[Editor's Note: This week we have the conclusion of this Colloquy Essay; the first section was published here last week. A pdf of the full essay can be downloaded here, and a full version in html form is available here.]
II. Ramped Up Review of Rulemaking Denials
A second aspect of Massachusetts that we predict will likely have long-term implications for administrative law involves the Court’s willingness to thoroughly scrutinize the reasons that the EPA offered for denying the petition to regulate greenhouse gases. The D.C. Circuit (which is by far the most important court in the country when it comes to shaping administrative law) established years ago that courts may review inaction in the rulemaking context—albeit only through a highly deferential and very narrow version of “arbitrary and capricious” review. The D.C. Circuit has explained that constrained review, rather than searching review, is appropriate because the decision whether to engage in rulemaking boils down to a legislative judgment that may turn on a variety of policy considerations ill-suited to judicial review, such as resource allocation concerns.
Despite the D.C. Circuit’s well-settled views on the topic, the Supreme Court prior to Massachusetts had never explicitly weighed in on whether an agency’s denial of a rulemaking petition is subject to review, and if so, what standard of review should apply. The Supreme Court’s pronouncements on the topic in Massachusetts accordingly merit attention. In a nutshell, the Court—following the lead of the D.C. Circuit—declared that refusals to promulgate rules are susceptible to judicial review but that such review is limited and very deferential.
Given the D.C. Circuit’s established views on the topic, we are not surprised that the Court in Massachusetts made clear that an agency’s decision not to engage in rulemaking should be subject to some kind of judicial review. What we find surprising, however, is the level of scrutiny that the Court applied when reviewing the EPA’s reasons for declining to regulate. To be sure, the Court articulated a verbal formula that sounds quite constrained: refusals to promulgate rules are susceptible only to “extremely limited” and “highly deferential” review. The Court’s actual review of the EPA’s reasons for declining to regulate, however, was meticulous and probing—a far cry from what one would expect of “highly deferential” review.
In its detailed review of the EPA’s decision to decline to regulate emissions from new motor vehicles, the Court analyzed two reasons offered by the EPA to justify its inaction. First, the EPA concluded that it lacked the statutory authority to regulate because the emissions are not “air pollutants” as that term is used in the CAA. Second, the EPA justified its inaction by relying on a long list of policy considerations—ranging from a desire to avoid piecemeal regulation to concerns about interfering with the President’s foreign policy initiatives—that convinced the EPA that it would be unwise to regulate at this time, even if it did have the statutory authority to act.
With respect to the EPA’s claim that it lacked statutory authority to regulate, we think it was proper for the Court to carefully scrutinize the EPA’s reasoning. The Court, after all, faced a purely legal issue: Did the CAA authorize the EPA to regulate greenhouse gases or not? This question, of course, could be resolved through traditional statutory construction by looking at the plain language of the CAA. That is, the Court had to do little more than analyze the statutory text (which is easily susceptible to judicial review) in order to assess and ultimately reject the agency’s claim that it lacked the statutory authority to regulate. In this sense, the Court’s willingness to subject the EPA’s statutory justification to significant scrutiny does not break any new ground. Rather, it simply applies a rule that the D.C. Circuit has long embraced: A refusal to institute a rulemaking may be overturned where the agency has made a “plain error of law, suggesting that the agency has been blind to the source of its delegated power.”
We, however, cannot say the same of the Court’s scrutiny of the EPA’s second reason for declining to regulate. Here, the EPA did not rely upon any clear statutory text, legal principles, or specific factual findings that the Court could easily subject to judicial review. Rather, the EPA’s second reason for declining to regulate turned on various policy considerations that convinced the EPA that regulating greenhouse gases at this time would be unwise.
In reviewing the EPA’s policy determinations, the Court acknowledged the EPA’s “laundry list” of reasons not to regulate. However, the Court quickly dismissed all of these considerations, declaring that they were “divorced from the statutory text.” The Court’s reliance on the statutory text here is interesting; the relevant statutory text provides only that the Administrator of the EPA “shall by regulation prescribe . . . standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” Thus, as Justice Scalia pointed out in his dissent, the relevant statutory text makes it quite clear that when the Administrator actually “makes a judgment whether to regulate greenhouse gases, that judgment must relate to whether they are air pollutants that ‘cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.’” However, the statute “says nothing at all about the reasons for which the Administrator may defer making a judgment.”
