Valero Energy Corp. v. Envtl. Prot. Agency ( 2019 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 8, 2018 Decided June 25, 2019
No. 18-1028
VALERO ENERGY CORPORATION,
PETITIONER
v.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
On Petition for Review of an Action of the
United States Environmental Protection Agency
Samara L. Kline argued the cause for petitioner. On the
briefs were Clara Poffenberger, Lisa M. Jaeger, Brittany M.
Pemberton, Warren W. Harris, Yvonne Y. Ho, and Christopher
L. Dodson. Megan H. Berge, Vincent M. Wagner, and Evan A.
Young entered appearances.
Benjamin R. Carlisle, Attorney, U.S. Department of
Justice, argued the cause for respondent. With him on the brief
were Jeffrey H. Wood, Acting Assistant Attorney General, and
Jonathan D. Brightbill, Deputy Assistant Attorney General.
Before: HENDERSON, ROGERS, and SRINIVASAN, Circuit
Judges.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
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SRINIVASAN, Circuit Judge: The Energy Independence
and Security Act of 2007 contains a citation to nowhere. The
Act requires gasoline sold in the United States to include a
certain amount of renewable fuel, and tasks the Environmental
Protection Agency with conducting periodic reviews to enable
appropriate adjustments to the renewable-fuel requirements. In
setting out EPA’s periodic-review obligation, the statute
directs the agency to examine certain requirements ostensibly
set out in a referenced provision of the Clean Air Act. The cited
provision, though, does not exist.
In an effort to make sense out of nonsense, EPA issued a
document setting forth its interpretation of the periodic-review
provision and explaining why it believes it has complied.
Valero Energy Corporation, a petroleum refiner, took issue
with EPA’s position in the document and filed a petition for
review in this court. We conclude that the EPA document does
not constitute final agency action. We therefore dismiss
Valero’s petition for lack of jurisdiction.
I.
A.
In 2005 and 2007, Congress amended the Clean Air Act to
establish the Renewable Fuel Standards program. See Energy
Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594; Energy
Independence and Security Act of 2007, Pub. L. No. 110-140,
121 Stat. 1492. Congress aimed to “move the United States
toward greater energy independence and security” and to
“increase the production of clean renewable fuels.” 121 Stat.
at 1492. The program charges EPA with requiring “that
gasoline sold . . . in the United States . . . contain[] [a
minimum] volume of renewable fuel.” 42 U.S.C.
§ 7545(o)(2)(A)(i). The statute defines renewable fuel to mean
fuel “produced from renewable biomass.” Id. § 7545(o)(1)(J).
3
To ensure that gasoline sold in the United States meets
those standards, EPA requires refiners (and importers) of
gasoline to include a minimum amount of renewable fuel in
their gasoline. The required annual volumes for each
renewable fuel are prescribed in statutory tables. See id.
§ 7545(o)(2)(B). For years not covered by the tables, the
statute calls for EPA to set the required volumes “based on a
review of the implementation of the program . . . and an
analysis of [six factors].” Id. § 7545(o)(2)(B)(ii).
In addition, the statute directs EPA to conduct “periodic
reviews” of the program “[t]o allow for the appropriate
adjustment” of the minimum total volumes for each renewable
fuel. Id. § 7545(o)(11). Specifically, EPA must periodically
review “existing technologies,” “the feasibility of achieving
compliance with the requirements,” and “the impacts of the
requirements described in subsection (a)(2) on each individual
and entity described in paragraph (2).” Id. (emphasis added)
(footnote omitted). The highlighted reference, however, is an
error: there is no “subsection (a)(2).”
B.
In November 2017, EPA published a document entitled
“Periodic Reviews for the Renewable Fuel Standard Program.”
The first of the document’s two parts addresses the agency’s
obligations under the periodic-review provision,
§ 7545(o)(11), including the provision’s reference to the
nonexistent “subsection (a)(2).” See Periodic Review
Document at 3–7, J.A. 5–9. With regard to the intended
meaning of that erroneous reference, EPA opines that there is
“no ‘overwhelming evidence from the structure, language, and
subject matter’ of the statute pointing in a single direction.” Id.
at 4, J.A. 6 (quoting U.S. Nat’l Bank v. Indep. Ins. Agents of
Am., 508 U.S. 439, 462 (1993)). As a result, EPA concludes,
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the reference to “subsection (a)(2)” renders the provision
“unintelligible” and thus partially “inoperative.” Id. at 3–5,
J.A. 5–7.
