U.S. Steel Corp. v. U.S. E.P.A.

• Citation: 595 F.2d 207
• Decision Date: 03 May 1979
• Docket Number: Nos. 78-1922,78-1927,s. 78-1922
• Parties: , 9 Envtl. L. Rep. 20,311 UNITED STATES STEEL CORP., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent. REPUBLIC STEEL CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 207

595 F.2d 207

13 ERC 1149, 9 Envtl. L. Rep. 20,311

UNITED STATES STEEL CORP., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

REPUBLIC STEEL CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.

Nos. 78-1922, 78-1927.

United States Court of Appeals, Fifth Circuit.

May 3, 1979.

Thomas, Taliaferro, Forman, Burr & Murray, J. Ross Forman, III, Robert G. Tate, Birmingham, Ala., for petitioner in No. 78-1922.

James W. Moorman, Asst. Atty. Gen., Angus Macbeth, Chief Pollution Control Sec., Land & Natural Resources Div., Dept. of Justice, Washington, D. C., for respondent in No. 78-1922.

Phelps, Dunbary, Marks, Claverie & Sims, Eugene R. Preaus, New Orleans, La., Thorp, Reed & Armstrong, Peter G. Veeder, Pittsburgh, Pa., for petitioner in No. 78-1927.

Douglas M. Costle, Administrator, E. P. A., James N. Cahan, Atty., U. S. Environmental Protection Agency, Washington, D. C., Barbara Brandon, Asst. Atty. Gen., Land & Natural Resources Div., Dept. of Justice, Washington, D. C., for respondent in Nos. 78-1922 and 78-1927.

On Petitions for Review of an Order of the Environmental Protection Agency.

Before GODBOLD, Circuit Judge, SKELTON, ^* Senior Judge, and RUBIN, Circuit Judge.

GODBOLD, Circuit Judge:

Petitioners United States Steel and Republic Steel have petitioned for review of the Environmental Protection Agency's designation of areas in Alabama as nonattainment areas for suspended particulate pollution pursuant to § 107(d) of the Clean Air Act, 42 U.S.C. § 7407(d). ¹ These designations mean that particulate levels in these areas ² exceed the national primary ambient air quality standards set by the EPA under § 7409.

The steel companies' challenges rest on several grounds, substantive as well as procedural. We do not reach the substantive issues on either petition, for we agree with both petitioners that in making the designations the EPA failed to follow the procedures required by the Administrative Procedure Act, 5 U.S.C. § 553. We therefore set aside the designations and remand to the Agency so that it may repromulgate the Alabama nonattainment list after proper public notice and opportunity to comment.

We begin with a consideration of the purposes and effects of the § 7407(d) designations, for these factors are critical in our evaluation of the major legal issues raised: ripeness of the action for judicial review, applicability of the "good cause" exception to notice and comment under 5 U.S.C. § 553, and the Agency's claim of harmless error.

The primary function of the designations is as a preliminary step in formulating a state plan to meet all primary ambient air quality standards. Congress recognized in 1977 that these standards were not met by the original target dates, ³ and provided for a new timetable in the Clean Air Act Amendments of 1977, P.L. 95-95, 91 Stat. 685. The states ⁴ were directed to submit a list of nonattainment areas to the EPA by December 5, 1977 (120 days after the date of enactment of the 1977 Amendments). 42 U.S.C. § 7407(d) (1). The EPA was then to review, modify if necessary, and promulgate the lists within 60 days. § 7407(d)(2). Thus the EPA promulgation should have occurred by February 3, 1978. These designations are among the factors to be taken into account by a state in development of its state implementation plan (SIP) to attain the primary standards, 42 U.S.C. §§ 7410, 7502. Submission of the SIP revisions was due January 1, 1979 (§ 129(c) of the Amendments, 91 Stat. 750-51 (uncodified)); the submission must provide for attainment of the primary standard for particulates by December 31, 1982. ⁵ The procedures quickly fell behind the statutory schedule. The AAPCC submitted its list December 22, 1977, and the EPA promulgated it March 3, 1978.

