Central & SW Serv.

• Decision Date: 15 August 2000
• Docket Number: N,No. 98-60804,No. 98-60495,98-60495,98-60804
• Citation: 220 F.3d 683
• Parties: (5th Cir. 2000) CENTRAL AND SOUTH WEST SERVICES, INC.; ENTERGY SERVICES INC.; MISSISSIPPI POWER COMPANY; UTILITY SOLID WASTE ACTIVITIES GROUP, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent. THE GENERAL ELECTRIC COMPANY, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent. SIERRA CLUB, a non-profit California corporation, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent. o. 98-60642 AND
• Court: U.S. Court of Appeals — Fifth Circuit

Page 683

220 F.3d 683 (5th Cir. 2000)

CENTRAL AND SOUTH WEST SERVICES, INC.; ENTERGY SERVICES INC.; MISSISSIPPI POWER COMPANY; UTILITY SOLID WASTE ACTIVITIES GROUP, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

THE GENERAL ELECTRIC COMPANY, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

SIERRA CLUB, a non-profit California corporation, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 98-60495, No. 98-60642 AND No. 98-60804.

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

August 15, 2000

[Copyrighted Material Omitted] Petition for Review of Regulations of the United States Environmental Protection Agency BEFORE DAVIS, CYNTHIA HOLCOMB HALL^*, and SMITH, Circuit Judges.

W. EUGENE DAVIS:?

Petitioners challenge the Environmental Protection Agency's ("EPA") final "Mega Rule" ("Final Rule") concerning the use and disposal of polychlorinated biphenyls ("PCBs"). Petitioners Central and South West Services, Inc., Entergy Services Inc., Mississippi Power Company, Utility Solid Waste Activities Group (collectively "USWAG") and General Electric Co. ("GE") argue that discrete portions of EPA's Final Rule are too restrictive. Petitioner Sierra Club argues that certain provisions of the Final Rule do not sufficiently restrict the use of PCBs. For the reasons that follow, we dismiss, or remand Petitioners's challenges to the Final Rule.

I Facts and Procedural History

In 1976, Congress enacted the Toxic Substances Control Act ("TSCA"), directing EPA to control the manufacture, processing, distribution, use and disposal of chemical substances and mixtures. 15 U.S.C. § 2601 et seq. Congress enacted TSCA "to set in place a comprehensive national scheme to protect humans and the environment from the dangers of toxic substances." Rollins Environmental Services, Inc. v. St. James Parish, 775 F.2d 627, 632 (5th Cir. 1985). Section 6(e) of TSCA generally phased out the manufacture, processing, commercial distribution and use of a certain class of chemicals known as PCBs. 15 U.S.C. § 2605(e).

PCBs are a class of compounds that were manufactured for a variety of purposes, including cooling and lubricating transformers, capacitors and other electrical equipment. PCBs are particularly useful for these purposes because they do not burn easily and are excellent insulators. Monsanto Corp., the U.S. manufacturer of PCBs, produced PCBs between 1930 and 1977. PCBs are also produced as a by-product in the production of various organic chemicals. The most recent EPA study on PCBs states that "PCBs are highly likely to pose a risk of cancer to humans." PCBs: Cancer Dose-Response Assessment and Application to Environmental Mixtures, September 1996, ("1996 Reassessment").

TSCA permits EPA to issue rules authorizing certain uses of PCBs, but only if the agency finds that such use "will not present an unreasonable risk of injury to health or the environment." 15 U.S.C. § 2605(e)(2)(B). Section 6(e) also requires the Administrator to "promulgate rules to ... prescribe methods for the disposal of [PCBs]." 15 U.S.C. § 2605(e)(1)(A).

Pursuant to these statutory directions, EPA in 1991 initiated rulemaking proceedings on what would become the "PCB Mega Rule." EPA initiated this rulemaking for several reasons. First, EPA's knowledge about the sources, uses, risks, and disposal of PCBs had increased substantially in the years following promulgation of the first disposal regulations. 56 Fed. Reg. at 26,738 (June 10, 1991). Second, the regulated community and the public brought to EPA's attention a number of ways to streamline PCB regulations and to better protect human health and the environment from the risks associated with PCBs. 59 Fed. Reg. at 62,788 (Dec. 6, 1994). Third, fourteen years after the ban on manufacturing, over eight hundred thousand tons of PCBs were still being disposed of each year in the United States. 61 Fed. Reg. at 11,096 (Mar. 18, 1996). EPA was particularly concerned about "large volume PCB wastes" from the shredding of automobiles, appliances, and the like and also PCB-contaminated soils and sediments. 59 Fed. Reg. at 62,791.

In June 1991, EPA published an Advance Notice of Proposed Rulemaking ("ANPR"), which sought comment on a number of sweeping changes to the PCB regulations. 56 Fed. Reg. at 26,738 (June 10, 1991). After receiving comments on the ANPR, EPA published a Notice of Proposed Rulemaking ("NPRM"), proposing amendments to, among other things, controls on the use and storage of PCB-containing electrical equipment and disposal and cleanup of PCBs. 59 Fed. Reg. at 62,788 (Dec. 6, 1994). EPA received over 200 comments on the NPRM and held a public hearing on the NPRM in June 1995.

