Posted on October 4, 2016
More about that title later, but first let me set the stage. On September 27, 2016, the D.C. Circuit, sitting en banc, heard argument in West Virginia v. EPA, in which state, industry, and labor petitioners challenge EPA’s Clean Power Plan (CPP, the Plan, or the Rule). The Plan regulates carbon dioxide emissions from existing power plants under Clean Air Act (CAA) §111(d). I will refrain from addressing issues on which the trade and mainstream press have opined at length (e.g., the judges’ frustration at being asked to make policy decisions because Congress has failed to act and that participants – judges, lawyers, parties, reporters, the public – had to sit through almost 7 hours of argument in one day, in addition to the hours many spent waiting in line). Instead, I offer an ACOEL-centric tour, in non-chronological order, of the five “segments” of the September 27 argument.
Argument Segment #2: The Battle Between CAA §§112 and 111(d). Aficionados of the College’s 2014 white paper on EPA’s §111(d) regulatory authority will recall the difference of opinion over whether – under the 1990 Amendments to the CAA – EPA is prohibited from regulating power plants under CAA §111(d) if EPA already regulates power plants under CAA §112. Plan challengers point to the plain meaning of §111(d)(1)(A) as it appears in the U.S. Code. Plan supporters point to the existence of a “conforming amendment” to §111(d)(1)(A) found in the Statutes at Large but omitted from the U.S. Code, and they argue that EPA’s approach is a valid attempt to reconcile that amendment with the U.S. Code. After listening to the judges express frustration at not being able to satisfyingly reconcile the two versions, I recalled D.C. Circuit Judge Leventhal’s concurring opinion in Citizens to Save Spencer County v. EPA, in which he concluded that contradictory CAA provisions should be viewed as “countermanding.” Quoting from Eugene Field’s poem “The Duel” – about the fight between the gingham dog and the calico cat – he summed up the irreconcilable differences as follows: “The tension between the two animals culminates in these final lines of doggerel: ‘The truth about the cat and pup is this, They ate each other up.’ ”
Argument Segment #3: Constitutional Issues. If forced at knife-point to articulate the first portion of this argument, which began at 2:35 p.m., right after the lunch break, I would be unable to do so, other than to say that the word “commandeering” cropped up a lot. More interesting was how the second advocate for petitioners on this point – Professor Laurence Tribe of Constitutional law fame – was able to expand his separation-of-powers argument into a further analysis of issues argued during the morning session.
Argument Segments #4 and #5: Notice and Record-Based Issues. At the end of a very long day, the panel heard arguments on (a) whether EPA’s standards are “achievable” and whether parts of the Plan’s approach have been “adequately demonstrated” under §111; and (b) whether the final rule is so different from what was proposed that the public lacked notice and an opportunity to comment. Petitioners arguing the former point (the unachievability of program requirements) faced a weary panel, which pondered what the options for state and source relief would be if the Rule is upheld but later turns out to be a train wreck.
A colleague describes as follows the situation that gives rise to parties complaining that they had no notice of what a final rule would require because EPA’s proposal was so different: “EPA may propose an apple and finalize an orange. That’s OK; they’re both fruits. What EPA may not do (and what petitioners argue EPA has done here) is to propose an apple and finalize a pork chop.” Dick Stoll passionately argued – in his June 7, 2016 post for ACOEL – that previous 3-judge panels in the D.C. Circuit have not properly dealt with this lack-of-notice issue. Those panels refused challengers’ attempts to overturn pork chops, saying challengers of pork chops must first file administrative petitions for review under CAA §307(d)(7)(B) and then wait (for what could be years, if ever) for EPA to act on those petitions. Dick argued that the only way the previous 3-judge panel decisions would ever be overturned was by action of the entire court, sitting en banc. I cannot promise Dick the entire court will overturn the previous panels’ reading of §307(d)(7)(B), but I can say that Tom Lorenzen teed up the issue. When asked by Judge Griffith whether this argument appeared in petitioners’ briefs, Lorenzen said it did not because when petitioners wrote their briefs, the case was going to be heard by a 3-judge panel. But said Lorenzen, looking up at Judge Griffith, “Now we are here.” To which Judge Griffith replied, “And who else to ask but an en banc court?” “Exactly,” said Lorenzen.
