Daimler Trucks North America LLC v. Environmental Protection Agency
737 F.3d 95
D.C. Cir.2013Background
- EPA adopted a stringent 0.20 g/bhp-hr NOx standard for heavy-duty diesel engines in 2001, phasing in through 2010; most manufacturers used SCR technology, while Navistar pursued EGR and relied on banked credits.
- The Clean Air Act authorizes nonconformance penalties (NCPs) for manufacturers temporarily unable to meet new standards, but EPA must find three criteria: (1) the standard is more difficult to achieve, (2) "substantial work will be required" to meet it, and (3) there is likely a technological laggard.
- In 2012 EPA promulgated a final rule creating NCPs for model years 2012–2013 and amended the regulatory definition of the "substantial work" criterion to read in the past/present tense and to measure work "regardless of when EPA establishes the NCP."
- Petitioners (competitors of Navistar) challenged the 2012 Rule, arguing EPA failed to provide adequate notice and opportunity for comment on its revision to the "substantial work" regulation and raised other substantive objections (e.g., the laggard finding and NCP calculation).
- The D.C. Circuit held EPA did not provide adequate notice that it would amend the regulatory text to adopt a backward-looking test for "substantial work," granted the petition, and vacated the 2012 Rule (EPA stated vacatur would cause no harm because Navistar would be compliant by 2014).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EPA lawfully amended the regulatory text for the "substantial work" criterion without adequate notice-and-comment | EPA changed the regulation from a forward-looking test ("will be required") to a backward-looking/present test ("is required") without giving notice; commenters could not reasonably anticipate the change | EPA treated the change as a clarification, pointed to prior agency statements and documents showing its interpretation, and argued petitioners had actual notice | Court: EPA failed to provide adequate notice; amendment was not a logical outgrowth of the NPRM; petition granted and rule vacated |
| Whether EPA permissibly found Navistar to be a technological laggard | Navistar had not achieved the standard by 2012 and relied on credits, so NCPs and a laggard designation were improper without correct procedural process | EPA argued evidence supported a likelihood of a laggard and that its determinations fit the statutory criteria | Court did not reach this substantive challenge because it disposed of the case on notice-and-comment grounds |
| Whether EPA’s NCP calculation departed from past practice without rational explanation | Petitioners contended EPA changed the upper-limit and payment formula in ways disadvantaging compliant manufacturers | EPA defended the calculation as within its regulatory formula and justified by facts presented | Court did not decide this substantive challenge; remand/vacatur rendered it unnecessary |
| Appropriate remedy (vacatur vs. remand) | Petitioners sought vacatur given EPA’s failure to follow rulemaking procedures | EPA argued limited disruption and framed the change as non-substantive; urged remand or narrow relief | Court vacated the 2012 Rule, noting EPA counsel’s concession that vacatur would cause no harm because Navistar would comply by 2014 |
Key Cases Cited
- Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012) (interim NCP rule vacated for lack of notice-and-comment)
- City of Waukesha v. EPA, 320 F.3d 228 (D.C. Cir. 2003) (final rule must be a logical outgrowth of the proposed rule)
- Int’l Union, United Mine Workers of Am. v. Mine Safety & Health Admin., 626 F.3d 84 (D.C. Cir. 2010) (standards for when a final rule is a logical outgrowth of the proposed rule)
- Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506 (D.C. Cir. 1983) (agency cannot learn from comments only by restarting notice-and-comment in perpetuity)
- Shell Oil Co. v. EPA, 950 F.2d 741 (D.C. Cir. 1991) (vacatur is the ordinary remedy when an agency wholly fails to provide notice and comment)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (agency must provide reasoned explanation; post hoc rationalizations are insufficient)