Idaho Conservation League v. Andrew Wheeler

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 13, 2019 Decided July 19, 2019

No. 18-1141

IDAHO CONSERVATION LEAGUE, ET AL.,

PETITIONERS

v.

ANDREW WHEELER, ADMINISTRATOR,

U.S. ENVIRONMENTAL PROTECTION AGENCY AND

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENTS

ALBEMARLE CORPORATION, ET AL.,

INTERVENORS

On Petition for Review of Final Action by

the United States Environmental Protection Agency

Amanda W. Goodin argued the cause for the petitioners.

Jan E. Hasselman and Jaimini Parekh were with her on brief.

Patti A. Goldman entered an appearance.

Jeffrey Bossert Clark, Assistant Attorney General, United

States Department of Justice, argued the cause for the

respondents. Jonathan Brightbill, Deputy Assistant Attorney

General, and John E. Sullivan, Attorney, were with him on

brief.

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Brian T. Burgess argued the cause for the Industry

Intervenors. Michael S. Giannotto, Andrew Kim, Kevin P.

Martin, Keith Bradley, Carolyn L. McIntosh, Kevin A. Gaynor,

Jeremy C. Marwell, Joshua S. Johnson, George A. Tsiolis,

Chris S. Leason, Andrew E. Dudley, Thomas A. Lorenzen and

Preetha Chakrabarti were with him on brief.

Mark Brnovich, Attorney General, Office of the Attorney

General for the State of Arizona, Dominic E. Draye, Solicitor

General at the time the brief was filed, Andrew G. Pappas and

Keith Miller, Associate Solicitors General, Leslie C. Rutledge,

Attorney General, Office of the Attorney General for the State

of Arkansas, Nicholas J. Bronni, Solicitor General, Jeff

Landry, Attorney General, Office of the Attorney General for

the State of Louisiana, Elizabeth B. Murrill, Solicitor General,

Michelle White, Assistant Attorney General, Timothy C. Fox,

Attorney General, Office of the Attorney General for the State

of Montana, Dale Schowengerdt, Solicitor General, Jahna

Lindemuth, Attorney General, Office of the Attorney General

for the State of Alaska, Ashley Brown, Assistant Attorney

General, Cynthia H. Coffman, Attorney General, Office of the

Attorney General for the State of Colorado, Bill Schuette,

Attorney General, Office of the Attorney General for the State

of Michigan, Matthias Sayer, Special Assistant Attorney

General, Office of the Attorney General for the State of New

Mexico, Alan Wilson, Attorney General, Office of the Attorney

General for the State of South Carolina, James Emory Smith,

Jr., Deputy Solicitor General, Sean Reyes, Attorney General,

Office of the Attorney General for the State of Utah, Tyler

Green, Solicitor General, Lara Katz, Special Assistant

Attorney General, Office of the Attorney General for the State

of New Mexico, Adam Paul Laxalt, Attorney General, Office

of the Attorney General for the State of Nevada, Lawrence

VanDyke, Solicitor General, Marty J. Jackley, Attorney

General, Office of the Attorney General for the State of South

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Dakota, Steven R. Blair, Assistant Attorney General, Erik E.

Petersen and Michael M. Robinson, Senior Assistant Attorneys

General, Office of the Attorney General for the State of

Wyoming, Brad D. Schimel, Attorney General at the time the

brief was filed, Office of the Attorney General for the State of

Wisconsin, Misha Tseytlin, Solicitor General at the time the

brief was filed, and Luke N. Berg, Deputy Solicitor General at

the time the brief was filed, were on joint brief for State

Intervenors’ in support of the respondents. Lee P. Rudofsky,

Solicitor, and Jamie L. Ewing, Assistant Attorney General,

Office of the Attorney General for the State of Arkansas,

Oramel H. Skinner, III, Solicitor, Office of the Attorney

General for the State of Arizona, and Steven C. Kilpatrick,

Assistant Attorney General, Office of the Attorney General for

the State of Wisconsin, entered appearances.

Steven G. Barringer was on brief for the amici curiae

Alaska Miners Association, et al. in support of the respondents.

Before: HENDERSON and GRIFFITH, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: In January

2017, acting pursuant to the Comprehensive Environmental

Response, Compensation, and Liability Act (CERCLA), 42

U.S.C. § 9608(b), the Environmental Protection Agency (EPA)

proposed setting financial responsibility requirements for the

hardrock mining industry. Financial Responsibility

Requirements Under CERCLA § 108(b) for Classes of

Facilities in the Hardrock Mining Industry (Proposed Rule), 82

Fed. Reg. 3388 (Jan. 11, 2017). Other federal agencies, state

agencies and industry representatives submitted comments

opposing the EPA’s proposal as unnecessary due to existing

4

federal and state programs and modern mining practices. The

EPA ultimately agreed with the comments and announced in

February 2018 that it decided not to issue financial

responsibility requirements for the hardrock mining industry.

