Bluewater Network v. E.P.A., 03-1120.

• Decision Date: 22 June 2004
• Docket Number: No. 03-1120.,03-1120.
• Citation: 372 F.3d 404
• Parties: BLUEWATER NETWORK, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY and Michael O. Leavitt, Administrator, United States Environmental Protection Agency, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

372 F.3d 404

BLUEWATER NETWORK, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY and Michael O. Leavitt, Administrator, United States Environmental Protection Agency, Respondents.

No. 03-1120.

United States Court of Appeals, District of Columbia Circuit.

Argued February 20, 2004.

Decided June 22, 2004.

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

J. Martin Wagner argued the cause for the petitioner.

Barbara B. Baird and Frances L. Keeler were on brief for amicus curiae, South Coast Air Quality Management District.

Eileen T. McDonough, Attorney, United States Department of Justice, argued the cause for the respondents. John C. Cruden, Deputy Assistant Attorney General, United States Department of Justice, was on brief.

Janice K. Raburn, for American Petroleum Institute, John Longstreth, for The Transportation Institute, C. Jonathan Benner, for International Association of Independent Tanker Owners and Chamber of Shipping of America, and Marc J. Fink for World Shipping Council, were on joint brief for amici curiae, American Petroleum Institute et al. Sean T. Connaughton, for International Association of Independent Tanker Owners and Chamber of Shipping of America, entered an appearance.

Before: GINSBURG, Chief Judge, HENDERSON, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge:

Petitioner Bluewater Network (Bluewater) challenges the Environmental Protection Agency's (EPA or Agency) final rule adopting a two-tiered approach to setting emissions standards for "Category 3" marine diesel engines which are "very large marine engines used primarily for propulsion power on ocean-going vessels such as container ships, tankers, bulk carriers, and cruise ships." Control of Emissions from New Marine Compression-Ignition Engines at or Above 30 Liters Per Cylinder, 68 Fed. Reg. 9746, 9747 (Feb. 28, 2003) (to be codified at 40 C.F.R. pts. 9 & 94). Bluewater claims that the rule fails to reduce emissions from those engines and entirely omits to regulate the emissions from foreign-flagged ships' engines, as required by section 213(a)(3) of the Clean Air Act (CAA). 42 U.S.C. § 7547(a)(3); see also id. § 7607(d)(9)(A). We conclude that the EPA reasonably interpreted and implemented the CAA and therefore deny Bluewater's petition for review.

I.

In 1970, the Congress enacted the CAA "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population." Id. § 7401(b)(1). In 1990, it added section 213, which authorizes the EPA to establish emissions standards for "nonroad engines and nonroad vehicles." Id. § 7547(a)(1); see Husqvarna AB v. EPA, 254 F.3d 195, 197 (D.C.Cir.2001); see also Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1080-81 (D.C.Cir.1996). Section 213(a)(1) and (2) requires the EPA to determine whether the emissions from "new and existing nonroad engines or nonroad vehicles" are "significant contributors" to air pollution in areas with air quality problems. 42 U.S.C. § 7547(a)(1) & (2). Section 213(a)(3) in turn requires the EPA to promulgate emissions standards for all "new nonroad engines... which in the Administrator's judgment cause, or contribute to, such air pollution." Id. § 7547(a)(3) (emphasis added). The standards must:

achieve the greatest degree of emission reduction achievable through the application of technology which the [EPA] Administrator determines will be available for the engines or vehicles to which such standards apply, giving appropriate consideration to the cost of applying such technology within the period of time available to manufacturers and to noise, energy, and safety factors associated with the application of such technology.

Id. The standards must also "take effect at the earliest possible date considering the lead time necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period and energy and safety." Id. § 7547(b). Finally, the EPA must revise the standards from "time to time." Id. § 7547(a)(3).

