572 F.2d 872
11 ERC 1358, 8 Envtl. L. Rep. 20,207
SEACOAST ANTI-POLLUTION LEAGUE et al., Petitioners,
v.
Douglas M. COSTLE, as Administrator of the Environmental
Protection Agency, Respondent,
Public Service Company of New Hampshire, Intervenor.
No. 77-1284.
United States Court of Appeals,
First Circuit.
Argued Nov. 10, 1977.
Decided Feb. 15, 1978.
As Amended Feb. 23, 1978.
Robert A. Backus, Manchester, N. H., and Harvey N. Winchester, Denver, Colo., with whom O'Neill, Backus, Spielman, Little, Manchester, N. H., for petitioner.
Fred R. Disheroon, Atty., Dept. of Justice, and William F. Pedersen, Atty., Environmental Protection Agency, Washington, D. C., with whom Sanford Sagalkin, Acting Asst. Atty. Gen., Juneau, Alaska, was on brief, for respondent.
Harrison A. Fitch, Boston, Mass., with whom Ronald A. Zumbrun, Raymond M. Momboisse, Robert K. Best, Sacramento, Cal., Albert Ferri, Jr., Washington, D. C., Donald C. Simpson, Lawrence P. Jones, Washington, D. C., Wayne S. Henderson, Boston, Mass., and Peter D. Kinder, Columbus, Ohio, were on brief, for intervenor, The New Hampshire Voice of Energy.
John C. Ottenberg, Boston, Mass., and Harvey N. Winchester, Denver, Colo., on brief for amicus curiae, Conservation Law Foundation of New England, Inc.
Thomas G. Dignan, Jr., Boston, Mass., with whom John A. Ritsher and Ropes & Gray, Boston, Mass., were on brief, for intervenor, Public Service Co. of New Hampshire.
Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.
COFFIN, Chief Judge.
This case is before us on a petition by the Seacoast Anti-Pollution League and the Audubon Society of New Hampshire (petitioners) to review a decision by the Administrator of the Environmental Protection Agency (EPA). We have jurisdiction under 33 U.S.C. § 1369(b)(1). The petition presents several important issues relating to the applicability and effect of the Administrative Procedure Act (APA), 5 U.S.C. §§ 501 et seq., and the interpretation of the Federal Water Pollution Control Act of 1972 (FWPCA), 33 U.S.C. §§ 1251 et seq. In order to place those issues in context we set forth the procedural and factual background of the case.
The Public Service Company of New Hampshire (PSCO) filed an application with the EPA for permission to discharge heated water into the Hampton-Seabrook Estuary which runs into the Gulf of Maine. The water would be taken from the Gulf of Maine, be run through the condensor of PSCO's proposed nuclear steam electric generating station at Seabrook, and then be directly discharged back into the Gulf at a temperature 39o F higher than at intake. The water is needed to remove waste heat, some 16 billion BTU per hour, generated by the nuclear reactor but not converted into electrical energy by the turbine. Occasionally, in a process called backflushing, the water will be recirculated through the condensor, and discharged through the intake tunnel at a temperature of 120o F in order to kill whatever organisms may be living in the intake system.
Section 301(a) of the FWPCA, 33 U.S.C. § 1311(a), prohibits the discharge of any pollutant unless the discharger, the point source operator, has obtained an EPA permit. Heat is a pollutant. 33 U.S.C. § 1362(6). Section 301(b) directs the EPA to promulgate effluent limitations. The parties agree that the cooling system PSCO has proposed does not meet the EPA standards because PSCO would utilize a once-through open cycle system the water would not undergo any cooling process before being returned to the sea. Therefore, in August, 1974, PSCO applied not only for a discharge permit under § 402 of the FWPCA, 33 U.S.C. § 1342, but also an exemption from the EPA standards pursuant to § 316 of the FWPCA, 33 U.S.C. § 1326. Under § 316(a) a point source operator who "after opportunity for public hearing, can demonstrate to the satisfaction of the Administrator" that the EPA's standards are "more stringent than necessary to assure the projection (sic ) and propagation of a balanced, indigenous population of shellfish, fish, and wildlife in and on the body of water" may be allowed to meet a lower standard. Moreover, under § 316(b) the cooling water intake structure must "reflect the best technology available for minimizing adverse environmental impact."