Financial Responsibility Requirements Under CERCLA

Section 108(b) for Classes of Facilities in the Hardrock Mining

Industry (Final Action), 83 Fed. Reg. 7556, 7556 (Feb. 21,

2018). Following the EPA’s announcement, six

environmental organizations—the Idaho Conservation League,

Earthworks, Sierra Club, Amigos Bravos, Great Basin

Resource Watch and Communities for a Better Environment

(collectively, “Environmental Groups”)—jointly petitioned for

review of the EPA’s decision, arguing that it is contrary to

CERCLA, arbitrary and capricious and procedurally defective.

For the reasons set forth infra, we deny the petition.

I. BACKGROUND

The Congress enacted CERCLA as a “response to the

serious environmental and health risks posed by industrial

pollution.” Burlington N. & Santa Fe Ry. Co. v. United States,

556 U.S. 599, 602 (2009). CERCLA mitigates the harm

caused by industrial pollution by “promot[ing] the ‘timely

cleanup of hazardous waste sites’” and by “ensur[ing] that the

costs of such cleanup efforts [are] borne by those responsible

for the contamination.” Id. (quoting Consol. Edison Co. v.

UGI Utils., Inc., 423 F.3d 90, 94 (2d Cir. 2005)). Specifically,

CERCLA provides the EPA with two mechanisms for doing

so. First, the EPA can take “response actions” to address past

or impending releases of hazardous substances. 42 U.S.C.

§ 9604. The EPA initially finances these response actions

with CERCLA’s Hazardous Substance Superfund (Superfund),

id. § 9611, after which the EPA can initiate cost-recovery

actions against responsible parties, id. § 9607(a). Second, the

EPA can compel responsible parties, via administrative or

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court order, to undertake and finance response actions directly.

Id. § 9606(a).

To ensure that responsible parties have the wherewithal

either to reimburse the Superfund or to finance their own

response actions, CERCLA mandates that the EPA require

certain classes of facilities identified by the EPA to “establish

and maintain evidence of financial responsibility” by

obtaining, inter alia, insurance, surety bonds or letters of credit.

Id. § 9608(b). 1 The financial responsibility requirements

must be “consistent with the degree and duration of risk

associated with the production, transportation, treatment,

storage, or disposal of hazardous substances.” Id.

§ 9608(b)(1). Moreover, “[t]he level of financial

responsibility shall be initially established, and, when

necessary, adjusted to protect against the level of risk which the

[EPA] in [its] discretion believes is appropriate based on the

payment experience of the Fund, commercial insurers, court[]

settlements and judgments, and voluntary claims satisfaction.”

Id. § 9608(b)(2). CERCLA instructed the EPA to “identify

those classes [of facilities] for which requirements will be first

developed” by 1983, prioritizing “those classes of facilities,

owners, and operators which the [EPA] determines present the

highest level of risk of injury.” Id. § 9608(b)(1).

Twenty-six years after CERCLA’s mandated deadline, the

EPA finally announced in 2009, in response to litigation, its

decision to prioritize financial responsibility requirements for

the hardrock mining industry. Identification of Priority

Classes of Facilities for Development of CERCLA

Section 108(b) Financial Responsibility Requirements, 74 Fed.

1

CERCLA authorizes the President to issue financial

responsibility requirements, 42 U.S.C. § 9608(b), and the President

delegated his authority in relevant part to the EPA, Exec. Order No.

12,580, 3 C.F.R. 193, 194, 198 (1988).

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Reg. 37,213, 37,213 (July 28, 2009); see Sierra Club v.

Johnson, No. C 08-01409, 2009 WL 482248, at *10 (N.D. Cal.

Feb. 25, 2009). It did not act on its announcement, however,

until the Environmental Groups petitioned for a writ of

mandamus from this Court directing the EPA to issue financial

responsibility requirements for the hardrock mining industry

among others. See In re Idaho Conservation League, 811 F.3d

502, 506 (D.C. Cir. 2016). While the petition was pending,

the parties agreed to a schedule requiring the EPA to issue a

proposed rule for the hardrock mining industry by December

1, 2016 and to take final action by December 1, 2017. Id. at

506–07. In approving the proposed schedule, this Court

emphasized that the EPA “retains ‘discretion to promulgate a

rule or decline to do so.’” Id. at 514 (quoting Defs. of Wildlife

v. Perciasepe, 714 F.3d 1317, 1325 n.7 (D.C. Cir. 2013)).

