CHAPTER 5 EPA'S AUTHORITY TO POSTPONE THE IMPLEMENTATION OF EXISTING RULES

• Jurisdiction: United States

Air Quality Issues Affecting Oil, Gas, and Mining Development and Operations (Feb 2018)
CHAPTER 5
EPA'S AUTHORITY TO POSTPONE THE IMPLEMENTATION OF EXISTING RULES
Whit Swift ¹
Partner
Bracewell LLP
Austin, TX

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WHIT SWIFT is a Partner with the law firm of Bracewell LLP, in Austin, TX. Swift advises industrial companies on air quality matters, such as state and federal new source review permitting and Title V operating permit matters. In connection with that permitting work, he has represented applicants in contested permit matters before the Texas Commission on Environmental Quality (TCEQ) and the Texas State office of Administrative Hearings (SOAH). In addition to permitting work, Whit assists major manufacturing, energy, chemical and petrochemical companies with compliance issues related to the Clean Air Act (CAA). His CAA compliance work includes both compliance counseling and enforcement defense work under state and federal programs, including the federal Risk Management Plan (RMP) program, federal regulatory requirements governing sources of hazardous air pollutants (National Emissions Standards for Hazardous Air Pollutants (NESHAP), release reporting, and State Implementation Plan (SIP) rules regulating point sources.

I. Introduction

President Donald Trump has an ambitious agenda for the U.S. Environmental Protection Agency ("EPA"), with a focus on changing course on a number of high-profile rules promulgated during the Obama administration, including the Clean Power Plan and the rule defining "Waters of the United States." As part of that agenda, EPA Administrator Scott Pruitt has taken actions to stay or delay the implementation of multiple rules promulgated by the prior administration - including certain elements of the New Source Performance Standard ("NSPS") establishing requirements for the control of methane emissions from oil and gas sources (the "Methane Rule"), ² and the January 2017 amendments to the Risk Management Plan ("RMP") rules. ³ Similarly, the U.S. Department of the Interior's Bureau of Land Management ("BLM") has taken action to delay the implementation of key aspects of the Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule ("BLM Waste Prevention Rule") that BLM had adopted as a final rule in November 2016. ⁴ These rules - particularly EPA's Methane Rule and the BLM Waste Prevention Rule - directly impact the owners and operators engaged in oil and gas exploration and production activities in the west.

All of these rules met vocal opposition from members of the regulated community and some states when promulgated during the Obama administration. At the same time, the current administration's delay actions have been opposed by advocacy groups and certain states, and have been challenged in court. In two cases, federal courts have issued decisions that struck down EPA and BLM actions aimed at delaying implementation of Obama-era rules. On July 3, 2017, the U.S. Court of Appeals for the District of Columbia Circuit vacated EPA's initial 90-day stay of certain Methane Rule requirements, complicating the Independence Day vacations of many associated with the oil and gas industry and, more broadly, signaling the challenge that EPA would face when seeking to stop or delay the implementation of one of its own rules. ⁵ On

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October 4, 2017, the U.S. District Court for the Northern District of California confirmed that challenge, vacating BLM's notice postponing the compliance dates for certain requirements of the BLM Waste Prevention Rule. ⁶

This paper will examine the different forms of statutory authority available to an agency to stay or to delay the implementation of an existing rule, the limitations on that authority, and how EPA and BLM used that authority in 2017. It will also discuss the implications of the court decisions in the Methane Rule and BLM Waste Prevention Rule cases for the regulated community, and for the administration's broader efforts to delay implementation of these and other Obama-era environmental regulations.

II. Statutory Authority to Delay the Implementation of an Existing Rule

Following the change in administrations, EPA and BLM were faced with implementing and defending in court certain Obama-era rules that do not align with the agencies' current direction. In response, the agencies have announced reconsideration proceedings for a number of rules, ⁷ and at the same time requested that the courts place the judicial challenges of the merits of those Obama-era rules in abeyance for the duration of the reconsideration proceedings - requests that have been granted by the D.C. Circuit. ⁸ In addition to initiating reconsideration proceedings, EPA and BLM have used multiple mechanisms to delay the implementation of rules that it plans to reconsider and may ultimately change, under both the Clean Air Act ("CAA") and the Administrative Procedure Act ("APA").

