in the united states district court for the … a. throne throne law office 211 w. 19th street,...

Mary A. Throne Throne Law Office 211 W. 19th Street, Suite 200 PO Box 828 Cheyenne, WY 82003 Telephone: 307-637-2822 Facsimile: 307-674-6104 Ezekiel J. Williams Steven K. Imig Ducker Montgomery, Lewis & Bess, P.C. 1560 Broadway, Suite 1400 Denver, CO 80202 Telephone: 303-861-2828 Facsimile: 303-861-4017 Attorneys for Petitioner Western Energy Alliance

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF WYOMING

WESTERN ENERGY ALLIANCE, ) Petitioner, ) ) v. ) Case No. 10-CV-237F ) KEN SALAZAR, SECRETARY OF ) REPLY IN SUPPORT OF THE INTERIOR, UNITED STATES ) PETITION FOR REVIEW BUREAU OF LAND MANAGEMENT, ) OF AGENCY ACTION ROBERT V. ABBEY, DIRECTOR ) OF THE BUREAU OF LAND ) MANAGEMENT, UNITED STATES ) FOREST SERVICE, and ) THOMAS TIDWELL, CHIEF OF THE ) UNITED STATES FOREST SERVICE ) Respondents. )

Case 2:10-cv-00237-NDF Document 32 Filed 08/05/11 of 34

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TABLE OF CONTENTS

INTRODUCTION & SUMMARY................................................................................................. 1

ARGUMENT .................................................................................................................................. 4

I. This Court Has Jurisdiction. ................................................................................... 4

A. Western Energy Has Standing. ................................................................... 4

1. The New Rules Injure Western Energy Members Because They Increase Delay and Expense in Processing APDs and Create Legal Risks. .................................................................. 4

2. Western Energy Need Not Point to Particular APDs That Have Been Processed Under the New Rules to Have Standing. ......................................................................................... 8

3. Western Energy Satisfies the Immediacy and Redressability Requirements For Procedural Rights Standing. .............................. 8

B. The New Rules Are Reviewable Final Agency Action Because They Adopt a Binding Change in the Law. .............................................. 10

1. The New Rules Mark the Consummation of Respondents’ Decision-Making Process About the Application of the Statutory CXs. ............................................................................... 10

2. Legal Consequences Flow From the New Rules. ......................... 11

a. The New Rules Changed the Law by Repudiating the Statutory Conditions for the Use of the Statutory CXs. .................................................................................. 12

b. The New Rules Definitively Resolve Substantive Legal Questions Posed by the GAO and Others. .............. 13

c. The New Rules Establish Binding and Unequivocal Extra-Statutory Conditions on the Use of the Statutory CXs. .................................................................................. 14

d. The New Rules Need Only Bind Respondents, Not Western Energy, to be Final. ............................................. 15

C. The New Rules Are Ripe. ......................................................................... 15


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1. This is a Purely Legal Challenge. ................................................. 16

2. This Challenge is Ripe Under Ohio Forestry. .............................. 16

II. The New Rules are Legislative Rules Issued Without Notice and Comment in Violation of the APA Because They Adopt a Binding Change in the Law. ...................................................................................................................... 18

III. The New Rules are Contrary to the Plain Language of Section 390. ................... 21

A. The BLM’s Interpretation of Statutory CX2 Defies the Plain Language of Section 390. ......................................................................... 21

B. The BLM’s Interpretation of Statutory CX3 Defies the Plain Language of Section 390. ......................................................................... 22

C. Respondents’ Application of Extraordinary Circumstances Review to the Statutory CXs is Unreasonable. ......................................... 23

IV. The Court Should Enjoin the New Rules Nationwide. ......................................... 24

CONCLUSION ............................................................................................................................. 25

CERTIFICATE OF COMPLIANCE ............................................................................................ 26


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TABLE OF AUTHORITIES

CASES

Alabama-Tombigbee Rivers Coal. v. Norton, 338 F.3d 1244 (11th Cir. 2003) ................................................................................................... 6

Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106 (D.C. Cir. 1993) ................................................................................................ 20

Appalachian Power Co. v. E.P.A., 208 F.3d 1015 (D.C. Cir. 2000) .......................................................................................... 14, 18

Bennett v. Spear, 520 U.S. 154 (1997) ........................................................................................................... passim

Cement Kiln Recycling Coal. v. E.P.A., 493 F.3d 207 (D.C. Cir. 2007) ...................................................................................... 15, 16, 18

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) ................................................................................................ 21, 22, 23, 24

Clinton v. City of New York, 524 U.S. 417 (1998) .................................................................................................................... 7

Covenant Media of S.C., LLC v. City of N. Charleston, 493 F.3d 421 (4th Cir. 2007) ...................................................................................................... 6

Ctr. for Auto Safety v. Nat’l Highway Traffic Safety Admin., 452 F.3d 798 (D.C. Cir. 2006) .................................................................................................. 11

Davis v. Federal Election Comm’n, 554 U.S. 724 (2008) .................................................................................................................... 8

Gen. Elec. Co. v. E.P.A., 290 F.3d 377 (D.C. Cir. 2002) ............................................................................................ 15, 18

Harmon v. Thornburgh, 878 F.2d 484 (D.C. Cir. 1989) .................................................................................................. 24

Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1393 (9th Cir. 1995) ..................................................................................................... 24


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Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ...................................................................................................... 5, 8, 9, 10

McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317 (D.C. Cir. 1988) ................................................................................................ 15

Nat. Res. Def. Council v. Env’t Prot. Agency, 643 F.3d 311 (D.C. Cir. 2011) ........................................................................................... passim

National Mining Ass’n v. U.S. Army Corps of Engineers, 145 F.3d 1399 (10th Cir. 1998) ................................................................................................. 23

Ohio Forestry Assoc., Inc. v. Sierra Club, 523 U.S. 726 (1998) .................................................................................................. 3, 16, 17, 18

Powder River Basin Res. Council, 180 IBLA 1 (2010) ..................................................................................................................... 7

Public Service Co. of Colo. v. E.P.A., 225 F.3d 1144 (10th Cir. 2000) ................................................................................................. 15

San Juan Citizens Alliance v. Stiles, __ F.3d __, 2011 WL 2899603 (10th Cir. July 21, 2011) ........................................................... 7

Sugar Cane Growers Coop. of Florida v. Veneman, 289 F.3d 89 (D.C. Cir. 2002) ...................................................................................................... 9

Summers v. Earth Island Inst., 129 S. Ct. 1142 (2009) ............................................................................................................ 8, 9

Syncor Int’l Corp. v. Shalala, 127 F.3d 90 (D.C. Cir. 1997) .................................................................................................... 19

United States v. Kaycee Bentonite Corp., 64 IBLA 183 (1982) ................................................................................................................. 14

United States v. Mead, 533 U.S. 218 (2001) .................................................................................................................. 19

Utah Animal Rights Coal. v. Salt Lake City Corp., 371 F.3d 1248 (10th Cir. 2004) ................................................................................................... 6


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STATUTES

5 U.S.C. § 553 ........................................................................................................................ passim

5 U.S.C. § 704 ............................................................................................................................... 10

42 U.S.C. §§ 4321-4370 ................................................................................................................. 7

42 U.S.C. § 4332 ........................................................................................................................... 23

42 U.S.C. § 15942 .................................................................................................................. passim

REGULATIONS

36 C.F.R. Part 215........................................................................................................................... 7

36 C.F.R. Part 220........................................................................................................................... 7

36 C.F.R. § 220.6 .......................................................................................................................... 23

36 C.F.R. § 228.107 ........................................................................................................................ 7

40 C.F.R. §§ 1500.1-1508.28 .......................................................................................................... 7

40 C.F.R. § 1506.5 .......................................................................................................................... 6

40 C.F.R. § 1508.4 ........................................................................................................................ 23


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EXHIBITS

Number Name

12 Nat. Res. Def. Council v. Env’t Prot. Agency, 643 F.3d 311 (D.C. Cir. 2011).

13 Supplemental Declaration of Randy Bolles, Devon Energy Production Company, L.P.

14 Supplemental Declaration of Robert Boswell, Laramie Energy II, LLC

15 Supplemental Declaration of Mike Smith, QEP Resources, Inc.


1

INTRODUCTION & SUMMARY

Respondents have “fired nearly all the arrows in [their] jurisdictional quiver”1 in a futile

attempt to avoid public and judicial review of rules that repudiate congressionally-mandated

procedures and that violate the Administrative Procedure Act (“APA”), 5 U.S.C. § 553. The

2010 rules (together, the “New Rules”) issued by the United States Bureau of Land Management

(“BLM”) and United States Forest Service (“Forest Service”) are legislative rules subject to the

notice and comment obligation of 5 U.S.C. § 553 because they alter the legal regime applicable

to the statutory categorical exclusions provided in Section 390 of the Energy Policy Act of 2005

(“Statutory CXs”), produce direct legal consequences, and express Respondents’ position in a

form that binds agency-decision makers.

Respondents fire three jurisdictional arrows – standing, finality, and ripeness – yet all

miss their mark. The record and declarations accompanying this Reply2 show that Western

Energy Alliance (“Western Energy”) members have established the requisite injury, causation,

and redressability to provide standing to invoke this Court’s jurisdiction. Western Energy

members intend to submit applications for permits to drill (“APDs”) on specified federal oil and

gas leases in 2011 and 2012 that will be subject to the New Rules. Western Energy members

will be injured by the delay, expense, and legal consequences the New Rules cause. A ruling

vacating the New Rules for failing to comply with the APA and defying Section 390 would

1 Nat. Res. Def. Council v. Env’t Prot. Agency, 643 F.3d 311, 311 (D.C. Cir. 2011) (rejecting the same procedural defenses because “all three arrows miss their mark” and ruling that the agency improperly adopted as “guidance” legislative rules in violation of the notice and comment requirement of the APA) (attached as Exhibit 12 and hereinafter “NRDC”). 2 See Exs. 13, 14, 15.


2

redress those injuries under the applicable Supreme Court standard for procedural rights

standing.