Argument Segment #1: Core Legal Issues. Although I visit Argument Segment #1 last, the fate of the Clean Power Plan may well rest on how the panel addresses the issue raised at the very beginning of the day: whether or not the Plan is “transformative.” The Supreme Court, in UARG v. EPA, held that EPA cannot engage in a “transformative expansion” of its regulatory authority absent “clear congressional authorization” to do so. Petitioners argue that EPA’s Clean Power Plan amounts to a transformative expansion of EPA’s explicit regulatory authority and thus is illegal. EPA argues the program is not “transformative”; indeed, says EPA, the Rule is very similar to other CAA programs that the D.C. Circuit has upheld. So, is the Rule “business as usual” or is it “transformative”?
And so we return to the title of this post. I cannot predict what the D.C. Circuit will decide, but I think its determination will revolve around how the en banc panel answers the following question about the Clean Power Plan: Is You Is or Is You Ain’t Transformative? And that question prompts me to offer these final lines of doggerel in memory (and honor) of Judge Leventhal:
To predict the end here, it’s informative
To know if C-P-P is transformative.
To prevail in this Court,
One must prove that the sort
Of change caused by that Rule is enormative.
Posted on July 5, 2016
Administrative lawyers, especially environmental lawyers, are well familiar with the doctrine of Chevron deference as applied to agency interpretations of statutes. In the 1984 Clean Air Act case of Chevron U.S.A. Inc. v. Natural Resources Defense Council, the U.S. Supreme Court announced a 2-step approach: (1) the court must determine whether Congress has directly spoken to the precise question at issue and, if so, that ends the matter—the Court, as well the agency, must give effect to that intent; and (2) if not, the court must defer to the agency’s interpretation if it is “reasonable,” the presumption being that Congress intended to leave its resolution to the agency. In a more recent Clean Air Act case, Michigan v. EPA, the Court, although determining EPA acted unreasonably in failing to consider costs in its regulation of hazardous air pollutants from power plants, applied the Chevron doctrine, but Justice Thomas, in his concurring opinion, challenged the doctrine’s legal underpinnings, causing some to question the continued vitality of the doctrine. In Encino Motorcars v, Navarro, decided on June 20, 2016, the Supreme Court, although deciding that the agency’s interpretation was not entitled to deference, provided assurance that the Chevron doctrine is alive and well.
The case involved the issue of whether service advisors at car dealerships were exempt from overtime pay under the Fair Labor Standards Act. In 2008, the Department of Labor had proposed a rule confirming a long-standing practice that they were exempt, but in its final rulemaking--in 2011--it reversed course, without explanation. The Court of Appeals for the Ninth Circuit had applied Chevron deference in upholding the rule, but the Supreme Court reversed. It held that, although the Department could change its policy, its interpretation was not entitled to Chevron deference because it did not provide a reasoned explanation for doing so. The Court therefore remanded to the Ninth Circuit to determine the rule’s validity in the first instance. In her concurring opinion, Justice Ginsburg, joined by Justice Sotomayor, noted: “’[U]nexplained inconsistency’ in agency policy is ‘a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.’” In his dissent, Justice Thomas, joined by Justice Alito, agreed with the majority--that the Court “need not wade into the murky waters of Chevron deference,” but disagreed that the Court should have reversed and argued that the rule change was simply invalid.
So, Chevron deference lives, but it does not apply to unexplained rule changes.
Posted on June 7, 2016
Clean Power Plan (CPP) groupies are beside themselves over the D.C. Circuit’s surprise “straight-to-en banc” move for CPP judicial review. The buzz is mostly over the survivability of the CPP’s interpretations of Clean Air Act (CAA) §111(d) in light of the nine judges’ dispositions.
