United States: DC Circuit Vacates Stay Of Clean Air Act Methane Rule – A Canary In EPA's Regulatory Reform Coal Mine?

Last Updated: July 20 2017
Article by Fred Wagner

Immediate reaction to the D.C. Circuit's July 3 ruling in Clean Air Council v. Pruitt spanned the predictable political divide.  The decision was either a major rebuke of the administration's efforts to rethink a number of environmental regulations, or it merely represented a case-specific blip on the policy radar screen.  A close reading of the majority opinion suggests that EPA's ongoing reconsideration of a wide range of its own rules might face close scrutiny under otherwise mundane aspects of the Administrative Procedure Act (APA).

In its 2-1 decision, the court grappled with whether Section 307(d)(7)(B) of the Clean Air Act mandated reconsideration of an Obama-era rule establishing standards for fugitive emissions of methane and other pollutants in the oil and gas sector.  Several industry groups petitioned EPA for reconsideration of the rule.  In response, the agency published notice that it would in fact begin the process to review the disputed rule, and in the meantime, would stay enforcement of the rule – just days before the new standards would have taken effect.  At first, the agency announced a 90-day stay; shortly thereafter, it extended that to two years, allowing EPA "to look broadly at the entire 2016 Rule" during its reconsideration.  A broad coalition of environmental groups filed an emergency motion for a stay of the stay ("sit, methane regulation, sit!") or for "summary vacatur" ("bad agency order, bad!").

After finding that it had jurisdiction to review the stay – a conclusion drawing a vigorous dissenting opinion – the D.C. Circuit rejected all of EPA's procedural arguments and vacated the proposed stay.

First, the court held that while federal agencies have "broad discretion" to review a regulation at any time, they all must comply with the APA, including requirements for notice and comment.  Second, the court rejected EPA's position that it had "inherent authority" to issue a "brief" stay of the final rule.  It found that the agency can act only in accordance with the authority granted to it by Congress, even if only to stay enforcement of a rule.  The court found no such authority in the Clean Air Act.  Moreover, it held that the actual text of the Clean Air Act section in question authorized the agency to issue a stay in those circumstances where EPA is mandated to convene reconsideration proceedings – circumstances found absent in this case.

The court's first two conclusions are noteworthy.  Many of the current EPA's actions in the environmental arena have relied generally on the agency's discretion to revisit rules from the prior administration.  That's fair game – elections have consequences, as they say.  However, in ways large and small, the APA constrains an agency's ability to reverse course suddenly.  That's what notice and comment is all about.  As we noted in this space last week, the proposed repeal of the "Waters of the United States" rule will go through that very process.

Should those rules even apply to an agency's enforcement of existing rules?  The problem in the methane rule case perhaps lies with EPA's express announcement of a stay.  Agencies choose not to enforce rules (or at least not to enforce aggressively) all the time.  That policy decision could draw ire from the other branches of government, but in reality, that sort of enforcement discretion goes unchallenged most of the time.  Here, however, EPA expressly stated what it intended while it conducted reconsideration of the rule, and that may have dictated the outcome.

In addition, the agency's "inherent authority" argument only goes so far.  This proposition swings back and forth like a pendulum depending on who's running the federal government.  Remember President Obama's argument that he had "inherent authority" to enforce immigration laws in a particular way that would grant greater leniency to the children of undocumented immigrants?  That position was rejected for many of the same reasons articulated by the D.C. Circuit in the methane rule case.  The line between agency discretion and agency authority can certainly be fuzzy.  If a new administration doesn't like a certain rule or policy, it can go ahead and change it – so long as it follows the APA playbook.

When the court got to the merits of the Clean Air Act argument, it really wasn't a close call.  (Arguing that the court didn't have jurisdiction to consider the case in the first place, the dissent did not address these issues.)  Reconsideration of the rule would have been mandated only had it been "impracticable" for parties to object to certain elements of the rule announced for reconsideration during the initial notice-and-comment period.  In each of the substantive areas identified by the agency, the court found that stakeholders had ample opportunity to comment, therefore making imposition of a stay "arbitrary and capricious."

At the conclusion of its opinion, the court stressed that EPA has clear authority to reconsider the rule consistent with its Federal Register announcement.  Only the administrative stay was improper given the Clean Air Act section in question and general APA requirements.  As EPA continues to revisit or reconsider a whole panoply of environmental regulations, two things are likely:  The agency will more strictly adhere to notice-and-comment requirements, and it probably won't announce so boldly its intent to ease enforcement of existing rules.

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