Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01394/USCOURTS-caDC-00-01394-0/pdf.json

Parties Involved:
Environmental Protection Agency
Respondent
General Electric Company
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 3, 2001 Decided May 17, 2002

No. 00-1394

General Electric Company,

Petitioner

v.

Environmental Protection Agency,

Respondent

On Petition for Review of an Order of the

Environmental Protection Agency

Angus Macbeth argued the cause for petitioner. With him

on the briefs were Patricia K. Casano, Christopher L. Bell

and Timothy K. Webster.

H. Michael Semler, Attorney, U.S. Department of Justice,

argued the cause and filed the briefs for respondent.

Before: Ginsburg, Chief Judge, and Randolph and Tatel,

Circuit Judges.

Opinion for the Court filed by Chief Judge Ginsburg.

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Ginsburg, Chief Judge: General Electric Co. petitions for

review of the "PCB Risk Assessment Review Guidance Document" issued by the Environmental Protection Agency. The

parties dispute (1) whether this case is ripe for review; (2)

whether the Document is a "rule" within the meaning of

s 19(a) of the Toxic Substances Control Act (TSCA), and

hence whether the court has jurisdiction to review its promulgation; and (3) whether the Agency should have followed the

procedures required for rulemaking in the TSCA and in the

Administrative Procedure Act when it promulgated the Document. We conclude that the case is ripe for review, and that

the Guidance Document is a legislative rule such that the

court does have jurisdiction to entertain GE's petition and the

Document should not have been issued without prior notice

and an opportunity for public comment.

I. Background

The TSCA prohibits the manufacture, processing, distribution, and use (other than in a "totally enclosed manner") of

polychlorinated biphenyls (PCBs) unless the EPA determines

that the activity will not result in an "unreasonable risk of

injury to health or the environment." 15 U.S.C. s 2605(e)(2)

& (3). The Guidance Document governs the application of

two regulations promulgated by the EPA under the TSCA to

provide respectively for the cleanup and disposal of PCB

remediation waste and for the disposal of PCB bulk product

waste. See 40 C.F.R. ss 761.61 ("cleanup and disposal options for PCB remediation waste"), 761.62 (how "PCB bulk

product waste shall be disposed").

Under subsection (c) of each regulation a party may apply

for permission to use a method other than one of the generic

methods set out in the regulations for sampling, cleaning up,

or disposing of PCB remediation waste, or for sampling or

disposing of PCB bulk product waste. The EPA will approve

applications under these subsections if the alternative method

proposed does "not pose an unreasonable risk of injury to

health or the environment." Id. The regulations do not,

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however, tell applicants how to conduct the necessary risk

assessment.*

That is where the Guidance Document comes in. It "provide[s] an overview of risk assessment techniques, and guidance for reviewing risk assessment documents submitted

under the final PCB disposal rule." Guidance Document at

10. Of particular relevance to this case, in the Guidance

Document the EPA also explains that an applicant seeking to

use an alternative method under s 761.61(c) may take either

of two approaches to risk assessment. Id. at 21, 42. First,

the applicant may calculate cancer and non-cancer risks separately. Id. To calculate cancer risks the applicant would

have to use a cancer potency factor recognized by the EPA.

Such cancer potency factors range, depending upon the exposure pathway and upon the composition of the PCB mixture,

from .04 to 2.0 (mg/kg/day)-1. Id., Table 9, at 64. To

calculate the non-cancer risks a different type of toxicity

value--a reference dose, for example--would have to be used,

and certain specified non-cancer risks would have to be taken

into account. Id. at 21, 42.

The second approach endorsed in the Guidance Document

is to use a "total toxicity factor" of 4.0 (mg/kg/day)-1 to

account for cancer and non-cancer risks together. Id. In its

brief the EPA explains that this approach "provides the

applicant an opportunity to reduce the time and expense

associated with the risk assessment" because the Agency is

willing "to accept this 'default' toxicity value of 4.0 (mg/kg/

day)-1[ ] without requiring further justification."

II. Analysis

GE's primary argument is that the Guidance Document is a

legislative rule and therefore should have been promulgated

only after public notice and an opportunity for comment. In

__________

* The Guidance Document initially says it applies to both

s 761.61 and s 761.62. See Guidance Document at 10. Later in

the Guidance Document the EPA appears to use s 761.61 as

shorthand for both provisions. See id. at 21. We follow the

Agency's lead in referring henceforth only to s 761.61.

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the alternative it contends that the Guidance Document is not

supported by substantial evidence. Before considering these

arguments about the merits, however, we must determine

whether the case is ripe for review and whether we have

jurisdiction to hear it.

