Clean Air Council, et al. v. E. Scott Pruitt, Administrator, Environmental Protection Agency and Environmental Protection Agency

In June 2016, EPA Administrator Gina McCarthy issued a final rule establishing new source performance standards for fugitive emissions of methane and other pollutants by the oil and natural gas industries. The rule took effect on August 2, 2016, and required regulated entities to conduct an initial monitoring survey to identify leaks by June 3, 2017. After publication, several industry groups (American Petroleum Institute, Texas Oil and Gas Association, and Independent Petroleum Association of America) filed administrative petitions seeking reconsideration under Clean Air Act section 307(d)(7)(B), arguing it was impracticable to raise certain objections during the notice and comment period. On April 18, 2017, new EPA Administrator Scott Pruitt announced EPA would convene reconsideration proceedings and issue a 90-day stay of certain compliance deadlines. On June 5, 2017—just two days after the June 3 deadline for initial emissions surveys—EPA published a notice staying the effectiveness of fugitive emissions requirements, pneumatic pump standards, and professional engineer certification requirements for 90 days pending reconsideration. EPA also announced its intention to extend the stay for two years. Six environmental groups filed an emergency motion challenging the stay as unlawful.

• Whether the court has jurisdiction to review EPA's stay of portions of a final rule pending reconsideration
• Whether the stay constitutes final agency action subject to judicial review
• Whether EPA had statutory authority under Clean Air Act section 307(d)(7)(B) to stay the methane rule
• Whether the industry groups met the two requirements for mandatory reconsideration under CAA section 307(d)(7)(B): (1) impracticability of raising objections during the comment period and (2) central relevance to the outcome of the rule
• Whether the final rule was a logical outgrowth of the notice of proposed rulemaking with respect to: (a) low-production wells, (b) alternative means of compliance, (c) professional engineer certification of vent systems, and (d) pneumatic pump exemptions

The Court granted the Environmental Petitioners' motion and vacated EPA's 90-day stay of the methane rule as arbitrary, capricious, and in excess of statutory authority under 42 U.S.C. § 7607(d)(9)(A), (C). The Court emphasized that nothing in its opinion limits EPA's authority to reconsider the final rule through proper administrative procedures, including notice-and-comment rulemaking.

An agency's stay of a final rule constitutes final agency action subject to judicial review when it suspends compliance deadlines and affects regulated parties' rights and obligations. Under Clean Air Act section 307(d)(7)(B), EPA may only stay a final rule during reconsideration proceedings when reconsideration is mandatory—that is, when a petitioner demonstrates both that (1) it was impracticable to raise objections during the notice-and-comment period and (2) the objections are of central relevance to the outcome of the rule. Whether it was impracticable to raise objections turns on whether the final rule was a logical outgrowth of the notice of proposed rulemaking. A final rule is a logical outgrowth if interested parties should have anticipated the change was possible and reasonably should have filed comments on the subject during the notice-and-comment period. EPA lacks inherent authority to stay lawfully promulgated regulations; it may only act pursuant to authority delegated by Congress. When an agency fails to meet the statutory requirements for mandatory reconsideration, any stay imposed pursuant to section 307(d)(7)(B) is arbitrary, capricious, and in excess of statutory authority.

The Court emphasized that nothing in its opinion limits EPA's authority to reconsider the final methane rule and proceed with its notice of proposed rulemaking. Although EPA had no section 307(d)(7)(B) obligation to reconsider the rule, it is free to do so as long as "the new policy is permissible under the statute, there are good reasons for it, and the agency believes it to be better," citing FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). The dissent, written by Judge Brown, argued that the court lacked jurisdiction because the stay was not final agency action, characterizing it as merely an interlocutory decision that "merely announces that [EPA] will not, legally or practically, enforce the rule under reconsideration." The dissent contended that the majority improperly expanded the doctrine of final agency action and created a "backdoor" to review EPA's discretionary reconsideration decision. Judge Brown distinguished cases like International Union, United Mine Workers and argued that a time-limited stay preserving the status quo pending reconsideration does not constitute the consummation of agency decision-making or impose legal obligations on regulated parties.

This case establishes important precedent on the reviewability of agency stays and the limits of EPA's discretion under the Clean Air Act's reconsideration provisions. The decision clarifies that: (1) an agency's stay of a final rule constitutes final agency action subject to judicial review, even when the underlying reconsideration decision is not reviewable; (2) EPA's authority to stay a final rule under CAA section 307(d)(7)(B) is limited to situations where mandatory reconsideration is required; (3) agencies cannot invoke inherent authority to suspend lawfully promulgated regulations without statutory authorization; and (4) the logical outgrowth test applies to determine whether objections could have been raised during the notice-and-comment period. The case demonstrates robust judicial oversight of agency attempts to delay implementation of duly promulgated regulations and reinforces the principle that agencies must comply with statutory procedures when taking actions affecting regulated parties' rights and obligations. It is significant in U.S. administrative law for constraining agency discretion to effectively suspend regulations through stays while reconsideration proceedings are pending.