On Monday, the United States District Court for the District of Columbia issued an opinion in Sierra Club v. Jackson, No. 11-1278 (D.C.D.C. Jan. 9, 2012), that has much to chew on with respect to judicial review of agency actions, particular those involving stays.  For those not following this long-running saga, a brief background is in order.

In 1990, the Clean Air Act (the “CAA”) was substantially revised.  Among other things, the revisions required the EPA to issue regulations to control emissions, including emissions from Commercial Industrial Solid Waste Incinerators (“CISWI”).  There was significant delay in establishing these rules, in excess of the time provided for in the CAA amendments, thus in 2001, the Sierra Club filed suit to require the EPA to comply with the CAA  In 2006, D.C. District Court ordered the EPA to “fully discharge[] all of its statutory duties” under the CAA by June, 2009.  This deadline was extended several times, and on February 21, 2011, the EPA finally signed several related rules, including the CISWI Rule, the Boiler MACT Rule and the Area Source Boiler Rule, which were published on March 21, 2011 to be effective as of May 20, 2011.  At the same time as it issued these final rules, however, the EPA also announced that it would be reconsidering certain aspects of the CISWI and Boiler MACT Rules.  Both industry and environmental groups appealed the new rules and on May 18, 2011, the EPA issued a notice in the Federal Register delaying the effectiveness of the CISWI and Boiler MACT Rules until completion of the agency’s reconsideration of the rules, or the completion of the pending DC Circuit cases, whichever occurred first (the “Delay Notice”).

Which finally brings us to the present case, in which the Sierra Club challenged the Delay Notice in the DC District Court under the Administrative Procedures Act, challenging the EPA’s authority to issue the Delay Notice as well as EPA’s justification for the Delay Notice.   In the opinion issued on Monday, the District Court determined that, while the Delay Notice was  not a substantive rule that required notice/comment and was properly issued under section 705 of the Administrative Procedure Act (“APA”) which permits an agency to postpone the effective date of actions pending judicial review, it was nevertheless arbitrary and capricious.  Of particular note, the Court did not simply remand to the EPA, but rather vacated the Delay Notice, making it immediately null and void.  In essence, that mean that the CISWI and Boiler rules are immediately effective.

From a litigation standpoint, two aspects of this ruling are of note.  The first is the Court’s finding that the EPA’s issuance of the Delay Notice was arbitrary and capricious, the standard utilized under the APA.  The Court held that because the EPA “failed to employ or even mention” the test that is to be applied whenever an agency stays action under Section 705 of the APA, the Delay Notice was arbitrary and capricious.  Specifically, the Court held that the EPA was required to use the four part preliminary injunction test before issuing a stay, taking into consideration the likelihood of success on the merits in the underlying action, the likelihood of irreparable harm absent a stay, the likelihood of harm if the stay is granted, and the public interest.  While the EPA argued that the preliminary injunction test was not applicable to stays granted pursuant to section 705, the Court disagreed, holding that the test was applicable whether the stay was granted by the agency or by a reviewing court.  Moreover, the Court noted, the EPA’s own precedent required use of the preliminary injunction test.  (The Court also offered a third reason why the EPA’s Delay Notice was arbitrary and capricious:  although there is pending litigation concerning the CISWI and Boiler MACT Rules, the Delay Notice did not articulate how it was tied to the pending litigation, as opposed to the EPA’s own reconsideration of the rules.”).

The second point of interest is the action the Court took, vacating the Delay Notice rather than remanding it to the EPA for further consideration.  The Court found that vacatur was the appropriate remedy because it was doubtful that the EPA would be able to justify a decision to stay the rules pending judicial review given its earlier statements regarding its intent to reconsider the rules, and because of the already lengthy delay in implementing the amendments to the CAA.  The fact that the EPA had previously requested, and been denied, a further extension beyond the February 21, 2011 date for promulgation of the rules was probably also a factor, and it may have appeared to the Court that the Delay Notice was the EPA’s attempt to make an end run around that denial.  As the Court concluded, vacating the Delay Notice “will finally, more than 12 years after a clear congressional mandate, [require industry facilities] to comply with overdue Clean Air Act emission standards. . . . [P]ermitting the Delay Notice to remain in place and thereby depriving the Boiler Rule and the CISWI Rule of their effectiveness could have significant deleterious effects on the environment.”

Of course, this is not the end of the CISWI and Boiler MACT story.  As mentioned above, the EPA is reconsidering these and related rules and numerous entities, including two represented by MGKF, have challenged the rules in the D.C. Circuit Court.  It is thus certain that we’ll hear much more about these cases in the future.

Note:  Much of the analysis above was done by MGKF attorney Michael Carter.

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