D.C. Circuit: EPA may limit geographical scope of certain Federal court decisions

In National Environmental Development Association’s Clean Air Project v. EPA, decided June 8, 2018, the D.C. Circuit Court of Appeals upheld an EPA rule providing that adverse federal court decisions, other than those of the U.S. Supreme Court or the D.C. Circuit, will not automatically apply uniformly nationwide.

The genesis of this case was a 2012 opinion by the Sixth Circuit in Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Cir. 2012), involving EPA regulations treating multiple pollutant-emitting activities as “adjacent,” and therefore a single source under the Clean Air Act, based on the functional interrelationships between the facilities and not simply the physical distance separating them.  In Summit, the court vacated an EPA determination that a natural gas plant and associated wells were one “source” for permitting under the Act.

After Summit, EPA issued a Directive to the Regional Air Directors of the ten EPA regions stating that outside of the Sixth Circuit, EPA would not change “its longstanding practice of considering interrelatedness” in Clean Air Act permitting actions.  Industry challenged the directive in the D.C. Circuit, and in 2014 the court held that the Summit Directive conflicted with existing EPA regulations.  After that decision, EPA went through formal rulemaking to address the conflict.  The result was the adoption of a final rule stating that only the decisions of the U.S. Supreme Court or the D.C. Circuit that arise from challenges to “national applicable regulations” or final actions shall apply uniformly.  Thus, in cases of judicial circuit splits, EPA retained the ability to apply different standards in different judicial circuits.

In this case, industry groups argued that by authorizing non-uniform permitting standards nationwide, EPA’s rule was arbitrary and capricious and in conflict with the Clean Air Act.  The D.C. Circuit rejected this argument.

Key to the court’s analysis was its observation that nothing in the Clean Air Act requires nationwide uniformity to resolve judicially-created inconsistencies.  The court noted that under the petitioner’s view, the first court of appeals to address an issue would determine EPA’s policy nationwide.  This could not be squared with the Clean Air Act, which already mandates that challenges to “nationally applicable regulations” be brought in the D.C. Circuit.

“The implication of Petitioners’ position – that EPA must conform its policies nationwide to the first circuit decision disagreeing with an agency rule – is illogical, and plainly inconsistent with the Act’s judicial review provision.  In fact, it is even worse than that, because if a second (or third, etc.) circuit were to disagree with that first mover, EPA would be forced to change its rules again to avoid a lack of uniformity, if that were even possible.  There is certainly no statutory requirement that EPA follow such an approach”

One takeaway from this ruling is that a party challenging an EPA action that desires nationwide uniformity needs to consider that as part of its legal strategy.  In his concurring opinion, Senior Judge Silberman suggested that the determination in the original Summit case – whether “adjacent” facilities should be determined based on geography or interrelatedness – might very well be an issue of national applicability that should have been brought in the D.C. Circuit rather than the Sixth Circuit.  But Summit never challenged EPA on that issue.

In short, this decision leaves open the door for EPA policy to reflect judicially-created inconsistencies under the Clean Air Act.  Companies operating facilities in multiple judicial districts and EPA regions should be aware that, depending on the issue, their facilities may be treated differently even in factually similar situations.

A copy of the D.C. Circuit’s opinion is available here.