Lead Opinion
Dissenting Opinion filed by Circuit Judge BROWN.
Petitioners, a group of environmental organizations, challenge the Environmental Protection Agency’s decision to stay implementation of portions of a final rule concerning methane and other greenhouse gas emissions. For the reasons set forth in this opinion, we conclude that EPA lacked authority under the Clean Air Act to stay the rule, and we therefore grant petitioners’ motion to vacate the stay.
I.
In June 2016, EPA Administrator Gina McCarthy issued a final rule establishing “new source performance standards” for fugitive emissions of methane and other pollutants by the oil and natural gas industries. 81 Fed. Reg. 35,824 (June 3, 2016). The methane rule took effect on August 2, 2016, id., and required regulated entities to conduct an “initial monitoring survey” to identify leaks by June 3, 2017, 40 C.F.R. § 60.5397a(f).
After EPA published the rule, several industry groups — including the American Petroleum Institute (API), the Texas Oil and Gas Association (TXOGA), and the Independent Petroleum Association of America (IPAA) — filed administrative petitions seeking reconsideration under section 307(d)(7)(B) of the Clean Air Act (CAA). 42 U.S.C. § 7607(d)(7)(B); see also 82 Fed. Reg. 25,731 (June 5, 2017). That provision sets forth the circumstances under which
By letter dated April 18, 2017, the Administrator, now Scott Pruitt, stated that EPA “[found] that the petitions have raised at least one objection to the fugitive emissions monitoring requirements” that warrants reconsideration “under 307(d)(7)(B) of the CAA.” Letter from E. Scott Pruitt to Howard J. Feldman, Shannon S. Broome, James D. Elliott, & Matt Hite, Convening a Proceeding for Reconsideration, at 2 (Apr. 18, 2017). Accordingly, the Administrator announced, “EPA is convening a proceeding for reconsideration” of two specific provisions of the methane rule. Id. The letter also stated that “EPA intended] to exercise its authority under CAA section 307 to issue a 90-day stay of the compliance date” for the fugitive emissions requirements. Id.
On June 5 — -just two days after the deadline for regulated parties to conduct their first emissions surveys and begin repairing leaks, see 40 C.F.R. § 60.5397a(f) — EPA published a “[n]otice of reconsideration and partial stay” in the Federal Register,
On June 16, EPA published a notice of proposed rulemaking (NPRM) announcing its intention to extend the stay “for two years” and to “look broadly at the entire 2016 Rule” during “the reconsideration proceeding.” 82 Fed. Reg. 27,645 (June 16, 2017). Comments on that NPRM are due July 17, or if any party requests a hearing, by August 9. Id.
After EPA suspended implementation of the methane rule, six environmental groups — Environmental Defense Fund, Natural Resources Defense Council, Envi
II.
We begin with jurisdiction. Both EPA and Industry Intervenors argue that an agency’s decision to grant reconsideration of a rule is unreviewable because it does not constitute “final action” under 42 U.S.C. § 7607(b)(1). EPA Opp. 8; Interve-nors’ Opp. 6. Industry Intervenors argue that for the same reason we lack jurisdiction to review the stay. Intervenors’ Opp. 8.
