United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 12, 2005 Decided October 7, 2005
No. 04-1083
ENVIRONMENTAL INTEGRITY PROJECT, ET AL.,
PETITIONERS
v.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
UTILITY AIR REGULATORY GROUP, ET AL.,
INTERVENORS
Consolidated with
04-1243
On Petitions for Review of an Order of the
Environmental Protection Agency
Keri N. Powell argued the cause for petitioners. With her
on the briefs were Howard I. Fox, David G. McIntosh, Michael
C. Davis, Jennifer M. Wagman, Bradley A. Farrell, and
Christine A. Fazio. John D. Walke and Kelly Haragan entered
appearances.
David J. Kaplan, Attorney, U.S. Department of Justice,
argued the cause for respondent. With him on the brief were
2
John C. Cruden, Assistant Attorney General, and Kerry E.
Rodgers, Counsel, U.S. Environmental Protection Agency.
Christopher S. Vaden and Jon M. Lipshultz, Attorneys, U.S.
Department of Justice, and Nancy A. Ketcham-Colwill, Counsel,
U.S. Environmental Protection Agency, entered appearances.
William H. Lewis, Jr., Lauren E. Freeman, Leslie Sue Ritts,
Julie C. Becker, Charles H. Knauss, and M. Elizabeth Cox were
on the brief of intervenors Clean Air Implementation Project, et
al. in support of respondent.
Before: GINSBURG, Chief Judge, and SENTELLE and
ROGERS, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge: In these consolidated cases, the
Environmental Integrity Project and other petitioners petition for
review of the Environmental Protection Agency’s Part 70
regulations, as well as the Agency’s revised interpretation of its
“periodic” and “umbrella” monitoring rules. Petitioners contend
EPA’s Part 70 regulations are arbitrary, capricious, and
otherwise unlawful. In addition, petitioners claim EPA’s actions
in this case violate the notice-and-comment requirements of the
Administrative Procedure Act (APA). Because we agree EPA’s
final rule was not a “logical outgrowth” of the Agency’s
proposed interim rule, we grant the petition for review in No.
04-1083, vacate the final rule, and remand the matter to the
Secretary. We do not reach the issues presented in No. 04-1243.
I. Background
Title V of the 1990 Amendments to the Clean Air Act
(CAA) requires that certain air pollution sources, including
every major stationary source of air pollution, each obtain a
3
single, comprehensive operating permit to assure compliance
with all emission limitations and other substantive CAA
requirements that apply to the source. See 42 U.S.C. §§
7661a(a), 7661c(a) (2000); Virginia v. Browner, 80 F.3d 869,
873 (4th Cir. 1996) (describing the Title V permit as “a source-
specific bible for Clean Air Act compliance”). In addition, all
sources with Title V permits must conduct monitoring of their
emissions that is sufficient to assure compliance with applicable
requirements under the CAA. See 42 U.S.C. § 7661c(a), (c)
(2000).
To implement these statutory mandates, EPA has
promulgated numerous monitoring regulations, which are
codified at 40 C.F.R. Parts 70 and 71.1 Two of Part 70’s rules
are relevant here. The “periodic monitoring” rule, 40 C.F.R. §
70.6(a)(3)(i)(B), requires that
[w]here the applicable requirement does not require
periodic testing or instrumental or noninstrumental
monitoring (which may consist of recordkeeping designed
to serve as monitoring), [each Title V permit must contain]
periodic monitoring sufficient to yield reliable data from the
relevant time period that are representative of the source’s
compliance with the permit, as reported pursuant to [§
70.6(a)(3)(iii)]. Such monitoring requirements shall assure
use of terms, test methods, units, averaging periods, and
other statistical conventions consistent with the applicable
requirement. Recordkeeping provisions may be sufficient
to meet the requirements of [§ 70.6(a)(3)(i)(B)].
1
The final rule challenged in this case applies to monitoring
regulations that appear in identical form in both Part 70 and Part 71.
For ease of reference, we—like the parties—refer to EPA’s Title V
monitoring requirements as the “Part 70” rules, but all such references
apply equally to Part 71’s parallel monitoring provisions.
