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Sierra Club and Natural Resources Defense Council v. Environmental Protection Agency And Pruitt

United States Court of Appeals, District of Columbia Circuit

July 6, 2018

Sierra Club and Natural Resources Defense Council, Petitioners
v.
Environmental Protection Agency and E. Scott Pruitt, Respondents Brick Industry Association, et al., Intervenors

          Argued November 9, 2017

          On Petitions for Review of a Final Action of the United States Environmental Protection Agency

          James S. Pew argued the cause and filed the briefs for Environmental petitioners.

          William L. Wehrum, Felicia H. Barnes, Todd E. Palmer, Valerie L. Green, Cameron F. Field, Howard L. Gilberg, Jean M. Flores, Jeffrey S. Longsworth, Charles M. Denton, and Roger J. Marzulla were on the joint briefs for Industry petitioners.

          Kate R. Bowers, Attorney, U.S. Department of Justice, argued the cause for respondents. With her on the brief were Sonya J. Shea, Attorney, and Sonja L. Rodman and Scott J. Jordan, Attorneys, U.S. Environmental Protection Agency.

          Felicia H. Barnes argued the cause for Industry respondent-intervenors. With her on the joint brief were William L. Wehrum Jr., Todd E. Palmer, Valerie L. Green, Cameron F. Field, Jeffrey S. Longsworth, and Charles M. Denton.

          James S. Pew was on the brief for Environmental respondent-intervenors.

          Before: Rogers and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.

          OPINION

          Sentelle, Senior Circuit Judge.

         In this consolidated proceeding, we consider petitions for review of an Environmental Protection Agency ("EPA") final rule entitled "NESHAP for Brick and Structural Clay Products Manufacturing; and NESHAP for Clay Ceramics Manufacturing," 80 Fed. Reg. 65, 470 (Oct. 26, 2015) ("Brick/Clay Rule"), and its partial denial of reconsideration of that rule, 81 Fed. Reg. 31, 234 (May 18, 2016).

         In Case No. 15-1487, petitioners Sierra Club and Natural Resources Defense Council (collectively, "Environmental Petitioners") contend that the EPA erred in its use of health-based standards for acid gas emissions, failed to properly explain its methodology in setting maximum achievable control technology-based standards, and improperly allowed brick plants to meet alternative emissions floors. In Case Nos. 15-1492, 15-1493, 15-1496, and 16-1179, the Brick Industry Association, the Tile Council of North America, Inc., and the Kohler Company (collectively, "Industry Petitioners") contend that the EPA made multiple errors in its methodology in the Brick/Clay Rule.

         Finally, the EPA moved to sever and hold in abeyance the Industry Petitioners' petition for review while it reconsiders the Brick/Clay Rule. Industry Petitioners supported the motion; the Environmental Petitioners opposed the motion to hold the entire case in abeyance but not EPA's motion to sever and hold in abeyance the Industry Petitioners' petition. See Unopposed Mot. at 2, Doc. No. 1703072 (Filed Nov. 3, 2017). We deferred consideration of the motion pending oral argument. We now deny the motion and consider this case on its merits. For the reasons stated below, we deny Industry Petitioners' petition for review and grant in part that of the Environmental Petitioners and remand the Brick/Clay Rule to the agency for further proceedings consistent with this opinion.

         I. Background

         Under the Clean Air Act ("CAA"), the EPA regulates all major and area sources of hazardous air pollutants. 42 U.S.C. § 7412(d)(1). There are 189 hazardous air pollutants subject to regulation under the CAA, including hydrogen chloride, hydrogen fluoride, chlorine, and heavy metals such as mercury. Id. § 7412(b)(1). During the regulatory process, the EPA identifies categories of sources that generate hazardous air pollutants, and then sets emissions limits for each major source category. Id. § 7412(c)(1)-(2), (d)(1).

         The EPA found that kilns emit hazardous acid gases, primarily hydrogen chloride (HCl), hydrogen fluoride (HF), and chlorine (Cl2). 80 Fed. Reg. at 65, 473. Each of these acid gas pollutants causes health issues, such as asthma, respiratory problems, skin irritation, burns, low blood pressure, and, in severe cases, death. Regulatory Impact Analysis: Final Brick and Structural Clay Products NESHAP at 4-28 to 4-30, Docket # EPA-HQ-OAR-2013-0291-0665 (July 2015). Kilns also emit heavy metal pollutants, such as mercury, lead, arsenic, and other particulate matter. 80 Fed. Reg. at 65, 473. Heavy metal pollutants also cause health issues, such as neurological damage, respiratory harm, and cancer, and threaten the natural environment. Regulatory Impact Analysis at 4-27 to 4-33, Docket # EPA-HQ-OAR-2013-0291-0665.