In 1994, the EPA determined that nonroad engines and vehicles contribute significantly to air pollution in problem areas throughout the country and set about the process of setting emissions standards for various categories of engines, including marine diesel engines. See Control of Air Pollution; Determination of Significance for Nonroad Sources and Emission Standards for New Nonroad Compression-Ignition Engines at or Above 37 Kilowatts, 59 Fed. Reg. 31, 306 (June 17, 1994) (to be codified at 40 C.F.R. pts. 9 & 89); Control of Air Pollution; Emission Standards for New Gasoline Spark-Ignition and Diesel Compression-Ignition Marine Engines, 59 Fed. Reg. 55,930 (notice of proposed rulemaking) (Nov. 9, 1994). As noted above, the Category 3 marine diesel engines that are the subject of this rulemaking are some of the largest engines in the world, with greater than 30 liters displacement per cylinder. See 68 Fed. Reg. at 9747. The engines burn residual fuel oil — a byproduct of refining crude oil into higher-grade products — which tends to have higher ash, sulfur and nitrogen content than other fuels. See id. at 9767. Residual fuel oil also has a higher variability than other fuels, which makes engine emissions more difficult to control. See id. at 9763. The engines thus contribute to national ozone, carbon monoxide, nitrous oxide (NOx) and particulate matter levels, especially near commercial ports like New Orleans, LA and along coastal areas like Santa Barbara, CA. See id. at 9751. Existing diesel engine technologies, such as turbo and super-charging, in-cylinder injection improvements and engine cooling, are used to increase the efficiency and reduce emissions from these engines. See id. at 9749. There are also new, advanced technologies, including systems that introduce water into the combustion process, selective catalytic reduction systems that add a reducing agent like ammonia into the engine's exhaust and the use of fuel cells. See id. at 9764-67.

The EPA's effort to set emissions standards for Category 3 engines coincided with similar action taken by the International Marine Organization (IMO).¹ See, e.g., Control of Air Pollution; Emission Standards for New Gasoline Spark-Ignition and Diesel Compression-Ignition Marine Engines; Exemptions for New Nonroad Compression-Ignition Engines at or Above 37 Kilowatts and New Nonroad Spark-Ignition Engines at or Below 19 Kilowatts, 61 Fed. Reg. 4600, 4618 (supplemental notice of proposed rulemaking; proposed revisions) (Feb. 7, 1996); 59 Fed. Reg. at 55,934. In 1997, the IMO formally adopted Annex VI to the International Convention on the Prevention of Pollution from Ships, 1973, as Modified by the Protocol of 1978 Relating Thereto (MARPOL). Annex VI prescribes a NOx emissions limit for diesel engines on ships constructed on or after January 1, 2000 and for engines undergoing "major conversion" on or after that date. Regulation 13 to Annex VI of MARPOL. Annex VI has recently been ratified by the requisite number of IMO member countries and will take effect in May 2005. See http:// www.imo.org/home.asp (last visited June 2, 2004).

Following the IMO's adoption of Annex VI, the EPA noticed its intent to set the CAA emissions standards for Category 3 engines at the same level set by Annex VI. See Control of Emissions of Air Pollution from New CI Marine Engines at or Above 37 Kilowatts, 63 Fed. Reg. 28,309, 28,313 (advance notice of proposed rulemaking) (May 22, 1998). It reasoned that Category 3 engines "have only a minimal impact on U.S. air quality" because they operate in U.S. waters for "only a limited amount of time" and that any stricter standards could be applied to U.S. ships only, potentially compromising their competitiveness in the world shipping market. Id. Several months later, the EPA decided to postpone adopting emissions standards for these engines. Control of Emissions of Air Pollution from New CI Marine Engines at or Above 37 kW, 63 Fed. Reg. 68,508, 68,541-42 (notice of proposed rulemaking) (Dec. 11, 1998). Because it believed Annex VI's standards to be appropriate for Category 3 engines under the CAA based on its analysis of available control technologies, the EPA concluded that adopting those standards "would be unnecessary and redundant" because it expected U.S. vessels to comply with the Annex VI standards. Id. at 68,542. In the same notice, the EPA also proposed excluding smaller (categories 1 and 2) diesel engines on foreign-flagged vessels in U.S. waters from any emissions standards, id. at 68,516-17, because, relying in part on United States Treasury Department rulings and tariff schedules, it deemed foreign-flagged ships engaged in international trade not to have been imported into the United States. Id. The EPA's final rule adopted both positions: it did not set emissions standards for Category 3 engines and it defined the Category 1 and Category 2 engines to which its rule applied so as to exempt those aboard foreign-flagged ships. Control of Emissions of Air Pollution From New Marine Compression-Ignition Engines at or Above 37 kW, 64 Fed. Reg. 73,300, 73,302, 73,306 (Dec. 29, 1999) (codified at 40 C.F.R. pts. 89, 92, 94).

In 2000, Earth Island Institute, an environmental group, originally petitioned for review of that rule; Bluewater became the petitioner in 2002. As part of a settlement agreement in that matter, the EPA agreed to initiate the rulemaking that resulted in the rule now under review. Thus, in May 2002, the EPA proposed, among other things, to formally adopt the Annex VI emissions standards as the CAA standards for Category 3 engines. Control of Emissions of Air Pollution from New Marine Compression-Ignition Engines at or Above 30 Liters/Cylinder, 67 Fed. Reg. 37,548 (proposed rule) ...