State of Nebraska v. United States Environmental Protection Agency
MEMORANDUM AND ORDER -The EPS's 8 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM is granted. This case is dismissed; and A separate judgment will be entered. Ordered by Judge John M. Gerrard. (MKR)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
STATE OF NEBRASKA,
MEMORANDUM AND ORDER
AGENCY; and GINA McCARTHY,
Administrator, U.S. EPA,
This matter is before the Court on the motion to dismiss (filing 8) filed
by the defendants, the Environmental Protection Agency and its
administrator, Gina McCarthy (collectively, "the EPA"). As the EPA points
out, the State of Nebraska's attempt to short-circuit the administrative
rulemaking process runs contrary to basic, well-understood administrative
law. Simply stated, the State cannot sue in federal court to challenge a rule
that the EPA has not yet actually made. Accordingly, the Court will grant the
EPA's motion and this case will be dismissed.
This case concerns the EPA's effort, under the Clean Air Act, 42 U.S.C.
§ 7401 et seq., to draft new standards that would limit emissions of carbon
dioxide from newly-built fossil fuel-fired "electric utility generating units"
(i.e., the equipment used to produce electricity, such as in a power plant). The
EPA's proposal focuses primarily on coal- and natural gas-fired units. The
EPA first proposed a new standard on April 13, 2012. See Standards of
Performance for Greenhouse Gas Emissions From New Stationary Sources:
Electric Utility Generating Units, 77 Fed. Reg. 22,392. After considering
more than 2.5 million comments, the EPA determined that revisions were
warranted. So, the EPA withdrew the 2012 proposal and published a new
proposal on January 8, 2014. See Standards of Performance, 79 Fed. Reg.
1,430 (the "Proposed Rule").
The State contends that by basing the Proposed Rule (in part) on
information from energy facilities that have received federal assistance, the
EPA has violated a portion of another statute, the Energy Policy Act of 2005,
Pub. L. No. 109–58, 119 Stat. 594. To understand this dispute, it will help to
briefly review the relevant portions of the Clean Air Act and Energy Policy
A. THE CLEAN AIR ACT AND NEW SOURCE PERFORMANCE STANDARDS
The Clean Air Act established "a comprehensive national program that
made the States and the Federal Government partners in the struggle
against air pollution." General Motors Corp. v. United States, 496 U.S. 530,
532 (1990). Section 111 of the Clean Air Act sets forth mechanisms for
controlling emissions of air pollutants from "stationary sources" (such as
factories and power plants). 42 U.S.C. § 7411. The EPA is tasked with
establishing "standard[s] of performance" for "new [stationary] sources." 42
U.S.C. § 7411(a)(2), (b). Standards of performance for new sources are
sometimes referred to as "new source performance standards" or "NSPS."
A "standard of performance" is defined as
a standard for emissions of air pollutants which reflects the
degree of emission limitation achievable through the application
of the best system of emission reduction which (taking into
account the cost of achieving such reduction and any nonair
quality health and environmental impact and energy
requirements) the Administrator determines has been adequately
42 U.S.C. § 7411(a)(1) (emphasis supplied). As the emphasized portions show,
an NSPS must be based upon the "best system of emission reduction" which
has been "adequately demonstrated." This latter concept lies at the heart of
the current dispute. Bearing that in mind, the Court turns to the Energy
B. THE ENERGY POLICY ACT
Among other things, the Energy Policy Act of 2005 provided federal
funding for the development of coal-based energy projects which were
designed to "advance efficiency, environmental performance, and cost
competitiveness well beyond the level of technologies" then in commercial
service. 42 U.S.C. § 15962(a). Although the Energy Policy Act seeks to
encourage the development of cleaner energy facilities, it also includes
"several provisions that limit the EPA's authority to rely on information from
those facilities in conducting rulemaking or taking other action" under
various provisions of the Clean Air Act, including the promulgation of NSPS
under section 111. Standards of Performance, Notice of Data Availability, 79
Fed. Reg. 10750, 10752 (Feb. 26, 2014).
