370 F.3d 1 (D.C. Cir. 2004), 03-1003, Bluewater Network v. E.P.A.

Docket Nº:03-1003 to 03-1005, 03-1249.
Citation:370 F.3d 1
Party Name:BLUEWATER NETWORK, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY and Christine Todd Whitman, Administrator, U.S. Environmental Protection Agency, Respondents. International Snowmobile Manufacturers Association, Intervenor.
Case Date:June 01, 2004
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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370 F.3d 1 (D.C. Cir. 2004)

BLUEWATER NETWORK, Petitioner,

v.

ENVIRONMENTAL PROTECTION AGENCY and Christine Todd Whitman, Administrator, U.S. Environmental Protection Agency, Respondents.

International Snowmobile Manufacturers Association, Intervenor.

Nos. 03-1003 to 03-1005, 03-1249.

United States Court of Appeals, District of Columbia Circuit

June 1, 2004

Argued April 12, 2004.

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On Petitions for Review of an Order of the Environmental Protection Agency.

James S. Pew argued the cause for petitioners Bluewater Network and Environmental Defense. With him on the briefs was Jennifer R. Kefer.

Eric B. Wolff argued the cause for petitioner International Snowmobile Manufacturers Association. With him on the briefs were Stuart A. Drake and Granta Y. Nakayama.

Stephen E. Crowley and Kent E. Hanson, Attorneys, U.S. Department of Justice, argued the cause for respondents. With them on the brief were John C. Cruden, Deputy Assistant Attorney General, and Michael J. Horowitz, Attorney, U.S. Environmental Protection Agency.

James S. Pew and Jennifer R. Kefer were on the brief for intervenors Bluewater Network and Environmental Defense.

Stuart A. Drake, Granta Y. Nakayama, and Eric B. Wolff were on the brief for intervenor International Snowmobile Manufacturers Association.

Before: EDWARDS, SENTELLE, and TATEL, Circuit Judges.

OPINION

HARRY T. EDWARDS, Circuit Judge:

In November 2002, the Environmental Protection Agency ("EPA" or "Agency") issued a final rule establishing emissions standards for snowmobiles and certain other "nonroad" vehicles. See Control of Emissions From Nonroad Large Spark-Ignition Engines, and Recreational Engines (Marine and Land-Based), 67 Fed.Reg. 68,242 (Nov. 8, 2002). The snowmobile standards at issue in this case - promulgated under § 213 of the Clean Air Act ("CAA" or "Act"), 42 U.S.C. § 754 7 (2000) - regulate emissions of three pollutants: carbon monoxide ("CO"), hydrocarbons ("HC"), and oxides of nitrogen ("NO subx ").

The CO standard was adopted under § 213(a)(3). Under this provision, EPA must regulate CO and certain ozone-precursor emissions from a category of engines if, and only if, the Agency finds that such emissions "cause, or contribute to" CO or ozone concentrations in more than one area that has failed to attain the relevant national ambient air quality standard ("NAAQS"). Where the Agency makes such a finding - as it did for snowmobiles with respect to CO emissions - it must adopt standards reflecting "the greatest degree of emission reduction achievable" through the application of technology that "will be available," taking cost and other factors into account.

EPA regulated HC and NO subx emissions under § 213(a)(4), which is directed at pollution problems other than CO and ozone. This provision authorizes EPA - upon making certain findings - to adopt such standards as the Agency "deems appropriate," again based on technology that will

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be available and taking cost and other factors into account. Of crucial importance for this case, § 213(a)(4) only permits regulation of "emissions not referred to in" § 213(a)(2), which expressly mentions emissions of CO, volatile organic compounds, and NO subx .

The Agency based its standards on the expected application of two "advanced" technologies to snowmobiles: direct injection two-stroke engines and four-stroke engines. EPA estimated that compliance with the final phase of its standards - effective in 2012 - would require the use of these engines in 70% of all new snowmobiles. The Agency found that broader application would not be possible by 2012, because of resource constraints on manufacturers and the magnitude of the investment required to apply the technologies to the wide variety of snowmobile models on the market.

Petitioner International Snowmobile Manufacturers Association ("ISMA") challenges EPA's authority to promulgate the standards. ISMA argues that EPA lacks authority to issue the CO standard, because the Agency's finding that snowmobiles contribute to CO pollution in more than one area that has failed to attain the NAAQS is based on an impermissible interpretation of the statute and is arbitrary and capricious. ISMA claims, in addition, that the statute bars EPA from regulating HC and NO subx emissions under § 213(a)(4), because those emissions are "referred to" in § 213(a)(2).