In June 1998, approximately three-and-a-half years after the NPRM and seven years after the ANPR, EPA promulgated the final PCB Mega Rule ("Final Rule")(codified at 40 C.F.R. §§ 761.1 - .398), adopting significant amendments affecting the use, manufacture, processing, distribution in commerce, and disposal of PCBs. 63 Fed. Reg. at 35,384 (June 29, 1998).

Two sets of petitioners, USWAG and GE, challenge discrete aspects of the Final Rule, arguing essentially that the revisions do not go far enough in relaxing regulatory controls on PCB storage and disposal. In the third petition, Sierra Club argues that the rule goes too far and thus allows unreasonably risky disposal practices. This Court has jurisdiction to review challenges to the Final Rule pursuant to Section 19(a) of TSCA, 15 U.S.C. § 2618(a), which grants interested parties the right to appeal directly a final rule promulgated under section 6(e) to this or any other regional circuit court of appeals. We consider each of the petitioners' arguments in turn.

II Standard of Review

TSCA states that the Administrative Procedure Act's scope of review provision, 5 U.S.C. § 706, shall apply to review of rules under TSCA section 6(e) except that "the court shall hold unlawful and set aside such rule if the court finds that the rule is not supported by substantial evidence in the rulemaking record ... taken as a whole." TSCA § 19(c)(1)(B)(i); U.S.C. § 2618(c)(1)(B)(i)(emphasis added).

The substantial evidence standard requires reviewing courts "to ask whether a 'reasonable mind might accept' a particular evidentiary record as 'adequate to support a conclusion.'" Dickinson v. Zurko, 527 U.S. 150, 162, 119 S.Ct. 1816, 1823, 144 L.Ed.2d 143 (1999) (citations omitted). "Substantial evidence requires 'something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.'" Corrosion Proof Fittings v. EPA, 947 F.2d 1201, 1213 (5th Cir. 1991)(quoting Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620 (1966)). As this Court emphasized, "Congress put the substantial evidence test in the statute because it wanted the courts to scrutinize [EPA's] actions more closely than an arbitrary and capricious standard would allow." Id. at 1214.

Moreover, when EPA seeks to change its regulatory course, it bears the burden of producing evidence in the record supporting the change in its rules. Center for Science in the Public Interest v. Hodel, 797 F.2d 995, 999 (D.C. Cir. 1986)(citation omitted)(the agency bears "the burden ... to justify the change from the status quo ...."). And, "[i]t is axiomatic that an agency choosing to alter its regulatory course 'must supply a reasoned analysis indicating that its prior policies and standards are being deliberately changed, not casually ignored.'" Action for Children's Television v. F.C.C., 821 F.2d 741, 745 (D.C. Cir. 1987) (citations omitted); accord Acadian Gas Pipeline Sys. v. F.E.R.C., 878 F.2d 865, 870 (5th Cir. 1989); Action on Smoking and Health v. C.A.B., 699 F.2d 1209, 1216 (D.C. Cir. 1983) (agency rescinding rule must "explain why the old regulation is no longer desirable"). "When an agency acts to rescind a standard it previously adopted, a reviewing court will subject that rescission to the same level of scrutiny applicable to the agency's original promulgation." Association of Public-Safety Comm. Officials Int'l, Inc. v. F.C.C., 76 F.3d 395, 398 (D.C. Cir. 1996)(citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 41 (1983))

The parties disagree as to how the substantial evidence standard applies to the rulemaking at issue. According to EPA, the unique feature of TSCA § 6(e), which generally prohibits the manufacture or use of PCBs unless EPA has authorized a use, reflects a legislative finding that PCBs pose an unreasonable risk of injury to health. Therefore, EPA argues, TSCA § 6(e) creates a rebuttable presumption that all uses of PCBs present an unreasonable risk of injury to health and the environment. Thus, according to EPA, if a petitioner, such as USWAG or GE, alleges that EPA unreasonably refused to allow a particular use of PCBs, EPA need not show by substantial evidence that petitioners' desired use poses an unreasonable risk to health or the environment. We agree.

When considered in the context of section 6(e), the review provision of TSCA § 19(c)(1)(B)(i) reflects Congress's intent that courts apply the higher substantial evidence standard of review only to those EPA decisions permitting the use of PCBs. Section 6(e) establishes a categorical ban on most uses of PCBs except as authorized by EPA. Although this section permits EPA to craft exceptions to this outright ban, it does not require the agency to do so. Section 19(c)(1)(B)(i), in turn, ensures that when EPA does exercise its discretion to create an exception, it does so only to the extent supported by substantial evidence. Nothing in the statutory scheme suggests that EPA must support by substantial evidence either its decision not to act or its decision not to craft as large an exemption as petitione...