In particular, section 402(i) of the Energy Policy Act provides that "[n]o
technology, or level of emission reduction, solely by reason of the use of the
technology, or the achievement of the emission reduction, by 1 or more
facilities receiving assistance under this Act, shall be considered to be . . .
adequately demonstrated for purposes of" section 111 of the Clean Air Act. 42
U.S.C. § 15962(i) (emphasis supplied). In other words, the federal
government cannot subsidize construction of facilities with the Energy Policy
Act and then claim that the facilities for which it paid demonstrate, for Clean
Air Act purposes, that the technology is viable.
C. THE STATE'S CHALLENGE TO THE PROPOSED RULE
As part of its Proposed Rule, the EPA found that certain technology
was "adequately demonstrated" for purposes of section 111 of the Clean Air
Act. In making that determination, the EPA relied, in part, on data from
facilities receiving assistance under the Energy Policy Act. Filing 1 at ¶¶ 4,
18–26; see e.g., Proposed Rule, 79 Fed. Reg. at 1478. The State filed suit,
claiming that this violated section 402(i) of the Energy Policy Act. The EPA
has responded by moving to dismiss the State's complaint for lack of
jurisdiction and failure to state a claim.
II. STANDARD OF REVIEW
A. FED. R. CIV. P. 12(B)(1)
A motion pursuant to Fed. R. Civ. P. 12(b)(1) challenges whether the
Court has subject matter jurisdiction. The party asserting subject matter
jurisdiction bears the burden of proof. Great Rivers Habitat Alliance v.
FEMA, 615 F.3d 985, 988 (8th Cir. 2010). Rule 12(b)(1) motions can be
decided in three ways: at the pleading stage, like a Rule 12(b)(6) motion; on
undisputed facts, like a summary judgment motion; and on disputed facts.
Jessie v. Potter, 516 F.3d 709, 712 (8th Cir. 2008).
A Rule 12(b)(1) motion can be presented as either a "facial" or "factual"
challenge. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990).
When reviewing a facial challenge, the Court restricts itself to the face of the
pleadings, and the nonmovant receives the same protections as it would
facing a Rule 12(b)(6) motion. Id. By contrast, when reviewing a factual
challenge, the Court considers matters outside the pleadings, and the
nonmovant does not receive the benefit of Rule 12(b)(6) safeguards. Id.
Moreover, unlike a motion for summary judgment, the Court is free to resolve
disputed issues of fact. Jessie, 516 F.3d at 712.
B. FED. R. CIV. P. 12(B)(6)
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a
complaint must contain sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). A claim has facial plausibility when the plaintiff pleads factual
content that allows the Court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. Id. While the Court must
accept as true all facts pleaded by the nonmoving party and grant all
reasonable inferences from the pleadings in favor of the nonmoving party,
Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012), a pleading
that offers labels and conclusions or a formulaic recitation of the elements of
a cause of action will not do. Iqbal, 556 U.S. at 678. Determining whether a
complaint states a plausible claim for relief requires the Court to draw on its
judicial experience and common sense. Id. at 679.
The State brings its challenge to the Proposed Rule under the
Administrative Procedure Act (APA), 5 U.S.C. § 500 et seq. The APA
empowers federal courts to hold unlawful and set aside agency action,
findings, and conclusions, if they fail to conform with any of six specified
standards. Marsh v. Or. Natural Res. Council, 490 U.S. 360, 375 (1989).
Among other things, a reviewing court may set aside agency action that is
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law; or in excess of statutory authority. 5 U.S.C. § 706(2).
The State seeks a declaration that the Proposed Rule's consideration of
federally-financed facilities is not in accordance with law and in excess of
statutory authority. 5 U.S.C. § 706(2)(A), (C). And the State seeks an
injunction ordering the EPA to withdraw the Proposed Rule and prohibiting
the EPA from future consideration of these facilities as a basis for finding
that certain technologies are adequately demonstrated under section 111 of
the Clean Air Act. See filing 1 at ¶¶ 2–5 & pp. 8–9.