The EPA published its Proposed Rule on January 11, 2017.

82 Fed. Reg. at 3388. In the Proposed Rule, the EPA reviewed

three reports that examined past and present mining practices,

evidence of exposure to hazardous substances at mining sites

and releases at several recently or currently operating mines.

Id. at 3471–75. Based on the reports, the EPA found

“abundant evidence that hardrock mining facilities continue to

pose risks associated with the management of hazardous

substances at their sites,” id. at 3470, and accordingly proposed

issuing financial responsibility requirements for the industry,

id. at 3388.

The United States Department of the Interior’s Bureau of

Land Management, the United States Forest Service, several

state agencies and industry representatives submitted

comments opposing the Proposed Rule. See Final Action, 83

Fed. Reg. at 7560, 7566. The comments focused on two

alleged deficiencies in the Proposed Rule. First, the

commenters argued that the Proposed Rule “[r]elied on

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inappropriate evidence, such as data that did not demonstrate

risk, and evidence not relevant to the facilities to be regulated

under the rule.” Id. at 7560. Second, the commenters urged

that the Proposed Rule “failed to consider relevant evidence,”

including “the role of federal and state mining programs and

voluntary protective mining practices in reducing risks at

current hardrock mining operations” as well as “the reduced

costs to the taxpayer resulting from effective hardrock mining

programs, including existing financial responsibility

requirements, and owner or operator responses.” Id. (footnote

omitted).

The EPA ultimately agreed with those opposed to the

Proposed Rule and announced on February 21, 2018 that it had

decided not to issue financial responsibility regulations for the

hardrock mining industry. Id. at 7556 (Final Action). In

particular, the EPA found that existing federal and state

programs as well as modern mining practices reduced the risk

that the EPA would be required to use the Superfund to finance

response actions at currently active mines. Id. The EPA also

explained in its Technical Support Document to the Final

Action why it no longer found persuasive many of the site-

specific case studies contained in the reports relied upon in the

Proposed Rule. Id. at 7581–83; CERCLA Section 108(b)

Hardrock Mining Final Rule Technical Support Document

(TSD) 1–71. In particular, the EPA observed that (1) some of

the sites discussed in the Proposed Rule operated before the

development of modern mining regulatory schemes, rendering

their “legacy contamination” irrelevant in determining modern

mining risks, (2) many of the sites were cleaned up without

Superfund expenditures—through either funds from private

parties or preexisting financial responsibility obligations—and

thus were irrelevant in determining risks of taxpayer funded

cleanups and (3) spills at several of the sites occurred as a result

of problems since addressed by updated state regulations. See

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id. at 5–6. The Environmental Groups timely petitioned for

review. See 42 U.S.C. § 9613(a) (review must be sought

“within ninety days from the date of promulgation”).

II. ANALYSIS

We have jurisdiction to review regulations the EPA

promulgates under CERCLA. Id. Although it is debatable

whether the EPA’s Final Action qualifies as a “regulation,” 2

we have jurisdiction under the All Writs Act, 28 U.S.C.

§ 1651(a), to review the EPA’s “withdrawal of a proposed

rule . . . in order ‘to support [our] ultimate power of review.’”

Int’l Union, United Mine Workers of Am. v. U.S. Dep’t of

Labor, 358 F.3d 40, 43 (D.C. Cir. 2004) (alteration in original)

(quoting Telecomms. Research & Action Ctr. v. FCC, 750 F.2d

70, 76 (D.C. Cir. 1984)). We may set aside the EPA’s Final

Action if it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law” or is “in excess of

statutory jurisdiction, authority, or limitations, or short of

statutory right.” 5 U.S.C. § 706(2)(A), (C). We address in

turn the Environmental Groups’ arguments that the Final

Action rests on an incorrect interpretation of CERCLA, is

2

To assess whether agency action constitutes a “regulation,”

we examine three factors: “(1) the Agency’s own characterization of

the action; (2) whether the action was published in the Federal

Register or the Code of Federal Regulations; and (3) whether the

action has binding effects on private parties or on the agency.”

Molycorp, Inc. v. EPA, 197 F.3d 543, 545–46 (D.C. Cir. 1999). The

first two factors indisputably cut in favor of finding the EPA’s Final

Action to be a regulation—the EPA characterized the Final Action

as a regulation and published it in the Federal Register, 83 Fed. Reg.

at 7556, 7557 n.8. It is unclear, however, whether the Final Action

binds private parties or the Agency because it simply manifests the

EPA’s decision not to promulgate financial responsibility

requirements for the hardrock mining industry.

