Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-01135/USCOURTS-caDC-01-01135-0/pdf.json

Parties Involved:
Alliance of Automobile Manufacturers
Petitioner
Association of International Automobile Manufacturers, Inc.
Petitioner
Environmental Protection Agency
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 26, 2002 Decided May 3, 2002

No. 01-1052

National Petrochemical & Refiners Association,

Petitioner

v.

Environmental Protection Agency,

Respondent

International Truck and Engine Corporation, et al.,

Intervenors

Consolidated with

01-1092, 01-1093, 01-1094, 01-1130, 01-1132,

01-1134, 01-1404, 01-1414

On Petitions for Review of Orders of the

Environmental Protection Agency

Theodore L. Garrett argued the cause for petitioner Cummins Inc. With him on the briefs was Andrew J. Heimert.

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Julie R. Domike argued the cause and filed the briefs for

petitioner Volvo Truck Corporation.

Michael F. McBride argued the cause for petitioner National Petrochemical & Refiners Association, et al. With him

on the brief were Maurice H. McBride, Bruce W. Neely,

John W. Lawrence, John S. Hahn, Julie Anna Potts, Janice

K. Raburn, David T. Deal, Thomas Sayre Llewellyn and Chet

M. Thompson.

William A. Anderson, II, argued the cause for petitioners

Alliance of Automobile Manufacturers and Association of

International Automobile Manufacturers, Inc. With him on

the briefs were Julie C. Becker, Ellen L. Shapiro, Charles H.

Lockwood and Susan A. MacIntyre.

Jed R. Mandel and Timothy A. French were on the briefs

for Engine Manufacturer petitioners.

Eric G. Hostetler, Kent E. Hanson and Norman L. Rave,

Jr., Attorneys, U.S. Department of Justice, argued the causes

for respondents. With them on the briefs were Kenneth C.

Amaditz, Attorney, U.S. Department of Justice, John T.

Hannon, Michael J. Horowitz and Steven E. Silverman,

Attorneys, U.S. Environmental Protection Agency.

Howard I. Fox and John D. Walke were on the brief for

intervenors American Lung Association, et al.

Janice K. Raburn, David T. Deal, Thomas Sayre Llewellyn, Michael F. McBride, Bruce W. Neely, John W. Lawrence

and Maurice H. McBride were on the brief for intervenor

American Petroleum Institute, et al.

Hope M. Babcock, Richard Blumenthal, Attorney General,

State of Connecticut, Kimberly Massicotte, Assistant Attorney General, M. Jane Brady, Attorney General, State of

Delaware, Kevin Maloney, Assistant Attorney General, J.

Joseph Curran, Jr., Attorney General, State of Maryland,

Kathy M. Kinsey, Assistant Attorney General, Thomas F.

Reilly, Attorney General, Commonwealth of Massachusetts,

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Kirsten H. Engel, Assistant Attorney General, Philip T.

McLaughlin, Attorney General, State of New Hampshire,

Maureen D. Smith, Assistant Attorney General, Eliot Spitzer, Attorney General, State of New York, Peter H. Lehner,

Assistant Attorney General, Robert A. Reiley, M. Dukes

Pepper, Jr., Sheldon Whitehouse, Attorney General, State of

Rhode Island, Tricia K. Jedele, Assistant Attorney General,

Barbara Beth Baird and Jeri G. Voge were on the brief for

intervenors State and Territorial Air Pollution Program Administrators, et al. and amicus curiae South Coast Air Quality

Management District. Jennifer L. Wazenski, Assistant Attorney General, State of Maryland, entered an appearance.

Laurence H. Levine, Robert M. Sussman, Julia A. Hatcher, William A. Anderson, II, Susan A. MacIntyre, Julie C.

Becker and Ellen L. Shapiro were on the brief for intervenors

International Truck and Engine Corporation, et al.

Before: Sentelle and Tatel, Circuit Judges, and

Williams, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

PER CURIAM:1 We have here a set of challenges to an

EPA rule affecting diesel fuel and engines. The rule requires

drastic reductions in exhaust emissions starting in 2007 (for

some emissions 95% lower than current standards). To aid in

the achievement of the new emission standards, the rule also

requires a 97% reduction in the sulfur level in diesel fuel.

Numerous parties, including engine manufacturers (including

Cummins Inc.), automobile makers, and fuel refiners, challenged the rule on various grounds, while others, including

environmental groups and states, defended it. We deny the

petitions.

I. The Regulations

Diesel engines emit nitrous oxides ("NOx"), non-methane

hydrocarbons, and particulate matter ("PM"), all of which are

__________

1 Parts I and II of the opinion are by Senior Judge Williams;

part III is by Judge Sentelle; and parts IV and V are by Judge

Tatel.

harmful to the environment and human health (as no party

disputes). Fulfilling its duty under the Clean Air Act to set

emission standards that "reflect the greatest degree of emission reduction achievable" through cost-effective technology,

42 U.S.C. s 7521(a)(3), the EPA decided on dramatic reductions of diesel engine emission standards, issuing a final rule

on January 18, 2001: Control of Air Pollution from New

Motor Vehicles: Heavy-Duty Engine and Vehicle Standards

and Highway Diesel Fuel Sulfur Control Requirements, 66

Fed. Reg. 5002 (2001) (hereinafter "2007 Rule").

The 2007 Rule sets the following standards for diesel

engines: 0.01 grams per brake-horsepower-hour (g/bhp-hr)

for PM, 0.20 g/bhp-hr for NOx, and 0.14 g/bhp-hr for nonmethane hydrocarbons. 66 Fed. Reg. at 5005; 40 C.F.R.

s 86.007-11(a)(1), (3). For PM and NOx, the new standards

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are "90 percent and 95 percent below current standard levels,

respectively." 66 Fed. Reg. at 5002. Engine emissions are

to be measured by the Federal Test Procedure, see 40 C.F.R.

s 86.1301-90 et seq., as well as two other test procedures that

are not at issue in this case.

The standard for PM takes full effect in 2007. 66 Fed.

Reg. at 5005. The standards for NOx and non-methane

hydrocarbons, however, will be phased in as follows: 50% of a

manufacturer's sales for 2007, 2008 and 2009 engines and

100% of sales for 2010 and following. Id.; 40 C.F.R.

s 86.007-11(g). During the phase-in period, manufacturers

will be allowed to participate in an averaging, banking, and

trading ("ABT") program. This program allows the generation of credits from engines that beat the standards; the

credits can then be applied to engines that may not be able to

meet the 2007 standards right away. 66 Fed. Reg. at 5109-

11; 40 C.F.R. s 86.007-15. A crucial distinction is made

here: Averaging across service classes (e.g., between light

heavy-duty engines and heavy heavy-duty engines) is allowed,

but not banking or trading. 66 Fed. Reg. at 5110.

The 2007 Rule also eliminates a preexisting exception--

available only for turbocharged heavy-duty diesel engines--

for emissions from engine crankcases. 66 Fed. Reg. at 5040;

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40 C.F.R. s 86.007-11(c). As a result, any crankcase emissions not eliminated count against a vehicle's emission limit.

High pollutant levels in fuel make it impossible or at least

far more difficult to achieve low emissions. Thus, under its

authority to regulate any fuel components that significantly

impair "the performance of any emission control device or

system," 42 U.S.C. s 7545(c)(1)(B), the EPA also decided to

require "a 97 percent reduction in the sulfur content of diesel

fuel." 66 Fed. Reg. at 5002. As of 2006, the maximum sulfur

content of diesel fuel will be reduced from 500 ppm to 15

ppm. (Under a 15 ppm cap, the EPA predicts that the

average sulfur level in diesel will actually be 7 ppm. Response to Comments at 3-50.) Under its "Temporary Compliance Option," the EPA actually requires that only 80% of

fuel from any given refinery meet the 15 ppm cap in years

2006-08. Any overachieving refiner will generate credits,

which it can then use to average with another refinery owned

by that refiner, bank for future years, or sell to another

refiner. 66 Fed. Reg. at 5065.

