Natural Res. Def. Council v. U.S. Dep't of Energy
Natural Res. Def. Council v. U.S. Dep't of Energy
Opinion of the Court
Sweet, D.J.
There are four motions pending in this action involving significant issues of administrative law and judicial review. The defendant, the Department of Energy ("DOE" or the "Defendant") has moved pursuant to Rules 12(b)(1) and 56 of the Federal Rules of Civil Procedure to dismiss the amended complaint ("AC") of plaintiff Natural Resources Defense Council ("NRDC" or the "Plaintiff") for lack of jurisdiction, or alternatively, for summary judgment. ECF No. 29. DOE has also moved to dismiss the AC as moot pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure. ECF No. 56. NRDC has cross-moved for summary judgment and to supplement the Administrative Record ("AR") pursuant to the Administrative Procedures Act ("APA"). ECF Nos. 38, 40. Based on the facts and conclusions set forth below, the motion of DOE for dismissal for lack of jurisdiction and for summary judgment are denied, as is its motion to dismiss on mootness grounds; the motion of NRDC to supplement the AR and its cross-motion for summary judgment are granted.
I. Prior Proceedings
This action was commenced on September 14, 2017 by NRDC to challenge DOE's issuance of a stay under Section 705 of the APA of its Test Procedure Rule. ECF No. 1. NRDC's AC was filed on March 15, 2018. ECF No. 25.
By this Court's Opinion dated March 6, 2018, the motion of the DOE to transfer the action was denied. ECF No. 23.
The motion of DOE for dismissal or summary judgment, NRDC's cross-motion for summary judgment, and NRDC's motion to supplement the AR were heard and marked fully submitted on September 12, 2018, as was DOE's motion to dismiss this action as moot.
II. Background and Facts
The parties have not submitted statements of fact pursuant to Local Civil Rule 56.1 because the facts are set forth and cabined by the AR. See *133Just Bagels Mfg., Inc. v. Mayorkas ,
The Energy Policy and Conservation Act ("EPCA"),
Carrying out that obligation, DOE conducted several years of rulemaking proceedings in 2008 to update and strengthen the energy efficiency standards and test procedures for central air conditioners and heat pumps. This extensive process resulted in final rules in 2011 (the "2011 Rule") and 2016 (the "2016 Rule") to refine the regulations related to central air conditioners and heat pumps.
A significant part of these proceedings-including "proposals and comments from three separate rulemakings, two guidance documents, and two working groups," 81 Fed. Reg. at 36,994 -dealt with "split systems," air-conditioning systems that consist of an outdoor unit and an indoor unit. See generally id. at 36,996 (defining "split systems"). When an outdoor unit breaks down, it is often possible to replace that unit with an "unmatched" outdoor unit, without replacing the existing indoor components. Until 2016, however, DOE did not have a clear process for testing and certifying unmatched outdoor units. See U.S. DEP'T OF ENERGY, ENFORCEMENT POLICY STATEMENT: SPLIT-SYSTEM CENTRAL AIR CONDITIONERS WITHOUT HSVC (Dec. 16, 2015), https://www.energy.gov/sites/prod/files/2015/12/f27/Enforcement% 20Policy-CAC% 202015_0.pdf (acknowledging that many split systems "cannot be tested in accordance with the DOE test procedure"). This led to widespread noncompliance, particularly for "dry-shipped" units-that is, unmatched outdoor units that are shipped separately from the refrigerant needed to operate them. Id. The 2016 Rule redesigned the test procedures to require dry-shipped outdoor units to be paired for certification purposes with an indoor unit representative of the older, less-efficient indoor units they are typically paired with in practice. See 81 Fed. Reg. at 37,008 -09.
After DOE issued the 2016 Rule, Johnson Controls Inc. ("JCI") began marketing a new type of unmatched outdoor unit that shipped with one refrigerant, R-407C, but was compatible with a different refrigerant, R-22-a hydrofluorocarbon ("HCFC") with one of the "highest ozone depletion potentials of all HCFCs," which the Environmental Protection Agency ("EPA") has been phasing out. EPA, PHASEOUT OF CLASS II OZONE-DEPLETING SUBSTANCES , https://www.epa.gov/ods-phaseout/phaseout-class-ii-ozone-depleting-substances; see also AR 102. EPA had banned the sale and distribution of new systems designed to use R-22, but JCI's new outdoor units could operate as replacement R-22 units without complying with either the ban on R-22-equipped units or DOE's test procedures for unmatched units shipped without their intended refrigerant. See 81 Fed. Reg. at 81,170.
