National Petrochemical & Refiners Ass'n v. Environmental Protection Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Filed: April 22, 2011

No. 10-1070

NATIONAL PETROCHEMICAL & REFINERS ASSOCIATION,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

GROWTH ENERGY AND NATIONAL BIODIESEL BOARD,

INTERVENORS

Consolidated with 10-1071

On Petition for Rehearing En Banc

Before: SENTELLE*, Chief Judge, and GINSBURG,

HENDERSON*, ROGERS, TATEL, GARLAND, BROWN*,

GRIFFITH, and KAVANAUGH, Circuit Judges.

2

ORDER

Petitioners’ petition for rehearing en banc, the responses

thereto, and the reply were circulated to the full court, and a

vote was requested. Thereafter, a majority of the judges

eligible to participate did not vote in favor of the petition.

Upon consideration of the foregoing, it is

ORDERED that the petition be denied.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY: /s/

Jennifer M. Clark

Deputy Clerk

* Circuit Judge Henderson did not participate in this matter.

* A statement by Circuit Judge Brown, with whom Chief

Judge Sentelle joins, dissenting from the denial of the petition

for rehearing en banc is attached.

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BROWN, Circuit Judge, joined by SENTELLE, Chief Judge,

dissenting from the denial of rehearing en banc: It is a

commonplace of administrative law that “[a]n agency may

not promulgate retroactive rules absent express congressional

authority.” Nat’l Min. Ass’n v. Dep’t of Labor, 292 F.3d 849,

859 (D.C. Cir. 2002). We have previously speculated, “[t]here

may be an exception for situations in which the ‘statute

prescribes a deadline by which particular rules must be in

effect’ and the ‘agency misses that deadline.’” Sierra Club v.

Whitman, 285 F.3d 63, 68 (D.C. Cir. 2002) (quoting Bowen v.

Georgetown Univ. Hosp., 488 U.S. 204, 224–25 (1988)

(Scalia, J., concurring)). But until this case, we have never so

held. The panel opinion holds that an agency may promulgate

fully retroactive regulations absent express congressional

authority, as long as “implicit” authority for the retroactivity

may be discerned in the structure of the relevant statute. Nat’l

Petrochemical & Refiners Ass’n v. EPA, 630 F.3d 145, 163

(D.C. Cir. 2010). I respectfully disagree. The exception

adopted here conflicts with the Supreme Court’s clear-

statement rules, usurps legislative power, renders statutory

deadlines precatory, multiplies uncertainty for regulated

entities, and encourages lethargic administration. For these

reasons, we should have reheard this case en banc.

I

Congress enacted the Energy Independence and Security

Act (“EISA”) on December 19, 2007, to increase the volume

of renewable fuel mandated for annual use by the Energy

Policy Act of 2005 (“2005 Act”) and to expand the class of

fuels subject to those standards. The EISA required the EPA

to promulgate implementing regulations within a year. 42

U.S.C. § 7545(o)(2)(A)(i). EPA missed this deadline by more

than a year, publishing on March 26, 2010, its Final Rule

which became effective on July 1, 2010. 75 Fed. Reg. 14,670.

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To compensate for its delayed implementation of the EISA’s

more stringent standards, the EPA rolled the 2009 volume

requirement into the 2010 requirement, requiring the industry

to use the combined volume of renewable fuel by the 2010

compliance date, February 8, 2011. Id. at 14,676. The panel

assumed, without deciding, that the EPA’s regulation had

primary, not secondary, retroactive effects. Nat’l

Petrochemical & Refiners Ass’n v. EPA, 630 F.3d 145, 162

(D.C. Cir. 2010). In other words, the court accepted the

petitioners’ view that the regulation altered “the past legal

consequences of past actions,” not just the value of past

investments made in reliance on the old rule. Nat’l Cable &

Telecomms. Ass’n v. FCC, 567 F.3d 659, 670 (D.C. Cir.

2009).