In January, 1975, the Regional Administrator of the EPA held a non-adjudicatory hearing at Seabrook. He then authorized the once-through system in June, 1975. Later, in October, 1975, he specified the location of the intake structure. The Regional Administrator granted a request by petitioners that public adjudicative hearings on PSCO's application be held. These hearings were held in March and April, 1976, pursuant to the EPA's regulations establishing procedures for deciding applications for permits under § 402 of the FWPCA, 40 C.F.R. § 125.36. The hearings were before an administrative law judge who certified a record to the Regional Administrator for decision. The Regional Administrator decided in November, 1976, to reverse his original determinations and deny PSCO's application.
PSCO, pursuant to 40 C.F.R. § 125.36(n), appealed the decision to the Administrator who agreed to review it. Thereafter, a new Administrator was appointed, and he assembled a panel of six in-house advisors to assist in his technical review. This panel met between February 28 and March 3, 1977, and submitted a report finding that with one exception PSCO had met its burden of proof. With respect to that exception, the effect of backflushing, the Administrator asked PSCO to submit further information, offered other parties the opportunity to comment upon PSCO's submission, and stated that he would hold a hearing on the new information if any party so requested and could satisfy certain threshold conditions (set out below). Petitioners did request a hearing, but the Administrator denied the request.
The Administrator's final decision followed the technical panel's recommendations and, with the additional information submitted, reversed the Regional Administrator's decision, finding that PSCO had met its burden under § 316. It is this decision that petitioners have brought before us for review.
Applicability of the Administrative Procedure Act
Petitioners assert that the proceedings by which the EPA decided this case contravened certain provisions of the APA governing adjudicatory hearings, 5 U.S.C. §§ 554, 556, and 557. Respondents answer that the APA does not apply to proceedings held pursuant to § 316 or § 402 of the FWPCA, 33 U.S.C. §§ 1326, 1342.
The dispute centers on the meaning of the introductory phrases of § 554(a) of the APA:"This section applies . . . in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing . . . ."
Both § 316(a) and § 402(a)(1) of the FWPCA provide for public hearings, but neither states that the hearing must be "on the record". We are now the third court of appeals to face this issue. The Ninth Circuit and the Seventh Circuit have each found that the APA does apply to proceedings pursuant to § 402. Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977); United States Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977). We agree.
At the outset we reject the position of intervenor PSCO that the precise words "on the record" must be used to trigger the APA. The Supreme Court has clearly rejected such an extreme reading even in the context of rule making under § 553 of the APA. See United States v. Florida East Coast Ry. Co., 410 U.S. 224, 245, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973); United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 757, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972). Rather, we think that the resolution of this issue turns on the substantive nature of the hearing Congress intended to provide.
We begin with the nature of the decision at issue. The EPA Administrator must make specific factual findings about the effects of discharges from a specific point source. On the basis of these findings the Administrator must determine whether to grant a discharge permit to a specific applicant. Though general policy considerations may influence the decision, the decision will not make general policy. Only the rights of the specific applicant will be affected. "As the instant proceeding well demonstrates, the factual questions involved in the issuance of section 402 permits will frequently be sharply disputed. Adversarial hearings will be helpful, therefore, in guaranteeing both reasoned decisionmaking and meaningful judicial review. In summary, the proceedings below were conducted in order 'to adjudicate disputed facts in particular cases,' not 'for the purposes of promulgating policy-type rules or standards.' " Marathon Oil Co., supra at 1262.
This is exactly the kind of quasi-judicial proceeding for which the adjudicatory procedures of the APA were intended. As the Supreme Court has said, "Determination of questions of (the Administrative Procedure Act's) coverage may well be approached through consideration of its purposes as disclosed by its background." Wong Yang Sung v. McGrath, 339 U.S. 33, 36, 70 S.Ct. 445, 448, 94 L.Ed. 616 (1950). One of the developments that prompted the APA was the "(m)ultiplication of federal administrative agencies and expansion of their functions to include adjudications which have serious impact on private rights." Id., 339 U.S. at 36-37, 70 S.Ct. at 448. This is just such an adjudication. The panoply of procedural protections provided by the APA is necessary not only to protect the rights of an applicant for less stringent pollutant discharge limits, but is also needed to protect the public for whose benefit the very strict limitations have been enacted. If determinations such as the one at issue here are not made on the record, then the fate of the Hampton-Seabrook Estuary could be decided on the basis of evidence that a court would never see or, what is worse, that a court could not be sure existed. We cannot believe that Congress would intend such a result.
