McCoy Elkhorn Coal Corp. v. Environmental Protection Agency

No. 79-9 (E.D. Ky. May 7, 1979)

Section 125 of the Clean Air Act, under which major air pollution sources can be required to use local coal in order to minimize local economic disruption, is not unconstitutional under either the Commerce Clause or the Fifth Amendment.Although this provision treats differently persons within and without a geographic region, the Fifth Amendment's implicit guarantee of equal protection is not violated since the distinction is made on an economic basis and bears a reasonable relationship to the valid congressional purpose of relieving economic depression in certain coal producing regions. No suspect classification subject to strict scrutiny is involved. The Commerce Clause argument fails for the same reasons: as long as a rational nexus exists, Congress may protect some local industries at the expense of others. Corporate claims that severe economic hardship will result from implementation of § 125 must be addressed to the political process, and not the judiciary, for remedy.

Counsel for Plaintiff
Donald H. Vish
McCoy Elkhorn Coal Corp.
465 E. High St., Lexington KY 40508
(606) 269-2754

Counsel for Defendant
Patrick H. Molloy, U.S. Attorney
P.O. Box 1490, Lexington KY 40591
(606) 233-2661

[9 ELR 20545]

Hermansdorfer, J.:

Memorandum Opinion

This litigation involves a direct facial attack upon the constitutionality of § 125 of the Clean Air Act Amendments of 1977, P.L. 95-95, 42 U.S.C. § 7425 (Act).¹ The initiating plaintiff, McCoy Elkhorn Coal Corporation (McCoy Elkhorn), is a Kentucky corporation engaged in coal mining in Pike County, Kentucky. Through interlocking corporations plaintiff's coal is shipped by rail in interstate commerce to northern and tidewater markets. This litigation was commenced against the United States Environmental Protection Agency (EPA) when the Agency undertook its statutory duties with regard to implementing the provisions of § 125. The pendency of this case has attracted several expressions of concern by way of motions for leave to file briefs in amicus curiae and for leave to intervene as parties under Rule 24, Federal Rules of Civil Procedure. All such motions have been sustained.

Four knowledgeable members of the House of Representatives, the Honorable Messrs. Carl D. Perkins (7th Dist., Ky.), Thomas L. Ashley (9th Dist., Ohio), John P. Murtha (12th Dist., Pa.), and John M. Slack (3rd Dist., W. Va.) filed an amicus curiae brief to aid this court's understanding of the legislative history and intent of § 125. The position taken asserts the constitutionality of § 125 but cites the legislative history of the Act for the conclusion that the phrase "locally or regionally available" was never intended to encompass a single state.

The Governor of Kentucky, the Honorable Julian M. Carroll, filed an amicus brief expressing concern about the economic disruption to the Kentucky coal industry that would result from the implementation of § 125 were such implementation to foreclose Kentucky coal from the right to compete in commerce with potential customers in the State of Ohio. The evidence submitted by Governor Carroll is compatible with McCoy Elkhorn's; plaintiff's evidence shows without contradiction that because of market conditions its employees have been cut back to a three day work week.

The Ohio Edison Company, an Ohio coal burning electric generating utility,² an intervening plaintiff, describes itself as on the horns of a most expensive dilemma which it attributes to the government. Prior to the passage of § 125 Ohio Edison, as did all Ohio utilities subject to the Act,³ elected to come into compliance with the clean air requirements by burning low sulfur coal as opposed to the other EPA alternative of installing gas flue desulfurization technology, the so-called "scrubbers," to accomodate the use of high sulfur coal. The estimated comparative cost analysis indicates that hundreds of millions of dollars are involved; that burning low sulfur coal is significantly more cost effective and that, in any event, Ohio Edison cannot make any decision without risking enormous capital sums with no assurance of being able to recover such money in the event it is not permitted to pursue the course its business judgment dictates. Further, this [9 ELR 20546] utility fears it will be subject to the penalty provisions of 42 U.S.C. § 7413 for failure to comply by the established deadline for compliance.

The Governor of Ohio, the Honorable James A. Rhodes, and theState of Ohio have intervened as parties defendants. The composite argument of Ohio is that economic disruption in the Ohio coal industry attributable to the Clean Air Act impacts substantially upon coal related jobs, the Ohio utilities and their customers, and the state's treasury not only in terms of lost revenue but in terms of the prospective drainage of enormous amounts of money from unemployment type accounts. It has been stipulated between the parties that two study documents, "Draft Final Report" Potential Impacts on the Ohio Coal Market: Ohio Utility Compliance with Applicable Air Emission Limitations: Section 125 Study and Ohio Section 125 Study: Regional Economic Impact Analysis touching on economic disruption and unemployment are factually correct.

