Natural Resources Defense Council, Inc. v. U.S Environmental Protection Agency

Background

The case concerned an October 31, 2017 EPA directive titled “Strengthening and Improving Membership on EPA Federal Advisory Committees.” One provision stated that no member of an EPA federal advisory committee could be currently receiving an EPA grant as a principal investigator, co-investigator, or person otherwise positioned to receive a substantial direct benefit from the grant. The provision did not apply to state, tribal, or local government agency recipients.

Before the directive, EPA grant recipients could serve on EPA advisory committees. Prospective members had to submit financial disclosures, and EPA ethics officials reviewed conflicts of interest. Committee members could not participate in matters affecting their financial interests, and members were recused when committees considered research conducted by a member or affecting a member’s EPA-funded project. The EPA’s peer-review guidance also stated that a scientist receiving a competitively awarded, peer-reviewed EPA research grant generally could still provide independent scientific advice on other projects.

After issuing the directive, the EPA removed committee members who received EPA grants. The opinion gives the example of Peter Adams, Ph.D., who was required to choose between continuing his EPA grant and serving on an EPA advisory committee; after he chose to continue receiving funding, the EPA terminated his committee service.

NRDC principally alleged that the directive was arbitrary and capricious under the Administrative Procedure Act and that the EPA issued it without the notice and public-comment process required for certain agency rules. The EPA moved to dismiss under Rules 12(b)(1) and 12(b)(6) or, alternatively, for summary judgment. NRDC filed a cross-motion for summary judgment.

Reviewability under the Administrative Procedure Act

The EPA argued that the court lacked subject-matter jurisdiction because the directive was not reviewable under the Administrative Procedure Act. The court explained that agency action is generally presumed reviewable, except when Congress has committed the action to agency discretion and there is no legal standard for a court to apply.

The court held that the Federal Advisory Committee Act supplied judicially manageable standards. That statute requires advisory committees to be fairly balanced and to provide advice not inappropriately influenced by the appointing authority or a special interest. The court also relied on implementing regulations, ethics rules, federal guidance, and EPA materials that supplied additional standards. The EPA therefore did not overcome the presumption favoring judicial review.

Arbitrary-and-capricious claim

The court granted NRDC summary judgment on its claim that the directive was arbitrary and capricious. Under the Administrative Procedure Act, an agency must examine relevant information and provide a satisfactory explanation connecting the facts it found to the decision it made. When an agency changes an established policy, it must acknowledge the change, give good reasons for it, and consider serious reliance interests created by the earlier policy.

The EPA conceded that the directive departed from its prior policy allowing EPA grant recipients to serve on advisory committees. The court found that the EPA did not explain why its previous conflict-of-interest reviews and publicly recorded recusals were inadequate or why an outright ban was preferable. The memorandum accompanying the directive offered only a brief conclusion that excluding grant recipients would strengthen committee members’ independence, integrity, objectivity, and reliability.

The administrative record contained no examples showing that EPA grant recipients had provided biased recommendations while serving on advisory committees. The EPA also did not explain how the directive would affect the balance of committee membership, including the percentage of members receiving EPA grants, their qualifications or affiliations, or whether removing them would produce committees with less varied backgrounds and perspectives. The court further found that the EPA ignored the reliance interests of scientists who had received multi-year EPA grants and served on committees, forcing them to choose between their funding and committee service.

The court rejected the EPA’s argument that new leadership, congressional correspondence, and general concerns about committee composition adequately explained the change. The record did not show that the EPA had reviewed relevant data or engaged in reasoned analysis connecting those concerns to the grant-recipient ban.

Notice and public comment

The court ruled that the directive was a general policy statement rather than a substantive rule. It explained how the EPA intended to exercise discretion under the Federal Advisory Committee Act and did not create new legal rights or duties. Therefore, the EPA was not required to use the Administrative Procedure Act’s notice-and-comment rulemaking process.

The court acknowledged that the directive affected committee members and that their reliance interests mattered to the arbitrary-and-capricious analysis. But a regulation provided that advisory committee members serve at the pleasure of, and that membership terms are at the sole discretion of, the appointing authority. The court concluded that committee members did not have enforceable rights altered by the directive for purposes of the notice-and-comment claim.

Office of Government Ethics regulation

NRDC separately argued that the EPA failed to follow an Office of Government Ethics regulation governing supplemental agency ethics regulations. The court agreed with the EPA that the regulation expressly provided that a violation did not create a right or benefit enforceable by another person against the United States, its agencies, officers, or others. Because NRDC identified no basis for a private lawsuit to enforce that regulation, the court rejected this claim.

Disposition

Judge Denise Cote denied the EPA’s August 23 motion to dismiss and for summary judgment. The court granted NRDC’s September 27 cross-motion for summary judgment. The opinion thus ruled for NRDC on the arbitrary-and-capricious challenge, while rejecting NRDC’s notice-and-comment and Office of Government Ethics regulation arguments.