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arbitrary and capricious based on the record and is not a logical

outgrowth of the Proposed Rule.

A. Statutory Interpretation

The Environmental Groups mount two statutory

challenges. First, they claim that the EPA wrongly interpreted

“risk” in the operative provisions of 42 U.S.C. § 9608(b) as

limited to the risk of taxpayer funded response actions.

Second, they contend that, regardless of the meaning of “risk,”

CERCLA requires the EPA to promulgate some financial

responsibility requirements for the hardrock mining industry.

We review the EPA’s interpretation of CERCLA under the

familiar Chevron two-step framework, deferring to the EPA’s

interpretation if (1) the statutory text is ambiguous and (2) the

EPA’s interpretation of the text is reasonable. See Chevron,

U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–

845 (1984).

1. § 9608(b) “Risk”

CERCLA’s financial responsibility provision, 42 U.S.C.

§ 9068(b), includes three clauses that use “risk.” First, in the

“general mandate clause,” CERCLA obligates the EPA to

require certain classes of facilities to “establish and maintain

evidence of financial responsibility consistent with the degree

and duration of risk associated with the production,

transportation, treatment, storage, or disposal of hazardous

substances.” 42 U.S.C. § 9608(b)(1) (emphasis added).

Second, in the “prioritization clause,” CERCLA directs the

EPA to prioritize issuing financial responsibility requirements

for “those classes of facilities, owners, and operators which the

[EPA] determines present the highest level of risk of injury.”

Id. (emphasis added). Third, the “amount clause” instructs the

EPA to set financial responsibility requirements in the amount

necessary “to protect against the level of risk which the [EPA]

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in [its] discretion believes is appropriate based on the payment

experience of the Fund, commercial insurers, court[]

settlements and judgments, and voluntary claims satisfaction.”

Id. § 9608(b)(2) (emphasis added).

The parties agree that § 9608(b), by modifying “risk” with

“of injury” in the prioritization clause, requires the EPA to

consider the risk of harm to human health and the environment

in deciding the classes of facilities for which it should prioritize

issuing financial responsibility requirements. The

Environmental Groups, however, fault the EPA for interpreting

the general mandate and amount clauses as not requiring the

EPA to account for risks to human health and the environment

in deciding whether and to what extent to set financial

responsibility requirements, instead requiring only that the

EPA consider financial risks, such as the “risk of taxpayer

funded response actions.” Final Action, 83 Fed. Reg at 7556,

7567, 7568; accord id. at 7557, 7562 see also id. at 7558

(faulting Proposed Rule for considering “information unrelated

to risks of taxpayer financed costs posed by the current

facilities to which the proposed rule would apply”). 3

Whether the Congress intended “risk” in § 9608(b)’s

general mandate and amount clauses to encompass risks to

health and the environment is ambiguous. Neither party

disputes that the unmodified term “risk” is ambiguous. The

Environmental Groups, however, urge that, because the

Congress used the term “risk” in the prioritization clause and

other provisions of CERCLA to refer to health and

environmental harms, it must have intended to employ the

same meaning in the general mandate and amount clauses.

The Environmental Groups are correct that “[n]ormally, the

3

Although the EPA maintains that it considered human health

and environmental risks in its Final Action, see 83 Fed. Reg. at 7570–

81, its brief claims that CERCLA did not require it to do so.

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same word appearing in different portions of a single provision

or act is taken to have the same meaning in each appearance.”

Weaver v. U.S. Info. Agency, 87 F.3d 1429, 1437 (D.C. Cir.

1996). The general rule, however, “is defeasible”—that is,

“[i]dentical words may have different meanings where ‘the

subject-matter to which the words refer is not the same in the

several places where they are used, or the conditions are

different.’” Id. (quoting Atl. Cleaners & Dyers, Inc. v. United

States, 286 U.S. 427, 433 (1932)). The text of § 9608(b)

suggests that the Congress may have intended “risk” to have

different meanings in the three clauses. For example, the

Congress included the phrase “of injury” to modify “risk” in

the prioritization clause but omitted it from the other two

clauses. See 42 U.S.C. § 9608(b). Indeed, the Congress used

only financial terms to modify “risk” in the amount clause.

See id. § 9608(b)(2) (considering “the payment experience of

the Fund, commercial insurers, court[] settlements and

judgments, and voluntary claims satisfaction”). Thus, the

general rule that terms carry the same meaning throughout a

statutory provision may not be applicable to § 9608(b), making

the meaning of “risk” in the general mandate and amount

clauses ambiguous. CERCLA’s general purpose provides no

greater clarity. Although CERCLA’s primary purpose is to

address health and environmental harms resulting from

industrial pollution, Burlington N. & Santa Fe Ry. Co., 556

U.S. at 602, § 9608(b) may nonetheless also serve the narrower

purpose of ensuring that the EPA can recover the costs of

cleanup from responsible parties.

