Gen Mtr Corp v. EPA ( 1999 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 19, 1998 Decided March 23, 1999
No. 98-1027
General Motors Corporation,
Petitioner
v.
Environmental Protection Agency and
Carol M. Browner,
Administrator, U.S. Environmental Protection Agency,
Respondents
On Petition for Review of an Order of the
Environmental Protection Agency
Michael F. McBride argued the cause for petitioner. With
him on the briefs were LaJuana S. Wilcher, D. Randall
Benn, Robert J. Kinney, Brenda Durham, and James P.
Walle.
Christopher S. Vaden, Attorney, U.S. Department of Jus-
tice, argued the cause for respondents. On the brief were
Lois J. Schiffer, Assistant Attorney General, Karen L. Eg-
bert, Attorney, and Richard T. Witt, Steven J. Sweeney, and
Reginald Pallesen, Attorneys, Environmental Protection
Agency.
Scott M. DuBoff, Kenneth S. Kaufman, Saone Baron
Crocker, Julie Becker, Thomas M. Sneeringer, George Vary,
Charles H. Lockwood, Fred Main, Robin S. Conrad, J.
Walker Henry, Jan Amundson, Marjorie E. Powell, and
John W. Pettit were on the brief for amici curiae American
Automobile Manufacturers Association, et al.
Joseph M. Polito, Jay E. Brant, Christopher J. Dunsky,
Kenneth C. Gold, and Daniella D. Landers were on the brief
for amici curiae Dott Industries, Inc., et al.
Before: Williams, Ginsburg, and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Ginsburg, Circuit Judge: The Environmental Protection
Agency determined that General Motors violated a Clean
Water Act permit issued by the State of Michigan, for which
the agency imposed an administrative penalty of $62,500.
GM petitions for review, arguing primarily that the EPA
erred in refusing to consider the Company's collateral attack
upon the validity of the state-issued permit. We conclude,
first, that the EPA reasonably interpreted the Clean Water
Act, 33 U.S.C. s 1311 et seq., to preclude such a collateral
attack in the course of an enforcement proceeding and,
second, that substantial evidence supports the EPA's finding
that GM violated the permit. Accordingly, we deny the
Company's petition for review.
I. Background
Section 402 of the CWA, id. s 1342, establishes the Nation-
al Pollutant Discharge Elimination System (NPDES), a per-
mitting program through which the EPA and the several
States implement various regulatory limits upon the dis-
charge of pollutants into navigable waters. Forty-two States,
including Michigan, administer the NPDES program within
their borders. See s 1342(b). Although those States assume
responsibility as the primary permitting authority, see
s 1342(c), the EPA retains the power to enforce state-issued
permits in federal court. See, e.g., s 1319.
In 1984 GM applied to the Michigan Department of Natural
Resources for an NPDES permit to discharge stormwater
from a point source, known as "Outfall 002," at a plant in
Pontiac, Michigan. The MDNR initially advised GM that it
would not act upon the application until later that year, when
GM would be applying to renew its NPDES permit for the
other point sources at the plant. Upon receiving the renewal
application, however, the MDNR decided not to address the
stormwater permit application for Outfall 002 but rather to
revisit that matter "when EPA finalizes stormwater discharge
permit regulations." In 1987 the Congress put a stop to the
EPA's ongoing attempt to craft stormwater permit regula-
tions by prohibiting, except in limited circumstances, "the
Administrator or the State ... [from requiring] a permit
under this section for discharges composed entirely of storm-
water." 33 U.S.C. s 1342(p)(1).*
In June, 1988 the MDNR issued GM a stormwater NPDES
permit for Outfall 002 based upon its 1984 application. The
permit advised GM that if aggrieved by its terms the Compa-
ny could petition the MDNR for review but that the agency
"may reject any petition filed more than 60 days after issu-
ance as being untimely." The permit, which specified limits
upon GM's discharge of copper, lead, and zinc, was to be in
effect through October 1, 1990. GM could renew the permit
by submitting the appropriate forms "no later than 180 days
prior to the date of expiration." GM did not challenge the
terms of the permit. Meanwhile, in August, 1988, the Pontiac
plant ceased operating.
