### Memorandum

To: File

Subject: Delegation of PSD Permit Au thority to Assistant Administrator

Date: March 3, 2011

This memorandum sets forth the legal basis for the Administrator’s decision to delegate, without notice and comment rulemaking, authority to the Assistant Administrator for the Office of Air and Radiation to issue a final permit d ecision on the Avenal PSD permit application under 40 CFR § 124.15 and to take other associated actions that are a ssigned to a Regional

Administrator under 40 CFR Part 124.

Conclusion

The Administrator’s decision to dele gate this authority to one official rather than another is an internal agency procedure that does not aff ect the rights of memb ers of the public. The delegation can thus be classified as a rule of “agency organization, pr ocedure, or practice” that is not subject to the notice and comment requiremen ts of the Administrativ e Procedure Act (APA) or Clean Air Act (CAA). See 5 U.S.C. § 553(b)(A); 40 U.S.C. 7607(d). EPA is not required to publish this procedural rule in th e Code of Federal Regulations in order for the delegation to be

effective.

Legal Analysis

I. Notice and comment rulemaking is no t required for procedural rules.

Section 553 of the APA and sect ion 307(d) of the Clean Air Act require public notice and opportunity for comment prior to the promulgation of substantive rules. The APA contains an exception for “rules of agency organization, procedure, or practice.” 5 U.S.C. § 553(b)(3)(A). The applicability of this exception is expressly preserved under section 30 7(d) of the Clean Air Act. This exception for procedural rules has rep eatedly been affirmed by the courts. The Third Circuit stated plainly in SBC Inc. v. FCC , 414 F.3d 486, 498 (3d Cir. 2005) that “procedural rules . . . are exempted from the notice and comme nt requirement.” Similarly, the D.C. Circuit explained the following in James A. Hurson Assocs. v. Glickman , 229 F.3d 277, 280 (D.C. Cir. 2000): “Although federal agencies ordinarily must provide the public with notice of a proposed rule and the opportunity to submit comments on it, the APA makes an exception for, among others, rules of agency organi zation, procedure, or practice.” Furthermore, courts have recognized that “[t]he expre ss exemption under section 553(b)(3 )(A) extends to ‘technical regulation of the form of ag ency action and proceedings.’” S. Cal. Edison Co. v. FERC , 770 F.2d 779 (9th Cir. 1985) (FERC rule establishing approval procedures for interim rates exempt

from notice and comment.

1II. A delegation of authority within an agency is a procedural rule, not a substantive

rule.

Courts recognize that the delega tion of authority from one agen cy official to another is procedural, not substantive. In Sacora v. Thomas , the Ninth Circuit determined that an agency’s requirement that regional director s approve prisoner placements was an agency practice “merely assign[ing] a particular official the responsibility of exercising the authority delegated to the [Bureau of Prisons] and its Dire ctor by statute.” 628 F.3d 1059, 1063 (9th Cir. 2010). Similarly,

in United States v. Gonzales , a district court held that th e decision by the Department of Homeland Security to delegate immigration bond -breach review authority to the Bureau of Citizenship and Immigration Se rvices was not subject to the APA’s notice and comment requirements “[s]ince the delegati on specifies the internal organi zation of the agency.” 728 F. Supp. 2d 1077, 1085 (N.D. Cal. 2010). The court reasone d that the delegation “does not alter the right to make an appeal; it only identifies the body that will exercise jurisdiction over the appeal once the appeal is made.” Id. Finally, the court not ed that the rights or obligations of the party making the appeal “are properly laid out in a separate section of the Code of Federal Regulations.” Id. at 1085-86.

These principles apply here. First, the te mporary delegation applicable to the Avenal permit application specifies the internal organi zation of EPA and, thus, falls within the APA’s procedural exemption. The Administrator’s decision here to aut horize the Assistant Administrator to issue the final permit decision on this application instead of the Regional Administrator affects only which Agency official is responsible for completing procedures specified in the Part 124 regul ations. Second, the delegation does not alter the rights and obligations of parties under Part124, including rights to reques t appeals to the Environmental Appeals Board (EAB), which are located elsewhere in the Code of Federa l Regulations (CFR).
See, e.g., 40 C.F.R. § 124.19(a) (establishi ng right of appeal to EAB); id. (obligation to raise issues during comment period in order to pr eserve them for appeal). Accordingly, the

Administrator can effect this dele gation without notice and comment. See 5 U.S.C. § 553(b)(A).