*134On August 24, 2016, DOE published a Supplemental Notice of Proposed Rulemaking to close this loophole. See Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat Pumps,
A. DOE Delays the Test Procedures Rule Twice, Opposed by All But One Manufacturer
On January 20, 2017, the White House Chief of Staff directed agencies to "temporarily postpone" the effective date of all regulations that had not yet become effective, "as permitted by applicable law." Memo. from Reince Priebus to Heads of Exec. Dep'ts & Agencies (Jan. 20, 2017) (the "Preibus Memo"), https://www.whitehouse.gov/presidential-actions/memorandum-heads-executivedepartments-agencies/. On February 2, 2017, without notice or opportunity to comment, DOE published a final rule purporting to postpone the Test Procedures Rule's effective date by 60 days. AR 349 (the "February Final Rule"). The sole basis for this delay was "to give DOE officials the opportunity for further review and consideration of new regulations" in light of the Preibus memo.
The February 2, 2017 delay--and the prospect DOE might delay the Test Procedures Rule again--came to the attention of industry participants who opposed any delay. One manufacturer of central air conditioners, Lennox International ("Lennox"), sent a letter to DOE on March 17, 2017, explaining that the Test Procedures Rule "was crafted during a negotiated rulemaking ... with broad stakeholder involvement" and "has broad industry support, because it makes many improvements to the test procedure." AR 320. Lennox cautioned that "[i]f this negotiated outcome is delayed or overturned, industry will either be subject to the existing inferior test procedure or will be at the mercy of yet another federal rulemaking." AR 321.
On March 21, 2017, without any advance notice or opportunity to comment, DOE published another final rule purporting to further postpone the Test Procedures Rule's effective date, this time to July 5, 2017, the rule's original compliance date. AR 348 (the "March Final Rule"). The sole basis for this delay was to provide the Secretary of DOE more time "for further review and consideration of new regulations." AR 348.
Two days later, the Air-Conditioning, Heating, and Refrigeration Institute ("AHRI"), an industry trade association representing more than 300 manufacturers of air conditioners and related equipment, supported the Test Procedures Rule. AR 322. AHRI explicitly stated that it "is not seeking to delay or rescind the [Test Procedures Rule]."
On April 12, 2017, Lennox expanded on the reasons the Test Procedures Rule should be "implemented without further delay" in a detailed twelve-page letter. AR 324-25. Lennox noted that "JCI is in the *135unique position in the industry of [seeking to certify] products with R-407C refrigerants in residential applications." AR 324. It then provided several arguments against further delay in subjecting those products to the updated test procedures, explaining both the Test Procedures Rule's lawfulness and the negative impacts of a delay on consumers, industry, and energy efficiency. AR 324-35. JCI responded on May 22, 2017 disagreeing with Lennox's arguments. AR 336-42. Lennox replied to these assertions a month later in a June 28, 2017 letter. AR 343-46.
B. JCI Petitions for Review in the Seventh Circuit and Privately Petitions DOE for an Extension, Waiver or Stay
Meanwhile, JCI petitioned for review of the Test Procedures Rule in the Seventh Circuit and sent three non-public submissions to DOE, asking for individual relief.
Specifically, JCI filed its petition for review in the Seventh Circuit on March 3, 2017. AR 107-08. That same day, JCI confidentially petitioned DOE for a 180-day extension under
On April 6, 2017, JCI sent another confidential petition to DOE for a waiver from two provisions of the Test Procedures Rule under
On April 28, 2017, the Seventh Circuit suspended all briefing on JCI's petition for review so that the parties could conduct mediated settlement discussions. AR 315-17.
On May 31, 2017, JCI requested that DOE issue an administrative stay under Section 705 pending the resolution of the Seventh Circuit case. AR 68-73. It acknowledged that in "reviewing an application for stay" the four factors considered in any request for injunctive relief "must be balanced against one another." AR 69. If it did not receive relief within a week, JCI claimed, it would "file a request for judicial stay with the Seventh Circuit ... in order to give the Court sufficient time to act on that request before the July 5th compliance deadline." AR 73.
