Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-07-01116/USCOURTS-ca3-07-01116-0/pdf.json

Parties Involved:
TSG Inc
Petitioner
United States Environmental Protection Agency
Respondent

Document Text:

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 07-1116

 

TSG INCORPORATED,

 Petitioner

v.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY,

 Respondent

 

On Petition for Review from an

Applicability Determination of the

United States Environmental Protection Agency

 

Argued April 17, 2008

Before: SCIRICA, Chief Judge,

AMBRO and FISHER, Circuit Judges.

(Filed: August 8, 2008)

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Bart E. Cassidy (Argued)

Katherine L. Vaccaro

Manko, Gold, Katcher & Fox

401 City Avenue, Suite 500

Bala Cynwyd, PA 19004

Attorneys for Petitioner

David Gunter (Argued)

Thomas A. Lorenzen

United States Department of Justice

Environmental Defense Section

P.O. Box 23986

Washington, DC 20026-3986

Attorneys for Respondent

 

OPINION OF THE COURT

 

FISHER, Circuit Judge.

TSG, Inc. (“TSG”) filed this petition to challenge the

validity of the Environmental Protection Agency’s (“EPA”)

Applicability Determination, which found that TSG was a fabric

“finishing operation” under Subpart OOOO of the National

Emission Standards for Hazardous Air Pollutants (“NESHAP”).

TSG argues that its fabric treating process should not be

required to abide by the finishing operation standards and should

instead qualify as a coating operation under the regulations. For

the reasons that follow, we conclude that the EPA did not

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clearly err when it classified TSG as a finishing operation.

Therefore, we will deny the petition for review and uphold the

EPA’s determination.

I. BACKGROUND

Petitioner TSG is a “commission fabric coater” with

facilities in Pennsylvania and North Carolina. It receives fabrics

from other entities, including “jobbers, importers, and interior

decorators,” and treats these fabrics to enhance qualities such as

“water repellancy, stain resistance, and fire repellancy” and to

meet other such specifications or requirements. TSG claims its

process and business model can be contrasted with that used by

large, vertically integrated mills, which typically apply

“aqueous-based stain repellant coatings.” Such large mills are

able to use this method because of their familiarity with their

fabric, as the aqueous-based method can potentially harm some

fabrics. Because TSG deals with a variety of non-uniform and

unfamiliar fabrics, it uses a solvent-based process.

In TSG’s process, stain-repellant chemicals are diluted in

a solvent, trichloroethene (“TCE”), which is then sprayed onto

the fabric as it passes through the spraying machinery. This

method allows TSG to process many different fabric weights,

widths, colors, and constructions, as the solvent is generally

gentler on a wider variety of fabrics than is a water-based

system. As TSG characterizes it, the solvent acts as a “carrier”

for the stain-repellant chemicals as they are sprayed onto the

fabric and then evaporates when the fabric passes through the

heating and drying machinery. A solvent recovery system then

captures the evaporated solvent for reuse.

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Congress enacted the Clean Air Act (“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.” 42 U.S.C. § 7401(b)(1). Under the

CAA, the administrator of the EPA (“Administrator”) “shall

promulgate regulations establishing emissions standards” for

each category of sources of “hazardous air pollutants” (“HAP”).

Id. § 7412(d)(1).

On May 29, 2003, the EPA promulgated a NESHAP for

the category of new and existing fabric and textile operations

involved in “coating, printing, slashing, dyeing, and finishing.”

68 Fed. Reg. 32,172 (May 29, 2003) (codified at 40 C.F.R.

§ 63.4280 et seq. (Part 63, Subpart OOOO)). Subpart OOOO

further divided these operations into the subcategories of

“coating and printing,” “slashing,” and “dyeing and finishing,”

setting different emission standards for each of these

subcategories. 40 C.F.R. § 63.4281; Id. § 63.4290; Id., Table 1.

“Coating” is defined as

“the application of a semi-liquid coating material

to one or both sides of a textile web substrate.

Once the coating material is dried (and cured, if

necessary), it bonds with the textile to form a

continuous solid film for decorative, protective, or

functional purposes. Coating does not include

finishing where the fiber is impregnated with a

chemical or resin to impart certain properties, but

a solid film is not formed.”

Id. § 63.4371. “Finishing” is defined as

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“the chemical treatment of a textile (e.g., with

resins, softeners, stain resist or soil release agents,

water repellants, flame retardants, antistatic

agents, or hand builders) that improves the

appearance and/or usefulness of the textile

substrate.”

Id.

