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Can a Federal Court Obtain Jurisdiction Over an Agency’s Unpublished Informal Decisions?

Regulated entities may not be able to challenge an agency’s informal decisions if those decisions are unpublished and the entity was not a party to the decision. In a recent D.C. Circuit case, the court dismissed a plaintiff’s petition to review an agency’s informal decision for lack of jurisdiction. The plaintiff’s petition, according to the court, had failed to identify a final agency action, such as a discrete informal adjudication or decision making.

The problem, however, was that the plaintiff could not identify a final action because the agency had refused to publish its informal decisions. Instead, the plaintiff had to rely on challenging other agency statements, press releases, or patterns of agency rulemaking that it perceived had taken place. But these were not final agency actions. Without publication of the agency’s informal decisions, the event triggering a “final action” never occurred, and plaintiff was effectively sealed off from seeking judicial review.

Background

In Advanced Biofuels v. EPA, 2019 WL 6217965 (D.C. Cir. Nov. 12, 2019), the court noted how an agency’s ability to escape judicial review of its informal decisions by not publishing them painted “a troubling picture.” Advanced Biofuels involved a trade association’s challenge to the EPA under the Clean Air Act’s Renewable Fuel Program. This program requires large refineries and importers to produce a percentage of renewable fuel each year from their overall fuel supplies. “Small refineries” were initially exempt from having to comply with the program. However, in order to maintain their exempt status, small refineries had to petition the EPA to issue an informal decision on whether the small refinery qualified for an extension. Because the EPA used stricter criteria for these decisions, only a fraction of initially exempt refineries qualified for further exemptions.

The EPA granted increasingly fewer exemptions to small refineries between 2013 and 2015 before sharply reversing course in 2016 when the number of exemptions skyrocketed. The EPA then acknowledged in a 2017 proposed rulemaking that it was considering relaxing the exemption criteria. By 2018, Reuters reported that the EPA had tripled the amount of exemptions granted to small refineries. This chain of events prompted several U.S. Senators to reproach the EPA in writing, saying that the increase in exemptions fell outside the spirit of the law and harmed demand in the biofuels market.

The trade association then sued the EPA, alleging harm to its member biofuel companies as a result of the EPA’s decision to change the exemption criteria. In bringing its challenge, however, the association did not point to a specific EPA decision. The EPA had not published any of its informal decisions, either those granting extensions or its decision to amend the criteria. Moreover, the EPA had refused the association’s Freedom of Information Act request to obtain the informal decisions, claiming that they were “confidential business information.” The association inferred that the EPA changed the criteria by pointing to the proposed rulemaking, the Reuters report, and the Senate letter.

Although the association could not initially challenge a discrete informal decision, this soon changed. In response to a motion to compel, the EPA released its exemption decisions from 2017-2018. Then the EPA released its amended exemption criteria in a public memorandum. The disclosures provided the association with an opportunity to challenge a specific EPA decision. The association, however, explicitly rejected this opportunity, choosing instead to argue that the proposed rulemaking, Reuters report, and Senate letter plainly demonstrated a pattern of increased exemptions granted by the EPA. The association added that this pattern could “only be attributable to a decision by the EPA to modify the criteria.” The association believed it had done enough to show that the EPA had engaged in a final agency action.

Advanced Biofuels v. EPA

When the D.C. Circuit heard the case, it noted that the EPA’s initial secrecy “painted a troubling picture of intentionally shrouded and hidden agency law.” The court observed how the EPA “could have left those aggrieved . . . without a viable avenue for judicial review” if it continued to conceal its informal decisions. But since the EPA had ultimately published its informal decisions, and the association did not amend its challenge to account for that fact, the court held that the association had to challenge a specific the EPA informal decision to satisfy the final action requirement. Because the association failed in this regard, the court dismissed the case for lack of subject matter jurisdiction.

Takeaways

Regulated entities cannot satisfy the final action requirement by challenging agency statements, press releases, or perceived patterns of agency rulemaking. Instead, they must challenge an agency’s final action. This might not be possible if an agency refuses to publish its informal decisions and the regulated entity is not a party to the decision. Since no rule requires agencies to publish their informal decisions, nothing guarantees that the event triggering a final action — publication — will take place. Agencies can insulate their informal decisions from judicial review by refusing to publish them, which, as noted by the D.C. Circuit, can paint a “troubling picture” for petitioners seeking to challenge an agency’s informal decisions.

© 2020 Schiff Hardin LLP

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About this Author

Anthony Robert Sarna Litigation Attorney Schiff Hardin Law Firm Chicago
Associate

Anthony has experience in a wide range of legal matters in multiple practice areas. He has conducted witness interviews and researched and drafted memoranda for various motions, including to exclude expert witnesses and to argue for removal to federal court based on diversity jurisdiction. Anthony applies a creative approach in helping his clients find efficient solutions.

While working for the U.S. Dept. of Housing and Urban Development, Anthony conducted complainant, respondent, and witness interviews in pending discrimination lawsuits and...

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J. Michael Showalter, Litigator, Schiff Hardin LLP
Associate

Mike Showalter is a litigator whose practice is focused on resolving complex disputes. Mr. Showalter's past clients span diverse industries including manufacturing, mining, power generation and transmission, oil and gas, the financial and insurance sectors, and process outsourcing.

Mr. Showalter's practice has focused on distilling complicated technical information into a format where it can be understood by decision makers. He has worked with experts in fields including medicine, economics, history, physical sciences, industrial hygiene, toxicology, environmental engineering and risk assessment.

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