As required by its permit, GM began to submit to the
MDNR periodic discharge monitoring reports (DMRs) for
Outfall 002. Beginning in May, 1989 the DMRs revealed that
water discharged at Outfall 002 contained levels of metals in
__________
* This prohibition was to last until 1992, but was extended by
statute to 1994 and then by regulation to 2001. See Pub. L. No.
102-580, s 364(1) (1992); 60 Fed. Reg. 40,230, 40,230/3 (1995).
excess of the limits set in the permit. GM determined that
those levels were the result not of cross-connections to the
plant's idled operations but of some combination of metals
present in the rain and metals leached from the roofs of
buildings and from copper gutters.
In 1991 the EPA twice ordered GM to come into compli-
ance with the terms of its permit. GM responded by coating
most of the roofs and gutters, which lowered the concentra-
tions of metals in the discharges, but did not bring GM into
full compliance with the terms of its permit. In 1993 the
EPA filed an administrative complaint against GM under
s 1319(g)(1), alleging 92 violations of its NPDES permit and
seeking the maximum administrative penalty ($125,000) per-
mitted under s 1319(g)(2)(B).
After a hearing an Administrative Law Judge held that GM
had violated the terms of its permit. First, the ALJ rejected
GM's claims that when found in stormwater copper, lead, and
zinc are not "pollutants" within the meaning of the CWA, see
s 1362(6), (13), and that channeling stormwater to a point
source does not constitute adding pollutants to navigable
waters. Second, the ALJ held that GM's failure to challenge
its NPDES permit within 60 days of its issuance by the
MDNR prevented the Company from mounting a collateral
attack upon the permit in the course of the EPA enforcement
action; therefore he did not consider GM's claims that the
permit was void both for mutual mistake and under the
prohibition of stormwater permits in 33 U.S.C. s 1342(p).
Third, based upon his reading of Michigan case law and upon
GM's conduct after October 1, 1990--the Company continued
to submit DMRs and thrice wrote to the MDNR requesting
that it terminate the permit for Outfall 002--the ALJ held
that the permit had not expired upon that date despite GM's
failure to apply for an extension at least 180 days prior
thereto. Finally, the ALJ rejected GM's skeletal equal pro-
tection and due process claims on the ground that GM's
status as an NPDES stormwater permittee both distin-
guished it from other companies with similar discharges and
gave it notice of the basis for the enforcement action against
it.
The ALJ assessed GM a civil penalty of $62,500, half the
amount sought by the EPA, because GM's violations were not
willful and because but for the Company's apparently unique
status as holder of an NPDES permit for discharges of
stormwater it likely would have faced no penalty at all. See
s 1319(g)(3) ("In determining the amount of any penalty
assessed under this subsection, the [agency] ... shall take
into account ... such other matters as justice may require").
The ALJ also held that if the Environmental Appeals Board
or this court reversed his ruling that the permit continued in
effect after October 1, 1990, then the 39 violations that
occurred before that date would still warrant a penalty of
$62,500. The EAB affirmed the judgment of the ALJ.
II. Analysis
We review the EPA's finding of violations of a permit
issued under the Clean Water Act for lack of "substantial
evidence in the record, taken as a whole," and the assessment
of an administrative penalty for "abuse of discretion," 33
U.S.C. s 1319(g)(8), as we would under the Administrative
Procedure Act, 5 U.S.C. s 706(2)(A), (E). Cf. Buxton v.
EPA, 961 F. Supp. 6, 9 (D.D.C. 1997). Because in this case
GM does not argue that the EPA abused its discretion in
assessing the penalty, we address only the question whether
substantial evidence supports the agency's finding that the
Company violated the terms of its permit.
GM raises a threshold challenge to the EPA's reliance upon
the Clean Water Act rather than upon state law and, as a
fallback position, challenges the EPA's interpretation of the
Clean Water Act. We dispose of those arguments before
turning to GM's other objections to the EPA's decision.
A.Federal versus State Law
GM's initial argument is that the EAB erred in following
federal rather than Michigan law, which arguably permits a
collateral attack upon a state-issued permit when the State
initiates the enforcement proceeding. See Michigan v. Sper-
andeo, 112 Mich. App. 337, 342, 315 N.W.2d 863, 865 (1981).
Apparently, in GM's view the alternative to state law on the
question of collateral attacks is federal common law, which
would be inappropriate under the Supreme Court's teaching
in O'Melveny & Myers v. FDIC, 512 U.S. 79 (1994). See id.
at 87 (limiting federal common law to situations in which
"there is a significant conflict between some federal policy or
interest and the use of state law").
