Environmental versions of administrative law issues dominate this week’s review of regulatory practice. In different district courts, a hydraulic fracturing rule was preliminarily enjoined pending final resolution of litigation, while another district court rejected a challenge to a rule withdrawal. The Environmental Protection Agency (EPA) contributed all of the rules of interest, including ozone standards, effluent standards for electric generating unites, and technology standards for the petroleum industry.
Fracking Rule Enjoined: The United States District Court for the District of Wyoming enjoined the Department of the Interior (DOI), Bureau of Land Management (BLM), Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands final rule pending final disposition in Wyoming v. Department of the Interior. The district court stayed the rule last June pending the lodging of the administrative record and resolution of the motions for preliminary injunctions. In resolving those motions, the district court found that plaintiffs were likely to succeed on several arguments, including
- BLM did not have statutory authority to promulgate the hydraulic fracturing rule despite a variety of statutory sources for land management authority and particularly in light of Congress’ past limitation of statutory delegations to regulate fracturing, and in the alternative,
- BLM failed to make a rational connection between facts found and the decision made in the final rule, rendering the final rule arbitrary and capricious, and
- BLM failed to show the minimal evidence in the administrative record to support its conclusion in the final rule.
The court found also that the State plaintiffs would suffer irreparable harm from a loss of sovereignty rights (even temporarily during litigation).
DOI likely will appeal the extensive opinion, but the level of detail together with the high abuse of discretion standard of review for a preliminary injunction make success less than likely. An appeal could actually delay a final resolution of the litigation.
► Three points of interest here: BLM’s delayed lodging of the administrative record expanded the effective date delay for the rule from 60 days to six months. The preliminary injunction will delay the rule much further, particularly if the government appeals.
The court’s statutory analysis and conclusion that BLM lacked authority for the rule warrants a close look – in effect, the court treated each of several statutory delegations as discrete and read each delegation as limited to the specific purpose of the underlying statute. The court accorded no synergy between the statutes. “Strict constructionists” would embrace this approach, while “interpretivists” would think it too narrow and ignoring broader Congressional intent.
The district court noted the paucity of evidence that hydraulic fracturing had compromised ground water in the past. Even a post-record confirmation of the rule’s predictive value failed BLM as the court took note (which could be judicial notice) of a post-record EPA report that such compromise had not occurred.
Rule Withdrawal Judicial Review: In a rare decision, the district court also granted summary judgment to the agency when an advocacy group sought judicial review of the agency withdrawal of a proposed rule in Environmental Integrity Project v. EPA. As part of a consent decree, EPA committed to propose a rule requiring Concentrated Animal Feeding Operations (CAFOs) to provide certain information to EPA pursuant to the Clean Water Act (CWA). The settlement agreement further specified some substantive aspects of the proposed rule. EPA committed to take final action on the proposal by July 13, 2012, but EPA did not commit to adopting the rule or any specific course of action. To the contrary, consistent with the Administrative Procedure Act (APA), the settlement agreement expressly provided that it did not limit the EPA’s ultimate rulemaking discretion. EPA formally withdrew the proposed rule on July 20, 2012, deciding to proceed under the Paperwork Reduction Act (PRA) rather than a CWA rulemaking.
The district court found that it had jurisdiction and could review EPA’s decision, although this type of judicial review is very rare – neither the review of an agency’s failure or withholding of action, nor the full review of a final rule. In reviewing the withdrawal, the court found that EPA acted within its statutory authority and the withdrawal was not arbitrary and capricious.
► Consent decrees can cause significant problems, and committing to some final decision can result in judicial review of a withdrawal. Otherwise, the much more common agency “non-decision” to proceed with finalizing a proposed rule is not judicially reviewable – many proposed rules wither on the vine. This type of issue arises rarely, but all parties need to recognize that they can create judicially reviewable events.
Environmental Push: EPA released three economically significant final rules last week, an indication of the Administration’s desire to institutionalize environmental policies. Judicial review is likely for all three rules.
Ozone Standards: EPA released the long-anticipated new limitations for ground-level ozone (O3). EPA revised both the primary and secondary national ambient air quality standards (NAAQS) for ozone to 70 parts per billion (ppb). EPA withdrew proposals to reduce the current standard from 75 ppb to 65 ppb in 2011, and some recent news reports suggest a push for 68 ppb. The change includes corresponding revisions in data handling for ozone, changes to the Air Quality Index, revising prevention of significant deterioration (PSD) program regulations to add a transition provision, and other changes.
The final rule is economically significant, but the Clean Air Act (CAA) and court decisions have made clear that EPA does not consider the economic and technical feasibility of attaining standards in setting or revising NAAQS. Nonetheless, EPA attributes $1.4 billion in costs, and claims $2.9 to $5.9 in quantifiable benefits such as reductions in premature mortality and reduced hospital visits. The PRA burdens total almost $45 million.
► The final rule succeeded in displeasing everyone – a not uncommon attribute of a final rule and an all but guarantee that petitions for review will be pursued in the United States Court of Appeals for the District of Columbia Circuit. The NAAQS inherently become the fodder for litigation – the costs alone render litigation economically preferred.
Electric Generator Effluents: EPA also released the economically significant Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category final rule under the Clean Water Act (CWA). The final rule sets effluent limitations on water discharges from 1,200 steam electric power plants using nuclear or fossil fuels – an almost ubiquitous application that will affect every utility and every rate-payer. EPA estimated that annual compliance costs for the final rule to be $480 million while estimated benefits range from $451 to $566 million, but EPA admits that these costs and benefits depend on other rules:
EPA’s analysis reflects the Agency’s understanding of the actions steam electric power plants will take to meet the limitations and standards in the final rule. EPA based its analysis on a baseline that reflects the expected impacts of other environmental regulations affecting steam electric power plants, such as the Clean Power Plan (CPP) rule that the Agency finalized in July 2015 (as well as other relevant rules such as the Coal Combustion Residuals (CCR) rule that the Agency promulgated in April 2015). EPA understands that these modeled results have uncertainty due to the possibility of unexpected implementation approaches and thus that the actual costs could be somewhat higher or lower than estimated.
► Do not confuse this rule with the EPA’s Clean Power Plan: Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units – released August 3, but yet to be published. The cost spread is significantly different from the benefit spread in this rule – costs will be charged across rate-payers while benefits will be more community specific.
Petroleum Sector: Finally, EPA also released the sector-specific Petroleum Refinery Sector Risk and Technology Review and New Source Performance Standards final rule. In 2012, environmental and public health groups sued EPA alleging that the agency missed CAA statutory deadlines for reviewing and revising the Refinery Maximum Achievable Control Technology (MACT) 1 and 2 rules. A consent decree in that litigation required the Administrator to sign a final action no later than September 30, 2015. Although this final rule is sector specific, EPA predicts the rule will cause minimal change in the average national price of refined petroleum products (0.0001% or less on average).
► Here again, a consent decree required some action. And here, the sector costs are complicated by the nature of the industry and the current downturn in petroleum pricing.
The post Monday Morning Regulatory Review – 10/05/15: Fracking Rule Enjoined, Rule Withdrawal Judicial Review & Environmental Push appeared first on Federal Regulations Advisor.