The EPA is correct in characterizing the nonattainment designation, insofar as it is part of the SIP revision process, as a preliminary step that in itself would perhaps be unripe for judicial review. But even accepting this point, and disregarding U.S. Steel's claim that it has already been harmed by the AAPCC's response to the designation, ⁶ we find that the designations have consequences apart from their role in the SIP revision process that constitute a substantial injury to the petitioners and clearly make the controversy ripe for review. These consequences arise from the EPA's interpretive ruling of December 21, 1976, concerning emission offsets (the Offset Ruling), 41 Fed.Reg. 55524. The Offset Ruling places strict limitations on construction of new facilities, or modification of existing facilities, that will contribute to an existing violation of a national ambient air quality standard. Such construction will only be allowed if the proposed facility will use the requisite technology to attain "the lowest achievable rate for such type of source" and if new emissions from the proposed facility will be more than offset by reductions elsewhere. ⁷

Moreover, the Offset Ruling is not a mere statement of policy. Its provisions have the force of law and are enforceable by the EPA. In enacting the Amendments, Congress explicitly adopted the Ruling, with minor modification, as an interim limitation on construction in nonattainment areas. ⁸ Another provision of the Amendments empowers the EPA, if it finds that a state is not enforcing the provisions of the Ruling, to enforce it directly. 42 U.S.C. § 7413(a)(5). In such a situation the EPA may sue to enjoin construction and for a civil penalty of up to $25,000 per day. 42 U.S.C.A. § 7413(b)(5).

EPA concedes the petitioners' contention that the § 7407(d) designations are ripe for review, and we agree. The leading case on the issue of ripeness is Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). There the Court allowed a challenge to an FDA drug labeling rule, emphasizing the great risk of loss to the petitioners if they had to await enforcement to challenge the rule's validity. Such loss included the possibly wasteful reprinting of labels and other materials, as well as criminal and civil penalties that could be imposed in enforcement proceedings. Id. at 152-53, 87 S.Ct. at 1517, 18 L.Ed.2d at 694. The situation here is similar. If the § 7407(d) designations are valid, they necessarily bring the Offset Ruling into play with regard to any proposed new sources in the area. ⁹ If the petitioners were forced to wait to challenge the designations until the EPA took enforcement action under § 7413(b)(5), they would face similar risks of civil penalties and lost investment in uncompleted improvements. ¹⁰ We therefore find the controversy ripe for review.

Having determined the EPA's action reviewable, we must still determine whether we are the appropriate reviewing court. We recently held in PPG Industries, Inc. v. Harrison, 587 F.2d 237 (CA5, 1979), that despite the 1977 revisions to 42 U.S.C. § 7607(b), which provides for direct review in the courts of appeals of certain EPA actions, some actions will be reviewable only in the district courts. Our reason for that holding was our recognition that "the mechanical limitations of the courts of appeals" make impracticable their review of agency actions that are made without the development of a full record. Id. at 244-45. Jurisdiction was found lacking in PPG Industries because the action there (a ruling that a certain regulation was applicable to a specific plant) was evidenced only by an exchange of correspondence. Here the challenged action is EPA promulgation of regulations that have general effect in the specified areas, and it was based on a substantial record. ¹¹ We therefore find that the considerations that gave rise to the result in PPG Industries are absent, and we have jurisdiction under § 7607(b).

On the merits the petitioners' principal argument is that before making the § 7407(d) designations, the EPA was obliged under the Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq., to give notice and receive pre-promulgation comments from interested parties. Clearly there was no notice and comment period before the March 3, 1978 promulgation of the list. The EPA did attempt to provide opportunity for input by affected parties by accepting comments for 60 days after the March 3 promulgation, which were used in making modifications to the designation list. The list was repromulgated on September 11, 1978, 43 Fed.Reg. 40412, with several changes, although none affecting the challenged designations. We agree with petitioners that the EPA's procedures failed to comply with the APA and that we must remand for reconsideration of the designations.

EPA does not contend that its § 7407(d) designations were not " rules" under the APA or that they are not therefore subject to the rule making provisions of § 553. Indeed, the designations clearly come within the broad statutory definition, 5 U.S.C. § 551(4), since they are agency statements of future effect ¹² designed to "implement, interpret, or prescribe law or policy." Instead the EPA recognized the APA's approach of defining "rule" very broadly but creating substantial exceptions to the procedural requirements of § 553. The exception claimed is that of § 553(b)(B), which provides that notice of proposed rule making need not be given

when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

The EPA included a statement of the sort required in its March 3, 1978 designation. ¹³ Its principal argument appears to be that compliance with the statutory timetable required action without the usual notice and comment period. The Agency was under pressure, since the time allowed by Congress was short. But the mere existence of deadlines for agency action, whether set by statute or court order, does not in itself constitute...