The pertinent distinction between this case and O'Melveny,
however, is that here there is a federal statute to apply.
Accordingly, our task is but to "construe[ ] the language of
[the] federal statute ... [an] enterprise [that] is, and always
has been, a matter of federal law." RTC v. Diamond, 45
F.3d 665, 671 (2d Cir. 1995); see also Auction Co. of Am. v.
FDIC, 132 F.3d 746, 749 (D.C. Cir. 1997) (statute applies "by
its own terms ... not by virtue of any lawmaking power of
federal courts"). Therefore, there is no choice of law issue.
Nor do the cases GM cites provide any support for the
proposition that state law governs which defenses a permittee
may raise in the course of a federal proceeding to enforce the
terms of a state-issued permit. See United States v. Puerto
Rico, 721 F.2d 832 (1st Cir. 1983) (resolving question whether
CWA ousts federal courts of their original jurisdiction, under
28 U.S.C. s 1345, of all suits brought by the United States,
not whether federal enforcement agency must apply state
law); District of Columbia v. Schramm, 631 F.2d 854, 863
(D.C. Cir. 1980) (holding that CWA does not create "implied
right of action" for private party to challenge state permitting
decision, not that state law follows state permit into federal
forum for enforcement of CWA).
Accordingly, we reject GM's claim that the Environmental
Appeals Board erred in looking to federal law in order to
determine whether GM could raise a collateral attack upon
the validity of its permit in an administrative penalty proceed-
ing brought pursuant to s 1319(g).
B.What Does Federal Law Allow?
As noted above, under s 1319(g)(8) the standard for re-
viewing the EPA's finding that a person has violated a permit
is whether "there is ... substantial evidence in the record,
taken as a whole, to support the finding of a violation." In
this case GM claims there is no substantial evidence that it
violated its permit because the evidence demonstrates that
the permit was invalid from the outset, but the EPA refused
to hear this attack upon the validity of the permit. The
question now before us, therefore, is whether the EPA erred
in interpreting the CWA to limit the grounds upon which GM
may challenge the validity and applicability of its permit in
this federal enforcement proceeding. Cf. Hoffman Homes,
Inc. v. EPA, 999 F.2d 256, 260-61 (7th Cir. 1993) (reviewing
EPA's interpretation of CWA regulations in course of admin-
istrative penalty proceeding).
As GM suggests, because the EPA is charged with adminis-
tering s 1319(g)(1), we review its decision per the familiar
analysis of Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).
Our first task, using the "traditional tools of statutory con-
struction" is to determine whether the Congress has spoken
to "the precise question at issue," id. at 843 n.9. If so, then
we "must give effect to the unambiguously expressed intent
of Congress." Id. at 842-43. If the Congress has not
expressed itself on that question, then Chevron step two
requires the court to defer to the agency's interpretation if it
"is reasonable and consistent with the statutory purpose."
Ohio v. United States Dep't of Interior, 880 F.2d 432, 441
(D.C. Cir. 1989).
1.Chevron step one
In its brief, GM raised two arguments against the EPA's
interpretation. First, GM claimed that the EPA required it
to exhaust its state administrative remedies, despite the lack
of an exhaustion requirement in the CWA and in the teeth of
the Supreme Court's teaching that such a requirement can be
imposed only by positive law--that is, by statute or agency
rule. See Darby v. Cisneros, 509 U.S. 137, 154 (1993); see
also Time Warner Entertainment Co. v. FCC, 144 F.3d 75, 79
n.5 (D.C. Cir. 1998) ("[J]udge made notions of 'common law'
[exhaustion] always yield to statutes--particularly in adminis-
trative law"). An exhaustion requirement, however, is not
the same as a prohibition upon collateral attack. The former
refers to administrative or judicial proceedings that must be
completed as a prelude to federal judicial review; in the
reviewing forum, of course, such proceedings do not have res
judicata effect. For example, on a petition to review a
decision of the NLRB, a federal court will not hear an issue
that was not first raised before the agency; an issue that was
raised before the agency, however, is not res judicata but
open to review. See, e.g., Exxel/Atmos, Inc. v. NLRB, 147
F.3d 972, 978 (D.C. Cir. 1998); see also 28 U.S.C.
s 2254(b)(1)(A) (federal court shall not grant a state prison-
er's petition for writ of habeas corpus unless "the applicant
has exhausted the remedies available in the courts of the
State"). In contrast, the state administrative and judicial
proceedings that GM failed to pursue when the MDNR issued
its permit would not have been but a prelude to further
review by the EPA. On the contrary, had GM pursued its
state remedies and prevailed, then there would have been no
permit for the EPA to enforce; had GM done so and lost,
then it would have been prevented, under the doctrine of res
judicata, from relitigating the validity of its permit in a later
enforcement proceeding before the EPA.