We believe the EPA’s interpretation is reasonable. As

noted, the Congress used only financial terms to describe the

relevant “risk” in the amount clause. See 42 U.S.C.

§ 9608(b)(2). It is plausible, as the EPA contends, that the

Congress intended it to consider the same risks in deciding

whether to issue any financial responsibility requirements

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under the general mandate clause. The structure of § 9608

supports the EPA’s position. Section 9608(a), the immediate

predecessor provision, creates financial responsibility

requirements for vessels to cover their liability to the EPA in

the event of a Superfund-financed cost recovery action. Id.

§ 9608(a). Similarly, § 9608(c), the immediate successor

provision, authorizes the EPA to recover cleanup costs by

asserting claims directly against the providers of financial

responsibility instruments. Id. § 9608(c). Although not

unambiguous, § 9608(a) and § 9608(c) lend support to the

EPA’s reading that the financial responsibility requirements

promulgated under § 9608 relate only to ensuring against

financial risks associated with cleanup costs.

Because § 9608(b)’s use of “risk” in the general mandate

and amount clauses is ambiguous and the EPA’s interpretation

is reasonable, we defer to the EPA’s interpretation that it

should set financial responsibility regulations based on

financial risks, not risks to health and the environment.

2. EPA’s Decision Not to Regulate

The Environmental Groups next argue that whatever

discretion § 9608(b) grants the EPA in setting the amount of

financial responsibility requirements, it does not include the

decision not to promulgate financial responsibility

requirements for the hardrock mining industry. The

Environmental Groups point to § 9608’s use of the obligatory

“shall” in instructing the EPA to promulgate financial

responsibility requirements. See 42 U.S.C. § 9608(b)(1).

The Environmental Groups overstate § 9608(b)’s

mandate. Although the provision directs that the EPA “shall”

promulgate financial responsibility requirements for certain

“classes of facilities,” the provision does not specify which

classes of facilities. See id. The omission leaves discretion

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in the EPA to determine the classes of facilities for which it

should issue requirements. We said as much in the

Environmental Groups’ previous mandamus action when we

noted that the EPA “retains ‘discretion to promulgate a rule or

decline to do so’” and that the EPA’s decision to undertake a

rulemaking “neither resolves the substance of any rulemaking

nor even which classes of hardrock mining facilities will be

regulated.” In re Idaho Conservation League, 811 F.3d at 514

(quoting Defs. of Wildlife, 714 F.3d at 1325 n.7).

Relatedly, the Environmental Groups argue that the EPA

cannot avoid promulgating financial responsibility

requirements on the ground that requirements already

mandated under other federal and state regulations provide an

adequate guarantee of financial accountability. The

Environmental Groups assert that § 9608(b)(1) requires the

EPA to issue financial responsibility requirements “in addition

to” those required under other federal laws. See 42 U.S.C.

§ 9608(b)(1). The phrase “in addition to,” however, modifies

the types of facilities to be regulated, not the extent of financial

responsibility requirements—that is, the EPA may need to

promulgate financial responsibility requirements “for facilities

in addition to those” covered by other federal statutes, id.

(emphasis added), but the phrase does not place any obligation

on the EPA to issue redundant financial responsibility

requirements. Consequently, nothing in § 9608(b) mandates

the EPA to promulgate financial responsibility requirements

for the hardrock mining industry, authorizing the EPA to

decline to do so.

B. Arbitrary and Capricious Challenges

The Environmental Groups next challenge as arbitrary and

capricious the substance of the EPA’s decision not to issue

financial responsibility requirements for the hardrock mining

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industry. See 5 U.S.C. § 706(2)(A). An agency acts

arbitrarily or capriciously if it “has relied on factors which

Congress has not intended it to consider, entirely failed to

consider an important aspect of the problem, offered an

explanation for its decision that runs counter to the evidence

before the agency, or is so implausible that it could not be

ascribed to a difference in view or the product of agency

expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43 (1983). In reviewing the

EPA’s decision, we may not substitute our judgment for that of

the EPA. Citizens to Preserve Overton Park, Inc. v. Volpe,

401 U.S. 402, 416 (1971).

A major portion of the Environmental Groups’ arbitrary

and capricious challenge focuses on what they contend is the

EPA’s failure to account adequately for risks to health and the

environment in its Final Action. As discussed, supra Section

II.A.1, however, we defer to the EPA’s interpretation of

CERCLA that it need not consider risks to health and the

environment in deciding whether to issue financial

responsibility requirements. Accordingly, the EPA’s alleged

failure to consider health or environmental risks, if any, does

not render its decision arbitrary or capricious.

