United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 10, 2007 Decided January 22, 2008
No. 07-1040
NATURAL RESOURCES DEFENSE COUNCIL,
PETITIONER
v.
ENVIRONMENTAL PROTECTION AGENCY AND
STEPHEN L. JOHNSON, ADMINISTRATOR,
U.S. ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENTS
CHEMTURA CORPORATION AND
AMERICAN CHEMISTRY COUNCIL,
INTERVENORS
On Petition for Review of an Order of the
Environmental Protection Agency
Benjamin H. Longstreth argued the cause for petitioner.
With him on the briefs was David D. Doniger.
Steven E. Rusak, Attorney, United States Department of
Justice, argued the cause for respondents. With him on the
brief were John C. Cruden, Deputy Assistant Attorney
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General, and Diane E. McConkey, Counsel, U.S.
Environmental Protection Agency.
David B. Weinberg and Eric Andreas were on the brief
for intervenor American Chemistry Council.
Before: SENTELLE and HENDERSON, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: Natural Resources
Defense Council challenges the Environmental Protection
Agency’s 2007 “critical use” exemption for methyl bromide
on the grounds that it applies an unreasonable interpretation of
the Clean Air Act and that it is arbitrary and capricious in
light of the United States’ agreements with other nations on
reducing the use of methyl bromide and other ozone-depleting
chemicals. The 2007 exemption applied a framework that
EPA adopted in a 2004 rule—a rule that NRDC challenged
previously and that we affirmed. See NRDC v. EPA, 464 F.3d
1 (D.C. Cir. 2006). NRDC’s claim has not changed: in the
first case it argued that the 2004 framework was invalid as
adopted and applied to determine the 2005 exemption, and
now it challenges the 2004 framework—which EPA left
unchanged—as applied to determine the 2007 exemption.
Under principles of claim preclusion, the first case bars
NRDC’s new challenge.
* * *
Methyl bromide is used in the United States and
throughout the world as a broad-spectrum pesticide and, since
1992, has been a controlled substance under the Montreal
Protocol on Substances that Deplete the Ozone Layer. In
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1997 the parties to the Montreal Protocol established a 2005
deadline for phasing out its use and production, but at the
same time provided that the phaseout would not apply “to the
extent the Parties decide to permit the level of production or
consumption that is necessary to satisfy uses agreed by them
to be critical uses.” Montreal Protocol art. 2H(5), Sept. 16,
1987, S. Treaty Doc. No. 100-10, 1522 U.N.T.S. 29, as
adjusted by the parties, U.N. Env’t Programme, Report of the
Ninth Meeting of the Parties to the Montreal Protocol on
Substances that Deplete the Ozone Layer, U.N. Doc.
UNEP/OzL.Pro.9/12, Annex III (Sept. 25, 1997) (“Ninth
Report”). Congress amended the Clean Air Act (“CAA”) in
October 1998 to adopt the Montreal Protocol’s phaseout
schedule, CAA § 604(h), 42 U.S.C. § 7671c(h), and to include
an exemption for critical uses, CAA § 604(d)(6), 42 U.S.C.
§ 7671c(d)(6) (“To the extent consistent with the Montreal
Protocol, the Administrator [of the EPA] . . . may exempt the
production, importation, and consumption of methyl bromide
for critical uses.”).
In 2004 EPA promulgated a rule “describing the
framework for the critical use exception” and approving
critical uses for 2005. Protection of Stratospheric Ozone:
Process for Exempting Critical Uses From the Phaseout of
Methyl Bromide, 69 Fed. Reg. 76,982, 76,985/2 (Dec. 23,
2004) (“Framework Rule”). In setting a framework for the
approval of critical uses and of production and importation of
methyl bromide for those uses, EPA interpreted Article 2H of
the Montreal Protocol and post-ratification decisions of the
parties that applied Article 2H. Id. at 76,984/2. One such
decision limited production and importation to instances
where “[m]ethyl bromide is not available in sufficient quantity
and quality from existing stocks,” id. (quoting Ninth Report,
Decision IX/6), and EPA read that language as recognizing
“the possibility that available stocks could be less than
existing stocks,” id. at 76,987/3. EPA also looked to the
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decision of the Montreal parties allowing the United States in
2005: (1) a total amount of permissible critical use of methyl
bromide, and (2) a total amount of permissible production and
importation of methyl bromide for those critical uses. See id.
at 76,986/3-76,987/1 (citing the Report of the First
Extraordinary Meeting of the Parties to the Montreal Protocol
on Substances that Deplete the Ozone Layer, U.N. Doc.
UNEP/OzL.Pro.ExMP/1/3, Decision Ex.I/3 (Mar. 27, 2004)).
EPA understood that decision to mean that when permissible
use exceeded permissible production and importation (as it
did in 2005 and in each later year), use of pre-existing stocks
of methyl bromide would make up the difference. Id.