I won’t weigh in on that issue here. My target is another issue, one that has been lurking in the background and has bugged me greatly for the last couple of years. Now that the issue is before an en banc panel, I am fervently hoping the Court will do what only en banc panels can do: declare that a few recent D.C. Circuit rulings are wrong.
The issue involves garden variety adlaw: should the CPP be vacated because EPA failed to propose or adequately foreshadow key elements of the final rule? Parties attacking the CPP have advanced this argument, and EPA has defended on numerous grounds that its notice was adequate.
I won’t opine here on whether EPA’s notice was adequate. My beef is with EPA’s fall-back defense: EPA’s argument that even if there were wholly insufficient notice of the CPP’s final provisions, the Court has no authority to vacate the CPP on those grounds.
EPA’s theory is that since CAA §307(d)(7)(B) provides that only an issue raised in public comments can be raised on judicial review, a final rule that was never proposed cannot be challenged on judicial review because there were no public comments on that provision. Yep, read on.
EPA argues that parties claiming a final rule was never proposed must instead file administrative petitions for review under CAA §307(d)(7)(B) and wait (usually for a few years, if ever) for EPA to act on those petitions. In the meantime, under EPA’s position, regulatory provisions that were never proposed or foreshadowed must go into full force and effect.
This means that EPA can get away with murder, at least in the adlaw context. Just forget the bedrock principle that an agency can impose and enforce only those rules that have first been proposed. Under EPA’s position, the bedrock is blown away by a Richter 8.8 otherwise known as CAA §307(d)(7)(B).
In the last two years, EPA has managed to convince D.C. Circuit panels to accede to this unfair and baseless approach. See my 2015 ACOEL post discussing these opinions. In a piece I published in Bloomberg BNA in 2014, I showed how the D.C. Circuit had never previously interpreted CAA §307(d)(7)(B) in this fashion , and had on many occasions vacated final rule provisions that had never been proposed.
As explained in the above-cited pieces, the absurdity of EPA’s position is that final rules will go into full force and effect against parties because they failed to object to something they could not object to. This just can’t be right. The en banc CPP panel should do the right thing and declare the three most recent decisions to be wrong.
[Mr. Stoll is not representing any party in the pending D.C. Circuit CPP judicial review proceedings.]
Posted on January 27, 2016
In an excellent December 21st blog post (“Are Obama’s Climate Pledges Really that ‘Legally Durable’?”) Richard Stoll questions two of the premises behind my assessment of the legal durability of U.S pledges at the recent Paris climate conference. In particular he challenges my conclusions that EPA’s Clean Power Plan is likely to survive judicial review and that its repeal by a new president would require a lengthy rulemaking process that could be rejected on judicial review.
First, he correctly notes that “EPA’s authority to regulate GHG emissions is not at issue in the challenges now pending in the D.C. Circuit.” But my belief that the Obama administration’s Clean Power Plan ultimately will be upheld in the Supreme Court is not founded principally on the Court’s repeated affirmation of Massachusetts v. EPA. My reasons for believing the Clean Power Plan ultimately will be upheld are discussed in detail here. I agree that it will be close, probably 5-4, with Justice Kennedy likely casting the deciding vote.
Second, Stoll argues that a new administration is free to reverse course and that there is no heightened scrutiny from reviewing courts when it seeks to do so. I agree entirely. In fact, that is precisely what the Supreme Court held in Motor Vehicle Manufacturers Ass’n v. State Farm, the case cited in my initial posting. In fact, State Farm is the very case the D.C. Circuit relied on when it applied those long-settled principles in National Association of Home Builders v. EPA, the case Stoll cites.
But the State Farm case also provides a powerful lesson that a new administration must have a good reason for changing course beyond knee-jerk opposition to federal regulation. In State Farm the new Reagan administration sought to rescind a regulation by the National Highway Transportation Safety Administration (NHTSA) that required passive restraints in new automobiles. Like the Clean Power Plan, the regulation had been the subject of considerable political controversy and it was bitterly opposed by the auto industry. Chrysler CEO Lee Iacocca had famously endorsed the notion that air bags were more suited to serve as a method of capital punishment than as safety devices. The Supreme Court later observed that “the automobile industry waged the regulatory equivalent of war against the airbag and lost.”