It is true that an agency’s decision to grant a petition to reconsider a regulation is not reviewable final agency action. See Portland Cement Association v. EPA,
The imposition of the stay, however, is an entirely different matter. By staying the methane rule, EPA has not only concluded that section 307(d)(7)(B) requires reconsideration, but it has also suspended the rule’s compliance deadlines. EPA’s stay, in other words, is essentially an order delaying the rule’s effective date, and this court has held that such orders are tantamount to amending or revoking a rule. As we explained in a very similar situation, where an agency granted an application for interim relief from a safety standard while it reconsidered that standard: “In effect, the Administrator has granted a modification of the mandatory safety standard for the entire period of time that the petition is pending. There is no indication that the Secretary intends to reconsider this decision or to vacate the grant of interim relief. Thus, the Secretary’s decision represents the final agency position on this issue, has the status of law, and has an immediate and direct effect on the parties. Therefore, we have no difficulty concluding that the Secretary has issued a final decision .... ” International Union, United Mine Workers of America v. Mine Safety & Health Administration,
In addition to “mark[ing] the consummation of ... [EPA’s] decisionmaking process” with respect to the final rule’s effective date, the stay also affects regulated parties’ “rights or obligations.” Bennett,
The dissent draws a sharp distinction between the denial of a stay, which would have required regulated entities to comply with the rule, and the imposition of the stay, which erased that obligation. As the dissent sees it, only forced compliance has “obvious consequences” for regulated parties. Dissent at 17. But this one-sided view of final agency action ignores that, by staying the rule’s effective date and its compliance duties, EPA has determined “rights or obligations ... from which legal consequences will flow.” Bennett,
The dissent also stresses that EPA’s proceedings concerning the methane rule are ongoing. Dissent at 15; see
EPA’s argument that courts have no authority to review CAA section 307(d)(7)(B) stays is also at odds with the statute’s language. Section 307(d)(7)(B) authorizes not only the Administrator, but also courts to stay a final rule. 42 U.S.C. § 7607(d)(7)(B) (authorizing “the Administrator or the court” to issue a three-month stay). Given that Congress granted this court the power to enter a stay, it seems quite anomalous that it did not also confer upon us the lesser power to review the Administrator’s decision to issue a stay.
Indeed, EPA’s reading would have the perverse result of empowering this court to act when the agency denies a stay but not when it chooses to grant one. Under section 307(d)(7)(B), if EPA had granted
EPA and Industry Intervenors argue that Environmental Petitioners’ motion amounts to a collateral attack on the underlying reconsideration proceeding. See also Dissent at 16. But CAA section 307(d)(7)(B) expressly links EPA’s power to stay a final rule to the two requirements for mandatory reconsideration, ie., that it was “impracticable to raise” an objection during the public comment period and the objection is “of central relevance to the outcome of the rule.” Only when these two conditions are met does the statute authorize the Administrator to stay a lawfully promulgated final rule. Accordingly, to determine whether the stay was lawful — that is, to assess EPA’s final action — we must consider whether the agency met the statutory requirements for reconsideration. In other words, although absent a stay we would have no authority to review the agency’s decision to grant reconsideration, because EPA chose to impose a stay suspending the rule’s compliance deadlines, we must review its reconsideration decision to determine whether the stay was authorized under section 307(d)(7)(B).
III.
Environmental Petitioners seek two types of relief: a “judicial stay” of EPA’s administrative stay, and in the alternative, “summary disposition and vaca-tur” of EPA’s stay “because the stay is clearly unlawful.” Environmental Petitioners’ Mot. 1. To consider the former, we would have to assess Environmental Petitioners’ motion under the four-factor standard for a stay pending judicial review: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Nken v. Holder,
For reasons explained below, however, we agree with Environmental Petitioners that the 90-day stay was unauthorized by section 307(d)(7)(B) and was thus unreasonable. Accordingly, we have no need to consider the criteria for a stay pending judicial review. Cf. United States Association of Reptile Keepers, Inc. v. Zinke,
A.
Defending the stay, EPA repeatedly invokes its “broad discretion” to reconsider its own rules. EPA Opp. 6. Agencies obviously have broad discretion to reconsider a regulation at any time. To do so, however,
EPA argues that it nonetheless has “inherent authority” to “issue a brief stay” of a final rule — that is, not to enforce a lawfully issued final rule — while it reconsiders it. See EPA Opp. 6, 10, 13. This argument suffers from two fundamental flaws.
First, EPA cites nothing for the proposition that it has such authority, and for good reason: as we have made clear, it is “axiomatic” that “administrative agencies may act only pursuant to authority delegated to them by Congress.” Verizon v. FCC,
Second, when EPA granted reconsideration and imposed the stay of the methane rule, it did not rely on its so-called inherent authority. See Securities & Exchange Commission v. Chenery Corp.,
EPA insists that “the statutory text [of section 307] suggests that Congress did not intend to cabin EPA’s authority to issue a stay to only those circumstances where EPA is mandated to convene reconsideration proceedings .... ” EPA Opp. 12 (emphasis in original). The language of section 307(d)(7)(B) is to the contrary: it authorizes the agency to grant a stay during “such reconsideration,” a term that quite obviously refers back to the reconsideration that EPA “shall” undertake when someone presents an objection of “central relevance” that was “impracticable” to raise during the period for public comment. 42 U.S.C. § 7607(d)(7)(b).
