High-Stakes Roller Coaster Ride Continues – Court Holds EPA to One Month to Finalize Boiler MACT

January 24, 2011

In a move that surprised many observers, on Jan. 20, 2011, the District of Columbia U.S. District Court in Sierra Club v. Lisa Jackson, No. 01-1537 (Jan. 21, 2011), denied EPA’s Dec. 7, 2010, motion for a 15-month extension to finalize controversial “Boiler MACT” regulations for commercial/ industrial and institutional facilities. EPA has been under a court order to promulgated these regulations, and had requested additional time based on the high volume of comments – more than 4,800 – received on its June 4, 2010, Proposed Rule (75 Fed. Reg. 32006) and the anticipated need to substantially change and re-propose the regulations. But, in an opinion that reveals the court’s impatience with EPA’s inability to finish this rulemaking (which originally began in 2006), the court found EPA failed to demonstrate it is impossible to complete the rulemaking without the requested delay, and placed EPA on a fast-track to promulgate the Final Rule by Feb. 21, 2011.

EPA almost immediately issued a highly unusual press release, announcing its intent to comply with the order, but also plainly indicating it will grant any motion for administrative reconsideration it may receive in the rulemaking docket. Although the content of the final rules is still unknown, EPA has essentially invited a motion for reconsideration from regulated entities by stating it will re-open public review and comment on the Final Rule during reconsideration.

While EPA seeks to provide assurance that the Final Rule promulgated in February will not be the last word, EPA does not state it will stay the effective date of the Final Rule during reconsideration. Absent an administrative stay of the effective date, the rule will become effective for new sources within 60 days after its publication in the Federal Register (i.e., by the end of April 2011. (Existing sources will likely have three years to comply.)

While an administrative stay would appear appropriate in this case, the court and the petitioners in Sierra Club could view any such stay as circumvention of the court’s order. Further, any appeal of the Final Rule with a request for a judicial stay would go directly to the D.C. Circuit U.S. Court of Appeals, where the court would be in the odd position of being asked to stay the effect of a rule after the District Court refused to allow EPA time to fix it. In another scenario, the District Court could be trumped if Congress were to intervene during the 60-day Congressional Review Act period.

The Proposed Rule was widely criticized by regulated entities as misapplying the Clean Air Act’s Maximum Achievable Control Technology (MACT) requirements, and creating overly stringent and unworkable standards for “major” and “area” sources of hazardous air pollutants. During the comment period following the proposal, two things happened: (1) the proposal became the environmental “poster child” for job destroying administrative regulation; and (2) EPA amassed a scientific record that EPA acknowledges requires substantial revision of its proposed rules.

The EPA press release gives affected entities reassurance that “The standards will be significantly different than what EPA proposed in April 2010.” But, what those changes will be and whether they will satisfy the many concerns raised by the regulated community is unknown. A significantly changed rule is generally subject to re-proposal, and in the absence of that, may be voided under the Administrative Procedure Act (APA) simply on the basis that the public did not have opportunity to review it. EPA reconsideration may provide an avenue for avoiding an APA challenge and continuing this rulemaking to a sensible conclusion. But if the rule goes into effect before that process is concluded, state permitting authorities will be left in a quandary as to how to address boiler requirements in pending new source permits.

With this court order, the Boiler MACT roller coaster ride continues – stay tuned for an interesting next few months. For further information and analysis of EPA’s Boiler MACT rulemaking, please contact the authors.