Clean Air Project v EPA: Sometimes the Seemingly “Dumb” Question Can Be Decisive

How many times have you heard someone begin a question with, “This may be a dumb question, but . . .”?

There is a natural reluctance to voice a question that may reveal our ignorance of an obvious answer. But the answer to that seemingly dumb question sometimes opens up strategies and opportunities that can be decisive.

I was reminded of this when I read the D.C. Circuit’s decision in Clean Air Project v. EPA (D.C. Cir. May 30, 2014). The prevailing argument was so novel, I have to wonder if it was born out of one of those seemingly-stupid-but-ultimately-decisive questions.

To summarize, back in 2012 the federal Sixth Circuit Court of Appeals reversed U.S. EPA’s determination that a group of natural gas production wells and associated facilities constituted one major “stationary source.” As a consequence of that determination, EPA directed the owner, Summit Petroleum, to obtain a federal operating permit under Title V of the Clean Air Act. But that group of wells and facilities was spread out over a forty-three square mile area. The question presented to the Sixth Circuit was whether the air emissions from that dispersed group of sources could be combined, or “aggregated,” for purposes of determining whether Summit must obtain a permit. The Sixth Circuit ruled in favor of Summit, holding that physical proximity, not functional relatedness, was the key consideration in determining whether several facilities should be deemed a single stationary source.

That was a milestone decision in air pollution law. But for the purpose of this post, what happened next was even more interesting.

Since the Sixth Circuit’s interpretation of “stationary source” was a radical departure from EPA’s established and more expansive interpretation, EPA issued a memorandum to the Regional Air Directors of each of EPA’s ten regions “to explain the applicability of the decision by the [Sixth Circuit].” In what is now known as the “Summit Directive,” EPA said:

Outside the [Sixth] Circuit, at this time, the EPA does not intend to change its longstanding practice of considering interrelatedness in the EPA permitting action in other jurisdictions. In permitting actions occurring outside the [Sixth] Circuit [i.e., outside of the states of Michigan, Ohio, Kentucky, and Tennessee], the EPA will continue to make source determinations on a case-by-case basis using the three factor test in the NSR and Title V regulations . . . .

In other words, EPA essentially said, “Outside of Michigan, Ohio, Kentucky, and Tennessee, the Sixth Circuit isn’t the boss of me.”

And at first blush, it would seem that the Summit Directive was legally defensible, since decisions of the Sixth Circuit are not controlling in other circuits. Under the legal doctrine of “intercircuit nonacquiescence,” an agency can elect to disregard a decision of a circuit court, at least in matters that are outside that court’s territorial jurisdiction.

Nor was the Summit Directive the only time EPA announced that it would do so. For example, in 1998 EPA issued similar guidance stating that it would not apply the ruling in U.S. v. Wilson, 133 F.3d 251 (4 Cir. 1997), a wetlands case, outside the Fourth Circuit. And just last year, according to a Bloomberg BNA article, EPA made a similar pronouncement regarding an Eighth Circuit decision regarding EPA’s ban on wet-weather mixing zones at wastewater outfalls.

Nevertheless, the Summit Directive did not sit well with members of the National Environmental Development Association’s Clean Air Project, which included companies in the oil and gas industry. Some of those members operated facilities outside the Sixth Circuit and thus remained subject to EPA’s more stringent “functionally interrelated” permitting test. These members were concerned that the Summit Directive put them at a competitive disadvantage.

I imagine someone in a Clean Air Project meeting saying, “This may be a dumb question but . . . can EPA really do this?”

On appeal of the Summit Directive, the D.C. Circuit’s answer to that question was a resounding no. The key to that outcome was a little-known EPA regulation entitled “Regional Consistency—Policy.” That rule states that:

• Officials in the Regional Offices “shall assure that actions taken under the act . . . [a]re as consistent as reasonably possible with the activities of other Regional Offices,” and

• The regional consistency requirements apply as well to officials in EPA Headquarters who are responsible for developing policies for Clean Air Act implementation and enforcement.

40 C.F.R. §§ 56.2 – 56.3.

The D.C. Circuit’s ruling on the merits was straight-forward: Notwithstanding the doctrine of intercircuit nonacquiesence, an administrative agency is not free to ignore its own regulations. The Summit Directive, which violated EPA’s Regional Consistency rule, was arbitrary and capricious and therefore contrary to law.

The idea that EPA must follow its own rules is not novel. What I find novel about the case is the way a little-known rule governing EPA’s inner workings was brought to bear against the Agency. Air pollution lawyers in private practice are very familiar with EPA’s regulations on emissions aggregation. After all, those principles apply to our clients. But the Regional Consistency rule, which governs EPA’s internal operations, is more arcane. Someone on the Clean Air Project team did some out-of-the-box thinking to develop that argument.

Which gets me back to my original point. Push back on every premise, no matter how basic or axiomatic it may seem. No matter how much experience you have, don’t assume anything. Ask the seemingly dumb question. It may prove to be decisive.

(Photo: Thawt Hawtje, Flickr.)

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