Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01423/USCOURTS-caDC-96-01423-0/pdf.json

Parties Involved:
Eastman Chemical Company
Petitioner
Environmental Protection Agency
Respondent

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 13, 2003 Decided April 8, 2003

No. 96-1422

ARTEVA SPECIALTIES S.A.R.L., D/B/A KOSA,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

No. 96-1423

EASTMAN CHEMICAL COMPANY,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

–————

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #96-1423 Document #742662 Filed: 04/08/2003 Page 1 of 9
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No. 01-1398

ARTEVA SPECIALTIES S.A.R.L., D/B/A KOSA,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

On Petitions for Review of Orders of the

Environmental Protection Agency

Alan H. McConnell argued the cause for the petitioners.

William F. Lane was on brief. Kurt E. Blase and Victoria

A. Cochran entered appearances.

Laurel A. Bedig, Attorney, United States Department of

Justice, argued the cause for the respondent. Steven Silverman, Attorney, United States Environmental Protection

Agency, was on brief. John C. Cruden, Assistant Attorney

General, Christopher S. Vaden, Eric G. Hostetler and Mary

F. Edgar, Attorneys, United States Department of Justice,

and Patricia A. Embrey, Attorney, United States Environmental Protection Agency, entered appearances.

Before: EDWARDS, HENDERSON and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: In 1996 the

Environmental Protection Agency (EPA) promulgated national standards to reduce emissions of hazardous air pollutants

from plants that manufacture a group of polymers and resins,

including polyethylene terephthalate resin (PET). National

Emissions Standards for Hazardous Air Pollutant Emissions:

Group IV, Polymers and Resins: Final Rule, 61 Fed. Reg.

48,208 (Sept. 12, 1996) (Group IV NESHAP), pursuant to

USCA Case #96-1423 Document #742662 Filed: 04/08/2003 Page 2 of 9
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section 112 of the Clean Air Act, 42 U.S.C. § 7412. Arteva

Specialties S.a.r.l. d/b/a KoSa (KoSa)1

 and Eastman Chemical

Company (Eastman), which operate PET manufacturing

plants, seek review of the equipment leak standard of Group

IV NESHAP on the ground the required emission controls

are not cost effective as required by section 112(d)(2), 42

U.S.C. § 7412(d)(2). Specifically, the petitioners contend it

was arbitrary for EPA to aggregate costs and effectiveness

facility-wide, rather than disaggregating the costs and effectiveness of the individual control technologies proposed. For

the reasons set forth below, we grant the petitions for review

and remand to the agency to clarify its decision to aggregate

costs and effectiveness.

I.

Section 112 of the Clean Air Act directs EPA to set

national emission standards to reduce emission of various

‘‘hazardous air pollutants.’’ See 42 U.S.C. § 7412.2

 Subsection (d)(2) provides:

Emission standards promulgated under this subsection

and applicable to new or existing sources of hazardous

air pollutants shall require the maximum degree of reduction in emissions of the hazardous air pollutants

1 KoSa replaced then-petitioner Hoechst Celanese Corporation on

February 5, 2002 after purchasing its PET manufacturing facilities.

2 Section 112(b)(2) defines ‘‘hazardous air pollutants’’ as

pollutants which present, or may present, through inhalation or

other routes of exposure, a threat of adverse human health

effects (including, but not limited to, substances which are

known to be, or may reasonably be anticipated to be, carcinogenic, mutagenic, teratogenic, neurotoxic, which cause reproductive dysfunction, or which are acutely or chronically toxic)

or adverse environmental effects whether through ambient

concentrations, bioaccumulation, deposition, or otherwise, but

not including releases subject to regulation under subsection (r)

of this section as a result of emissions to the airTTTT

42 U.S.C. § 7412(b)(2).

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subject to this section (including a prohibition on such

emissions, where achievable) that the Administrator, taking into consideration the cost of achieving such emission

reduction, and any non-air quality health and environmental impacts and energy requirements, determines is

achievable for new or existing sources in the category or

subcategory to which such emission standard applies,

through application of measures, processes, methods,

systems or techniquesTTTT

42 U.S.C. § 7412(d)(2). Subsection (d)(3) requires that EPA

set a minimum standard for a category which, for existing

sources such as those here, must be at least as stringent as

the average emission level achieved by the ‘‘best performing’’

existing sources. 42 U.S.C. § 7112(d)(3)(A)-(B). Pursuant to

these provisions, EPA promulgates standards in a two step

process. First, EPA identifies a ‘‘maximum achievable control technology’’ (MACT) for each pollutant and source category which serves as a ‘‘floor’’ for its control standards; then

the agency selects as its standard either the MACT floor or,

if achievable in light of the factors and methods listed in

subsection (d)(2), ‘‘beyond the floor’’ technology that is more

stringent than the MACT. See generally Cement Kiln Recycling Coalition, 255 F.3d 855, 858 (D.C. Cir. 2001). In the

Group IV NESHAP rulemaking EPA selected as the MACT

floor for PET manufacturing facilities sensory leak detection

and repair (LDAR), which relies solely on the human senses

to detect leaks. See EPA’s Opp’n to Pet’r’s Motion for Stay

Pending Review, at 3 (filed December 10, 2001). Nevertheless, for most of the equipment categories addressed in the

leak provisions, EPA prescribed, in lieu of or as an alternative

to sensory LDAR, one or both of two beyond-the-floor technologies: ‘‘one time’’ equipment modification or ‘‘Method 21’’

LDAR, which uses portable organic vapor analyzers to monitor emissions.

