Notice & Comment

A Particularly Noteworthy Denial of Administrative Reconsideration in the Good Neighbor Rule Case, by Megan M. Herzog & Sean H. Donahue

There has been a quiet but noteworthy development in the litigation of the Environmental Protection Agency’s Good Neighbor Rule—adding a new administrative law wrinkle to a case with already big administrative law implications.

On February 21, the Supreme Court heard oral argument on a set of stay applications, consolidated under Ohio v. EPA, that ask the Court to block EPA’s Good Neighbor Rule.  This Clean Air Act rule sets pollution-control requirements for 23 states that are contributing significantly to smog problems in “downwind” states and interfering with achievement of national health-based air quality standards.  Stay applicants are conservative attorneys general and polluting industries.  The core claim in their applications is that EPA did not sufficiently explain what might happen if one or more of the states covered by the regulatory program drops out—as has temporarily happened to 12 states due to judicial stays of separate EPA actions concerning those states.   

In our first post on this case a few weeks ago, we highlighted multiple administrative law flaws in these stay applications.  For instance, we explained that no commenter even asked EPA to consider the fewer-than-23-states issue; it wouldn’t have changed the outcome anyway; and even if applicants were correct about how the rule works (which they are not), courts do not strike down important public health rules based on non-prejudicial procedural error.  In short, essentially every basic principle that applies when a court reviews an agency action cuts against a stay.  

It is highly unusual, to say the least, for litigants to seek a Supreme Court stay of a federal rule based on an alleged procedural violation.  (To reiterate: this is not a statutory authority or “major questions” case—it is a rather typical D.C. Circuit record-review case.)  It would be even more unusual for the Court to stay public health protections based on a failure-to-explain claim.  To do so would be inviting a flood of shadow docket filings from any regulated business with a colorable procedural complaint and a desire to avoid compliance costs, regardless of statutory context.  

For all of those reasons, it was surprising that the Court did not summarily deny the applications, but instead set the matters for argument.  And it was even more surprising that much of the oral argument focused on EPA’s alleged failure to explain that the rule should continue to apply in the remaining covered states even if some states drop out.  

For instance, Justice Kavanaugh insisted that the standard for evaluating a stay application requires the Court to assess whether applicants are “likely to succeed in saying that the rule was not adequately explained” (Tr. 77-78).  He chided EPA for, in his view, failing to “explain why it still works” with fewer than the 23 original states and instead providing nothing but “goose egg” (at 34).  He asserted that EPA “should have explained” better that “even if 12 states drop out, who cares, because it still works” (id.).  

Justice Gorsuch, too, expressed concern that “the APA is all about an opportunity to be heard, and nobody got a chance to be heard” regarding the fewer-than-23-states issue (at 65).  

Justice Alito quizzed the Deputy Solicitor General about when and how EPA might respond to petitions for administrative reconsideration raising the fewer-than-23-states issue (at 58-59, 68).  And the Chief Justice even pointedly asked, “How long do you think it would take if there were a proceeding” for EPA to consider whether covering fewer states might affect the regulatory program?  He then answered his own question: “I’ll bet they do it real quickly” (at 8-9). 

As it turns out, the Chief Justice was correct:  EPA was able to quickly do the analysis.  Last Thursday, EPA finalized its partial denial of petitions for administrative reconsideration of the rule.  In that action, EPA specifically addressed, and rejected, claims “that because the [rule] is suspended in several states due to preliminary judicial stays of a predicate action, it should not apply in the remaining states” (at 1).  (Note that EPA’s denial is “partial” because EPA has not yet decided certain other issues in the petitions unrelated to the fewer-than-23-states issue.)  The Solicitor General swiftly informed the Court of EPA’s decision by letter.  

In the denial, EPA confirms that whether its methodology “is applied to two states or twenty, it would yield the same obligations for included states” (at 3).  “It does not matter if there is one state or 50 states in the plan—the methodology and the result for any particular state would remain the same” (at 35).  EPA further affirms that sources remaining in the program “would be under the same legal obligation to control their pollution even if the EPA developed a [rule] containing just those states or some subset of them or separate [rules] for each state” (at 3-4).  And EPA explains that “implementation … is not impacted or undermined by only being applied to a subset of the states included in the Rule” (at 31).  

Meanwhile, the Supreme Court has not yet ruled on the pending stay applications.  It will be very interesting to see what the Court does next.

Megan M. Herzog and Sean H. Donahue are partners at Donahue, Goldberg & Herzog, which represents the Environmental Defense Fund, a respondent-intervenor in the Good Neighbor Rule litigation.

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