The Environmental Groups additionally argue that the

EPA arbitrarily and capriciously ignored certain financial risks

and that it supported its Final Action with a faulty economic

analysis. We are unpersuaded.

1. Financial Risks

The EPA explained why it concluded that existing federal

and state programs and modern mining practices have obviated

the need for new financial responsibility requirements. It first

summarized the extensive regulatory requirements other

federal programs and the states have developed “over the past

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several decades.” Final Action, 83 Fed. Reg. at 7571; see id.

at 7565–67, 7571–80. In particular, it conducted an in-depth

review of the mining programs of Nevada, New Mexico,

Alaska, Colorado and Montana, which together include

approximately 35% of all hardrock mines. Id. at 7572–77.4

In reviewing the state regimes, the EPA found that they have

comprehensive regulations governing how mines handle

hazardous substances and include their own financial

responsibility requirements. See id. Although the EPA

acknowledged that “the risk of a release is never totally

eliminated,” it concluded that “substantial advances have been

made in the development of mining practices and the

implementation of federal and state regulatory programs to

address releases at hardrock mining facilities.” Id. at 7580.

Indeed, the EPA found that, of the $12.9 billion spent in

response to releases at hardrock mining facilities, only $4

billion came from the Superfund and that the “vast majority”

of that $4 billion targeted legacy contamination, not ongoing

releases. Id. at 7567. Ultimately, the EPA recognized that

existing federal and state programs have minimized the need

for the EPA’s expenditures to respond to “CERCLA-like”

releases and have “reduce[d] the risk of federally financed

response actions to a low level.” Id. at 7565–66. The

remaining “handful of examples of sites where EPA has

incurred response costs, notwithstanding regulation under . . .

4

The EPA also alluded to, but did not discuss, record evidence

regarding the “protectiveness” of the regulatory regimes of Arizona,

Utah, South Dakota and Idaho. Id. at 7572. And the EPA noted

that the record included information about other states that further

supported its conclusion that existing regulations minimized the need

for new financial responsibility requirements. See id. at 7567 &

n.96, 7577 & n.277 (citing the National Mining Association’s

comment and report on state regulatory regimes, including the

regimes of California, Florida, Michigan, Minnesota, Oregon,

Washington and Wyoming); see also id. at 7572 & n.157.

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state and federal law,” the EPA concluded, are not “an

appropriate basis for regulation” under § 9608(b). Id. at 7567.

The Environmental Groups nonetheless claim that the

EPA ignored several relevant financial risks. First, they assert

that the EPA failed to analyze all of the financial factors listed

in § 9608(b)(2)’s amount clause. The amount clause requires

the EPA to consider “the payment experience of the Fund,

commercial insurers, court[] settlements and judgments, and

voluntary claims satisfaction.” 42 U.S.C. § 9608(b)(2).

According to the Environmental Groups, the EPA myopically

focused on the first of these financial factors—“the payment

experience of the Fund”—without addressing the others. We

believe the Environmental Groups have misread the record and

the EPA’s analysis. The EPA credited some commenters’

concern that commercial insurers would be unwilling to

provide financial responsibility instruments “for the amounts

proposed in the forms specified.” Final Action, 83 Fed. Reg.

at 7583. Moreover, the EPA also expressly considered

“payments made pursuant to settlements and voluntary

response actions.” Id. at 7568; see also id. at 7567–68 &

n.103 (discussing settlement data). It ultimately decided not

to issue financial responsibility requirements for the hardrock

mining industry in large part because many ongoing cleanup

sites are “being paid for by private parties and through existing

financial assurance requirements.” TSD 15. The EPA’s

analysis of the record demonstrates that it considered all of the

financial factors enumerated in § 9608(b)(2)’s amount clause.

Second, the Environmental Groups complain that the EPA

failed to account for the cost of natural resource damage

resulting from hazardous substance spills at mining sites. As

an initial matter, this objection appears to be an attempt to

resuscitate the Environmental Groups’ arguments regarding

risks to health and the environment—arguments foreclosed by

17

the EPA’s reasonable interpretation of “risk” in § 9608(b), see

supra Section II.A.1. Regardless, the EPA discussed the role

of natural resource damages in setting financial responsibility

requirements. Final Action, 83 Fed. Reg. at 7567 n.99, 7569,

7584. It reasonably concluded that “modern regulation of

both process discharges and runoff, as well as reclamation

requirements to control sources of contamination, significantly

address” hardrock mining’s “impacts to natural resources.”

