June 5, 2014

EPA Directive Found to Violate Its Own Regional Consistency Regulations

Holland & Knight Regulatory Litigation Blog
Jessica L. Farmer

A panel of the D.C. Circuit vacated the Environmental Protection Agency's Summit Directive — a directive which, in response to an unfavorable decision, imposed different regulatory requirements in one region of the country than those in force elsewhere.  The Court found that the directive violated EPA's regional consistency regulations.

EPA's regulations, in connection with the requirements of the Clean Air Act, state that multiple pollutant-emitting activities are considered to be a single stationary source if they are "adjacent." In applying these regulations, EPA has stated that determinations as to whether two or more facilities are "adjacent" should be based on the functional interrelationships of the facilities, not just the physical distance.  This functional interrelationship theory was challenged, and in August of 2012, in Summit Petroleum Corp. v. EPA, the Sixth Circuit held that EPA's broad definition of the term "adjacent" was arbitrary and capricious.  It therefore required that EPA limit its interpretation to review only the geographical proximity of separate facilities.   In response, EPA issued a directive to ordering all regional EPA offices outside of the Sixth Circuit to continue to use the functional interrelationship theory in determining whether facilities are a single source (the "Summit Directive").

The National Environmental Development Association challenged the Summit Directive, asserting its members and facilities outside the Sixth Circuit are at a competitive disadvantage to those within the Sixth Circuit and that EPA established inconsistent criteria in violation of the EPA's regional consistency requirements.  EPA argued that it was not required it to ensure national uniformity in response to a judicial decision and that the doctrine of nonaquiescence allowed it to issue the Summit Directive using the broad definition of "adjacent" in states outside the Sixth Circuit.  

Giving credence to the competitive advantage argument, the D.C. Circuit rejected EPA's position and vacated the Summit Directive. The Court also noted that the nonaquiescence doctrine does not allow EPA to ignore the plain language of its own regulations, which require regional consistency.  The Court did not decide whether the Summit Directive contravened the requirements of the Clean Air Act because the Directive was plainly contrary to EPA's own regulations requiring national uniformity.

National Environmental Development Association's Clean Air Project v. Environmental Protection Agency, 13-1035 (D.C. Cir.)

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