -- tramples the states and the CAA's elaborate scheme of cooperative federalism.

That's all for now. Thanks for reading, and have a nice weekend!

From the Appellate Practice Group at Wiggin and Dana.
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