Aug 6: In the U.S. Court of Appeals, Tenth Circuit, Case No. 11-9533. On petition for review of a final action by U.S. EPA. The Appeals Court explains that US Magnesium seeks review of a recent final rule from the U.S. EPA. In its rule, the EPA has called for Utah to revise its State Implementation Plan (SIP) for the federal Clean Air Act (CAA). Under the CAA, the EPA may call for a state to revise its SIP (a SIP Call) if the EPA finds the state's current SIP substantially inadequate. Here, the EPA determined that Utah's SIP was substantially inadequate because it contains an Unavoidable Breakdown Rule (UBR), which permits operators of CAA-regulated facilities to avoid enforcement actions when they suffer an unexpected and unavoidable equipment malfunction. In this SIP Call, published as a final rule in April 2011, EPA requested that Utah promulgate a new UBR -- one that conforms with the EPA's interpretation of the CAA. US Magnesium maintains that the SIP Call is arbitrary and capricious and asks the court to vacate it. However, the Appeals Court denied the petition for review.
After several years of negotiations between EPA and Utah's Division of Air Quality (UDAQ) failed to produce an acceptable UBR, in 2010, EPA published a notice of proposed rulemaking proposing to find the Utah SIP substantially inadequate due to its continued inclusion of the UBR. Although UDAQ opposed the proposed rule, EPA nevertheless published the SIP Call as a final rule in April 2011, and Utah has since agreed to revise the UBR.
When it promulgated the final rule, the EPA provided three primary justifications for its finding that the Utah SIP was substantially inadequate. First, the EPA found that the UBR "[d]oes not treat all exceedances of SIP and permit limits as violations," which could preclude injunctive relief; Second, the EPA determined that the UBR "could be interpreted to grant the Utah executive secretary exclusive authority to decide whether excess emissions constitute a violation"; and Third, the EPA found that the UBR "improperly applies to Federal technology-based standards such as [NSPS and NESHAPS]."
On of the primary concerns was, "EPA lacks the regulatory authority to make a SIP Call based on policy or guidance that has not become applicable law. The [Herman Memorandum] EPA cites as justification for the SIP Call has never been subjected to the legal requirements of notice and public rulemaking under the Administrative Procedures Act. . ."
EPA argued that US Magnesium did not have standing to bring the action, however, after a lengthy analysis the Appeals Court ruled, "Because the SIP Call significantly affects Utah's decisionmaking process, and because we find that a decision overturning the SIP Call would significantly increase the chances of action by Utah that is favorable to US Magnesium, we hold that US Magnesium has standing in this case." One Justice issued a separate concurring opinion state agreement that "US Magnesium must be denied relief, but my reasons differ from those of the majority. In my view, US Magnesium lacks standing because it has failed to make the necessary showing that its alleged injury would be redressed by a favorable decision."
However, contrary to US Magnesium claims, the Appeals Court determined that the Administrative Record adequately supports the EPA's conclusion that the UBR rendered the Utah SIP substantially inadequate; and EPA's SIP Call was not inconsistent with its own policy statements and regulations.
On the subject of the Herman Memo not being a rule, EPA responded that it agree that the Memo "was a nonbinding policy statement, not a legislative rule," and said that it treated the memorandum as a "policy statement and did not rely on it in the
rulemaking other than as a statement of the EPA's interpretation of the CAA." The Appeals court said, ". . .the EPA referenced the policy statements to explain its interpretation of the CAA, but did not attempt to rely on the statements as a rule of law in their own right." The Appeals Court said, "This is in keeping with our precedent. AMREP Corp. v. FTC, 768 F.2d 1171, 1179 (10th Cir. 1985). . ."
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