Supreme Court Rejects “Regulatory Reasonableness” Petition

In Center for Regulatory Reasonableness v EPA, 138 S. Ct. 1041 (2018) the Supreme Court rejected a petition from the Center for Regulatory Reasonableness, challenging “policy letters” issued by EPA, upholding a D.C Court of Appeals ruling that concluded that the court did not have jurisdiction to review the letters.   While the ruling is primarily a technical ruling regarding how to challenge regulatory action, the decision supports a position I have often taken – that agency policy statements that are not the result of a rulemaking process are not the law; they are merely the agency’s opinion regarding what the law is.

In 2013, EPA issued policy letters explaining certain of their policies regarding publicly owned treatment facilities.  The Iowa League of Cities challenged the policy letters as a violation of the Administrative Procedure Act and the Clean Water Act.  The Eighth Circuit Court of Appeals held that it had jurisdictions to hear the challenge and vacated the letters.  Iowa League of Cities v EPA, 711 F3d 844 (8th Cir. 2013).  EPA then made statements that it will not accept the 8th Circuit’s decision outside the 8th Circuit and the Center for Regulatory Reasonableness challenged those statements.

In rejecting the challenge, the D.C. Circuit said that the statements were not promulgation of a rule, but the statements “merely articulate how EPA will interpret the Eighth Circuit decision.”  The result is that in the 8th Circuit, EPA’s policy cannot be enforced and in the rest of the country, EPA believes those policies can be enforced and some of the regulated community disagree.  How an attorney advises a client when the agency policy statement seems to be in conflict with the law depends of the specific situation.  Here, the advice may be easier because one federal court of appeals has held that the policy statements cannot be enforced.  In any case, the best thing for the regulated community is clarity regarding what the requirements are and with that in mind, it seems clear that regulatory reasonableness has lost.