State of Ohio v. United States Environmental Protection Agency
302 U.S. App. D.C. 318, 997 F.2d 1520 (1993)
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Rule of Law:
An agency's interpretation of an ambiguous statute it administers is generally permissible under Chevron, but a regulation that represents a significant and unexplained departure from the agency's prior policy is arbitrary and capricious under the Administrative Procedure Act and will be remanded.
Facts:
- In 1980, Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to address hazardous waste sites.
- CERCLA directs the President, who delegated the authority to the Environmental Protection Agency (EPA), to create and revise a National Contingency Plan (NCP) to implement the statute's requirements.
- In 1986, the Superfund Amendments and Reauthorization Act (SARA) significantly amended CERCLA and again directed the EPA to revise the NCP.
- The EPA's NCPs from 1982 and 1985 provided that the agency could enter into agreements allowing states to exercise most of the cleanup and enforcement authority available under the statute on a case-specific basis.
- In 1990, the EPA issued a revised NCP that established a new, blanket prohibition against delegating final remedy selection authority and certain enforcement powers to states, regardless of a particular state's capability.
- This 1990 revision represented a significant change from the EPA's previous policy of making individualized determinations of state capability.
- A coalition of states and private parties challenged numerous provisions of the 1990 NCP as being inconsistent with CERCLA.
Procedural Posture:
- Various states and private parties (Petitioners) filed consolidated petitions for review directly in the United States Court of Appeals for the District of Columbia Circuit.
- The petitions challenged the validity of multiple regulations within the National Contingency Plan (NCP) promulgated by the Environmental Protection Agency (Respondent) in 1990.
- The court considered the petitioners' multifarious challenges to the NCP, which were organized into claims regarding environmental protectiveness and claims regarding state participation and cost-sharing.
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Issue:
Does the Environmental Protection Agency act arbitrarily and capriciously when it promulgates a regulation that represents a significant, unexplained departure from its prior policy by categorically barring states from applying for final remedy selection and enforcement authority under CERCLA?
Opinions:
Majority - Per Curiam
Yes, the EPA's regulation is arbitrary and capricious because it represents an inadequately justified departure from the agency's prior practice. While CERCLA grants the EPA discretion in delegating authority to states, an agency cannot make a significant change in its established policy without providing a reasoned explanation, as required by the Administrative Procedure Act and articulated in Motor Vehicle Mfrs. Ass’n v. State Farm. The EPA's prior policy allowed for case-by-case determinations of whether to delegate authority to states, but the 1990 NCP imposes a blanket prohibition. The EPA's sole justification—the need to ensure consistency in remedy selection—was cursory and unsubstantiated. The agency failed to explain how state selection would lead to less consistency than selections by various EPA regional offices, nor did it consider less restrictive alternatives. Because the agency failed to provide a reasoned explanation for its policy reversal, this portion of the NCP is remanded.
Concurring - Randolph
Yes, the regulation must be remanded for lack of a reasoned explanation. While I agree with the outcome, I write to emphasize that CERCLA provides the EPA with unlimited discretion to determine the terms and conditions of cooperative agreements with states. Therefore, the EPA could lawfully impose a categorical restriction on delegating authority if it chose to. The legal flaw here is not the substance of the restriction itself, but the agency's failure to provide an adequate justification for its decision to implement one. The EPA can announce beforehand that there are certain authorities it will never delegate, but it must provide a reasoned basis for that categorical decision.
Analysis:
This case is a significant application of core administrative law doctrines to a major environmental statute, reinforcing the principle that agency discretion is not absolute. While courts grant substantial deference to agency interpretations of ambiguous statutes under Chevron, this decision emphasizes the power of the 'arbitrary and capricious' standard from State Farm as a check on agency power, particularly when an agency reverses a longstanding policy. The ruling affirms the importance of state participation in the Superfund program and clarifies that the federal government cannot categorically diminish the states' role without a well-supported, public justification. It serves as a precedent for challenging agency rulemaking based on procedural flaws in reasoning, even where the agency's substantive interpretation might otherwise be permissible.
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