Less than one month after taking office, the Reagan administration reopened the passive restraint rulemaking. Two months later it postponed the effective date of the passive restraint regulation and proposed its rescission. The White House Press Office announced the decision, describing it as part of a package of “economic recovery” measures. After a six-month rulemaking, NHTSA rescinded the passive restrain regulation, despite the agency’s previous estimate that it would save 12,000 lives per year and prevent more than 100,000 serious injuries annually.
When NHTSA’s decision was challenged in the D.C. Circuit, the prevailing assumption was that “arbitrary and capricious” review was so toothless that it rarely could be used to overturn an agency’s decision. Instead, the D.C. Circuit panel struck down the rescission decision by announcing a new standard of judicial review – that sudden reversals of course by an agency required heightened judicial scrutiny. [State Farm Mutual Automobile Insurance Co. v. Department of Transportation, 680 F.2d 206 (D.C. Cir. 1982), affirmed on other grounds 463 U.S. 29 (1983)].
The Supreme Court then granted review. The Justices unanimously rejected the D.C. Circuit’s conclusion that a new administration’s sudden change of course required heightened judiciary scrutiny. But the Court surprised most observers by declaring NHTSA’s rescission of the rule to be arbitrary and capricious. In an opinion by Justice White, the Court held that NHTSA had “failed to present an adequate basis and explanation for rescinding the passive restraint requirement . . .”
What State Farm powerfully illustrates is that a new administration cannot simply impose its ideological preference for less regulation to quickly rescind a rule as the Reagan administration tried to do to eliminate passive restraint requirements. The auto industry then was as vehement in its opposition to air bags as states opposing EPA’s Clean Power Plan are now. But because the record supported the extraordinary life-saving potential of airbags, the Court held that the regulation could not be repealed without the agency coming up with a new record or a better explanation for doing so. Due to this surprising Supreme Court decision hundreds of thousands of lives have been saved and millions of serious injuries prevented.
To be sure, the Supreme Court did not order that air bags be required. Rather it required the agency to offer more than ideological opposition to regulation as a justification for repealing the rule. Archival research I conducted in the papers of the late Justice Thurgood Marshall revealed a memorandum from Justice White stating that for at least one aspect of its decision he doubted that NHTSA on remand “would find it too difficult to cover its tracks based on the present record.” I agree with Stoll that a new administration could repeal the Clean Power Plan. But State Farm cautions that it should not act too hastily if it wishes such a decision to withstand judicial review.
In the wake of the State Farm decision both President Reagan and Lee Iacocca eventually changed their minds about the merits of air bags. The fascinating story of how Transportation Secretary Elizabeth Dole helped persuade President Reagan that air bags should be required is told in Michael R. Lemov, Car Safety Wars: One Hundred Years of Technology, Politics and Death (2015). Perhaps today’s fierce opponents of EPA’s Clean Power Plan ultimately will have a similar epiphany concerning the merits of the Clean Power Plan and the transition to a greener energy infrastructure.
Posted on March 29, 2012
As Ted Garrett reported in his recent blog, the Supreme Court has issued its long-awaited decision in Sackett v. EPA. Not surprisingly (based on the questions asked at oral argument), the Court unanimously reversed the Ninth Circuit and ruled that the recipient of an administrative compliance order to restore wetlands under Section 404 of the federal Clean Water Act (CWA) can challenge that order in court under the APA. The Court soundly rejected the Government’s argument and the Ninth Circuit’s conclusion that the CWA implicitly precludes “pre enforcement” judicial review of such orders.
In addition to that important ruling, this decision is noteworthy for what it did not do. Even more pointedly, the decision highlights the enormous underlying problem of uncertainty about the scope of waters regulated by the CWA, which remains untouched and unfixed by this opinion.
One of the important issues not addressed by the Sackett decision is the constitutional due process argument made by the plaintiffs that precluding judicial review of such orders is unfair and unlawful. The decision simply says that the CWA itself does not preclude judicial review, so the right to review of this final agency action is presumed under the APA. As a result, it left for another day whether other statutes (like CERCLA § 113(h)) that expressly preclude pre-enforcement judicial review would pass constitutional muster.