At oral argument, GM in fact acknowledged that the EAB
had merely been imprecise, using the language of exhaustion
and of prohibition interchangeably; the Board did not pur-
port to require that the Company have exhausted its state
remedies in order to challenge the validity of its permit in the
EPA enforcement proceeding. That is, the EAB did not even
imply that it could have heard GM's challenge to the validity
of its permit if only GM had previously sought state adminis-
trative and judicial review of that permit (and presumably
been denied relief in those fora). Because the EAB did not
interpret the CWA to require exhaustion of state remedies
prior to raising a collateral attack upon the validity of a
permit in a federal enforcement proceeding, GM's first argu-
ment fails. (For the same reason, the argument made by a
number of Michigan companies appearing as amici--that even
if the EAB correctly imposed an exhaustion requirement, GM
nonetheless should be permitted collaterally to attack its
permit under the authority of McKart v. United States, 395
U.S. 185 (1969)--is irrelevant.)
Second, GM (joined by the Michigan amici) argues that the
CWA allows a collateral attack upon a state-issued NPDES
permit in an enforcement proceeding because s 1369(b)(2)
prohibits only collateral attacks against "[a]ction[s] of the
Administrator with respect to which review could have been
obtained under [s 1369(b)(1)]," of which one is "issuing or
denying any [NPDES] permit." A state-issued NPDES per-
mit, GM points out, is neither an action of the Administrator
nor otherwise made reviewable under s 1369(b)(1); therefore,
the argument goes, the prohibition of collateral attacks in
s 1369(b)(2) does not bar its challenge in this federal proceed-
ing to the validity of its state-issued permit. Further, be-
cause references to state-issued and EPA-issued permits are
so often coupled in the Clean Water Act, see, e.g., 33 U.S.C.
ss 1311(i) & (k), 1319(c)-(d) & (g), 1342(p), GM would have us
infer that, by referring in s 1369(b)(2) solely to "[a]ction[s] of
the Administrator," the Congress intended not to bar a
collateral attack against a state-issued permit; expressio uni-
us est exclusio alterius.
The inference GM would have us draw, however, simply
does not follow. Section 1369(b)(1) authorizes the federal
courts of appeals to review certain actions of the EPA, not to
review the permitting decisions of the States. The failure of
the Congress in s 1369(b)(2) expressly to forbid collateral
attacks upon state permits is of no import, therefore. That
is, not having authorized any review of state permits in the
first place, the Congress simply had no reason to single out
and prohibit collateral review of state permits.
In sum, neither of GM's arguments persuades us that the
Congress resolved the question whether a state permittee
may collaterally challenge the validity of its state-issued
permit in the course of a federal enforcement proceeding.
We must therefore proceed to Chevron step two and deter-
mine whether the EPA reasonably interpreted the CWA to
preclude such a collateral attack.
2.Chevron step two
Presumably, the EPA would not find a permit violation if a
permit holder could demonstrate that a state court had
previously decided that the permit was void ab initio; cer-
tainly we would not find reasonable an interpretation of the
CWA that precluded such a challenge to an EPA enforcement
action. GM can point to no such decision, however, because it
declined to take advantage of available state procedures to
challenge its permit. Cf. PIRG v. Powell Duffryn Terminals
Inc., 913 F.2d 64, 78 & n.27 (3d Cir. 1990) (permittee "not
denied due process" when denied opportunity collaterally to
attack permit because "it simply failed to use the process
available to it"). And the EPA persuasively argues that it
reasonably interpreted the Act to prevent GM from doing in a
federal enforcement proceeding what the Company had de-
clined to do before the MDNR and the Michigan state courts.
