dissenting:

I respectfully dissent.

I concur in the majority’s interpretation of the Administrative Procedure Act and the Federal Water Pollution Control Act Amendments of 1972. I respectfully dissent, however, with respect to the majority’s disposition of petitioners’ constitutional challenges. I would rule that the EPA’s procedures denied petitioners procedural due process as guaranteed by the Fifth Amendment.

I.

In mid-1973, petitioners applied to the EPA for permits to discharge pollutants into federal waters. In December 1973, after informal hearings, the Seattle Regional Administrator (RA) issued draft permits. Dissatisfied with the terms of the permits, petitioners requested administrative review as authorized by 40 C.F.R. § 125.36 . In August 1974, adjudicatory hearings were held before an administrative law judge who, in turn, certified the record to the RA. In April 1975, the RA issued an “initial decision” modifying the pollutant limitations of the draft permits and continuing to refuse to insert bypass and upset provisions. Petitioners then sought review by the Administrator. In September 1975, the Administrator issued a final decision again modifying the pollutant limitations and disallowing bypass and upset provisions.

II.

It is fundamental that the procedural requirements of due process apply only when a liberty or property interest is threatened. Board of Regents v. Roth, 408 U.S. 564, 569 , 92 S.Ct. 2701 , 33 L.Ed.2d 548 (1972). In my view, this threshold requirement is clearly satisfied in the present case. While it is clear that “the range of interests protected by procedural due process is not infinite,” id. at 570 , 92 S.Ct. at 2705 , it cannot be gainsaid that the concerns encompassed by the concept of “property interest” include the right to maintain an ongoing commercial enterprise. Louis K. Liggett Co. v. Baldridge, 278 U.S. 105, 111 , 49 S.Ct. 57 , 73 L.Ed. 204 (1928), overruled on other grounds, N.D. Pharmacy Bd. v. Snyder’s Drug Stores, Inc., 414 U.S. 156 , 94 S.Ct. 407 , 38 L.Ed.2d 379 (1973); United States v. Tropiano, 418 F.2d 1069,1076 (2d Cir. 1969), cert. denied, 397 U.S. 1021 , 90 S.Ct. 1258 , 25 L.Ed.2d 530 (1970); Cf. Truax v. Corrigan, 257 U.S. 312, 327 , 42 S.Ct. 124 , 66 L.Ed. 254 (1921); Duplex Printing Press Co. v. Peering, 254 U.S. 443, 465 , 41 S.Ct. 172 , 65 L.Ed. 349 (1921).

According to the express terms of the Federal Water Pollution Control Act, it would be unlawful for petitioners to discharge any pollutant without first securing a section 402 permit. 33 U.S.C. § 1311 . Thus, the EPA’s refusal to issue the necessary permit would require petitioners to *1276 cease operations. In the case before us, the EPA has not wholly declined to issue permits. However, we hold today that the EPA’s permits imposed upon petitioners a more restrictive standard than that mandated by the statutory scheme. Therefore, the difference between the complete refusal posited above 1 and the EPA’s conduct in this case is one of degree rather than kind.

I cannot agree that the EPA has the power to force the termination of an ongoing business by means of a procedure that does not meet due process standards. 2

III.

The thrust of petitioners’ constitutional attack is that the RA’s review of his own prior adjudicatory decision denies due process. In order to prevent this assertedly unfair circumstance, petitioners requested the Administrator or RA to allow the administrative law judge to make the initial decision pursuant to 40 C.F.R. § 125.36 (o) and 40 C.F.R. § 125.36 (a)(4)(iii). This request was denied.

The EPA’s response to petitioners’ attack is unpersuasive. EPA asserts that the RA’s modification of the draft permits following formal hearings was “not a review of a prior decision of the Regional Administrator but constitute^] merely the first formal decision in an ongoing process.” The argument lays great weight upon the denomination of the second stage of the proceedings as the RA’s “initial decision.” 40 C.F.R. § 125.36 (7). This contention is superficial. The plain substance of the procedure remains: the RA, pursuant to adjudicatory powers (as opposed to rule-making power) issued draft permits affecting substantial rights of the petitioners. Subsequently, the RA formally reviewed this same decision.

It is fundamental that the individual principles of due process have as their common aim the guarantee of “a fair trial in a fair tribunal.” In re Murchison, 349 U.S. 133, 136 , 75 S.Ct. 623, 625 , 99 L.Ed. 942 (1955). In order to assure fairness,

Id.

