EPA Farm Reporting Exemption Final Rule Vacated

The 2008 Exemption Decision
In 2008, the Environmental Protection Agency (EPA) promulgated a final rule generally exempting farms from reporting requirements set out in the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA) and the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA). Those two laws require parties to notify authorities when they have knowledge of releases of hazardous substances under certain circumstances. The lists of hazardous substances addressed by those statutes include certain compounds, such as hydrogen sulfide and ammonia, that are formed from organic substances such as decomposing animal waste. Hydrogen sulfide and ammonia are both listed as “hazardous substances” under CERCLA and “extremely hazardous substances” under EPCRA.

In promulgating the final rule, CERCLA/EPCRA Administrative Reporting Exemption for Air Releases of Hazardous Substances from Animal Waste at Farms, 73 Fed. Reg. 76,948 (Dec. 18, 2008), the EPA limited the exemption (in response to comments expressing a desire to receive information from large concentrated animal feeding operations (CAFOs)) by retaining the EPCRA reporting requirements for CAFOs.

Unsatisfied with this retention under EPCRA only, environmental groups sued the EPA. And unsatisfied with continued reporting requirements for CAFOs, agricultural groups also challenged the final rule.

Court Review of Final Rule Challenge
The D.C. Circuit reviewed the exemption decision set forth in the final rule, noting that even though EPCRA jurisdiction would be in district court, CERCLA gave the court express jurisdiction over CERCLA rules. The court noted that it would be a “wasteful exaltation of form over substance” to divide the dispute between several courts where there was, as here, a single agency action relying on multiple statutes and where this court had jurisdiction under at least one of those statutes. 853 F.3d at 533.

The EPA then challenged the standing of petitioners, arguing that only EPCRA required public disclosure of the reports, so there was no informational injury to petitioners under CERCLA. However, the court determined that the complex interplay between CERCLA and EPCRA, the case law requiring that the merits be assumed in favor of petitioners, and the exemption from the CERCLA reporting mandate prevented petitioners from obtaining information under EPCRA (which was tied to CERCLA by the statute). The court, in analyzing the statutes, determined that cutting back on CERCLA reporting automatically had the effect of cutting back on EPCRA reporting and disclosure requirements. Thus, the court found that was “injury enough.” Id.

After establishing its jurisdiction and the standing of petitioners, the court analyzed the various facets of the case, as discussed in the subsections below.

The court found a clear reporting requirement. After citing various cases in which statutory language was found not to preclude the agency from identifying additional exemptions even where the statute directly set forth certain exemptions, the court, in this opinion, reviewed the statutory language by which Congress set forth various exemptions from CERCLA along with the remaining sweeping reporting mandate: “‘any release . . . of a hazardous substance . . . in quantities equal to or greater than’ the reportable quantities authorized under § 9602. . . .” The court found that, when read together, the statutory language and reporting mandate set forth a “straightforward reporting requirement” for any nonexempt release (over the reportable quantity (RQ)). The opinion also notes the absence of wording that would imply delegation, such as as appropriate, effective, economical, or under circumstances to be determined by the EPA. Id. at 535. Thus, the court found that the statutory language did not appear ambiguous on the subject of exemption from the reporting requirement and that the agency’s establishment of the farm exemption was not clearly authorized by the statute.

The concurring opinion filed by D.C. Circuit Court Judge Brown sets forth an intriguing comment on what he perceived to be the panel’s seeming truncation of the Chevron, USA, Inc. v NRDC, Inc., 467 U.S. 837 (1984), two-step analysis into a one-step “reasonableness” requirement. He emphasized that Step 1 requires an analysis of the statutory language to determine and set boundaries within which the agency’s authority remains. Then, and only then, can the reasonableness of the agency’s action be evaluated. While he agreed with the panel’s opinion, he emphasized that this was only because it did not extend to the situation in which an agency’s statutory interpretation was found to be reasonable without a court first determining the statutory bounds of agency authority. In fact, though the panel’s opinion discusses the reasonableness standard, there was clearly a detailed review of the statutory language as well.

The court found the de minimis argument unwarranted. After determining that the final rule exemption did not meet the reasonableness standard set forth in Chevron, the court then described the remaining core dispute more specifically as a question of whether the record supported the decision or the agency had exceeded its power under its “implied de minimis authority to create even certain categorical exceptions to a statute when the burdens of regulation yield a gain of trivial or no value.” Public Citizen v. FTC, 869 F.2d 1541, 1556 (D.C. Cir. 1989) (quoting Alabama Power v. Costle,636 F.2d 323, 360–61 (D.C. Cir. 1979) (emphasis in original)).

