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DC Circuit Rejects EPA’s Reliance on Guidance Documents in Lieu of Rulemaking in Clean Air Act Case

July 21, 2011

EPA has recently suffered a series of defeats in court cases challenging its reliance on “guidance documents” that were never adopted as administrative rules. The most recent example has to do with guidance under the Clean Air Act (“CAA” or “Act”). In Natural Resources Defense Council (“NRDC”) v. EPA,[1] the D.C. Circuit held that EPA violated the Administrative Procedure Act (“APA”) by relying on interpretive guidance – rather than a regulation – to allow states to propose alternatives to statutorily required fees for ozone non-attainment areas.


The CAA requires EPA to establish national ambient air quality standards (“NAAQS”) on certain pollutants, including ozone.[2] The Act also includes requirements for “non-attainment” areas – or areas that have not attained the various NAAQS.[3] The CAA imposes deadlines on these non-attainment areas, giving certain areas additional time to come into compliance with the NAAQS.[4] One of these requirements, Section 185 – which is specific to ozone – requires states to impose fees on all major stationary sources in “severe” or “extreme” areas of non-attainment that fail to meet the deadlines.[5]

In 1997, EPA modified the ozone NAAQS, switching from a “1-hour” standard, which prohibited average hourly emission concentrations from exceeding a certain level, to a stricter “8-hour” standard, which limits emissions concentrations over an eight hour period.[6] EPA formally revoked the 1-hour standard in a 2004 rulemaking, leaving only the 8-hour standard in force. In doing so, EPA sought to reconcile the regulatory change in the ozone NAAQS with the CAA’s “anti-backsliding” provision, Section 172(e).[7] Although that provision typically applies when EPA “relaxes” a NAAQS, EPA recognized that due to an overall improvement in air quality since the CAA’s 1990 amendments (which contained the 1-hour ozone standard), some non-attainment areas that would have been classified as “severe” or “extreme” under the 1-hour standard would now be in a lower classification, such as “marginal” or “moderate,” under the 8-hour standard. As such, EPA concluded that Section 172(e) should apply even though EPA had strengthened the ozone NAAQS, and implemented some of the non-attainment requirements to these lower-classification areas. In 2006, the D.C. Circuit generally upheld EPA’s interpretation of Section 172(e), but clarified that the fee structure in Section 185 must apply to areas as well.[8] In other words, the ruling required states to impose Section 185 fees on the major stationary sources in an area that failed to meet its attainment deadline under the now-defunct 1-hour standard.[9]

In response to the ruling, EPA issued a guidance document providing alternatives for implementing the Section 185 fee system in non-attainment areas (“Guidance”).[10] The Guidance authorized states to adopt and implement “alternative programs” in 1-hour non-attainment areas in lieu of implementing the Section 185 fee program, as long as those alternatives were “not less stringent” than the Section 185 program.[11] The Guidance also provided an “attainment alternative,” which allowed regions to avoid Section 185 fees if the region attained the 8-hour standard (even if the region remained in non-attainment of the 1-hour standard).[12] EPA sought to satisfy the APA’s notice and comment requirements by specifying that the approval of individual alternatives, either program or attainment based, would occur on a case-by-case basis, and when EPA found an alternative satisfactory, it would proceed with notice and comment to finalize that finding.[13]

NRDC challenged the Guidance on direct review in the D.C. Circuit, alleging that EPA violated the APA by issuing the Guidance without notice and comment. NRDC also alleged that both the program and attainment alternatives in the Guidance violated the Act. In response, EPA raised several procedural arguments, including lack of standing, final agency action, and ripeness, and sought to justify the Guidance as a “policy statement” or “interpretive rule” not subject to the APA’s notice and comment requirements.

D.C. Circuit’s Decision

The court first dispensed with EPA’s procedural arguments, concluding that NRDC had properly shown injury on behalf of its members to assert standing. In reviewing EPA’s finality and ripeness arguments, the court considered whether the Guidance “announces a binding change in the law.”[14] Concluding that it did, the court pointed to the fact that prior to issuing the Guidance, “neither the statute nor EPA regulations nor case law” authorized alternatives to Section 185 fees.[15] Moreover, now that EPA had issued the Guidance, the court noted that EPA’s regional directors no longer retained the discretion to reject state programs that proposed alternatives to Section 185 fees, as they had done in the past. The court explained that post-Guidance, the “permissibility of alternatives is now a closed question.”[16] According to the panel, the Guidance also represented final agency action because it “definitively interpreted” Section 172(e) (the anti-backsliding provision) as permitting alternatives to Section 185. By answering that question affirmatively, “the Guidance binds EPA regional directors and thus qualifies as final agency action.”[17] As such, the court concluded that the Guidance was final agency action that was ripe for review.[18]

