President Obama Halts
Midnight Regulations
Gale Lea Rubrecht
During the transition between the November election and
President Obama’s inauguration on January 20, 2009, the media
focused attention on end-of-term or “midnight” regulations by the
Bush administration. This article reviews various tools President
Obama used to halt those regulations using Clean Air Act (CAA)
examples.
Like his predecessors, President Obama immediately had his
White House Chief of Staff issue a memorandum to the heads of all
executive departments and agencies freezing last-minute regulations by President Bush. The justification for the moratorium is a
need to allow Obama appointees the opportunity to review and approve any new or pending regulations. The freeze is not applicable
to regulations subject to statutory or judicial deadlines. Department
and agency heads are asked to notify the Office of Management
and Budget of any regulations that should not be subject to the
moratorium “because they affect critical health, safety, [or] environmental . . . functions.” The memorandum instructs department
and agency heads to: (1) stop sending proposed or final regulations
to the Office of the Federal Register (OFR); (2) withdraw from the
OFR proposed or final regulations that have not been published;
and (3) extend for sixty days the effective date of regulations that
have been published in the Federal Register but not yet taken effect.
In cases where an extension is made, the rules are to be reopened
for a thirty-day notice-and-comment period.
Of the rules under review, final rules that have been published
but not yet taken effect are the most durable; however, even
they can be modified or rescinded by a new administration. An
example is the U.S. Environmental Protection Agency’s (EPA’s)
new source review (NSR) final rule published January 15, 2009,
and originally scheduled to take effect February 17, 2009 (74 Fed.
Reg. 2376). Before the rule, EPA’s aggregation policy evolved
from specific, case-by-case, after-the-fact inquiries related to the
possible circumvention of NSR in existing permits. The rule would
establish an “aggregation” test that could be universally applied
in the NSR program, which requires facilities to install pollution
controls when they make modifications that increase emissions.
The rule would permit facilities to combine emissions when the
changes are “substantially related,” preclude grouping changes
based on timing alone, and establish a rebuttable presumption that
modifications separated by three or more years are not substantially
related. Environmentalists protested that the rule allows facilities to
treat several modifications at a single facility as separate rather than
considering the aggregated emissions increases, which could result
in the evasion of new pollution controls, and petitioned for reconsideration. The Obama EPA granted reconsideration and, relying
on the White House memorandum and CAA provisions governing reconsideration proceedings, stayed and delayed the effective
date of the rule for ninety days. EPA promised to follow procedures
for reconsideration proceedings, including the right to request a
hearing. Using notice-and-comment rulemaking, EPA proposed an
additional delay. Following comment, EPA extended the effective
date of the rule an additional twelve months until May 18, 2010.
This last delay strongly suggests that the Obama EPA will modify
or rescind the rule, while the notice-and-comment process being
followed helps protect against procedural, legal challenges.
Also under review are final rules signed but not published in
the Federal Register, which is a necessary step for them to become
law. Some, such as the Flexible Air Permitting Rule signed January
13, 2009, which would revise Title V of the CAA for operating
permits and provide flexibility under both the operating and NSR
regulations, may be abandoned. Others may eventually become
law; however, delayed rulemaking creates enormous confusion and
uncertainty.
For example, EPA finalized the designations rule for the 2006
twenty-four-hour fine particulate matter (PM2.5) national ambient air quality standard (NAAQS) in December 2008, consistent
with the CAA requirement that EPA promulgate designations
within two years of a revised NAAQS. The designations rule set
a deadline for states to submit updated monitoring data in support
of a change in designations status of February 20, 2009, that has
now passed. In addition to the designations rule, proposed revisions
to Air Quality Index Reporting, which states use to report PM2.5
daily concentrations, and PM2.5 “significant harm levels,” which
states use in developing emergency episode plans, are also under
review. The Bush administration’s denial of environmentalists’ petition for reconsideration of EPA’s PM2.5 NSR implementation rule
was also under review, and, on April 24, 2009, EPA reversed that
denial. To add further confusion and uncertainty, the D.C. Circuit
has not decided challenges to the designations for the 1997 PM2.5
NAAQS and remanded to EPA the PM2.5 annual standard in
February, setting the stage for the Obama EPA to lower the PM2.5
NAAQS. These delays create uncertainty for states that must
implement the PM2.5 NAAQS and industry that must plan to
meet the NAAQS, while postponing air-quality improvement.
The moratorium also applies to unpublished, proposed rules,
which are easy targets for an incoming administration. The new
administration may legally decline to pursue the proposed rules and
do so without notice and comment. Sometimes, however, the delayed rulemaking hurts the public that it is intended to protect. For
example, EPA signed proposed rules on January 9, 2009, proposing
to disapprove five states’ attainment demonstrations for northeastern ozone nonattainment areas for the 8-hour ozone NAAQS and
made findings that two states failed to submit attainment demonstrations. These actions are subject to statutory deadlines for EPA
to act on state implementation plans and, in the case of nonsubmissions, promulgate federal implementation plans, and, arguably,
affect “critical . . . environmental . . . functions” of EPA. Although
the Obama EPA eventually approved these proposals, publishing
them on May 8, 2009, the delayed rulemaking opens EPA to the
threat of citizen suits and postpones air-quality improvement in
areas that do not meet the ozone NAAQS that has been on the
books since 1997.
In addition to last-minute regulations, the Bush administration issued end-of-term agency interpretive rules, memoranda, and
guidance. These actions are fairly easy for a new administration to
Published in Natural Resources & Environment, Volume 24, Number 1, Summer 2009. © 2009 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
set aside because notice-and-comment rulemaking is not required.
