DC Circuit Signals Limits on EPA’s Authority to Reduce Requirements in Existing Environmental Rules

As the Trump Administration seeks to re-write many of the nation’s environmental rules, the U.S. Court of Appeals, District of Columbia Circuit, has issued a decision in Waterkeeper Alliance v. US EPA that signals the important oversight role the federal courts will play in reviewing executive actions, providing a cautionary note on the limits of executive authority.

The decision of the DC Circuit arises from a regulatory interpretation of the environmental release notice requirements that EPA adopted in 2008 through a notice and comment rulemaking process. In that process, EPA amended reporting rules that it had enacted under two federal laws, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and the Emergency Planning and Community Right-to-Know Act (EPCRA). Through a rule amendment process conducted pursuant to the federal Administrative Procedures Act, EPA adopted what it labeled an administrative reporting exemption, with the intended effect of reducing hazardous substance release reporting requirements on a segment of the regulated community by excluding from release reporting requirements any releases to the air where the source of the hazardous substances was animal wastes at farms.

The administrative reporting exemption was challenged by five environmental groups, which alleged that EPA’s interpretation conflicted with the statutory mandates in CERCLA and EPCRA to notify authorities when certain regulated substances – in this case ammonia and hydrogen sulfide gases that are produced when animal wastes decompose - are released to the environment.

In its rulemaking, EPA based its decision to adopt the exemption on a conclusion that reporting of the air releases addressed by the amendment was unnecessary because “in most cases, a federal response is impractical and unlikely” (73 Fed. Reg. at 76956).

The D.C. Circuit reviewed EPA’s decision under the once settled (and now not quite so settled) two-step agency review standard enunciated in Chevron, USA v. NRDC, 467 US 837 (1984). The Chevron standard first looks to determine if the statutory language is clear on its face, in which case the statute governs without further consideration of agency expertise. If the statutory language is determined to be ambiguous, then the courts will defer to an agency’s technical judgments within the scope of its authority. Here, the Court did not reach the question of agency deference, as it found that the statutes themselves were not ambiguous.

First, the Court determined that the statutes contained explicit exemptions that did not include the one adopted by EPA in its rulemaking, and that the statutory language adopted “a sweeping reporting mandate” which did not indicate a Congressional intent to provide EPA with additional discretion to carve out new reporting exemptions.

Second, the Court found that its de minimis doctrine, a judicial doctrine that is used to avoid “pointless expenditures of effort”, did not save EPA’s interpretation because the rulemaking record demonstrated several examples of statutory benefits that would be lost if EPA’s exemption were applied, and unsatisfactory responses to those examples by EPA on the record. Consequently, the effects of the rule amendment were not amenable to the de minimis doctrine.

As a guidepost for those evaluating efforts to rescind or reduce the scope of a wide variety of environmental rules, Waterkeeper Alliance v. US EPA signals that courts will remain an important independent evaluator of executive branch authority and that the language used by Congress in enacting the statutes on which agency actions are based is a very real and very powerful limit on future agency actions.

In addition, for the specific impacts of this ruling on farm facilities formerly believed to be exempt from reporting, it is likely those facilities will turn to the annual continuous release reporting (CRR) process under CERCLA and EPCRA to address emissions of ammonia and hydrogen sulfide. However, the CRR program is far from clear: it has a statutory basis but the regulatory provisions EPA has adopted to run the program are quite vague and EPA has over time created a guidance document-based program that is riddled with ambiguity. This would certainly be an appropriate time for EPA to take a fresh look at the CRR program and to consider clarifying the scope and procedures through the rulemaking process.