Our holding does not render the opening phrases of § 554 of the APA meaningless. We are persuaded that their purpose was to exclude "governmental functions, such as the administration of loan programs, which traditionally have never been regarded as adjudicative in nature and as a rule have never been exercised through other than business procedures." Attorney General's Manual on the Administrative Procedure Act 40 (1947). Without some kind of limiting language, the broad sweep of the definition of "adjudication", defined principally as that which is not rule making, 5 U.S.C. § 551(6), (7), would include such ordinary procedures that do not require any kind of hearing at all. In short, we view the crucial part of the limiting language to be the requirement of a statutorily imposed hearing. We are willing to presume that, unless a statute otherwise specifies, an adjudicatory hearing subject to judicial review must be on the record. The legislative history of the APA and its treatment in the courts bear us out.
This rationale and conclusion also are supported by our holding in South Terminal Corp. v. EPA, 504 F.2d 646, 660 (1st Cir. 1974) ("public hearing" not tantamount to "on the record"), and the other rule making cases cited to us for similar propositions. The presumption in rule making cases is that formal, adjudicatory procedures are not necessary. A hearing serves a very different function in the rule making context. Witnesses may bring in new information or different points of view, but the agency's final decision need not reflect the public input. The witnesses are not the only source of the evidence on which the Administrator may base his factual findings. For these reasons, we place less importance on the absence of the words "on the record" in the adjudicatory context.
"It is believed that with respect to adjudication the specific statutory requirement of a hearing, without anything more, carries with it the further requirement of decision on the basis of the evidence adduced at the hearing. With respect to rule making, it was concluded, supra, that a statutory provision that rules be issued after a hearing, without more, should not be construed as requiring agency action 'on the record', but rather as merely requiring an opportunity for the expression of views. That conclusion was based on the legislative nature of rule making, from which it was inferred, unless a statute requires otherwise, that an agency hearing on proposed rules would be similar to a hearing before a legislative committee, with neither the legislature nor the agency being limited to the material adduced at the hearing. No such rationale applies to administrative adjudication. In fact, it is assumed that where a statute specifically provides for administrative adjudication (such as the suspension or revocation of a license) after opportunity for an agency hearing, such specific requirement for a hearing ordinarily implies the further requirement of decision in accordance with evidence adduced at the hearing. Of course, the foregoing discussion is inapplicable to any situation in which the legislative history or the context of the pertinent statute indicates a contrary congressional intent." Attorney General's Manual, supra, 42-43 (footnote and citation to statutory history omitted) (emphasis added).
Here the statute certainly does not indicate that the determination need not be on the record, and we find no indication of a contrary congressional intent. Therefore, we will judge the proceedings below according to the standards set forth in §§ 554, 556, and 557 of the APA.
Compliance with the Administrative Procedure Act
Petitioners contend that two steps in the EPA's proceedings in this case violated the APA. We will look at each in turn.
1. The Post-hearing Submissions; The Request for Information
The Regional Administrator, in his initial decision, had determined that the record was insufficient to properly evaluate the environmental effects of backflushing. The Administrator's technical panel agreed. The Administrator asked PSCO to submit supplemental information on that subject. Other parties were given permission to comment on PSCO's submission. In addition, the Administrator provided that a hearing with respect to the submission would be held if four conditions designed to guarantee that the hearing could resolve a substantial issue of fact were met. PSCO submitted the requested information. Other parties, including petitioners, submitted comments, and petitioners requested a hearing. The Administrator denied the hearing because petitioners had failed to meet the threshold conditions.
Petitioners argue, first, that the Administrator could not rely on this information because it was not part of the exclusive record for decision. 5 U.S.C. § 556(e). Second, petitioners argue that even if the information was legitimately part of the record, the Administrator was obligated to provide an opportunity for cross-examination pursuant to 5 U.S.C. § 556(d).