In the alternative, EPA sets forth its best attempt to give
content to § 7545(o)(11)’s mistaken cross-reference. Because
the reference to “subsection (a)(2)” is ambiguous, EPA
reasons, it can adopt “any reasonable construction.” Id. at 6,
J.A. 8. EPA concludes that, if necessary, it would read
“subsection (a)(2)” to refer to subsection (o)(2)(B)—i.e.,
§ 7545(o)(2)(B). See id. at 5–7, J.A. 7–9. EPA would also
interpret the ensuing reference to “each individual and entity
described in paragraph (2)” to refer to the list of regulated
individuals and entities in § 7545(o)(2)—namely, “refineries,
blenders, distributors, and importers” and “consumers of
transportation fuel.” Id. at 6–7, J.A. 8–9 (citations omitted). In
sum, EPA would interpret the provision to require periodic
review of the impacts of the required annual volumes contained
in § 7545(o)(2)(B) on “refineries, blenders, distributors, and
importers, as well as on consumers of transportation fuel.” Id.
at 7, J.A. 9.
In the second part of the document, EPA explains why,
under either interpretation of the erroneous cross-reference, its
prior actions have fulfilled its statutory obligation to conduct
periodic reviews. See id. at 8–12, J.A. 10–14. As evidence that
it has conducted the required reviews, EPA points to various
analyses it has performed for rulemakings relating to the
Renewable Fuel Standard program and for other occasions.
See id., J.A. 10–14. The document marks the first time those
analyses have been explicitly identified as “periodic reviews.”
See id. at 8, J.A. 10. Nonetheless, EPA concludes that they
suffice to establish compliance with the requirements of
§ 7545(o)(11). That said, a footnote states that “neither [the]
interpretation of the statute nor the description of [EPA’s]
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studies in this document require any party or the agency to do
(or not do) anything beyond what the statute requires.” Id. at 2
n.1, J.A. 4 n.1. The footnote also states: “[O]ur reviews of the
[Renewable Fuel Standard] program occur on a continuing
basis, and are subject to change in both approach and results.
Indeed, we regularly consider new approaches and update our
[Renewable Fuel Standard] technical analysis, and we intend
to continue doing so.” Id.
C.
In January 2017, ten months before publication of the EPA
document, petitioner Valero Energy Corporation sued EPA in
the Northern District of Texas. Among other claims, Valero
contended that § 7545(o)(11) imposes a mandatory duty to
conduct periodic reviews and that EPA had failed to conduct
even a single review. See Valero Energy Corp. v. EPA, No.
7:17-cv-00004-O, 2017 WL 8780888, at *5 (N.D. Tex. Nov.
28, 2017). Valero sought an order compelling EPA to conduct
periodic reviews. Id. The district court dismissed Valero’s
claim, concluding that the statute “does not clearly mandate a
date certain on which [EPA is] required to conduct
[§ 7545(o)(11)] periodic reviews.” Id.
Soon after the district court’s decision, EPA published the
document at issue in this case. Valero filed a timely petition
for review of the document in this court. According to Valero,
EPA’s document incorrectly interprets the periodic-review
provision and erroneously concludes that the agency has
complied with its periodic-review obligations.
II.
We start (and end) with the question of finality. The Clean
Air Act authorizes review only of “final action,” 42 U.S.C.
§ 7607(b)(1), a term synonymous with “final agency action”
6
under the APA, see Sierra Club v. EPA, 873 F.3d 946, 951
(D.C. Cir. 2017). Under the Clean Air Act, the requirement of
finality is jurisdictional. See, e.g., Portland Cement Ass’n v.
EPA, 665 F.3d 177, 193 (D.C. Cir. 2011) (per curiam). We
therefore must address at the outset whether the EPA document
is sufficiently final to support our jurisdiction. We conclude
that the document does not constitute “final action,”
§ 7607(b)(1), and we thus have no occasion to reach the merits
of Valero’s petition.
An agency action is final “if two independent conditions
are met: (1) the action marks the consummation of the
agency’s decisionmaking process and is not of a merely
tentative or interlocutory nature; and (2) it is an action by which
rights or obligations have been determined, or from which legal
consequences will flow.” Soundboard Ass’n v. FTC, 888 F.3d
1261, 1267 (D.C. Cir. 2018) (formatting modified) (quoting
Bennett v. Spear, 520 U.S. 154, 177–78 (1997)). Because
“both prongs of Bennett v. Spear must be satisfied
independently,” id. at 1271, the failure to satisfy either prong
means that the challenged action is nonfinal. Here, EPA’s
document does not meet Bennett’s second prong.
That prong looks to the “actual legal effect (or lack
thereof) of the agency action in question on regulated entities.”
Nat’l Mining Ass’n v. McCarthy, 758 F.3d 243, 252 (D.C. Cir.