Finality and ripeness “turn on the same question: whether the Guidance announces a

binding change in the law.”3 The New Rules are final agency action and ripe for judicial review

because they adopt a binding change in the law. The New Rules express the settled – rather than

tentative or preliminary – decision to restrict the use of Statutory CXs to circumstances permitted

by the administrative extraordinary circumstances doctrine; they forbid discretion and compel

agency decision makers to follow their terms; and they mandate compliance with the National

Environmental Policy Act (“NEPA”) for APDs that meet the statutory criteria in Statutory CX2

and CX3 for exclusion from NEPA.4

Legal consequences flow from the New Rules, making them final and ripe for judicial

review.5 Respondents will not approve APDs except in compliance with the New Rules. The

New Rules compel agencies to prepare environmental assessments for certain APDs that are

categorically excluded from NEPA by Section 390, Statutory CX2 and Statutory CX3.6 Such

agency action alters the legal regime because those APD decisions must comply with NEPA and

3 NRDC, 643 F.3d at 319. 4 See Western Energy Opening Brief (“Op. Br.”) at 29-43. Two Statutory CXs specifically at issue here are: (1) “Drilling an oil or gas well at a location or well pad site at which drilling has occurred previously within 5 years prior to the date of spudding the well.” (42 U.S.C. § 15942 (b)(2), hereinafter “Statutory CX2”) and (2) “Drilling an oil or gas well within a developed field for which an approved land use plan or any environmental document prepared pursuant to NEPA analyzed such drilling as a reasonably foreseeable activity, so long as such plan or document was approved within 5 years prior to the date of spudding the well.” (Id. § 15942(b)(3) hereinafter “Statutory CX3”). 5 See Bennett v. Spear, 520 U.S. 154, 178 (1997). 6 See Op. Br. at 31-35.


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third parties can seek an injunction on NEPA grounds, legal consequences that do not exist for

an APD decision based on a Statutory CX.

Western Energy demonstrates ripeness by raising purely legal issues in this facial

challenge to the New Rules: Western Energy challenges the text of the New Rules on the basis

that they cannot be issued without notice and comment under 5 U.S.C. § 553, and because they

defy the plain language of Section 390, 42 U.S.C. § 15942. Western Energy does and need not

challenge the application of the New Rules to specific APDs. Western Energy’s claims are ripe

because future administrative action will not further crystallize the dispute or change the text of

the New Rules, no additional factual development will occur, and delaying judicial review will

cause Western Energy members to suffer the hardship they filed suit to avoid.7

On the merits, Respondents urge the Court to make conflicting rulings. Respondents

argue there was no notice and comment obligation because the New Rules are mere “policy

statements” or “interpretive rules” that do not create law or legal consequences. Yet

Respondents assert that the New Rules merit Chevron deference because Congress “delegated

authority to the agency to make rules carrying the force of law” to fill the “gaps” in the language

of Section 390. That argument admits that the New Rules are legislative and, as a consequence,

violated the notice and comment requirement of the APA. Respondents’ arguments cannot be

reconciled; they are at war with one another. The Court should enjoin the New Rules

nationwide.

7 See Ohio Forestry Assoc., Inc. v. Sierra Club, 523 U.S. 726, 733 (1998).


4

ARGUMENT

I. This Court Has Jurisdiction.

A. Western Energy Has Standing.

Respondents claim that Western Energy lacks standing because Western Energy has not

demonstrated that the New Rules will harm Western Energy members in the future (Response at

15) and Western Energy has not identified “any APD processed under the guidance in a manner

that caused them harm” (Id.). The first claim ignores record evidence that the New Rules will

harm Western Energy members and is rebutted by the declarations accompanying this Reply.

The second claim is irrelevant because the final agency action Western Energy challenges is the

issuance of the New Rules without notice and comment, not the future administrative review of

individual APDs.

1. The New Rules Injure Western Energy Members Because They Increase Delay and Expense in Processing APDs and Create Legal Risks.

The New Rules injure Western Energy members in a direct and concrete way: they

require the Respondents to prepare an Environmental Impact Statement (“EIS”) or

Environmental Assessment (“EA”) in situations where those documents are not required by

Section 390 prior to approving APDs.8 The New Rules require NEPA documents for APDs that

are not required by Section 390 because: (1) they restrict the use of all five Statutory CXs to

circumstances permitted by the administrative extraordinary circumstances doctrine; (2) the 2010

BLM Rule restricts the use of Statutory CX2 to instances when a site-specific NEPA document

8 See AR at CAT1070-CAT1073, FS0000216.


5

addresses the proposed drilling; and (3) the 2010 BLM Rule restricts the use of Statutory CX3 to

instances when a site-specific NEPA document addresses the proposed drilling. See Op. Br. at

31-39.

Those restrictions in the New Rules, and the NEPA documents they require, injure

Western Energy members in three ways: (1) delay in obtaining APD approvals; (2) expense; and

(3) unnecessary legal risks because Respondents must satisfy the requirements of NEPA in

authorizing APDs.

First, the New Rules injure Western Energy members because they delay Respondents’

approval of APDs submitted by Western Energy members. APD approval takes longer if an EA

or EIS is prepared than if one is not. This obvious fact is amply supported by Western Energy’s

declarations9 and the administrative record. For example:

“When the BLM or Forest Service requires the preparation of a NEPA document prior to authorizing an APD, the preparation of the NEPA document delays approval of the APD.” Ex. 14 ¶ 8; see also Ex. 13 ¶ 9.

“[T]he vast majority of BLM officials we spoke with told us that using section 390 categorical exclusions expedited the application review and approval process.” AR at CAT00117.

“[T]he cumulative time savings from processing multiple actions with section 390 categorical exclusions can be, and has been, significant.” AR at CAT00121.

9 Western Energy submitted declarations with its opening brief to establish standing consistent with its initial burden. See, e.g., Lujan, 504 U.S. at 561 (explaining that the burden to demonstrate standing varies at “successive stages of the litigation”). Western Energy is entitled to rebut Respondents’ standing arguments with the supplemental declarations that accompany this Reply. See id. (“In response to a summary judgment motion, however, the plaintiff can no longer rest on such ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific facts [to establish standing], which for purposes of the summary judgment motion will be taken to be true.”).


6

“Industry officials with whom we spoke stated that BLM’s use of section 390 categorical exclusions has generally decreased APD-processing times.” AR at CAT00121.

In addition, the BLM NEPA Handbook itself states that application of the New Rules’

“extraordinary circumstances” review causes delay in the form of “considerable review” even if

an EA or EIS is not prepared.10

Even a “small” delay in government processing of a permit application that may be

“insufficient to support a claim for compensatory damages” nonetheless provides the requisite

“injury” to support standing to challenge the regulation that prescribes the permitting process. Utah

Animal Rights Coal. v. Salt Lake City Corp., 371 F.3d 1248, 1256 (10th Cir. 2004); accord NRDC,

643 F.3d at 318 (“the Guidance injures NRDC’s members . . . [by] delaying, at the very least,

implementation of section 185”); Covenant Media of S.C., LLC v. City of N. Charleston, 493

F.3d 421, 428 (4th Cir. 2007) (recognizing “the injury of not having an application processed

timely"); Alabama-Tombigbee Rivers Coal. v. Norton, 338 F.3d 1244, 1254 (11th Cir. 2003)

(“injury in the form of planning, studies, and delays” confers standing).

Second, the New Rules injure Western Energy members because they pay for the

preparation of the NEPA documents in accord with BLM and Council on Environmental Quality

(“CEQ”) policies. See Ex. 14 ¶¶ 9-10; BLM NEPA Handbook, Op. Br. Ex. 2 § 13.5 (“An

applicant may also pay a contractor to prepare an EA)”; 40 C.F.R. § 1506.5 (CEQ regulations on

applicant-prepared EAs). Financial harm constitutes injury for standing purposes. See, e.g.,

10 See, e.g., Op. Br. Ex. 2 § 4.2.2.


7

Clinton v. City of New York, 524 U.S. 417, 433 (1998) (government actions that result in

economic injury provide standing).

Third, the New Rules injure Western Energy members because they produce legal

consequences that do not exist under Section 390. Where Respondents require the preparation of

either an EA or EIS under the New Rules where Section 390 does not require one, that NEPA

document must meet the requirements of NEPA. Those legal requirements are set forth in

statutes,11 regulations,12 agency policies,13 and federal court rulings.14 Respondents significantly

altered Section 390’s legal regime in the New Rules, and triggered this litigation, by requiring

the preparation of NEPA documents for APDs that are categorically excluded from NEPA by

Section 390.15 That creates a concrete legal injury to Western Energy members. Exs. 13 ¶ 12;

15 ¶ 9. It makes the associated APD authorization subject to challenge by third parties who can

administratively appeal the BLM’s compliance with NEPA to the Interior Board of Land

Appeals16 and file suit to enjoin or set aside the APD decision in United States District Court on

the grounds that the agency did not satisfy NEPA in preparing the EA or EIS. Exs. 13 ¶ 12; 15 ¶

9. A Statutory CX, on the other hand, does not need to meet the requirements of NEPA. See 42

U.S.C. § 15942.

11 42 U.S.C. §§ 4321-4370d. 12 E.g., 40 C.F.R. §§ 1500.1-1508.28; 36 C.F.R. Part 220. 13 See, e.g., BLM NEPA Handbook, Op. Brief Ex. 2. 14 E.g., San Juan Citizens Alliance v. Stiles, __ F.3d __, 2011 WL 2899603 (10th Cir. July 21, 2011). 15 See Op. Br. at 31-39. 16 E.g., Powder River Basin Res. Council, 180 IBLA 1 (2010) (NEPA-based administrative challenge to APDs). The Forest Service’s NEPA compliance may be appealed within the Forest Service. See 36 C.F.R. Part 215, § 228.107 (c).


8

2. Western Energy Need Not Point to Particular APDs That Have Been Processed Under the New Rules to Have Standing.

The Respondents claim that Western Energy lacks standing because Western Energy has

not “identif[ied] any APD processed under the guidance in a manner that caused them harm.”

Response at 15. This is not the law.

“[T]he injury required for standing need not be actualized. A party facing prospective

injury has standing to sue where the threatened injury is real, immediate, and direct.” Davis v.

Federal Election Comm’n, 554 U.S. 724, 734 (2008). Western Energy members need not wait to

incur injury before seeking judicial review of Respondents’ final decision to require APDs to be

processed in accord with the New Rules. See, e.g., Summers v. Earth Island Inst., 129 S. Ct.

1142, 1149 (2009) (the “threat” of suffering an “injury in fact” confers standing).

3. Western Energy Satisfies the Immediacy and Redressability Requirements For Procedural Rights Standing.

Western Energy sues to enforce procedural rights granted to its members by Section 390

(the right to have APDs processed according to the statute) and by 5 U.S.C. § 553 (the right to

receive notice and submit comments). Because Western Energy sues to enforce procedural

rights, it need not show immediacy or redressability. In Lujan v. Defenders of Wildlife, the

Supreme Court explained:

There is much truth to the assertion that ‘procedural rights’ are special: The person who has been accorded a procedural right to protect his concrete interests can assert that right without meeting all the normal standards for redressability or immediacy. . . . one living adjacent to the site for proposed construction of a federally licensed dam has standing to challenge the licensing agency’s failure to prepare an environmental impact statement, even though he cannot establish with any certainty that the statement will cause the license to be withheld or altered, and even though the dam will not be completed for many years.


