UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


GEN MTR CORP

v.

EPA


98-1027a

D.C. Cir. 1999


*	*	*


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


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


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 




__________

n * 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


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


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


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


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.


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


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


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


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


III. Conclusion


For the foregoing reasons, the petition for review is


Denied.