The United Mine Workers of America, District 6, has intervened on behalf of some 16,000 coal miners in Ohio and a part of northern West Virginia whose employment would be disrupted by permitting the burning of low sulfur coal by Ohio steam generating electric utilities. District 6 initiated a formal request to EPA to implement § 125. The plaintiff's evidence shows that Ohio does not have an identifiable reserve of low sulfur coal but does have a substantial reserve of high sulfur coal.⁴ The economic impact studies mentioned above generally support the argument of District 6.

Jurisdiction and Justiciability

The defendant EPA and others argue that plaintiff does not present a case or controversy under Article III, § 2 of the Constitution. The argument proceeds from the assertion that plaintiff has suffered no cognizable injury to date. Plaintiff has shown an immediate impediment and a greater threatened impairment to its ability to do business in Ohio directly attributable to § 125 of the Act. It is not necessary that such injury or threatened injury be reducible to a specific dollar amount as a requisite to stating a case or controversy. Craig v. Boren, 429 U.S. 190 (1976); Singleton v. Wulff, 428 U.S. 106 (1976). Each of the cited cases relates to limitations upon potential economic circumstances. No reason is presented upon which this court should limit plaintiff's opportunity to litigate its claim since its attack goes only to statutory and not to administrative action concerns. The conclusion is that plaintiff states a claim cognizable under Article III, § 2.

Statutory jurisdiction exists under 28 U.S.C. §§ 1331(a) and 1337; the contention that subject matter jurisdiction is vested by 28 U.S.C. § 7607(b) in circuit courts of appeals is inapposite since this action does not challenge final administrative action.

Issues

The constitutional tensions arising within this litigation inhere about the claims of McCoy Elkhorn that (1) it has a right to engage in interstate commerce which is impermissibly denied to it by § 125 of the Act in violation of the Fifth Amendment to the federal Constitution and (2) that § 125 represents an ultra vires act of the Congress under the Commerce Clause inthat it enables the erection of a discriminatory trade barrier around a single state, or a region substantially coterminous with the political boundaries of a state. Ohio Edison presents the obverse side of the argument and challenges the power of Congress to prescribe that it purchase on long term contract some determinable quantity of Ohio produced coal to the exclusion of all other coal available to it on the market.All of the arguments are seen as addressing the primary question of the power of the Congress to regulate interstate commerce.

At this juncture it is useful to outline briefly what Congress and EPA have done by way of regulating the nation's air Act appears. Congress entered the field of air pollution control in 1955 by passing legislation authorizing research and technical assistance to the states in that area.A major revision of federal legislation came in the Air Quality Act of 1967, 42 U.S.C. § 1857 et seq., which set up "air quality control regions," required the Secretary of Health, Education and Welfare to promulgate "air quality criteria" for air pollutants, and left to the states the responsibility for setting standards limiting levels of pollutants in the air so as to meet the Secretary's criteria. 42 U.S.C. § 1857 et seq., as amended. In order to, inter alia:

protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population,

42 U.S.C. § 1857(b)(1), as amended, Congress passed the Clean Air Act Amendments of 1970, 42 U.S.C. § 1857 et seq., as amended. The 1970 amendments adopted a technology forcing policy in air quality control, transferred the duties of the Secretary to the Environmental Protection Agency, and required that agency to promulgate national air quality control standards for pollutants. The states were to promulgate implementation plans to meet the federal air quality control standards.

In 1973, EPA issued national ambient air quality standards for sulfur oxides (SO). 40 C.F.R. §§ 50.4, 50.5. After Ohio had submitted and withdrawn two SO implementation plans, EPA promulgated its own SO plan for Ohio in August, 1976. 40 C.F.R. § 42.1871 et seq. That plan set forth certain SO emission limits for Ohio utility power plants and required each plant to notify EPA whether it would meet the emission limits by installing scrubbers or by burning low sulfur coal.40 C.F.R. § 1882(a)(4). Those plants electing to meet the emission standards by burning low sulfur coal were required to submit a 10-year projection of the type of coal to be used and of the availability of such coal. Id. As noted supra, the record shows that all Ohio electric utility companies elected to convert to low sulfur coal to meet the emission limits.

As part of the Clean Air Act Amendments of 1977, Congress enacted § 125, 42 U.S.C. § 7425, which provides that certain executive officers may, in order to ". . . prevent or minimize significant local or regional economic disruption or unemployment . . ., prohibit [certain power plants] from using fuels other than locally or regionally available coal or coal derivatives to comply with implementation plan requirements . . . ." 42 U.S.C. §§ 7425(3)-7425(b)(3).