A. CAA Section 307(d)(7)(B): Stay Pending Reconsideration

One source of statutory authority for keeping a rule from taking effect exists in the CAA. Under the CAA, EPA has the authority to stay the effectiveness of a rule that meets the criteria for a reconsideration proceeding:

If the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within such time or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule, the Administrator shall convene a proceeding

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for reconsideration of the rule and provide the same procedural rights as would have been afforded had the information been available at the time the rule was proposed. . . . 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. ⁹

EPA can stay an existing rule under CAA Section 307(d)(7)(B), and can do so with a single notice in the Federal Register. A stay issued under CAA Section 307(d)(7)(B) is limited in time, however, to the three months provided in the CAA. ¹⁰ Like many other deadlines established in the CAA, three months is aspirational for a reconsideration proceeding. As a result, EPA's issuance of a three-month administrative stay under CAA Section 307(d)(7)(B) is perhaps best viewed as providing EPA an opportunity to pursue a longer stay through rulemaking that will actually provide the agency the time it needs to complete the reconsideration process without the administratively stayed rule springing back into effect. ¹¹

In addition, while the CAA allows EPA to stay the effectiveness of one of its own rules, that CAA Section 307(d)(7)(B) stay is available "only under carefully defined circumstances." ¹² As discussed in greater detail below as relates to the Methane Rule stay litigation, while EPA may issue a stay under CAA Section 307(d)(7)(B) when it convenes a reconsideration proceeding, the conditions that give EPA grounds to initiate reconsideration must be present for the administrative stay to be valid.

B. APA Section 705: Stay Pending Judicial Review

An agency also has the authority to stay the effectiveness of a rule under the APA when that rule is challenged in court, under APA Section 705:

When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review. On such conditions as may be required and to the extent necessary to prevent irreparable injury, the reviewing court, including the court to which a case may be taken on appeal from or on application for certiorari or other writ to a reviewing court, may issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending conclusion of the review proceedings. ¹³

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Like the administrative stay notice for a reconsideration under the CAA, the agency can postpone the effective date of a rule under the APA with a single Federal Register notice, as opposed to notice-and-comment rulemaking. However, unlike the CAA administrative stay, a postponement under APA Section 705 is not limited in time. The stay available under the APA is only available when the underlying rule is subject to judicial review, and when the agency finds "that justice so requires."

In 2012, the U.S. District Court for the District of Columbia issued a decision striking down an APA Section 705 stay issued by EPA for rules regulating hazardous air pollutant emissions from industrial, commercial, and institutional boilers and process heaters at major sources (the "Boiler Rule") and for regulating air pollutant emissions from commercial and industrial solid waste incineration units (the "CISWI Rule"), and in doing so highlighted a number of limitations on an agency's ability to rely on APA Section 705. ¹⁴ In the Boiler Rule and CISWI Rule case, EPA had issued a delay notice under APA Section 705 asserting that justice required postponing the effectiveness of the rule because litigation challenging the rule was pending. ¹⁵ EPA had also announced a reconsideration of the Boiler Rule and CISWI Rule, and claimed that the APA Section 705 delay would remain in-place until the judicial review proceedings were complete or EPA had completed its reconsideration, whichever came first. ¹⁶

Sierra Club challenged the APA Section 705 delay notice. The court found that the APA granted EPA authority to issue a delay notice, and that notice and comment rulemaking were not required for such a delay under the APA. ¹⁷ However, the court vacated the APA Section 705 delay, finding that EPA's delay notice was arbitrary and capricious. ¹⁸ The court found that, while EPA "paid lip service" to the pending rule challenge litigation, the agency's statements more clearly tied the indefinite stay under...