         Once the EPA listed brick and ceramic kilns as a major source of hazardous air pollutants, it was required to regulate them. 42 U.S.C. § 7412(e)(1)(E). In 2003, the EPA first undertook the regulation of kiln emissions under the CAA. 68 Fed. Reg. 26, 690 (May 16, 2003) ("2003 Rule"). In 2007, this Court held that the 2003 Rule did not comply with the CAA and vacated it. Sierra Club v. EPA, 479 F.3d 875, 876 (D.C. Cir. 2007) (per curiam) ("Sierra I"). In 2012, Sierra Club brought suit against the EPA to force it to promulgate regulations to replace the vacated 2003 Rule. Sierra Club v. EPA, 850 F.Supp.2d 300, 301 (D.D.C. 2012). In 2014, after years of data collection, the EPA proposed a new rule to replace the vacated standards for kiln emissions. 79 Fed. Reg. 75, 622 (Dec. 18, 2014). On October 26, 2015, the EPA published the final Brick/Clay Rule. 80 Fed. Reg. at 65, 470. Industry Petitioners then submitted a petition for reconsideration of the Brick/Clay Rule, which the EPA denied in relevant part. 81 Fed. Reg. 31, 234 (May 18, 2016).

         The Brick/Clay Rule and the EPA's partial denial of reconsideration are the subjects of the petitions in this consolidated case. The Brick/Clay Rule applies to brick, clay, and tile kilns. The emissions standards for brick and structural clay products, such as clay pipe and roof tile, are published in the Brick/Clay Rule and codified at 40 C.F.R. pt. 63, subpt. JJJJJ. 80 Fed. Reg. at 65, 520. The emissions standards for clay ceramic products, such as pressed tile and sanitaryware (e.g., toilets and sinks), are published within the Brick/Clay Rule, titled the National Emissions Standards for Hazardous Air Pollutants for Clay Ceramic Manufacturing ("Clay NESHAP"), codified at 40 C.F.R. pt. 63, subpt. KKKKK. 80 Fed. Reg. at 65, 543.

         Now, the Brick Industry Association petitions for review of the Brick/Clay Rule as applicable to the brick industry and for review of the EPA's denial of reconsideration of the Brick/Clay Rule. The Kohler Company petitions for review of the Clay NESHAP. The Tile Council of North America petitions for review of certain provisions of the Clay NESHAP applicable to the subcategory of ceramic tile manufacturing ("Tile NESHAP"). Finally, the Environmental Petitioners petition for review of the Brick/Clay Rule as applicable to all the Industry Petitioners. Industry Petitioners intervened on behalf of the EPA in response to the Environmental Petitioners' petition; the Environmental Petitioners intervened on behalf of the EPA in response to the Industry Petitioners' petitions.

         A. Clean Air Act Framework for Emissions Standards

         The CAA governs the setting of emissions standards using technology and health thresholds. 42 U.S.C. § 7412(d). When these types of limits are not feasible, the EPA may substitute alternative methods to limit emissions such as operational controls. Id. § 7412(h).

         1. Maximum Achievable Control Technology Emissions Standards

         The 1990 amendments to the CAA directed the EPA to issue emissions limits using technology-based standards, called "Maximum Achievable Control Technology" ("MACT"). MACT standards require the "maximum degree of [emissions] reductions" that the EPA "determines is achievable." 42 U.S.C. § 7412(d)(2); see Sierra I, 479 F.3d at 877. The emissions standards for new sources must be no "less stringent than the emission control that is achieved in practice by the best controlled similar source." 42 U.S.C. § 7412(d)(3). Congress adopted this MACT-based scheme because the EPA's previous use of health-based standards had been "problematic," because of uncertainty over which pollutants pose a health risk. NRDC v. EPA, 529 F.3d 1077, 1079 (D.C. Cir. 2008).