9

504 U.S. 555, 573 n.7 (1992). Under Lujan, Western Energy need not show that its members

face imminent harm or that a favorable decision will redress its injuries by causing Respondents

to adopt Western Energy’s construction of Section 390. See id.; Sugar Cane Growers Coop. of

Florida v. Veneman, 289 F.3d 89, 94-95 (D.C. Cir. 2002) (“A plaintiff who alleges a deprivation

of a procedural protection to which he is entitled never has to prove that if he had received the

procedure the substantive result would have been altered. All that is necessary is to show that

the procedural step was connected to the substantive result.”) (citing Lujan).

In Summers, an environmental group plaintiff challenged Forest Service logging

regulations and submitted affidavits showing only that one of its members “plans to visit several

unnamed National Forests in the future.” 129 S.Ct. at 1150. The Court held the unspecified

future plans did not support standing because they were not “concrete and particularized” and the

plaintiff did not demonstrate it faced imminent harm. Id. at 1150-1151.

The harm here is markedly different. Western Energy members are direct beneficiaries

of Section 390 and the primary parties affected by the New Rules. Western Energy submitted

declarations that demonstrate that its members: (1) own specific identified federal oil and gas

leases that are subject to Section 390 and the New Rules (Op. Brief Exs. 9 ¶¶ 3, 7; 10 ¶¶ 3, 7, and

11 ¶¶ 3,7; Exs. 13 ¶¶ 5-8; 14 ¶¶ 4-7); (2) have submitted APDs that were authorized by the

Respondents’ based on the Statutory CXs (Op. Brief Exs. 9 ¶ 5; 10 ¶ 5; 11 ¶ 5; Ex. 13 ¶ 10); and

(3) have definite plans to continue submitting APDs in 2011 and 2012 that qualify for the

Statutory CXs and will be injured by the delay, expense and legal consequences of the New

Rules (Op. Brief Exs. 9 ¶¶ 6-7; 10 ¶¶ 6-7, and 11 ¶¶ 6-7; Exs. 13 ¶¶ 7-8; 14 ¶¶ 6-7; 15 ¶¶ 6-9).


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These allegations demonstrate the imminent “concrete and particularized” harm that

Western Energy members face. That harm is real, immediate, and direct rather than “conjectural

or hypothetical.” Lujan, 504 U.S. at 560.

B. The New Rules Are Reviewable Final Agency Action Because They Adopt a Binding Change in the Law.

“[F]inal agency action for which there is no other adequate remedy in a court [is] subject

to judicial review.” 5 U.S.C. § 704. Agency action is final if: (1) the action “mark[s] the

consummation of the agency’s decision-making process,” and (2) is “one by which rights or

obligations are determined, or from which legal consequences flow.” Bennett v. Spear, 520 U.S.

154, 177-78 (1997).

1. The New Rules Mark the Consummation of Respondents’ Decision-Making Process About the Application of the Statutory CXs.

Respondents claim that the New Rules are not final because they “do not represent the

consummation of the BLM’s decision-making process for authorizing oil and gas development

activities on federal lands.” Response at 18. This argument seeks to substitute a different

agency action for the one Western Energy challenges. Western Energy does not challenge the

authorization of “oil and gas development activities on federal lands.” Response at 18. Western

Energy challenges the text of the New Rules, which express Respondents’ final and settled

resolution of significant legal issues about Section 390.

The New Rules are not marked “draft” or “proposed.” Quite the opposite. As

Respondents admit, they are the product of years of review, mark Respondents’ final position,

and were issued to resolve litigation after coordination with the CEQ. See Response at 7-11.


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Under these facts, the New Rules mark the consummation of Respondents’ decision-making

process about the use of the Statutory CXs. See Bennett, 520 U.S. at 178; NRDC, 643 F.3d at

320 (ruling that guidance was final because it rendered prior uncertainties “a closed question”).

2. Legal Consequences Flow From the New Rules.

The New Rules have legal consequences that alter the legal regime for APDs subject to

Section 390 and, as a result, are final agency action under Bennett v. Spear. The United States

Court of Appeals for the District of Columbia Circuit recently issued a remarkably relevant

decision. In Natural Resources Defense Counsel v. Environmental Protection Agency, the court

addressed an EPA “guidance” document that addressed Section 185 of the Clean Air Act (the

“Section 185 Guidance”). Section 185 imposes fees on air pollution sources in areas not

attaining ozone standards. Section 185 provides limited, defined exemptions from the fees.

Without undertaking notice and comment, the EPA issued the Section 185 Guidance and added a

new fee exemption to those identified in Section 185. See NRDC, 643 F.3d at 317. The

plaintiffs sued, and argued that the EPA violated the APA by issuing the Section 185 Guidance

without notice and comment and that the Guidance violated the Clean Air Act. The EPA

asserted the jurisdictional defenses of standing, finality, and ripeness.

The D.C. Circuit rejected each jurisdictional defense and held that the Section 185

Guidance was final agency action because it “announces a binding change in the law.” NRDC,

643 F.3d at 319-320; see also Ctr. for Auto Safety v. Nat’l Highway Traffic Safety Admin., 452

F.3d 798, 806 (D.C. Cir. 2006) (“the agency’s adoption of a binding norm obviously would

reflect final agency action.”). The court based its holding on three primary factors. First, the


12

Section 185 Guidance changed the law by adding an extra-statutory fee exemption. NRDC, 643

F.3d at 319 (“prior to issuing the Guidance, neither the statute nor EPA regulations nor case law

authorized EPA regional directors to approve . . . alternatives to section 185 fees.”). Second, the

Guidance definitively resolved legal questions posed by a committee. See id. at 320 (“the

Guidance altered the legal regime by resolving the question posed by the Clean Air Act Advisory

Committee . . . . Answering that question affirmatively, the Guidance binds EPA regional

directors and thus qualifies as final agency action.”). Third, the Guidance foreclosed agency

discretion and bound agency decision makers to apply its terms. See id. at 319 (prior to the

Guidance, the EPA “retained discretion, now withdrawn by the Guidance”). Each of the NRDC

factors is present here.

a. The New Rules Changed the Law by Repudiating the Statutory Conditions for the Use of the Statutory CXs.

The New Rules change the law expressed in Section 390 and in Respondents’ 2005

Guidance. See AR at CAT01806-CAT01819 (2005 BLM Guidance), FS0000227-FS0000239

(2005 Forest Service Guidance). Prior to the New Rules, BLM and Forest Service line officers

were prohibited from applying extraordinary circumstances review to Statutory CXs. AR at

CAT01812-CAT01813. After the New Rules, they must. AR at CAT01071, FS 0000231. Prior

to the New Rules, Statutory CX2 applied where no site-specific NEPA review had been

conducted. See AR at CAT01814. After the New Rules, BLM decision-makers cannot use

Statutory CX2 unless a site-specific NEPA document addresses the proposed drilling. AR at

CAT01071. Prior to the New Rules, APDs qualified for Statutory CX3 if they were within the


13

reasonably foreseeable development scenario contemplated in a recent land use plan. AR at

CAT01815. After the New Rules, BLM decision makers cannot use Statutory CX3 based on a

land-use plan EIS. AR at CAT01071. Those restrictions are summarized in the table below.

Issue Statute 2005 BLM & USFS

Guidance

2010 BLM Rule

2010 USFS Rule

Does Statutory CX2 require prior site-specific NEPA-document?

No No Yes No

Can Statutory CX3 be based on a land use plan EIS?

Yes Yes No Yes

Can Statutory CX3 be based on a NEPA document that was not project-specific?

Yes Yes No Yes

Do extraordinary circumstances apply?

No No Yes Yes

Those “direct and appreciable legal consequences” of the New Rules are final agency action.

See Bennett, 520 U.S. at 178 (Biological Opinion final because it had “direct and appreciable

legal consequences”); NRDC, 643 F.3d at 319.

b. The New Rules Definitively Resolve Substantive Legal Questions Posed by the GAO and Others.

Respondents argue that the New Rules were developed after the change in Presidential

administrations to reverse their 2005 Guidance, fill gaps in Section 390’s language, settle a

lawsuit against the BLM by adopting the plaintiffs’ position about extraordinary circumstances,

and resolve controversy. See Response at 7-11. This is a striking admission. The New Rules

definitively resolve substantive legal questions identified by the GAO and others and asserted in

litigation against the BLM. Id. They are final agency action for purposes of judicial review.


14

NRDC, 643 F.3d at 320 (finding final agency action because “the Guidance altered the legal

regime by resolving the question posed by the Clean Air Act Advisory Committee”).

c. The New Rules Establish Binding and Unequivocal Extra-Statutory Conditions on the Use of the Statutory CXs.

Like the Section 185 Guidance, the New Rules impose binding extra-statutory conditions

on Section 390 that are not tentative, flexible, or discretionary. The New Rules “from beginning

to end . . . reads like a ukase. It commands, it requires, it orders, it dictates.” Appalachian Power

Co. v. E.P.A., 208 F.3d 1015, 1023 (D.C. Cir. 2000) (finding EPA “guidance” to be final

because it was binding and unequivocal). The 2010 BLM Rule dictates:

“In order to use CX2 and CX3 prior NEPA analysis will have to have been completed as specified in this section, and any proposed use of these CXs will be subject to extraordinary circumstances review” (AR at CAT01071) (emphasis added).

“Section 390 CX2 may only be used if the specific location and/or well pad site for the proposed drilling was adequately analyzed in an existing activity-level or project specific [NEPA document].” (id.) (emphasis added).

“Section 390 CX3 may only be used if the developed field in which the proposed drilling will take place was adequately analyzed in an existing activity-level or project-specific EIS or EA (not solely in an approved land use plan and associated EIS” (id.) (emphasis added).

“Field officers are directed to conduct a review for extraordinary circumstances” (id.) (emphasis added).

BLM Field officers have no discretion; they must apply these mandatory provisions as written.17

17 E.g., United States v. Kaycee Bentonite Corp., 64 IBLA 183, 214 (1982) (BLM line officers bound to follow binding direction in instructional memoranda). The 2010 Forest Service Rule is similarly binding and unequivocal. See, e.g., AR at FS0000216 (“A review of Extraordinary Circumstances . . . must be made”).


15

d. The New Rules Need Only Bind Respondents, Not Western Energy, to be Final.

Respondents claim based on a law review article that the New Rules must be binding on

Western Energy, as well as Respondents, to be final. Response at 19. That is not the law. When

an agency adopts policy that binds itself to a course of action, that action is final regardless

whether private parties are bound. See, e.g., Public Service Co. of Colo. v. E.P.A., 225 F.3d

1144, 1148 (10th Cir. 2000) (holding action not final because “[t]he EPA could also alter its

opinion”); McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1320 (D.C. Cir. 1988) (“If a

statement denies the decisionmaker discretion in the area of its coverage . . . then the statement is

binding, and creates rights or obligations”) (emphasis added); Cement Kiln Recycling Coal. v.

