On May 9, the Court of Appeals for the D.C. Circuit upheld US EPA’s rule revising the annual National Ambient Air Quality Standard (NAAQS) for fine particulate matter (PM2.5) despite serious concerns regarding how states and regulated entities are to proceed under new rules.  The January 2013 final rule lowers the annual allowable limit for PM2.5, eliminates the option of “spatial averaging” (whereby certain areas could demonstrate compliance based on averaged results from multiple monitoring sites), and requires additional monitoring near heavily trafficked areas in larger urban areas.

A group of industry petitioners challenged the final rule, raising several arguments related to the PM2.5 limit, including that US EPA prejudged the outcome by failing to request comment on whether to revise the NAAQS at all, inconsistently weighed the scientific evidence, and provided an inadequate response to public comments. The Court rejected each of these arguments.

As to the necessity of the rulemaking, the Court found that US EPA had described the rulemaking broadly enough (and thus petitioners had a fair opportunity to comment) to encompass the question of necessity for revising the standards.  Regarding the weighing of scientific evidence, the Court noted that “Petitioners simply have not identified any way in which EPA jumped the rails of reasonableness in examining the science.” As to US EPA’s response to comments, the Court observed that although the Agency did not respond to every comment, applicable precedents “do not require as much.” The Court noted that US EPA “admittedly did not directly address every study” cited by the Petitioners in its response to comments. And while the Court cited precedent requiring that a certain “threshold of materiality must be maintained before any lack of agency response or consideration becomes a concern,” the Court failed to elaborate on where that line should be drawn.  Left to US EPA’s own discretion to pick and choose which studies to disregard, the risk increases that relevant data will be unconsidered or undistinguished.

The Court also addressed challenges to the other aspects of the rulemaking.  First, with regard to “spatial averaging,” the Court found that US EPA reasonably explained its rationale for the action (including its decision to eliminate averaging) and that court review does not give “presumptive validity” to the old standard.  US EPA must only reasonably explain the current standard.  As to the petitioners’ challenge that placement of road monitors in prescribed locations would lead to unrealistically high results, the Court disagreed noting that US EPA would be abdicating its responsibility to the populations in those areas by ignoring those monitoring results or by not monitoring those areas at all.  Last but certainly not least, the Court rejected petitioners’ argument that US EPA should have provided implementation guidance, finding that nothing in the law dictates additional guidance from the Agency.

The affirmance of this final rule raises practical implications, in particular the uncertainty caused by US EPA’s failure to promulgate implementation rules that provide necessary timetables and technical guidance to states in developing their implementation plans and for affected sources to demonstrate compliance.  The rule also raises concern that the tightened standards will ultimately impede growth in non-attainment areas by restricting the ability to site new industry.  The full impact of the final rule, however, will remain uncertain in the near term.  US EPA reports that, based upon 2009-2011 air quality data, 66 counties nationwide are not currently meeting the standard.  For those areas in non-attainment (which tend to be larger urban centers), the final rule provides a timetable until 2020-2025 to reduce levels to meet the standard.

Equally troubling is the fact that this decision follows a trend in recent decisions, affirming US EPA decision-making despite serious flaws in addressing how states and regulated entities are to proceed under new rules.  Whereas in this rule, the petitioners cited US EPA’s failure to promulgate implementation rules, in the Cross-State Air Pollution Rule (CSAPR) (recently reinstated by the US Supreme Court), US EPA failed to quantify target interstate emission reductions that “upwind” states were required to meet.  These omissions, which some have characterized as “hiding the ball,” create non-compliance risks for regulated entities and opportunities for federal takeovers resulting from state non-compliance caused by US EPA’s failure to clarify how these new standards are to be implemented.