TSG did not comment on the proposed rulemaking during

the notice and comment period. Instead, TSG requested, by a

letter dated June 23, 2005, that the EPA develop “an alternative

MACT [maximum achievable control technology] standard for

its textile operations.” TSG asserted that the stringency of the

finishing operation requirements, if applied to TSG, would

likely require it to cease operation. TSG acknowledged that

“[o]n its face, TSG’s application of stain-repellent chemicals

constitutes a ‘finishing operation’” but stated that because TSG

uses a chemical solvent rather than a water-based solution, it

should not be subject to “finishing operation” emission

standards. The EPA requested more information to make its

determination, but TSG did not respond until June 30, 2006. In

order to obtain the necessary information, the EPA contacted the

Pennsylvania Department of Environmental Protection

(“PDEP”), which faxed additional information regarding TSG’s

processes from its records of TSG’s state permit application.

On November 8, 2006, based on the information it had

gathered, the EPA issued an Applicability Determination. The

EPA concluded that TSG’s operations were “finishing

operations” for purposes of Subpart OOOO. The EPA

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determined that the TSG process impregnates textile fibers with

a stain repellant without resulting in the formation of a solid

film, so it is a “finishing,” rather than a “coating” operation.

The EPA also determined that the chemical solvent used by

TSG was not merely a “carrier” of materials, but itself a

“finishing material.” The EPA stated that its decision was based

on the current MACT standard and noted that TSG was

permitted to petition the EPA to develop a different standard.

TSG received the decision on November 16, 2006. This petition

for review followed.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction to review a final action of the EPA

under 42 U.S.C. § 7607(b)(1) (“A petition for review of . . . any

. . . final action of the Administrator under this chapter . . .

which is locally or regionally applicable may be filed only in the

United States Court of Appeals for the appropriate circuit.”). To

be a final action, the EPA’s Applicability Determination must

comply with the requirements of Bennett v. Spear, 520 U.S. 154,

177-78 (1997). “First, the action must mark the consummation

of the agency’s decisionmaking process-it must not be of a

merely tentative or interlocutory nature. And second, the action

must be one by which rights or obligations have been

determined, or from which legal consequences will flow.” Id.

(internal citations and quotation marks omitted). As the parties

concede, and as the facts detailed above indicate, the Bennett

requirements have been met here. The EPA’s action was the

consummation of the decisionmaking process. It determined

that TSG was a finishing operation and was therefore obligated

to abide by a particular HAP control standard. Thus, the EPA’s

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Applicability Determination is a final agency action and we

have jurisdiction to consider TSG’s petition. See Star Enter. v.

Envtl. Prot. Agency, 235 F.3d 139 (3d Cir. 2000).

We review an administrative agency’s interpretation of

its own regulations for plain error, deferring to the agency’s

construction of the regulation’s language, unless it is plainly

erroneous or inconsistent with the regulation. Beazer E., Inc. v.

Envtl. Prot. Agency, 963 F.2d 603, 606-07 (3d Cir. 1992)

(internal citations and quotation marks omitted).

“While we apply the ‘plainly erroneous’ standard

of review where the meaning of the words in the

regulation is in doubt or subject to different

interpretations, we are not at liberty to allow the

agency to imply language that does not exist in

the regulation. We acknowledge the complex

nature of environmental statutes and regulations

and the specialized knowledge necessary to

construe them, and therefore, subject to these

limitations, defer to the EPA’s interpretations of

its own regulations.”

Id.; see also Star Enter., 235 F.3d at 147.

III. DISCUSSION

The crux of TSG’s argument is that there are operational

differences between its process for imbuing fabrics with stainresistant qualities and those processes generally used by large,

vertically integrated mills. TSG argues that despite these

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differences, it has been unfairly and arbitrarily lumped into the

“finishing operation” category because, in promulgating the

regulation, the EPA primarily considered the processes used by

the larger mills. More specifically, TSG asserts that because it

uses a solvent-based process for treating its fabric, whereas most

large mills generally use an aqueous-based process, TSG should

not be considered a “finishing operation” under the regulations.

In addition, TSG asserts, it more closely fits the definition of a

“coating operation.” TSG makes a number of arguments based

on the language of the regulations and the intent of the EPA, and

it finally argues that, in any case, the EPA did not have enough

information to make the determination that it did.

A.