E.P.A., 493 F.3d 207, 216 (D.C. Cir. 2007) (agency actions that “bind[] private parties or the

agency itself with the ‘force of law’” are final) (quoting Gen. Elec. Co. v. E.P.A., 290 F.3d 377,

382 (D.C. Cir. 2002)); NRDC, 643 F.3d at 319-320 (guidance binding on EPA regional

administrators is final).

Each of the NRDC factors is present here. The New Rules: add conditions to Section

390; definitively resolve substantive legal questions; and are binding, unequivocal, and non-

discretionary. The New Rules are reviewable final agency action under 5 U.S.C. § 704. See

Bennett, 520 U.S. at 178; NRDC, 643 F.3d at 319.

C. The New Rules Are Ripe.

Respondents argue Western Energy “has not challenged any concrete action applying the

guidance.” Response at 20. Respondents’ ripeness argument fails for the same reason their


16

finality argument fails: Western Energy seeks judicial review of Respondents’ decision to issue

the New Rules without notice and comment, not Respondents’ future review of individual APDs.

1. This is a Purely Legal Challenge.

When challenging an agency’s adoption of a guidance document like the New Rules, the

jurisdictional questions of finality and ripeness “turn on the same question: whether the

Guidance announces a binding a change in the law.” NRDC, 643 F.3d at 319. For the reasons

stated on pages 10 to 15, supra, the New Rules announce a binding change in the law and are

ripe for review.

The New Rules are ripe because “a purely legal claim in the context of a facial challenge

is presumptively reviewable.” Cement Kiln Recycling Coal., 493 F.3d at 215. See also NRDC,

643 F.3d 320 (“because the Guidance is final, and because the issue raised by NRDC is purely

legal, the question before us is fit for judicial review.”). Whether the New Rules triggered the

notice and comment obligation of 5 U.S.C. § 553 is purely legal. Cement Kiln Recycling Coal.,

493 F.3d at 215. Whether the text of the New Rules defies the plain language of Section 390 is

purely legal. Id. Neither issue depends on Respondents’ application of the Rules to particular

APDs because the text of the New Rules will not change. Factual development will not make

these claims “more ripe” so they are justiciable now. NRDC, 643 F.3d 320.

2. This Challenge is Ripe Under Ohio Forestry.

Respondents claim the factors the Supreme Court identified in Ohio Forestry demonstrate

this challenge is not ripe. Response at 22; Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S.

726, 733 (1998) (stating that courts should look to: “(1) whether delayed review would cause


17

hardship to plaintiffs; (2) whether judicial intervention would inappropriately interfere with

further administrative action; and (3) whether the courts would benefit from further factual

development of the issues presented.”).

To the contrary, the Ohio Forestry factors demonstrate that this case is ripe. First,

“delayed review would cause hardship to” Western Energy. Id. at 733. Absent review now,

Western Energy members will incur the delay and expense they seek to avoid with this litigation.

Member will be forced to wait until Respondents: (1) apply the New Rules to a specific APD

that qualifies for a Statutory CX; (2) improperly require the preparation of an EA or EIS for that

APD although it qualifies for a Statutory CX; and (3) after that NEPA process, approve the APD

in a final decision.18 If the Court precludes review of the New Rules now, it precludes review

forever because an as-applied challenge can only be brought after an applicant has incurred the

New Rules’ delay and received its belated approval, at which point the challenge could be moot.

Second, judicial intervention will not “inappropriately interfere with further

administrative action.” Ohio Forestry, 523 U.S. at 733. As described on pages 10 to 15, supra,

the New Rules are final, definitive, and compulsory. No further administrative action will alter

their text. Respondents claim that judicial review will hinder the “development of future

18 Any interlocutory challenge at the time of Respondents’ decision to prepare a NEPA document rather than a Statutory CX would not be reviewable because the decision about that individual APD would not represent final agency action until a final decision on the APD. Western Energy members would have to wait until after the NEPA process was over (and a decision approving or denying their APD was made) to challenge the review process, at which time the claim would be moot.


18

guidance.” Response at 22. Courts have squarely rejected that contention.19 Respondents claim

that judicial review will “pre-empt” Respondents from “mak[ing] the best use of existing NEPA

analysis . . . to reduce paperwork and possible delay.” Response at 22. This is wrong. Judicial

review will not “pre-empt” Respondents from using existing NEPA documents.

Third, as described above, there is no benefit from further factual development because

this is a purely legal challenge. Ohio Forestry, 523 U.S. at 733; Cement Kiln Recycling Coal.,

493 F.3d at 215.

II. The New Rules are Legislative Rules Issued Without Notice and Comment in Violation of the APA Because They Adopt a Binding Change in the Law.

Respondents claim the New Rules were properly adopted without notice and comment

because they are policy statements or interpretive rules rather than legislative rules. See

Response at 23-28; 5 U.S.C. § 553(b). Respondents are wrong because the New Rules alter the

legal regime for application of the Statutory CXs in a binding way that produces legal

consequences distinct from the statutory text of Section 390. See pages 10 to 15, supra. That

proves (1) that this Court has jurisdiction, and (2) the New Rules are legislative and were

improperly issued without notice and comment in violation of 5 U.S.C. § 553. See NRDC, 643

F.3d 320 (“Given that the Guidance document changed the law, the first merits question –

whether the Guidance is a legislative rule that required notice and comment – is easy.”).

19 E.g., Appalachian Power, 208 F.3d at 1022 (“The fact that a law may be altered in the future has nothing to do with whether it is subject to judicial review at the moment.”); General Electric Co. v. E.P.A., 290 F.3d 377, 380 (2002) (“If the possibility (indeed, the probability) of future revision in fact could make agency action non-final as a matter of law, then it would be hard to imagine when any agency rule . . . would ever be final”).


19

First, the New Rules are not mere statements of policy because, as described above, they

bind Respondents’ decision-makers to apply Section 390 according to their terms. See Syncor

Int’l Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997) (“[P]olicy statements are binding on

neither the public nor the agency.”). Respondents claim that the New Rules are not legislative

because they bind the Respondents rather than Western Energy. Response at 25, n. 6. This is

not the law. Courts routinely find rules to be legislative where the rule binds agency employees.

See, e.g., NRDC, 643 F.3d at 321 (“[B]ecause the Guidance binds EPA regional directors, it

cannot, as EPA claims, be considered a mere statement of policy; it is a rule.”) (emphasis added).

Because the New Rules require the Respondents to apply NEPA to APDs in a manner prohibited

by Section 390, they are legislative.

Second, the New Rules are not interpretive. The New Rules created new law.

Respondents concede this point when they claim repeatedly that they merely carried out

Congress’ delegated authority to determine the applicability of the Statutory CXs: (1) “Congress

delegated authority to the agency generally to make rules carrying the force of law” (Response at

29, quoting United States v. Mead, 533 U.S. 218, 227 (2001)); (2) “Congress delegated to Forest

Service and the BLM the discretion to determine whether, and under what circumstances, the

five categorical exclusions would be applied” (Response at 30); (3) “the guidance was developed

pursuant to the Respondents’ delegated authority to determine how to apply Section 390” (Id.);

and (4) the New Rules fill “a gap delegated to the agency to fill” (Response at 32).


20

The New Rules alter the legal regime for the application of Section 390 by restricting the

use of the Statutory CXs to circumstances permitted by the administrative extraordinary

circumstances doctrine and to instances when site-specific NEPA documents analyze APDs

subject to Statutory CX2 and CX3. In NRDC, the court held that the EPA’s Section 185

Guidance was not interpretive because “nothing in the statute, prior regulations, or case law

authorizes EPA to accept alternatives to section 185.” NRDC, 643 F.3d at 321. Similarly,

nothing in Section 390, the Respondents’ prior 2005 Guidance, case law, or other authority

grants the Respondents the authority to: (1) subject the Statutory CXs to extraordinary

circumstances review; and (2) restrict the use of Statutory CX2 and CX3 to APDs that are

addressed in site-specific NEPA documents. See 42 U.S.C. § 15942; AR at CAT01806-

CAT01819 (2005 BLM Guidance), FS0000227-FS0000239 (2005 Forest Service Guidance). In

fact, Respondents 2005 Guidance required the exact opposite. See AR at CAT01812 -

CAT01815, FS0000227-FS0000239.

Because Respondents adopted the New Rules to carry out their perceived congressional

delegation to legislate, and those New Rules adopt legal positions and produce legal

consequences that are not provided in Section 390 and the 2005 Guidance, the New Rules are by

definition legislative and may not be adopted without notice and comment. See NRDC, 643 F.3d

at 321; Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106, 1112 (D.C. Cir.

1993) (where “in the absence of the rule there would not be an adequate legislative basis for

enforcement action or other agency action to confer benefits or ensure the performance of

duties,” the rule is legislative).


21

III. The New Rules are Contrary to the Plain Language of Section 390.

A. The BLM’s Interpretation of Statutory CX2 Defies the Plain Language of Section 390.

Statutory CX2 exempts from NEPA review:

Drilling an oil or gas well at a location or pad site at which drilling has occurred previously within 5 years prior to the date of spudding the well.

42 U.S.C. § 15942(b)(2). Respondents argue that the BLM may permissibly add an additional

condition to the use of Statutory CX2 – the drilling must have been analyzed in a previous site-

specific NEPA document – because Congress was “silent” on whether Statutory CX2 is

conditioned on prior NEPA review. Response at 39-40. Congress was not “silent” regarding the

conditions for use of Statutory CX2. Congress precisely identified the criteria for Statutory CX2

in Section 390. See 42 U.S.C. § 15942(b)(2). The Court should reject Respondents’ argument.

It fails the first step of statutory construction under Chevron because it does not give effect to the

unambiguous language that Congress used. Chevron U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 842-45 (1984) (if “the intent of Congress is clear,” then the court and the

agency “must give effect to the unambiguously expressed intent of Congress.”).

Respondents claim that it is appropriate to add additional conditions because Congress

did not explicitly prohibit them. Response at 39. That contention is absurd. It makes a mockery

of statutory construction and eviscerates the legislative choices Congress made in Section 390.

The 2010 BLM Rule turns Statutory CX2, 42 U.S.C. § 15942(b)(2), on its head by transforming

a categorical exclusion from NEPA review into a categorical obligation to conduct NEPA


22

review. The 2010 BLM Rule is a naked rejection of the policy choice made by Congress in

Statutory CX2. It cannot stand. Chevron, 467 U.S. at 842-45.

B. The BLM’s Interpretation of Statutory CX3 Defies the Plain Language of Section 390.

Statutory CX3 exempts from NEPA:

Drilling an oil or gas well within a developed field for which an approved land use plan or any environmental document prepared pursuant to NEPA analyzed such drilling as a reasonably foreseeable activity, so long as such plan or document was approved within 5 years prior to the date of spudding the well.

42 U.S.C. § 15942(b)(3) (emphasis added). Respondents argue: “Although it is clear that

Congress intended that CX3 should not be utilized unless the impacts of drilling had been

‘analyzed’ under NEPA, CX3 is ambiguous as to the type of analysis required.” Response at 42.