On February 13, 1978, the Sixth Circuit Court of Appeals, Cleveland Electric Illuminating Co. v. EPA, 572 F.2d 1150 [8 ELR 20312] (6th Cir. 1978), upheld EPA's Ohio SO plan; and District 6 of the United Mine Workers of America, apparently believing that regions where its members lived and worked were undergoing ". . . significant . . . economic disruption or unemployment . . ." because of Ohio utilities' election to use non-Ohio low sulfur coal rather than install scrubbers to meet the requirements of the SO plan, immediately petitioned EPA to institute § 125 proceedings.

On December 19, 1978, EPA issued a "proposed determination" that such economic disruption existed in Ohio because of the SO plan and indicated that it would issue rulings requiring Ohio utilities to enter into contracts to buy as much Ohio high sulfur coal as they had bought before the promulgation of the SO plan. 42 Fed. Reg. 60652-56. Shortly thereafter plaintiff commenced this action.

Since the decision in Gibbons v. Ogden, 9 U.S. (1 Wheat) 196 (1824), the power of Congress to regulate commerce has been recognized as awesome primarily upon the ground that the Commerce Clause is written without limitation:

Congress shall have power . . . to regulate commerce with foreign Nations, among the several States and with the Indian Tribes.

Constitution, Article I, § 8, Clause 3. For the current period of history it may be argued that the existing parameters of such power, as enunciated by the Supreme Court, rest upon such cases as Wickard v. Filburn, 317 U.S. 111 (1942); United States v. Darby, 312 U.S. 100 (1941); and N.L.R.B. v. Jones & Laughlin Steel Corporation, 301 U.S. 1 (1937).⁵ In any event, no recent case suggests any identifiable limit upon the power of Congress to [9 ELR 20547] regulate commerce which is not founded upon another constitutional provision:

The power of Congress over commerce exercised entirely without reference to coordinated action of the states is not restricted, except as the Constitution expressly provides, by any limitation which forbids it to discriminate against interstate commerce and in favor of local trade. Its plenary scope enables Congress not only to promote but also to prohibit interstate commerce, as it has done frequently and for a great variety of reasons . . . Congress may keep the way open, confine it broadly or closely, or close it entirely, subject only to the restrictions placed upon its authority by other constitutional provisions and the requirement that it shall not invade the domains of action reserved exclusively for the states. [Footnotes omitted, emphasis added.]

Prudential Insurance Company v. Benjamin, 328 U.S. 408, 434 (1949).

The attack upon the statute is made under the claim of violation of the Fifth Amendment to the federal Constitution. Although the Fifth Amendment does not contain an equal protection clause, judicial engrafting permits recognition of equal protection arguments under Fifth Amendment claims. See Frontero v. Richardson, 411 U.S. 677 (1973).Such due process claims arise out of the Fifth Amendment's language prohibiting a deprivation of life, liberty, or property without due processof law. The basic thrust of the challenge to § 125 is that it deprives McCoy Elkhorn and Ohio Edison of the right to engage in interstate commerce to seek economic gain; a right which, they argue, cannot be impaired by geographical boundaries defining the several states.

Analysis

The assessment of a due process argument commences with an examination of the nature of the interest at stake. Board of Regents v. Roth, 408 U.S. 564, 571 (1972). To contend that one has a property right which is being impermissibly degraded it is necessary to demonstrate the origin of that right from independent sources such as state laws. Property rights do not arise from the federal Constitution. 408 U.S. at 577. The evidence shows that McCoy Elkhorn has a long term contract for the supply of low sulfur coal with the Dayton Light and Power Company in Ohio; by stipulation of the parties that contract will not be affected by any of the defendant EPA's prospective actions. Ohio Edison does not present any evidence of actual contract impairment.Accordingly, the question is not reached as to the impact of § 125 on existing contracts. The issue is narrowly limited to the alleged protected interest to engage in interstate commerce.

Thus, what plaintiff and the intervenor assert is in the nature of a protected liberty to engage in commerce as enjoyed by any other citizens of the United States. Such liberty may be equated with the concept of a privilege which, if it is to be taken, is entitled to the constitutional requirement that it be taken within the due process of law.No procedural infirmities are asserted against § 125. The argument for unconstitutionality rests upon the contention that the infringement of the privilege to engage in commerce is not rationally related to any valid governmental concern. At this point it is noted that § 125 is solely an economic legislative act, and carries with it a presumption of constitutionality which can only be overcome by a showing of arbitrariness or irrationality. Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 83 [8 ELR 20545] (1978); Usery v. Turner Elkhorn Mining Co., 423 U.S. 1, 15 (1976).