This essential aspect of due process applies with equal force to administrative agencies. Withrow v. Larkin, 421 U.S. 35, 46 , 95 S.Ct. 1456 , 43 L.Ed.2d 712 (1975); Gibson v. Berryhill, 411 U.S. 564, 579 , 93 S.Ct. 1689 , 36 L.Ed.2d 488 (1973). The Supreme Court has held that one such impermissible “interest” may arise out of the blending of multiple functions within the *1277 same agency. Withrow v. Larkin, supra, 421 U.S. at 46-59 , 95 S.Ct. 1456 .

In Withrow , the Court upheld the investiture of investigatory and adjudicatory authority in a state medical examining board absent a showing of the risk of actual bias. The Court carefully distinguished its holding from prior cases disapproving the combination of initial adjudicatory and review authority in the same agency. 3

The majority suggests that the procedure whereby the RA issues draft permits and then, following formal administrative hearings, issues the “initial decision” more nearly resembles the combination of investigatory and adjudicatory functions sanctioned by Withrow . I disagree. My view that both steps constitute adjudication (initial and review) is fortified by the EPA’s regulations. First, the regulations clearly indicate that the RA’s draft permits become the agency’s final determination unless the formal hearings are requested by the applicant. 40 C.F.R. § 125.35 (c). Second, the language of the regulations clearly indicates that the purpose of the formal administrative hearings and subsequent decision by the RA is essentially appellate.

40 C.F.R. § 125.36 (b)(1) (emphasis added).

Accordingly, if the RA’s actions had been merely an investigation of petitioners’ applications, followed by an adjudication, due process would not have been violated. Here, however, the RA’s formal review of his prior adjudication plainly conflicts with the constitutional mandate that in a review proceeding, “the decision maker must be one other than the one who made the decision under review.” Withrow v. Larkin, supra, 421 U.S. at 58 n. 25, 95 S.Ct. at 1470 .

In conclusion, I would follow the Supreme Court’s admonition that “[t]he extent to which procedural due process must be afforded the recipient is influenced by the extent to which he may be ‘condemned to suffer grievous loss’ . . . .” Goldberg v. Kelly, 397 U.S. 254, 262-63 , 90 S.Ct. 1011, 1017 , 25 L.Ed.2d 287 (1970). Here, the potential loss to petitioners is great. At the same time, little if any increased burden on the EPA would result from requiring that initial determinations regarding section 402 permits be reviewed by “one other than the one who made the decision under review.” Withrow v. Larkin, supra, 421 U.S. at 58 n. 25, 95 S.Ct. at 1470 .

. Both the express language and the legislative history of the Federal Water Pollution Control Act indicate that the aim of the legislation is the complete elimination of “the discharge of pollutants into the navigable waters . by 1985.” 33 U.S.C. § 1251 (a)(1). See 2 U.S. Cong. & Ad.News 1972, p. 3678. Thus, the suggestion that the EPA might, at some point, completely refuse a permit is not highly speculative.

. There may be an independent and alternative ground for holding that petitioners are entitled to due process in section 402 permit proceedings. Petitioners’ interest in securing the necessary permit may be an “entitlement” as we have explained that term. Geneva Towers Tenants Org. v. Federated Mortgage Investors, 504 F.2d 483 (9th Cir. 1974). Cf. Board of Regents v. Roth, supra, 408 U.S. 564 , 92 S.Ct. 2701 , 33 L.Ed.2d 548 ; Perry v. Sindermann, 408 U.S. 593 , 92 S.Ct. 2694 , 33 L.Ed.2d 570 (1972).

In Geneva Towers we held that residents of federally sponsored low-cost housing had a property interest in maintaining low rental rates. Thus, while the tenants were not, strictly speaking, statutorily entitled to a permanently fixed rental cost, their landlord could not increase their rent without affording procedural due process.

The teaching of Geneva Towers for our purposes today is that a “claim to the benefits of [a] governmental program” which is reasonable and justifiable in light of the program’s purposes may be an “entitlement” for Fifth Amendment purposes. Geneva Towers, supra, 504 F.2d at 489.

. In Gagnon v. Scarpelli, 411 U.S. 778 , 93 S.Ct. 1756 , 36 L.Ed.2d 656 (1973) and Morrissey v. Brewer, 408 U.S. 471 , 92 S.Ct. 2593 , 33 L.Ed.2d 484 (1972), the Court had “held that when review of an initial decision is mandated, the decisionmaker must be other than the one who made the decision under review.” Withrow v. Larkin, supra, 421 U.S. at 58 n. 25, 95 S.Ct. at 1470 .