Appalachian Power Co. v. Environmental Protection Agency
208 F.3d 1015, 341 U.S. App. D.C. 46, 30 Envtl. L. Rep. (Envtl. Law Inst.) 20560 (2000)
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Rule of Law:
An agency guidance document that significantly broadens the scope of an existing regulation, effectively amending it and creating new substantive obligations, constitutes a legislative rule requiring notice-and-comment rulemaking under the Administrative Procedure Act, even if the agency labels it as non-binding guidance.
Facts:
- In 1990, Congress enacted Title V of the Clean Air Act Amendments, which altered air pollution control by requiring stationary sources to obtain operating permits from state or local authorities.
- Title V instructed the EPA to promulgate regulations establishing minimum elements for state permit programs, including monitoring and reporting requirements.
- In 1992, EPA promulgated rules implementing the Title V permit program, including 40 C.F.R. § 70.6(a)(3)(i)(B), which mandated 'periodic monitoring' where an 'applicable requirement' (emission standard) did not already require periodic testing or instrumental/noninstrumental monitoring, or provided no frequency for monitoring.
- Petitioners (electric power companies and trade associations) understood the 1992 rule to merely fill gaps where existing emission standards lacked any monitoring requirement, a one-time startup test, or a specified frequency.
- In September 1998, EPA issued a 'Periodic Monitoring Guidance for Title V Operating Permits Programs' over the signature of two high-level EPA officials.
- The Guidance stated that 'periodic monitoring is required' for emission points, and that existing monitoring in 'applicable requirements' must be reviewed for 'sufficiency' to yield reliable data representative of compliance.
- The Guidance further instructed state agencies to add more stringent monitoring requirements to permits if existing federal or state standards were deemed inadequate, even if those standards already specified some periodic testing.
- State authorities, relying on the EPA's Guidance, began insisting on enhanced monitoring requirements (e.g., continuous opacity monitors instead of visual observation methods) during Title V permit negotiations with petitioners.
Procedural Posture:
- Congress enacted Title V of the Clean Air Act Amendments of 1990, establishing a new operating permit program for stationary sources of air pollution.
- The Environmental Protection Agency (EPA) promulgated rules implementing the Title V permit program in 1992, including 40 C.F.R. § 70.6(a)(3)(i)(B), which addressed periodic monitoring requirements.
- In September 1998, EPA issued a 'Periodic Monitoring Guidance for Title V Operating Permits Programs,' outlining its interpretation and expectations for monitoring requirements.
- Electric power companies and trade associations (Petitioners) filed consolidated petitions for judicial review with the United States Court of Appeals for the District of Columbia Circuit, challenging the validity of portions of the 1998 Guidance, or, in the alternative, the 1992 EPA rule.
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Issue:
Does an Environmental Protection Agency (EPA) guidance document that directs state permitting authorities to conduct wide-ranging sufficiency reviews of existing monitoring requirements in federal and state emission standards, and to impose enhanced monitoring in permits beyond what is currently required, constitute an unlawful amendment of the underlying regulation without complying with notice-and-comment rulemaking procedures?
Opinions:
Majority - Circuit Judge Randolph
Yes, the EPA's Periodic Monitoring Guidance unlawfully amended the underlying regulation by significantly broadening its scope without complying with notice-and-comment rulemaking procedures. The court found that the Guidance constituted final agency action because it marked the 'consummation' of the agency's decision-making process and generated 'legal consequences,' despite EPA's boilerplate disclaimer. The Guidance functioned as 'marching orders' for state permitting authorities, who were expected to enforce its provisions, directly affecting regulated private parties. The court concluded that the 1992 periodic monitoring rule, 40 C.F.R. § 70.6(a)(3)(i)(B), was intended only for 'gap-filling'—requiring periodic monitoring when an applicable emission standard entirely lacked such a provision, specified no frequency, or included only a one-time test. The 1998 Guidance, however, expanded this by instructing states to conduct a broader 'sufficiency review' of all existing monitoring requirements and to insert additional, more stringent monitoring into permits if existing standards were deemed 'inadequate,' even if those standards already mandated some form of periodic testing. This expansion constituted a substantive change, as monitoring requirements impose significant costs and duties and can directly affect the stringency of emission limitations. Such substantive changes, characterized as legislative rules, necessitate notice-and-comment rulemaking under 42 U.S.C. § 7607(d), which the EPA failed to conduct. The EPA's previous promises in 1992 to address inadequate federal monitoring standards through its own rulemaking further contradicted its current approach of delegating such authority to states via guidance. The court rejected the EPA's argument that the Guidance was merely an interpretative rule or policy statement, finding that it had the practical binding effect of a legislative rule.
Analysis:
This case establishes a critical limit on administrative agencies' ability to expand regulatory obligations through informal 'guidance documents' without adhering to formal rulemaking procedures. It reinforces that courts will examine the practical effect of an agency's pronouncements, not just its label, to determine if they constitute binding legislative rules. By requiring notice-and-comment for substantive changes, the decision upholds the Administrative Procedure Act's principles of transparency, public participation, and due process in agency lawmaking. It serves as a significant check against agency overreach, protecting regulated entities from new, often costly, compliance burdens imposed without proper legal authority or public input, and signals that agencies cannot bypass established legal processes through the use of de facto regulations.