The 2010 BLM Rule resolves the perceived “ambiguity” by forbidding use of Statutory CX3

unless the drilling was analyzed in an “activity-level or project specific EIS or EA.” AR at

CAT01071.

Statutory CX3 is not ambiguous. Congress authorized its use so long as the proposed

drilling was analyzed within the past five years in (1) “an approved land use plan,” or (2) “any

environmental document prepared pursuant to NEPA.” 42 U.S.C. § 15942(b)(3) . The 2010

BLM Rule defies the plain language of Statutory CX3 by prohibiting its use based on “an

approved land use plan” or “any environmental document prepared pursuant to NEPA.”

Respondents may not like the policy choice Congress made: to base Statutory CX3 on a “land

use plan” or “any” NEPA document (not just a site or project-specific one). But “the appropriate

body to turn to is Congress.” National Mining Ass’n v. U.S. Army Corps of Engineers, 145 F.3d


23

1399, 1410 (10th Cir. 1998). Unless Congress amends Statutory CX3, the statute controls, and

the 2010 BLM Rule cannot stand. Chevron, 467 U.S. at 842-45.

C. Respondents’ Application of Extraordinary Circumstances Review to the Statutory CXs is Unreasonable.

Respondents claim they appropriately determined in the New Rules that Statutory CXs

may only be used when consistent with the administrative “extraordinary circumstances”

doctrine identified in 40 C.F.R. § 1508.4 and 36 C.F.R. § 220.6 because the doctrine is “a

fundamental component” of the categorical exclusion process. Response at 34. Respondents

overlook the fundamental difference between administrative and Statutory CXs: they arise from

different branches of government. An administrative CX “is a class of actions that normally do

not have significant impacts” and the extraordinary circumstances process is necessary to

determine if a particular project actually does have such impacts. Response at 33. The

extraordinary circumstances process is required because an agency may not exempt itself from

NEPA if the proposed action may, in fact, produce significant effects, the trigger for NEPA in

the first instance. See 42 U.S.C. § 4332; 40 C.F.R. § 1508.4. The activities covered by the

Statutory CXs, by contrast, often will have significant impacts even in “normal” circumstances.

See, e.g., 42 U.S.C. § 15942(b)(1) (creating up to 5 acres of surface disturbance); (2)-(3) (drilling

oil or gas wells) and (4) (laying pipeline). Limiting the use of Section 390 to instances when no

“extraordinary circumstances” exist does not recognize Congress’ authority to categorically

exclude an activity from NEPA, the stated intent of Section 390. The New Rules’ restriction on

the use of the Statutory CXs based on the extraordinary circumstances principle is contrary to the


24

plain language of Section 390 and is arbitrary, capricious, and manifestly contrary to the statute.

Chevron, 467 U.S. at 843.

IV. The Court Should Enjoin the New Rules Nationwide.

Respondents argue that the Court should enter only declaratory relief – and not enjoin

application of the New Rules – because the Court has discretion to tailor a remedy based on

“principles of equity.” Response at 44. The Court has significant discretion to tailor an

appropriate remedy. But as even the cases Respondents cite acknowledge, declaratory relief is

the exception to the rule of vacating and enjoining the application of a regulation that was

unlawfully promulgated. See, e.g., Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1393, 1405 (9th

Cir. 1995) (“Ordinarily when a regulation is not promulgated in compliance with the APA, the

regulation is invalid.”); see also Harmon v. Thornburgh, 878 F.2d 484, 495 n. 21 (D.C. Cir.

1989) (“When a reviewing court determines that agency regulations are unlawful, the ordinary

result is that the rules are vacated – not that their application to the individual petitioners is

proscribed.”). There is no equitable reason to leave a rule in place that was issued without public

notice or an opportunity to comment especially where, as here, the New Rules conflict with

congressional direction, and where the New Rules cause Western Energy members to incur

expense, delay, and legal risks. For this reason, and because Western Energy satisfies the four

elements to obtain a permanent injunction (see Op. Brief at 46-47), this Court should enjoin the

New Rules nationwide.


25

CONCLUSION

Western Energy respectfully requests that the Court vacate and enjoin the application of

the New Rules nationwide as an unlawful repudiation of Section 390 made without providing

notice or granting an opportunity for comment as required by 5 U.S.C. § 553.

Respectfully submitted this 5th day of August, 2011.

Mary A. Throne Throne Law Office 211 W. 19th Street, Suite 200

PO Box 828 Cheyenne, WY 82003 Telephone: 307-637-2822 Facsimile: 307-674-6104

Ezekiel J. Williams Steven K. Imig Ducker Montgomery, Lewis & Bess, P.C. 1560 Broadway, Suite 1400 Denver, CO 80202 Telephone: 303-861-2828 Facsimile: 303-861-4017

Attorneys for Petitioner Western Energy Alliance


26

CERTIFICATE OF COMPLIANCE

Pursuant to Rule 32(a)(7)(C) of the Federal Rules of Appellate Procedure, I hereby

certify that Western Energy’s Reply is proportionately spaced and contains 6,970 words. I relied

on my processing program Microsoft Word 2007, to obtain this count.

Respectfully submitted August 5, 2011.

Mary A. Throne


27

CERTIFICATE OF SERVICE

I certify that on August 5, 2011, I electronically filed the foregoing with the Clerk of the Court using CM/ECF system which will automatically send e-mail notification of such filing to the following:

Barclay T. Samford Trial Attorney, Natural Resources Section

U.S. Department of Justice 999 18th Street, South Terrace, Suite 370 Denver, CO 80212 Joseph H. Azbell Assistant United States Attorney P.O. Box 668 Cheyenne, WY 82003-0668

Mary A. Throne


EXHIBIT 12

Case 2:10-cv-00237-NDF Document 32-1 Filed 08/05/11 Page 1 of 10

EZEKIEL WILLIAMS 8/1/2011For Educational Use Only

Natural Resources Defense Council v. E.P.A., 643 F.3d 311 (2011)

© 2011 Thomson Reuters. No claim to original U.S. Government Works. 1

643 F.3d 311United States Court of Appeals,

District of Columbia Circuit.

NATURAL RESOURCESDEFENSE COUNCIL, Petitioner

v.ENVIRONMENTAL PROTECTION

AGENCY, RespondentAmerican Chemistry Council, et al., Intervenors.

No. 10–1056. Argued May12, 2011. Decided July 1, 2011.

Synopsis

Background: Environmental organization brought Petitionfor Review from final action of Environmental ProtectionAgency (EPA), promulgating guidance document addressingobligations of regions in nonattainment of ozone air qualitystandards under Clean Air Act (CAA).

Holdings: The Court of Appeals, Tatel, Circuit Judge, heldthat:1 organization had standing to maintain action;2 promulgation of document constituted “final agency action”ripe for review;3 document constituted “legislative rule” triggering noticeand comment procedures; and4 attainment alternative contained within guidance documentcontravened language of CAA.

Petition granted; vacated.

West Headnotes (5)

1 Environmental LawNon-attainment areas

Regions in nonattainment of national ambientair quality standards (NAAQS) are subjectto additional restrictions over and aboveimplementation requirements of Clean Air Act(CAA). Clean Air Act, § 109(a), 42 U.S.C.A. §7409(a).

2 Environmental LawOrganizations, associations, and other

groups

Environmental organization challengingpromulgation of Environmental ProtectionAgency (EPA) guidance document addressingobligations of regions in nonattainment of ozoneair quality standards under Clean Air Act (CAA)established organizational standing to maintainaction, due to alleged injuries suffered by twoof its members; both members lived in 1-hournonattainment areas, both asserted that localambient ozone levels had adversely affected theirhealth and forced them to reduce time spentoutside, and EPA guidance allegedly exacerbatedsuch injuries by delaying or suspending future airquality improvements. Clean Air Act, § 181(a)(1),42 U.S.C.A. § 7511(a)(1).

3 Environmental LawFinality

Environmental LawRipeness

Promulgation of Environmental ProtectionAgency (EPA) guidance document addressingobligations of regions in nonattainment of ozoneair quality standards under Clean Air Act (CAA)constituted “final agency action” ripe for review,since guidance announced binding change inapplicable law; prior to issuing guidance, neitherstatute, EPA regulations nor case law authorizedregional directors to approve implementationplans containing alternatives to fees imposed as tononattainment regions. Clean Air Act, § 181, 42U.S.C.A. § 7511.

4 Environmental LawNotice and comment

Environmental Protection Agency (EPA)guidance document addressing obligations ofregions in nonattainment of ozone air qualitystandards under Clean Air Act (CAA) constituted“legislative rule” triggering notice and comment


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procedures under Administrative Procedure Act(APA); nothing in statute, prior regulations orcase law authorized EPA regional directorsto approve implementation plans containingalternatives to fees, and nothing prior to guidanceentitled state to have EPA evaluate proposedalternative for equivalency rather than reject itoutright. 5 U.S.C.A. § 553; Clean Air Act, §§109(a), 181, 42 U.S.C.A. §§ 7409(a), 7511.

5 Environmental LawOzone

Attainment alternative contained withinEnvironmental Protection Agency (EPA)guidance document addressing obligations ofregions in nonattainment of ozone air qualitystandards contravened language of Clean Air Act(CAA) pertaining to national ambient air qualitystandards (NAAQS); statute expressly requiredthat any alternatives to controls imposed as tononattainment regions be “not less stringent” thanthose already provided, and attainment alternativeexceeded precedential limits to agency's “gap-filling” discretion. Clean Air Act, §§ 109(a), 181,42 U.S.C.A. §§ 7409(a), 7511.

*313 On Petition for Review of a Final Action of theEnvironmental Protection Agency.

Attorneys and Law Firms

Paul Cort argued the cause for petitioner. With him on thebriefs was Deborah Reames.

Stephanie J. Talbert, Attorney, U.S. Department of Justice,argued the cause for respondent. With her on the brief wereJohn C. Cruden, Deputy Assistant Attorney General andSara Schneeberg, Attorney, U.S. Environmental ProtectionAgency. Thomas A. Lorenzen, Attorney, U.S. Department ofJustice, entered an appearance.Barbara Baird argued the cause for intervenor South CoastAir Quality Management District. With her on the brief wasKurt R. Wiese.

Leslie Sue Ritts, Claudia M. O'Brien, Charles H. Knauss,Sandra P. Franco, Thomas G. Echikson, Rachel D. Gray,and Adam J. White were on the brief for intervenors forrespondent American Chemistry Council, et al. Richard P.Sobiecki and Stacey L. VanBelleghem entered an appearance.

Before: ROGERS, TATEL, and GRIFFITH, Circuit Judges.