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The “umbrella” rule, 40 C.F.R. § 70.6(c)(1), requires that each
Title V permit contain, “[c]onsistent with paragraph (a)(3) of
this section [i.e., the “periodic monitoring” rule], compliance
certification, testing, monitoring, reporting, and recordkeeping
requirements sufficient to assure compliance with the terms and
conditions of the permit.” EPA must review and approve all
Title V permits, and if a specific permit requires insufficient
monitoring, EPA must reject it. See CAA § 505, 42 U.S.C. §
7661d (2000).
In November and December 2000, EPA rejected two Title
V permits. See In the Matter of Pacificorp, Petition No. VIII-00-
1 (Nov. 16, 2000), JA 410-34 (“Pacificorp”); In the Matter of
Fort James Camas Mill, Petition No. X-1999-1 (Dec. 22, 2000),
JA 435-69 (“Fort James”). In both decisions, EPA held the
“umbrella” rule empowers state permitting authorities to review,
on a case-by-case basis, the sufficiency of each permittee’s
monitoring requirements, independent of any other monitoring
that might be imposed under the “periodic monitoring” rule.
Thus, EPA concluded that where a permit requires no “periodic”
monitoring at all, the “umbrella” rule is satisfied by meeting the
more substantive requirements of the “periodic monitoring” rule.
On the other hand, where there is some periodic monitoring but
it is not sufficient to assure compliance, the umbrella rule’s
“separate regulatory standard” governs instead and requires
case-by-case enhancement of existing monitoring “as necessary
to be sufficient to assure compliance.” Pacificorp at 18-19, JA
427-28 (emphasis added); see also Fort James at 7, JA 441.
On September 17, 2002, EPA published a proposed rule to
clarify the monitoring required in Title V permits by “codifying”
the interpretation of Part 70 that the Agency embraced in
Pacificorp and Fort James. See 67 Fed. Reg. 58,561 (Sept. 17,
2002). Specifically, EPA proposed to remove the italicized
prefatory language to § 70.6(c)(1) providing that all Title V
permits contain, “[c]onsistent with paragraph (a)(3) of this
section,” monitoring “sufficient to assure compliance with the
5
terms and conditions of the permit.” EPA proposed that the
deletion of the italicized language from its umbrella rule would
clarify the fact that its Part 70 regulations operate independently
of one another, and the “separate regulatory standard” of §
70.6(c)(1) requires case-by-case supplementation of permits
with insufficient monitoring, regardless of whether the permit
also requires periodic monitoring under § 70.6(a)(3). See 67 Fed.
Reg. at 58,561. A contrary interpretation would render
“superfluous” § 70.6(c)(1)’s sufficiency requirement. Id. at
58,564.
In its final rule, however, EPA decided not to amend Part
70, based on EPA’s “interpretation of the [CAA], the plain
language and structure of [the umbrella rule] and the policy
considerations discussed in this preamble.” 69 Fed. Reg. 3202,
3204 (Jan. 22, 2004). Instead of codifying Pacificorp and Fort
James, EPA’s final rule switched course and adopted the
opposite position, holding §§ 70.6(a)(3) and 70.6(c)(1) are not
“separate regulatory standard[s],” and permits that satisfy the
former subsection cannot be supplemented with additional
monitoring requirements under the latter. The upshot of EPA’s
final interpretation of its Part 70 rules is that state permitting
authorities are now prohibited from adding new monitoring
requirements under the “umbrella” rule if the Title V permit
already contains some (albeit insufficient) monitoring under the
“periodic monitoring” rule.
EPA explains its abandonment of the proposed rule (and its
adoption of the inverse interpretation of its Part 70 regulations)
on the basis of public comments, which insisted that source-
specific, case-by-case reviews by permitting authorities would
have been unduly time-consuming and wasteful of valuable
regulatory resources. A better approach, EPA claims, is to bar
all supplemental monitoring and case-by-case sufficiency
reviews for permits that already require some periodic
monitoring and to address any inadequacies in the current
monitoring regime through a four-part nationwide rulemaking
6
process. Petitioners argue that regardless of the corrective
actions EPA has planned for the future, its Part 70 rules are
presently unlawful and must be set aside.