TSG first argues it is not a “finishing operation” because

TCE, the solvent that it uses in treating fabrics with anti-stain

agents, is not a “finishing material” under the regulations. In

doing so, TSG conflates two distinct issues: whether TSG’s

operation constitutes “finishing” as defined in Subpart OOOO,

and whether TCE is a “finishing material.” TSG makes no

argument that its process, which indisputably involves treatment

of fabrics with anti-stain agents, is not “finishing” as defined by

the regulations. “Finishing” is defined as the “chemical

treatment of a textile . . . that improves the appearance and/or

usefulness of the textile substrate,” and specifically includes

“stain resist or soil release agents.” 40 C.F.R. § 63.4371.

Based on the plain language of this definition, we cannot

conclude that the EPA clearly erred in determining that TSG’s

operations fit within the definition of “finishing.”

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Despite this, TSG proceeds to argue that TCE is not a

“finishing material,” and therefore that TSG’s operation cannot

be a “finishing operation.” This argument is something of a

non-sequitur, as there is no authority for the proposition that all

materials used in a finishing operation must fall under the

definition of finishing materials. Regardless, the EPA did not

clearly err in its determination that TCE is, in fact, a finishing

material.

The regulations define finishing materials as

“the purchased substances (including auxiliaries

added to the finish to improve the finishing

process or the characteristics of the finished

textile) that are applied individually or as

mixtures to textile substrates to impart desired

properties.”

Id. TSG asserts that in its process the solvent acts only as a

carrier for the application of other materials to the fabric, and

technically the solvent itself has not been “applied” to the fabric

as required by the regulation, because it later evaporates.

The EPA has not clearly erred in declining to construe

the term “applied” so narrowly in this context. We therefore

defer to the EPA’s determination that under the plain language

of the regulation, the solvent, as used in TSG’s process, is a

“finishing material.” It is undisputed that the solvent is a

“substance[]” that is part of a “mixture[],” and it is sprayed onto

“textile substrates to impart desired properties,” in this case,

anti-stain properties. According to the Oxford English

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Dictionary, to “apply” is “[t]o lay or spread (esp. a soft or liquid

substance, as paint, ink, etc.) on to a surface.” OED Online

(2008), available at http://dictionary.oed.com.

Merriam-Webster similarly defines it as “to lay or spread on [as

in] varnish.” Webster’s Third New International Dictionary 110

(1981). Absent from these definitions is any requirement that to

be “applied,” a substance must adhere permanently to the

substance to which it has been applied.

We agree with the EPA’s determination that “[t]he

solvent that TSG uses to dilute stain repellent finishes is a

transfer agent that is added to the finish as an auxiliary to

improve the finishing process, and therefore, is a finishing

material.” As the regulation states, the definition of finishing

materials “includ[es] auxiliaries,” so long as they are “added to

the finish to improve the finishing process.” 40 C.F.R.

§ 63.4371. TSG itself states in its initial letter to the EPA that

its solvent mixtures “are used to improve the efficiency of the

application process.” As TSG has acknowledged that the

solvent has been added as “carrier” to improve the process, the

EPA has not clearly erred in determining that it meets the

criteria for being considered an auxiliary. Therefore, the solvent

used in TSG’s operation is by definition a “finishing material.”

B.

TSG next argues that its operation should not have been

classified as a “finishing operation” because it more closely fits

the definition of a “coating operation.” As stated previously,

“coating” is defined as

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“the application of a semi-liquid coating material

to one or both sides of a textile web substrate.

Once the coating material is dried (and cured, if

necessary), it bonds with the textile to form a

continuous solid film for decorative, protective, or

functional purposes.”

Id. It is not disputed that TSG’s operation sprays the solvent

mixture over one side of the fabric substrate in order to achieve

a functional purpose, but this is not in itself sufficient to qualify

it as a coating operation. In addition, to constitute “coating,” a

“continuous solid film” must be formed, and the process may

not “impregnate” the fabric with chemicals. See id. (“Coating

does not include finishing where the fiber is impregnated with

a chemical or resin to impart certain properties, but a solid film

is not formed.”).

Based on the information provided by PDEP and TSG,

the EPA determined that “the TSG process impregnates textile

fibers with a stain repellent to impart stain repellent properties,

and does not result in formation of a solid film.” The EPA

therefore concluded that TSG was not a coating operation, but

rather a finishing operation. Although TSG now argues that its

process does, in fact, result in a continuous solid film, and that

this occurs “without impregnating the fiber,” TSG provides no

support in the record for this assertion. It relies solely on a fax

from PDEP, which generally describes TSG’s process, but does

not make any reference to the formation of a continuous solid

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TSG also cites an EPA Technical Support Document,

relied upon by the EPA in the promulgation of Subpart OOOO,

for the proposition that its operation is a coating operation. This

document is, however, not part of the administrative record in

this case. Even if we were to consider it, it does little to support

TSG’s contentions. While it generally explains the sort of

operations that the EPA considered designating as “coating”

operations, it does not provide support for TSG’s argument that

its particular process forms a solid film or does not impregnate

the fibers. Because the final regulation is determinative of what

constitutes “coating,” the Technical Support Document does not

place the EPA’s Applicability Determination in doubt.

