Hoisted by its own petard: D.C. Circuit finds that EPA’s own regulations prevent the agency’s inconsistent application of a judicial decision

EPA’s controversial practice of declining to apply unfavorable judicial decisions outside of the jurisdictions in which they were issued finally caught up with the agency last week.  In Nat’l Envtl. Dev. Ass’n’s Clean Air Project v. EPA, No. 13-1035 (D.C. Cir. May 30, 2014) (hereinafter NEDACAP), the U.S. Court of Appeals for the D.C. Circuit vacated an EPA memorandum announcing its intention not to apply the decision in Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Cir. 2012), outside of the Sixth Circuit.

Under the Clean Air Act, a stationary source that emits a certain amount of pollution is subject to more stringent permitting processes and obligations.  Pursuant to its regulations, for purposes of determining whether a stationary source emits that amount of pollution, EPA considers multiple activities as a single stationary source and aggregates their emissions when, among other things, they “are located on one or more contiguous or adjacent properties.”  Moreover, in determining whether multiple emissions activities are located on “adjacent” properties, EPA considers not only the physical distance between them but also their “functional interrelationship.”

As you may recall from our brief discussion here, in Summit Petroleum, the U.S. Court of Appeals for the Sixth Circuit soundly rejected EPA’s policy of considering the “functional interrelationship” of multiple emissions activities in determining whether they are located on “adjacent” properties, a policy that it found to be entirely inconsistent with the plain meaning of the term “adjacent.”  Shortly thereafter, EPA issued a memorandum explaining how the agency intended to apply the Summit Petroleum decision.  Although the memo appropriately advised that the agency “may no longer consider interrelatedness in determining adjacency when making source determination decisions . . . in areas under the jurisdiction of the [Sixth] Circuit,” the memo also declared that “at this time, the EPA does not intend to change its longstanding practice of considering interrelatedness in the EPA permitting actions in other jurisdictions.”

In NEDACAP, an association of resource extraction and manufacturing companies challenged the EPA memo, which it claimed injured its members who operated facilities outside of the Sixth Circuit by putting them at a competitive disadvantage vis-à-vis companies operating facilities located within the Sixth Circuit.  Among other things, the association argued that the memo violated EPA’s Clean Air Act “Regional Consistency” regulations, which set forth EPA’s policies of “assur[ing] fair and uniform application by all Regional Offices of the criteria, procedures, and policies employed in implementing and enforcing the act” and of “provid[ing] mechanisms for identifying and correcting inconsistencies by standardizing criteria, procedures, and policies being employed by Regional Office employees in implementing and enforcing the act.”  For its own part, EPA invoked the “doctrine of intercircuit nonacquiescence,” the concept that “an agency is entitled to maintain its independent assessment of the dictates of the statutes and regulations it is charged with administering [after one circuit has disagreed with its position], in the hope that other circuits, the Supreme Court, or Congress will ultimately uphold the agency’s position.”

In the end, the D.C. Circuit sided with the association, finding that the doctrine of intercircuit nonacquiescence does not permit EPA to ignore the plain language of its own regulations, which in this case “strongly articulate EPA’s firm commitment to national uniformity in the application of its permitting rules.”  The court found that EPA’s regulations obligated EPA “to respond to the Summit Petroleum decision in a manner that eliminated regional inconsistency, not preserved it.”  Concluding that the memo (which it affectionately referred to as the Summit Directive) was contrary to law, the court wasted no time in vacating it.

The NEDACAP decision presents EPA with several options.  First, it can petition for Supreme Court review.  Second, it can revise its regulations to expressly authorize consideration of the “functional interrelationship” of multiple emissions activities in determining whether they are located on “adjacent” properties.  Third, it can revise its “Regional Consistency” regulations to expressly authorize inconsistent application of a judicial decision when the agency is invoking the doctrine of intercircuit nonacquiescence.  Finally, it can accept (dare I say acquiesce to?) the cold, hard reality that the Summit Petroleum decision is now the law of the land.  Given the long odds of a favorable outcome at the Supreme Court and the fact that EPA’s regulatory dance card is rather full at the moment, I’m putting my money on the final option.