Turning to the merits, the panel had no trouble concluding that the Guidance violated the APA’s notice and comment requirements: “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. [The Guidance cannot] be considered a mere statement of policy; it is a rule.”[19] The court rejected EPA’s argument that the Guidance was merely interpretive, rather than a legislative rule. Per the court, a rule is legislative, and thus subject to the APA’s notice and comment requirements, if “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.”[20] Reiterating that “nothing in the statute, prior regulations, or case law authorizes EPA to accept alternatives to section 185,” the court concluded that the Guidance was a legislative rule because prior to its issuance, nothing “entitled a state to have EPA evaluate a proposed alternative for equivalency rather than reject it outright.”[21]

Although the court could have stopped after finding that the Guidance violated the APA’s notice and comment provision, it went on to weigh NRDC’s substantive CAA claims. The panel first decided to defer ruling on the program alternative’s validity in the interest of preserving the “integrity” of the notice and comment period, because “neither the statute nor our case law obviously precludes that alternative.”[22] The attainment alternative, however, presented a “very different situation.”[23] Concluding that EPA had “once again failed to heed the restrictions on its discretion set forth” in the CAA, the court rejected the attainment alternative because it allowed violations of the 1-hour standard to continue unchecked.[24] This in turn violated Section 172(e)’s anti-backsliding requirements, which represent a one-way ratchet that may only be tightened, not loosened, according to the court.[25]

Courts Rejecting Substitution of Guidance for Rulemaking: A Growing Trend?

The D.C. Circuit’s decision follows a district court ruling earlier this year that EPA likely exceeded the bounds of its statutory authority and violated the APA by relying on guidance to establish protective standards under the Clean Water Act. National Mining Association v. Jackson;[26] see also District Court Says EPA Cannot Shortcut Rulemaking Process by Issuing Interpretive Guidance, Marten Law Environmental News (Feb. 3, 2011). In that case, EPA had sought by interpretive guidance to direct review of CWA permits for so-called mountain-top removal coal mining. Specifically, EPA used interpretive guidance to implement “conductivity” levels for streams impacted by coal mining and to identify certain permits for additional environmental review. The National Mining Association (“NMA”) filed suit and sought an injunction, arguing that EPA had exceeded its statutory authority by using interpretive guidance, instead of rulemaking, to set the conductivity levels. Although the district court did not grant the preliminary injunction, it did conclude that NMA “established that it will likely succeed in showing that the EPA exceeded its authority under the [CWA] by adopting and implementing the [guidance].”[27] The court is currently considering motions for summary judgment from both sides in NMA v. Jackson, and a decision is expected later this year.


EPA has, in recent years, tended to favor the use of interpretive guidance where it can, as the rulemaking process is typically long and arduous. No matter, the D.C. Circuit has joined other courts in holding that guidance is not a substitute for rulemaking.

For more information regarding, contact any member of Marten Law’s Air Quality practice.

[1] --- F.3d ----, 2011 WL 2601560 (D.C. Cir. 2011). All page references in this article refer to the Westlaw version.

[2] 42 U.S.C. § 7409(a).

[3] CAA, Subchapter I, Part D.

[4] 42 U.S.C. § 7511(a)(1).

[5] Id. § 7511d(a).

[6] NRDC v. EPA, at *2.

[7] 42 U.S.C. § 7502(e).

[8] See S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882 (D.C. Cir. 2006).

[9] NRDC v. EPA, at *3.

[10] EPA, Memorandum – Guidance on Developing Fee Programs Required by Clean Air Act Section 185 for the 1-hour Ozone NAAQS (2010) (“Guidance”).

[11] See Guidance, at 3.

[12] See id. at 3-4.

[13] NRDC v. EPA, at *5.

[14] Id. at *7.

[15] Id.

[16] Id.

[17] Id. at *8.

[18] Id. at *7-8.

[19] Id. at *8.

[20] Id. (quoting Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106, 1112 (D.C.Cir.1993)).

[21] Id. at *8.

[22] Id. at *9.

[23] Id.

[24] Id. at *10 (quoting S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d at 886) (internal quotation marks omitted).

[25] Id. at *10.

[26] 768 F. Supp. 2d 34 (D.D.C. 2011).

[27] NMA, 768 F. Supp. 2d at 50.

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