Despite the statute’s apparent silence on the issue of when the EPA can defer making a judgment, the Court read the statutory text to mean that Congress tightly constrained the EPA’s discretion to defer. Specifically, the Court declared that once the EPA decides to act on a petition for rulemaking under Section 202 of the CAA, the EPA can deny the petition for rulemaking and thereby avoid taking further action only if (a) it determines that greenhouse gases do not contribute to global warming, or (b) it provides some “reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.” In other words, the Court seemed to be warning the EPA that, even though the agency possesses significant discretion to rely on policy considerations to decide when it wants to respond to rulemaking petitions, it loses that discretion once it actually acts on a petition.
Here, in acting on the rulemaking petition, the EPA plainly had not determined whether greenhouse gases contribute to global warming, nor did the Court think that the EPA had offered “a reasoned justification for declining to form a scientific judgment.” The EPA’s policy concerns suggested reasons why the EPA might prefer not to regulate at this time, but the concerns did not—according to the Court—demonstrate that the EPA could not form a reasoned scientific judgment as to whether greenhouse gases contribute to global warming. Thus, none of the EPA’s reasons for declining to regulate survived the Court’s exacting review.
Perhaps the Court’s willingness to apply such rigorous review is limited to the specifics of this case, namely the immense importance of global warming. In other words, there are petitions—and then there are petitions. When an agency denies a petition for rulemaking on a relatively small issue, such as an issue that involves only a narrow kind of economic regulation, the reviewing court is unlikely to be as troubled by the denial, even when denials are based on policy considerations. But when an agency is presented with very big issues that impact public health or safety—such as the EPA being presented with what is, according to many commentators, the most important environmental issue of the century—the courts might be willing to review the agency’s decision more closely. Although the Court’s opinion does not state in so many words that this is what is driving its analysis, it may nevertheless serve as a basis to distinguish the case in the future. The problem, of course, with trying to use this distinction in the future is that the line between “important” and “unimportant” subjects is amorphous and malleable, and thus it may be nearly impossible to determine ahead of time when something will be “big” or “important” enough in a court’s eyes to warrant closer judicial scrutiny.
An alternative (and perhaps more useful) means of restricting the Court’s seemingly rigorous standard of review might be found at the end of the opinion. There the Court notes that it did not reach the question of whether “policy concerns can inform EPA’s actions in the event that it makes” an endangerment finding. In other words, the Court seems to leave the door open for the agency to decline to regulate for policy reasons even if it concludes that greenhouse gases contribute to climate change. Accordingly, perhaps the Court merely read Section 202 to require the EPA to first make a scientific judgment (or to explain why it has not) before turning to policy considerations. Or perhaps the Court simply wants to see the expert agency “do the work” in its area of expertise before turning to policy considerations. In either scenario, it seems possible that the Court’s decision might allow policy reasons to be considered, but only after the agency uses its expertise to render a judgment on the technical issue before it.
Besides trying to determine whether the Court’s searching review applies broadly or narrowly, the Court’s approach raises two other major questions. First and foremost, it remains to be seen what will and what will not qualify as a “reasonable” explanation in other cases when an agency declines to regulate in the future. Although the Court’s opinion casts doubt on whether policy-driven considerations, like agency agenda setting and resource allocation issues, can constitute a “reasonable” explanation for declining to regulate in the context of Section 202 of the CAA, the Court’s opinion does not even hint at a general line between permissible and impermissible reasons to regulate. As a result, future courts will need to clarify what will and what will not count as good explanations for failing to regulate. Specifically, does Massachusetts completely remove policy-driven considerations from the permissible calculus of reasons not to regulate? Or does it permit policy reasons to be considered, but only after the agency does the hard scientific or technical calculus that is at the core of its expertise? Or does the decision simply tell us that the analysis will vary by the specific statutory command at issue?