Pursuant to subsection (d)(2)’s directive to ‘‘tak[e] into

consideration the cost of achieving such emission reduction,’’

EPA conducted a cost effectiveness analysis of the proposed

standard, using the following methodology. First, EPA calculated the aggregate effectiveness of the proposed controls

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at each PET producing facility by subtracting the aggregate

estimated post-control leak rates from the aggregate estimated pre-control leak rates to ascertain the amount of emission

reduction. EPA then calculated the aggregate estimated

costs to implement the leak reduction technologies selected at

each facility. Third, EPA calculated the cost effectiveness by

dividing the aggregate estimated costs of all of the technologies for each facility by the aggregate estimated reductions

for the facility. Finally, EPA reported the combined costeffectiveness of the improvements at the facilities in each of

four subcategories of PET production plants—identified by

the feedstock used (dimethyl terephthalmate (DMT) or terephthalic acid (TPA)) and by the manufacturing process applied (batch or continuous)—as the annual cost per ton of

HAP reduction: $620/ton (DMT-batch), $320/ton (DMTcontinuous), $1500/ton (TPA-continuous) and $730/ton (TPAbatch). See 66 Fed. Reg. at 40,905.3

 EPA concluded that

these aggregate figures demonstrate that implementation of

the standard for each subcategory is cost effective.4

In November 1996 KoSa and Eastman filed separate petitions for review with this court and a joint petition for

reconsideration with EPA. With the petition for reconsideration they submitted new cost and emissions data that they

contended should be used to determine cost effectiveness. In

response, in October 1998 EPA conducted a new analysis

using the petitioners’ data which produced new, less cost

effectivene figures: $2100/ton (DMT-batch), $1300/ton (DMTcontinuous), $1600/ton (TPA-continuous) and $1600/ton (TPAbatch). See 66 Fed. Reg. at 40,905. Based on these results,

3 Initially, EPA reported the cost effectiveness in $/megagram,

see EPA, Re-valuation of Equipment Leak Analysis for PET

Facilities Subject to the Group IV Polymers and Resins NESHAP,

at 7 (October 26, 1998), but converted the results to $/ton in its final

denial of the petition for reconsideration.

4 EPA identified a single facility type within the TPA-continuous

subcategory (the type using a ‘‘continuous TPA high viscosity

multiple end finisher process,’’ 61 Fed. Reg. at 48,225), for which it

found the standard would not be cost effective.

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EPA again concluded the standard is cost effective and issued

a proposed denial of the petitions for reconsideration on June

8, 1999. National Emission Standards for Hazardous Air

Pollutants: Group IV Polymers and Resins: Proposed Denial

of Petition for Reconsideration and Notice of Public Hearing,

64 Fed. Reg. 30,456 (June 8, 1999).

The petitioners submitted comments on the proposed denial, asserting EPA had underestimated the costs of the control

and overestimated the emission reductions and that EPA

should not have aggregated the cost effectiveness of the

controls. EPA conducted another analysis in December 2000

and calculated the following costs/ton: $3300/ton (DMTbatch), $2700/ton (DMT-continuous), $1700/ton (TPAcontinuous) and $1600/ton (TPA-batch). On June 8, 2001

EPA published its final denial of the petition for reconsideration, concluding once again that the standards are cost effective. National Emission Standards for Hazardous Air Pollutant Emissions: Group IV: Polymers and Resins: Final rule;

Amendments and Denial of Petitions, 66 Fed. Reg. 40,903

(August 6, 2001). KoSa filed a petition for review of the

denial on November 12, 2001.

II.

The petitioners do not here challenge EPA’s basic cost

effectiveness methodology but fault only the agency’s decision

to aggregate the cost effectiveness of the proposed controls—

facility-wide and by facility subcategory—which, they contend, misrepresents the cost effectiveness of the leak provisions, at least for some types of equipment, because it averages the cost effectiveness of using Method 21 with the cost

effectiveness of the other two controls—one time modification

and sensory LDAR.5

 Because of the high cost of Method 21,

the petitioners maintain, only a separate analysis of this

control will accurately reflect the cost effectiveness of the

equipment leak standard. We conclude that, although aggre5 The petitioners also challenge EPA’s conclusion that sensory

LDAR is cost effective. Because we are remanding to EPA to

clarify its cost effectiveness analysis, we need not reach this issue.