However, the APA only allows judicial review in two situations: when
agency action is "made reviewable by statute" and for "final agency action[s]
for which there is no other adequate remedy in a court." 5 U.S.C. § 704. The
State does not argue that any other statute provides for review. So, the State
must show that promulgation of the Proposed Rule was a final agency action
and that there is no other adequate remedy. The EPA contends that both
prerequisites to judicial review are lacking, and the Court agrees. The
Proposed Rule is not a final action, and the Clean Air Act already provides
the State with an adequate remedy, albeit in a different federal court.
A. FINAL AGENCY ACTION
The Supreme Court uses a two-part test to determine whether an
agency action is "final." First, the action must mark the consummation of the
agency's decisionmaking process—it must not be of a merely tentative or
interlocutory nature. Bennett v. Spear, 520 U.S. 154, 177–78 (1997). And
second, the action must be one by which rights or obligations have been
determined, or from which legal consequences will flow. Id.
In this case, it is not necessary to proceed beyond the first prong of
Bennett. The Proposed Rule is, on its face, an interlocutory and tentative step
in an ongoing process. See, e.g., Proposed Rule, 77 Fed. Reg. at 1430. That
process is set forth in section 111 of the Clean Air Act. As was done here, the
EPA first issues a set of proposed regulations. 42 U.S.C. § 7411(b)(1)(B). The
EPA must then allow interested parties to submit comments. Id.; see also 42
U.S.C. § 7607(d). Finally, and only after considering such comments, does the
EPA promulgate a final rule, which includes "such modifications as [the EPA]
deems appropriate." 42 U.S.C. § 7411(b)(1)(B). The EPA has only reached the
proposal stage; it has not "'rendered its last word on the matter' in question;"
so its action is not final. Whitman v. American Trucking Ass'ns, 531 U.S. 457,
478 (2001) (quoting Harrison v. PPG Indus., Inc., 446 U.S. 578, 586 (1980)).
The State insists that there has, in fact, been a final agency action. In
the State's view, section 402(i) "creates a procedural right for the State and
members of the public and regulated community to have NSPS-rulemaking
proceedings conducted without the influence of the Agency's consideration
of . . . federally-funded facilities." Filing 11 at 9 (emphasis supplied). In other
words, the State argues, section 402(i) prohibits the EPA "from considering
instances of deployment of control technology at federally-funded facilities at
any stage of a rulemaking proceeding." Filing 11 at 18. As best as the Court
understands it, the remainder of the State's argument goes as follows: the
EPA has already decided to "consider" information from federally-funded
facilities, in violation of section 402(i); there is no way to remedy this
violation without withdrawing the Proposed Rule; and, therefore, the decision
to consider this information should be considered final.
But the State's argument shifts the finality inquiry away from its
proper focus: The action complained of here is a component of a proposed
rule. That proposal is not a final action. It does not matter if the EPA has
purportedly violated section 402(i).1 The fact that section 402(i) may confer a
The merits of this claim are not before the Court. But the Court notes that § 402(i) only
forbids the EPA from considering a given technology or level of emission reduction to be
adequately demonstrated solely on the basis of federally-funded facilities. 42 U.S.C. §
15962(i). In other words, such technology might be adequately demonstrated if that
determination is based at least in part on non-federally-funded facilities.
"procedural" right is also beside the point. That is not the same as conferring
an immediate right to judicial review. The alleged violation has occurred in
the context of a non-final agency action, and the APA expressly defers review
of such violations until there has been a final action: "A preliminary,
procedural, or intermediate agency action or ruling not directly reviewable is
subject to review on the review of the final agency action." 5 U.S.C. § 704.
The State's argument rests on the premise that one aspect of the
Proposed Rule—the decision to consider federally-financed facilities—can be
singled out and considered outside the context of the agency action of which it
is a part. The Court is not convinced that this is an appropriate way to
analyze the issue. But even when the focus is narrowed to this particular
aspect of the Proposed Rule, the State cannot show a final agency action.
