The week of June 23, 2024, in Ohio v. Environmental Protection Agency, the U.S. Supreme Court clarified in a 5-4 decision that if a federal agency fails to provide a reasoned response to comments raised during the rulemaking process, a court may consider the final rule unlawful.
When a federal agency engages in rulemaking, the Administrative Procedure Act (APA) requires the agency to publish a proposed rule announcing and explaining the action. The publication of a proposed rule triggers an opportunity for public comment, after which, the agency decides whether to continue, modify, or withdraw its proposed rule. The final rule must consider the comments and offer a satisfactory explanation for its action and may not ignore problems raised during the public comment period.
Ohio v. EPA dealt with the Environmental Protection Agency's (EPA) rulemaking under the Clean Air Act (CAA). Under the CAA, EPA sets air pollutant standards and requires states to adopt corresponding state implementation plans (SIP), which are state regulations and documents used to comply with the CAA's mandates. If EPA determines a state's SIP fails to meet the CAA's requirements, then EPA may impose its own plan on the state, known as a federal implementation plan (FIP). The imposition of a FIP requires publication of a proposed plan and opportunity for public comment.
In 2015, EPA revised its air-quality standards and required states to adopt revised SIPs. Upon submission, EPA determined 23 states were noncompliant with the new standards, and in response, EPA published a proposed FIP imposing a blanket plan on all 23 non-compliant states.
The FIP imposed emissions reduction measures on all 23 non-complaint states in order to achieve a specified desired ozone level based on the assumption that all 23 non-compliant states would participate in the FIP. During the public comment period on the proposed FIP, commenters expressed concern that the FIP would not obtain the same emissions-control measures if fewer than all 23 states participated in the plan. If less than 100% participation occurred, commenters argued EPA would need to conduct a new assessment and modeling for the plan.
In response to the comments, in its final FIP, EPA adopted a broad severability provision stating that "should any [state] drop out, [the FIP] would 'continue to be implemented as to any remaining jurisdictions.'" In response to EPA's adoption of the final FIP, a number of states and private parties (together, Petitioners) filed suit, challenging the FIP as arbitrary and capricious because it was not reasonably explained.
Petitioners requested the lower court to stay the enforcement of the FIP during the pendency of the action. The D.C. Circuit Court of Appeals denied the stay request, and Petitioners' request for a stay was appealed to the Supreme Court.
In considering whether to stay an agency action pending a final judicial determination, the Court considers four factors: (1) whether the applicant is likely to succeed on the merits; (2) whether the applicant will suffer irreparable harm; (3) whether stay will result in substantial injury to the other party; and (4) where the public interest lies. Here, the majority's determination turned primarily on the merits and who was likely to prevail on whether the FIP was "reasonable and reasonably explained."
The majority held Petitioners were likely to succeed on the merits because the FIP was not "reasonably explained" and EPA sidestepped commenters' concerns regarding the impact of less than 100% participation in the FIP. The majority opinion stated that "[a]lthough commenters posed this concern to the EPA during the notice and comment period, EPA offered no reasoned response." In fact, the severability provision was the agency's only response to the comments, and "in doing so, EPA did not address whether or why the same emissions-control measures it mandated would continue to further the FIP's stated purpose of maximizing cost-effective air-quality improvement if fewer states remained in the plan." Even if there was an explanation regarding how the number of participants would not impact the success of the FIP, "if there [was] an explanation, it does not appear in the final rule," and "as a result, [Petitioners] are likely to prevail on their argument that EPA's final rule was not 'reasonably explained.'"
EPA advanced three arguments as to why Petitioners were unlikely to prevail on the merits of their case. First, it stated that the severability provision amounted to a reasoned response to public comment on the subject. However, the majority opinion stated that the severability provision "did not address the [Petitioners'] concern so much as sidestep it," and awareness of the commenters' concern did not substitute for an explanation addressing the same.
Second, EPA claimed the Petitioners were precluded from challenging the FIP because the disputed issues were not raised with "reasonable specificity" during the public comment period. The majority disagreed and stated that a party is not required to "rehearse the identical argument made before the agency" during the public comment period. Instead, the reasonable specificity requirement is designed to confirm that an agency had notice of the challenge during the public comment period and had a chance to consider the substance of the concern. As the majority concluded, Petitioners sufficiently put EPA on notice.
Third, EPA stated Petitioners should have sought relief by filing a motion with the agency and asked EPA to reconsider the final FIP before seeking judicial relief. Four of the Courts' dissenting justices agreed with EPA on this point. However, the majority opinion stated that "nothing requires [commenters] to return to EPA to raise (again) a concern EPA already had a change to address."
The majority's holding was limited to a stay of the FIP pending a final decision on the merits by the D.C. Circuit Court of Appeals, and thus, the ruling did not make a final determination on whether the FIP was arbitrary and capricious. However, the majority opinion's lengthy discussion of Petitioners' likelihood of success on the merits clarifies that when a commenter raises concerns about an agency's methodology, assumptions, or reasoning of a proposed action, the agency must provide a reasoned response to those comments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.