This article was originally published in the Outside Perspectives section of CCM -The American Lawyer's Corporate Counsel Magazine, October 1999 issue, and appears here with the permission of American Lawyer Media, L.P.
A recent federal appeals court decision could have a profound impact on the way the U.S. Environmental Protection Agency (EPA) issues new environmental standards and regulatory requirements in the future, effectively requiring the agency to provide more meaningful participation in the regulatory process for regulated parties. In a decision that appears to eschew the deferential treatment the courts traditionally have accorded EPA in challenges to governmental agency rulemakings, the U.S. Court of Appeals for the District of Columbia Circuit recently struck down EPA's air quality standards for ozone and particulate matter (PM) after concluding that EPA failed to articulate an "intelligible principle" from which to set the standards. While the ultimate fate of EPA's new ozone and particulate matter standards remains uncertain at this time, the court's ruling is likely to become an oft-cited judicial standard by which private parties affected by EPA regulations may be able to challenge the Agency's rulemakings that lack an objectively sound scientific rationale.
In this case American Trucking Associations v. EPA, the D.C. Circuit held that EPA had failed to adequately explain how it had arrived at the new air pollution standards for ozone and PM and why these new standards were necessary to protect human health, as opposed to either existing standards or even more stringent standards. Without such an explanation, the court concluded that EPA's interpretation of the Clean Air Act would have amounted to "an unconstitutional delegation of legislative power" to the agency and therefore ruled that these standards could not be upheld.
The American Trucking case specifically addressed EPA's July 1997 final regulations that revised the existing National Ambient Air Quality Standards (NAAQS) for ground-level ozone and particulate matter. As part of these rulemakings, EPA had proposed lowering the ozone standard from 0.09 parts per million (ppm) to 0.08 ppm, and also established a new "fine" standard for particulates smaller than 2.5 micrometers in diameter-known as PM25. The appellants in the case challenged both rules, arguing among other things that because EPA failed to adequately explain the basis for both rules, its interpretation of the air quality provisions of the Clean Air Act amounted to an unconstitutional delegation of legislative power to EPA.
In reviewing this case, the D.C. Circuit initially noted that the Clean Air Act requires EPA to set standards for pollutants (including ozone and PM) at a level necessary to protect human health within an "adequate margin of safety." Prior to the issuance of the new standards, EPA already determined that both ozone and PM had adverse health effects at any exposure level above zero. Therefore, in order for EPA to establish any level above zero as the standard, the court ruled in this case that the Agency must explain why the specific level it chose was necessary to protect human health and why a lesser or more stringent standard was not necessary. Without such an explanation, the court concluded that the rulemaking would run afoul of the Constitution's nondelegation doctrine, which requires Congress to give administrative agencies sufficiently "channeled" parameters within which to promulgate regulations.
Addressing the ozone rule in light of this requirement, the court held that EPA did not clearly explain in its rulemaking how the particular concentration of ozone (0.08 ppm) the agency had selected as the new standard would satisfy the statute's requirement to provide for an adequate margin for safety. Thus, given the agency's failure to explain the scientific basis for its decision to lower the existing ozone standard to 0.08 ppm, the court concluded that EPA was effectively legislating rather than simply issuing rules to carry out the Clean Air Act, thereby exceeding its constitutional authority. The court therefore remanded the ozone rule to EPA and instructed the agency to develop "binding standards for itself" for determining what constitutes an adequate margin of safety to protect human health.
At the same time, the court also invalidated the PM25 rule, holding that EPA had not only failed to adequately explain the scientific basis for the rule, but also had acted arbitrarily and capriciously in adopting this rule. In arriving at this decision, the court acknowledged that there were independent health consequences from different levels of exposure to PM which justified creating separate standards, but found that the new standard effectively left coarse PM between 2.5 and 10 micrometers unregulated. According to the court, this action would possibly have the ultimate effect of allowing increased levels of particular matter in the range of 2.5 to 10 micrometers, an impermissible result under the law.
Impact on Future EPA Rulemakings
The court's approach in American Trucking, as well as the result, is certainly a departure from prior case law trends involving judicial review of EPA rulemakings. Traditionally, EPA actions have enjoyed considerable deference from the courts. For example, in one particularly notable and oft-cited case involving an EPA rulemaking, Chevron U.S.A. Inc. v. Natural Resources Defense Council, the U.S. Supreme Court ruled that in cases where Congress' intent is not clear, the courts cannot substitute their own interpretation of statutory requirements for a reasonable interpretation of the statute by an agency vested with the authority to enforce the statute in question. In another important case, Lead Industry Association v. EPA, the D.C. Circuit said that the role of the courts, when reviewing agency rulemakings, was limited to determining whether the policy choices the Agency made were supported by the record. Given this standard of review, challenging EPA rulemakings has proven to be a formidable and sometimes insurmountable task, even where the entities challenging such rulemakings could show that EPA's decision was flawed in some respects. However, American Trucking suggests that at least in some cases, courts may more closely scrutinize EPA rulemakings to ensure that they are based on an objectively-sound scientific rationale. This holding, in turn, may give regulated parties a stronger position than before from which to challenge EPA rulemakings.
The D.C. Circuit's decision in American Trucking highlights the importance of active participation by regulated parties in administrative rulemakings. Although EPA traditionally has been accorded substantial deference by the courts, the case provides a clear signal that EPA must fully explain the scientific basis for its regulatory actions. As a result, the ruling creates significant opportunities for regulated industries to secure more favorable outcomes in EPA rulemakings. By actively forcing EPA to demonstrate the basis for proposed regulations, regulated parties that participate early in the regulatory process have an opportunity not only to shape the record, but will be poised to challenge a regulation that does not include an adequate explanation of the agency's rulemaking action or is otherwise not well grounded in science.
* Daniel M. Steinway is the chairman of Kelley Drye & Warren LLP's Environmental Practice Group and specializes in all aspects of environmental practice, including regulatory counseling, litigation/enforcement proceedings, and business transactions.