2

Although TSG argues that it is a “coating operation,” it

repeatedly refers to itself as a “finishing operation” in its

correspondence with the EPA. TSG’s letter of June 23, 2005,

states that “TSG is requesting a the development of an alternate

MACT standard for its textile finishing operations” and later, in

describing its process, notes that “[w]hen finishing fabrics, TSG

does not use a water-based . . . system.” While it is

acknowledged that there is some overlap in the definitions of

“coating” and “finishing,” these statements further undermine

TSG’s attempt to characterize its operation as a “coating

operation” for purposes of this appeal.

12

film, coating, or finishing.1

 In light of the foregoing, we

conclude that the EPA has not clearly erred in determining that

TSG is a finishing operation and not a coating operation.2

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3

This document is not part of the administrative record.

However, even if we were to consider it, it would not change the

outcome here for the reasons explained below.

13

C.

In addition to its arguments that it does not qualify as a

finishing operation based on the text of the regulation, TSG

argues that its solvent-based processes are not finishing

operations because finishing operations are aqueous-based

processes, as conceived of by the EPA itself. In its Summary of

Public Comments, the EPA states that “[s]lashing and dyeing

and finishing operations are aqueous processes, and therefore,

the cleaning materials and preparation activities used in these

operations do not contain HAP.” The EPA reiterates this

statement in the preamble to Subpart OOOO. In addition, a

Technical Support Document relied on by the EPA in

promulgating Subpart OOOO notes that “[t]he coatings applied

by facilities . . . can be classified as solvent-borne and waterborne, with the vast majority of the coatings applied being

solvent-borne.”3

TSG argues that these statements illustrate that in

promulgating the regulations, the EPA based the control

standard required for “finishing” and “coating” operations on

the assumption that finishing operations were generally

aqueous-based, and the that coating operations were generally

solvent-based. TSG speculates that the EPA did not account for

solvent-based finishing operations like TSG, which uses a

“process unique in the textile finishing industry.” In its

Applicability Determination, the EPA acknowledges that

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“[u]nlike the water-based systems typically used in the textile

finishing industry, TSG uses a solvent-based system in which

stain-repellent chemicals are diluted with solvent.” However,

for the reasons already stated, the EPA nonetheless determined

that TSG was a “finishing operation” under the regulations.

TSG concludes that the EPA erred in its Applicability

Determination because, in promulgating Subpart OOOO, the

EPA intended that the more stringent finishing operation

requirements would apply to aqueous-based finishing

operations, not solvent-based operations such as TSG’s. This

argument is without merit. At no time does TSG argue that any

of the terms used in the regulations are ambiguous, nor does it

challenge the regulations themselves. Therefore, regardless of

the EPA’s purported intention to differentiate between solventbased and aqueous-based operations, we are left with the plain

language of the regulations as actually promulgated. The

definitions of coating and finishing do not differentiate between,

or even mention, aqueous- and solvent-based processes.

As stated previously, we exercise a deferential standard

of review where an agency is interpreting the meaning of its

own regulation, and will not disturb the agency’s determination

unless it is “plainly erroneous []or inconsistent with the

regulation.” Beazer, 963 F.2d at 606. Under this stringent

standard of review, the agency’s interpretation of the definitions

of coating and finishing operations is neither plainly erroneous

nor inconsistent with the regulation. TSG’s argument that the

EPA should read the regulations to imply a difference between

aqueous- and solvent-based processes must then necessarily fail,

as the regulations do not include this language. The EPA’s

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interpretation and application of Subpart OOOO must be based

on the plain language of that regulation, not what it might have

intended. See Beazer, 963 F.2d at 607 (“[W]e are not at liberty

to allow the agency to imply language that does not exist in the

regulation”); Bethlehem Steel Corp. v. Occupational Safety &

Health Review Comm'n, 573 F.2d 157, 161 (3d Cir. 1978)

(“[T]he [agency] should not strain the plain and natural meaning

of words in a standard to alleviate an unlikely and

uncontemplated hazard. The responsibility to promulgate clear

and unambiguous standards is upon the Secretary. The test is

not what he might possibly have intended, but what he said.”).

