B-208593.7, Jun 29, 1989

B-208593.7, Jun 29, 1989

MISCELLANEOUS TOPICS - Environment/Energy - Natural Resources - Environmental protection - Rulemaking - Review authority DIGEST; OMB decision to review EPA State Implementation Plan (SIP) disapprovals under Executive Order No. 12,291 and individual OMB determinations with regard to specific SIP applications are generally not subject to judicial review. Actions on SIP applications are unquestionably rules, and the order gives OMB authority to decide what rules to review. Nonreviewability stems from the fact that the order is limited to internal management improvements and creates no rights for third parties.

The Honorable John D. Dingell

Chairman

Subcommittee on Oversight and Investigations

Committee on Energy and Commerce

House of Representatives:

Your letter of December 7, 1988, requested our comments on reviews by the Office of Management and Budget (OMB), under Executive Order No. 12,291 (order), of State Implementation Plan (SIP) disapprovals by the Environmental Protection Agency (EPA). You enclosed copies of correspondence between EPA and OMB which suggest that EPA believes that, in a number of cases, the SIP revisions are not sufficiently significant to warrant OMB review under the order. For the reasons explained below, we believe that questions of interpretation of the executive order, including the extent of OMB's authority under the order, are internal management matters for resolution within the executive branch.

Background

President Reagan signed Executive Order No. 12,291 on February 17, 1981. /1/ With certain limited exceptions, /2/ the order requires federal agencies to submit all major rules to OMB for prepublication review. Moreover, it expressly prohibits agencies from publishing rules and regulations until OMB review is concluded. /3/ OMB's review of proposed regulations concentrates on economic and societal cost benefit analysis, and agencies are required to prepare a Regulatory Impact Analysis setting forth their justification for the regulation. While the order makes it clear that it is not to be construed to displace the agencies' responsibilities delegated by law, order, section 3(f)(3), it prohibits agencies from publishing final rules until they have responded to OMB views, and incorporated those views and their response in the rulemaking file. Order, section 3(f)(2).

The order only applies to "major rules" and defines them as rules costing more than $100 million to implement nationwide, rules that will result in increased costs or prices, or rules that could decrease the competitiveness of United States-based enterprises. Order, section 1(b). Significantly, the order also gives the Director of OMB authority "to order a specific rule to be treated as a major rule, and to require that any set of related rules be considered together as a major rule." Order, section 3(b).

EPA's actions approving or disapproving SIP revisions have been held to be rulemakings, subject the to requirements of section 553 of title 5, United States Code. Buckeye Power Co. v. EPA, 481 F.2d 162 (6th Cir. 1973), cert. denied, 425 U.S. 934 (1976). As rules, these actions fall under the general authority of Executive Order No. 12,291. Pursuant to the order, OMB advised EPA that, as a general policy, it would forego review of SIP approvals but that it would retain review of any proposed SIP disapprovals regardless of whether they would otherwise constitute "major rules."

OMB has exercised its authority under the order to review SIP disapprovals for reasonableness and consistency. For example, correspondence between EPA and OMB shows that in one instance OMB objected to EPA's denying a corporation's application for a variance from the prevailing SIP based on the unavailability in the region of a particular low emission varnish used in its production process. EPA had wanted the firm to conduct a national survey demonstrating the unavailability of the varnish before granting the SIP application. /4/ OMB held the proposed rule for 7 months /5/ and, in the end, EPA proposed disapproval of the corporation's request on other grounds.

Legal Status of the Executive Order

Several courts have had an opportunity to review questions raised about specific OMB actions under Executive Order No. 12,291. Except in one instance where OMB had delayed mandatory regulations beyond a statutory deadline, /5/ the courts have upheld OMB's actions under the order. /7/ Most importantly, the courts have repeatedly noted that, by its express terms, the order "is intended only to improve the internal management of the Federal government" and not to create any private or third party right of action. Order, section 9. /8/ This means that OMB's actions under the order are not subject to judicial review and that, for all practical purposes, OMB decisions to treat specific rules as "major rules" or delay making comments on particular rules, are matters of internal management within the executive branch and outside the courts' purview. /9/

Conclusion

OMB is given broad authority under Executive Order No. 12,291, and its actions are not subject to judicial review. Accordingly, any disagreements between EPA and OMB concerning OMB's decision to review SIP disapprovals in general or its action on any individual SIP application in particular are matters for resolution within the executive branch.

We hope the foregoing is useful to you. Under our usual procedures, this opinion will be available to the public 30 days from its date, unless you release it sooner.

/1/ 46 Fed.Reg. 13193. The order is reprinted as a note at 5 U.S.C. Sec. 601.

/2/ These exceptions include regulations that respond to emergency situations and regulations for which OMB review would conflict with deadlines imposed by statute or judicial order. Order, section 8(a).

/3/ Order, section 3(f)(1). See also, Staff of Senate Comm. on Environment and Pub. Works, Office of Management and Budget Influence on Agency Regulations, S. Prt. No. 156, 99th Cong., 2d Sess., passim (1986).

/4/ OMB was also concerned that the memorandum on which the requirement for a national survey was based had been issued by EPA 3 years after the firm had submitted the SIP application. EPA maintained that the policy memorialized in the memorandum had existed for some time and was known to the applicant at the time of the application. See, letter from Arthur Fraas, to Donald Clay, dated May 10, 1988, explaining OMB's concerns and 53 Fed. Reg. 45103, Nov. 8, 1988, proposing disapproval of the SIP application.

/5/ The order provides no time limit for completion of OMB review.

/6/ Environmental Defense Fund v. Thomas, 627 F. Supp. 566 (D.D.C. 1986).

/7/See, e.g., Michigan v. Thomas, 805 F.2d 176 (6th Cir. 1986); Louisiana ex rel. Guste v. Verity, 681 F. Supp. 1178 (E.D. La. 1988). But see, Public Citizen Health Research Group v. Tyson, 796 F.2d 1507 (D.C. Cir. 1986), where the court alluded to separation of powers questions in dictum.

/8/ Michigan v. Thomas, supra note 7. See also, Ishtyaq v. Nelson, 627 F. Supp. 13 (E.D.N.Y. 1988). On the issue of nonreviewability of management centered executive orders generally, see, Independent Meat Packers Ass'n v. Butz, 526 F.2d 228, 236 (8th Cir. 1975), cert. denied, 424 U.S. 966 (1976) and In re Surface Mining Regulation Litigation, 627 F.2d 1346, 1357 (D.C.Cir.1980).

/9/ EPA has recently published regulations aimed at streamlining its review and disposition of proposed SIP revisions. 54 Fed. Reg. 2214, published January 19, 1989. Among other things, these regulations will expand the use of EPA's "direct final rulemaking" procedure. It is uncertain how these SIP processing changes may affect OMB review under Executive Order No. 12,291.