Opinion

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

Yet again we face a challenge to the Environmental ProtectionAgency's regulation of ozone under the Clean Air Act. Atissue this time is an EPA “guidance document” addressingobligations of regions still in nonattainment of a now-revoked ozone air quality standard. Petitioner argues that theGuidance amounts to a legislative rule issued in violationof the Administrative Procedure Act's notice and commentrequirement and that its substantive content is contrary to law.Firing nearly all the arrows in its jurisdictional quiver, EPAargues that petitioner lacks standing, that the Guidance doesnot qualify as final agency action, and that petitioner's claimsare unripe for judicial review. As we explain in this opinion,all three arrows miss their target. On the merits, we concludethat the Guidance qualifies as a legislative rule that EPA wasrequired to issue through notice and comment rulemaking andthat one of its features—the so-called attainment alternative—violates the Clean Air Act's plain language. We thereforegrant the petition for review and vacate the Guidance.

I.

1 The Clean Air Act requires EPA to establish nationalambient air quality standards (NAAQS) for certain criteriapollutants, including ozone. 42 U.S.C. § 7409(a). Regions innonattainment of those standards are subject to “additionalrestrictions over and above the [Act's] implementationrequirements.” Whitman v. Am. Trucking Ass'ns, 531 U.S.457, 476, 121 S.Ct. 903, 149 L.Ed.2d 1 (2001). Theseadditional restrictions appear in Title I, Part D of the Act.“Subpart 1 contains general nonattainment regulations thatpertain to every pollutant for which a NAAQS exists....Subpart 2, added by the Clean Air Act Amendments of 1990,addresses ozone.” Id. (internal citations omitted). That latter
























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subpart classifies nonattainment areas as either “marginal,”“moderate,” “serious,” “severe,” or “extreme,” 42 U.S.C.§ 7511(a)(1), giving areas with worse air quality extratime to come into compliance in exchange for imposingmore stringent standards. Id. (listing *314 classificationsand attainment dates). Subpart 2 also contains provisionsdesigned to encourage these regions to meet their deadlines.Central to this case, one of those provisions, section 185,directs states to impose fees on all major stationary sourcesin severe and extreme nonattainment areas that miss theirdeadlines. Id. § 7511 d(a). Under section 185, such states mustsubmit implementation plans, and if a state fails to do so, EPAmust collect the fees itself. Id. § 7511d(a), (d). In addition,states failing to submit adequate implementation plans mayincur penalties, including loss of federal highway funding. Id.§ 7509(b)(1).

Until 1997, EPA had in place a 1–hour ozone NAAQSprohibiting average hourly concentrations from exceeding .12parts per million. The 1990 amendments, including thetable specifying nonattainment classifications and attainmentdeadlines, incorporate that 1–hour standard. Id. § 7511(a)(1). In 1997, however, EPA found the 1–hour standardinsufficient to “protect the public health,” id. § 7409(b),and so promulgated an 8–hour standard of .08 parts permillion. National Ambient Air Quality Standards for Ozone:Final Rule, 62 Fed.Reg. 38,856, 38,863 (July 18, 1997)(codified at 40 C.F.R. pt. 50) (“1997 Ozone Rule”). Becausethe .12 parts per million 1–hour standard roughly correspondsto a .09 parts per million 8–hour standard, the revisionchanged not only “the measuring stick [but also] the target.”S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882,892 (D.C.Cir.2006). Overall, the 8–hour standard is moreprotective of public health and “generally even more effectivein limiting 1–hour exposures ... than is the ... 1–hourstandard.” 1997 Ozone Rule, 62 Fed.Reg. at 38,863. Thatsaid, EPA acknowledged that “it is possible that an 8–hourstandard alone could allow for high 1–hour exposures ofconcern.” Id. Accordingly, to ease the transition to the newstandard, EPA determined that the requirements of Subpart2, including section 185, would apply only to nonattainmentunder the 1–hour standard, which would remain in placeuntil all areas achieved attainment. Id. at 38,873. The 8–hour standard would be implemented only under Subpart 1,a part of the statute that leaves EPA substantial regulatoryflexibility.

Reviewing the 1997 rule in Whitman v. American TruckingAss'ns, the Supreme Court observed that even though Subpart2 expressly relies on the 1–hour standard, EPA remainedfree to revise the NAAQS. 531 U.S. at 484, 121 S.Ct. 903.Given this, the Court recognized that the statute left severalgaps for EPA to fill as it implemented revised NAAQS.Id. at 483–84, 121 S.Ct. 903 (identifying three specificgaps related to classification and attainment deadlines). TheCourt nonetheless held that EPA's exemption of the 8–hour standard from the Subpart 2 requirements violated thestatute. Id. at 484–86, 121 S.Ct. 903. According to the Court,Congress intended Subpart 2 to “eliminate[ ] [the] regulatorydiscretion” that Subpart 1 allowed and that EPA's reading wasimpermissible because it “render[ed] Subpart 2's carefullydesigned restrictions on EPA discretion utterly nugatory.” Id.at 484, 121 S.Ct. 903. “A plan reaching so far into the future,”the Court explained, “was not enacted to be abandoned thenext time the EPA reviewed the ozone standard.” Id. at 485,121 S.Ct. 903.

Following American Trucking, EPA tried again to reconcileSubpart 2 with the new 8–hour standard. See Final Rule toImplement the 8–Hour Ozone National Ambient Air QualityStandard—Phase 1, 69 Fed.Reg. 23,951 (Apr. 30, 2004)(codified at 40 C.F.R. pts. 50, 51, 81). In a 2004 rulemaking,the agency determined that Subpart 2 would apply onlyto areas in *315 nonattainment of both the 1–hour andthe 8–hour standards, but that the 1–hour standard wouldbe withdrawn in full one year after the 8–hour standard'seffective date. Pursuant to this new scheme, 76 of the 122then-non-attaining areas would be subject only to Subpart1. S. Coast, 472 F.3d at 892. Addressing one of the gapsthe Supreme Court identified in American Trucking—relatingto regional classification under the 8–hour standard—EPAnoted that because net air quality had improved since 1990,some areas would have a lower classification under the 8–hour standard than they had had under the 1–hour standard.Id. at 890. For instance, although Baton Rouge had been asevere nonattainment area under the 1–hour standard, it wasin only marginal nonattainment of the 8–hour standard. Seeid. at 899. Rather than allow such regions to loosen existingimplementation standards, EPA interpreted section 172(e)—a Subpart 1 “anti-backsliding” provision that applies “[i]fthe administrator relaxes a [NAAQS],” 42 U.S.C. § 7502(e)(emphasis added)—to apply as well where NAAQS weremade more stringent. See Final Rule to Implement the 8–







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Hour Ozone National Ambient Air Quality Standard—Phase1, 69 Fed.Reg. at 23,972 (concluding that Congress intended“that such controls not be weakened where the NAAQS ismade more stringent”). Section 172(e) provides that whereEPA relaxes a NAAQS, it “shall ... promulgate requirementsapplicable to all areas which have not attained that standardas of the date of such relaxation. Such requirements shallprovide for controls which are not less stringent than thecontrols applicable to areas designated nonattainment beforesuch relaxation.” 42 U.S.C. § 7502(e). Accordingly, the 2004Rule announced that Subpart 2 “applicable controls” had toremain in place for areas that had been in nonattainmentunder the 1–hour standard and were in attainment or a lowerclassification of nonattainment under the 8–hour standard.S. Coast, 472 F.3d at 890. For Baton Rouge, for instance,controls applicable to severe nonattainment regions wouldcontinue to apply despite the fact that the city qualified as amarginal nonattainment area under the new standard. Sortingthrough the various Subpart 2 provisions, EPA determinedthat some were applicable controls and others, includingsection 185 fees, were not. Id.

In South Coast Air Quality Management District v. EPA,we rejected a challenge to EPA's withdrawal of the 1–hourstandard but vacated the portions of the rule exemptingareas in nonattainment of only the 8–hour standard fromSubpart 2 strictures. Id. at 892–95. At the least, we held,Subpart 2 must apply for areas with 8–hour concentrationsexceeding .09 parts per million, the 8–hour equivalent of the1–hour standard on which Congress relied in enacting Subpart2. Id. at 892–94. For areas with 8–hour concentrationsbetween .08 parts per million (the new standard) and .09 partsper million, we found that EPA's sole reason for excludingthese areas from Subpart 2—to create regulatory flexibilityand thus “maximize its own discretion”—contradicted the“clear intent of Congress.” Id. at 894–95. We also concludedthat although EPA's interpretation of section 172(e) wasreasonable, the same could not be said for its exclusion ofsection 185 fees from “applicable controls.” Id. at 900, 902–03. We explained: “[a]s Congress set the penalty deadlinewell into the future, giving states and industry ample noticeand sufficient incentives to avoid the penalties, they were‘applicable’ before they were actually imposed ..., [and][b]ecause these penalties were designed to constrain ozonepollution, they are controls that section 172(e) requiresto be retained.” Id. at 903. Responding to EPA's *316argument that enforcement would be impractical because the

penalty calculation relied on the no-longer-measured 1–hourstandard, we warned that “section 172(e) does not conditionits strict distaste for backsliding on EPA's determinationsof expediency; EPA must determine its procedures afterit has identified what findings must be made under theAct.” Id. In sum, we ruled that pursuant to section 172(e)'santi-backsliding principles, an area subject to section 185penalties due to its classification under the now-defunct 1–hour standard must apply those penalties as an “applicablecontrol” if the area missed its attainment deadline under the1–hour standard.

Now before us is EPA's latest attempt to reconcile the 8–hourstandard with Subpart 2. This time its effort relates only to theapplication of section 185 fees to the eight regions in severeor extreme nonattainment of the 1–hour standard: Baltimore,Baton Rouge, Houston, New York City, Sacramento, theSan Joaquin Valley, the South Coast Air Basin (CA), andthe Southeast Desert (CA). Because attainment deadlines forthe eight regions have now expired, all are in the processof developing section 185 implementation plans. Faced withthe prospect of hefty fees, industry groups complained toEPA that because they already had in place the best availableemission control technology, they could reduce emissions andthus avoid fees only by cutting production. Report of theU.S. EPA Clean Air Act Advisory Committee Task Force onSection 185 of the Clean Air Act 3 (May 12, 2009) (includedat J.A. 56). Moreover, they asserted, because section 185 setsuch a low emissions threshold for major stationary sources,the fees would apply to many small businesses, as well asto hospitals and schools. Id. at 4. Lastly, they alleged thatstationary sources contribute far less to overall air pollutiontoday than they did in 1990 and face far higher marginal costsfor further reduction than do mobile sources. Id. at 3.