2014). EPA’s document has no legal consequences for any
regulated party. The document imposes no obligations,
prohibitions, or restrictions; it “compels action by neither the
recipient nor the agency.” Holistic Candlers & Consumers
Ass’n v. FDA, 664 F.3d 940, 944 (D.C. Cir. 2012). Nor does it
affect EPA’s legal obligation to conduct periodic reviews.
Rather, it leaves the world just as it found it. See Indep. Equip.
Dealers Ass’n v. EPA, 372 F.3d 420, 428 (D.C. Cir. 2004). For
instance, the document does not expose any regulated party to
7
the possibility of an enforcement action or to enhanced fines or
penalties. See Sackett v. EPA, 566 U.S. 120, 126 (2012). The
document instead only presents EPA’s position on what the law
is and whether it has complied. Absent some identifiable effect
on the regulated community, an agency works no legal effect
“merely by expressing its view of the law.” AT&T Co. v.
EEOC, 270 F.3d 973, 976 (D.C. Cir. 2001).
The agency’s own characterization of its action is to the
same effect. See Nat’l Mining Ass’n, 758 F.3d at 252. EPA
expressly disclaims any legal effect. The document states that
it does not “require any party or the agency to do (or not do)
anything beyond what the statute requires.” Periodic Review
Document at 2 n.1, J.A. 4 n.1. And the document makes clear
that it has no binding effect on how EPA will conduct future
reviews. See id. While disclaimers of that sort can carry little
weight when they are “boilerplate,” Appalachian Power Co. v.
EPA, 208 F.3d 1015, 1023 (D.C. Cir. 2000), we have taken
cognizance of such language when—as here—the rest of “the
document is [similarly] devoid of relevant commands” to
regulated parties. Nat’l Mining Ass’n, 758 F.3d at 253; see also
Gen. Elec. Co. v. EPA, 290 F.3d 377, 383 (D.C. Cir. 2002).
On its own terms, then, the EPA document “do[es] not
purport to carry the force of law.” Ctr. for Auto Safety v. Nat’l
Highway Traffic Safety Admin., 452 F.3d 798, 808 (D.C. Cir.
2006). The EPA accordingly acknowledged at oral argument
that the document has “no legal effect.” Oral Argument at
35:47–35:48. It “has force only to the extent the agency can
persuade a court to the same conclusion,” AT&T Co., 270 F.3d
at 976, which weighs against finding that it qualifies as final
action.
That is dispositive under certain of our precedents, which
instruct that the analysis under Bennett’s second prong focuses
8
solely on the agency action’s legal consequences. See Joshi v.
Nat’l Transp. Safety Bd., 791 F.3d 8, 11–12 (D.C. Cir. 2015).
In other decisions, though, we have indicated that the finality
analysis can look to whether the agency action has a practical
effect on regulated parties, even if it has no formal legal force.
E.g., CSI Aviation Servs., Inc. v. U.S. Dep’t of Transp., 637
F.3d 408, 412 (D.C. Cir. 2011) (concluding that agency action
was final because it “imposed an immediate and significant
practical burden”); Nat’l Ass’n of Home Builders v. Norton,
415 F.3d 8, 15 (D.C. Cir. 2005) (“Finality resulting from the
practical effect of an ostensibly non-binding agency
proclamation is a concept we have recognized in the past.”); cf.
U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct. 1807,
1815 (2016) (endorsing a “pragmatic approach . . . to finality”
(internal quotation marks omitted)).
We need not explore the potential tension between those
lines of decisions because the EPA document is nonfinal even
if we take into account its practical consequences. The
document does not impose an “immediate and significant
practical burden on” regulated parties like Valero. CSI
Aviation Servs., 637 F.3d at 412. It does not, for example, put
Valero to the “painful choice between costly compliance and
the risk of prosecution at an uncertain point in the future.” Id.Nor does it impose obligations by chicanery—disclaiming
legal force and effect but nonetheless “read[ing] like a ukase.”
Appalachian Power, 208 F.3d at 1023. In short, the EPA
document is nonfinal and therefore unreviewable.
Valero sees things differently. It first contends that the
document “alter[s] the legal regime,” NRDC v. EPA, 643 F.3d
311, 320 (D.C. Cir. 2011), because it “ascrib[es] new meaning
to clear statutory terms,” Valero Reply Br. 6. We have never
held that legal novelty alone establishes finality. In NRDC, we
decided that a guidance document amounted to final agency
9
action, not because it presented a novel interpretation of the
Clean Air Act, but because it purported to “bind[] EPA regional
directors” to that interpretation, resulting in legal consequences
for states submitting implementation plans. NRDC, 643 F.3d
at 320. Here, by contrast, the document binds no one and
results in no discernible legal consequences.