For example, it is unclear whether it will be permissible for the EPA on remand to conclude that emissions of greenhouse gases do contribute to global warming, but decline to regulate greenhouse gases on the ground that the agency’s resources are constrained and that the agency cannot possibly do everything that Congress has empowered it to do. On the one hand, if this is not permissible, the work of agencies will become exponentially more difficult since they will have to act on every potentially legitimate petition. On the other hand, if it turns out that such a justification is a permissible reason not to regulate, then agencies might well choose in the future to rest their decisions not to regulate on this type of not-so-easily reviewable ground so as to better insulate their decisions from searching judicial review. We are stuck, it seems, between the proverbial rock and a hard place.
A second significant question that we think flows from the Court’s decision has to do with whether rigorous review of agency inaction in the rulemaking context will create perverse incentives for agencies. The Court’s opinion made clear that—because the EPA was not required by statute to act on the rulemaking petition within a certain timeframe—the EPA enjoyed significant latitude as to the timing and manner of its regulations. Once the EPA decided to act on the rulemaking petition, however, it opened the door to a challenge to its reasons for declining to regulate. A key lesson that agencies may well take away from Massachusetts, accordingly, could be as follows: Whatever discretion you enjoy prior to taking action on a rulemaking petition may well disappear once you affirmatively rule on a petition. If this is the lesson that agencies glean from Massachusetts, then agencies may well feel as if they should delay ruling on petitions for rulemaking for as long as possible—perhaps until a court finds that the agency has unreasonably delayed agency action.
We should note that if agencies do choose to sit on rulemaking petitions, agencies may be able to sit idle for quite some time. This is because, even if an agency is operating under a statutorily-imposed deadline, a mandatory statutory deadline is only one factor considered under the predominant test applied by courts when reviewing claims of unreasonable agency delay. Furthermore, the Supreme Court recently handed down a decision that makes it tough to get any review of agency inaction, unless the agency fails to take discrete action that it is required to take.
The key take-away from all of this should be fairly apparent: The Court’s ramped up review of agency inaction ironically may not lead to better reasoning by agencies with respect to denials of rulemaking petitions. Rather, the Court’s willingness to scrutinize the EPA’s inaction in the rulemaking context may simply mean that agencies will increasingly delay ruling on petitions, and that parties seeking rulemaking proceedings may well have to wait even longer before the agency offers reasons to justify its disposal of the petition.
Although it will be some time before we know whether the Court’s much-touted “global warming” decision ever leads to regulation of greenhouse gases, either under the current CAA or under new legislation, the significance of the decision will not be short-lived. Rather, we believe that the Court’s opinion will likely have a long-term impact on both (1) the special Article III standing that States enjoy in federal courts, and (2) the level of scrutiny that agencies may face when justifying decisions not to engage in rulemaking. When added together, these two doctrinal developments result in an interesting mix. States are left in a relatively powerful position vis-à-vis federal agencies in terms of their ability both to file suits against agencies and to seek fairly exacting judicial review of the agency’s reasons for declining to regulate. Although a twist on common perceptions about this case, fans of states’ rights ought to be quite pleased.
*. Visiting Assistant Professor, Northwestern University School of Law.
**. Associate Professor of Law, University of Utah, S.J. Quinney College of Law. Much of the discussion on state standing is based on Professor Wildermuth’s larger project, Why State Standing in Massachusetts v. EPA Matters, which will appear this summer in the Journal of Land, Resources and Environmental Law.
68. See, e.g., Midwest Indep. Transmission Sys. Operator, Inc. v. FERC, 388 F.3d 903, 910–11 (D.C. Cir. 2004) (link); Nat’l Customs Brokers & Forwarders Ass’n of Am., Inc. v. United States, 883 F.2d 93, 96 (D.C. Cir. 1989); Am. Horse Prot. Ass’n v. Lyng, 812 F.2d 1, 4–5 (D.C. Cir. 1987); WWHT, Inc. v. FCC, 656 F.2d 807, 816–17 (D.C. Cir. 1981). See generally Ronald M. Levin, Understanding Unreviewability in Administrative Law, 74 Minn. L. Rev. 689, 763–68 (1990) (discussing the D.C. Circuit’s treatment of the issue of the reviewability of denials of rulemaking petitions).