A. Ripeness

To determine whether a controversy is ripe for judicial

review the court must evaluate "the fitness of the issues for

judicial decision and the hardship to the parties of withholding court consideration." Abbott Labs. v. Gardner, 387 U.S.

136, 149 (1967). "In determining the fitness of an issue for

judicial review we look to see whether the issue is purely

legal, whether consideration of the issue would benefit from a

more concrete setting, and whether the agency's action is

sufficiently final." Clean Air Implementation Project v.

EPA, 150 F.3d 1200, 1204 (D.C. Cir. 1998).

Here the EPA argues that "GE's claims satisfy neither

aspect of the 'fitness'/'hardship' standard under Abbott Laboratories." Regarding fitness, the EPA argues that (1) GE is

asking the court to consider factual questions, such as how

the EPA would evaluate an application that did not use either

of the approaches to toxicity set out in the Guidance Document; (2) the Guidance Document is not final agency action

because the Agency "is currently conducting an assessment of

the non-cancer risks of PCBs" and will be modifying the

Document "as needed"; (3) "the Court's consideration would

be aided by further application of the agency's position to

particular facts"; and (4) judicial review is premature because

"adjudication may well prove unnecessary."

We think the issues presented are fully fit for review.

First, whether the Guidance Document is a legislative rule is

largely a legal, not a factual, question, turning as it does in

this case primarily upon the text of the Document. GE does

rely in part upon the Agency's application of the Guidance

Document, but we need not reach that issue; we hold the

Guidance Document is a legislative rule because on its face it

purports to bind both applicants and the Agency with the

force of law.

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Second, it is clear that the Guidance Document is final

agency action because it marks the consummation of the

EPA's decisionmaking process and it determines the rights

and obligations of both applicants and the Agency. See

Bennett v. Spear, 520 U.S. 154, 178 (1997). The EPA argues

that the Guidance Document is not final because it is subject

to change and the "EPA has not completed its decisionmaking process regarding the non-cancer impacts of PCBs." We

rejected a similar argument in Appalachian Power Co. v.

EPA, 208 F.3d 1015 (2000), stating: "The fact that a law may

be altered in the future has nothing to do with whether it is

subject to judicial review at the moment." Id. at 1022. If the

possibility (indeed, the probability) of future revision in fact

could make agency action non-final as a matter of law, then it

would be hard to imagine when any agency rule--and particularly one that must be updated periodically to reflect advances in science--would ever be final as a matter of law.

In the same vein, the EPA contends that the Fifth Circuit's

decision in Central & South West Services, Inc. v. EPA, 220

F.3d 683, 695 (2000), remanding the Final Rule governing

PCB remediation and decontamination--which Rule the

Agency promulgated using the 4.0 (mg/kg/day)-1 toxicity factor--was "[i]n effect" a decision that the case was "not ripe

because EPA's position on this complex scientific issue was

not final." But the court there did not purport in the least to

hold GE's petition non-ripe or the Agency's Final Rule nonfinal. Id. Rather, the court remanded the issue without

considering the merits of GE's petition because, in view of the

EPA's continuing assessment of the toxicity of PCBs, the

Agency had "no objection to a remand," and that was all the

relief GE was seeking. Id.*

__________

* This is all the Fifth Circuit had to say:

EPA is in the process of conducting a comprehensive assessment of the non-cancer toxic effects of PCBs. According to

EPA, it promulgated the Final Rule before the assessment was

completed, in order to comply with the desires of the regulated

community to finalize the rulemaking as soon as possible.

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Third, we do not think "the Court's consideration would be

aided by further application of the agency's position to particular facts." We conclude below that the Guidance Document

should not have been issued without public notice and an

opportunity for comment because the Document purports on

its face to bind both applicants and the Agency. In this

situation, nothing would be gained from delaying review.

The EPA's final argument regarding the fitness of the

issues for review is that, if the court does not resolve this case

now, then it may never be necessary to decide the underlying

controversy. This contention rests upon the EPA's assertion

that it will apply the Guidance Document flexibly. That

assertion, however, simply restates a portion of the Agency's

argument that the Document is not binding, an argument we

reject below.

As for hardship, the EPA argues that GE will not be

harmed if the court defers review of the Guidance Document

because GE can later challenge under the APA any decision

of the EPA denying its application for a risk-based alternative. As we have previously explained, however, "[w]here the

first prong of the [Abbott Laboratories] ripeness test is met

and Congress has emphatically declared a preference for

immediate review ... no purpose is served by proceeding to

the second [or hardship] prong." George E. Warren Corp. v.

