Natural Resources Defense Council v. E.P.A., 04-1323.

Citation489 F.3d 1364
Decision Date19 June 2007
Docket NumberNo. 04-1323.,No. 04-1325.,No. 04-1328.,No. 06-1140.,04-1323.,04-1325.,04-1328.,06-1140.
PartiesNATURAL RESOURCES DEFENSE COUNCIL and Sierra Club, Petitioners v. ENVIRONMENTAL PROTECTION AGENCY and Stephen L. Johnson, Administrator, Environmental Protection Agency, Respondents American Forest and Paper Association Inc., et al., Intervenors.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

James S. Pew argued the cause for petitioners NRDC, et al. With him on the briefs was John D. Walke. Amanda C. Leiter and David G. McIntosh entered appearances.

Russell S. Frye argued the cause and filed the briefs for petitioner Louisiana-Pacific Corporation.

Thomas E. Starnes and L. Eden Burgess were on the brief for amici curiae State and Territorial Air Pollution Program Administrators and Association of Local Air Pollution Control Officials in support of petitioners.

David S. Gualtieri, Attorney, and David Gunter, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were John C. Cruden, Deputy Assistant Attorney General, David Gunter, Attorney, and Michael W. Thrift, Counsel, U.S. Environmental Protection Agency.

Claudia M. O'Brien argued the cause for industry intervenors in support of respondent. With her on the brief was Cassandra Sturkie. Brock R. Landry, Guy J. Sternal, Paul H. Amundsen, and William F. Lane entered appearances.

Peter L. de la Cruz was on the brief for amicus curiae Formaldehyde Council, Inc. in support of respondents.

Before: GINSBURG, Chief Judge, and ROGERS and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge.

These are consolidated petitions for review of two final rules promulgated by the Environmental Protection Agency in 2004 and 2006 under Section 112 of the Clean Air Act ("CAA"), 42 U.S.C. § 7412, to regulate hazardous air pollution from processing plywood and composite wood products ("PCWP").1 PCWP sources use heat and pressure to bond wood material, usually with resin, to form a panel or other engineering product. The outputs from PCWP processes include veneer, particleboard, oriented strandboard, hardboard, fiberboard, medium density fiberboard, as well as other products. As a result of the PCWP process, at least six primary hazardous air pollutants ("HAPs") are released into the air. HAPs are defined in the CAA as "pollutants which present, or may present . . . a threat of adverse human health effects . . . or adverse environmental effects whether through ambient concentrations, bioaccumulation, deposition, or otherwise." 42 U.S.C. § 7412(b)(2).

The Environmental Petitioners — the Natural Resources Defense Counsel, the Sierra Club, and the Environmental Integrity Project (together, "NRDC") — contend that EPA has failed to adhere to the statutory requirements to set emission standards for listed HAPs. They also contend that EPA exceeded its authority in creating a risk-based subcategory and in extending the deadline for complying with emission standards set by the 2004 Rule. Pursuant to EPA's request following this court's decision in Sierra Club v. EPA, 479 F.3d 875 (D.C.Cir.2007), we vacate and remand the 2004 Rule insofar as it fails to set emission standards for listed HAPs; neither the NRDC nor industry intervenors object, although each seeks an additional remedy, which we will leave for EPA's consideration. We hold that EPA lacked authority to create a low-risk subcategory and to extend the compliance deadline and therefore grant NRDC's petitions on those issues and vacate those provisions of the rules.

Louisiana-Pacific Corporation also petitions for review of the two rules. It contends that EPA was arbitrary and capricious in declining to create a separate subcategory for wet/wet hardboard presses and to establish a variance procedure. Finding no arbitrary or capricious action by EPA, we deny the petition.

I.

The relevant statutory provisions and the regulatory background of the 2004 and 2006 Rules are as follows.

A.

Until 1990, Section 112 of the CAA directed EPA to use health-risk-based regulations for air pollution. Thus, Congress directed EPA to establish risk-based air pollution standards that provided an "ample margin of safety to protect public health." 42 U.S.C. § 7412(b)(1)(B) (1990). In 1990, Congress determined that the risk-based approach had "worked poorly." National Lime Ass'n v. EPA, 233 F.3d 625, 633-34 (D.C.Cir.2000). Over the course of twenty years, EPA had promulgated only seven standards. H.R. REP. No. 101-490, pt. 1, at 151, reprinted in 2 A LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 3175 (1993) ("LEGISLATIVE HISTORY"). Concerned, then, that EPA had failed to adequately regulate toxic emissions, see S. REP. No. 101-228 (1990), reprinted in 5 LEGISLATIVE HISTORY, supra, at 8338, U.S.Code Cong. & Admin.News 1990, p. 3385. Congress adopted the current version of Section 112 to require technology based standards in place of the previous risk-based standards. See Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 857 (D.C.Cir.2001). Additionally, EPA no longer had discretion to set emission standards for individual sources, nor to set whatever standards EPA deemed adequate.