II. The Emissions Standards

We review the 2007 Rule under the arbitrary and capricious standard of 42 U.S.C. s 7607(d), which is indistinguishable from the Administrative Procedure Act equivalent. See

Ethyl Corp. v. EPA, 51 F.3d 1053, 1064 (D.C. Cir. 1995);

Small Refiner Lead Phase-Down Task Force v. EPA, 705

F.2d 506, 519 (D.C. Cir. 1983). Deference is particularly

great where EPA's decision is based on complex scientific or

technical analysis. Appalachian Power Co. v. EPA, 251 F.3d

1026, 1035 (D.C. Cir. 2001).

A. Background on Emissions Control Technology

Diesel exhaust emissions can be controlled through the use

of catalytic emission control devices in the vehicle's exhaust

system. 66 Fed. Reg. at 5007. These resemble the familiar

catalytic converters found on ordinary automobiles. Id.

Current control devices for diesel engines work less well than

they do for gasoline engines, because of diesels' "oxygen-rich

and relatively cool ... exhaust environment." Id. at 5009.

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PM emissions are also more difficult to control in diesel

engines because of the soot formed during diesel combustion.

Id. Compounding the difficulties is the fact that "historical

diesel NOx control approaches tend to increase PM and vice

versa, but both are harmful pollutants that need to be controlled." Id.

Thus, in order to achieve drastic--and simultaneous--reductions in PM, NOx, and non-methane hydrocarbons, engine

manufacturers will need technical innovations in emission

controls. The EPA predicts that two relatively new technologies will aid in achieving the 2007 reductions: the catalyzed

diesel particulate filter ("particulate filter") and the NOx

adsorber. 66 Fed. Reg. at 5036. In the following paragraphs, we explain briefly--and to the best of our understanding--how each technology works on the targeted emissions.

Particulate matter is made up of three things: Unburned

carbon particles (or soot), unburned hydrocarbons (also called

the "soluble organic fraction"), and sulfates (resulting from

the oxidation of sulfur in the engine's exhaust). 66 Fed. Reg.

at 5047. The majority of diesel PM is soot. Catalyzed

particulate filters work by passing the exhaust through a

ceramic or metallic filter that captures soot and other PM.

Particulate filters eventually become plugged up with particulate matter, at which point the collected particles (mostly

carbon) have to be burned off (or oxidized). Id. The

burning-off process is called "regeneration," and the result

(from oxidizing carbon) is of course carbon dioxide. Id. The

EPA was convinced that precious metal catalysts would make

regeneration possible at the low temperatures typical of

diesel engines, and that such catalysts could thus be used on a

continuous basis throughout the life of the trap. Id.; see also

Regulatory Impact Analysis ("RIA") III-6.

NOx adsorbers do their work by storing NOx during the

normal oxygen-rich conditions of diesel engine operation.

RIA III-18. Over time, the adsorber becomes full of the

stored NOx, thus requiring regeneration. During regeneration, the excess NOx is burned off; technically, it is reduced

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to N2 by an interaction with carbon monoxide across a

catalyst system that typically contains platinum and rhodium;

the less-harmful gases that result are N2 and CO2. Id. Like

NOx, sulfur from the fuel accumulates over time by bonding

to the NOx adsorber's catalysts, and must be burned off

during a "desulfation" process (more on that below). The

EPA suggests the use of dual-bed NOx adsorbers (for a

diagram, see RIA III-23), which involve splitting of the

exhaust stream into two pipes, each of which has an adsorber

bed. The benefit of such an arrangement is that regeneration and/or desulfation can be conducted in one bed while

nearly all the exhaust stream is directed to the bed that is

still in adsorbtion mode, thus maintaining a consistent level of

performance. RIA III-22 to III-25.

Crankcase emissions are emitted from the vehicle's crankcase, having gotten there by leaking from the combustion

chamber through the piston rings. 66 Fed. Reg. at 5040.

The EPA's elimination of the previous exception for such

emissions is a "performance requirement," leaving the solution entirely up to manufacturers. Id. The EPA predicts

that manufacturers will either filter crankcase gases and

route them back into the engine intake, or route the gases

into the exhaust stream (upstream of any emissions control

devices). RIA III-78-79. Another option would be to vent

crankcase gases directly to the atmosphere; this is an unlikely choice, because the combined emissions from exhaust and

crankcase together would have to fall within the exhaust

emissions standards. 66 Fed. Reg. at 5040.

B. Cummins's Challenges

1. Feasibility of NOx and PM Standards

Cummins argues that the EPA acted arbitrarily and capriciously in concluding that engine manufacturers will be able

to develop emissions-control systems satisfying the new rule.

According to Cummins, the EPA failed to make "reasonable

extrapolations," Cummins's Opening Brief at 5 (quoting Natural Resources Defense Council v. Thomas, 805 F.2d 410, 432

(D.C. Cir. 1986)), or to "provide a reasoned explanation for

believing that its projection is reliable," id. (quoting National

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Resources Defense Council, Inc. v. EPA, 655 F.2d 318, 328

(D.C. Cir. 1981)).

In reviewing these issues, we note that EPA was "not

obliged to provide detailed solutions to every engineering

problem," but had only to "identify the major steps" for

improvement and "give plausible reasons for its belief that

the industry will be able to solve those problems in the time

remaining." Husqvarna AB v. EPA, 254 F.3d 195, 201 (D.C.

Cir. 2001) (quoting NRDC, 655 F.2d at 333). Since the EPA

is authorized to adopt "technology-forcing" regulations, see

NRDC, 655 F.2d at 333; Sierra Club v. Costle, 657 F.2d 298,

364 (D.C. Cir. 1981), a petitioner's evidence that current

technology is inadequate is not enough to show that the EPA

was arbitrary in predicting future success.

a. Availability of Adequate NOx Adsorbers

In support of its assessment that manufacturers can feasibly meet the 2007 standards using NOx adsorbers, the EPA

pointed to the successful results achieved already in various

test programs. For example, the National Vehicle and Fuel

Emission Laboratory ("NVFEL") program reached the following conclusion: "This test program has shown that NOx

adsorbers and [particulate filters] are capable of greater than

90% emission reductions ... after running approximately 200

hours on 5 ppm sulfur equivalent fuel, without a desulfation

event. With reasonably expected desulfation, the expected

NOx reduction efficiency would be higher." EPA, 2007 Diesel

Emission Test Program, Initial Test Report at 31, IV-A-29

(Dec. 11, 2000) (hereinafter "NVFEL Study"); see also RIA

III-35 to III-48 (discussing the NVFEL test program). The

Department of Energy's Diesel Emission Control Sulfur Effects ("DECSE") program produced several reports finding

"NOx conversion efficiencies exceeding 90 percent...." RIA

III-35. And ironically, Cummins's own researchers (cited by

the EPA's Regulatory Impact Analysis) reported using a NOx

adsorber that cut NOx emissions by 98% on the Federal Test

Procedure, to a level of 0.055 g/bhp-hr (slightly more than a

quarter of the 0.20 g/bhp-hr standard adopted for 2007).

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Byron Bunker, Memo to File II-E-25, Handout 6 (Sept. 18,

2000) (Joint Appendix "J.A." III 1947); see also RIA III-34.