DOE granted JCI's March 3rd request for a 180-day extension on June 2, 2017. AR 66-67. Three days later, JCI asked DOE to hold its request for a stay in abeyance. AR 64-65. Lennox challenged the 180-day extension in federal district court in Texas on June 29, 2017, simultaneously moving for an emergency stay. AR 6. In its motion, Lennox explained that it was "not ask[ing] to be held to a less-accurate testing and representations requirement" than provided by the Test Procedures Rule, but rather "that JCI not be given the unique ability to rely on misleading test data for six months while Lennox and others in the industry are governed by regulations that protect consumers." AR 42. The court denied Lennox's motion on June 30, 2017, finding that Lennox's alleged injuries would not be irreparable. See Order, Lennox Int'l Inc. v. DOE, No. 17 -Civ. 1723 (N.D. Tex. June 30, 2017), ECF No. 16. In light of this defeat, Lennox voluntarily dismissed its case on July *13617, 2017. Notice of Dismissal, Lennox Int'l Inc. v. DOE, No. 17 -Civ. 1723 (N.D. Tex. July 17, 2017), ECF No. 22.
C. DOE Stays the Test Procedures Rule
As the twice-rescheduled July 5, 2017 effective date approached, nobody in the industry was asking DOE to stay the Test Procedures Rule. JCI had withdrawn its request for a stay, AHRI had weighed in against a delay, and Lennox had explicitly disavowed the idea of levelling down the test procedures to hold all manufacturers to the same low standard as JCI.
However, on July 12, 2017, DOE filed a stay of the Test Procedures Rule's R-407C provisions with the Office of the Federal Register ("OFR"). SAR 1-25 (the "Delay Rule"). DOE's explanation, in its entirety, read as follows:
DOE has determined that, during the pendency of the lawsuit brought by JCI, it is in the interests of justice to postpone the effectiveness of the [R-407C provisions]. DOE has determined to postpone the effectivenes [sic ] of these provisions based on JCI's submissions to DOE that raise concerns about significant potential impacts on JCI, and further to ensure all manufacturers of central air conditioners and heat pumps have the same relief granted to JCI.
SAR 2. The effect of the stay is to permit JCI to continue to sell air conditioners whose efficiency falls below DOE standards. See AR 102.
Although the Delay Rule was not filed with OFR until July 12, 2017 or published until July 13, 2017, it asserts that it was "[i]ssued" on July 3, 2017. SAR 2. DOE submitted an unpublished version of the stay to the district court hearing Lennox's suit on July 3, 2017 and, according to DOE, a contractor posted that version on a DOE website the same day. See Def.'s Mem. Supp. Mot. Dismiss & Summ. J. 6, ECF No. 30.
III. DOE's Motions to Dismiss for Lack of Jurisdiction Are Denied
A. DOE's Motion to Dismiss in Light of the Seventh Circuit Litigation is Denied
DOE contends, "[f]or the reasons stated in [its] memoranda of law in support of its motion to transfer this case to the Seventh Circuit," that this Court this lacks jurisdiction over NRDC's amended complaint. See Def.'s Mem. Supp. Mot. to Dismiss & Summ. J. 7-9, ECF No. 30. According to DOE, evaluating DOE's decision to administratively stay the Test Procedures Rule would "overly entangle this Court" with issues involved in the Seventh Circuit litigation.
"[T]here is no overlap between the present action and the litigation in the Seventh Circuit. This case concerns an agency action in which the DOE issued a stay postponing the effective date of two provisions of the Test Procedures Rule, whereas the Seventh Circuit litigation challenges the Test Procedures Rule itself. The current action concerns an entirely distinct issue, as well as a separate rule with a separate administrative record, than that before the Seventh Circuit."
Op. 18, ECF No. 23 ; see also
Accordingly, DOE's motion to dismiss for lack of jurisdiction on this basis is denied.
B. DOE's Motion to Dismiss This Action as Moot is Denied
DOE has moved to dismiss this case as moot because the agency action NRDC
*137challenges is no longer in effect. Def.'s Mem. Supp. Mot. Dismiss 1, ECF No. 57. DOE argues that, since it has lifted the Administrative Stay and the formerly postponed provisions of the Test Procedures Rule have gone into effect, a judgment would have no practical effect on the parties' legal rights and any declaratory judgment regarding the Administrative Stay would be an impermissible advisory opinion.
1. Background and Facts
The procedural and factual background of this case have been set forth above. Additional facts follow.
Under
On April 6, 2017, JCI petitioned DOE for a waiver and interim waiver from the relevant provisions of the Test Procedures Rule. AR 90-95. DOE took no action on this petition, instead choosing to grant JCI a 180-day extension of its obligation to comply with the Test Procedures Rule on June 2, 2017, followed by the full Delay Rule in July 2017. AR 66-67; SAR 1-2. NRDC filed this action to challenge the Delay Rule on September 14, 2017. Compl., ECF No. 1.