Valero contends that legal consequences necessarily flow
from the document’s conclusion that EPA has complied with
§ 7454(o)(11). In support of that view, Valero leans heavily on
Sierra Club v. EPA, 699 F.3d 530 (D.C. Cir. 2012), in which
we concluded that an EPA notice was final because it
“declared, for the first time, that [EPA] ha[d] fully
accomplished the [duties] required by § 112(c)(6)” of the Clean
Air Act. Id. at 534. But in Sierra Club, unlike this case, EPA’s
notice had legal force and effect.
Sierra Club had originally sued EPA to compel the
promulgation of emissions standards for certain hazardous air
pollutants, as required by § 112(c)(6) of the Clean Air Act. See
id. at 532. EPA sought dismissal of that complaint, pledging
that, after it fully complied with its statutory obligation, “it
intended . . . to issue a notice that explains how it has satisfied”
the Act. Id. (internal quotation marks omitted). The district
court “accepted EPA’s view” and dismissed the complaint. Id.
EPA subsequently promulgated the promised notice, which
declared that EPA was in compliance with the Act, and which,
crucially, “bar[red] further demands for additional source-
listing or standard-setting.” Id. at 535. We held that the EPA
notice was final because it “purport[ed] to close off any legal
claim that [EPA] ha[d] fallen short of compliance with [the
Act].” Id. at 534.
Valero asserts that the EPA document in this case likewise
“forecloses interested parties from arguing that EPA has failed
10
to conduct periodic reviews”: “Courts can no longer compel
EPA to conduct periodic reviews because the [document]
proclaims that EPA has been doing those reviews all along.”
Valero Reply Br. 8–9. The document, though, does no such
thing. It has no effect whatsoever on Valero’s ability to sue to
compel EPA to conduct periodic reviews. See 42 U.S.C.
§ 7604(a)(2) (authorizing suit “where there is alleged a failure
of the Administrator to perform any act or duty . . . which is not
discretionary”). EPA itself thus has represented that it “has not
and will not argue . . . that the . . . Document ‘close[s] off’ or
has any other legal effect on that claim.” EPA Br. 18.
In fact, Valero and another litigant have already brought
two such cases, arguing (unsuccessfully) that EPA has failed to
comply with its duty under § 7454(o)(11). See EPA Motion to
Dismiss, Small Retailers Coal. v. EPA, No. 7:17-cv-00121-O
(N.D. Tex. Feb. 20, 2018); Valero Energy Corp. v. EPA, No.
7:17-cv-00004-O, 2017 WL 8780888, at *1 (N.D. Tex. Nov.
28, 2017). Tellingly, the EPA document has had no legal effect
on the outcome of either case. Small Retailers Coalition was
decided after the publication of the document, and the court did
not find—and EPA did not argue—that the challenge was
categorically foreclosed by the document.
Instead, the EPA document sets forth a legal position
without imposing any new obligations, prohibitions, or
requirements. As our precedents dictate, such an action fails
the second prong of Bennett v. Spear’s finality test and is
unreviewable. See, e.g., Nat’l Min. Ass’n, 758 F.3d at 252;
Holistic Candlers, 664 F.3d at 944; Indep. Equip. Dealers
Ass’n, 372 F.3d at 427–28; AT&T Co., 270 F.3d at 975–76.
A contrary conclusion would have the undesirable
consequence of discouraging agencies from issuing clarifying
documents like this one. EPA published its interpretation of
11
the statute because it wished to “ma[k]e its views public” “as a
matter of good governance and transparency,” EPA Br. 15.
“Treating such [interpretations] as final and judicially
reviewable agency action would discourage their use, ‘quickly
muzzl[ing] [those] informal communications between agencies
and their regulated communities . . . that are vital to the smooth
operation of both government and business.’” Rhea Lana, Inc.
v. Dep’t of Labor, 824 F.3d 1023, 1028 (D.C. Cir. 2016)
(quoting Indep. Equip. Dealers Ass’n, 372 F.3d at 428). Our
finality jurisprudence rightly rejects that unwelcome result.
Finally, to the extent Valero believes that any of the
periodic reviews identified by the EPA document were
themselves arbitrary, capricious, or otherwise contrary to law,
we note that Valero could have directly petitioned for review
of those actions under 42 U.S.C. § 7607. While such petitions
ordinarily need to be filed within sixty days of publication, if a
“petition is based solely on grounds arising after such sixtieth
day, then any petition for review under this subsection shall be
filed within sixty days after such grounds arise.” § 7607(b)(1).
Here, EPA did not identify any of the prior analyses as
“periodic reviews” until it issued its document in November
2017. Valero did not thereafter bring a petition challenging any
of the agency’s prior analyses.
* * * * *
For the foregoing reasons, we dismiss the petition for
review.
So ordered.