Other industry commenters agreed that NOx adsorber

technology could be developed and available by 2007. See,

e.g., Letter of Manufacturers of Emission Controls Association (April 5, 2000), II-G-60; Testimony of Johnson Matthey

(June 22, 2000), IV-F-100; Testimony of the Engelhard

Corp. (June 27, 2000), IV-F-188; Letter of Apyron Technologies, Inc. (Aug. 10, 2000), IV-D-227; Letter of the Engelhard

Corp. (Oct. 3, 2000), IV-G-38; Letter of Johnson Matthey

(Oct. 19, 2000), IV-G-55. Of course it is no surprise that NOx

adsorber manufacturers would support a regulation creating

a potential for sales of their products. See, e.g., George J.

Stigler, The Economic Theory of Regulation, 2 Bell J. Econ.

& Management Sci. 3 (1971). But such a manufacturer would

risk a considerable loss of reputation if its technology could

not fulfill a mandate that it had persuaded EPA to adopt. So

the submissions add something to the more direct experimental evidence.

Cummins, however, asserts that no NOx control system will

be capable of meeting the EPA's 2007 standards. It presents

three reasons to support this conclusion; ultimately, we are

convinced by none.

* * *

First, Cummins argues that though the EPA standards in

effect require NOx adsorbers to operate at 90% efficiency,

rapid degeneration will prevent them from lasting for anywhere near the useful life of a heavy heavy-duty diesel

engine. According to Cummins, the EPA's tests showing the

requisite 90% efficiency were short-term rather than for

extended periods.

Cummins fails, however, to give a full picture of the EPA's

research. Whereas Cummins claims that a certain EPA test

was only short-term, it actually involved a NOx adsorber

system that had already accumulated "190 hours of operation," the equivalent of "more than 13,000 miles of driving."

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tion events (see below), which likely reduced performance;

even so, the NOx adsorber was almost able to meet the 2007

standard. Id. (Table III.A-4). Cummins also cites a test

mentioned at 66 Fed. Reg. 5049 as showing that degradation

happens after 600 miles. But that test used 150 ppm diesel

fuel--10 times the maximum level allowed by the 2007 Rule

(and 20 times what EPA believes the 15 ppm cap will yield in

practice). Cummins also complains that the DECSE study

cited by the EPA showed that 90% efficiency declined to 75%

after only 40 hours--and that was using 3 ppm sulfur fuel to

boot. Cummins's Opening Brief at 8 (citing RIA III-66 &

Fig. III.A-15). Overall, NOx adsorber performance degraded

by 2% per hour of operation, with higher degradation when

higher sulfur fuel was used. Id. (citing RIA III-67). But the

EPA never denied that degradation is currently something of

a challenge; what matters is whether (as discussed below in

regard to desulfation) the EPA was arbitrary or capricious in

predicting that degradation could eventually be controlled.

* * *

In a closely-related argument, Cummins urges that the

desulfation process is an intractable obstacle to long-lasting

NOx adsorbers. As we've said, the NOx adsorber works

primarily by adsorbing NOx on catalysts. 66 Fed. Reg. at

5059. Sulfur, however, bonds to the catalysts as well, clogging up the catalyst sites and degrading performance. Id.

To prevent degradation, NOx adsorbers must periodically be

subject to "desulfation," a process that removes sulfur. Desulfation, however, requires that exhaust temperatures be

increased--and this in turn poses a risk of so-called "sintering," in which the catalysts are melted. Id. at 5060. Sintering, unsurprisingly, degrades the device's future NOx adsorbance. Id.

The result, according to Cummins, is a technical "catch-22"

that pulls manufacturers in "conflicting directions." On one

hand, desulfation should happen often and at high temperatures to prevent clogging by sulfur; on the other hand,

frequent, high-temperature desulfation itself degrades NOx

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adsorbance. As Cummins sees it, the EPA presents no

reason to think that this technical obstacle will be overcome,

other than "unsupported predictions of government and

private-sector observers, who assert in conclusory fashion

that technology that overcomes these inherent problems will

develop in due time." Cummins's argument turns on its

heavy discounting of the studies relied on by EPA.

Cummins says that the Ford Study (Mark A. Dearth et al.,

Sulfur Interaction with Lean NOx Traps (Oct. 1998) J.A. III

2187)) is not strictly relevant because it was performed using

a "pulsator," a device that burns synthetic gases and injects

pollutants to test catalyst performance. Cummins seems to

regard it as self-evident that the use of a pulsator leads to

inaccurate or inapplicable results. In making this assumption

it overestimates our technical sophistication. The EPA argues in response that the pulsator experiment does shed light

on the ability of NOx adsorbers to withstand desulfation. As

Cummins gives no articulable reason to doubt this conclusion,

we cannot fault the EPA for having relied on the study.

As for Cummins's objection that further Ford experiments

found significant degradation, the EPA observes that these

further experiments were conducted at temperatures of 900

to 1000 degrees Celsius (see Ford Study, J.A. III 2192-93),

whereas a "heavy-duty diesel engine in contrast rarely has

exhaust gas temperatures in excess of 500ø C." RIA III-68.

Given the adverse effect of excessive heat, this seems a

pertinent response.

Cummins complains that the DECSE study showed that

while desulfation did improve adsorber performance (compared to a sulfur-clogged state), it did not return the adsorber's performance to prior levels. Cummins's Opening Brief

at 10 (citing RIA III-66 & fig. III.A-15, J.A. IV 2480).

Moreover, the DECSE study showed that even without the

presence of sulfur, the desulfation-phase temperatures caused

a "continued decline in the catalyst's desulfated performance."

Id. (citing RIA III-67 & fig. III.A-16).

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The EPA, for its part, admits that the equipment used for

the DECSE test was not optimized for durability, but notes

that the EPA already pointed out several engineering steps

that would help adsorbers "to better withstand potential

thermal sintering from desulfation." For example, the EPA

cited technical solutions used in light-duty vehicles, such as

"modifications to the catalyst supports and surface structures

that stabilize the precious metals at high temperatures," and

"strengthening of crystalline lattice structures." RIA III-68;

see also Respondent's Brief at 23; 66 Fed. Reg. at 5060.

Other steps identified by EPA include careful control of

maximum temperatures during desulfation, and lowering the

air-to-fuel ratios. RIA III-69.

* * *

Finally Cummins argues that compliance with the Federal

Test Procedure will be impossible because of reduced performance during the so-called "cold start" section of that test.

The Federal Test Procedure has two main sections--a "cold

start" period of 20 minutes, and then a "hot start" period of

another 20 minutes. 40 C.F.R. s 86.1330-84(a); RIA III-49.

Separate tests are needed because the catalysts in NOx

adsorbers are ineffective at lower temperatures; according to

EPA data, NOx adsorber efficiency does not reach 90% until

the temperature is above 275 degrees Celsius. RIA III-32.

The NVFEL tests did not include the cold-start portion of

the Federal Test Procedure. See RIA III-49. This was

because the "adsorber system was not optimized for cold

start performance," see NVFEL at 24 (J.A. III 2114)--

though why such optimization was left undone, we do not

know.

Nevertheless, the EPA relied on averaging, pointing out

that a "manufacturer could achieve the composite FTP standard with considerably less than 90 percent reduction over

the cold-start test, provided the hot-start test achieves greater than 90 percent reduction." RIA III-51, J.A. IV 2465.

The weighting system of the Federal Test Procedure helps

the EPA's arithmetic on this--the hot-start cycle counts as

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6/7 of the final result, leaving a mere 1/7 to the cold cycle.

See 40 C.F.R. s 86.1342-90(a); RIA III-49. Thus modest

overachievement in the hot cycle can offset considerable

underachievement in the cold. Cummins notes, however, that

if the cold-start cycle on a particular engine were only 50%

efficient, then the hot-start cycle would have to achieve 96.7%

efficiency. And if performance during the cold-start period

dropped below 30%, then it would be mathematically impossible to meet the standard (because the hot-start period would

have to be more than 100% efficient).