Second, it did not expressly address whether a party can judicially challenge any aspect of an administrative order, or can only make the basic “jurisdictional challenge” regarding whether the agency in fact has regulatory authority over the subject property or persons. Justice Ginsburg, in her concurring opinion, states that the decision only addresses the jurisdictional issue and leaves the question of whether other types of challenges can be brought “open for another day and case.” It remains to be seen whether EPA and the lower courts will adopt this narrow reading of the decision.
Third, the opinion emphasizes the clear finality of the administrative order at issue in the Sackett case as a basis for APA judicial review. It remains to be seen whether an agency order or ruling subject to some additional agency appeal, review or deliberative process, no matter how futile or fore-ordained, would be considered a “final agency action”. It also remains to be seen whether EPA and other agencies will attempt to address and undercut this “finality” factor by creating post-order administrative processes that delay or frustrate judicial review.
Finally, while some will trumpet this as a great victory for the regulated community, Justice Alito’s concurring opinion got it right in saying that this “decision provides a modest measure of relief”, but the huge underlying problem reflected by this dispute is the “hopelessly indeterminate” scope of “waters of the United States” regulated under the CWA, which this decision does nothing to alleviate or address. As a result, while a tiny fraction of regulated persons may now choose to challenge an administrative compliance order in court, the very significant cost of doing so, and the low chance of success combined with the draconian and mounting penalties resulting from a failed challenge, will still leave nearly all regulated persons (in Justice Alito’s words) “with little practical alternative but to dance to the EPA’s tune.”
The bottom-line is that allowing regulated persons to sue in these circumstances (again in Justice Alito’s words) is “better than nothing,” but the underlying regulatory morass will not be fixed unless and until Congress or EPA and the Corps develop a clear, appropriate and formal delineation of waters regulated by the CWA. The informal “Jurisdictional Guidance” floated last year by EPA and reportedly now parked at the White House, if adopted, would worsen rather than resolve this uncertainty. After 40 years, it’s time to fix this mess and pass a clear law or rule on the reach of the Clean Water Act.
Posted on March 22, 2012
The Supreme Court issued its long awaited decision in Sackett v. EPA. In a unanimous decision, the Court held that the Sacketts may bring a civil action under the Administrative Procedure Act to challenge EPA’s compliance order. The court rejected the government’s argument that EPA is less likely to use orders if they are subject to judicial review, saying that “[t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.” It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters. See link to the Sackett opinion.
EPA had issued a compliance order charging the Sacketts with filling in a wetland during construction of their home, in violation of the Clean Water Act, and requiring them to restore their property. The Sacketts argued that they were entitled to prompt judicial review because they faced severe penalties for noncompliance and disputed that their property is a wetland. The United States argued that the Sacketts could comply with the EPA order and submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order. The tenor of the oral argument did not bode well for the United States, as previously reported. The Court’s unanimous opinion, reversing the Ninth Circuit, bears that out.
The court’s opinion, written by Justice Scalia, starts with the proposition that the APA provides for judicial review of “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. §704. The court concludes that EPA’s compliance order has all the hallmarks of APA finality: it required the Sacketts to restore their property according to an agency-approved plan, exposed the Sacketts to double penalties in future enforcement proceedings, and severely limits their ability to obtain a Section 404 permit from the Army Corps of Engineers. See 33 U. S. C. §1344; 33 CFR§326.3(e)(1)(iv). Rejecting the government’s argument, the court held that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied does not provide an adequate remedy.
The Court also had little difficulty in disposing of the government’s argument that the Clean Water Act should be read as precluding judicial review under the APA, 5 U. S. C. §701(a)(1). The APA creates a presumption favoring judicial review of administrative action, and the Court concluded that nothing in the Clean Water Act’s statutory scheme precludes APA review. The court was similarly not persuaded that the issuance of a compliance order is simply a step in the deliberative process, given that EPA rejected the Sackett’s attempt to obtain a hearing, and the next step will involve judicial and not administrative deliberation. Justice Scalia’s opinion concludes that “there is no reason to think the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review -- even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.”