II. Analysis
A.
This Court will uphold EPA’s final agency action unless it
was arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law. See 5 U.S.C. § 706(2)(A) (2000);
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994);
Air Transp. Ass’n of Am. v. FAA, 291 F.3d 49, 53 (D.C. Cir.
2002). However, an interpretation of a legislative rule “cannot
be modified without the notice and comment procedure that
would be required to change the underlying
regulation—otherwise, an agency could easily evade notice and
comment requirements by amending a rule under the guise of
reinterpreting it.” Molycorp, Inc. v. EPA, 197 F.3d 543, 546
(D.C. Cir. 1999); see also Paralyzed Veterans of Am. v. D.C.
Arena L.P., 117 F.3d 579, 586 (D.C. Cir. 1997).
B.
The Environmental Integrity Project and other petitioners
raise four principal arguments in their petition for review. First,
petitioners argue EPA’s Part 70 regulations unlawfully,
arbitrarily, and capriciously compel state permitting authorities
to accept “inadequate but ‘periodic’ monitoring . . . without
enhancement.” 67 Fed. Reg. 58,529, 58,532 (Sept. 17, 2002).
Second, petitioners argue the interpretation of Part 70 in EPA’s
final rule undermines the 1990 Amendments to the CAA by
reinstating state-by-state variations in monitoring requirements
and arbitrarily treating similarly situated sources differently.
Third, petitioners argue the final rule violates CAA § 114(a)(3)’s
“enhanced monitoring” requirements. See 42 U.S.C. §
7414(a)(3) (2000); Natural Res. Def. Council v. EPA, 194 F.3d
130, 135-36 (D.C. Cir. 1999) (thrice suggesting the independent
7
operation of Part 70’s umbrella and periodic monitoring rules,
combined with EPA’s Compliance Assurance Monitoring Rule,
constitute “enhanced monitoring”). Fourth and finally,
petitioners argue that EPA’s final rule violates APA §§ 551(5),
553(c), because it was not a “logical outgrowth” of the Agency’s
proposed interim rule and therefore did not comport with the
requirements of notice-and-comment rulemaking. See Sprint
Corp. v. FCC, 315 F.3d 369, 375-76 (D.C. Cir. 2003); Kooritzky
v. Reich, 17 F.3d 1509, 1513 (D.C. Cir. 1994).
Because we conclude the fourth and final argument is
dispositive in this case, we need not and do not reach
petitioners’ other claims. See Ne. Maryland Waste Disposal
Auth. v. EPA, 358 F.3d 936, 947 (D.C. Cir. 2004); Harbor
Gateway Commercial Prop. Owners’ Ass’n v. EPA, 167 F.3d
602, 604 (D.C. Cir. 1999).
C.
Last term, in International Union, United Mine Workers of
America v. Mine Safety & Health Administration, 407 F.3d 1250
(D.C. Cir. 2005) (“International Union”), we noted:
[The APA’s n]otice requirements are designed (1) to ensure
that agency regulations are tested via exposure to diverse
public comment, (2) to ensure fairness to affected parties,
and (3) to give affected parties an opportunity to develop
evidence in the record to support their objections to the rule
and thereby enhance the quality of judicial review.
Id. at 1259 (citing Small Refiner Lead Phase-Down Task Force
v. EPA, 705 F.2d 506, 547 (D.C. Cir. 1983)). Given the
strictures of notice-and-comment rulemaking, an agency’s
proposed rule and its final rule may differ only insofar as the
latter is a “logical outgrowth” of the former. See Shell Oil Co. v.
EPA, 950 F.2d 741, 750-51 (D.C. Cir. 1991); Ne. Maryland
Waste Disposal Auth., 358 F.3d at 952 (stating a final rule is a
“logical outgrowth” of a proposed rule only if interested parties
8
“‘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”) (quoting City of
Waukesha v. EPA, 320 F.3d 228, 245 (D.C. Cir. 2003)). The
“logical outgrowth” doctrine does not extend to a final rule that
finds no roots in the agency’s proposal because “[s]omething is
not a logical outgrowth of nothing,” Kooritzky, 17 F.3d at 1513,
nor does it apply where interested parties would have had to
“divine [the agency’s] unspoken thoughts,” Arizona Pub. Serv.
