The U.S. Court of Appeals for the D.C. Circuit determined it is improper for the U.S. Environmental Protection Agency (EPA) to use its general rulemaking authority to further delay the effective dates of accidental release prevention regulations under the federal Clean Air Act (CAA). EPA has twice-delayed the effective dates during reconsideration proceedings, despite a three-month limitation on such delays. [Air Alliance Houston v. U.S. Environmental Protection Agency,___F.3d___, Case No. 17-1155 (D.C. Cir. Aug. 17, 2018).]

 Factual and Procedural Background

On January 13, 2017, following public notice and comment, the EPA issued the Accidental Release Prevention Requirements: Risk Management Programs Under the Clean Air Act (Chemical Disaster Rule), 82 Fed. Reg. 4594-01 (Jan. 13, 2017). The Chemical Disaster Rule, inter alia, revised accidental release prevention requirements in three major areas: 1) accident prevention; 2) emergency response; and 3) public information disclosure. The Chemical Disaster Rule’s overall effective date was set at March 14, 2017, with some provisions having later effective dates.

EPA delayed the effective date of the Chemical Disaster Rule three separate times. Relevant to the court’s decision, on March 16, 2017, EPA stayed the effective date for 90 days until June 19, 2017 (90-Day Stay). 82 Fed. Reg. 13968-02 (Mar. 16, 2017). On June 14, 2017, EPA again delayed the effective date by 20 months to February 19, 2019 (Delay Rule). 82 Fed. Reg. 27133-01 (June 14, 2017).

As authority for promulgating the Delay Rule, the EPA cited §§ 307(d)(7)(B) and 112(r)(7) of the Clean Air Act. Section 112(r)(7)(A) grants the EPA general rulemaking authority over accidental release prevention requirements. Where the EPA issues a regulation pursuant to § 112(r)(7)(A), the regulation must “have an effective date … assuring compliance as expeditiously as practicable.” Section 307(d)(7)(B) requires EPA to reconsider a rule, in part, where a petitioner demonstrates that it was impracticable to raise an objection within the notice and comment period. Section 307(d)(7)(B) also provides, however, that reconsideration must not postpone the effective of the rule, but that the effectiveness of the rule may be stayed during reconsideration for a period not to exceed three months.

According to the EPA, the 90-Day Stay “was insufficient to complete the necessary steps in the reconsideration process for the Chemical Disaster Rule,” and, therefore, the 20-month delay of the Chemical Disaster Rule was necessary. In a petition for review of the Delay Rule, several community and environmental groups, including Air Alliance Houston (Community Petitioners), and several states (State Petitioners) challenged the EPA’s authority to further delay the effective date of the Chemical Disaster Rule under §§ 307(d)(7)(B) and 112(r)(7).

The D.C. Circuit’s Analysis

On August 17, 2018, the D.C. Circuit held that: 1) the both the Community Petitioners and the State Petitioners had standing under Article III of the U.S. Constitution to bring the petition for review of the Delay Rule, 2) the EPA did not have the authority under §§ 307(d)(7)(B) and 112(r)(7) to delay the effective date of the Chemical Disaster Rule for 20 months for the purpose of reconsideration, and 3) the EPA acted arbitrarily and capriciously in doing so. Accordingly, the court vacated the Delay Rule.

Standing

First, the court considered whether the Community Petitioners and State Petitioners had the requisite standing to bring the petition for review of the Delay Rule. As to the Community Petitioners’ standing, the court determined, in part, that living and working with a higher risk of harms caused by accidental releases than would exist if the Chemical Disaster Rule became effective on time is an injury “particularized to the chemical plant workers such as the United Steelworkers’ members” and “directly traceable to the Delay Rule.”

As to the State Petitioners’ standing, the court held that the State Petitioners’ “[m]onetary expenditures to mitigate and recover from harms that could have been prevented absent the Delay Rule” constituted “independent proprietary interests in avoiding chemical releases in their territory sufficient to support standing” given that they are “incurred by the [states themselves].”

EPA Authority to Delay

The court next considered whether the EPA had authority under §§ 307(d)(7)(B) and 112(r)(7) to delay the effective date of the Chemical Disaster Rule for 20 months for the purpose of reconsideration. The court noted that, while § 307(d)(7)(B) allows EPA to stay the effectiveness of a regulation while during reconsideration proceedings, this section expressly limits the permissible length of any such stay to “a period not to exceed three months.” The EPA claimed that § 307(d)(7)(B) merely limited the length of a stay and did not restrict the length of reconsideration generally. The court did not give deference to EPA’s interpretation, finding it contrary to the plain meaning of the section, as well as its legislative history. Thus, the court determined that the 90-Day Stay exhausted EPA’s authority to delay the Chemical Disaster Rule because “the Delay Rule is the functional equivalent of a stay under [section 307(d)(7)(B)].”

Moving to § 112(r)(7), the court first noted that, while § 112(r)(7) grants the EPA general rulemaking authority over accidental release prevention requirements, such authority is limited to substantive amendments. The court then highlighted EPA’s admission in the preamble to the Delay Rule that it “made no substantive decisions demanded by [section 112(r)(7)].” In the same vein, the court determined that EPA’s reasoning with respect to the necessity of an additional 20-month delay:

• . . .does not relate to what is ‘practicable’ for compliance by regulated sources; its explanation relates to its own ‘unidentified, new ‘policy preferences’ and the mere fact of reconsideration.

Accordingly, the court held that it would be unreasonable to interpret § 112(r)(7) as allowing the EPA to further delay the Chemical Disaster Rule for the purpose of reconsideration through its general rulemaking authority. Such interpretation would “render illusory” § 307(d)(7)(B)’s limitation.

Arbitrary and Capricious Standard

Lastly, the court determined that EPA acted arbitrarily and capriciously in issuing the Delay Rule, citing three reasons. First, the court noted that the EPA’s sole justification for the 20-month delay was its reconsideration and that noted that:

• . . .reconsideration, alone, is not a sufficient basis to delay promulgated effective dates specifically chosen by the EPA on the basis of public input and reasoned explanation, particularly where the statute requires the agency to ‘assur[e] compliance as expeditiously as practicable.’

Second, the court noted that EPA failed to “rationally explain” its departure from its stated reasoning in setting the original effective and compliance dates. Third, the court concluded it was impermissible for EPA to delay the entire Chemical Disaster Rule on the basis that one explosion may have been caused by something other than an accident.

Conclusion and Implications

While the EPA’s general rulemaking authority under the CAA may be broad, it is nevertheless limited. EPA cannot use its general rulemaking authority to effectively circumvent express limitations of a statutory scheme. Importantly, in analyzing whether EPA action comports with statutory requirements, courts may evaluate EPA’s reasons for acting against the text of a regulation and also the function of the regulation. This decision also reflects a disfavor of any efforts by EPA to use general procedural mechanisms to change the impact of substantive rules, which have already been promulgated pursuant to the Administrative Procedure Act. The court’s decision is available online here: https://www.cadc.uscourts.gov/internet/opinions.nsf/D635BFF007DFAA56852582EC00509B00/$file/17-1155-1746106.pdf

(Rebecca Andrews)