EPA responds that this argument was never raised before

now, and is thus barred. See 42 U.S.C. s 7607(d)(7)(B);

Respondent's Brief 25-26 (citing Appalachian Power Co. v.

EPA, 249 F.3d 1032, 1055 (D.C. Cir. 2001)). But Cummins

answers that it raised the issue with "reasonable specificity,"

as required by the statute. Its comments argued that NOx

adsorbers did not work "over the entire range of engine

operating conditions," and that adsorbers work "at only isolated steady-state condition [sic] within a narrow temperature

range." While neither of these comments specifically mentions the cold-start portion of the Federal Test Procedure,

they do raise the underlying issue of poor performance at

certain temperatures. Since the word "reasonable" should

not be "read out of the statute in favor of a hair-splitting

approach," Appalachian Power Co. v. EPA, 135 F.3d 791, 817

(D.C. Cir. 1998), Cummins's objections seem close enough to

have put the EPA on notice that it had to defend the

performance of NOx adsorbers at all relevant temperatures

and conditions.

On to the merits: EPA says that Cummins wrongly depicts

the "cold start" test period as if the engine and exhaust

system were cold throughout the period. But in fact the

emission control system warms up throughout the "cold start"

period. EPA cites--by way of analogy--tests done on gasoline engines that found that catalyst temperatures of 450

degrees could be reached in a mere 30 seconds after a cold

start. Joseph McDonald & Lee Jones, Demonstration of

Tier 2 Emission Levels for Heavy Light-Duty Trucks, at 25,

IV-G-131 (J.A. III 2176). If similar steps were taken for

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diesel engines, then the portion of the Federal Test Procedure that would be conducted in a genuinely "cold state"

would make up a trivial percentage of the weighted score for

the test.

Moreover, the RIA discussed a number of ways by which

cold start performance could be improved. RIA III-49-51.

Cummins has not shown that EPA was arbitrary in believing

that, collectively, they would provide an adequate solution.

In sum we find no basis for reversing EPA's prediction of

the future development of adequate NOx adsorbers.

b. Availability of NOx Sensors

Cummins asserts that the new standards for 2007 will

require NOx sensors that are not and will not be available.

Cummins points out that regeneration (essential for burning

off the accumulated NOx from the NOx adsorber) has to be

triggered by a NOx sensor that measures the rising levels of

NOx in exhaust gas (as rising levels indicate degenerating

performance of the adsorber). But, says Cummins, such

sensors "do not exist." Cummins believes the studies relied

on by EPA fail to support its belief in the future availability

of such sensors.

EPA relied in part on the "Kato" study (Nobuhide Kato et

al., Long Term Stable NOx Sensor with Integrated InConnector Control Electronics, SAE 1999-01-0202, J.A. VI

3913) as demonstrating that current NOx sensors are "capable

of detecting NOx emissions in the 100 ppm range." Response

to Comments 7-22. Cummins notes that the paper shows

data only from the 70 ppm to 400 ppm range (Cummins's

Reply Brief at 6, citing J.A. VI 3916), and argues that it is

impermissible to extrapolate the results to the 15 ppm range

(as does EPA, see Respondent's Brief at 29) because errors

that are relatively minor at a high level would be fatal at a

low one. If this were EPA's sole basis, and if EPA were

required to show present availability of proper sensors, this

might be a winning argument. Neither is true.

EPA also relies on the NVFEL test program, which successfully used NOx sensors. Response to Comments 7-22.

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Cummins argues that during this test program regeneration

was controlled manually, see NVFEL Study at 15 (J.A. III

2105), so that the test failed to prove that sensors could

control regeneration in real-life situations. The EPA, by

contrast, seems to imply that NOx sensors were used to

trigger every regeneration event. In fact, neither side is

precisely correct. For the NVFEL tests, the engineers first

performed a process they called "steady state optimization,"

the function of which is to figure out the conditions for

regeneration that will minimize emissions and fuel economy

impact. NVFEL Study at 14, 16. (J.A. III 2104, 2106.) The

optimization methods used, including the ones in which manual operation played a role (described at NVFEL Study 15),

involved the use of a NOx sensor to determine the best time

for regeneration. But for the actual tests of emissions, the

engineers used a "time-based regeneration schedule,"

NVFEL Study at 24, so that "regenerations occurred at

predetermined engine conditions during the transient cycle."

Id. So, while it may be literally true (as Cummins says) that

the ultimate test results do not directly prove that a NOx

sensor could independently trigger regeneration as needed,

the test offers indirect proof, as NOx sensors were essential in

optimizing the system so that the NOx adsorber could reduce

emissions by greater than 90 percent. NVFEL Study at 21,

Figure 5.3. Cummins thus fails to show arbitrariness in the

EPA's prediction that adequate NOx sensors will be available.

More generally, the EPA claims that adequate NOx sensors

have already been developed. Respondent's Brief 28 (citing

RIA III-56; Sherwood Memo to Docket, IV-B-10 (J.A. II

1097-98)). Contrary to Cummins's implication, the latter

document concludes that a NOx sensor can successfully "be

used to control both NOx regeneration of a NOx adsorber

system, and diagnosis of the NOx adsorber system."

Again, Cummins has not shown that the EPA acted arbitrarily or capriciously.

c. Feasibility of the Crankcase Standard

Here Cummins argues that it is not feasible to eliminate

the prior exception that allowed crankcase emissions from

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heavy-duty engines. As discussed above, the EPA envisions

that eliminating crankcase emissions will require manufacturers either to (1) use a crankcase filtration system, with "blowby" gas routed to the engine's air-intake system, or (2) route

the emissions into the exhaust system upstream of the emissions control equipment. RIA III-78-79.

According to Cummins, however, the filtration systems are

only 80% effective, id., leaving 20% of crankcase emissions to

go back and foul the intake system. See 66 Fed. Reg. at

5040/3 (attributing prior exception for crankcase emissions

from turbocharged heavy-duty diesels to concern over such

fouling). The EPA notes, however, that such filtration systems are already required in Europe (see 66 Fed. Reg. 5040),

and have been used on a Mercedes heavy-duty diesel engine

in the United States since 1999 (see Response to Comments

3-88). (Cummins's Reply Brief's citation of DaimlerChrysler's discussion of "filter plugging" is not inconsistent with

Mercedes's practice, as the DaimlerChrysler remark was

directed to particulate filters, not crankcase systems. See

J.A. III 1717-18.) Cummins presents no evidence that these

systems have caused material fouling of turbochargers.

Cummins also complains that the EPA made no findings

whatever about the durability of crankcase filtration systems;

this is of concern because the systems would be required to

last 50,000 miles or 1,500 hours, see 40 C.F.R. s 86.007-25.

But the issue was not raised until now and is therefore

waived. See 42 U.S.C. s 7607(d)(7)(B); cf. 40 C.F.R.

s 86.094-25(b)(7) (allowing manufacturers to seek approval to

replace emissions systems at intervals shorter than 50,000

miles).

Because the rule can stand so long as there was one

solution as to which EPA's prediction was not arbitrary, we

shall not proceed to evaluate the second option--venting

crankcase emissions into the exhaust system.

d. The Effects of Sulfur

One last bit on feasibility: Cummins argues (in one paragraph) that even with fuel sulfur reduced as low as 15 ppm,

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sulfur can still cause PM emissions that are up to 60% of the

2007 limit. Standing alone, the point seems meaningless (as

60% is less than 100%). Cummins seeks to render it meaningful by also arguing that EPA failed to consider potential

increases in PM resulting from crankcase emissions and coldstart problems. But as EPA points out, Cummins failed to

raise these in the rulemaking, so they are waived pursuant to

42 U.S.C. s 7607(d)(7)(B).

2. Accuracy of Measuring Equipment

Cummins's second main argument is that there will be no

testing equipment accurate enough to measure the extremely

low emissions required by the new regulation. Cummins

claims that the equipment currently available is plagued by

too much variability and inaccuracy. Assuming this to be

true (and some such errors are inevitable), it would not

provide a basis to upset the rule. As we said in Amoco Oil

Co. v. EPA, 501 F.2d 722 (D.C. Cir. 1974):

The possibility of statistical measurement error ...

merely deprives the agency of the power to find a

violation of the standards, in enforcement proceedings,

where the measured departure from them is within the

boundaries of probable measurement error. Furthermore, if the test methods eventually adopted raise a

greater potential for error than is practical or necessary,

a reviewing court may order revisions.