TSG’s argument is further undermined by the fact that it

refers to itself as a finishing operation in its initial letter to the

EPA and never as a coating operation. TSG goes so far as to

admit that “[o]n its face, TSG’s application of stain-repellant

chemicals constitutes a ‘finishing’ operation covered by the

regulations.” As the EPA suggests, TSG’s most appropriate

course of action would have been to submit a comment to the

EPA during the notice and comment period after the regulation

was proposed, noting that solvent-based finishers would have

difficulty meeting the stringent emissions limitations in the

proposed regulations, and advocating for a recognition of the

distinction between solvent-based and aqueous-based operations

in the regulations themselves.

In addition, as the EPA informed TSG in its Applicability

Determination, it was “address[ing] the issue of applicability

only,” not TSG’s request for an alternative MACT standard. As

the EPA then advised TSG, TSG may petition the Office of Air

Quality Planning and Standards, the office that initially

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promulgated Subpart OOOO, to request that different standards

be developed for solvent-based, as opposed to aqueous-based,

finishing operations. See 5 U.S.C. § 553(e) (“Each agency shall

give an interested person the right to petition for the issuance,

amendment, or repeal of a rule.”). However, the question

whether it is appropriate for the EPA to modify its rule and

differentiate between solvent-based and aqueous-based finishing

processes is not before us, and we will not speculate with

respect to this question. The only question properly before us is

whether the EPA has plainly erred in its interpretation and

application of Subpart OOOO’s plain language to TSG in its

determination that TSG qualified as a finishing operation. For

the reasons set forth above, we conclude that the determination

was not plainly erroneous or inconsistent with the statute.

D.

TSG’s final argument is that the EPA erred in issuing the

Applicability Determination because the information it

possessed was insufficient to support its conclusion that TSG’s

operation was a finishing operation. TSG argues that the EPA

should have issued a determination that it did not have sufficient

information, rather than determining that TSG was a “finishing

operation.” The linchpin of this argument is TSG’s assertion

that the EPA itself admitted that it did not have sufficient

information to provide a response to TSG’s August 3, 2005

letter reiterating its request for an alternative MACT. TSG

points to the EPA’s statement in the Applicability

Determination:

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“In response to your August 3, 2005 letter, we

examined the applicability of Subpart OOOO to

the TSG process. However, we did not feel that

there was enough information included with your

submittal to provide a response.”

TSG’s argument is flawed for a number of reasons. First,

TSG has mischaracterized EPA’s statements in the Applicability

Determination. As the EPA explains, it declined to reach a

determination when it concluded that there was insufficient

information, and instead requested additional information.

When that information was not forthcoming in a timely manner,

the EPA obtained supplemental information from PDEP

regarding the nature of TSG’s processes. The EPA then reached

its conclusion that TSG was a finishing operation “[b]ased on

TSG’s letter and the supplemental information provided by the

state.” As the rest of the Applicability Determination clearly

states, although the EPA concluded that it did not have enough

information to make a determination at the time that it received

TSG’s initial letter on August 3, 2005, it concluded that it had

since gathered sufficient evidence to make a determination by

the time it issued the Applicability Determination on

November 8, 2006. Therefore, there is no merit to TSG’s

argument that the EPA admitted that it ultimately did not

possess sufficient information to make a determination.

TSG next argues that the information that the EPA relied

on is “not dispositive of the issue of whether TSG’s fabric

coating processes are finishing operations under Subpart

OOOO.” TSG’s argument is conclusory. TSG does not explain

why the PDEP information is not dispositive of the question. It

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4

As noted in footnotes 2 and 3, supra, TSG has relied on

certain documents not contained in the administrative record.

Upon motion, TSG requested that these documents be included

in the record on appeal. As we have determined that TSG’s

reliance on these documents does not alter our holding in this

case, we will deny this motion as moot.

18

does not describe any of the ways in which the information that

the EPA relied on was insufficient, nor does it indicate what sort

of information TSG might have provided that would have

resulted in a different determination. To the contrary, the

information on which the EPA relied reveals that TSG’s process

applies stain resistant chemicals to various fabrics, and

therefore, as described previously, comports with the definition

of finishing operation. Accordingly, we conclude that the EPA

had sufficient information to determine that TSG was a finishing

operation.

IV. CONCLUSION

For the foregoing reasons, we conclude that the EPA did

not clearly err in determining that TSG’s operation constituted

a finishing operation under Subpart OOOO, nor is the

determination inconsistent with the regulations. Therefore, we

will deny the petition for review.4

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