Applying this interpretation of its responsibilities under
the Montreal Protocol, EPA adopted a framework for
promulgating critical use exemptions each year. EPA would
draw upon existing stocks to make up the difference between
each year’s permissible critical use, on the one hand, and
production and importation, on the other; but it would not
make new production and importation contingent on any
further drawdown from existing stocks, nor would it place any
restriction on the amount of existing stocks that could be
devoted to noncritical uses. In adopting that framework, EPA
rejected the two arguments that are the subject of this petition
for review. First, EPA noted that “[t]wo commenters stated
that all stocks must be used before any new production is
permitted and that all stocks other than those used for export
to developing countries should be considered ‘available’ for
critical uses.” Id. at 76,987/2. EPA responded that this was
not an “accurate characterization” of its duty under the
Montreal Protocol and that it would not adopt such a
requirement. Id. at 76,987/2-3. Second, EPA discussed a
“comment stating that there is no legal basis for allowing use
of stocks by users that did not apply for or did not qualify for
critical use status”; EPA disagreed and said that it would not
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require that the drawdown of pre-phaseout stocks be restricted
to critical uses. Id. at 76,988/1-2.
In an earlier suit in this court, NRDC challenged these
two decisions of the Framework Rule, arguing that they were
inconsistent with the post-ratification decisions of the parties
to the Montreal Protocol and thus in violation of CAA
§ 604(d)(6)’s provision that the critical use exemption
program must be “consistent with the Montreal Protocol.”
We denied NRDC’s petition, holding that the “post-
ratification agreements of the parties were not ‘law’”; thus any
inconsistency between those decisions and the Framework
Rule would not render the Rule “not in accordance with law,”
the relevant standard of review under CAA § 307(d)(9)(A), 42
U.S.C. § 7607(d)(9)(A). NRDC, 464 F.3d at 7, 11.
Meanwhile, EPA announced its critical use exemption for
2006, and then its critical use exemption for 2007, the rule
under review here. Protection of Stratospheric Ozone: The
2007 Critical Use Exemption From the Phaseout of Methyl
Bromide, 71 Fed. Reg. 75,386 (Dec. 14, 2006) (“Final Rule”).
(EPA has since then promulgated a critical use exemption for
2008. Protection of Stratospheric Ozone: The 2008 Critical
Use Exemption From the Phaseout of Methyl Bromide, 72
Fed. Reg. 74,128 (Dec. 28, 2007).)
In the 2007 Final Rule, EPA said that it was “not
changing the framework of the exemption program” but
instead was approving critical uses for 2007 and setting the
amounts of methyl bromide that would be available from new
production and importation, as well as from pre-phaseout
stocks, to satisfy those critical uses. 71 Fed. Reg. at 75,389/1.
NRDC challenges the 2007 Final Rule as inconsistent with
law, pointing to the same two decisions it contested in the
original Framework Rule.
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EPA, joined in part by intervenors, claims that NRDC’s
new challenge is an untimely assault upon the 2004
Framework Rule rather than a timely challenge to the 2007
Final Rule, that it is barred by issue and claim preclusion, and
that, in any event, NRDC is wrong on the merits. Because we
agree that NRDC’s petition is barred by claim preclusion, we
address neither timeliness nor the merits.
Before addressing claim preclusion, however, we note a
possible difficulty with EPA’s timeliness argument. Section
307(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b)(1),
establishes a 60-day window for challenges to regulations
promulgated and final action taken by the EPA Administrator
under the Act. Because EPA’s Framework Rule decided the
two matters that NRDC now presents for our review, EPA
suggests that NRDC’s challenge is time-barred unless EPA, in
its notice of proposed rulemaking for the 2007 exemption or
in the 2007 Final Rule itself, reopened consideration of those
matters. See Envtl. Def. v. EPA, 467 F.3d 1329, 1332-33
(D.C. Cir. 2006); Nat’l Ass’n of Reversionary Prop. Owners v.
Surface Transp. Bd., 158 F.3d 135, 141 (D.C. Cir. 1998).
This case is unusual, however, among ones raising
statutory time limits and the reopening doctrine: the decision
challenged here, being an application of the principles
developed in the prior rule, appears to depend for its legality
on the legality of that prior rule. Accordingly, it is at least
arguable that the timeliness issue here is governed by the
established doctrine that parties claiming substantive
invalidity of a rule for which direct statutory assault is time-
barred are nonetheless free to raise their claims in actions
against agency decisions applying the earlier rule. See
Murphy Exploration & Prod’n Co. v. Dep’t of Interior, 270
F.3d 957, 958-59 (D.C. Cir. 2001); NLRB Union v. FLRA, 834
F.2d 191, 195-96 (D.C. Cir. 1987); Functional Music, Inc. v.