Although the statute contains no “express congressional

authority” for retroactive rulemaking, Nat’l Min. Ass’n, 292

F.3d at 859, the court nevertheless concluded that “any

primary retroactive effects” of the EPA’s Final Rule “were

implicitly authorized under the EISA,” 630 F.3d at 162,

because some degree of retroactivity was foreseeable in any

event. Even if the EPA had published its regulations on the

statutory deadline, the Final Rule, including the renewable

fuel standard for 2009, would not have gone into effect until

February 18, 2009, after the 60-day Congressional Review

period mandated by 5 U.S.C. § 801(a)(3). But the EISA

specified that the implementing regulations should “ensure”

the statutory volumes are used each year “[r]egardless of the

date of promulgation.” 42 U.S.C. § 7545(o)(2)(A)(iv). Thus,

the court reasoned, Congress anticipated at least a month and

a half of potential retroactive application. Nat’l

Petrochemical, 630 F.3d at 163. The court also looked to a

provision of the 2005 Act that set a default renewable fuel

standard for the year 2006 in the event the EPA failed to

promulgate regulations by the 2005 Act’s statutory deadline.

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Id. (citing 42 U.S.C. § 7545(o)(2)(A)(iv)). Even though the

EISA contains no similar provision for 2009, the court

interpreted the 2005 Act’s default rule as a sign that

Congress, when it passed the EISA in 2007, contemplated the

EPA might miss its deadline. Id. According to the court, this

and the “regardless of the date” provision reflected

“Congress’ focus on ensuring the annual volume requirement

was met regardless of EPA delay.” Id. The court concluded

that these structural features of the EISA and its predecessor

gave the EPA “clear albeit implicit authority . . . to apply both

the 2009 and 2010 volume requirements in the 2010 calendar

year.” Id.

II

In upholding the EPA’s retroactive rulemaking absent

express congressional authority, the panel opinion relies on an

atypical concurring opinion by Justice Scalia. Nat’l

Petrochemical, 630 F.3d at 162–63 (quoting Bowen, 488 U.S.

at 224–25 (Scalia, J., concurring)). Writing only for himself,

Justice Scalia speculated,

It may even be that implicit authorization of

particular retroactive rulemaking can be found

in existing legislation. If, for example, a statute

prescribes a deadline by which particular rules

must be in effect, and if the agency misses that

deadline, the statute may be interpreted to

authorize a reasonable retroactive rule despite

the limitation of the APA.

488 U.S. at 224–25. The Supreme Court has never endorsed

this view. Although we have treated as “substantially

authoritative” the distinction Justice Scalia drew between

primary and secondary retroactive effects in the same

opinion, see Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585,

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588 (D.C. Cir. 2001) (citing Bergerco Canada v. U.S.

Treasury Dep’t, 129 F.3d 189, 192–93 (D.C. Cir. 1997)), we

have never, until now, adopted his hypothetical exception to

the general rule against primary retroactivity. In Sierra Club

v. Whitman we only repeated Justice Scalia’s speculation that

“[t]here may be an exception for situations in which the

‘statute prescribes a deadline by which particular rules must

be in effect’ and the ‘agency misses that deadline.’” 285 F.3d

63, 68 (quoting Bowen, 488 U.S. at 224–25).

Neither Justice Scalia in Bowen nor our court in Whitman

had occasion to decide the lawfulness (or the wisdom) of

allowing retroactive rulemaking on the basis of implicit

congressional authorization. When the opportunity finally

presented itself in this case, several considerations should

have led us to reject that hypothesis.

A

The court’s exception to the categorical rule against

retroactive rulemaking conflicts with the Supreme Court’s

clear-statement rules. The enactments of Congress itself will

not be given retroactive effect absent a demonstration of

“clear congressional intent” in the form of an “unambiguous

directive” or “express command.” Martin v. Hadix, 527 U.S.

343, 354 (1999) (quoting Landgraf v. USI Film Prods., 511

U.S. 244, 280 (1994)); see Lindh v. Murphy, 521 U.S. 320,

325 (1997) (describing Landgraf’s “clear-statement rule”);

Plaut v. Spendthrift Farm, 514 U.S. 211, 237 (1995)

(“[S]tatutes do not apply retroactively unless Congress

expressly states that they do.”). 1 And “[i]t is axiomatic that an

1

We recently suggested in dicta that a statute could be given

retroactive effect if that result were indicated by “clear evidence in

the legislative history.” Lytes v. DC Water & Sewer Auth., 572 F.3d

936, 939–40 (D.C. Cir. 2009). We received that notion from the

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administrative agency’s power to promulgate legislative

regulations is limited to the authority delegated by Congress.”