To address these concerns, the Clean Air Act AdvisoryCommittee, a body created by the 1990 Amendments toadvise EPA on scientific and industry developments relevantto rule making, established a task force that generated alist of section 185 alternatives including shifting costs tomobile sources and implementing market-based programs.Environmental organizations participating in the task forcesubmitted an “Alternative Opinion” criticizing the policyrationales of the industry groups and asserting that the statuteallowed no alternatives. The Committee submitted the taskforce report to EPA along with the following question: “Is itlegally permissible under either section 185 or 172(e) for a




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State to exercise the discretion identified in [the options listedin this letter]?” Letter from Eddie Terrill & Robert Wyman,Co-chairs of the Section 185 Task Force, to Elizabeth Craig,Acting Assistant Administrator, Office of Air & Radiation(May 16, 2009) (“Task Force Letter ”) (included at J.A. 51).

In response, EPA issued a “Guidance” document aimedat Regional Air Division Directors—the agency officialsdirectly responsible for implementation plan approval. ThatJanuary 5, 2010, document explains to Directors that

[i]n the implementation rule for the 1997 ozone NAAQS,EPA determined that although section 172(e) does notdirectly apply where EPA has strengthened the NAAQS,as it did in 1997, it was reasonable to apply the sameprinciple for the transition from the 1–hour NAAQS to the1997 8–hour NAAQS. As part of applying the principle insection 172(e) for purposes of the transition from the 1–hour standard to the 1997 8–hour standard, EPA can eitherrequire states *317 to retain programs that applied forpurposes of the 1–hour standard, or alternatively can allowstates flexibility to adopt alternative programs, but only ifsuch alternatives are ‘not less stringent’ than the mandatedprogram.

Memorandum from Stephen D. Page, Director, Office ofAir Quality Planning & Standards to Regional Air DivisionDirectors 3 (Jan. 5, 2010) (“Fee Program Guidance ”)(included at J.A. 66). In other words, EPA believes 1–hournonattainment areas have flexibility to choose between thestatutorily mandated program and an equivalent—i.e., theprogram alternative.

In addition to that alternative, the Guidance explains,regions attaining either the 1–hour or the 8–hour standardcan avoid section 185 fees through an “attainmentalternative.” Specifically, in such regions the existing 8–hour implementation controls would qualify as a “not lessstringent” alternative to section 185 fees. Id. at 3–4. In otherwords, a region satisfying the 8–hour standard would have noobligation to pay section 185 fees even though it remainedin nonattainment of the 1–hour standard. The Guidancesets forth two justifications for the attainment alternative.First, “it would unfairly penalize sources in these areas torequire that fees be paid after an area has attained the 8–hour standard due to permanent and enforceable emissionreductions because the fees were imposed due to a failureto meet the applicable attainment deadline for the 1–hour

standard, not any failure to achieve the now applicable 8–hourstandard by its attainment date.” Id. at 4. Second, becauseEPA no longer redesignates areas under the 1–hour standard,“relief from the 1–hour fee program requirements under theterms of the statute is an impossibility, since the conditionsthe statute envisioned for relieving an area of its fee programobligation”—reclassification as in attainment of the 1–hourstandard—“no longer can exist.” Id.

As to both the program and attainment alternatives, theGuidance explains that approval of individual alternativeswould occur on a case-by-case basis. Specifically, if afterpreliminarily assessing a proposal, EPA were to find thealternative satisfactory, it would proceed with notice andcomment to finalize that finding. Id. at 3.

On March 5, 2010, the Natural Resources Defense Council(NRDC) filed a petition for review of the Guidance pursuantto Clean Air Act section 307(b)(1), which gives this courtexclusive jurisdiction over challenges to final EPA actions.42 U.S.C. § 7607(b)(1). NRDC argues that EPA violatedthe Administrative Procedure Act by issuing the Guidancewithout notice and comment and that both the program andattainment alternatives violate the Clean Air Act. In response,EPA argues that NRDC lacks standing, that the Guidance failsto qualify as final agency action, and that NRDC's challengesare unripe for review. On the merits, EPA contends that theGuidance is either a policy statement or an interpretive ruleand, in either case, is exempt from the notice and commentrequirement. It also defends both alternatives as permissibleexercises of statutory gapfilling. Numerous industry groupsand the South Coast Air Quality Management District haveintervened in support of EPA.

II.

2 NRDC argues that it has “organizational standing” dueto alleged injuries suffered by two of its members. SierraClub v. EPA, 292 F.3d 895, 898 (D.C.Cir.2002) (listing threerequirements of organizational standing, only one of which—that at least one member would have standing to sue inher own right—is at issue in this *318 case); see alsoLujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112S.Ct. 2130, 119 L.Ed.2d 351 (1992) (to demonstrate thata member would have standing to sue in her own right,the organization must establish that she has suffered injury,caused by the defendant's action, and redressable through this


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claim). Both members live in 1–hour nonattainment areas(one in the Houston area, which has an attainment deadline ofNovember 15, 2007, and the other in the San Joaquin Valley,which has a deadline of November 15, 2010), and bothassert that local ambient ozone levels have adversely affectedtheir health and forced them to reduce time they spendoutside. See Marilyn McGill Aff. ¶¶ 2, 6; Gaylee AmendAff. ¶¶ 2, 6–8; see also 42 U.S.C. § 7511(a)(1); Approvaland Promulgation of Implementation Plans; Texas; Houston/Galveston Nonattainment Area; Ozone, 66 Fed.Reg. 57,160(Nov. 14, 2001) (codified at 40 C.F.R. pt. 52) (approvingplan for Houston, a severe nonattainment area, to achieveattainment by 2007); Clean Air Act Reclassification; SanJoaquin Valley Nonattainment Area, 69 Fed.Reg. 20,550(Apr. 16, 2004) (codified at 40 C.F.R. pt. 81) (reclassifyingthe San Joaquin Valley as an extreme nonattainment area andtherefore pushing the attainment deadline to 2010 from 2005).According to NRDC, the Guidance exacerbates these injuriesby delaying or suspending future air quality improvements.Any such effect, EPA counters, is purely hypothetical becauseit may never approve an alternative.

In our view, the Guidance injures NRDC's members inthree independent ways. First, the Guidance caused severalnonattainment areas, including Houston and the San JoaquinValley, to abandon plans to submit section–185–compliantimplementation plans, thus delaying, at the very least,implementation of section 185, which in turn delays thereduction of ambient ozone and harms NRDC members.See Elena Craft Aff. ¶¶ 7–9; Sarah Jackson Aff. ¶¶ 6–12. Second, even in the San Joaquin Valley, where theattainment deadline had not yet passed at the time NRDCfiled this petition, the Guidance had a present, concreteeffect because it eliminated section 185's powerful incentivefor major stationary sources to reduce emissions before thedeadline. See S. Coast, 472 F.3d at 903 (explaining thateven where a nonattainment deadline has yet to pass, section185 is currently applicable because it incentivizes emissionreductions before fees are implemented). Third, because theGuidance replaces a brightline section 185 requirement with aflexible standard, it is likely to result in lengthier rulemakingprocesses. And because an order vacating the Guidancewould require Houston and the San Joaquin Valley to submitsection–185–compliant state implementation plans (or, ifthey failed to do so, because EPA itself would be obligatedto implement section 185, see 42 U.S.C. § 7511d(d)), theseinjuries are all redressable. See Recording of Oral Arg.

at 31:05–09 (counsel for EPA clarifying that were we tovacate the Guidance, nonattainment regions would remainobligated to submit SIPs under existing deadlines and wouldnot receive extensions related to future rulemakings); Lujan,504 U.S. at 562, 112 S.Ct. 2130 (explaining that where“a plaintiff's asserted injury arises from the government'sallegedly unlawful regulation [of a third party]” the criticalquestion is how the third party would respond to an orderdeclaring the government's action illegal).

EPA nonetheless insists that the Guidance causes no injurybecause any approved alternative program will, by definition,be “not less stringent” than section 185 fees. Of course, thisargument carries absolutely no weight with respect to theattainment alternative for which the Guidance *319 requiresno equivalency analysis. The argument is also unpersuasivewith respect to the program alternative. To begin with, it ispossible that a plan EPA might legitimately find equivalentto a section 185 penalty (and which we would thus upholdon the merits) could nonetheless be so meaningfully differentas to cause cognizable Article III injury. In any event, evenassuming that a resulting program were perfectly equivalent,the delay in improving air quality would still injure NRDCmembers. EPA's argument also proves far too much. WereEPA to prevail, although NRDC might well have standingto bring an as-applied challenge to any particular “not lessstringent” determination, no one would have standing tochallenge EPA's authority to allow alternatives in the firstplace. Especially given that Congress enacted Subpart 2for the very purpose of curtailing EPA discretion, see Am.Trucking, 531 U.S. at 484–86, 121 S.Ct. 903, it wouldbe ironic indeed if the application of standing doctrineallowed EPA to effectively maintain that very discretion.Neither precedent nor logic requires us to adopt such acounterintuitive approach to standing.

3 The next two jurisdictional issues—finality and ripeness—turn on the same question: whether the Guidanceannounces a binding change in the law. Bennett v. Spear,520 U.S. 154, 177–78, 117 S.Ct. 1154, 137 L.Ed.2d 281(1997) (explaining that to be final, the action must (1)“mark the consummation of the agency's decisionmakingprocess,” and (2) “be one by which rights or obligationshave been determined, or from which legal consequences willflow” (internal quotation marks omitted)); Abbott Labs. v.Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681(1967) (identifying finality as a necessary feature of fitness











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for review). It did. Prior to issuing the Guidance, neitherthe statute nor EPA regulations nor case law authorizedEPA regional directors to approve implementation planscontaining alternatives to section 185 fees. Conceding asmuch with respect to regulations and case law, EPA arguesthat section 172(e) expressly authorizes alternatives in thisspecific context. We disagree. Although section 172(e) doesallow EPA to sanction alternatives where it relaxed theNAAQS, nothing in the statute expressly addresses situationswhere, as here, EPA strengthened the NAAQS. Accordingly,while section 172(e) expressly contemplates alternatives, itsapplication in this context requires interpretation—a pointEPA acknowledges elsewhere when it asserts that “there is agap in the statute that the EPA must fill.” Resp't's Br. 34. Thisis all the more so with respect to the attainment alternative:because section 172(e) protects against backsliding from anold standard, nothing in it hints that a state could escape fromits strictures by satisfying a new standard.

EPA insists that the Guidance changed nothing because priorto its issuance, a regional director could have consideredan alternative. Perhaps so, but that director also retaineddiscretion, now withdrawn by the Guidance, to rejectthe alternative solely for failing to comply with section185. Indeed, this is essentially what happened when theSan Joaquin Valley Unified Air Pollution Control Districtsubmitted a section 185 plan that exempted certain majorstationary sources. After notice and comment, EPA rejectedthe plan for failure to comply with section 185, explainingthat because San Joaquin never characterized the plan asan alternative, EPA had no need to “take a final positionregarding whether it could approve a substitute program forthe program specified under [Clean Air Act] section 185.”Revisions to the California State Implementation *320 Plan,San Joaquin Valley United Air Pollution Control District, 75Fed.Reg. 1716, 1717–18 (Jan. 13, 2010). In other words, hadSan Joaquin asked EPA to treat its proposal as an alternative,the regional director might have performed an equivalencyanalysis or determined that alternatives were categoricallyunacceptable. Post–Guidance, however, the director may nolonger reject a plan on the latter ground. The permissibility ofalternatives is now a closed question, and the Guidance leavesto future rulemakings only the issue of whether a specificproposed alternative satisfies the program or attainmentoption.