B.
Under CAA section 307(d)(7)(B), then, the stay EPA imposed is lawful only if reconsideration was mandatory. Accordingly, the question before us is whether the industry groups that sought a stay of the methane rule met the two requirements for mandatory reconsideration.
We begin — and ultimately end— with impracticability. Environmental Petitioners and EPA agree that this issue turns on whether industry groups had an opportunity to raise their objections during the comment period, which in turn depends on whether the NPRM provided adequate notice of the final methane rule. This case hinges, then, on whether the final rule was a logical outgrowth of the NPRM. A final rule is the “logical outgrowth” of a proposed rule if “interested parties should have anticipated that the change was possible, and thus reasonably should have filed their comments on the subject during the notice-and-comment period.” CSX Transportation, Inc. v. Surface Transportation Board,
EPA granted reconsideration and stayed the emissions standards on four grounds: (1) industry groups had no opportunity to object to provisions concerning “low production well sites,” (2) the final rule included a process for demonstrating “alternative means” of compliance that was not in the NPRM, (3) without adequate notice or consideration of costs, the final rule required “certification by a professional engineer” that regulated entities had a proper closed vent system, and (4) without adequate notice, the final rule predicated an exemption from regulation for “well site pneumatic pumps” on a professional engineer’s certification that “it is technically infeasible to route the pneumatic pump to a control device or a process.”
Low-Production Wells
The final rule subjects low-production wells to fugitive emissions requirements.
When EPA granted reconsideration and imposed the stay, however, it invoked a wholly different rationale: acting pursuant to CAA section 307(d)(7)(B), EPA concluded that “the final rule differs significantly from what was proposed in that it requires these well sites to comply with the fugitive emissions requirements based on informa
Although it is true that the NPRM for the final methane rule proposed to exclude low-production well sites, EPA and Industry Intervenors ignore the fact that the notice went on to solicit comment on whether such an exclusion would be warranted. The NPRM states: “To more fully evaluate the exclusion, we solicit comment on the air. emissions associated with low production wells .... [W]e solicit comment on the relationship between production and fugitive emissions over time.” 80 Fed. Reg. 56,639 (Sept. 18, 2015). The NPRM also states that EPA “solicit[s] comment on whether [it] should include low production well sites for fugitive emissions and if these types of well sites are not excluded, should they have a less frequent monitoring requirement.” Id. (emphasis added).
Many regulated entities responded with comments, including the industry groups that later sought reconsideration. See, e.g., API, Comments on EPA’s NSPS for the Oil and Natural Gas Sector, at 103 (Dec. 4, 2015) (“API Comments”). API, for instance, submitted extensive comments on low-production wells, noting its support for an exemption and clarifying that “fugitive emissions [from such wells] do not correlate to production.” Id.
Responding to these comments in the final rule, EPA explained that it had decided not to exempt low-production wells because, among other reasons, “[i]n discussions with us, stakeholders indicated that well site fugitive emissions are not correlated with levels of production, but rather based on the number of pieces of equipment and components.”
Perhaps sensing the flimsiness of its claim that regulated entities had no opportunity to comment on low-production wells, EPA argues that the stay was also warranted because the low-production well provision is inconsistent with the rule’s definition of well “modification.” EPA Opp. 17-18. As noted above, this was one of IPAA’s arguments for reconsideration. See supra 15. It was not, however, the rationale on which EPA relied when it granted reconsideration and stayed the rule. EPA cannot now justify its action on a rationale it failed to invoke when it imposed the stay. See Chenery,
Alternative Means of Compliance
The final rule permits regulated entities to demonstrate that they comply with emissions regulations by alternative means, and thus, ought not be subject to the rule. Specifically, the rule provides that regulated entities may “submit an application requesting that the EPA approve certain state requirement [sic] as ‘alternative means of emission limitations’ under the NSPS ....”