Id. at 743. Accordingly, issues about the reliability of testing

methods can be addressed at a later stage.

3. Possible Misfueling in Canada and Mexico

Cummins's last main argument is that the rule unlawfully

exposes manufacturers to the risk of recalls resulting from

the "poisoning of catalysts from fueling of vehicles in Mexico

and Canada." But the risk, if not simply nil, is so remote as

to render the claim unripe. If the alleged poisoning occurs

(because many trucks operate in both the U.S. and Canada

and Mexico, and on the assumption that one or both neighboring countries will fail to mandate 15 ppm diesel fuel),

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Cummins would apparently have a good defense to a recall

action. The recall-authorizing statute provides that a recall

can be ordered only if "a substantial number of any class or

category of vehicles or engines, although properly maintained and used, do not conform to [the emission standards]."

(42 U.S.C. s 7541(c)(1)) (emphasis added). On Cummins's

scenario, the border-crossing trucks would not have fulfilled

the proper maintenance condition. Indeed, EPA explicitly

abjured any right to demand recalls for exceedences caused

by "the use of high-sulfur (>500 ppm) fuel in Alaska during

the period of the temporary sulfur exemption" that it had

granted in reference to Alaska. 66 Fed. Reg. 5086/2.

III. Diesel Fuel Sulfur Standard

Under 42 U.S.C. s 7545(c)(1), EPA is empowered to regulate fuel content if the Administrator either determines that

(A) "any emission product of such fuel ... causes, or contributes, to air pollution which may reasonably be anticipated to

endanger the public health or welfare," or (B) "emission

products of such fuel ... will impair to a significant degree

the performance of any emission control device or system

which is in general use, or which ... would be in general use

were such regulation to be promulgated." 42 U.S.C.

s 7545(c)(1)(A) & (B). We first consider whether EPA's 15

ppm sulfur rule is justified as protecting public health or

welfare under s 7545(c)(1)(A). Determining it is not, we

consider whether EPA's decision to regulate diesel fuel in

order to prevent impairment of sulfur-sensitive emission control devices was arbitrary, capricious, or otherwise contrary

to law. We conclude it was not. Finally, we consider and

reject the remaining challenges to the 15 ppm sulfur rule

brought by petitioners National Petrochemical & Refiners

Association, et al. ("NPRA"), and deny their petition for

review.

A. Basis for the Diesel Fuel Standard

At the outset, EPA argues that the ultra-low diesel fuel

standard of 15 ppm sulfur is justified as a regulation to

protect public health or welfare under 42 U.S.C.

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sensitive control technology under s 7545(c)(1)(B). Because

NPRA only challenges EPA's determination under

s 7545(c)(1)(B) (specifically, the availability of sulfur-sensitive

control technology), EPA contends that we must dismiss the

petition for review. However, we agree with NPRA that

EPA has not justified the 15 ppm sulfur requirement under

the "public health or welfare" rubric of s 7545(c)(1)(A). Although it is possible EPA could have justified the 15 ppm

sulfur limit based on effects on public health and welfare,

here it has not done so. EPA makes no findings that justify

a choice of a 15 ppm limitation (rather than some other

concentration) on the bases of health and welfare.

EPA's justifications for a 15 ppm sulfur rule in this proceeding belie its post-hoc assertion that it was regulating

pursuant to its authority under s 7545(c)(1)(A). Although the

Agency cited general health and environmental effects of

diesel exhaust, as well as sulfur dioxide formation, e.g. 66

Fed. Reg. 5002, 5021-23 (2001), it explicitly declared that

"[w]e are requiring significant reductions in diesel fuel sulfur

to enable certain emission control devices to function properly." Id. at 5034 (emphasis added). Indeed, EPA justified the

15 ppm standard (as opposed to some other concentration) as

necessary for effective operation of the NOx adsorber and PM

trap. See id. at 5053; id. at 5047. In the section of the final

rule entitled "Need for Low Sulfur Diesel Fuel," 66 Fed. Reg.

at 5056, EPA did not mention health or environmental concerns. Rather, relying on the three factors of "efficiency,

reliability, and fuel economy," EPA concluded that "diesel

fuel sulfur levels of 15 ppm will be required in order to make

feasible the heavy-duty vehicle emission standards." Id.

EPA referred to control technologies being "directly affected

by sulfur in diesel fuel," and concluded that "[b]ased on the

strong negative impact of sulfur on emission control efficiencies for all of the technologies evaluated, we believe that 15

ppm represents an upper threshold of acceptable diesel fuel

sulfur levels." Id. Further, according to EPA, its analysis

"makes clear that diesel fuel sulfur levels will need to be

under 15 ppm in order to ensure robust operation of the

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pated to be experienced in the field." Id. EPA made no

commensurate findings that the 15 ppm sulfur concentration

is needed to protect public health or welfare.

Similarly in the section entitled "Our Program for Controlling Highway Diesel Sulfur," EPA stated: "With today's

action, we are requiring substantial reductions in highway

diesel fuel sulfur levels nationwide, because sulfur significantly inhibits the ability of the diesel emission control devices to

function which are necessary to meet the emission standards

finalized today." Id. at 5063 (emphasis added). It could

hardly be clearer--EPA is regulating sulfur because of its

effects on emission-control devices, and not for health and

welfare reasons. Therefore, the 15 ppm sulfur rule either

rises or falls with EPA's justification under 42 U.S.C.

s 7545(c)(1)(B).

B. Sulfur-Sensitive Control Technology

NPRA argues that EPA's 15 ppm sulfur requirement is

arbitrary, capricious, and contrary to law because EPA has

failed to show that the emission-control technology requiring

ultra-low sulfur fuel is in or near general use. Specifically

NPRA contends that NOx adsorption technology requiring 15

ppm sulfur diesel fuel will not be "in general use" even if this

fuel standard is adopted. Further, NPRA argues that the

PM control technology does not require ultra-low sulfur fuel.

As discussed in Part II.B, supra, EPA has reasonably determined that NOx adsorption technology will be available. The

record contains ample support for EPA's conclusion that NOx

adsorbers will be available by 2007 if fuel sulfur is regulated.

Although some research remains to be done to solve the

problem of catalyst sintering (deterioration caused by desulfation--high temperature operation to remove sulfur building

up on the catalyst), petitioners have identified no theoretical

barriers to the development of NOx adsorbers. "In the

absence of theoretical objections to the technology, the agency need only identify the major steps necessary for development of the device, and give plausible reasons for its belief

that the industry will be able to solve those problems in the

time remaining." NRDC, 655 F.2d at 333. Here EPA notes

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that NOx adsorbers are used in gas turbine systems and

natural gas fired powerplants. EPA claims that the "differences between these current applications of the NOx adsorber

technology and the future use of NOx adsorbers to control

NOx emission from diesel engines lies only in the need to

adapt the diesel engine operation to the NOx adsorber performance." It is only necessary that a desulfation cycle be

developed--and EPA cites evidence that such research is

under way. EPA has evidence that application of this technology is feasible, appears to have set forth an engineering

path rather than mere optimism, and has given a reasoned

explanation why it believes this path can be followed. See 66

Fed. Reg. at 5052. That is sufficient: "EPA is not obliged to

provide detailed solutions to every engineering problem posed

in the perfection of the [technology]." NRDC v. Thomas, 805

F.2d 410, 434 (D.C. Cir. 1986) (quoting NRDC, 655 F.2d at

333).

