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EPA Lacked Authority to Stay Greenhouse Gas Emissions Rule

The  Court of Appeals for the D.C. Circuit determined that, under the Clean Air Act, the EPA lacked authority to stay implementation of a new rule on Greenhouse Gas (GHG) Emissions. In Clean Air Council v. Pruitt, the Court  found that the stay was arbitrary, capricious and in excess of the authority of the EPA Administrator.

In June 2016, the then EPA administrator issued a rule regarding leaks of methane and other oil and gas pollutants. The rule required,  among other things, an “initial monitoring survey” be conducted by June 3, 2017. In April, 2017 the new EPA administrator, Scott Pruit, issued a letter indicating the EPA would reconsider the rule and intended to issue a 90 day stay of the rule, as permitted under the Clean Air Act (CAA).  The required notice of reconsideration was published on June 5, 2017, two days after the initial monitoring was to have been completed. The notice provided for the following reconsideration and 90 day stay:

“…reconsideration on four aspects of the methane rule: (1) the decision to regulate low-production wells, (2) the process for proving compliance by “’alternative means,’” (3) the requirement that a professional engineer certify proper design of vent systems, and (4) the decision to exempt pneumatic pumps from regulation only if a professional engineer certified that it was “’technically infeasible’” to route such pumps “’to a control device or a process.’” 82 Fed. Reg. at 25,731–32. In addition, the notice “’stay[ed] the effectiveness of the fugitive emissions requirements, the standards for pneumatic pumps at well sites, and the certification by a professional engineer requirements’” for 90 days “’pending reconsideration.’” 82 Fed. Reg. at 25,732. The notice explained that the stay had gone into effect on June 2, 2017—that is, three days before the notice was published in the Federal Register. 82 Fed. Reg. at 25,731.”

However, on June 16, 2017 another notice was issued advising of the intent to reconsider the entire 2016 rule and to extend the stay for two years. After the suspension, several environmental groups brought the action seeking alternatively a stay or  vacating the actions of the EPA Administrator, on the grounds that the: “…EPA’s stay violates CAA section 307(d)(7)(B) because “’all of the issues Administrator Pruitt identified could have been, and actually were, raised (and extensively deliberated) during the comment period.’”

The EPA and industry parties argued that the stay and reconsideration was not a final agency action and therefore the Court lacked jurisdiction to review it. The Court concluded it does have jurisdiction due  to the nature of the action.

“…EPA has not only concluded that section 307(d)(7)(B) requires reconsideration, but it has also suspended the rule’s compliance deadlines. EPA’s stay, in other words, is essentially an order delaying the rule’s effective date, and this court has held that such orders are tantamount to amending or revoking a rule.”

The Court noted that, as the initial monitoring was to be completed by June 3 and repairs of leaks performed within thirty days of June 3, with potential penalties of non-compliance, “[t] he stay—which EPA made retroactive to one day before the June 3 compliance deadline—eliminates that threat, see 82 Fed. Reg. at 25,731, and thus relieves regulated parties of liability they would otherwise face.”

The Court went on to say that the EPA’s argument that the Court could impose a stay upon a regulation being imposed but could not prevent the EPA’s stay of a regulation, would have a “perverse result”. It further noted that the CAA provides specific criteria be met in order to permit the stay of a final rule. The test is ” that it was “’impracticable to raise’” an objection during the public comment period and the objection is “’of central relevance to the outcome of the rule.’” Only when these two conditions are met does the statute authorize the Administrator to stay a lawfully promulgated final rule.”

In addressing the EPA’s lack of authority to issue the stay in this instance the Court held:

“… it is “’axiomatic’” that “’administrative agencies may act only pursuant to authority delegated to them by Congress.” Verizon v. FCC, 740 F.3d 623, 632 (D.C. Cir. 2014)”‘…EPA must point to something in either the Clean Air Act or the APA that gives it authority to stay the methane rule, and as we explain below, the only provision it cites—CAA section 307(d)(7)(B)—confers no such authority.”

The Court noted that the EPA expressly stated it was reconsidering and issuing the stay based upon its authority under CAA section 307(d)(7)(B) which has the two prong test, noted above, for mandatory reconsideration. The Court went on to analyze each of the issues the EPA proposed to reconsider. It found that there was, in fact, an opportunity to raise issues related to those provisions during the public comment period, the final rule was a logical outgrowth of comments  and therefore there was a failure to meet the test for mandatory reconsideration.

“The administrative record thus makes clear that industry groups had ample opportunity to comment on all four issues on which EPA granted reconsideration, and indeed, that in several instances the agency incorporated those comments directly into the final rule.”

Finally, the Court noted that, as long as the EPA follows the statutory requirements, it is still free to reconsider the rule, without the stay.

-Steven Silverberg