EPA, 159 F.3d 616, 622 (1998). In this case the TSCA

requires that any petition for review of a rule be filed within

60 days of the promulgation of the rule. 15 U.S.C.

s 2618(a)(1)(A). Consequently, having demonstrated that the

issue is fit for review, GE need not also show that delaying

review would work a hardship. For these reasons, we hold

the case ripe for review.

__________

ine the toxicity of PCBs and has no objection to a remand so

that it can consider the results of the assessment. Therefore,

we remand ss 761.61(a) and 761.79(b) to give EPA an opportunity to complete its assessment and reconsider the Final Rule

in light of its study.

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B. Jurisdiction under the TSCA

Before we can reach the merits, we must consider whether

the Document is a "rule" subject to our review under

s 19(a)(1)(A) of the TSCA, 15 U.S.C. s 2618(a)(1)(A). That

section provides:

Not later than 60 days after the date of the promulgation

of a rule under section ... 2605(e) ... of this title, ...

any person may file a petition for judicial review of such

rule with the United States Court of Appeal for the

District of Columbia Circuit.

GE contends that the term "rule" should be read broadly to

track the definition in the APA. See 5 U.S.C. s 551(4). The

EPA takes the narrower view that "direct appellate review is

limited to legislative rules, i.e., rules which were (or should

have been) promulgated through notice and comment rulemaking." See, e.g., Appalachian Power, 208 F.3d at 1020 &

n.11. We need not decide which interpretation of the term

"rule" in s 19(a)(1)(A) is correct because we conclude that the

Guidance Document is indeed a legislative rule.

GE argues that the Guidance Document is a legislative rule

rather than a statement of policy or an interpretive rule

because it gives substance to the vague language of 40 C.F.R.

s 761.61(c) ("unreasonable risk of injury to health or the

environment"), does so in an obligatory fashion, and is treated

by the EPA as "controlling in the field." See Community

Nutrition Inst. v. Young, 818 F.2d 943, 946 (D.C. Cir. 1987);

McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1320-

22 (D.C. Cir. 1988); Appalachian Power, 208 F.3d at 1021.

The EPA argues that under the three-part test applied in

Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999), the

Guidance Document is not a legislative rule. Although it is

not entirely clear what in the EPA's view the Document is,

the EPA comes closest to characterizing it as a statement of

policy; thus:

[T]he portion of the guidance at issue here is simply an

expression of EPA's policy judgment, based on the available scientific data and analysis, that when the "total

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toxicity" analysis is used, the 4.0 (mg/kg/day)-1 toxicity

value is appropriate to avoid an unreasonable risk to

health or the environment.

With the Agency's argument so understood, the question

before us can be framed as whether the Guidance Document

is a legislative rule or a statement of policy.

As GE argues, in cases where we have attempted to draw

the line between legislative rules and statements of policy, we

have considered whether the agency action (1) "impose[s] any

rights and obligations" or (2) "genuinely leaves the agency

and its decisionmakers free to exercise discretion." Community Nutrition Inst., 818 F.2d at 946; Chamber of Commerce

v. Dep't of Labor, 174 F.3d 206, 212 (1999). In McLouth, we

recognized that "[i]n practice, there appears some overlap in

the Community Nutrition criteria" because "[i]f a statement

denies the decisionmaker discretion in the area of its coverage, so that [the agency] will automatically decline to entertain challenges to the statement's position, then the statement

is binding, and creates rights or obligations." 838 F.2d at

1320. We emphasized that an agency announcement has

"present-day binding effect" if the agency is "simply unready

to hear new argument" in proceedings governed by the

announcement. Id. at 1321.

The EPA urges the court to consider three factors: "(1) the

Agency's own characterization of its action; (2) whether the

action was published in the Federal Register or the Code of

Federal Regulations; and (3) whether the action has binding

effects on private parties or on the agency." Molycorp, Inc.,

197 F.3d at 545; see also Florida Power & Light Co. v. EPA,

145 F.3d 1414, 1418 (D.C. Cir. 1998); American Portland

Cement Alliance v. EPA, 101 F.3d 772, 776 (D.C. Cir. 1996).