A claim of arbitrariness or irrationality cannot be founded upon narrowness of the Act's scope or upon its lack of uniform geographic application. Currin v. Wallace, 306 U.S. 1, 14 (1939). The power of Congress to exercise its political powers to attend to fluctuating regional needs was validated unequivocally in Secretary of Agriculture v. Central Roig Refining Corp., 338 U.S. 604 (1950). It follows a fortiori that Congress has the power to define a region about which it is concerned in terms of a state's boundaries or upon any other rational basis regardless of the size of the region. Consequently, there is no merit in the argument about the definition of a region or its size.⁶

It is clear that § 125 differentiates between the legislative treatment afforded to persons within and without the congressional region of concern. The distinction made is an economic one and does not constitute a suspect classification subject to special scrutiny.⁷ The discrimination engendered by the Act is forbidden by the implicit Fifth Amendment equal protection provision only if it is not rationally related to a valid congressional interest. This principle was reaffirmed in the recent opinion in Secretary of State v. Bradley, U.S. (No. 77-1254, decided Feb. 22, 1979):

The Constitution presumes that, absent some reason to infer antipathy, even improvident decisions will eventually be rectified by the democratic process and that judicial intervention is generally unwarranted no matter how unwisely we may think a political branch has acted. Thus, we will not overturn such a statute unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that we can only conclude that the legislature's actions were irrational.

47 U.S.L.W. 4176, 4177 (1979).

The enactment of the national clean air legislation clearly resulted in unbalancing the normal market competition between the Ohio high sulfur coal industry and nearby low sulfur coal producers.⁸ The federally enhanced low sulfur coal market is now the object of legislative discrimination in favor of the high sulfur coal produced within a region putatively distressed. Section 125 is intended to provide a remedy, if warranted by the requisite factual justifications. There is a rational nexus between the depressed Ohio coal industry and the remedy sought to be provided by § 125. The serious areas of concern raised by the plaintiff and Ohio Edison suggest that in the near term they will suffer economic harm because of the implementation of § 125. The weight of these arguments is not discounted; the distinction is made that they address themselves to the political process, not to the judiciary, for remedy. It is settled that the Commerce Clause empowers the Congress to provide protection to some local industries at the expense of other local industries. Secretary of Agriculture v. Central Roig Refining Corp., supra. It further appears:

[t]he Constitution does not guarantee the unrestricted privilege to engage in a business or to conduct it as one pleases. Certain kinds of business may be prohibited; and the right to conduct a business, or to pursue a calling, may be conditioned . . . . Statutes prescribing the terms upon which those conducting certain businesses may contract, or imposing terms if they do not enter into agreements, are within the State's competency.

Nebbia v. New York, 291 U.S. 502, 527-28 (1934) (upholding a state statute fixing maximum and minimum prices for milk). The plethora of cases invalidating state attempts to prescribe the conduct of private interstate businesses is based, not on the Fifth Amendment, but on the Commerce Clause. Within the bounds of the Commerce Clause, Congress is no more restricted in its power to prescribe by the Fifth Amendment than states are by the Fourteenth. United States v. Carolene Products Co., 304 U.S. 144, 147 (1938). It is equally clear that Congress may revisit an area of prior concern and make those adjustments it deems appropriate.

This court is obliged to conclude and hold that § 125 of the Clean Air Act Amendments of 1977 is a valid and subsisting law in terms of the challenges made to its validity on constitutional grounds. An appropriate judgment will be entered forthwith in accordance with this Memorandum Opinion.

[9 ELR 20548]

Order

The court having determined by Memorandum Opinion filed simultaneously with this Order that § 125 of the Clean Air Act Amendments of 1977, P.L. 95-95, 42 U.S.C. § 7425, does not violate any constitutional prohibition to the power of Congress to regulate interstate commerce and the court being sufficiently advised,

IT IS ORDERED that plaintiff's complaint be, and the same hereby is, DISMISSED. This action shall be STRICKEN from the docket of this court.

1. The entire text of § 125 is attached as Appendix A. [Appendix A omitted — Ed.]

2. The evidence indicates without contradiction that Ohio Edison operates a major fuel burning stationary source as used and defined in § 125.

3. This is a matter of stipulation filed by the parties. Record document no. 28.

4. The terms "low sulfur" and "high sulfur" as applied to coal do not import a fixed meaning, although for general purposes one may conclude that 1.2 pounds of sulfur dioxide emissions per million BTU's would describe the threshold for high sulfur coal. See Transcript of Evidence, Vol. II, p. 23.

5. P. R. BENSON, JR., THE SUPREME COURT AND THE COMMERCE CLAUSE, 1937-1970.

6. The question of EPA not obeying the intent of Congress as to the meaning of "region" is not before this court.

7. See Tussman and Ten Broek, The Equal Protection of the Laws, 37 CALIF. L. REV. 341 (1949), reprinted at E. BARRET AND P. BURTON, CONSTITUTIONAL LAW (4th ed. 1973).

8. The Act prior to the 1977 amendments, by its requirementthat Ohio utilities meet sulfur dioxide limits unachievable with high sulfur coal, in effect favored non-Ohio coal of low sulfur content, although the Act did not explicitly create classes of producers or address coal production in regional terms.