JCI amended its petition for a waiver and interim waiver on June 5, 2018, the same day NRDC moved for summary judgment in this case. See Notice of Petition for Waiver of Johnson Controls, Inc. from the Department of Energy Central Air Conditioners and Heat Pumps Test Procedure; Notice of Grant of Interim Waiver,
Despite the fact that JCI's petition had been pending for more than fifteen months, DOE had taken no action on it as of July 25, 2018, the date oral argument was initially scheduled in this case. Instead, two days before oral argument, DOE informed the Court and NRDC that it expected to take action on JCI's petition sometime the following week. ECF No. 49. It subsequently granted JCI an interim waiver on August 3, 2018, stated that it was "likely" to grant JCI a long-term waiver, and announced that it was "lifting" the Delay Rule. Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat Pumps,
As a result of the two actions, the substantive situation regarding JCI's R-407C outdoor units is the same: they are not subject to the Test Procedures Rule and can be marketed without complying with the test procedures for unmatched units shipped without their intended refrigerant.
2. The Applicable Standard
"It is well settled that 'a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the *138practice.' " Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc. ,
A defendant's voluntary change of conduct only renders a case moot if the defendant demonstrates both that "(1) there is no reasonable expectation that the alleged violation will recur and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation." Mhany Mgmt., Inc. v. Cnty. of Nassau ,
The "burden of showing mootness logically falls on the defendant because, 'by the time mootness is an issue, the case has been brought and litigated, often (as here) for years. To abandon the case at an advanced stage may prove more wasteful than frugal.' " Mhany Mgmt. ,
3. DOE Has Not Established That It Could Not Reasonably Be Expected to Delay the Test Procedures Rule Again
DOE has not categorically stated that it will not again delay the provisions of the Test Procedures Rule, but only that "there is no reasonable expectation" that it will. Def.'s Mem. Supp. Mot. Dismiss 8, ECF No. 57. In the context of the regulatory and judicial actions related to this case, it is reasonable to expect that DOE may reissue a delay of the Test Procedures Rule at any time it feels that JCI's exemption is threatened. At a minimum, it is not "absolutely clear" that the converse is true. Mhany Mgmt. ,
DOE has stated that it has withdrawn the Delay Rule and does not intend to reissue it if (a) its new waiver to JCI goes into effect or (b) it denies JCI's amended waiver petition and thus concludes in its own discretion that the Test Procedures Rule does not misrepresent the energy products of JCI's products. Def.'s Mem. Supp. Mot. Dismiss 9, ECF No. 57. In these two limited situations, DOE says, it does not expect that it would again delay the Test Procedures Rule.
In addition, as to the second scenario, DOE's explanation does not rule out the reasonable possibility that it will wish to exempt JCI from the Test Procedures Rule even if it denies a waiver. To issue a waiver, DOE must find that the Test Procedures Rule misrepresents the energy usage of JCI's products,
Furthermore, DOE's suggestion that it would not again delay the Test Procedures Rule in two specific situations does not amount to an assurance that it will not do so in any reasonably plausible scenario. To the contrary, JCI's challenge to the Test Procedures Rule remains pending in the Seventh Circuit, and DOE's position throughout this litigation has been that it can indefinitely stay the Test Procedures Rule as long as that challenge exists. See, e.g. , Def.'s Mem. Supp. Mot. to Dismiss & Summ. J. 19-20, ECF No. 30 ; Def.'s Mem. Opp. Pl.'s Mot. Summ. J. 24-25, ECF No. 46.
Relatedly, DOE has demonstrated an interest in exempting JCI from the Test Procedures Rule through any means available to it. It granted JCI a 180-day extension, AR 66-67; it granted JCI's request for an indefinite stay under Section 705, SAR 1-2; it granted JCI an interim waiver, 83 Fed. Reg. at 40012 ; and it has explicitly stated it is "likely" to grant JCI's petition for a long-term waiver, id. Where a defendant has shown a prolonged pattern of attempting to take an action, the Court can reasonably expect it to do so again in the future should the opportunity or need arise. See, e.g., Sheely v. MRI Radiology Network, P.A. ,
In addition, given the conclusory reasoning of the interim waiver and the fact that multiple organizations have already sued to challenge DOE's exemptions for JCI, it is reasonable to expect that any future long-term waiver will be subject to a challenge, whether by a competitor such as Lennox or an environmental and consumer advocacy organization such as NRD. If such a suit were successful, DOE's only recourse for promptly exempting JCI
*140would again be to stay the Test Procedures Rule under Section 705. DOE's effort to take an action now that it hopes will obviate the need for another Section 705 stay is thus compatible with a reasonable expectation that the challenged action may recur, and does not moot NRDC's claims. Cf. Nat. Res. Def. Council, Inc. v. Winter ,
One non-binding case cited by DOE, Clean Water Action v. Pruitt , held that an agency's voluntary cessation was sufficient to moot a case where the court concluded it was speculative to assert that a new rule might be vacated, leading the agency to issue a Section 705 stay.