Petitioners' claim that our decision in Amoco Oil Co. v.

EPA, 501 F.2d 722 (D.C. Cir. 1974), prohibits EPA from

relying on technology that is still in the testing stage as the

basis of fuel regulation under 42 U.S.C. s 7545(c)(1)(B) is

without merit. In Amoco, it was the petitioner who sought to

upset EPA's judgment of non-feasibility and require the

Administrator to consider technology alternatives to the catalytic converter that were in the testing stage. This Court

merely found that EPA was not required to evaluate such

technologies, when in EPA's reasoned judgment such technologies would not be "in general use" but the catalytic converter would be in such use. See Amoco, 501 F.2d at 738-39. In

the present context, however, it is EPA that believes NOx

adsorption technology will be available. Where, as here,

EPA's decision is based on complex scientific or technical

analysis, it is entitled to "great deference." Appalachian

Power Co. v. EPA, 251 F.3d 1026, 1035 (D.C. Cir. 2001)

(citation omitted). If anything, Amoco supports EPA's position. In Amoco, EPA had required emissions reductions that

necessitated the use of catalytic converters. 501 F.2d at 726.

Similarly, EPA is now requiring reductions that necessitate

the use of NOx adsorbers. 66 Fed. Reg. at 5005-06. In

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Amoco, EPA had found that no other emission reduction

system would be in general use by the effective date of the

rule. 501 F.2d at 738. In the present case, EPA found that

NOx adsorbers (and only NOx adsorbers) will be "in general

use." 66 Fed. Reg. at 5049-53. In sum, because EPA's

determination that NOx adsorption technology will be available is reasonable, EPA has met the statutory prerequisite to

regulating the sulfur content of diesel fuel under 42 U.S.C.

s 7545(c)(1)(B).

NPRA also contends that the decision to regulate under

s 7545(c)(1)(B) was arbitrary and capricious because EPA

overlooked sulfur-resistant technology, namely Selective Catalytic Reduction ("SCR"). Petitioners argue that EPA treated NOx adsorption technology and SCR technology inconsistently--having optimism for the former and disfavoring the

latter. That may be. Nonetheless as noted above, EPA is

entitled to deference in its evaluation of technologies, and in

any event EPA identified several practical obstacles to the

widespread implementation of SCR technology. In particular, SCR systems require refilling with urea on a regular

basis (3-6 gallons for every 100 gallons of fuel) in order to

operate and are subject to abuse. See 66 Fed. Reg. at 5053.

Failure to replenish the urea does not cause a loss in driving

performance (so truckers may have little incentive to spend

resources on urea) but does reduce emissions reductions.

See id. Furthermore, there is currently no system in place

to distribute urea to truck stops or other retail outlets for

dispensing into vehicles, and the evidence before EPA would

support a determination that these problems would not be

solved by model year 2007. See 66 Fed. Reg. at 5053. Given

these concerns, EPA reasonably determined that SCR was

not a viable means of achieving NOx emissions reductions,

and that sulfur-sensitive technology, and thus ultra-low sulfur

diesel, would be required.

EPA's determination that NOx adsorption technology is

viable and necessary justifies the 15 ppm sulfur diesel fuel

standard; therefore, we need not consider whether the diesel

fuel standard is necessary for the operation of PM control

technology.

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C. Other Challenges to the Diesel Fuel Standard

NPRA raises several other objections to the diesel fuel

standard, most of which may be dismissed summarily. First,

petitioners contend that the phase-in (or temporary compliance option, as EPA prefers) renders the 15 ppm standard

arbitrary and capricious. Although we find that petitioners

have standing (because of the alleged harm to distributors in

carrying the extra grade of fuel), we find no merit to the

claim that the phase-in undermines the fuel standard and

reject the claim that the decision to phase-in ultra-low sulfur

diesel is arbitrary and capricious. Similarly, although we find

petitioners to have standing to challenge the selection of

ASTM Method 6438 as the primary test method, we find

nothing arbitrary or capricious in EPA's selection of this test

method. Third, petitioners' argument that EPA failed to

comply with the Regulatory Flexibility Act is devoid of merit.

Finally, that brings us to NPRA's allegation that the decision

to require 15 ppm sulfur content will result in a shortfall in

diesel fuel. Although we ultimately reject this claim, it requires more elaborate consideration.

42 U.S.C. s 7521(a)(3)(A)(i) mandates that EPA "giv[e]

appropriate consideration to cost, energy, and safety factors"

associated with technology needed for the emissions standards it sets--which also includes the cost of fuel compatible

with that technology. Similarly, 42 U.S.C. s 7545(c)(2)(B)

requires that EPA consider "available scientific and economic

data." If EPA promulgated a regulation that would in fact

result in a diesel fuel shortage or energy crisis, it would be

acting arbitrarily and capriciously--failing to give "appropriate consideration to cost [and] energy" in setting emissions

standards under s 7521(a)(1), and failing to consider the

"economic data" in regulating diesel itself under s 7545(c)(1).

42 U.S.C. ss 7521(a)(3)(A)(i), 7545(c)(2)(B). Therefore, if

EPA's assessment of diesel fuel availability under its regulation of diesel fuel is unreasonable, then it has not properly

considered all of the relevant factors and its fuel regulation

should be vacated and remanded as arbitrary and capricious.

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Petitioners argue that EPA's estimating technique for assessing highway fuel loss due to cross-contamination in the

pipeline system is inadequate. They contend that when ultralow sulfur diesel fuel and non-highway diesel fuel are transported in tandem, the former will be contaminated by the

sulfur in the latter at the interface volume. This contaminated fuel cannot be used as highway fuel, as it would damage

the emission control devices. EPA assumed that this loss

would be only twice the current loss from transport of 500

ppm sulfur diesel fuel and non-highway diesel fuel. EPA's

fundamental assumption was that the interface volume would

not change. However, as petitioners argue, this fundamental

assumption may be incorrect.

Petitioners point out that "EPA considered only pipeline

diameter and length in calculating today's losses, but not the

different sulfur concentrations in the various products in

pipelines or the relative margin for error given the very low

allowed sulfur level." For example, "[i]t would take less than

0.5 percent of 3000-ppm sulfur containing product to contaminate [ultra low sulfur diesel] ... to a level above EPA's

maximum of 15 ppm." Petitioners note that "the size of the

interface volume pipeline operators will presume is affected

by adjoining products is likely to grow dramatically with

[ultra low sulfur diesel]," but that EPA has assumed the

interface volume will remain constant. Additionally, EPA

may further have underestimated the contamination loss by

failing to consider diffusion from residue on the walls of the

lines carrying the fuel. EPA, Regulatory Impact Analysis:

Heavy-Duty Engine and Vehicle Standards and Highway

Diesel Fuel Sulfur Control Requirements IV-90 (Dec. 2000).

Even assuming EPA made missteps in calculating crosscontamination, the burden is on petitioners to demonstrate

that EPA's ultimate conclusions are unreasonable. Crosscontamination is only a sub-issue of the critical question of

adequacy of projected supply. Petitioners have failed to

show that EPA's overall determination that there will not be

a diesel shortfall is unreasonable. EPA contends that there

are adequate economic incentives to ensure that refiners will

not abandon the highway diesel market, and that several

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refineries would have incentive to enter the diesel market.

Although EPA's effort at estimating losses due to crosscontamination may be flawed, petitioner fails to show that

cross-contamination will result in a shortfall. Therefore,

while perhaps EPA could have been more thorough, we deny

the petitioners' challenge.