Id. at 7569. The EPA thus did not arbitrarily or capriciously

ignore costs associated with natural resource damage.

Third, the Environmental Groups contend that the EPA

failed to consider that hardrock mining has a higher rate of

bankruptcy than most industries and therefore poses a higher

risk that abandoned hazardous waste will require long-term

remediation efforts. The EPA, however, expressly considered

the consequence of bankruptcies in its Final Action. It

recounted that states have changed their financial responsibility

requirements to account for the risk of bankruptcy and

accordingly determined that existing regulations sufficiently

account for the risks of long-term remediation efforts. See

Final Action, 83 Fed. Reg. at 7569, 7577, 7580. We believe

its analysis of the risk of bankruptcy was neither arbitrary nor

capricious.

As a last note, the Environmental Groups highlight several

mining sites for which they believe existing financial

responsibility requirements are inadequate. Whatever the

merits of the Environmental Groups’ concern regarding the

sites, it does not undermine the reasonableness of the EPA’s

decision not to promulgate additional financial responsibility

requirements for the entire hardrock mining industry. As

noted, the EPA found that only a small fraction of Superfund

funds spent on response actions at hardrock mining sites went

to address active spills at currently operating mines. Id. at

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7567. We decline to substitute our judgment for the EPA’s on

the question whether a handful of sites with likely minimal

impact on the Superfund justifies industry-wide financial

responsibility requirements. See id.; Citizens to Preserve

Overton Park, Inc., 401 U.S. at 416.

2. Economic Impact Analysis

The Environmental Groups also argue that the EPA

grounded its Final Action on arbitrary economic analysis.

“Notwithstanding the absence of a statutory duty, . . . when an

agency decides to rely on a cost-benefit analysis as part of its

rulemaking, a serious flaw undermining that analysis can

render the rule unreasonable.” Nat’l Ass’n of Home Builders

v. EPA, 682 F.3d 1032, 1039–40 (D.C. Cir. 2012). We

“review such a cost-benefit analysis deferentially.” Id. at

1040.

We find no “serious flaw” in the Final Action’s economic

analysis. There, the EPA explained that the Proposed Rule

would have cost the hardrock mining industry $111 to $171

million per year “to procure third-party instruments.” 83 Fed.

Reg. at 7585. But it also predicted that the Proposed Rule

would have shifted only $15 to $15.5 million “in annual

liability from the federal government to the regulated

industry.” Id. Although the EPA recognized that these two

sets of numbers are “not readily comparable,” it observed that

“the projected annualized costs to industry . . . are a magnitude

of order higher than the avoided costs to the government . . .

sought by the [Proposed Rule].” Id.

The Environmental Groups challenge the EPA’s analysis

as inflating the costs of the Proposed Rule and ignoring its

health and environmental benefits. To start, the

Environmental Groups point out that most of the $111 to $171

million the hardrock mining industry would need to expend to

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comply with the Proposed Rule represents a transfer of money

from the mining industry to institutions providing financial

responsibility instruments. Excluding the amount of the

transfer, the Environmental Groups explain, would have

yielded a net societal cost of only $30 to $44 million, not $111

to $171 million. The EPA acknowledged as much. Final

Action, 83 Fed. Reg. at 7585 n.321. Importantly, the

Environmental Groups’ critique misses the point of the EPA’s

analysis. The EPA expressly recognized that its estimates of

$111 to $171 million in costs to the hardrock mining industry

and $15 to $15.5 million in savings to the federal fisc are “not

readily comparable.” Id. at 7585. Its acknowledgement

demonstrates that the EPA did not intend to conduct a rigorous

societal cost-benefit analysis. Instead, the EPA compared in

broad strokes the potential impact of the $111 to $171 million

annual bill on the hardrock mining industry—more mine

closures and bankruptcies and stunted mining development due

to lost capital, id.—to the relatively small benefit to the federal

fisc. Such a general comparison is reasonable. Cf. Nat’l

Wildlife Fed’n v. EPA, 286 F.3d 554, 563 (D.C. Cir. 2002)

(rejecting claim that “EPA’s economic analysis was inadequate

because it failed to give sufficient specifics to support the

reasonableness of its conclusions regarding economic impact”

and noting EPA’s “analysis may be general” so long as it

explains its reasoning).

