Cal. Cmty. Against Toxics v. Envtl. Prot. Agency
934 F.3d 627 (2019)
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Rule of Law:
For an agency action to be considered 'final' and thus subject to judicial review, it must not only be the consummation of the agency's decision-making process but must also have direct and appreciable legal consequences. An action lacks such consequences if the governing statutory scheme provides specific, alternative avenues for judicial review at a later stage, such as after a permit decision, and the action itself imposes no independent legal obligations or penalties.
Facts:
- The Clean Air Act (CAA) regulates sources of hazardous air pollutants, distinguishing between 'major sources' subject to stringent 'Maximum Achievable Control Technology' (MACT) standards, and 'area sources' subject to more lenient or no standards.
- In 1995, John Seitz, an EPA official, issued a memorandum (the 'Seitz Memo') establishing a 'once in, always in' policy.
- The 'once in, always in' policy dictated that once a facility was classified as a 'major source,' it could never reclassify to an 'area source,' even if it later reduced its potential to emit pollutants below the major source threshold.
- This policy remained in effect for nearly twenty-five years.
- In 2018, William Wehrum, EPA's Assistant Administrator for the Office of Air and Radiation, issued a new memorandum (the 'Wehrum Memo') to all Regional Air Division Directors.
- The Wehrum Memo declared that the plain language of the CAA 'compels the conclusion' that a major source can reclassify as an area source at any time after it takes an enforceable limit on its potential to emit below the major source threshold.
- The Wehrum Memo explicitly stated that it 'supersedes' the 1995 Seitz Memo.
Procedural Posture:
- The State of California and several environmental organizations (Petitioners) filed petitions for review of the Wehrum Memo in the U.S. Court of Appeals for the D.C. Circuit.
- Petitioners alleged that the memo was a legislative rule that was procedurally invalid because it was issued without the notice-and-comment process required by the Administrative Procedure Act.
- The Environmental Protection Agency (EPA) was the Respondent, and a group of industry organizations intervened in support of the EPA.
- The EPA moved to dismiss the petitions, arguing that the court lacked subject matter jurisdiction because the Wehrum Memo did not constitute 'final agency action' subject to judicial review.
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Issue:
Does an Environmental Protection Agency (EPA) guidance memorandum, which announces a new interpretation of the Clean Air Act but can only be implemented through a separate statutory permitting process that itself provides for judicial review, constitute 'final agency action' subject to immediate judicial review?
Opinions:
Majority - Wilkins, Circuit Judge
No, an EPA guidance memorandum that announces a new statutory interpretation is not final agency action when the governing statute provides a detailed, separate process for challenging the application of that interpretation in specific permitting decisions, and the memo itself has no independent legal authority or consequences. To be final, an agency action must satisfy the two-prong test from Bennett v. Spear. While the Wehrum Memo is the consummation of EPA's decision-making process (prong one), it fails the second prong because it does not create rights or obligations, nor do legal consequences flow directly from it. The Clean Air Act's Title V provides a specific, detailed process for modifying permits, during which the Wehrum Memo's interpretation would be applied. Affected parties, including states and regulatory beneficiaries, can challenge permit decisions at that stage, and denials of those challenges are explicitly subject to judicial review. The memo is 'all bark and no bite' because it cannot be relied upon as independent legal authority, it imposes no penalties on state permitting authorities who ignore it, and it does not require any party to take any action. The specific review provisions in the CAA show Congress intended for challenges to this interpretation to occur within the permit-specific context, not through pre-enforcement review of the guidance document itself.
Dissenting - Rogers, Circuit Judge
Yes, the EPA guidance memorandum is final agency action because it marks the consummation of EPA's decision-making on a key statutory interpretation and creates immediate legal consequences by altering the legal regime for regulated sources. The Wehrum Memo satisfies both prongs of the Bennett v. Spear test. It is an unequivocal, binding interpretation that 'reads like a ukase,' commanding EPA officials and giving states their 'marching orders.' It alters the legal regime by creating a new 'safe harbor' for major sources to seek reclassification and escape more stringent regulations, a clear legal consequence. The availability of later, source-specific judicial review under Title V does not preclude pre-enforcement review of a nationally applicable policy under CAA § 7607(b)(1), which Congress specifically intended. Forcing regulatory beneficiaries to challenge this national policy in numerous, separate permit proceedings across the country imposes an undue burden and frustrates Congress's intent to allow for immediate review of such final actions.
Analysis:
This decision reinforces a context-specific approach to the 'final agency action' doctrine, emphasizing that the existence of a specific, alternative statutory review scheme can render an otherwise definitive agency policy non-final for purposes of immediate judicial review. It narrows the path for pre-enforcement challenges to agency guidance, particularly in complex regulatory areas like environmental law where policies are often implemented through permitting. The ruling forces challengers, such as environmental groups, to wait and contest the application of a policy on a piecemeal, case-by-case basis rather than challenging the overarching national policy at its inception. This raises the strategic and financial burden for regulatory beneficiaries seeking to block what they see as unlawful deregulatory actions.