Bowen, 488 U.S. at 208. It follows that an agency lacks

“power to promulgate retroactive rules unless that power is

conveyed by Congress in express terms.” Id.

The panel opinion, however, finds in the EISA’s

structure “implicit” authority for retroactive rulemaking that

falls far short of a clear statement. 630 F.3d at 162, 163. In so

doing, we permit an agency to seize by implication a power

that Congress itself may wield only by “unambiguous

directive.” Martin, 527 U.S. at 354.

B

The court’s missed-deadline exception invades the

legislative function, since it is for Congress to decide how and

when legislative regulations will go into effect. See Bowen,

488 U.S. at 208. The first branch of government is not

helpless. If Congress were not content to leave the status quo

in place until the EPA eventually promulgated its Final Rule,

Congress could have included its own interim rules in the

statute. See, e.g., 26 U.S.C. §§ 179D(f), 7807(a). This is

effectively what Congress did in the 2005 Act by including a

Ninth Circuit. Id. (citing Koch v. SEC, 177 F.3d 784, 786 n.3 (9th

Cir. 1999)). The Supreme Court’s unambiguous restatements of

Landgraf cast the Ninth Circuit’s view into grave doubt, and we

have never given a statute retroactive effect on the basis of

legislative history alone. Indeed, less than a month before Lytes, we

had expressed skepticism over the use of legislative history to

justify retroactivity. See Summers v. DOJ, 569 F.3d 500, 504 (D.C.

Cir. 2009) (rejecting the appellant’s argument for retroactive

application of an attorney’s fee provision based on legislative

history and observing “the general problem that neither a

committee nor a single Senator can speak for ‘the Congress’”).

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default renewable fuel standard for the year 2006. 42 U.S.C.

§ 7545(o)(2)(A)(iii). Or Congress could have authorized

rulemaking without notice-and-comment procedures. See Air

Transp. Ass’n of Can. v. FAA, 254 F.3d 277 (D.C. Cir. 2001).

Or Congress could have allowed the agency to promulgate

interim-final rules before undertaking notice-and-comment

procedures. See Michael Asimow, Interim-Final Rules:

Making Haste Slowly, 51 ADMIN. L. REV. 703 (1999); see,

e.g., 26 U.S.C. § 9833. Or Congress could have used some

combination of interim statutory rules and interim agency

rules to meet its legislative goals with minimal delay. See,

e.g., 6 U.S.C. § 944(a)(2), (4)(B). Where Congress has relied

instead on the default notice-and-comment procedures of the

APA, courts should not infer congressional intent to permit

retroactive rulemaking.

C

There are other reasons to doubt the wisdom of the

purely hypothetical exception Justice Scalia theorized to the

categorical rule against retroactive rulemaking. Bowen, 488

U.S. at 224 (Scalia, J., concurring). In the first place, any

exception at all would seem to conflict with his textual

emphasis on “future effect” as the defining trait of a “rule”

under the APA. Id. at 217 (quoting 5 U.S.C. § 551(4)); see id.

(“The only plausible reading of the italicized phrase is that

rules have legal consequences only for the future.”). This

exception in particular seems ill advised from the perspective

of good administration. In practice, it lets agencies like the

EPA get away with violating explicit congressional time

limits by promulgating untimely regulations with retroactive

effects. The missed-deadline exception creates perverse

incentives, rewarding dilatoriness and making regulatory

burdens even less predictable. If an agency can accomplish

tomorrow what the statute says to do today, Congress will

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lose a common and effective means of directing agency

priorities.

Of course, an agency does not lose all power to act when

a statutory deadline expires. Barnhart v. Peabody Coal Co.,

537 U.S. 149, 172 (2003). But it does not follow that an

agency acquires retroactive rulemaking power by missing a

deadline. Justice Scalia’s dissent in Barnhart suggests he may

no longer adhere to the exception he hypothesized in Bowen.