First, the Clean Water Act assigns to the participating
states the primary role in administering the NPDES permit-
ting program. See American Paper Inst., Inc. v. EPA, 890
F.2d 869, 874 (7th Cir. 1989) (stating it "seems beyond
argument that we should construe the [Clean Water] Act to
place maximum responsibility for permitting decisions on the
states"). As the EPA states, precluding collateral attacks
ensures that "the States [have] the opportunity as a threshold
matter to address objections" to the permits they issue.
Moreover, when a permit has been issued by a state agency,
it alone will have the information pertinent to an attack upon
the decisionmaking process that led to the issuance of that
permit. Not only would the EPA have to expend considera-
ble resources to obtain the information from the state agency;
it would also be second-guessing that agency, which is incon-
sistent with the primary role of the States under the Act.
Relatedly, the EPA argues that precluding collateral at-
tacks is "consistent with Congress' desire to limit the scope of
enforcement proceedings," as evidenced by a committee re-
port on the 1972 Clean Water Act amendments: "Enforce-
ment of violations of requirements under this Act should be
based on relatively narrow fact situations requiring a mini-
mum of discretionary decisionmaking or delay." S. Rep. No.
92-414, at 64 (1971). While we might not consider such a
report indicative of the intent of the whole Congress, we do
think it bolsters the agency's claim to have made a reasonable
interpretation of the Act. If the EPA cannot preclude a
collateral attack upon a state-issued permit, then it will find
enforcement proceedings burdened by all manner of objec-
tions to the state proceedings leading up to issuance of the
permit. Enforcement will become a protracted rather than
an expedited undertaking.
Finally, this court, in a dictum in Schramm, noted that
"congressional silence on federal court review of state permits
is consistent with the view that challengers to those permits
should be relegated to state law remedies in state courts."
631 F.2d at 863 n.15. Certainly the EPA, acting in accor-
dance with this dictum, the division of authority in the Act
between state and federal permitting agencies, and the Sen-
ate Committee's expectation that enforcement proceedings
would be straightforward and speedy, could reasonably inter-
pret the Act to remit to a state forum any attack upon the
validity of a state permit. Therefore, applying Chevron step
two, we conclude that the EPA was not unreasonable in
interpreting the CWA to preclude GM from attacking the
validity of its state permit in this federal enforcement pro-
ceeding.
C.GM's Other Challenges
GM raises two arguments that are not foreclosed by the
conclusion reached immediately above. Each may be re-
solved in short order.
First, GM contends the EPA erred in concluding that the
permit for Outfall 002 did not expire on October 1, 1990.
Recall the ALJ held that the appropriate penalty would be
the same regardless of whether GM was responsible for the
discharges after that date, and GM did not challenge the
ALJ's penalty calculations before the EAB or this court.
Therefore, we need not resolve whether substantial evidence
supports the EPA's finding that GM violated the terms of its
permit after October 1, 1990; even if GM did not do so, its
penalty would still be $62,500.
Second, GM claims it was denied due process because it
lacked notice that "metals present in rainfall or leached from
roofs and gutters would be considered 'pollutants' that were
the responsibility of the permit holder." The permit for
Outfall 002, however, clearly states that "the permittee is
authorized to discharge an unspecified amount of stormwater
runoff .... [which] shall be limited [to 140 F/l of copper, 75
Fg/of lead, and 1000 Fg/l of zinc]." GM, in its correspondence
informing the MDNR of its permit violations, itself counted
the ambient and leached metals as contributing to those
violations. Consequently, GM's lack of notice claim rings
hollow, to say the least. See NRDC v. EPA, 673 F.2d 400,
406-07 (D.C. Cir. 1982) ("Each individual subject to the
[Consolidated Permit Regulations] will of necessity have par-
ticipated in a permit proceeding before being punished for
violating the conditions specified in his permit. A polluter
charged with violating those conditions will certainly be on
notice of the duty he is alleged to have breached").
This exhausts GM's challenges to the EPA's finding that
the Company violated its NPDES permit for Outfall 002.
GM does not contest the EPA's conclusion that the informa-
tion contained in the DMRs it submitted constitutes substan-
tial evidence that GM violated its permit on at least 39
occasions prior to October 1, 1990. Accordingly, we hold that
substantial evidence supports the EPA's finding of violations.
III. Conclusion
For the foregoing reasons, the petition for review is
Denied.