Arteva Specialties S.A.R.L. v. E.P.A., 96-1422.

• Decision Date: 08 April 2003
• Docket Number: No. 96-1423.,No. 01-1398.,No. 96-1422.,96-1422.,96-1423.,01-1398.
• Citation: 323 F.3d 1088
• Parties: ARTEVA SPECIALTIES S.A.R.L., d/b/a KoSa, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. Eastman Chemical Company, Petitioner, v. Environmental Protection Agency, Respondent. Arteva Specialties S.a.r.l., d/b/a KoSa, Petitioner, v. Environmental Protection Agency, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

323 F.3d 1088

ARTEVA SPECIALTIES S.A.R.L., d/b/a KoSa, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.

Eastman Chemical Company, Petitioner, v. Environmental Protection Agency, Respondent.

Arteva Specialties S.a.r.l., d/b/a KoSa, Petitioner, v. Environmental Protection Agency, Respondent.

No. 96-1422.

No. 96-1423.

No. 01-1398.

United States Court of Appeals, District of Columbia Circuit.

Argued February 13, 2003.

Decided April 8, 2003.

On Petitions for Review of Orders of the Environmental Protection Agency.

Alan H. McConnell argued the cause for the petitioners. William F. Lane was on brief. Kurt E. Blase and Victoria A. Cochran entered appearances.

Laurel A. Bedig, Attorney, United States Department of Justice, argued the cause for the respondent. Steven Silverman, Attorney, United States Environmental Protection Agency, was on brief. John C. Cruden, Assistant Attorney General, Christopher S. Vaden, Eric G. Hostetler and Mary F. Edgar, Attorneys, United States Department of Justice, and Patricia A. Embrey, Attorney, United States Environmental Protection Agency, entered appearances.

Before: EDWARDS, HENDERSON and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge:

In 1996 the Environmental Protection Agency (EPA) promulgated national standards to reduce emissions of hazardous air pollutants from plants that manufacture a group of polymers and resins, including polyethylene terephthalate resin (PET). National Emissions Standards for Hazardous Air Pollutant Emissions: Group IV, Polymers and Resins: Final Rule, 61 Fed. Reg. 48,208 (Sept. 12, 1996) (Group IV NESHAP), pursuant to section 112 of the Clean Air Act, 42 U.S.C. § 7412. Arteva Specialties S.a.r.l. d/b/a KoSa (KoSa)¹ and Eastman Chemical Company (Eastman), which operate PET manufacturing plants, seek review of the equipment leak standard of Group IV NESHAP on the ground the required emission controls are not cost effective as required by section 112(d)(2), 42 U.S.C. § 7412(d)(2). Specifically, the petitioners contend it was arbitrary for EPA to aggregate costs and effectiveness facility-wide, rather than disaggregating the costs and effectiveness of the individual control technologies proposed. For the reasons set forth below, we grant the petitions for review and remand to the agency to clarify its decision to aggregate costs and effectiveness.

I.

Section 112 of the Clean Air Act directs EPA to set national emission standards to reduce emission of various "hazardous air pollutants." See 42 U.S.C. § 7412.² Subsection (d)(2) provides:

Emission standards promulgated under this subsection and applicable to new or existing sources of hazardous air pollutants shall require the maximum degree of reduction in emissions of the hazardous air pollutants subject to this section (including a prohibition on such emissions, where achievable) that the Administrator, 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 in the category or subcategory to which such emission standard applies, through application of measures, processes, methods, systems or techniques....

42 U.S.C. § 7412(d)(2). Subsection (d)(3) requires that EPA set a minimum standard for a category which, for existing sources such as those here, must be at least as stringent as the average emission level achieved by the "best performing" existing sources. 42 U.S.C. § 7112(d)(3)(A)-(B). Pursuant to these provisions, EPA promulgates standards in a two step process. First, EPA identifies a "maximum achievable control technology" (MACT) for each pollutant and source category which serves as a "floor" for its control standards; then the agency selects as its standard either the MACT floor or, if achievable in light of the factors and methods listed in subsection (d)(2), "beyond the floor" technology that is more stringent than the MACT. See generally Cement Kiln Recycling Coalition, 255 F.3d 855, 858 (D.C.Cir.2001). In the Group IV NESHAP rulemaking EPA selected as the MACT floor for PET manufacturing facilities sensory leak detection and repair (LDAR), which relies solely on the human senses to detect leaks. See EPA's Opp'n to Pet'r's Motion for Stay Pending Review, at 3 (filed December 10, 2001). Nevertheless, for most of the equipment categories addressed in the leak provisions, EPA prescribed, in lieu of or as an alternative to sensory LDAR, one or both of two beyond-the-floor technologies: "one time" equipment modification or "Method 21" LDAR, which uses portable organic vapor analyzers to monitor emissions.

