Natural Resources Defense Council, Inc. v. U.S. E.P.A., No. 81-2068

• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
• Writing for the Court: Before GIBBONS, HUNTER; GIBBONS; ANNE E. THOMPSON; JAMES HUNTER, III
• Citation: 703 F.2d 700
• Parties: , 13 Envtl. L. Rep. 20,446 NATURAL RESOURCES DEFENSE COUNCIL, INC., Petitioner, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, Respondent, Chemical Manufacturers Association, et al., Intervenors.
• Docket Number: No. 81-2068
• Decision Date: 27 May 1983

Page 700

703 F.2d 700 18 ERC 1825, 13 Envtl. L. Rep. 20,446 NATURAL RESOURCES DEFENSE COUNCIL, INC., Petitioner,
v.
U.S. ENVIRONMENTAL PROTECTION AGENCY, Respondent,
Chemical Manufacturers Association, et al., Intervenors. No. 81-2068. United States Court of Appeals,
Third Circuit. Argued Nov. 18, 1982.
Decided March 23, 1983.
Rehearing and Rehearing In Banc Denied May 27, 1983.

Page 701

Daniel B. Edelman (argued), Washington, D.C., for petitioner.

Carl Strass (argued), Environmental Defense Section Land & Natural Resources Div., Dept. of Justice, Washington, D.C., for respondent.

John M. Cannon (argued), Chicago, Ill., for intervenor Chicago Assoc. of Commerce and Industry, et al.

Before GIBBONS, HUNTER, Circuit Judges and THOMPSON, ^* District Judge.

OPINION ANNOUNCING THE JUDGMENT OF THE COURT

GIBBONS, Circuit Judge.

In NRDC v. EPA, 683 F.2d 752 (3d Cir.1982), the Natural Resources Defense Council (NRDC) filed a petition for review under section 509(b)(1) of the Clean Water Act, 33 U.S.C. Sec. 1369(b)(1) (1976). NRDC sought review of the Environmental Protection Agency's (EPA's) indefinite postponement of the effective date of final amendments to certain EPA regulations. This court held that EPA's actions violated the notice and comment requirements for rulemaking under 5 U.S.C. Sec. 553 (1976) of the Administrative Procedure Act (APA). We ordered EPA to reinstate all of the amendments effective March 30, 1981. NRDC v. EPA, 683 F.2d at 753.

NRDC now petitions the court for an award of counsel fees and other expenses in the amount of $34,375.85 pursuant to section 204(a) of the Equal Access to Justice Act, 28 U.S.C. Sec. 2412(d)(1)(A) (1976 & Supp. V 1981). Because we find that the position of EPA was not substantially justified, we will grant NRDC's fee petition.

I. BACKGROUND

Section 307(b)(1) of the Clean Water Act mandates that EPA promulgate regulations requiring industries to meet pretreatment standards before discharging certain pollutants into publicly owned treatment works. 33 U.S.C. Sec. 1317(b)(1) (1976 & Supp. I 1977). Pursuant to that mandate and to a consent decree, see NRDC v. EPA, 683 F.2d at 754 n. 6, EPA promulgated General Pretreatment Regulations for Existing and New Sources, 40 C.F.R. Sec. 403 (1978) (the 1978 regulations), and those regulations have been in effect since August 28, 1978. 43 Fed.Reg. 27,736 (1978).

Page 702

On October 29, 1979, EPA proposed a set of amendments to the 1978 regulations. After the required period of public comment, EPA promulgated those amendments in final form on January 28, 1981, to become effective on March 13, 1981. 46 Fed.Reg. 9,404 (1981).

On January 29, 1981, the President of the United States issued a memorandum ordering the federal agencies to postpone for sixty days from the date of the memorandum the effective dates of all regulations that were final but not yet effective. 3 C.F.R. Sec. 223 (1982). In response EPA postponed the effective date of the amendments to the 1978 regulations from March 13, 1981, to March 30, 1981. 46 Fed.Reg. 11,972 (1981). NRDC raised no challenge to that postponement.

On February 17, 1981, President Reagan issued Executive Order No. 12,291, 3 C.F.R. Sec. 127 (1982), reprinted in 5 U.S.C. Sec. 601 (Supp. V 1981) (E.O. 12,291). E.O. 12,291 called for a reassessment of federal agency action in order to insure concentration only on regulatory objectives that would maximize net benefits to society. E.O. 12,291 required the federal agency to prepare a Regulatory Impact Analysis for all its major rules for review by the Office of Management and Budget.

Section 7 of E.O. 12,291 specifically addressed agency regulations which were in final form but not yet effective. Subsections (a) and (d) provided in part:

(a) To the extent necessary to permit reconsideration in accordance with this Order, agencies shall, except as provided in Section 8 of this Order, suspend or postpone the effective dates of all major rules that they have promulgated in final form as of the date of this Order, but that have not yet become effective, excluding:

(1) Major rules that cannot legally be postponed or suspended;

(2) Major rules that, for good cause, ought to become effective as final rules without reconsideration.

....

....

