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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Monday Morning Regulatory Review: 5/12/14: Coal Dust Review; Conflict Minerals Stay II; Renewable Fuels Standard; & Particulate Matter

Posted in Judicial Process, Judicial Review & Remedies, Regulatory Process

Much follow-up on last week’s Monday Morning Regulatory Review, including multiple petitions for judicial review of the Federal Mine Safety and Health Administration (FMSHA)’s coal dust rule and stay litigation in the Securities and Exchange Commission (SEC)’s conflict minerals rule.  In two new judicial decisions, the Environmental Protection Agency (EPA) renewable fuel standards and particulate matter survived judicial review.

Coal Dust Review:  In a move that is totally unsurprising, the coal mining industry petitioned the United States Court of Appeals for the Eleventh Circuit to review FMSHA’s coal dust rule.  National Mining Assoc. v. MSHA, 11th Cir. No. 14-11942 (filed May 1, 2014).  As anticipated, Murray Energy filed in the Sixth Circuit.  Murray Energy Corporation, et al v. MSHA, 6th Cir. No. 14-3427 (filed May 1, 2014).  A petition for review in those cases heard directly by a court of appeal sets in motion the filing of the administrative record and briefing schedule – the petition is only a summary statement requesting review.

  Two petitions in different courts within 10 days of the rule, however, sets in motion an additional process – deciding which court will hear the petitions.  FMSHA will be expected to notify the Judicial Panel on Multidistrict Litigation (JPMDL) of the multiple petitions, and the JPMDL will randomly assign all of the proceedings to one of those courts.

 Additionally, in a prerequisite under for requesting a judicial stay of the rule pending review, the National Mining Association asked FMSHA, on May 2, 2014, to stay the effective date of the rule.  A request to the agency is required under Federal Rules of Appellate Procedure (FRAP) rule 18 before petitioner may request a stay from the court of appeals.  Well-healed practitioners use and recommend a similar procedure in litigation before the district courts.

Conflict Minerals Stay II:  With the limited administrative stay granted by the SEC, unsurprisingly, plaintiffs in National Assoc. of Manufacturers v. SEC moved for a judicial stay of the SEC’s entire Conflicts Minerals rule in the United States Court of Appeals for the District of Columbia Circuit.  NAM v. SEC, D.C. Cir. No. 13-5252, Doc. 1491452 (May 5, 2014).

As true of many well-argued cases of judicial review of final administrative action, the parties have agreed to and proposed a briefing schedule that will permit the court to timely rule on the request for a stay in the next few weeks and before the first reports (which would be stayed) are due.  The motion argues that the elimination of the publication requirement eviscerates the remainder of the rule, that the rule no longer serves the overall goals of the statute, and that there exists substantial doubt that the SEC would sever the unconstitutional provision and adopt the remainder of the rule.  Severability is not addressed by the SEC, but may be viewed as implicitly rejected by the SEC’s final rule preamble characterizations of the requirements in rejecting commenter proposed alternatives.  Given the unrecoverable costs, the SEC bears a heavy burden (though not a burden of proof) before the court.

Renewable Fuels Standard:  The D.C. Circuit declined to overturn the EPA 2013 Renewable Fuels Standard in Monroe Energy, LLC v. EPA.  The court noted that EPA possesses “wide latitude” in deciding how it sets fuel composition and was not required to consider the recent higher costs of Renewable Identification Numbers (RINs) (or credits) that a refiner must purchase if they fail blend sufficient renewable fuels into their traditional fuel mix.  The court found “no ground to conclude the 2013 standards are unlawful simply because RINs are costlier than in prior years.”

  EPA just recently exercised that wide latitude in granting two petitions for reconsideration of the cellulosic biofuel component because of reduced anticipated production and promulgated a direct final rule reflecting the new reality.  This anticipatory market regulation is fraught with peril and here exacerbated an already volatile market in credits causing unrecoverable costs.  “Five year plans” have inherent shortcomings that agencies often miscalculate.

Particulate Matter:  The D.C. Circuit denied also a petition for review of EPA’s particulate matter (aka “soot”) standard in National Assoc. of Manufacturers v. EPA.  In a 2013 rule, EPA lowered the particulate matter National Ambient Air Quality Standard (NAAQS) from 15.0 µg/m3 to 12.0 µg/m3 – based on its selection of a level from a range of scientific studies.  In short, none of the arguments provide sufficient basis to overturn EPA’s decision:

  • EPA did not prejudge the outcome of the review process by not requesting public comment on whether to revise the NAAQS at all because it asked for comment on the generic “all issues” (and EPA must revise the NAAQS every five years);
  • Petitioners had not shown that EPA was arbitrary and capricious against the great deference courts show agency decisions based on competing bodies of scientific research;
  • EPA was not required to respond to each and every scientific study cited by the petitioners, but only to respond to the substance of the petitioners comments; and
  • EPA was not unreasonable in eliminating the ability to average different monitors in an area (spatial averaging) from the prior rule – the question is not whether the prior rule is no longer justified, but only whether the new rule meets the standards of judicial review.

This decision, like that in EME Homer tends to illustrate one of the inherent frustrations of judicial review under the Administrative Procedure Act (APA) – issues that fall far outside the normal knowledge of a generalist judge tend toward greater deference to the agency than issues of more common experience.  A narrow review and agency expertise leads to such a result.