Section 556(e) provides that "(t)he transcript of testimony and exhibits, together with all papers and requests filed in the proceeding, constitutes the exclusive record for decision . . . ." The first point to make about this section is that it does not limit the time frame during which any papers must be received. Certainly the submissions at issue were "filed in the proceeding". Moreover, 5 U.S.C. § 557(b) provides that "(o)n appeal from or review of the initial decision, the agency has all the powers which it would have in making the initial decision . . . ." One of those powers is the power to preside at the taking of evidence. 5 U.S.C. § 556(b)(1). For these reasons we can find no fault with the Administrator's decision to seek further evidence. Indeed we think this procedure was a most appropriate way to gather the necessary information without the undue delay that would result from a remand.
The question remains, however, whether the procedures by which the Administrator gathered the information conformed to the governing law. The first point is whether the Administrator was empowered to require that the new evidence be submitted in written form. The Administrator may, under 5 U.S.C. § 556(d), so require in cases of initial licensing. This is an initial licensing. See note 2, supra. But just as the APA does not impose procedures excused by a governing statute, so the APA does not excuse procedures compelled by the governing statute. In this case § 316(a) of the FWPCA requires the EPA to afford an opportunity for a public hearing. We do not believe that an opportunity to submit documents constitutes a public hearing. Nor do we believe that the Administrator can comply with the statute merely by taking some evidence at a public hearing and then taking the rest in written form. If that were the law, nothing would prevent the Administrator from holding a ten minute hearing to establish compliance and then requiring the submission of the rest of the evidence. Therefore, we interpret the closing lines of § 556(d) of the APA to mean that the Administrator can require evidence to be submitted in written form in initial licensings unless the governing statute requires a public hearing. The public hearing can be especially important in cases such as this one which turn not so much upon the actual baseline data (which presumably all parties will be happy to have submitted in written form) as upon experts' interpretation of the data. The experts' credibility is, therefore, very much at issue here. See Attorney General's Manual, supra, at 78.
While we believe that it was error for the Administrator not to hold a hearing to receive the responses to his request for Information, and that therefore the submission was not properly part of the record, we cannot be sure that any purpose would be served by ordering a hearing on this issue at this stage in these proceedings. Petitioners' principal complaints are that either the Administrator could not take any evidence or that he was required to afford an opportunity for cross-examination. The latter complaint has no more basis than the former. A party to an administrative adjudicatory hearing does not have an absolute right to cross-examine witnesses. The plain language of 5 U.S.C. § 556(d) limits that right to instances where cross-examination is "required for a full and true disclosure of the facts."
We will order a remand for the limited purpose of allowing the Administrator to determine whether cross-examination would be useful. This remand is necessary because the Administrator's threshold conditions were designed to determine whether a hearing was necessary, not how that hearing should be conducted. The parties' submissions likewise went to that somewhat distinct question. Ordinarily we might well overlook what appears to be a more theoretical than practical distinction, but we are influenced here by the fact that a remand is necessary anyway for reasons discussed below. If the Administrator finds that cross-examination would help disclose the facts a hearing must be provided at which cross-examination would be available. If, however, the Administrator concludes that cross-examination would not serve any useful purpose then we will not require him to hold a hearing merely to have the already submitted statements read into the record.
2. Participation of the Technical Review Panel
Petitioners object to the Administrator's use of a panel of EPA scientists to assist him in reviewing the Regional Administrator's initial decision. The objection is two-fold: first, that the Administrator should not have sought such help at all; and, second, that the panel's report (the Report) to the Administrator included information not in the administrative record.
Petitioners point out that by the EPA's own regulations "(t)he Administrator shall decide the matters under review on the basis of the record presented and any other consideration he deems relevant." 40 C.F.R. § 125.36(n)(12) (emphasis added). It is true that when a decision is committed to a particular individual that individual must be the one who reviews the evidence on which the decision is to be based. See Morgan v. United States, 298 U.S. 468, 481, 56 S.Ct. 906, 80 L.Ed. 1288 (1936). But it does not follow that all other individuals are shut out of the decision process. That conclusion runs counter to the purposes of the administrative agencies which exist, in part, to enable government to focus broad ranges of talent on particular multi-dimensional problems. The Administrator is charged with making highly technical decisions in fields far beyond his individual expertise. "The strength (of the administrative process) lies in staff work organized in such a way that the appropriate specialization is brought to bear upon each aspect of a single decision, the synthesis being provided by the men at the top." 2 K. Davis, Administrative Law Treatise 84 (1958). Therefore, "(e)vidence . . . may be sifted and analyzed by competent subordinates." Morgan v. United States, supra, at 481, 56 S.Ct. at 912. Cf. 5 U.S.C. § 557(d) (forbidding ex parte communications only with persons outside the agency). The decision ultimately reached is no less the Administrators simply because agency experts helped him to reach it.