FCC, 274 F.2d 543, 546-48 (D.C. Cir. 1958); see also Pub.
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Citizen v. NRC, 901 F.2d 147, 151-52 (D.C. Cir. 1990).
Because this consideration has not been briefed and other
grounds exist for resolving the case, we need not enter this
thicket.
* * *
A subsequent lawsuit is barred by claim preclusion “if
there has been prior litigation (1) involving the same claims or
cause of action, (2) between the same parties or their privies,
and (3) there has been a final, valid judgment on the merits,
(4) by a court of competent jurisdiction.” Smalls v. United
States, 471 F.3d 186, 192 (D.C. Cir. 2006). Because NRDC
involved the same parties and proceeded to final judgment in
this court, the current petition for review is precluded by our
prior judgment if it involves “the same claims.” We hold that
it does.
In challenging the 2007 Final Rule, NRDC focuses on the
same two decisions it contested following promulgation of the
Framework Rule: (1) EPA’s allowance of continued new
methyl bromide production and importation for critical uses
despite the existence of stocks sufficient to meet all critical
uses, and (2) its failure to prohibit all non-critical uses of
those stocks. While NRDC challenges the 2007 exemption,
its claim in fact remains the same: that the framework adopted
in 2004—and used to calculate the 2007 exemption—is
inconsistent with law. Compare the current NRDC Br. 32
(“EPA has defied the key commitment that stockpiles be
exhausted before new production is allowed.”), and id. at 39
(claiming that EPA’s approach “is especially unconvincing in
light of the Agency’s remarkable failure to protect the
stockpile from non-critical users”), with its brief in the 2005
case (No. 04-1438) at 26 (arguing that the Framework Rule
“unlawfully fails to satisfy” the “obligation” that production
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and importation of methyl bromide be permitted only if stocks
are insufficient to satisfy critical uses), and id. at 28 (claiming
that the Framework Rule “exacerbates the unlawful failure to
account for stocks by allowing use of the stockpile for non-
critical purposes”). Whether these two suits are based on the
same claim “turns on whether they share the same nucleus of
facts.” Apotex, Inc. v. FDA, 393 F.3d 210, 217 (D.C. Cir.
2004) (quoting Drake v. FAA, 291 F.3d 59, 66 (D.C. Cir.
2002)). Here NRDC clearly challenges the same two EPA
decisions that it challenged in the previous case, arguing that
they are inconsistent with the decisions of the parties to the
Montreal Protocol that it invoked in that case. None of the
underlying facts has changed; in defining the 2007 critical use
exemption, EPA applied the same principles that it had
established—unlawfully, according to NRDC—in its
Framework Rule.
NRDC tries to avoid the force of claim preclusion by
arguing that in NRDC it limited its claim to a Chevron “step
one” argument that the Framework Rule violated
unambiguous dictates of international agreements that were
incorporated into U.S. law, while it now claims that EPA
violated its duty to give a reasonable construction of
governing statutes under Chevron “step two” and that it acted
in an arbitrary and capricious manner. NRDC Br. 7, 29-30. It
is true that in the earlier proceeding, as we said, “NRDC
fashion[ed] the entirety of its argument around the proposition
that the ‘decisions’ under the Protocol are ‘law,’” NRDC, 464
F.3d at 8, and that its arguments here are subtly different
(though they depend overwhelmingly on the same documents
as before). But claim preclusion precludes the relitigation of
claims, not just arguments. Unlike issue preclusion, which is
aimed at preventing relitigation of issues previously resolved,
see, e.g., SBC Commc’ns Inc. v. FCC, 407 F.3d 1223, 1229
(D.C. Cir. 2005), claim preclusion is also intended “to prevent
‘litigation of matters that should have been raised in an earlier
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suit,’” id. at 1230 (quoting Marrese v. Am. Academy of
Orthopaedic Surgeons, 470 U.S. 373, 376 n.1 (1985)); accord
Allen v. McCurry, 449 U.S. 90, 94 (1980) (“[A] final
judgment on the merits of an action precludes the parties or
their privies from relitigating issues that were or could have
been raised in that action.”); NRDC v. Thomas, 838 F.2d
1224, 1252 (D.C. Cir. 1988) (“[R]es judicata (claim
preclusion) bars relitigation not only of matters determined in
a previous litigation but also ones that a party could have
raised.”).
The two petitions simply offer different legal theories to
support the same claim: that two judgments made by EPA in
the Framework Rule were unlawful. Cf. CAA § 307(d)(9)(A),
42 U.S.C. § 7607(d)(9)(A) (providing for judicial relief
against EPA decisions found “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law”).
NRDC doesn’t get a second bite at that same apple. The
petition for review is barred by the preclusive effect of our
prior decision adjudicating its claims against EPA’s
framework for adopting critical use exemptions.
So ordered.