Section 112, as amended, provides that EPA "shall promulgate regulations establishing emission standards for each category or subcategory of major sources . . . [and that these] standards . . . shall require the maximum degree of reduction in emissions." 42 U.S.C. § 7412(d)(1)-(2) (emphasis added). Section 112 thus mandates that EPA list and establish emission standards for each category and subcategory of "major sources" that emit one or more of over 100 HAPs. Id. § 7412(b), (c), (e). The standards "shall require the maximum degree of reduction in emissions" of HAPs that EPA, "taking into consideration the cost of achieving such emission reduction, and any non-air quality health and environmental impacts and energy requirements, determines is achievable for new or existing sources." Id. § 7412(d)(1), (2). The standards for "major sources" of HAPs must reflect the "maximum reduction in emissions which can be achieved by application of [the] best available control technology." S. REP. No. 101-228, at 133, reprinted in 5 LEGISLATIVE HISTORY, supra, at 8473, U.S.Code Cong & Admin.News 1990, pp. 3385, 3518. Congress also specified the degree of control, namely, the maximum achievable control technology ("MACT"), which sets a floor for MACT emissions — a minimum degree of emissions reductions that HAP sources must achieve under the technology-based standards. 42 U.S.C. § 7412(d)(3). For new sources, the MACT floor "shall not be less stringent than the emission control that is achieved in practice by the best-controlled similar source, as determined by the [EPA]," Id. § 7412(d)(3); for existing sources, the MACT floor shall be no less stringent than "the average emission limitation achieved by the best performing 12 percent of the existing sources (for which the Administrator has emissions information)." Id. Congress also set the compliance date:

After the effective date of any emissions standard, limitation or regulation . . . the Administrator shall establish a compliance date or dates for each category or subcategory of existing sources, which shall provide for compliance as expeditiously as practicable, but in no event later than 3 years after the effective date of such standard . . . .

42 U.S.C. § 7412(i)(3)(A) (emphasis added).

Congress further envisioned that there would be circumstances where a "source category" could appropriately be exempted ("delisted") from MACT emission standards. Subsection 112(c)(9)(B)(i) provides that:

(B) The Administrator may delete any source category from the list under this subsection, on petition of any person or on the Administrator's own motion, whenever the Administrator makes the following determination or determinations, as applicable:

(i) In the case of hazardous air pollutants emitted by sources in the category that may result in cancer in humans, a determination that no source in the category (or group of sources in the case of area sources) emits such hazardous air pollutants in quantities which may cause a lifetime risk of cancer greater than one in one million to the individual in the population who is most exposed to emissions of such pollutants from the source (or group of sources in the case of area sources).

42 U.S.C. § 7412(c)(9)(B)(i) (emphasis added).

B.

The 2004 Rule regulates "total HAP" emissions from the process units within each PCWP source. 69 Fed.Reg. at 45,946, 45,949. In view of Sierra Club v. EPA, 294 F.3d 155, 161 (D.C.Cir.2002), which held that EPA could not set a "no emission reduction" standard for existing sources for listed HAPs, we need not review how EPA established the MACT floors for a source other than to note that EPA determined that "the only way in which PCWP [sources could] currently limit HAP emissions" was through add-on controls. 69 Fed.Reg. at 45,968.

As relevant to the petitioners' remaining challenges, the 2004 Rule created a PCWP "low risk" subcategory, pursuant to § 112(c)(9)(B), which included sources that met the statutory criteria and additional requirements, such as annual emissions testing and reporting, set forth in the 2004 and 2006 Rules. 69 Fed.Reg. 45,955; 71 Fed.Reg. 8344-49. Subject to acknowledged omissions, EPA determined that the sources in the low-risk subcategory did not emit carcinogens in excess of the statutory ceiling, namely, in amounts resulting in a lifetime cancer risk exceeding one in a million to the most-exposed individual; that they did not emit non-carcinogens in amounts exceeding a level adequate to provide an ample margin of safety to protect public health; and that no source emitted any HAP or combination of HAPs in amounts...

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