Opinion ID: 187435
Heading Depth: 2
Heading Rank: 2

Heading: Holmstead Memo

Text: Petitioners' argument that the Holmstead Memo had to undergo notice and comment stems, in part, from their erroneous belief that the final designations were subject to notice and comment. Our determination above, that the statute exempts the nonattainment designations from notice-and-comment procedures, suggests that the Holmstead Memo  which was simply the first step in the promulgation of designations  is also exempt. Petitioners' further argument, that the Holmstead Memo is a legislative rule that must undergo notice and comment independent of the final rule to which it relates, is also unavailing. For support, petitioners point to General Electric Co. v. EPA, 290 F.3d 377 (D.C.Cir.2002), in which we explained that whether an agency action is the type of action that must undergo notice and comment depends on whether the agency action binds private parties or the agency itself with the `force of law,' id. at 382  that is, whether a document expresses a change in substantive law or policy (that is not an interpretation) which the agency intends to make binding, or administers with binding effect, id. at 382-83 (quoting Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like  Should Federal Agencies Use Them to Bind the Public?, 41 DUKE L.J. 1311, 1355 (1992)). General Electric further explained that an agency pronouncement will be considered binding as a practical matter if it either appears on its face to be binding ... or is applied by the agency in a way that indicates it is binding. Id. at 383 (internal citation omitted). In response, EPA argues that the Holmstead Memo is merely a policy statement, not a legislative rule, because it does not create or modify legally binding rights or obligations. As EPA correctly notes, the APA expressly exempts policy statements from notice-and-comment requirements. See 5 U.S.C. § 553(b)(A) (specifying that, except when required by statute, the section 553 requirements for notice and comment do not apply to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice). EPA has the better of this dispute. First, the Holmstead Memo is not binding on its face. It specifies that it merely provides guidance to State and local air pollution control agencies ... on the process for designating areas for the purpose of implementing the fine particle national ambient air quality standards. Holmstead Memo at 1. It then explicitly states that it is not binding on the states or EPA and notes that it provides only EPA's current views on the designation process, suggesting that those views are open to revision. Id. at 2. Unlike the agency documents at issue in General Electric and CropLife America v. EPA, 329 F.3d 876 (D.C.Cir.2003), which petitioners also cite, the Holmstead Memo does not impose binding duties on states or the agency. It merely clarifies the states' existing duties under the Clean Air Act and explains the process EPA suggests for states to follow in providing their initial designations. As we explained above, see supra at 27-28, the Memo establishes a rebuttable C/MSA presumption and outlines nine factors for EPA to consider in its final designations, see Holmstead Memo Guidance at 5-7. Petitioners point to language in the Holmstead Memo that they view as evidence of its binding character vis-à-vis the states: A demonstration supporting the designation of boundaries that are less than the full metropolitan area must show both that violations are not occurring in the excluded portions of the metropolitan area and that the excluded portions are not source areas that contribute to the observed violations. Id. at 7. But this language does not create a new burden on the states; it merely reiterates the statutory requirements. See § 7407(d)(1)(A)(i) (requiring Governors to designate as nonattainment any area that does not meet (or that contributes to ambient air quality in a nearby area that does not meet) the NAAQS). Nor does the Holmstead Memo bind EPA. The Memo announces the C/MSA presumption as a rebuttable presumption, which preserves the agency's discretion to deviate from the boundaries of a C/MSA in the final designations. See Panhandle Producers & Royalty Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1110 (D.C.Cir.1987) (`An agency pronouncement is not deemed a binding regulation merely because it may have some substantive impact, as long as it leave[s] the administrator free to exercise his informed discretion.' ... Presumptions, so long as rebuttable, leave such freedom. (quoting Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533, 537 (D.C.Cir.1986) (internal quotation marks omitted))). Further, EPA has not applied the Holmstead Memo in a binding manner. Petitioners again cite General Electric for the proposition that an agency document will be considered binding if the affected private parties are reasonably led to believe that failure to conform will bring adverse consequences. Gen. Elec., 290 F.3d at 383 (quoting Anthony, supra, at 1328). The Memo encouraged states to address all nine factors EPA identified, but did not require them to do so. Holmstead Memo Guidance at 7. Some states did not address all or even any of the factors. See, e.g., Letter from Robert G. Burnley, Dep't of Envtl. Quality, Commonwealth of Virginia, to Donald S. Welsh, U.S. EPA Region III (Feb. 13, 2004) (recommending that all of Virginia be designated attainment without addressing any of the nine factors); Letter from Stephanie R. Timmermeyer, West Virginia Dep't of Envtl. Prot., to Donald S. Welsh, U.S. EPA Region III (Feb. 13, 2004) (recommending PM2.5 nonattainment areas to match the existing ozone nonattainment areas without addressing any of EPA's other eight factors). EPA considered such submissions and did not impose adverse consequences, notwithstanding the states' failure to address the factors listed in the Holmstead Memo. Compare State of West Virginia PM2.5 Designations  Preliminary Recommendations, with PM 2.5 Designations Rule, 70 Fed. Reg. at 1014-15 (showing that EPA designated as attainment an area that West Virginia had proposed be designated nonattainment, despite the fact that West Virginia did not address eight of EPA's nine factors). In sum, we deny petitioners' procedural claims because EPA was not required to submit either the final designations rule or the Holmstead Memo for notice and comment.