A December 18, 2008, “interpretive memorandum,” however,
merits examination. In response to a November decision by EPA’s
Environmental Appeal Board, the Bush EPA administrator chose
an “interpretive memorandum” to announce EPA’s “definitive
interpretation” of the applicability of the Prevention of Significant
Deterioration (PSD) program, which applies to sources that emit
more than certain tonnage per year of a regulated pollutant, to
carbon dioxide (CO2). Pursuant to the memorandum, EPA will
interpret the PSD program to exclude CO2 and other pollutants for
which EPA regulations require only monitoring or reporting but to
include each pollutant subject to actual control of emissions under
the CAA or its regulations. Effective immediately, permitting
authorities can issue PSD permits without considering controls for
CO2. The memorandum was issued without public comment and
goes to great lengths to explain why notice-and-comment rulemaking was not required. Environmentalists petitioned for reconsideration, challenging the characterization of the memorandum as an
“interpretive rule” not subject to procedural requirements. Later,
they requested an administrative stay and petitioned the D.C.
Circuit for review. The Obama EPA declined to issue a stay but
granted reconsideration. While the reconsideration proceedings are
pending, the D.C. Circuit case is on hold and the interpretation
remains in effect. The petitions have provided the Obama EPA
with vehicles by which to get out from under the Bush administration’s opposition to mandatory CO2 controls. EPA has promised a
“vigorous[] review” and notice-and-comment rulemaking characterized by “overwhelming transparency, adherence to the rule of
law, and science-based policies and regulations.” EPA Press Release
(Feb. 17, 2009). The Obama EPA has the opportunity to develop
a final rule that is consistent with the president’s climate change
strategy and likely to be more durable than the Bush administration’s memorandum.
While the regulatory moratorium provides an opportunity to review last-minute regulations by the Bush administration, President
Obama has not allowed that review to distract him from executing
his agenda. Six days after his inauguration, President Obama issued
a presidential memorandum to advance his climate change strategy
and reverse the Bush administration’s opposition to treating CO2 as
an air pollutant. He directed EPA to reconsider its previous denial
of California’s request to waive the CAA prohibition on state
adoption of motor vehicle emissions standards. Here, President
Obama has reached back to change a final, published regulation of
his predecessor.
Less than two months after President Obama took office, EPA
released the long-awaited, proposed greenhouse gas (GHG) reporting rule. Although the Bush EPA released an advanced notice of
rulemaking on GHG reporting last summer, the fast-approaching
end of President Bush’s second term prevented completion of
the notice-and-comment process. Moreover, Congress imposed
a timeline for the GHG reporting rule—proposal by September
26, 2008, and final rule by June 26, 2009—that meant the process
would overlap administrations. Further, the Obama EPA released a
proposed endangerment finding on April 17, 2009, two years after
the U.S. Supreme Court’s decision in Massachusetts v. EPA, 549
U.S. 497 (2007). If finalized, an endangerment finding would lead
to regulation of GHG emissions from motor vehicles and indirectly
stationary sources. President Obama has seized upon delay and
inaction by the Bush administration to shape policy early in his
term. This early start may allow completion of final, published rules
before mid-term elections in 2010.
President Obama has also used litigation strategy to remove
obstacles to his interpretation of the CAA remaining from the
Bush era. Within fifteen days of President Obama’s inauguration,
the U.S. Department of Justice withdrew EPA’s petition in the U.S.
Supreme Court for a writ of certiorari, seeking review of the D.C.
Circuit’s decision in the mercury de-listing and Clean Air Mercury
Rule (CAMR) litigation. The D.C. Circuit found that in removing
power plants from the list of hazardous emissions sources for mercury, EPA used “the logic of the Queen of Hearts, substituting EPA’s
desires for the plain text” of the CAA, and also set aside CAMR,
which established a trading program to reduce mercury emissions.
New Jersey v. EPA, 517 F.3d 574, 582 (D.C. Cir. 2008).
CAMR and the Bush administration’s interstate emissions
trading program to reduce ozone and PM2.5 or Clean Air Interstate Rule (CAIR), which the D.C. Circuit remanded to EPA in
December for correction of “fundamental flaws,” North Carolina v.
EPA, No. 550 F.3d 1176 (D.C. Cir. 2008), were the centerpieces
of the Bush administration’s strategy to regulate emissions from
power plants after its “Clear Skies” legislation failed. With CAMR
vacated and CAIR remanded, the new administration can now
develop rules to reflect President Obama’s interpretation of the
CAA. The Obama EPA has convened stakeholder meetings to
develop a new interstate rule and intends to promulgate mercury
regulations under CAA Section 112, which would require power
plants to comply with emissions limits by installing state-of-art pollution controls. EPA will have to undertake a notice-and-comment
rulemaking to support a new interstate rule and technology-based
standards to control mercury emissions from power plants. Even
without legal challenges, this process can be lengthy. For example,
EPA officials have stated publicly that the agency anticipates issuing the proposed interstate rule in January 2010 and the final rule a
year later in January 2011.
The tools that President Obama has used in addressing midnight regulations by the Bush administration are not unique. President Bush used them as have other presidents. Notwithstanding
the attention focused on midnight regulations by the media, there
appear to be no calls for reform in Congress. Because many of the
rules affected by a regulatory moratorium are unpublished, I favor
requiring agencies to publish in the Federal Register a list of the
regulations that either are not sent to or are withdrawn from OFR
following a presidential transition. This would facilitate tracking
and add transparency to the regulatory process.
Ms. Rubrecht is a member of Jackson Kelly PLLC in Charleston, West
Virginia, and a member of the editorial board of Natural Resources &
Environment. She may be reached at galelea@
jacksonkelly.com.
Published in Natural Resources & Environment, Volume 24, Number 1, Summer 2009. © 2009 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.