A different question is presented, however, if the agency experts do not merely sift and analyze but also add to the evidence properly before the Administrator. The regulation quoted above cannot allow the Administrator to consider evidence barred from consideration by the APA, 5 U.S.C. § 556(e), "The transcript of testimony and exhibits, together with all papers and requests filed in the proceeding, constitutes the exclusive record for decision . . . ." To the extent the technical review panel's Report included information not in the record on which the Administrator relied, § 556(e) was violated. In effect the agency's staff would have made up for PSCO's failure to carry its burden of proof.
Our review of the Report indicates that such violations did occur. The most serious instance is on page 19 of the Report where the technical panel rebuts the Regional Administrator's finding that PSCO had failed to supply enough data on species' thermal tolerances by saying:
"There is little information in the record on the thermal tolerances of marine organisms exposed to the specific temperature fluctuation associated with the Seabrook operation. However, the scientific literature does contain many references to the thermal sensitivity of members of the local biota."
Whether or not these references do exist and whether or not they support the conclusions the panel goes on to draw does not concern us here. What is important is that the record did not support the conclusion until supplemented by the panel. The panel's work found its way directly into the Administrator's decision at page 27 where he discusses the Regional Administrator's concerns about insufficient data but then precipitously concludes, "On the recommendation of the panel, however, I find that . . . local indigenous populations will not be significantly affected." This conclusion depends entirely on what the panel stated about the scientific literature.
Similar, though less egregious, examples occur in the Report at pages 13-14 ("Thus, while it is true that the applicant did not perform exhaustive studies on all (Representative Important Species) it is not true that nothing is known about these species, their biology, distribution or value to the ecosystem."); page 27 ("We concur . . . that there was no evidence on the question of whether there will be any impact on wildlife, such as birds. . . . Since we conclude that holoplankton . . . are not likely to be adversely affected, it is unlikely that there would be any conceivable impact at the top of the food chain.); and page 30 ("We agree that only limited data exist on the migratory pathways of fish to and from Hampton Harbor . . .. Nevertheless there have been substantial studies performed on fish migratory behavior; some of these have been done at power plant sites.") These find their way into the Administrator's decision at pages 25-26, 33-34, and 37, respectively.
We do not challenge the reliability of the panel, nor do we question the principle that informed opinion may be able to determine that information the Regional Administrator found lacking was either unavailable or irrelevant. On such issues the Administrator would be free to reverse the Regional Administrator. But the instances pointed to above, with the possible exception of page 27 of the Report, are of a different sort. The panel did not say that the information missing was unavailable or irrelevant; instead they supplied the information. They are free to do that as witnesses, but not as deciders.
The appropriate remedy under these circumstances is to remand the decision to the Administrator because he based his decision on material not part of the record. We are compelled to treat the use of the Report more severely than the use of the PSCO post-hearing submission because no party was given any opportunity to comment on the panel's Report. See generally Northeast Airlines, Inc. v. Civil Aeronautics Board, 345 F.2d 484, 486 (1st Cir. 1965). By contrast, all parties were given the opportunity to comment on PSCO's submission, and these comments were considered equally part of the record by the Administrator. We did hold that it was error to let the submission become part of the record, unless at an adjudicatory hearing. At such a hearing, however, the Administrator would have discretion to refuse cross-examination. 5 U.S.C. § 556(d). See note 16, supra. The remand on the point was to let the Administrator decide how he would use his discretion, assuming that all the materials in fact submitted had been in conjunction with an adjudicatory hearing. If the Administrator still would not allow cross-examination, then it would be pointless to require a hearing for the sole purpose of reading written statements into the record.
The Administrator will have the options of trying to reach a new decision not dependent on the panel's supplementation of the record; of holding a hearing at which all parties will have the opportunity to cross-examine the panel members and at which the panel will have an opportunity to amplify its position; or of taking any other action within his power and consistent with this opinion.Conclusion
Because of this resolution, we do not reach the question of whether the Administrator's opinion was supported by substantial evidence. 5 U.S.C. § 706(2)(E). The Administrator must first set the record in order and reach his own conclusions on the state of the record as it will then stand.
So ordered.