As the EPA concedes, however, the third factor is the most

important: "[T]he ultimate focus of the inquiry is whether the

agency action partakes of the fundamental characteristic of a

regulation, i.e., that it has the force of law." Molycorp, Inc.,

197 F.3d at 545.

The two tests overlap at step three of the Molycorp

formulation--in which the court determines whether the

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agency action binds private parties or the agency itself with

the "force of law." This common standard has been wellstated as follows:

If a document expresses a change in substantive law or

policy (that is not an interpretation) which the agency

intends to make binding, or administers with binding

effect, the agency may not rely upon the statutory exemption for policy statements, but must observe the

APA's legislative rulemaking procedures.

Robert A. Anthony, Interpretive Rules, Policy Statements,

Guidances, Manuals, and the Like--Should Federal Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1355

(1992).

Our cases likewise make clear that an agency pronouncement will be considered binding as a practical matter if it

either appears on its face to be binding, Appalachian Power,

208 F.3d at 1023 ("[T]he entire Guidance, from beginning to

end ... reads like a ukase. It commands, it requires, it

orders, it dictates."), or is applied by the agency in a way that

indicates it is binding, McLouth, 838 F.2d at 1321. As

Professor Robert A. Anthony cogently comments, the mandatory language of a document alone can be sufficient to render

it binding:

A document will have practical binding effect before it is

actually applied if the affected private parties are reasonably led to believe that failure to conform will bring

adverse consequences, such as ... denial of an application. If the document is couched in mandatory language,

or in terms indicating that it will be regularly applied, a

binding intent is strongly evidenced. In some circumstances, if the language of the document is such that

private parties can rely on it as a norm or safe harbor by

which to shape their actions, it can be binding as a

practical matter.

Interpretive Rules, 41 Duke L.J. at 1328-29.

GE argues that the Guidance Document is binding both

because it facially requires an applicant for a risk-based

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variance to calculate toxicity by one of two methods--either

use a total toxicity factor of 4.0 (mg/kg/day)-1 or use a cancer

potency factor and account for the specified non-cancer health

risks--and because, considering the cost, delay, and uncertainty entailed in the latter course, "[f]or all practical purposes, the Guidance is a rule that directs PCB toxicity to be

measured by a 4.0 (mg/kg/day)-1 CPF."

The EPA counters that the Guidance Document lacks the

force of law because it does not purport to be binding and

because it has not been applied as though it were binding.

First, we are told, the Document "allows great flexibility"

because it not only "recognizes two broad approaches to risk

assessment," but also acknowledges (at 44) that

some risk assessments may have components that require the use of non-standard reference materials, unique

exposure scenarios or assumptions, or require the use of

unconventional methods for estimating risks. These risk

assessments will need to be addressed on a case-by-case

basis.

Second, the EPA says that it has not in practice "applied the

guidance document inflexibly, as if it were a rule or regulation." By this, however, the EPA means only that it has

received and approved applications based upon the use of the

total toxicity factor and upon a separate analysis of cancer

and non-cancer risks--and even this limited assertion is

disputed by GE. Finally, the Agency contends that the

Guidance Document is "an expression of EPA's judgment on

values to be used in conducting risk assessments," much like

the data in the Agency's Integrated Risk Information System

(IRIS), which this court held are not subject to the requirements of notice and comment rulemaking. See Chemical

Mfrs. Ass'n v. EPA, 28 F.3d 1259, 1263 (1994).

We think it clear that the Guidance Document does purport

to bind applicants for approval of a risk-based cleanup plan

under 40 C.F.R. s 761.61(c). Consider the principal directives: "When developing a risk-based cleanup application

... both the cancer and non-cancer endpoints must be addressed...." Guidance Document at 21. If an applicant

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chooses not to use the 4.0 total toxicity factor, then it "must,

at a minimum account for the risk from non-cancer endpoints

for neurotoxicity, reproductive and developmental toxicity,

immune system suppression, liver damage, skin irritation, and

endocrine disruption for each of the commercial mixtures

found at the cleanup site." Id. Although the Guidance

Document does, as noted, anticipate and acknowledge that

"some risk assessments may have components that require

the use of non-standard ... unique ... or unconventional

methods for estimating risk," id. at 44, that does not undermine the binding force of the Guidance Document in standard

cases. See McLouth, 838 F.2d at 1321 ("such a provision for

exceptions ... does not push it much in the direction of a

policy statement"). Furthermore, even though the Guidance

Document gives applicants the option of calculating risk in

either of two ways (assuming both are practical) it still

requires them to conform to one or the other, that is, not to

submit an application based upon a third way. And if an

applicant does choose to calculate cancer and non-cancer risks

separately, then it must consider the non-cancer risks specified in the Guidance Document. To the applicant reading the

Guidance Document the message is clear: in reviewing applications the Agency will not be open to considering approaches

other than those prescribed in the Document.