In Waterkeeper Alliance, the court observed that the EPA never explicitly invoked the de minimis power in the reasoning set out in its promulgation of the final rule, but it noted that the reasoning set forth by the EPA “analysis tracks the exception’s logic.” Further, the U.S. Poultry and Egg Association, intervenor, specifically pointed to the agency’s de minimis power as a reason to uphold the final rule. However, petitioners argued that the reports “provide benefits, in the sense of furthering the regulatory objectives,” and the court agreed that the reports aren’t nearly as useless as the EPA made them out to be. 535 F.3d at 530 (quoting Alabama Power).

The court discussed the objectives of the two statutes’ reporting requirements and the broad authority of the EPA to investigate and respond to actual or threatened releases of hazardous substances, noting that the EPA was authorized to require notification of releases because otherwise it could not respond to releases it didn’t know about. CERCLA establishes the RQ as 100 pounds per day for both ammonia and hydrogen sulfide. Apparently, no party to the litigation argued that the daily emissions of commercial farms fall below the threshold RQ for these chemical compounds. Because the emissions are not from a stack or vent, the court took note that the statute dealt with continuous releases by requiring annual reporting, with a special notification requirement when it was determined there had been a statistically significant increase in the quantity of the continuous emissions previously reported.

The EPA’s final rule exemption was based on the agency’s determination that there had never been a response to a report containing a farm’s notification of air releases from animal waste and that it could not foresee a situation where it would take any future response action based on such a notification. Having invited comments on any foreseeable situation that might require a response and what type of response action would be taken, the agency remained unconvinced that there was such a future, foreseeable response action to a farm’s notification of air releases from animal waste. Further, it found that such reports were “unnecessary because, in most cases, a federal response is impractical and unlikely.” Id. (Based on public comments seeking information on emissions from the largest farms, the EPA did require those CAFOs to continue to report air emissions under EPCRA, which requires notification to state and local (rather than federal) authorities.)

In delving into the facts underlying the EPA’s determination that reporting by farms was unnecessary and no foreseeable situations could be identified and no practical response actions were available, the court pointed to several comments and state actions, safety reports, and guidance documents for CAFOs cited in the court submittals that effectively disputed the EPA’s decision and that, in fact, set forth specific factual scenarios identifying specific risks that could be avoided by implementing better operational and management procedures on the farms. In addition, certain specified investigational techniques could aid in investigation and response. The court determined that the record suggested the potentiality of some real benefits from reporting requirements, contrary to the EPA decision. Ultimately, even though the EPA argued that the cost outweighed any benefit from reporting, the court found that those facts were not enough to support application of the de minimis exception.

Extension and Stay of the Mandate
The actual wording of the April 11, 2017, court order was “that the Clerk withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing or petition for rehearing en banc.” On May 19, 2017, after many affected farms asked the EPA for help, the EPA moved for an extension of time to file a motion to stay issuance of the mandate; this was granted on May 31, revising the order to state that the issuance of the mandate would occur 14 days following resolution of any petitions for rehearing.

On June 2, 2017, the National Pork Producers and the U.S. Poultry and Egg Association filed a petition for a panel rehearing of the decision, which was denied on July 3, the court again stating that the EPA did not meet the standard set forth by the U.S. Supreme Court in Chevron and applied by the court in Waterkeeper Alliance.

On Monday, July 17, 2017, the EPA asked the D.C. Circuit to delay its mandate so that it could develop guidance for farms that would now have to submit information to comply with the April 11, 2017, ruling:

Thousands of small- and medium-sized farms that were exempt from the reporting requirements for almost a decade must suddenly come into compliance. Many have asked EPA for help in determining what their emissions are and whether they must file reports. Allowing EPA time to develop guidance will aid these farms in complying with the reporting requirements. A stay will also provide relief for these farms from enforcement suits during the transition.

The motion argues that the court has discretion to stay the issuance of the mandate, there is good cause for staying the issuance of the mandate, and the stay would provide needed relief from the risk of enforcement actions by the EPA or a private party through citizen suits. The motion argues that the temporary relief from a stay would allow farms to focus on achieving compliance rather than their vulnerability to legal action. Of course, the original environmental group petitioners oppose the motion for a stay, while the trade associations representing the regulated community affected by the mandate do not oppose the motion.

Conclusion
Now that the enviable CERCLA/EPCRA reporting exemption has been vacated, farms will need to renew their reporting efforts or could be subject to enforcement for nonreporting. Of course, the reported information on air releases from these operations could provide factual support for tort and nuisance suits by citizens and environmental groups in the future. And if the EPA’s analytical information on costs is correct, there will also be significant increases in costs and resource requirements to comply with the reporting requirements, even where emissions are consistent enough to qualify for continuous release reporting. Agricultural entities will now have to adjust to a new reality—one without a farm reporting exemption final rule.

Karen Aldridge Crawford is a partner at Nelson Mullins Riley & Scarborough, LLP, in Columbia, S.C., and Washington, D.C.

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