In sum, we deny all of the challenges brought by NPRA to

the 15 ppm sulfur diesel fuel standard.

IV. Mack Truck Petition

Petitioner Mack Truck challenges EPA's changes to its

Averaging, Banking and Trading ("ABT") program. This

program allows engine manufacturers who produce engines

cleaner than those required by the regulations to generate

"credits" that they may then use to offset higher emitting

engines ("averaging"), save for future use ("banking"), or sell

to other manufacturers ("trading"). See 40 C.F.R.

s 86.004-15. Traditionally, EPA has prohibited engine manufacturers from applying credits generated by light heavyduty or medium heavy-duty engines to heavy heavy-duty

engines. See 40 C.F.R. s 86.004-15(d), (e), (f)(3). The new

rule allows such cross-subclass averaging, but only during the

2007-09 phase-in period. See 2007 Rule, 66 Fed. Reg. at

5164 (to be codified at 40 C.F.R. s 86.007-15(m)(10)). Furthermore, when manufacturers use credits from one diesel

engine class in calculating the emissions of another diesel

engine class, credits are discounted by 20%. Id. at 5163 (to

be codified at 40 C.F.R. s 86.007-15(m)(3), (4)). Crosssubclass banking and trading remain prohibited. Id. at 5164

(to be codified at 40 C.F.R. s 86.007-15(m)(10)).

Mack's complaint about these new provisions stems from

the fact that it makes only heavy heavy-duty engines. According to Mack, because manufacturers cannot make a compliant heavy heavy-duty engine without sacrificing some fuel

efficiency and because Mack's customers are extremely sensitive to cost increases generated by decreased fuel economy,

the new rule will likely force Mack to purchase emissions

credits from manufacturers of the same engine class. Anticipating these harmful consequences, Mack urges us to find the

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revised ABT program's allowance of cross-subclass averaging

unlawful because EPA failed: (1) to give interested parties

notice and opportunity to comment in violation of 42 U.S.C.

s 7607(d)(6)(C); (2) to summarize in the record conversations

had with Mack's competitors in violation of 42 U.S.C.

s 7607(d)(6)(C); and (3) to give a reasoned explanation of its

new program, cf. Motor Vehicles Mfrs. Ass'n v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983) (requiring agency

to give reasoned explanation for decision). EPA contests

these claims, but also argues that, in any case, Mack lacks

prudential standing to challenge the allowance for crosssubclass averaging. We begin with this threshold issue.

To demonstrate prudential standing, Mack must show that

"the interest it seeks to protect 'is arguably within the zone of

interests to be protected or regulated by the statute ... in

question.' " Cement Kiln Recycling Coalition v. EPA, 255

F.3d 855, 870 (D.C. Cir. 2001) (quoting Ass'n of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 153 (1970)) (alteration

in original). This "test is not meant to be especially demanding." Clarke v. Secs. Indus. Ass'n, 479 U.S. 388, 399 (1987).

Indeed, a petitioner "is outside the statute's 'zone of interests'

only 'if [petitioner's] interests are so marginally related to or

inconsistent with the purposes implicit in the statute that it

cannot reasonably be assumed that Congress intended to

permit the suit.' " Motor & Equip. Mfrs. Ass'n v. Nichols,

142 F.3d 449, 458 (D.C. Cir. 1998) (quoting Clarke, 479 U.S. at

399). In determining whether a petitioner falls within the

"zone of interests" to be protected by a statute, "we do not

look at the specific provision said to have been violated in

complete isolation[,]" but rather in combination with other

provisions to which it bears an " 'integral relationship.' "

Fed'n for Am. Immigration Reform, Inc. v. Reno, 93 F.3d

897, 903 (D.C. Cir. 1996) (quoting Air Courier Conference v.

Am. Postal Workers Union, 498 U.S. 517, 530 (1991)).

With these principles in mind, we turn to the facts of this

case. According to Mack, "the structure of the CAA engine

certification program" demonstrates that Congress intended

EPA to consider anticompetitive injury. Mack Truck's Reply

Br. at 2. Mack points to the provisions of the statute that

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require manufacturers to pay nonconformance penalties

("NCPs") if they produce noncompliant engines. See 42

U.S.C. s 7525(g)(3)(E). These NCP provisions mandate that

"penalties ... remove any competitive disadvantage to manufacturers whose engines or vehicles achieve the required

degree of emission reduction." Id. Thus, Mack reasons, its

interest in avoiding anticompetitive injury plainly falls within

the zone of interests Congress sought to protect.

Although EPA established the current ABT program pursuant to CAA section 202(a), id. s 7521(a), the general grant

of authority to regulate pollutants that "cause[ ] or contribute[ ] to air pollution which may reasonably be anticipated to

endanger public health or welfare," id. s 7521(a)(1), not pursuant to the NCP provisions, we agree with the general

thrust of Mack's argument, as it appears to us that the two

provisions enjoy an "integral relationship." EPA itself has

observed the obvious, namely, that "averaging, banking and

trading ... provide another way besides payment of NCPs

for engines to meet emission standards." Certification Programs for Banking and Trading of Oxides of Nitrogen and

Particulate Emission Credits for Heavy-Duty Engines, 54

Fed. Reg. 22,652, 22,666 (May 25, 1989). Thus, EPA developed the ABT program to be compatible with the NCP

provisions. See id. at 22,658 (noting EPA's concern that a

manufacturer might " 'game' the programs by requesting

[cheaper] NCPs for engine families that could be meeting the

emission standard by averaging"); id. at 22,680 (suggesting

"credits for banking and trading should not be generated by

either single engine families or any engine families within an

averaging set where NCPs are used"). Moreover, the allowance for trading "accomplish[es] one of the express goals of

the NCP provision--[the] remov[al of] any competitive disadvantage from complying manufacturers--since the price of

credits ... reflect[s] the economic cost of obtaining the

standard technologically." Id. at 22,666. In light of the

"integral relationship" between section 202(a) and the NCP

provisions, which explicitly refer to anticompetitive effects, we

think it at least "arguable" that Congress intended EPA to

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take into account anticompetitive impacts should it establish

an ABT program.

Having found that Mack has prudential standing, we can

easily dispose of its procedural challenges to the ABT program. Setting a high bar for such challenges, the Clean Air

Act requires the challenger to demonstrate a "substantial

likelihood" that the rule would have been "significantly

changed" absent the alleged error. 42 U.S.C. s 7607(d)(8).

EPA argues that because Mack not only had actual notice of

the proposal to allow cross-subclass averaging but, in fact,

submitted comments, it cannot possibly meet this standard.

Mack disagrees, explaining that it heard of the proposal only

through a "casual conversation" with a competitor rather than

directly from the agency. Mack Truck's Reply Br. at 5.

Though Mack is correct that in all the actual notice cases

EPA cites, the notice came from the agency, we think this not

essential. In National Mining Ass'n v. Mine Safety &

Health Administration, the agency contended that comments

of another commenter gave petitioner notice. 116 F.3d 520,

532 (D.C. Cir. 1997). Rather than rejecting the agency's

actual notice defense out of hand because the notice had not

been given directly by the agency, we asked whether the

petitioner was "aware[ ]" that the agency was actually "considering adopting what the commenter has suggested" "despite [the agency's] failure to alert the public." Id.