Co. v. EPA, 211 F.3d 1280, 1299 (D.C. Cir. 2000) (quoting Shell
Oil, 950 F.2d at 751), because the final rule was “surprisingly
distant” from the Agency’s proposal. International Union, 407
F.3d at 1260.
Thus, we have refused to allow agencies to use the
rulemaking process to pull a surprise switcheroo on regulated
entities. In International Union, for example, the Agency’s
proposed rule provided that “[a] minimum air velocity of 300
feet per minute must be maintained” to ventilate underground
coal mines. 68 Fed. Reg. 3936, 3965 (Jan. 27, 2003) (emphasis
added). The final rule, however, provided that “[t]he maximum
air velocity in the belt entry must be no greater than 500 feet per
minute, unless otherwise approved in the mine ventilation plan.”
69 Fed. Reg. 17,480, 17,526 (Apr. 2, 2004) (emphasis added).
Although “[t]here were some comments during the hearings
urging the Secretary to set a maximum velocity cap,” we
vacated the final rule because the Agency “did not afford a . . .
public notice of its intent to adopt, much less an opportunity to
comment on, such a cap.” International Union, 407 F.3d at
1261; see also Fertilizer Inst. v. EPA, 935 F.2d 1303, 1312
(D.C. Cir. 1991) (stating EPA “cannot bootstrap notice from a
comment”).
The final rule in this case—unlike those at issue in cases
like International Union, Northeast Maryland Waste, and Shell
Oil—does not purport to be a “rule” at all; it purports to be a
mere “interpretation.” In EPA’s interim rule, the Agency
9
proposed to delete the prefatory language of 40 C.F.R. §
70.6(c)(1) to “codify the understanding set forth in the
Pacificorp and Fort James orders, where [EPA] characterized §
70.6(c)(1) [i.e., the ‘umbrella’ rule] as a ‘separate regulatory
standard’ from § 70.6(a)(3)(i)(B) [i.e., the ‘periodic monitoring’
rule].” 67 Fed. Reg. 58,561, 58,564 (Sept. 17, 2002). In its final
rule, however, EPA “decided not to adopt the changes to the
regulatory text of the umbrella monitoring rules that were
proposed in September 2002.” 69 Fed. Reg. 3202, 3202 (Jan. 22,
2004). Instead, EPA “ratifie[d] the regulatory text as it is
currently worded,” and the Agency “determined that the correct
interpretation of [the ‘umbrella’ rule] do[es] not establish a
separate regulatory standard or basis for requiring or
authorizing review and enhancement of existing monitoring
independent of any review and enhancement as may be required
under [the ‘periodic monitoring’ rule].” Id. at 3204 (emphasis
added). Thus, the final rule not only did not adopt the proposed
interim rule but also adopted a “reinterpretation” of the
unamended text.
Of course, there is nothing objectionable in the Agency’s
refusal to adopt its proposed amendments to Part 70’s text. See
Am. Iron & Steel Inst. v. EPA, 886 F.2d 390, 400 (D.C. Cir.
1989) (“One logical outgrowth of a proposal is surely, as EPA
says, to refrain from taking the proposed step.”); see also Ne.
Maryland Waste Disposal Auth., 358 F.3d at 951-52. However,
EPA’s final rule in this case did more—after taking its first bite
at the interpretive apple in its Pacificorp and Fort James orders,
EPA adopted a “reinterpretation” of Part 70’s unrevised text.