The Guidance's language supports the conclusion that EPAhas definitively interpreted section 172(e) as permittingalternatives. The Guidance explains that “EPA is electingto consider alternative programs to satisfy the section 185fee program [implementation plan] revision requirement,”and the document announces that “[i]f [EPA's] preliminaryassessment indicates that the alternative program is not lessstringent, we would issue a notice in the Federal Registerproposing to make such a determination.” Fee ProgramGuidance at 3. By contrast, with regard to approvability ofindividual plans, the document expressly reserves discretionfor future administrative action: “The remainder of thismemorandum describes the circumstances under which webelieve we can approve an alternative program that is ‘noless stringent.’ These interpretations will only be finalizedthrough ... notice-and-comment rulemaking to address thefee program obligations associated with each applicablenonattainment area.” Id.

In sum, then, the Guidance altered the legal regime byresolving the question posed by the Clean Air Act AdvisoryCommittee: “Is it legally permissible under either section 185or 172(e) for a State to exercise the discretion identified in [theoptions listed in this letter]?” Task Force Letter. Answeringthat question affirmatively, the Guidance binds EPA regionaldirectors and thus qualifies as final agency action. Bennett,520 U.S. at 177–78, 117 S.Ct. 1154; see also AppalachianPower Co. v. EPA, 208 F.3d 1015, 1020–23 (D.C.Cir.2000)(explaining that for the purposes of finality, it is irrelevanthow the interpretation will apply to any individual state's SIP-approval process). Moreover, because the Guidance is final,and because the issue raised by NRDC is purely legal, thequestion before us is fit for judicial review. See Cement KilnRecycling Coal. v. EPA, 493 F.3d 207, 215 (D.C.Cir.2007)(“[A] purely legal claim in the context of a facial challengeis presumptively reviewable.” (internal quotations marks andellipses omitted)); see also Abbott Labs., 387 U.S. at 149,87 S.Ct. 1507 (describing the fitness requirement). Andbecause “Congress has emphatically declared a preference forimmediate review” with respect to Clean Air Act rulemaking,we have no need to consider the ripeness test's secondelement, namely, the hardship to the parties of withholdingreview. Cement Kiln Recycling Coal., 493 F.3d at 215;see also Natural Res. Def. Council v. EPA, 22 F.3d 1125,1133 (D.C.Cir.1994) (finding such congressional intent inthe sixty day time limit in the Clean Air Act judicial review



















provision—the same provision governing review in this case—and concluding, therefore, that the court need not considerhardship).

III.

4 Given that the Guidance document changed the law, thefirst merits question—whether the Guidance is a legislativerule that required notice and comment—is easy. See 5U.S.C. § 553 (requiring that *321 legislative rules, butnot policy statements or interpretive rules, be issued onlyafter notice and comment). To begin with, because theGuidance binds EPA regional directors, it cannot, as EPAclaims, be considered a mere statement of policy; it is a rule.Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 94 (D.C.Cir.1997)(“[P]olicy statements are binding on neither the public northe agency.” (internal citation omitted)); see also CementKiln Recycling Coal., 493 F.3d at 226 & n. 14 (finding thatthe inquiries into whether the agency action was final andwhether the agency action was a rule were essentially thesame). Moreover, contrary to EPA's alternative argument,this rule is not interpretive; it is legislative. As we explainedabove, nothing in the statute, prior regulations, or caselaw authorizes EPA to accept alternatives to section 185.Likewise, nothing prior to the Guidance entitled a state tohave EPA evaluate a proposed alternative for equivalencyrather than reject it outright. Accordingly, the Guidancequalifies as a legislative rule that EPA had no authority toissue without notice and comment. See Am. Mining Cong.v. Mine Safety & Health Admin., 995 F.2d 1106, 1112(D.C.Cir.1993) (stating that where “in the absence of therule there would not be an adequate legislative basis forenforcement action or other agency action to confer benefitsor ensure the performance of duties,” the rule is legislative).

Having concluded that EPA issued the Guidance in violationof the Administrative Procedure Act's notice and commentrequirement, we could simply vacate and end this opinion.NRDC, however, urges us to resolve its substantive claims,arguing that “a ruling on these questions is in the interestof judicial and administrative economies.” Pet'r's Br. 26.Our case law provides little direction on whether, havingdetermined to vacate on procedural grounds, we shouldnonetheless address substantive claims. Compare SprintCorp. v. FCC, 315 F.3d 369, 377 (D.C.Cir.2003) (remandingwithout reaching substantive claims), and Syncor Int'l Corp.,127 F.3d at 96 (same), with Air Transp. Ass'n of Am. v. FAA,

169 F.3d 1, 4–6, 8 (D.C.Cir.1999) (reaching statutory claimsbut declining to evaluate arbitrary and capricious challenges),Owner–Operator Indep. Drivers Ass'n v. Fed. Motor CarrierSafety Admin., 494 F.3d 188, 206 (D.C.Cir.2007) (vacatinga portion of a rule both because agency failed to providean opportunity for comment and because agency failed toprovide adequate explanation), and Ala. Power Co. v. FERC,160 F.3d 7, 11 (D.C.Cir.1998) (finding it appropriate toproceed to petitioner's argument that agency lacked authorityto take challenged action after having found that agency failedto follow required procedure in taking that action).

In deciding how to proceed here, we keep in mind twocompeting interests. On the one hand, we must avoidprejudging the notice and comment process, the very purposeof which is to give interested parties the opportunity toparticipate in rulemaking and to ensure that the agency hasbefore it all relevant information. MCI Telecomms. Corp. v.FCC, 57 F.3d 1136, 1140–41 (D.C.Cir.1995). On the otherhand, were we to vacate the Guidance without passing on thevalidity of the two alternatives, we could exacerbate the verydelay that is injuring NRDC's members.

Evaluating the program alternative in light of theseconsiderations, we believe that the interest in preservingthe integrity of the notice and comment process stronglyoutweighs any concern about delay. Because neither thestatute nor our case law obviously precludes that alternative,we believe that by weighing in now we would unfairlyprejudge any future notice and comment process.

*322 5 The attainment alternative presents a very differentsituation. Because it violates the statute's plain language andour precedent, nothing would be gained by postponing adecision on the merits. Indeed, doing so would exacerbate thedelay that is harming NRDC.

We begin with the statute. Chevron, U.S.A., Inc. v. NaturalRes. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778,81 L.Ed.2d 694 (1984) ( “First, always, is the questionwhether Congress has directly spoken to the precise questionat issue.”). Section 172(e)'s plain language requires that anyalternative be “not less stringent than applicable controls.”Recall that under the attainment alternative, an area needachieve only one or the other of the two NAAQS, meaningthat an area in attainment of the 8–hour standard may treat its8–hour implementation plan as an alternative to section 185fees for 1–hour nonattainment. Although it is theoretically




























possible that controls in place to meet the 8–hour standardin a particular region could be equivalent to the section 185penalties under the 1–hour standard, EPA does not purportto draw such a conclusion. Instead, EPA equates the purposeof retaining section 185 as an anti-backsliding measure (toachieve attainment) with the purpose of 8–hour attainmentcontrols (to achieve attainment). But it ignores the fact thatto satisfy section 172(e), the alternative must be “not lessstringent” than the applicable control required to attain thesuperseded standard. In other words, those two attainmentsare of different standards.

The attainment alternative also exceeds several of the limitsto EPA's gapfilling discretion that we identified in SouthCoast. See Sierra Club v. EPA, 479 F.3d 875, 878, 880(D.C.Cir.2007) (per curiam) (explaining that where EPAviolates “the Clean Air Act's plain language as interpreted by[our precedent]” that is “ ‘the end of the matter’ ” (quotingChevron, 467 U.S. at 842, 104 S.Ct. 2778)). First, we heldthat applicable controls “must be enforced under the one-hourNAAQS.” S. Coast, 472 F.3d at 903. Expressly contradictingthat directive, the attainment alternative requires enforcementof section 185 in only a subset of the 1–hour nonattainmentregions—those also in nonattainment of the 8–hour standard.Second, we explained that the purpose of maintaining“applicable controls” under the 1–hour standard was notto achieve attainment of the new standard, but ratherto prevent backsliding from the old standard. Id. at 900(“Considered as a whole, the Act reflects Congress's intentthat air quality should be improved until safe and neverallowed to retreat thereafter. Even if EPA set requirementsthat proved too stringent and unnecessary to protect publichealth, EPA was forbidden from releasing states from theseburdens.”). In other words, the Act creates a one-way ratchet,“plac[ing] states onto a one-way street whose only outletis attainment” of the NAAQS—even NAAQS EPA hassubsequently replaced. Id. Because the attainment alternativeallows violations of the 1–hour standard to continue, itmakes the ratchet two-way—a clear violation of the statute.

Finally, we rejected EPA's argument that because it wouldno longer be making attainment findings under the 1–hourstandard, it could refrain from enforcing section 185 onregions in severe and extreme nonattainment of that standard.Repeating this argument here, EPA tells us that because it “nolonger promulgates redesignations for the 1–hour standardbecause that standard has been revoked ... relief from the1–hour fee program requirements under the terms of thestatute is an impossibility, since the conditions the statuteenvisioned for relieving an area of its fee program obligation*323 no longer can exist.” Fee Program Guidance at

4. In South Coast, however, we explained that “section172(e) does not condition its strict distaste for backsliding onEPA's determinations of expediency; EPA must determine itsprocedures after it has identified what findings must be madeunder the Act.” 472 F.3d at 903. The same is true here.

In concluding that EPA has once again “failed to heed therestrictions on its discretion set forth in the [Clean Air] Act,”S. Coast, 472 F.3d at 886, we recognize that EPA believes “itwould unfairly penalize sources in these areas to require thatfees be paid after an area has attained the 8–hour standard dueto permanent and enforceable emission reductions becausethe fees were imposed due to a failure to meet the applicableattainment deadline for the 1–hour standard, not any failure toachieve the now applicable 8–hour standard by its attainmentdate.” Fee Program Guidance at 4. But as we have saidbefore, “[i]f the Environmental Protection Agency disagreeswith the Clean Air Acts' requirements ..., it should take itsconcerns to Congress.... In the meantime, it must obey theClean Air Act as written by Congress and interpreted by thiscourt.” Sierra Club, 479 F.3d at 884.

IV.

For the foregoing reasons, we grant the petition for reviewand vacate the Guidance.

So ordered.

End of Document © 2011 Thomson Reuters. No claim to original U.S. Government Works.














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