III. The references to the Regional Administrator in Part 124 are procedural rules.

Part 124 of Title 40 sets forth the “Pro cedures for Decisionmaking” governing the issuance, modification, and termination of permits. It contains two types of provisions. First, it contains substantive provisions that (a) vest in the public rights to participate in the decisionmaking process, includi ng the right to appeal certai n permits to the EAB and (b) establish obligations regarding the content and timing of the public comment process and petitions for an appeal. See e.g. 40 C.F.R. § 124.19(a) (authorizi ng appeals for issues raised during comment period within fixed time frames). Second, it contains language establishing specific procedures to be followed by EPA and assi gning responsibility to pa rticular officials to carry out those procedures. See, e.g., 40 C.F.R. § 124.15 (noting that “after the close of the public comment period under § 124.10 on a draft perm it, the Regional Administrator shall issue a final permit decision.”); id. (“the Regional Administrator shall no tify the applicant” of the final permit decision); 40 C.F.R. § 124.19(a) (the 30-day d eadline for filing an appeal “begins with the

service of the notice of the Re gional Administrator’s action”). Unlike Part 124’s substantive provisions which provide rights to third parties, these references to the Regional Administrator

2identify the official within the agency respons ible for implementing particular steps in the procedures required under Part 124 and provide the framework and context within which the public can participate in the Agency’s decisionm aking process, includi ng exercising its appeal rights and obligations. In promul gating these rules, EPA chose to describe its procedures in the “active voice” (rather than the “pa ssive voice”) and to identify as th e subject of these sentences’ the official delegated the authority to complete these actions, i.e., the Regional Administrator. EPA’s decision to avoid passive ph rases like “the applicant shall be notified” or “the permit shall be issued” was motivated by an attempt to clarify for the public the agency permitting procedures; it did not create right s or obligations outside the agen cy with respect to who would implement the procedures.

Characterizing these provisions as procedural rules is consistent with longstanding case law. The D.C. Circuit has explaine d that “the critical feature of a rule that satisfies the so-called procedural exception is that it covers agency ac tions that do not themselves alter the rights or interests of parties, a lthough it may alter the manner in which the parties present themselves or their viewpoints to the agency.” James A. Hurson Assocs. v. Glickman , 229 F.3d at 280; see also

SBC Inc. v. FCC , 414 F.3d at 497 (rate recovery rule that did not impose new duties upon regulated entities was no t substantive). In Glickman , the court characterized an agency decision to abolish face-to-face meetings during the label approval process as procedural, even though the change affected the party’s interaction with agency decision makers. Despite its impact, the rule was held to be a procedural rule because it di d not change substantive criteria, but merely procedures for applying them. Id. ; see also Inova Alexandria Hosp. v. Shalala , 244 F.3d 342, 350 (4th Cir. 2001) (rule permitting dismissal of appeals for untimely filing is “a procedural rule for handling appeals” because it “does not alte r the substantive standards by which it reviews provider claims”). The Ad ministrator’s decision here to direct one Agency official rather than another to propose and issue this permit will have even less external impact than the rule upheld

in Glickman

, since the instant decision does not affect the rights of parties, or even the manner in which parties interact with the ag ency. Furthermore, the Administra tor’s selection of the official who will issue a final permit decision under 40 CF R 124.15 under the particular circumstances of the Avenal permit application does not impinge upon the underlying standards by which permit decisions are made, or even the proce dures for applying those standards.

To determine whether a rule is procedural, the D.C. Circuit has also “inquir[ed] more broadly whether the agency action . . . encodes a substantial value judgment.” Pub. Citizen v. Dep’t of State , 276 F.3d 634 (D.C. Cir. 2002) (State Depa rtment’s new date cutoff for FOIA requests was procedural). “[V]alue judgment” has been construed narrowly and does not encompass “judgments about what mechanic s and processes are most efficient.” JEM Broad.

Co. v. FCC , 22 F.3d 320, 326 (D.C. Cir. 1994). Under this standard, the Administrator’s decision to direct one Agency official rather than another to propose and issue this permit reflects an assessment of procedural efficienc y, rather than a substantial value judgment for which notice and comment would be required.

An agency’s characterization of its rule in the Federal Register provides guidance as to whether it is substantive or procedural in nature. United States v. Am. Prod. Indus. , 58 F.3d 404, 408 (9th Cir. 1995) (noting that agency descri bed rule delegating compromise authority to Branch Directors as “related to agency organi zation and management”). The preamble to Part 124 notes that “[t]hese regulations are an important element of an Agency-wide effort to

3consolidate and unify procedures and requirements applicable to EPA and State-administered programs” and “[e]stablish[] the procedures to be followed in making permit decisions.” The references in Part 124 to the perm it issuance and notification process, e.g., 40 C.F.R. §§ 124.15, 124.16 are examples of the procedural rule provisions encompassed within these historical descriptions.

