Allied Local & Regional Man. v. U.S. Envt'l Protenction

• Decision Date: 16 June 2000
• Docket Number: 98-1527,Nos. 98-1526,s. 98-1526
• Citation: 215 F.3d 61
• Parties: (D.C. 2000) Allied Local and Regional Manufacturers Caucus, et al.,Petitioners v. U.S. Environmental Protection Agency, Respondent National Paint & Coatings Association, et al., Intervenors
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 61

215 F.3d 61 (D.C. 2000)

Allied Local and Regional Manufacturers Caucus, et al.,Petitioners v. U.S. Environmental Protection Agency, Respondent

National Paint & Coatings Association, et al., Intervenors

Nos. 98-1526, 98-1527

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 1999

Decided June 16, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] On Petitions for Review of Orders of theEnvironmental Protection Agency

C. Boyden Gray argued the cause for petitioner DunnEdwards Corporation. With him on the briefs were James R. Wrathall and IJay Palansky. Daniel H. Squire entered an appearance.

William M. Smiland argued the cause for petitioners Allied Local and Regional Manufacturers Caucus, et al. With him on the briefs were Christopher G. Foster and Albert M. Cohen.

Scott J. Jordan, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Lois J. Schiffer, Assistant Attorney General, and Geoffrey L. Wilcox, Attorney, U.S. Environmental Protection Agency.Eric G. Hostetler, Attorney, U.S. Department of Justice, entered an appearance.

Nancy S. Bryson, Richard J. Mannix, Robert L. Rhodes and Rena I. Steinzor were on the brief for intervenors.Thomas J. Graves entered an appearance.

Before:Ginsburg, Tatel, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Garland.

Garland, Circuit Judge:

Petitioners in these consolidated cases challenge final regulations promulgated by the Environmental Protection Agency (EPA) to limit the content of volatile organic compounds in architectural coatings, including paints. The regulations were issued pursuant to section 183(e) of the Clean Air Act, which directs the agency to regulate emissions from consumer and commercial products to help achieve the national ambient air quality standard for ozone. Petitioners are Dunn-Edwards Corporation, a large paint manufacturer, and Allied Local and Regional Manufacturers Caucus, an association of manufacturers and distributors of architectural coatings. Intervening on EPA's side are other industry groups--including the National Paint & Coatings Association, a trade association of some 400 paint and coatings manufacturers and distributors--which urge us to uphold the regulations.

Petitioners challenge the regulations on a multitude of grounds, including their asserted inconsistency with the Clean Air Act, the Regulatory Flexibility Act, the Unfunded Mandates Reform Act, and the Commerce Clause. We conclude that EPA's regulations are lawful and deny the petitions for review.

I

The Clean Air Act, 42 U.S.C. 7401 et seq., directs EPA to establish national ambient air quality standards for harmful air pollutants. See 42 U.S.C. 7408(a). One of the pollutants so identified and regulated by the agency is ground-level ozone. See 40 C.F.R. 50.9. Although in the upper atmosphere ozone occurs naturally and forms a protective layer that shields human beings from the harmful effects of the sun's ultraviolet rays, at ground level, man-made ozone can have a wide array of negative effects on human health, crops, and forests.¹ See EPA, Study of Volatile Organic Compound Emissions From Consumer and Commercial Products, Report to Congress 1-1 (1995) (J.A. at 518) [hereinafter Report].

Section 183(e) of the Clean Air Act, added as part of the 1990 amendments to that Act, is aimed at mitigating the problem of ground-level ozone. See Clean Air Act Amendments of 1990, Pub. L. No. 101-549, 183(e), 104 Stat. 2399, 2444-47 (codified at 42 U.S.C. 7511b(e)). Ozone is formed when nitrogen oxides (NOx) react with volatile organic compounds (VOCs) in the presence of sunlight. See Report at 1-1 (J.A. at 518). Section 183(e) directs EPA to regulate emissions of VOCs from consumer and commercial products in order to help states achieve the national ambient air quality standard (NAAQS) for ozone.²

Section 183(e) contains a number of directions to EPA.First, it instructs the agency to "conduct a study of the emissions of volatile organic compounds into the ambient air from consumer and commercial products (or any combination thereof)" in order to "(i) determine their potential to contribute to ozone levels which violate the national ambient air quality standard for ozone" and "(ii) establish criteria for regulating consumer and commercial products." 42 U.S.C. 7511b(e)(2)(A). The section further directs that the study be completed, and a report submitted to Congress, "not later than 3 years after November 15, 1990." Id.