DOE's claim that the conduct cannot reasonably be expected to recur must be viewed skeptically, given its timing. "The Supreme Court has viewed mootness claims skeptically when they are not timely raised." Mhany Mgmt. ,
Given these circumstances, where recurrence is possible in multiple scenarios and the timing suggests an intent to thwart the Court's jurisdiction, DOE has not carried its heavy burden. See, e.g., Nat'l Advert. Co. v. City of Miami ,
*141At an absolute minimum, "[t]here are simply too many questions ... for [the Court] to conclude that it is 'absolutely clear' that the parties will not resume the challenged conduct." Mhany Mgmt. ,
DOE's citations reinforce this conclusion. In Natural Resources Defense Council v. United States Nuclear Regulatory Commission , for example, the plaintiff challenged a rule on substantive grounds and on the ground that it was issued without notice and comment.
DOE's other citations include per curiam opinions that simply stated that the defendants had met their burden in that particular case, without providing reasoned analysis as to why the standard for voluntary cessation had been met. See Sussman v. Crawford ,
DOE also relies on cases that "treated governmental officials' voluntary conduct 'with more solicitude' than that of private actors." Rio Grande Silvery Minnow v. Bureau of Reclamation ,
*142Farez-Espinoza v. Napolitano , No. 08 Civ. 11060 (HB),
4. Interim Events Have Not Completely and Irrevocably Eradicated the Effects of the Violation
DOE has failed to show that "interim relief or events have completely and irrevocably eradicated the effects of the alleged violation," Granite State Outdoor Advert. ,
An agency's replacement of a challenged action with one that "disadvantages [plaintiffs] in the same fundamental way" cannot moot a pending challenge. Ne. Fla. ,
DOE does not dispute that its replacement action, the interim waiver from the Test Procedures Rule it has granted to JCI (and the long-term waiver it expects to grant), is similar to the Delay Rule and disadvantages NRDC in the same fundamental way. Quite to the contrary, DOE explicitly stated that the "waiver petition process is a ... more tailored approach" to achieve the exact same ends as the Delay Rule. 83 Fed. Reg. at 39874. The Delay Rule prevented JCI from needing to comply with the Test Procedures Rule; the waiver petition process produces the exact same result. DOE's conduct thus "disadvantages [NRDC] in the same fundamental way," Ne. Fla. ,
The interim waiver is just as conclusory as the Delay Rule, merely reciting that DOE reviewed JCI's materials, that it has the same "current understanding" as JCI, and that a waiver is "desirable for public policy reasons." 83 Fed. Reg. at 40012. The bulk of NRDC's arbitrary and capricious arguments apply just as much to this conclusory, unreasoned action. Cf. Pl.'s Mem. in Supp. Mot. Summ. J. 13-16, ECF No. 39 (explaining why Delay Rule's analysis was insufficient); Pl.'s Mem. Further Supp. Mot. Summ. J 2-5, ECF No. 48 (same). Where a replacement action embodies the same flaws as the originally challenged action, a pending claim is not moot. See, e.g., Lamar Advert. ,
In short, DOE's actions do not "completely and irrevocably eradicate[ ] the effects of the alleged violation" and do not moot this case. Granite State Outdoor Advert. ,
For these reasons, DOE's motion to dismiss this action as moot is denied.
*143IV. NRDC's Motion to Supplement the AR is Granted
NRDC has moved to supplement the AR to include the Federal Register Notice in which DOE published the Delay Rule, i.e., the rule which is being challenged in this case. The proposed Supplemental Administrative Record ("SAR") consists solely of that notice, Energy Conservation Program: Test Procedures for Central Air Conditioning and Heat Pumps,
"The Administrative Procedure Act and the cases require that the complete administrative record be placed before a reviewing court." Nat. Res. Def. Council, Inc. v. Train ,
The Federal Register Notice is the official record that DOE filed the Delay Rule with the Office of the Federal Register. Without it, the Delay Rule would be invalid. See
In light of its significance, the Federal Register Notice of a challenged agency action is contained in the administrative record in virtually every case, as long as such a Notice was published. In the rare instances where agencies have omitted the Federal Register Notice from an administrative record, courts have compelled their inclusion. See, e.g., Defenders of Wildlife v. Dalton ,
For these reasons, NRDC's motion to supplement the AR is granted and the Supplemental Administrative Record ("SAR") is part of the record before the court.