This flip-flop complies with the APA only if preceded by
adequate notice and opportunity for public comment. Compare
Alaska Prof’l Hunters Ass’n, Inc. v. FAA, 177 F.3d 1030, 1034
(D.C. Cir. 1999) (“When an agency has given its regulation a
definitive interpretation, and later significantly revises that
interpretation, the agency has in effect amended its rule,
something it may not accomplish without notice and
10
comment.”), and Paralyzed Veterans of Am. v. D.C. Arena L.P.,
117 F.3d 579, 586 (D.C. Cir. 1997) (“Once an agency gives its
regulation an interpretation, it can only change that
interpretation as it would formally modify the regulation itself:
through the process of notice and comment rulemaking.”), with
Hudson v. FAA, 192 F.3d 1031, 1036 (D.C. Cir. 1999) (stating
agency may change its longstanding policies without notice and
comment, so long as “there is no dispute as to the regulation’s
meaning”), and Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 94
(D.C. Cir. 1997) (“[I]nterpretative rules and policy statements
are quite different agency instruments. An agency policy
statement does not seek to impose or elaborate or interpret a
legal norm. It merely represents an agency position with respect
to how it will treat—typically enforce—the governing legal
norm.”).
Both of EPA’s conflicting constructions are the very
essence of “definitive interpretation[s]” of the Part 70
regulations. In late 2000, when EPA issued its orders in
Pacificorp and Fort James, it relied solely upon the umbrella
rule’s “separate regulatory standard” to require case-by-case
enhancement of existing monitoring “as necessary to be
sufficient to assure compliance.” Pacificorp at 18-19, JA 427-28
(emphasis added); see also Fort James at 7-9, JA 441-43; id. at
24 n.10, JA 458 n.10. In 2004, EPA’s final rule carried similarly
forceful effect (albeit in the diametrically opposite direction):
EPA has determined that the correct interpretation of [the
‘umbrella’ rules] is that these provisions do not establish a
separate regulatory standard . . . . EPA has determined
that where the periodic monitoring rules do not apply, [the
‘umbrella’ rules] do not require or authorize a new and
independent type of monitoring in permits in order for the
permits to contain monitoring to assure compliance as
required by the Act.
11
69 Fed. Reg. at 3204 (emphases added). Given the mandatory
language in both of EPA’s interpretations, there can be little
doubt that both purported to “bind[] private parties or the agency
itself with the ‘force of law.’” Gen. Elec. Corp. v. EPA, 290 F.3d
377, 382 (D.C. Cir. 2002). As such, EPA’s revised interpretation
of its Part 70 rules required adequate prior notice and an
opportunity to comment. See Alaska Prof’l Hunters Ass’n, Inc.
v. FAA, 177 F.3d 1030, 1034 (D.C. Cir. 1999); Paralyzed
Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579, 586 (D.C.
Cir. 1997).
EPA argues that it met its notice-and-comment obligations
because its final interpretation was also mentioned (albeit
negatively) in the Agency’s proposal. However, this argument
proves too much. If the APA’s notice requirements mean
anything, they require that a reasonable commenter must be able
to trust an agency’s representations about which particular
aspects of its proposal are open for consideration. See Fertilizer
Inst. v. EPA, 935 F.2d 1303, 1312 (D.C. Cir. 1991). A contrary
rule would allow an agency to reject innumerable alternatives in
its Notice of Proposed Rulemaking only to justify any final rule
it might be able to devise by whimsically picking and choosing
within the four corners of a lengthy “notice.” Such an exercise
in “looking over a crowd and picking out your friends,” Exxon
Mobil Corp. v. Allapattah Servs., Inc., 125 S. Ct. 2611, 2626
(2005), does not advise interested parties how to direct their
comments and does not comprise adequate notice under APA §
553(c).
In this case, EPA proposed to codify its interpretation of the
Part 70 rules through an amendment of the regulatory text.
Whatever a “logical outgrowth” of this proposal may include, it
certainly does not include the Agency’s decision to repudiate its
proposed interpretation and adopt its inverse. We therefore hold
EPA’s final rule violated the APA’s notice-and-comment
requirements.
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III. Conclusion
For the reasons set forth above, we grant the petition in No.
04-1083, vacate the final rule, and remand the matter to the
Secretary. See International Union, 407 F.3d at 1261;
Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm’n, 988
F.2d 146, 150-51 (D.C. Cir. 1993). Because we do not reach the
issues presented in No. 04-1243, we deconsolidate the cases and
call for motions to govern further proceedings in No. 04-1243.
So ordered.