Pursuant to subsection (d)(2)'s directive to "tak[e] into consideration the cost of achieving such emission reduction," EPA conducted a cost effectiveness analysis of the proposed standard, using the following methodology. First, EPA calculated the aggregate effectiveness of the proposed controls at each PET producing facility by subtracting the aggregate estimated post-control leak rates from the aggregate estimated pre-control leak rates to ascertain the amount of emission reduction. EPA then calculated the aggregate estimated costs to implement the leak reduction technologies selected at each facility. Third, EPA calculated the cost effectiveness by dividing the aggregate estimated costs of all of the technologies for each facility by the aggregate estimated reductions for the facility. Finally, EPA reported the combined cost-effectiveness of the improvements at the facilities in each of four subcategories of PET production plants — identified by the feedstock used (dimethyl terephthalmate (DMT) or terephthalic acid (TPA)) and by the manufacturing process applied (batch or continuous) — as the annual cost per ton of HAP reduction: $620/ ton (DMT-batch), $320/ton (DMT-continuous), $1500/ton (TPA-continuous) and $730/ ton (TPA-batch). See 66 Fed.Reg. at 40,905.³ EPA concluded that these aggregate figures demonstrate that implementation of the standard for each subcategory is cost effective.⁴

In November 1996 KoSa and Eastman filed separate petitions for review with this court and a joint petition for reconsideration with EPA. With the petition for reconsideration they submitted new cost and emissions data that they contended should be used to determine cost effectiveness. In response, in October 1998 EPA conducted a new analysis using the petitioners' data which produced new, less cost effective figures: $2100/ton (DMT-batch), $1300/ton (DMTcontinuous), $1600/ton (TPA-continuous) and $1600/ton (TPA-batch). See 66 Fed.Reg. at 40,905. Based on these results, EPA again concluded the standard is cost effective and issued a proposed denial of the petitions for reconsideration on June 8, 1999. National Emission Standards for Hazardous Air Pollutants: Group IV Polymers and Resins: Proposed Denial of Petition for Reconsideration and Notice of Public Hearing, 64 Fed.Reg. 30,456 (June 8, 1999).

The petitioners submitted comments on the proposed denial, asserting EPA had underestimated the costs of the control and overestimated the emission reductions and that EPA should not have aggregated the cost effectiveness of the controls. EPA conducted another analysis in December 2000 and calculated the following costs/ton: $3300/ton (DMT-batch), $2700/ ton (DMT-continuous), $1700/ton (TPA-continuous) and $1600/ton (TPA-batch). On June 8, 2001 EPA published its final denial of the petition for reconsideration, concluding once again that the standards are cost effective. National Emission Standards for Hazardous Air Pollutant Emissions: Group IV: Polymers and Resins: Final rule; Amendments and Denial of Petitions, 66 Fed.Reg. 40,903 (August 6, 2001). KoSa filed a petition for review of the denial on November 12, 2001.

II.

The petitioners do not here challenge EPA's basic cost effectiveness methodology but fault only the agency's decision to aggregate the cost effectiveness of the proposed controls — facility-wide and by facility subcategory — which, they contend, misrepresents the cost effectiveness of the leak provisions, at least for some types of equipment, because it averages the cost effectiveness of using Method 21 with the cost effectiveness of the other two controls—one time modification and sensory LDAR.⁵ Because of the high cost of Method 21, the petitioners maintain, only a separate analysis of this control will accurately reflect the cost effectiveness of the equipment leak standard. We conclude that, although aggregating cost effectiveness may be a permissible approach to assessing the standard's cost effectiveness, the present record does not demonstrate that EPA's use of aggregation was reasonable.

In its denial of reconsideration, EPA set forth the following justification for aggregating its cost effectiveness results:

We did not perform cost analyses which separate portions of the equipment leak programs that require one-time equipment modifications from the portions that are based on EPA...