V. DOE's Motion for Summary Judgment is Denied and NRDC's Cross-Motion for Summary Judgment is Granted
A. The Applicable Standard
Under the APA, a court must set aside an agency action that is "arbitrary, capricious, *144an abuse of discretion, or otherwise not in accordance with law," or is "without observance of procedure required by law."
In reviewing whether an agency action is "arbitrary, capricious, [or] an abuse of discretion," the court evaluates whether the agency "examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co. ,
When alleging that an agency action is "without observance of procedure required by law" or "otherwise not in accordance with law" pursuant to
Judicial review under the APA is unavailable, however, to the extent "statutes preclude judicial review" or "agency action is committed to agency discretion by law."
B. Section 705 Stays Are Not Committed to Agency Discretion by Law
Before addressing the validity of the Delay Rule, the Court must dispose of DOE's contention that Section 705 stays are "committed to agency discretion by law" and are therefore unreviewable under
"There is a strong presumption favoring judicial review of administrative action." Salazar v. King ,
DOE contends that the requisite finding for a Section 705 stay--that "justice so requires"--is one of the rare instances where the presumption of reviewability is overcome. However, courts routinely review agency action under statutes involving similar standards. For example, most courts faced with a dispute over a finding that a contract is in the "best interests" of the Government have held the finding to be judicially reviewable. See Alion Sci. & Tech. Corp. v. United States , 69 Fed. CI. 14, 22-23 (2007) (collecting cases). Similarly, in Rombough v. FAA , our Circuit found that a statute allowing the administrator of the Federal Aviation Administration to "grant exemptions ... if he finds that such action would be in the public interest" was not "an action committed to the unlimited discretion of the agency and thus beyond the scope of judicial review" even though it "incorporate[d] the term 'may' and the public interest standard."
DOE attempts to distinguish Rombough because it involved a "specific review provision" in the Aviation Act. Def.'s Mem. Opp. to Pl.'s Cross. Mot. Summ. J. 3, ECF No. 46. But the Second Circuit discussed the relationship between this provision and the "general provisions of the APA" after concluding that "the public interest standard" in the Aviation Act review provision is "not subject to unbridled discretion."
Moreover, as DOE acknowledges, the D.C. Circuit found that nearly indistinguishable language ("if it finds it to be in the interest of justice") provided a judicially administrable standard in Dickson ,
DOE principally relies for its argument against reviewability on two cases. First, DOE points to Webster v. Doe , in which *146the Supreme Court held that a statute allowing agency action when the agency "shall deem ... necessary or advisable in the interests of the United States" committed that action to the agency's discretion by law.
The second case, Target Training International v. Lee ,
Here, by contrast, the basic issue covered in Section 705 is a familiar one to courts: whether the relevant interests warrant a stay. According to the legislative history of the APA, the purpose of the agency's authority under Section 705 is "to prevent irreparable injury or afford parties an adequate judicial remedy." APA, Pub. L. 1944-46, S. Doc. 248 at 277 (1946). This is fundamentally the same consideration that courts address in every application for an injunction, giving content to the phrase "when justice so requires" even if the phrase might, in other contexts, be ambiguous. The Federal Rules of Civil Procedure, adopted by Congress just a decade earlier, use the phrase "when justice so requires" or "in the interest of justice" repeatedly, indicating suitability for judicial analysis. See, e.g. , Fed. R. Civ. P. 8, 15, 32, 61, 65. While agencies may be entitled to a degree of deference as to their determination, courts have ample ability to determine whether an agency made a finding that justice requires and whether that finding was in any meaningful way based on the facts in the administrative record. See Bauer ,
DOE also maintains that Section 705 must be unreviewable because it has *147"broad application." Def.'s Memo. Supp. Mot. Dismiss & Summ. J. 12, ECF No. 30. But Section 705's government-wide application counsels for finding it reviewable, as a contrary rule would take a wide swath of agency action out of the courts and undermine the APA's purpose and practice. No cases have been cited holding that a portion of the APA itself is not subject to judicial review. The few cases that have found an agency's discretion to be so broad as to be unreviewable have all involved authority granted to a particular agency under an organic statute, not the basic rules of agency procedure laid out in the APA. A finding that those rules of the road are so amorphous as to trigger Section 701(a) (2) would conflict with the general purpose of the APA to routinize agency procedure and review.