Justice Alito’s concurring opinion is of interest because of its emphasis on the fact that the “reach of the Clean Water Act is notoriously unclear.” Citing an amicus brief filed by the Competitive Enterprise Institute, Justice Alito cites EPA’s guidance advising property owners that jurisdictional determinations concerning wetlands will be made on a case-by-case basis. His opinion concludes that allowing property owners to sue under the APA is “better than nothing,” but only clarification of the reach of the Clean Water Act can rectify the underlying problem.
It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters. The Sackett decision will be relied upon by parties who are subject to orders under other statutes that EPA administers. For some of the reasons cited by Justice Alito, the Sackett decision also underscores the need for clarification of the reach of the Clean Water Act. Stay tuned.
Posted on February 1, 2012
Section 303(d) of the Clean Water Act requires each state to identify all water body segments within the state that do not meet water quality standards. The statute requires the states to submit a list of their impaired water body segments to EPA every two years for review and approval. The decision to list as stream segment as impaired is important because it usually triggers a chain of regulatory consequences, beginning with the preparation of a Total Maximum Daily Load (“TMDL”) study and typically ending with significantly more stringent permit limits for point sources and more robust regulation of non-point sources.
Although the decision to add a stream segment to a state’s 303(d) list is undeniably important, there is significant uncertainty whether the decision is subject to judicial review. An ACOEL blog entry reported in December 2011 on a Pennsylvania decision which questioned whether Pennsylvania’s issuance of its 303(d) list was an appealable agency action under state law. Chester Babst, Beware of “Impaired” Surface Water Designations, posted December 10, 2010.
The federal courts of appeals are split on whether EPA’s decisions in reviewing a state 303(d) list are subject to judicial review. The 8th Circuit has held that a private stakeholder challenge to EPA’s approval of a Missouri 303(d) list was premature and not justiciable because the addition of a segment to a 303(d) list, by itself, did not have any impact on the rights, duties, or property of private parties. On the other hand, the 9th Circuit has held that a private party had alleged sufficient claims of present injury to have standing to challenge EPA’s approval of California’s 303(d) list. Even after the 9th Circuit’s decision, EPA argued on remand that the scope of judicial review should be narrow because EPA’s role in reviewing California’s 303(d) list was supposedly only one of limited oversight (“[EPA] note[s] that the 30-day limitation on [its] review process demonstrates that [its] ‘role is one of mere oversight’.” The district court accepted this argument and rejected the challenge to EPA’s review on remand.
It must have been amusing for knowledgeable stakeholders and state water quality regulators to read EPA’s claim that its role is one of “mere oversight” that is strictly circumscribed by a 30-day time limit. The practical experience of most states has been quite different. In fact, EPA routinely runs months and even years past the 30-day limit on its review of state 303(d) lists, and it is not at all unusual for EPA to significantly alter the state’s submission, frequently with a supplemental factual record and the imposition of new impairment decisions generated out of whole cloth.
Normally one might think that identifying impaired stream segments would be a simple task of comparing the numbers in the monitoring results for a given stream segment to the relevant numeric water quality standards, and therefore questions of judicial review would rarely be relevant. In practice, however, the decision to list a segment as impaired frequently can be problematic or even controversial. To begin with, monitoring results are sometimes subject to questions regarding the adequacy and accuracy of the sampling and analysis. In many instances the relevant water quality standard is expressed in a narrative rather than numeric form, and therefore the simple comparison of two numbers is replaced by an exercise in subjective judgment. Even when the basic identification of an impaired segment has been made, there are still choices of priority and timing that can make a great deal of difference in how the impairment decision affects stakeholders.
Given the potential uncertainties that can attend a listing decision, and the gravity of the regulatory consequences that are set in motion by such a decision, it is unfortunate that EPA and some state agencies have displayed such resistance to any form of independent accountability for their decisions.