Petitioners Bluewater Network and Environmental Defense (collectively "Bluewater") challenge what they consider to be the excessive leniency of the standards. Bluewater's principal claim is that EPA's determination that advanced technologies cannot be applied to all new snowmobiles by 2012 is premised on an impermissible interpretation of the statute and is arbitrary and capricious. Bluewater also raises a host of other challenges to the regulation, including the claim that EPA improperly refused to base its standards on the application of catalyst technology.

We grant in part and deny in part each of the two petitions for review. First, we hold that EPA acted within its statutory authority in promulgating the CO and HC standards under § 213(a)(3) and (a)(4), respectively. Accordingly, we reject ISMA's challenges to those standards. However, we agree with ISMA that EPA lacks authority to regulate NO subx emissions under § 213(a)(4), because such emissions are "referred to" in § 213(a)(2). We therefore vacate the NO subx standard.

In response to Bluewater's petition, we remand the CO and HC standards for EPA to clarify the analysis and evidence upon which the standards are based. Specifically, we direct EPA to clarify (1) the statutory and evidentiary basis of the Agency's assumption that the standards must be sufficiently lenient to permit the continued production of all existing snowmobile models, and (2) the analysis and evidence underlying the Agency's conclusion that advanced technologies can be applied to no more than 70% of new snowmobiles by 2012. We reject Bluewater's remaining claims.

I. BACKGROUND

A. Factual Background

The snowmobile industry is relatively concentrated, with four manufacturers producing 99% of all snowmobiles, or "sleds," sold in the United States. These manufacturers offer various types of sleds designed for different applications - including high-performance trail riding, high-performance off-trail riding, mountain riding, touring, and entry-level riding - with multiple engine

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models available for each type. As a result, most of the major manufacturers offer 30 to 50 different engine-snowmobile model combinations. High-performance models, with very high power-to-weight ratios, dominate current sales. See 67 Fed.Reg. at 68,273.

The vast majority of snowmobiles now on the market use carbureted two-stroke engines. In comparison with fourstroke engines, carbureted two-stroke engines generally are simpler in design and have lower manufacturing costs. They also burn an air-fuel mixture that is comparatively rich in fuel. This makes them less fuel-efficient than four-stroke engines, but gives them a higher power-to-weight ratio, allows them to start more easily in cold weather, and permits them to run at cooler temperatures (which reduces engine wear) - all important advantages for snowmobiles. See 65 Fed.Reg. 76,797, 76,803-04 (Dec. 7, 2000) (advance notice of proposed rulemaking).

Because of their design characteristics, carbureted two-stroke engines emit comparatively high levels of CO and HC, see id., both of which can contribute to harmful air pollution. Elevated CO levels can cause a number of health problems associated with reduced delivery of oxygen to the body's tissues, including impairment of visual perception, work capacity, manual dexterity, learning ability, and performance of complex tasks. 67 Fed.Reg. at 68,245. HC emissions can, inter alia, cause visibility impairment (or "haze") due to fine particulate matter ("PM") pollution; specifically, HC emissions contain fine PM and can also contribute to the formation of "secondary" fine PM in the atmosphere. Id. at 68,254.

Like virtually all internal combustion engines, snowmobile engines emit volatile organic compounds ("VOCs") - most of which are hydrocarbons - and NO subx . VOCs and NO subx are the primary precursors of ground-level ozone, which can cause a number of severe respiratory problems. 65 Fed.Reg. at 76,798. Ground-level ozone is formed through a complex chemical reaction of VOCs and NO subx in the atmosphere. Because this reaction occurs only in the presence of heat and sunlight, elevated ground-level ozone concentrations are primarily a warm-weather phenomenon. See id.

B. Statutory Context

Recognizing the significant and growing role of unregulated emissions from "nonroad" engines in causing air pollution, Congress enacted § 213 of the Clean Air Act as part of the 1990 amendments to the Act. See Pub.L. No. 101-549,§ 222, 104 Stat. 2399, 2500-02 (1990) (codified at 42 U.S.C. § 7547); see also S. REP. No. 101-228, at 103-04 (1989) (discussing the policy rationale for regulating nonroad engine emissions). Section 213 authorizes EPA to set emissions standards for "nonroad engines and vehicles," a broad grouping including farm and construction equipment, lawn and garden equipment, airport service equipment, marine engines, and recreational vehicles such as off-road motorcycles, all-terrain vehicles, and snowmobiles.

Under § 213's multi-step scheme, EPA must first complete a study to determine whether emissions from nonroad engines "cause, or significantly contribute to, air pollution which may reasonably be anticipated to endanger public...

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