In any event, "under the APA the ultimate availability of substantive judicial review is distinct from the question of whether the basic rulemaking strictures of notice and comment and reasoned explanation apply." Am. Med. Ass'n v. Reno ,
In sum, DOE has not explained why the drafters of the APA chose a phrase commonly used to guide judicial analysis if they meant to immunize agency action from such analysis. Nor does it give weight to case law holding that "the question of whether the basic rulemaking strictures of notice and comment and reasoned explanation apply" even when substantive judicial review is foreclosed. Am. Med. Ass'n ,
C. The Delay Rule Was Arbitrary and Capricious
DOE's decision to stay portions of the Test Procedures Rule indefinitely is arbitrary and capricious and therefore unlawful. See
DOE's reasoning was less than a sentence long, stating only that "DOE has determined to postpone the effectivenss [sic ] of these provisions based on JCI's submissions to DOE that raise concerns about significant potential impacts on JCI, and further to ensure all manufacturers of central air conditioners and heat pumps have the same relief granted to JCI." SAR 2. Such conclusory statements cannot carry an agency's burden of providing a reasoned explanation for its action. See, e.g., Batalla Vidal ,
In addition, DOE's conclusory assertions are contrary to the record that was before it. The Delay Rule purports "to ensure all manufacturers of central air conditioners and heat pumps have the same relief granted to JCI." SAR 2. But the record establishes that only JCI could benefit from the delay, because only JCI sold units covered by *148the delayed provisions. AR 86, 324. AHRI, a trade association representing more than 300 manufacturers of central air conditioners and related products, had expressly told DOE that it was "not seeking to delay or rescind the [Test Procedures] Rule," AR 322, and Lennox had disavowed any desire "to be held to a less-accurate testing and representations requirement," AR 42. The entities whose interests DOE claimed to be protecting stated that a stay was not in their interests. Where an agency's cursory explanation "is simply not supported by the record," it must be invalidated. Cnty. of L.A. v. Shalala ,
DOE also "entirely failed to consider an important aspect of the problem." State Farm ,
DOE contends that any requirement that an agency address counterarguments against a Section 705 stay would "impose[ ] on agencies an overly prescriptive requirement to engage in cost-benefit analysis that is entirely absent from the statute." Def.'s Mem. Supp. Mot. Dismiss & Summ. J. 15, ECF No. 30. "If the words 'justice so requires' are to mean anything, they must satisfy the fundamental understanding of justice: that it requires an impartial look at the balance struck between the two sides of the scale." California ,
The two cases that DOE cites do not support its position that its statement sufficiently provides the reasoned basis for the agency's action required by law.
Reddy v. CFTC dealt with an agency analysis far different from the one-sentence explanation here.
Alaska Department of Environmental Conservation v. EPA is cited for the proposition that the Court can read reasoning into "skeletal orders" from "accompanying explanatory correspondence."
*149
DOE claims for the first time that when it said an immediate stay would "ensure all manufacturers of central air conditioners and heat pumps have the same relief granted to JCI," SAR 2, it actually meant that manufacturers would have the same relief if they manufactured similar products. See Def.'s Mem. Opp. to Pl.'s Mot. Summ. J. 6, ECF No. 46. However, the record does not suggest that DOE concluded that such a development might occur, nor does it contain any evidence that any manufacturer other than JCI produced or intended to produce central air conditioners that could benefit from the stay. To the contrary, the record shows that multiple industry participants indicated that they did not desire a stay. Thus, DOE's statement that a stay was appropriate for the benefit of manufacturers other than JCI cannot be accepted. See State Farm ,
In addition, DOE did not attempt to explain how its stay satisfies the four-part test for staying agency action. Instead, DOE devotes much of its reply to arguing against the application of the four-factor injunctive test. See Def.'s Mem. Opp. to Pl.'s Mot. Summ. J. 10-15, ECF No. 46. DOE is correct that, shortly before it filed its opening motion, a district court held for the first time that stays under Section 705 are not governed by any standard, even when issued by a court. See Order at 9 n.10, Wyoming v. U.S. Dep't of the Interior , No. 16-cv-285, --- F.Supp.3d ---- (D. Wy. Apr. 4, 2018), ECF No. 215 ; Order at 2-5, Wyoming v. U.S. Dep't of the Interior , No. 16-cv-285 (D. Wy. Apr. 30, 2018), ECF No. 234. This contradicts decades of prior case law. See, e.g., Wyoming v. U.S. Dep't of the Interior , No. 18-8027,
DOE contends that Sierra Club was wrongly decided as part of its argument that agencies' stay determinations are entirely free from judicial review. See Def.'s Mem. Supp. Mot. Dismiss & Summ. J. 10-11, ECF No. 30. However, the equitable test grows naturally out of both the language and the legislative history of Section 705. As noted above, the APA's drafters *150explicitly explained that the authority they granted to agencies "is equitable and should be used by both agencies and courts to prevent irreparable injury or afford parties an adequate judicial remedy." APA, Pub. L. 1944-46, S. Doc. 248 at 277 (1946).