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gating cost effectiveness may be a permissible approach to

assessing the standard’s cost effectiveness, the present record

does not demonstrate that EPA’s use of aggregation was

reasonable.

In its denial of reconsideration, EPA set forth the following

justification for aggregating its cost effectiveness results:

We did not perform cost analyses which separate portions of the equipment leak programs that require onetime equipment modifications from the portions that are

based on EPA Method 21 monitoring. We consider the

LDAR program to be a whole program designed to

reduce HAP emissions from equipment leaks across the

total facility. The leaks from individual equipment components are considered together due to the similarity of

the cause of the emissions and the control techniques.

We do not believe it is appropriate nor necessary to

disaggregate equipment leak programs by individual

component types

66 Fed. Reg. at 40,905. EPA now offers a different defense

of aggregation. Pointing out that ‘‘most of the leak detection

and repair provisions provide specific alternative ways of

achieving the standard,’’ the agency asserts that ‘‘this interchangeability of compliance methods’’ makes the standard

sufficiently ‘‘flexible’’ that aggregation does not distort the

results. Resp’t’s Br. at 20–21. The petitioners correctly

counter, however, that for two sources—‘‘[v]alves in gas/vapor

service and in light liquid service’’ and ‘‘[c]onnectors in

gas/vapor service and in light liquid service’’—the standard

authorizes only Method 21 LDAR so that, for those two

sources at least, aggregation appears to distort the cost

effectiveness. See 40 C.F.R. §§ 63.168 (valves), § 63.174

(connectors).

To shore its defense here, EPA has cited a fallback provision in the standards which permits a facility owner or

operator to use an ‘‘alternative means of emission limitation’’

if EPA determines, pursuant to the procedure set out in 40

C.F.R. § 63.177, that it is ‘‘a permissible alternative.’’ Thus,

EPA reasons, ‘‘[i]n all instances a facility may utilize a leak

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detection and repair method of its own choosing.’’ Resp’t’s

Br. at 20 (citing 40 C.F.R. §§ 63.162(b)(1)). At oral argument

EPA identified specific measures it contends may be used as

alternatives to Method 21 for § 63.168 valves and § 63.174

connectors. For § 63.168 valves the agency points to a

portion of a technical document it prepared in June 1993

which identified ‘‘two primary alternatives for controlling

equipment leaks from pressure relief devices: use of a rupture disc (RD) in conjunction with the [pressure relief valve],

or use of a closed vent system,’’ EPA, Protocol for Equipment

Leak Emission Estimates, at 5–4 (June 1993); for § 63.174

connectors the agency points to the language of the regulation itself, which provides ‘‘an optional credit for removed

connectors’’ that are satisfactorily welded to prevent leaks, 40

C.F.R. § 63.174(j).

EPA may well be correct that the availability of the

alternatives it cites adequately answers the petitioners’ concern over the cost-effectiveness of the cited provisions. We

are unable, however, to discern this from the administrative

record because EPA did not take into account these particular alternatives in conducting its cost effectiveness analysis.

We therefore have no evidence of their cost or of their

effectiveness. They may be relatively inexpensive and effective measures or they may be less cost effective than Method

21 LDAR. Because the agency failed to consider in its

analysis below the alternatives it now offers, we cannot accept

its assertion here that their availability makes EPA’s proposed standard cost effective notwithstanding the aggregation

problem. Cf. Sierra Club v. EPA, 167 F.3d 658, 665 (D.C.

Cir. 1999) (remanding emission standard for medical waste

incinerators because ‘‘[a]lthough th[e] potential rationale for

EPA’s method was made clear in the briefs for the agency

and the parties intervening on its behalf, it does not appear in

the rulemaking record with enough clarity for us to say that

the agency’s ‘path may reasonably be discerned’ ’’) (quoting

Bowman Transp., Inc. v. Arkansas–Best Freight Sys, Inc.,

419 U.S. 281, 286 (1974)). We emphasize that aggregating

cost effectiveness is not prohibited under the Clean Air Act’s

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cost effectiveness provisions and EPA’s decision to do so on

remand will therefore be upheld as long as it is reasonable.

See Husqvarna AB v. EPA, 254 F.3d 195 (D.C. Cir. 2001)

(upholding chosen methodology as ‘‘reasonable’’ because statute ‘‘d[id] not mandate a specific method of cost analysis’’). If

EPA demonstrates on remand that a cost effective and

practicable alternative to Method 21 exists for each leak

source, and expressly provides for the alternatives in the

standard, we do not see how the petitioners can then assail

aggregation as unreasonable.

For the foregoing reasons, we remand to EPA to clarify

the PET equipment leak standard after reconsidering its cost

effectiveness in accord with this opinion. On remand, the

stay of the standard issued by the court on January 7, 2002

will remain in effect pending final termination of the proceeding.

So ordered.

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