Unlike the Barnhart majority, Justice Scalia emphasized “the

surprise of new (and retroactive) liabilities” imposed by the

tardy agency action. Id. at 184 (Scalia, J., dissenting). If he

had applied his missed-deadline exception to the facts in

Barnhart, Justice Scalia would have approved the

retroactivity he perceived in the agency’s post-deadline

action. By applying his hypothetical exception in an actual

case, we venture where Justice Scalia himself has declined to

go.

D

The panel opinion leaves in doubt whether, as Justice

Scalia suggested in Bowen, the existence of a statutory

deadline is sufficient by itself to justify retroactivity when the

agency fails to meet the deadline, see Nat’l Petrochemical,

630 F.3d at 162 (quoting Bowen, 488 U.S. at 224–25 (Scalia,

J., concurring)), or whether other evidence of congressional

intent is necessary, see id. at 163. To the extent the panel

opinion purports to rely on other structural features of the

EISA for implicit authority, it grasps at straws.

The panel opinion notes the 60-day Congressional

Review period for major rules could have resulted in

retroactive application of a timely rule to January and part of

February 2009, even if the Final Rule were promulgated by

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the December 2008 deadline. 630 F.3d at 163; see 5 U.S.C.

§ 801(a)(3). But just because a statutory “provision on its face

permits some form of retroactive action” does not mean

Congress intended to grant general “authority for the

retroactive promulgation of . . . rules.” Bowen, 488 U.S. at

209; see Administrators of the Tulane Educ. Fund v. Shalala,

987 F.2d 790, 797–98 (D.C. Cir. 1993) (That a statute “by its

very terms, is intended to have some retroactive effect . . .

does not answer the separate question of whether [a particular

implementing regulation] is improperly retroactive.”). Thus,

the potential for a timely renewable fuel rule to have limited

retroactive effects does not imply Congress authorized

retroactive application of an untimely rule to the entire year.

If anything, it suggests Congress contemplated the possibility

of retroactivity and was content to restrict its scope.

As the panel opinion points out, the 2005 Act, which the

EISA amended, contained a default fuel standard for the year

2006 in case the EPA failed to promulgate regulations by the

statutory deadline. 2 But the 2005 Act’s inclusion of a now-

obsolete default standard proves nothing about what Congress

intended in 2007 when it enacted the EISA. When that time

came, Congress declined to update the old default provision

to correspond with its new delegation of rulemaking

authority. The opinion concludes somewhat hesitantly that the

absence of a default standard in the EISA “appears explained

by the fact that Congress was expanding an existing

renewable fuel program and EPA could, as it did, leave in

place the [prior] regulatory program . . . until the revised

regulations under the EISA . . . were finalized.” Nat’l

2

42 U.S.C. § 7545(o)(2)(A)(iv) (“If the Administrator does not

promulgate regulations under clause (i), the percentage of

renewable fuel in gasoline sold or dispensed to consumers in the

United States, on a volume basis, shall be 2.78 percent for calendar

year 2006.” (emphasis added)).

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Petrochemical, 630 F.3d at 163 (emphasis added). But the

EISA’s omission can just as easily be interpreted as evidence

that the 2007 Congress did not anticipate any delay from an

agency now experienced with administering renewable fuel

standards.

III

We once said “it would . . . be odd to conclude that

Congress implicitly entrusted a laggard agency with the

authority to devise a remedy for its own untimeliness.”

Linemaster Switch Corp. v. EPA, 938 F.2d 1299, 1303 (D.C.

Cir. 1991). That is precisely what the panel concludes in this

case. We have no authority to grant an agency a free pass to

promulgate retroactive rules just because it can’t or won’t get

the job done within the time Congress mandates. That will be,

I fear, the ultimate effect of the panel’s opinion. The better

course would have been to reaffirm the clear-statement rule

declared by the Bowen majority and repeated in our most

recent pronouncements on retroactive rulemaking. “An

agency may not promulgate retroactive rules absent express

congressional authority.” Nat’l Min. Ass’n, 292 F.3d at 859.

I respectfully dissent from the denial of rehearing en

banc.