But even if employment of the traditional equitable test is not required by law to issue a stay under Section 105, DOE has long employed some version of it, as numerous examples in the Federal Register reveal. See Sierra Club ,
DOE further argues that its action was not arbitrary and capricious because it had "broad latitude" to issue the Delay Rule in the face of the legal challenge to the Test Procedures Rule. Def.'s Mem. Supp. Mot. Dismiss & Summ. J. 14, ECF No. 30. But it is relevant that, at the time DOE issued the stay, the Seventh Circuit proceedings had been suspended indefinitely so that DOE and JCI could engage in settlement discussions. See AR 106. DOE thus had the ability to let settlement discussions, and therefore the stay, drag on indefinitely. A stay is supposed to be grounded on "the existence or consequences of the pending litigation." Sierra Club ,
For these reasons, the Delay Rule is arbitrary and capricious.
D. DOE Delayed the Test Procedures Rule After Its Effective Date
Section 705 only allows an agency to "postpone the effective date of action taken by it."
The Test Procedures Rule's original effective date, February 6, 2017, was not appropriately amended. The February Final Rule purporting to delay that date was published on February 2, 2017. AR 349. But "[t]he APA generally requires that, prior to issuing a final rule, an agency should provide both notice and an opportunity for comment to the public" and that "publication of a final substantive rule should precede its effective date by at least thirty days." Abraham ,
Even the invalidity of the February and March Final Rules are not relied upon, however. The Federal Register Notice for the Delay Rule reveals that the notice was not filed with the Office of the Federal Register until July 12, 2017. SAR 2. The Federal Register Act provides that a document that must be published in the Federal Register "is not valid as against a person who has not had actual knowledge of it until the duplicate originals or certified copies of the document have been filed with the Office of the Federal Register and a copy made available for public inspection."
DOE asserts nevertheless that the Delay Rule was issued on July 3, 2017, citing the Rule's signatory line. Def.'s Mem. Supp. Mot. Dismiss & Summ J. 16, ECF No. 30 (citing AR 5 ("Issued in Washington, DC on July 3, 2017.") ). This exact argument has been rejected previously. See Mineta ,
Even if the purported website posting is accepted, the same result would follow. The Federal Register Act requires that documents be "filed with [OFR] and a copy made available for public inspection as provided by [
Moreover, just two years ago DOE explicitly amended its regulations for issuing energy efficiency standards to allow "error correction" between "post[ing] a rule with the appropriate official's signature" and "publication in the Federal Register." Energy Conservation Program: Establishment of Procedures for Requests for Correction of Errors in Rules,
DOE also argues that the phrase "effective date" in Section 705 does not actually mean "effective date." Def.'s Memo. Supp. Mot. Dismiss & Summ. J. 18, ECF No. 30 ("[T]he meaning of the term 'effective date'
*153as it appears in Section 705 cannot be limited to the 'effective date' of a rule as that term appears in
Accordingly, NRDC's motion for summary judgment is granted and DOE's motion for similar relief is denied.
VI. Conclusion
Based on the conclusions set forth above, DOE's motion to dismiss for lack of jurisdiction or for summary judgment is denied, as is its motion to dismiss this action as moot. NRDC's motion to supplement the record and its cross-motion for summary judgment are granted. This matter is remanded to DOE for further proceedings consistent with this Opinion.
It is so ordered.
Neither JCI nor DOE has contended that the other basis for a waiver under
The Court may take judicial notice of the entries (or lack thereof) in a court's public docket. See, e.g. , Magniafico v. Blumenthal ,
DOE claims "that mediation is ongoing" in the stayed litigation, Def.'s Mem. in Opp. to Pl.'s Cross-Mot. at 9, ECF No. 47, but provides no evidence to support this assertion. In any event, the issue before the Court is not the pace of the mediation, but rather whether it is arbitrary and capricious to premise an open-ended stay of a rule on litigation that has been suspended indefinitely. The absence of progress merely illustrates that courts are right to take a skeptical view of Section 705 stays issued that accompany stayed litigation. See Becerra ,
Reference
- Full Case Name
- NATURAL RESOURCES DEFENSE COUNCIL v. U.S. DEPARTMENT OF ENERGY
- Cited By
- 11 cases
- Status
- Published