Here, despite Mack's contention that it was merely "speculat[ing] on rumor" when it submitted comments, Mack

Truck's Opening Br. at 7, the record indicates that the

company was "aware" that EPA was considering abolishing

the prohibition on cross-subclass averaging. To begin with,

in support of the proposition that Mack heard of the change

only through a "casual conversation" with a competitor, the

company cites its own petition for reconsideration, which in

turn cites an attached declaration that nowhere addresses the

issue of how Mack learned of the proposal. See Klein Decl.;

see also Fed. R. App. P. 28(a)(6) (requiring that briefs contain

citations to the "parts of the record" relied upon). Moreover,

the extensive comments that Mack submitted on December

15th give no indication that the company had any doubt about

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what EPA was proposing. In fact, in its comments, Mack

expressly states that "[i]n discussions with the Engine Manufacturers Association, [EPA] has indicated its intention to

include in [the 2007 Rule] provisions that would allow for

averaging, trading and banking of emissions across subclasses

of heavy-duty diesel engines." Cmts. of Mack Truck at 1.

Mack next argues that even if adequate, the notice was not

"fair" because it gave the company less than three weeks to

respond to the proposal, resulting in "hurried[ ]" and illprepared comments. Mack Truck's Reply Br. at 5. But even

with more time, Mack made basically the same arguments in

its petition for reconsideration that it made in its initial

comments; therefore, we think it quite unlikely that the rule

would have been "significantly changed" had Mack received

earlier notice. In any event, we have upheld regulations

where the notice provided even less time for comments. See

Appalachian Power Co. v. EPA., 135 F.3d at 814 (finding a

two-and-a-half week notice period sufficient); NRDC v.

Thomas, 838 F.2d 1224, 1243 (D.C. Cir. 1988) (finding actual

notice two weeks before promulgation of a rule sufficient).

Equally without merit is Mack's next procedural claim:

that EPA failed to include in the administrative record discussions held with Mack's competitors, as required by the Clean

Air Act's docketing provision, 42 U.S.C. s 7607(d)(6)(C).

Mack has neither alleged that EPA relied on any critical

"information or data," id., obtained from the disputed conversations nor provided any other reasons to think that there is a

"substantial likelihood" that EPA would have "significantly

changed" the rule had it received the full content of the

conversations. In any event, Mack not only received actual

notice of the proposed changes, but it submitted comments,

which EPA considered.

Challenging the substance of the ABT program, Mack

contends that the agency failed to provide a reasoned explanation for its "sudden reversal of its previous, long-standing

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position against cross-class averaging." Mack Truck's Opening Br. at 10. As EPA points out, however, a provision that

temporarily allows cross-subclass averaging from 2007

through 2009, but retains the prohibition against banking and

trading, can hardly be considered a wholesale reversal of a

general policy against cross-subclass averaging, banking, and

trading. Respondent's Br. at 60. In any event, EPA fully

explained its decision, noting that the revised ABT program

adds flexibility during the transition to the new emissions

standards. Any adverse environmental effects, EPA observed, would be eliminated by the temporary nature of the

cross-subclass averaging and by the 20% discount applied to

credit use. Responding to the claim of anti-competitive effects, EPA explained that although it "tries to avoid introducing competitive ... disadvantages when it establishes new

emissions control programs, it is not a result [EPA] can

ensure; nor is that the primary goal for EPA under the

statute." EPA Resp. to Mack Truck's Req. for Recons. at 12.

V. Petition of Alliance of Automobile Manufacturers/Association of International Automobile Manufacturers

Petitioners Alliance of Automobile Manufacturers and Association of International Automobile Manufacturers (collectively, "Alliance") challenge as arbitrary and capricious the

2007 Rule's failure to require ultra-low sulfur diesel fuel "in

time to enable ... [light-duty diesel vehicles] to comply" with

emissions standards promulgated by EPA in a previous rulemaking, the so-called "Tier 2 Rule." Alliance's Opening Br.

at 2. In addition to defending the merits of the 2007 Rule,

EPA argues that Alliance's petition is actually a challenge to

the Tier 2 Rule and as such time-barred by 42 U.S.C.

s 7607(b)(1), which requires all petitions for review to be

brought within sixty days of promulgation. We agree with

the latter argument.

Promulgated on February 10, 2000, the Tier 2 Rule established new emission standards for light-duty vehicles (basically passenger cars and pickup trucks). Control of Air Pollution from New Motor Vehicles: Tier 2 Motor Vehicle

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Emissions Standards and Gasoline Sulfur Control Requirements, 65 Fed. Reg. 6698 (Feb. 10, 2000) (to be codified at 40

C.F.R. pts. 80, 85 and 86). The Tier 2 Rule makes no

distinction between traditional gasoline engines and lightduty diesel vehicles, Id. at 6698, which presently comprise

only one percent of the total light-duty fleet. Like the 2007

Rule, the Tier 2 Rule attempts to create regulatory flexibility

by gradually phasing in the applicable emissions standards,

beginning in the 2004 model year. See Tier 2 Rule, 65 Fed.

Reg. at 6701-02.

The Tier 2 Rule set emission standards without establishing diesel sulfur limits, and the 2007 Rule altered none of

these standards. The Alliance, moreover, concedes that it

raised the low sulfur fuel issue in comments to the Tier 2

proposal. Alliance's Reply Br. at 2. EPA considered those

comments and concluded that "the interim standards [were]

feasible for diesel [vehicles] without further reductions in

diesel fuel sulfur." Tier 2 Rule, 65 Fed. Reg. at 6729. With

regard to the ability of light-duty diesel vehicles to meet the

final standards (triggered in 2007), EPA felt that ultra-low

sulfur diesel fuel would likely be required but concluded that

"[g]iven the significant potential costs of such fuel changes

and the small percentage of [light-duty vehicles] using diesel

fuel[,] ... it [was] inappropriate to make such changes in the

context of a rule regulating light-duty vehicles and engines."

EPA Resp. to Tier 2 Cmts. at 2-12. If the Alliance believed

the emissions standards contained in the Tier 2 Rule were

infeasible without ultra-low sulfur diesel fuel, it should have

petitioned for review of that rule.

Calling the 2007 Rule a "supporting regulation," Alliance

argues that a challenge to the Tier 2 Rule would have been a

"waste of judicial resources," pointing out that we have in the

past "upheld an otherwise valid ... regulation whose validity

hinged upon an adequate supporting regulation that the

Court nevertheless found wanting." Alliance Reply Br. at 2.

The case Alliance cites for this proposition, Automotive Parts

Rebuilders Ass'n v. EPA, 720 F.2d 142 (D.C. Cir. 1983),

however, is easily distinguishable. There, we upheld EPA's

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tions," id. at 148, even though in an entirely different case, we

had remanded to EPA the reimbursement scheme by which

vehicle manufacturers sought reimbursement from part manufacturers, id. at 161 n. 80 (citing Specialty Equip. Mkt. Ass'n

v. Ruckelshaus, 720 F.2d 124 (D.C. Cir. 1983)). In upholding

the warranty regulations, we specifically conditioned our approval on EPA developing an adequate reimbursement

scheme. Id. In that case, it would indeed have been a waste

of judicial resources to void the warranty regulations solely

because of defects in a reimbursement scheme that we had

already remanded. In contrast, the Alliance has conserved

no judicial resources by waiting to challenge a failure to

require ultra-low sulfur diesel fuel now rather than at the

time of the Tier 2 Rule's promulgation.

Nor can Alliance rely on the "reopening" doctrine under

which a review period "starts fresh ... if an agency reopens

[an] issue by holding out [an] unchanged section as a proposed regulation, offering an explanation for its language,

soliciting comments on its substance, and responding to the

comments in promulgating the regulation in its final form."

Am. Iron and Steel Inst. v. EPA, 886 F.2d 390, 397 (D.C. Cir.

1989). As EPA points out, although some automakers did

submit comments advocating that ultra-low sulfur diesel fuel

be made available earlier, EPA responded: "Our feasibility

analyses as presented in the Tier 2 Rule ... remain our

policy regarding light-duty diesel vehicles. We have not

reexamined or reopened the issues regarding the Tier 2

standards." EPA Resp. to Cmts. at 9-2.

VI. Conclusion

The petitions for review are denied.

So ordered.

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