(d) Agencies may, in accordance with the Administrative Procedure Act and other applicable statutes, permit major rules that they have issued in final form as of the date of this Order, and that have not yet become effective, to take effect as interim rules while they are being reconsidered in accordance with this Order, provided that, agencies shall report to the Director, no later than 15 days before any such rule is proposed to take effect as an interim rule, that the rule should appropriately take effect as an interim rule while the rule is under reconsideration.

Exec.Order No. 12,291, 3 C.F.R. Secs. 127, 131-32 (1982), reprinted in 5 U.S.C. Sec. 601 (Supp. V 1981). E.O. 12,291 section 3(b) gives each agency the power to decide which of its rules are "major rules" pursuant to the definition in E.O. 12,291 section 1(b). ¹ Initially EPA did not consider the amendments to be major rules, NRDC v. EPA, 683 F.2d at 756; however, on March 27, 1981, the Acting Administrator of EPA signed an order eliminating the March 30, 1981 effective date and instead indefinitely postponing the amendments. 46 Fed.Reg. 19,936 (1981). The Acting Administrator cited E.O. 12,291 as the sole reason for the indefinite postponement, indicating that EPA then considered the amendments to be major rules.

On June 24, 1981, NRDC filed a petition for review in the court of appeals pursuant to section 509(b)(1), 33 U.S.C. Sec. 1369(b)(1) (1976). NRDC challenged EPA's indefinite postponement of the amendments without the notice and comment period required by the APA, 5 U.S.C. Sec. 553 (1976). ²

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On October 5, 1981, EPA decided to make the postponed amendments effective as of January 31, 1982. 46 Fed.Reg. 50,502 (1981). On October 13 EPA indicated that it would conduct a rulemaking proceeding on whether further to postpone the amendments beyond January 31. It gave notice and initiated a public comment period on the possibility of that postponement. 46 Fed.Reg. 50,503 (1981). EPA indicated that it had considered putting the amendments into effect immediately and then conducting the notice and comment period. It had rejected that course, however, to avoid the confusion that would result if EPA put the amendments into effect and then suspended them after notice and comment. 46 Fed.Reg. 50,502 (1981).

After EPA had reviewed the comments received, it published an order on February 1, 1982, which allowed a majority of the amendments to become effective as of January 31, 1982. 47 Fed.Reg. 4,518 (1982). It indicated, however, that four controversial amendments would be postponed until further notice pending continued analysis. 47 Fed.Reg. 4,518 (1982).

II. THIS COURT'S DECISION

In addressing NRDC's challenge to the March 27, 1981 decision to postpone the amendments, we first examined EPA's and intervenors' contentions that the case was moot because EPA had subsequently established an effective date for the amendments and had held a notice and comment period before considering any further postponement. We noted that the "case may well be moot as to all of the amendments except the four which were further postponed." NRDC v. EPA, 683 F.2d at 759 n. 15. We concluded, however, that because we could order relief which would alter the status quo--i.e., we could order reinstatement of all of the amendments as of March 30, 1981--the case was not moot. Id. at 759. ³

Turning to the merits we first addressed the contention raised by intervenors, but not by EPA, that the postponement was not a rulemaking subject to the APA's requirements. Id. at 761. Because the repeal of a rule clearly constitutes rulemaking under the APA, 5 U.S.C. Sec. 551(5) (1976), we held that an indefinite postponement, operating effectively as a repeal, also constituted rulemaking.

We next considered and rejected an argument raised by intervenors, but not by EPA, that the agency had "good cause" under 5 U.S.C. Sec. 553(b)(B) (1976) for its failure to comply with the rulemaking requirements of the APA. Id. at 765-67. Although EPA stated that its March 27, 1981 postponement was pursuant to E.O. 12,291, we concluded that EPA could have complied with both the APA and E.O. 12,291. Id. at 765. We saw no reason why EPA could not have held a notice and comment period before its initial postponement instead of waiting until October of 1981 to do so. Id. at 766.

Having held that EPA's action violated the APA, we next addressed the question of a remedy. EPA contended that no remedy was required because it had cured any procedural defect in its initial postponement by establishing an effective date and then holding a notice and comment period before any further postponement. Id. at 767. We rejected EPA's contentions. We held that EPA's later notice and comment procedures did not cure its failure to provide them before the amendments were ever postponed. Accordingly, we remanded the case to EPA with instructions to reinstate all the amendments effective March 30, 1981. Id. at 769.

III. THE EQUAL ACCESS TO JUSTICE ACT

NRDC now petitions the court for counsel fees and expenses incurred in the litigation

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pursuant to section 2412(d)(1)(A) of the Equal Access to Justice Act (the EAJA or the Act). Section 2412(d)(1)(A) of the EAJA provides for a mandatory award of counsel fees to a qualified ⁴ prevailing party ⁵ in certain civil actions brought by or against the United States, unless the "position of the United States was substantially justified." That section is a specific statutory exception to the American rule which provides that each litigating party must assume its own counsel fees, absent a common-law exception or a contrary legislative provision. H.R.Rep. No. 1418,...