IV. EPA is not required to publish notice of the delegation in Federal Register.

The APA’s publication requirements are cente red upon providing public access to agency promulgations that affect the rights of the public . Section 552 is the on ly provision of the APA that discusses publication in the CFR (or Federal Register). Section 552(a) of the APA requires the publication of certain agency materials, includ ing “the nature and requirements of all formal and informal procedures available,” 5 U.S.C. § 5 52(a)(1)(B), and “rules of procedure,” 5 U.S.C. § 552(a)(1)(C). Section 552(b), however, spec ifically exempts certain materials from publication, including “matters that are related solely to the inte rnal personnel rules and practices of an agency.” 5 U.S.C. § 552(b)(2). Courts have interpreted § 552(b) as exempting internal agency practices from publica tion in the Federal Register. See, e.g.

, Bunge Corp. v. United

States , 5 Cl. Ct. 511, 523 (1984) (“When the matter in issue involves a policy that is entirely internal to the agency and that, of itself, does not affect the conduc t of private parties, publication is not required.”); Diller Active v. Schweiker , 556 F. Supp. 478, 483 (D.D.C. 1983) (Medicare reimbursement guidelines need not be published where “[t]here is no evidence that the guidelines impose mandatory obligations . . . or that they effect pre-existing legal rights or obligations”). The exception in § 552(b)(2) encompasses changes in internal agency procedure. Morgan v.

U.S. Postal Serv. , 798 F.2d 1162 (8th Cir. 1986) (internal procedures regarding administrative remedies for employee discrimination claims need not be published); Whelan v. Brinegar , 538 F.2d 924 (2d Cir. 1976) (DOT not required to comply with APA publication requirements prior to abrogating rule governing compensation). As discussed above, the delegation of PSD permitting authority to the Assist ant Administrator affects only internal agency practice, and does not affect the rights of the public to submit comments or to petition for administrative review of the final permit decision reached by the Administrator’s delegate. Hence, this delegation falls within the § 552(b) exemption.

Furthermore, the courts have specifically ch aracterized delegation as an internal agency procedure subject to this exemption. United States v. Fitch Oil Co. , 676 F.2d 673 (Temp. Emer. Ct. App. 1982) (DOE not required to publish statement delegating authority to issue subpoenas);

United States v. Goodman , 605 F.2d 870, 888 (5th Cir. 1979) (Attorney General did not have to publish delegation of authority to identify controlled substances to DEA Assistant Administrator because APA “does not require that all internal de legations of authority . . . must be published.”); Hogg v. United States , 428 F.2d 274 (6th Cir. 1970) (DOJ not required to publish internal instructions delegating authority to file notices of appeal). The publication requirements of § 552 “attach only to matters which if not publishe d would adversely affect a member of the public.” Chevron Oil v. Andrus , 588 F.2d 1383, 1388 fn. 8 (5th Cir. 1979), cert. denied , 444 U.S. 879 (1979) (publication not required for DOI guidelines stating that an officer who delegates authority does not divesthimself of it). Consequentl y, the Administrator’s delegation regarding the Avenal permit application is precis ely the type of delegation for which publication is not required.

45 This analysis is not altered by EPA’s past decision, as a matter of policy, to publish its EAB procedures in the CFR. Part 124 interweaves legislative and procedural rules. EPA chose to publish the procedural rules, including the re ferences to the Regional Administrator in 40 C.F.R. §§ 124.15, 125.16 and 124.19 among other places, in order help the public understand the context for the rights to submit public comments and appeal a final permit decision created in Part 124. This good-government choice does not change the provisions’ references to the Regional Administrator as “interna l personnel rules and practices of an agency”; nor, therefore, does it nullify the exemption establ ished in § 552(b)(2). The Agen cy could, if it wished, revise the CFR to codify this particular one-time delega tion, but it has no legal obligation to do so. In this case, EPA believes that clarity is not serv ed by changing the CFR text. Nor is the public interest served; rather, all members of the public will have received actual and timely notice of the delegation to the Assistant Administrator by virtue of the supplemental statement of basis that explains why the Administrator has issued this delegation and by the placement of the delegation in the public docket for this permit. Therefore, as a matter of policy, the agency has

the discretion to decide not to revise the CFR to accommodate the one-time delegation.

In short, the Administrator’s decision to make this delega tion without providing notice and an opportunity to comment and without revisi ng Part 124 to memorialize this delegation is

consistent with the APA.