69. See, e.g., NRDC v. SEC, 606 F.2d 1031, 1046–48 (D.C. Cir. 1979).
70. The Supreme Court had previously held in Heckler v. Chaney that an agency’s decision not to initiate an enforcement proceeding is not ordinarily subject to judicial review. 470 U.S. 821 (1985) (link). Although the Court in Heckler expressly left open the question of the reviewability of a rulemaking denial, id. at 825 n.2, many of the Court’s observations in Heckler as to why a decision not to enforce should not be subject to review could have equally been applied to an agency’s decision not to initiate a rulemaking. For example, both an agency’s decision not to enforce and an agency’s decision not to engage in rulemaking may simply reflect the agency’s own assessment of how its limited resources best should be allocated. Thus, after Heckler, there was reason to think that Heckler could be extended to decisions to refuse to engage in rulemaking. See Levin, supra note 68, at 762–63.
71. Massachusetts v. EPA, 127 S. Ct. 1453, 1459 (2007).
73. Id. (quoting Nat’l Customs Brokers, 883 F.2d at 96).
75. Id. at 52,929–31.
76. Am. Horse Prot. Ass’n v. Lyng, 812 F.2d 1, 5 (D.C. Cir. 1987) (internal quotation omitted).
77. 68 Fed. Reg. at 52,930–32 (link). None of the policy considerations were easily susceptible to judicial review because, as the Court itself admitted, the Court lacked “the expertise [and] the authority to evaluate” such policy judgments. Massachusetts, 127 S. Ct. at 1463.
78. Massachusetts, 127 S. Ct. at 1462.
81. Massachusetts, 127 S. Ct. at 1473 (Scalia, J., dissenting) (quoting 42 U.S.C. § 7521(a)(1)).
83. Id. at 1462. To the extent this means that the EPA’s discretion to pursue other priorities of the Administration or the President would be constrained, that was congressional design, the Court said.
84. Id. at 1463.
86. Cf. Nat’l Customs Brokers & Forwarders Ass’n of Am., Inc. v. United States, 883 F.2d 93, 103 (D.C. Cir. 1989) (noting that the court will act to overturn an agency judgment not to institute a rulemaking only in rare and compelling circumstances, such as when “grave health and safety problems” exist).
87. Massachusetts, 127 S. Ct. at 1463.
88. See generally William V. Luneburg, Petitioning Federal Agencies for Rulemaking: An Overview of Administrative and Judicial Practice and Some Recommendations for Improvement, 1988 Wis. L. Rev. 1, 48 (1988) (“By statute an agency may have very substantial, or total, discretion not to act, or, when acting, to act in particular ways.”).
89. We note that the Court leaves open the possibility that scientific uncertainty might justify the EPA’s refusal to determine whether greenhouse gases contribute to global warming. See Massachusetts, 127 S. Ct. at 1463 (“If the scientific uncertainty is so profound that it precludes EPA from making a reasoned judgment as to whether greenhouse gases contribute to global warming, EPA must say so.”).
90. See Transcript of Oral Argument at 20–21, Massachusetts, 127 S. Ct. 1438 (2007) (No. 05-1120) (Justice Ginsburg asks whether the EPA on remand could simply state that it needed to devote its limited resources elsewhere).
91. Massachusetts, 127 S. Ct. at 1462.
92. Id. (“[O]nce EPA has responded to a petition for rulemaking, its reasons for action or inaction must conform to the authorizing statute.”).
94. See Telecomm. Research & Action Ctr. v. FCC, 750 F.2d 70, 80 (D.C. Cir. 1984).
Copyright 2007 Northwestern University
Cite as: 102 Nw. U. L. Rev. (forthcoming 2008), 102 Nw. U. L. Rev. Colloquy 1 (2007).
Persistent URL: http://www.law.northwestern.edu/lawreview/Colloquy/2007/17/