Upon submission of the report, section 183(e) requires the EPA to "list those categories of consumer or commercial products that [it] determines, based on the study, account for at least 80 percent of the VOC emissions, on a reactivityadjusted basis, from consumer or commercial products in areas that violate the NAAQS for ozone." Id. 7511b(e)(3)(A). The statute then directs the agency "to divide the list into 4 groups establishing priorities for regulation" based on the criteria developed in the study. Id. Finally, the statute requires the EPA to regulate one group every two years until all four have been regulated. See id.

After passage of the 1990 amendments, EPA instituted a formal regulatory negotiation process, aimed at achieving consensus on the development of VOC regulations for paint and architectural coatings. Representatives of the affected industry were included on the negotiation committee. Complete consensus could not be reached, however, and the process was terminated in 1994. See National Volatile Organic Compound Emission Standards for Architectural Coatings, Final Rule, 63 Fed. Reg. 48,848, 48,850 (1998) [hereinafter Final Rule].

In March 1995, EPA submitted its statutorily-required report to Congress. The report concluded that "[c]onsumer and commercial products, while individually small sources of VOC emissions, contribute significantly to the ozone nonattainment problem." Report at 2-1 (J.A. at 523). VOC emissions from these products, the report said, constitute approximately 28% of all man-made VOC emissions. See id. at 2-8 (J.A. at 530). In compliance with Congress' direction, the report also set forth "criteria for regulating consumer and commercial products under the Act." Id. at 4-1 (J.A. at 557).The eight criteria listed by the agency were:

(1) utility

(2) commercial demand

(3) health or safety functions

(4) emissions of 'highly reactive' compounds

(5) availability of alternatives

(6) cost-effectiveness of controls

(7) magnitude of annual VOC emissions

(8) regulatory efficiency

Id. at 4-2 (J.A. at 558).³

In March 1995, EPA also published the statutorilymandated list of categories of consumer or commercial products that together account for at least 80% of VOC emissions from such products in ozone nonattainment areas on a reactivity-adjusted basis. See Consumer and Commercial Products, Notice of Product Category List and Schedule for Regulation, 60 Fed. Reg. 15,264 (1995) [hereinafter Notice of Product Category List]. Per Congress' instruction, EPA divided those categories into four groups, establishing priorities for regulation. Architectural coatings were included in the first group, along with certain household consumer products and automobile refinish coatings. EPA determined that these three categories account for about 30% of the VOC emissions from all consumer and commercial products. See Consumer and Commercial Products: Schedule for Regulation, Final Listing, 60 Fed. Reg. 48,792, 48,793 (1998) [hereinafter Final Listing]. According to EPA, the architectural coatings category alone accounts for about 9% of the emissions from all consumer and commercial products, making it "one of the largest emissions sources among the consumer and commercial products categories." Final Rule, 63 Fed. Reg. at 48,850; see National Volatile Organic Compound Emission Standards for Architectural Coatings, Proposed Rule, 61 Fed. Reg. 32,729, 32,731 (1996) [hereinafter Proposed Rule]; Report at 2-6 (J.A. at 528).

In September 1998, EPA published its final rules and listing. As proposed, the agency listed architectural coatings, along with consumer products and automobile refinish coatings, in the first group of consumer and commercial product categories subject to regulation under section 183(e). See Final Listing, 63 Fed. Reg. at 48,792. At the same time, it issued a rule specifying limits on the permissible VOC content of products in each of the categories. See National Volatile Organic Compound Emission Standards for Automobile Coatings, 63 Fed. Reg. 48,806 (1998); National Volatile Organic Compound Emission Standards for Consumer Products, 63 Fed. Reg. 48,819 (1998); National Volatile Organic Compound Emission Standards for Architectural Coatings, 63 Fed. Reg. 48,848 (1998).

Petitioners Dunn-Edwards and Allied challenge EPA's initial study and report to Congress, as well as the list and rule that followed.⁴ They assert that EPA has misinterpreted the Clean Air Act and that its regulations are arbitrary and capricious. By contrast, intervenor National Paint & Coatings Association, which, like Allied, participated in the unsuccessful attempt at regulatory negotiation, supports EPA's regulations, describing them as a "comprehensive set of reasonable limits that are tough but fair, and which can contribute significantly to ozone emissions reductions as mandated by the [Act]." NPCA Br. at 2-3.

II

In assessing petitioners' claim that EPA has misconstrued the statute, we are guided by the standards set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44 (1984). Under Chevron's first step, we ask whether Congress "has directly spoken to the precise question at issue," in which case we "must give effect to the unambiguously expressed intent of Congress." Id. at 842-43.If "the statute is silent or ambiguous with respect to the...