After the rule was promulgated, TXOGA requested reconsideration of the process “for determining State Equivalency,” ie., the alternative-means process. Administrative Petition for Reconsideration by the Texas Oil and Gas Association, No. EPA-HQ-OAR-2010-0505, at 2-3 (Aug. 2, 2016). EPA granted this request and stayed the rule on the ground that the alternative-means “process and criteria were included
In the NPRM, however, EPA expressly solicited “comments on criteria we can use to determine whether and under what conditions all new or modified well sites operating under corporate fugitive monitoring programs can be deemed to be meeting the equivalent of the NSPS standards ....”
Here, too, the final rule was a logical outgrowth of the NPRM. No regulated entity had to “divine the agency’s unspoken thoughts,” CSX Transportation,
Vent System Certification
The final rule requires regulated entities to obtain “certification by a qualified professional engineer [PE] that the closed vent system is properly designed ....”
Yet again, even a brief scan of the record demonstrates the inaccuracy of EPA’s statements. The NPRM “requests] comment as to whether [EPA] should specify criteria by which the PE verifies that the closed vent system is designed to accommodate all streams routed to the facility’s control system ....”
In response, industry groups submitted many comments on the PE certification requirement. API itself commented that requiring a PE to review vent system design was “unnecessary” because “[o]il and natural gas company engineering staff ... are able to design systems effectively.” API Comments at 48 — 49. API also expressed concern about the burden the PE requirement would impose on regulated parties, id at 49, and argued that the certification requirement was an effort to shift the cost of enforcement from EPA to the industry, id. at 48. Separately, IPAA commented that the entire rule’s “increased record-keeping and reporting requirements” imposed unreasonable costs on regulated parties. IPAA & American Exploration & Production Council, Comments for Three Regulatory Proposals, at 28 (Dec. 4, 2015).
Pneumatic Pumps
Finally, the 2016 rule exempts well-site pneumatic pumps from the final rule so long as a professional engineer has certified that it is “technically infeasible to capture and route pneumatic pump emissions to a control device or process .... ”
In its petition for reconsideration, IPAA objected to the idea that a professional engineer must certify “technical infeasibility,” arguing that the final rule “added a variety of requirements associated with ‘technical infeasibility’ that were not purposed [sic] or even mentioned in the proposed rule.” IPAA Reconsideration Request at 7. API mounted a similar objection to the pneumatic pump exemption, arguing that it had “no opportunity to comment” on the distinction between new construction sites (known as “greenfield” sites) and older emissions sites (“brownfield” sites). See API Reconsideration Request at 2.
Embracing these arguments, EPA granted reconsideration on the ground that it had never “propose[d] or otherwise suggested] exempting well site pneumatic pumps from emission control based on such [PE] certification.”
After proposing that a professional engineer certify regulated entities’ closed vent systems, the NPRM states that operators of oil and natural gas facilities must also “connect the pneumatic pump affected facility through a closed vent system .... ”
Given this, it was perfectly logical for EPA to adopt an exception to its proposed rule that requires a professional engineer’s certification of infeasibility, and to limit that exception to sites that had already been designed in a way that made compliance infeasible. The record thus belies EPA’s claim that no industry group had an opportunity to comment on the “scope and parameters” of the pneumatic pump exemption. EPA Opp. 22.
IV.
The administrative record thus makes clear that industry groups had ample opportunity to comment on all four issues on which EPA granted reconsideration, and indeed, that in several instances the agency incorporated those comments directly into the final rule. Because it was thus not “impracticable” for industry groups to have raised such objections during the notice and comment period, CAA section 307(d)(7)(B) did not require reconsideration and did not authorize the stay. EPA’s decision to impose a stay, in other words, was “arbitrary, capricious, [and] ... in excess of [its] ... statutory ... authority.” 42 U.S.C. § 7607(d)(9)(A), (C). We shall therefore grant Environmental Petitioners’ motion to vacate the stay.
We emphasize, however, that nothing in this opinion in any way limits EPA’s authority to reconsider the final rale and to proceed with its June 16 NPRM. Although EPA had no section 307(d)(7)(B) obligation to reconsider the methane rale, it is free to do so as long as “the new policy is permissible under the statute ..., there are good reasons for it, and ... the agency believes it to be better.” FCC v. Fox Television Stations, Inc.,
So Ordered.