The Environmental Groups also complain that the EPA

failed to account for two benefits of the Proposed Rule’s

financial responsibility requirements—(1) greater incentive for

the mining industry to follow best practices and (2) quicker

responses to hazardous substance releases. As the EPA’s

analysis elsewhere makes clear, existing federal and state

programs impose significant financial responsibility

requirements on the hardrock mining industry, id. at 7571–80,

and thereby already secure these benefits. The EPA therefore

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need not have considered these benefits as additional reasons

to adopt the Proposed Rule. Reviewing the EPA’s economic

analysis deferentially, we conclude it is neither arbitrary nor

capricious.

C. Logical Outgrowth

As a last resort, the Environmental Groups contend that we

should vacate the Final Action because it is not a “logical

outgrowth” of the Proposed Rule. To satisfy the

Administrative Procedure Act’s notice requirement, 5 U.S.C.

§ 553(b)(3), an agency’s final action must be a logical

outgrowth of its proposed rule. E.g., CSX Transp., Inc. v. STB,

584 F.3d 1076, 1079 (D.C. Cir. 2009). “A final rule qualifies

as a logical outgrowth ‘if interested parties should have

anticipated that the change was possible, and thus reasonably

should have filed their comments on the subject during the

notice-and-comment period.’” Id. at 1079–80 (quoting Ne.

Md. Waste Disposal Auth. v. EPA, 358 F.3d 936, 952 (D.C. Cir.

2004) (per curiam)). On the other hand, a final rule is not a

logical outgrowth if “interested parties would have had to

divine [the agency’s] unspoken thoughts, because the final rule

was surprisingly distant from the proposed rule.’” Id. at 1080

(alteration in original) (quoting Int’l Union, United Mine

Workers of Am. v. MSHA, 407 F.3d 1250, 1259–60 (D.C. Cir.

2005)).

Under Circuit and Supreme Court precedent, the EPA’s

Final Action not to adopt financial responsibility requirements

for the hardrock mining industry constitutes a logical

outgrowth of the Proposed Rule because “[o]ne logical

outgrowth of a proposal is surely . . . to refrain from taking the

proposed step,” New York v. EPA, 413 F.3d 3, 44 (D.C. Cir.

2005) (per curiam) (quoting Am. Iron & Steel Inst. v. EPA, 886

F.2d 390, 400 (D.C. Cir. 1989)); accord Long Island Care at

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Home, Ltd. v. Coke, 551 U.S. 158, 175 (2007) (“Since the

proposed rule was simply a proposal, its presence meant that

the Department was considering the matter; after that

consideration the Department might choose to adopt the

proposal or to withdraw it. As it turned out, the Department

did withdraw the proposal . . . . We do not understand why

such a possibility was not reasonably foreseeable.”). That the

EPA might choose not to promulgate financial responsibility

requirements for the hardrock mining industry has always been

a foreseeable possibility; our decision in the Environmental

Groups’ previous mandamus action expressly recognized that

the EPA “retains ‘discretion to promulgate a rule or decline to

do so.’” In re Idaho Conservation League, 811 F.3d at 514

(quoting Defs. of Wildlife, 714 at 1325 n.7).

Kicking against the goads, the Environmental Groups

maintain that even if the EPA’s decision not to promulgate

financial responsibility requirements for the hardrock mining

industry is a logical outgrowth of the Proposed Rule, its

reasons for changing course are not. Specifically, the

Environmental Groups urge that the Proposed Rule did not put

interested parties on notice that the EPA intended to embrace a

new construction of “risk” in § 9608(b) or to “dramatically

narrow[] the evidence it deemed relevant.” An agency’s

decision to withdraw a proposed rule ordinarily stems from a

changed view of the governing law or underlying facts. See,

e.g., Long Island Care at Home, Ltd. v. Coke, 551 U.S. at 163–

65 (Labor Department decided not to adopt proposed rule

because of changed interpretation of governing statute); Ariz.

Pub. Serv. Co. v. EPA, 211 F.3d 1280, 1286 (D.C. Cir. 2000)

(EPA chose not to adopt proposed rule due to intervening issue

regarding tribal immunity). Such a changed view does not

alter whether an agency’s decision to withdraw a proposed rule

is a logical outgrowth of the proposal. See, e.g., Long Island

Care at Home, Ltd. v. Coke, 551 U.S. at 175; Ariz. Pub. Serv.

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Co., 211 F.3d at 1299. The Proposed Rule contained the

EPA’s preliminary interpretation of § 9608(b) and its

understanding of the data regarding hazardous waste produced

at hardrock mining sites. 82 Fed. Reg. at 3389, 3400. It

adequately put interested parties on notice that the EPA was

planning regulatory action that might, as happened, not

materialize.

For the foregoing reasons, the Environmental Groups’

petition is denied.

So ordered.