The Guidance Document also appears to bind the Agency

to accept applications using a total toxicity factor of 4.0

(mg/kg/day)-1 to calculate the risk from both cancer and noncancer endpoints. Guidance Document at 21. The EPA

recognized this in its principal brief: "By indicating that [a]

total toxicity value [of 4.0 (mg/kg/day)-1] will be accepted

without detailed justification, the guidance document offers

an applicant an opportunity to reduce the time and expense

associated with risk assessment." In its supplemental brief,

however, the EPA backs away from this statement, asserting

that the "EPA is not 'bound' to approve an application under

Section 761.61(c) if the applicant uses a total toxicity factor of

4.0 (mg/kg/day)-1, even assuming that the application falls

within the framework of the guidance document." How can

this be? According to the Agency, its position with respect to

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the total toxicity factor "is a matter of policy" that "can be

changed at any time to respond to, inter alia, advances in

scientific knowledge." But the Guidance Document itself

says nothing of the sort. Clearly the EPA's initial response

more accurately describes the Agency's approach in the Document: Stating without qualification that an applicant may

use a total toxicity factor of 4.0 (mg/kg/day)-1 strongly implies

that use of that value will not be questioned; an applicant

reasonably could rely upon that implication.

The EPA argues that the Guidance Document "neither

adds to EPA's prior position nor imposes any further obligations on EPA or the regulated community" because the

Agency had used the toxicity factor of 4.0 (mg/kg/day)-1 when

it "establish[ed] the generic cleanup standards in the 1998

[PCB] regulations." In its supplemental brief, however, the

Agency explicitly states that it does not think its use of 4.0

(kg/mg/day)-1 in the 1998 regulations requires it to approve

use of that factor in an application under s 761.61(c). Because we conclude that the Guidance Document does bind the

Agency to accept use of 4.0 (kg/mg/day)-1, it follows that the

Document does indeed impose a "further obligation[ ] on the

EPA." In this way the Guidance Document is not like the

risk data at issue in Chemical Mfrs., which we held "constrain

no one until ... applied in a particular rule." 28 F.3d at

1263.

Furthermore, the EPA does not contend that in practice it

has not treated the Guidance Document as binding in the

ways described above. The EPA does not claim, for example,

that it has accepted any applications that (1) use neither of

the two methods of risk assessment approved in the Guidance

Document; or (2) calculate risk separately for cancer and

non-cancer endpoints, but fail to calculate endpoints for all

the non-cancer risks required by the Guidance Document to

be addressed. Nor does the EPA contend that it has ever

rejected an applicant's use of 4.0 (mg/kg/day)-1. Whether an

applicant has successfully used the second method of risk

assessment set out in the Guidance Document--as the EPA

asserts and GE disputes--is immaterial because, even if both

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methods are practically available, the Document nonetheless

binds applicants and the Agency in the ways described above.

In sum, the commands of the Guidance Document indicate

that it has the force of law. On its face the Guidance

Document imposes binding obligations upon applicants to

submit applications that conform to the Document and upon

the Agency not to question an applicant's use of the 4.0

(mg/kg/day)-1 total toxicity factor. This is sufficient to render

it a legislative rule. Furthermore, the Agency's application of

the Document does nothing to demonstrate that the Document has any lesser effect in practice. Consequently, we

conclude that the Guidance Document is a legislative rule.

The Guidance Document is therefore undisputedly a "rule"

for purposes of s 19(a)(1)(A) of the TSCA, and the manner of

its promulgation is subject to review.

C. The Merits

The EPA concedes that it did not comply with the procedural requirements of the TSCA and of the APA. More

specifically, as GE points out, it failed to publish a notice of

proposed rulemaking, give interested parties an opportunity

to comment, and hold an informal hearing. See 15 U.S.C.

s 2605(e)(4); 15 U.S.C. s 2605(c)(2); 5 U.S.C. s 553. Therefore, having held that the case is ripe for review and that the

Guidance Document is a "rule" for purposes of the TSCA, it is

clear that GE must prevail on the merits. The EPA agrees:

"Either the petition must be dismissed for lack of jurisdiction

or the PCB Guidance should be vacated." For this reason we

need not consider GE's alternative argument on the merits,

namely, that the Guidance Document is not supported by

substantial evidence.

III. Conclusion

GE's petition for review is granted because the EPA

promulgated a legislative rule without following the procedures required by the TSCA and the APA. The Guidance

Document is accordingly

Vacated.

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