Dissenting Opinion
dissenting:
My colleagues are quick to claim we have jurisdiction to hear this motion, but I disagree. While we presumptively possess jurisdiction over “final agency action,” the Administrative Procedure Act deprives us of jurisdiction when, inter alia, “agency action is committed to agency discretion by law.” See 5 U.S.C. § 701(a)(2). The Court acknowledges EPA’s decision to grant reconsideration “is not reviewable final agency action” as it “merely begins a process that could culminate in no change to the rule.” Op. 6. The Court further claims the Clean Air Act provision at issue here “expressly links EPA’s power to stay a final rale to the two requirements for mandatory reconsideration ....” Id. at 8. Indeed it does. See 42 U.S.C. § 7607(d)(7)(B) (“Such reconsideration shall not postpone the effectiveness of the rale. The effectiveness of the rule may be stayed during such reconsideration, however, by the Administrator or the court for a period not to exceed three months.”).
As EPA’s stay here is “of a[n] ... interlocutory nature,” it cannot satisfy the first element of “final agency action:” consummation of the agency’s decision-making process. See Bennett v. Spear,
The Court relies on a series of pre-Bennett cases to equate EPA’s stay with instances where this court has reviewed an agency amending or revoking a rule. See Op. 6. None of these cases are apposite.
In contrast to our precedent, the Court’s opinion concludes a particular administrative proceeding has innumerable final agency actions, including intermediate decisions. No authority supports this proposition. The majority contends Friedman v. FAA,
As a rule of decision, the Court’s unbounded reading of Friedman creates a peculiar backdoor: The Court insists, correctly, EPA’s decision to reconsider the rule is within the agency’s discretion. But if the stay is not, and the stay is tied up with the reconsideration authority, deeming the stay “final agency action” allows the Court to review the basis for reconsideration itself. See Op. 8. Certainly, the rule of law would benefit from the judiciary shedding its unfortunate sheepishness towards reviewing agency action. But that noble goal does not absolve us from “carefully considering] why and when we are meant to” review agency action. See AKM LLC v. Sec’y of Labor,
Turning to the second element of “final agency action,” the Court establishes nothing by asserting the stay creates obvious consequences for the regulated parties. See, e.g., Op. 7. Agency actions of various kinds, “final” or not, come with consequences. The relevant question is whether the consequences have a “legal force or practical effect” beyond “the disruptions that accompany” the agency making a decision to “initiate proceedings.” See Fed. Trade Comm’n v. Standard Oil Co. of Cal.,
Here, EPA’s unreviewable decision to reconsider its rule is akin to an agency making “a precatory finding of [a] ‘reason to believe’ ” legal action is warranted. Cf. Reliable Automatic Sprinkler Co. v. Consumer Prod. Safety Comm’n,
The Court is thus in error to claim Ciba-Geigy. See Op. 7. Ciba-Geigy was a “comply-or-else” case; “the next step was not further adjudication, but an enforcement action in federal court.” CSX Transp., Inc. v. Surface Transp. Bd.,
Without either element of the “final agency action” inquiry satisfied, I cannot conclude EPA’s stay falls within our jurisdictional reach. Section 7607(d)(7)(B) renders a stay a mere means to facilitate a decision we lack the authority to review. Accordingly, I would dismiss the Environmental Petitioners’ motion on the grounds that we lack jurisdiction to review EPA’s stay, and not reach the remaining issues. As the Court does otherwise, I respectfully dissent from the Court’s decision to grant the motion and vacate EPA’s stay.
Notes
. It is far from clear that designating the judiciary as an alternative forum to seek a stay, as the statute does, makes EPA action on stays subject to judicial review. But see Op. 7. The text’s obvious reading is to give private parties power to seek a stay without having to ask the agency. Given the statutory context, this makes sense; an agency may not want to reconsider its rule, let alone stay its implementation to facilitate an undesired reconsideration. By establishing the judiciary as an alternative, the statute ensures stays result from factual warrant and not simply because the agency wills one. Even if the statute could be read to authorize judicial review of agency action on stays, there is no basis to conclude
. Environmental Defense Fund, Inc. v. Gorsuch,
. The question in Int’l Union was the following: Whether an administrative law judge could order the Mine Safety & Health Administration to grant a party "interim relief” from a mine-safety standard while that party awaited a decision on whether it could receive a "mine-specific exemption from [the] mandatory standard.” See