Last Friday, the U.S. Court of Appeals for the District of Columbia Circuit published two decisions in cases involving environmental groups’ challenges to EPA’s efforts to regulate certain classes of hazardous air pollutants (“HAPs”).  Both cases concerned Section 112(c)(6) of the Clean Air Act, a provision enacted by Congress in 1990 that requires EPA to (1) complete a list of sources of seven specified HAPs that accounts for at least ninety percent of the total emissions of each of the seven HAPs and (2) subject these listed sources to emissions standards.  42 U.S.C. § 7412(c)(6).  Section 112(c)(6) gives EPA a choice among two emission standards:  (1) a stringent standard known as “maximum achievable control technology” (“MACT”) or (2) a standard based on health thresholds.  See § 112(c)(6), (d)(2) and (d)(4).  The cases decided last Friday highlight both procedural and substantive aspects of regulating air pollution.

The first case, Sierra Club v. EPA, No. 11-1184, resulted in the D.C. Circuit vacating EPA’s determination that the agency had complied with its § 112(c)(6) obligation to identify sources of HAPs and promulgate emission standards.  In 1998, Sierra Club filed a suit against EPA demanding that the agency timely list sources and set standards under § 112(c)(6).  Sierra Club v. Whitman, No. 01-1558 (D.D.C. filed July 18, 2001).  In March 2011, in part to put to an end lawsuits demanding that the agency list more sources and set more emissions standards, EPA published a determination in the Federal Register declaring that it  had satisfied its § 112(c)(6) obligations.  76 Fed. Reg. 15308.  pursuant to § 112(c)(6).

EPA’s attempt to use the determination to cut off opportunities for § 112(c)(6) lawsuits turned out to be the EPA’s undoing before the D.C. Circuit.  After rejecting EPA’s arguments that Sierra Club lacked standing and that the lawsuit was untimely, the court turned to Sierra Club’s contention that the determination was a “legislative rule” that could only become effective after publication of a notice in the Federal Register and an opportunity for public comment.  See 5 U.S.C. § 553.  The court concluded that the determination was a legislative rule because it altered existing obligations and rights.  First, the determination purported (according to the court) to end EPA’s obligation to list sources and promulgate emissions standards.  Second, the court found that the determination cut off the public’s right to sue EPA to compel listing sources or promulgating emissions standards.  Slip op. at 10.  As a consequence, the court vacated the determination and remanded it to EPA for notice and comment.

Although Sierra Club enjoyed success in its procedural challenge, the D.C. Circuit’s other opinion illustrated the deference EPA sometimes enjoys in challenges to the substance of its regulations.  In Desert Citizens Against Pollution v. EPA, No. 11-1113, Sierra Club (and another petitioner) challenged two positions EPA took in the preamble to a rulemaking listing gold mine ore processing and production as a HAP source for the purpose of § 112(c)(6).  76 Fed. Reg. 9450 (Feb. 17, 2011).  First, EPA asserted that when a source listed under § 112(c)(6) is subject to MACT emissions standards, the source would not be required to comply with MACT for all HAPs emitted by the source.  Rather, the sources would be subject to the MACT standard only for emissions of the HAP for which the source was listed under § 112(c)(6).  Id. at 9457.  Second, EPA asserted that its source listing excluded fugitive mercury emissions from tailing ponds and leach fields, among other things. Id. at 9457-58.  In its review of both assertions, the D.C. Circuit deferred to EPA’s reasonable interpretation of ambiguous statutory and regulatory provisions.

First, the panel rejected Sierra Club’s argument that the Clean Air Act required all HAPs (rather than just § 112(c)(6) HAPs) emitted by a § 112(c)(6) source to be subject to MACT emission standards.  Sierra Club argued, and the court agreed, that § 112(d)(2), which defines MACT, could be read to require all HAPs emitted by a source to be subject to MACT.  Slip op. at 6.  But the panel also agreed with EPA’s position that § 112(c)(6) can be fairly read to require only § 112(c)(6) HAPs to be subject to MACT.  Slip. op. at 7.  Recognizing this statutory ambiguity, the court then reviewed EPA’s interpretation to determine whether, under a standard familiar to students of administrative law, it was “based on a permissible construction” of the Clean Air Act.  Slip op. at 8 (citing Chevron, U.S.A. v NRDC, Inc., 467 U.S. 837, 843 (1984)).  The panel concluded EPA permissibly read these two statutory provisions.

The D.C. Circuit also deferred to EPA’s position that its source listing for gold mine ore processing and production did not encompass fugitive mercury emissions.  The court considered this issue under a different standard than the first because it involved EPA’s interpretation of its regulations rather than a statute.  Thus, the petitioners could only prevail in their challenge by showing that EPA’s position was “plainly erroneous or inconsistent with the regulation.”  Slip. op. at 10 (citing Auer v. Robbins, 519 U.S. 452, 461 (1997)).  The court observed that different provisions of the source listing regulations made the scope of the regulations amenable to a reading encompassing only a subset of gold mine operations that excludes fugitive emissions.  See slip. op. at 9-10.  As a consequence, the panel found EPA’s interpretation to be reasonable and rejected the petitioners’ challenge.  See id. at 10-11.

When one cuts past the complexities of the Clean Air Act’s hazardous air pollutant provisions, both of these cases illustrate basic principles of administrative law that pervade environmental regulation.  The first case discussed above highlights the Administrative Procedure Act’s requirement that certain agency actions must be preceded by notice and an opportunity for public comment.  When EPA seeks  to alter rights and obligations, the APA requires the agency to afford the public an opportunity to participate.  The second case demonstrates the deference a court will give an agency when it resolves an interpretive ambiguity in a statutory or regulation.  In all, these administrative law issues affect how EPA exercises its regulatory discretion and how the public can influence EPA’s regulatory processes.

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