         In establishing a MACT emissions standard, the EPA defines a minimum stringency requirement, or "floor," based on emissions levels achieved by existing sources. 42 U.S.C. § 7412(d)(3)(A), (B); Sierra I, 479 F.3d at 877. For categories and subcategories of existing emissions sources composed of thirty or more individual sources, the EPA sets the MACT floor using "the average emission limitation achieved by the best performing 12 percent of the existing sources (for which the Administrator has emissions information)." 42 U.S.C. § 7412(d)(3)(A). If there are fewer than thirty individual sources, the EPA sets the MACT floor using "the average emission limitation achieved by the best performing 5 sources." Id. § 7412(d)(3)(B). The EPA may set more stringent standards than the MACT floor if the more stringent standard is achievable considering cost and other factors. Id. § 7412(d)(2); U.S. Sugar Corp. v. EPA, 830 F.3d 579, 594-95 (D.C. Cir. 2016) (per curiam) ("U.S. Sugar"), cert. denied sub nom. American Mun. Power v. EPA, 137 S.Ct. 2296 (2017).

         2. Alternatives to MACT Standards

         Alternatively, the EPA may use a health threshold rather than MACT standards for "pollutants for which a health threshold has been established." 42 U.S.C. § 7412(d)(4); see U.S. Sugar, 830 F.3d at 623-24. Such a health-based standard must include an "ample margin of safety." 42 U.S.C. § 7412(d)(4). Additionally, if the EPA determines it is "not feasible" to prescribe either a health- or technology-based emissions standard the agency may promulgate a design, equipment, work-practice, or operational standard. Id. § 7412(h).

         B. Brick/Clay Rule

         In the Brick/Clay Rule, the EPA set MACT standards to regulate heavy metal emissions from kilns and health thresholds to regulate acid gas emissions. 80 Fed. Reg. at 65, 471.

         1. Heavy Metal Emissions

         The EPA chose to regulate heavy metal emissions in the Brick/Clay Rule using MACT standards under § 7412(d)(1). 80 Fed. Reg. at 65, 471. In setting the brick MACT floor, the EPA set separate standards for particulate matter (which it used as a surrogate for nonmercury hazardous metals) and mercury, with subcategories for large tunnel and small tunnel brick kilns. Id. at 65, 530-31. Additionally, the EPA provided "alternative equivalent limits" for heavy metal emissions from brick kilns. Id. at 65, 474, 65, 485. There were more than thirty individual sources for each category, so the best twelve percent of performers were used to set the brick MACT floor. Id. at 65, 485.

         The Clay NESHAP sets separate MACT standards for subcategories of floor tile, wall tile, and sanitaryware that are heavy metal emissions sources. Id. at 65, 478. In response to an EPA information request, Kohler activated a decommissioned emissions scrubber at its South Carolina Kiln 10 ("Kiln 10"), and that data was used as one of the best performing sources in setting the corresponding MACT floor. See id. at 65, 510; see also 81 Fed. Reg. at 31, 235. The Tile NESHAP regulates emissions for a subcategory of ceramic tile plants and has separate dioxin/furan and mercury emissions standards. 80 Fed. Reg. at 65, 554. Because fewer than thirty sources exist for each category of clay and tile kilns, the average of the five best performers was used to set the clay and tile MACTs. See id. at 65, 504 n.102, 65, 510.

         Both Industry and Environmental Petitioners challenge the EPA's methods of setting various MACT floors as unlawful and arbitrary. We will address the background of those methods in further detail with respect to the individual petitions for review.

         2. Acid Gas Emissions

         The EPA regulates hazardous acid gas emissions for new and existing brick tunnel kilns and all ceramics kilns except for sanitaryware shuttle kilns in the Brick/Clay Rule using health thresholds under § 7412(d)(4). 80 Fed. Reg. at 65, 471, 65, 474, 65, 478. Environmental Petitioners contend that EPA's choice of health thresholds over a MACT standard means that kiln facilities largely will not need to add more pollution controls. Environmental Petitioners challenge EPA's use of health thresholds and the methods it used to set the thresholds as contrary to the CAA. We will address the background of the EPA's reasoning in setting the health thresholds in the context of the Environmental Petitioners' petition for review.

         II. Standard of Review

         EPA's final rule is subject to judicial review under 42 U.S.C. § 7607(b)(1). We will set aside an EPA action under the CAA if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 42 U.S.C. § 7607(d)(9)(A). We review EPA's interpretation of the CAA under the two-step framework of Chevron U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984). We first determine if Congress has "directly spoken to the precise question at issue." Id. at 842. If so, then we must "give effect to the unambiguously expressed intent of Congress." Id. at 843. If, however, "the statute is silent or ambiguous with respect to the specific issue," we defer to the EPA's interpretation of the CAA so long as it "is based on a permissible construction of the statute." Id.

         Under these standards, we review in turn the Environmental Petitioners' and the Industry ...


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