That is because shortly after the EPA issued the Proposed Rule, it sought
additional comment on this very aspect of the proposal.
Specifically, the EPA solicited further comment on whether the EPA
was correct in its "preliminary interpretation" of section 402(i)—that it only
forbids the EPA from relying solely on information from federally-financed
facilities. Standards of Performance, Notice of Data Availability, 79 Fed. Reg.
at 10752. The EPA also requested comment on whether any of the evidence
presented in the Proposed Rule may not be evaluated due to the limits
imposed by section 402(i), and if so, whether the remaining evidence is
sufficient to support the EPA's finding of "adequate demonstration."
Technical Support Document, Effect of EPAct05 on BSER for New Fossil
Fuel-fired Boilers and IGCCs, Docket EPA-HQ-OAR-2013-0495 (January 8,
2014) [Filing 9-3 at 1, 17].
All of this goes to show that the EPA is still in the process of
considering the very aspect of the Proposed Rule that the State insists is
final. The EPA has expressly not taken "a definitive position on the issue,"
DRG Funding Corp. v. Secretary of Housing and Urban Development, 76 F.3d
1212, 1214 (D.C. Cir. 1996), and so there has not yet been a final agency
action. In other words, even if this small step in the process could somehow
become a "final action," the EPA has yet to even take that step.
To summarize: the EPA gets first crack at deciding whether the
Proposed Rule should be withdrawn or adopted before anyone can demand
that a federal court act on it. And as the Court next explains, the State also
failed to show the other prerequisite for review under the APA: the lack of an
adequate judicial remedy. 5 U.S.C. § 704.
B. THE CLEAN AIR ACT PROVIDES AN ADEQUATE REMEDY
Review under the APA is precluded where Congress has otherwise
provided a "special and adequate review procedure." Bowen v. Massachusetts,
487 U.S. 879, 904 (1988). The Clean Air Act contains its own framework for
obtaining judicial review, which includes review of the EPA's rulemaking
under section 111. 42 U.S.C. § 7607(b)(1). To be adequate, the alternative
remedy need not provide relief identical to that offered by the APA, so long as
it offers relief of the "same genre." Garcia v. Vilsack, 563 F.3d 519, 522 (D.C.
Cir. 2009). The Clean Air Act offers such relief.
The State seeks a declaration under the APA that the Proposed Rule
was not drafted in accordance with law and is in excess of the EPA's
statutory authority. 5 U.S.C. § 706(2)(A), (C). The judicial review provisions
of the Clean Air Act similarly allow a court to reverse any agency action
found to be (among other things) "arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law" or "in excess of
statutory . . . authority." 42 U.S.C. § 7607(d)(9)(A), (C). The State should find
this remedy adequate. See Garcia, 563 F.3d at 522.
The State will still have to wait until there is a final agency action, as §
7607(b) only authorizes review of final agency actions. See, 42 U.S.C. §
7607(b)(1); Portland Cement Ass'n v. E.P.A., 665 F.3d 177, 193–94 (D.C. Cir.
2011). But that hardly renders the remedy inadequate, when the same is true
under the APA. The only relevant difference is that, under the Clean Air Act,
the State must seek relief in the Court of Appeals for the District of
Columbia. See, 42 U.S.C. § 7607(b)(1); Missouri v. United States, 109 F.3d
440, 441 (8th Cir. 1997).
The State has jumped the gun. If Congress had wished to allow
immediate, interlocutory appeals of proposed rulemaking under the Clean
Air Act, it could have done so. It did not, and for good reason: making
environmental regulations is difficult and complicated enough without
having federal judges weigh in at every step along the way. Instead, as
dictated by basic and well-established principles of administrative law, the
State must wait for a final agency action. Accordingly,
IT IS ORDERED:
The EPA's motion to dismiss (filing 8) is granted;
This case is dismissed; and
A separate judgment will be entered.
Dated this 6th day of October, 2014.
BY THE COURT:
John M. Gerrard
United States District Judge
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