Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-01464/USCOURTS-caDC-01-01464-0/pdf.json

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

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 3, 2002 Decided October 22, 2002

No. 99-1255

Ethyl Corporation,

Petitioner

v.

Environmental Protection Agency and

Christine Todd Whitman, Administrator,

Environmental Protection Agency,

Respondents

Association of International Automobile

Manufacturers, Inc., et al.,

Intervenors

Consolidated with

00-1515, 01-1464

On Petitions for Review of Final Action of the

Environmental Protection Agency

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Kevin L. Fast argued the cause for petitioner. With him

on the briefs were Douglas S. Burdin and Andrew J. Turner.

Alan D. Greenberg, Attorney, U.S. Department of Justice,

argued the cause for respondents. With him on the brief was

John T. Hannon, Attorney, U.S. Environmental Protection

Agency. Lois J. Schiffer, Assistant Attorney General, Christopher S. Vaden and Eric G. Hostetler, Attorneys, U.S.

Department of Justice, and Mark M. Kataoka, Attorney, U.S.

Environmental Protection Agency, entered appearances.

Mitchell H. Bernstein argued the cause for intervenors

Alliance of Automobile Manufacturers and Association of

International Automobile Manufacturers, Inc. With him on

the brief were Richard A. Penna, Charles R. Sensiba, Julie

C. Becker and Charles H. Lockwood II.

Before: Edwards and Rogers, Circuit Judges, and

Williams, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

Williams.

Williams, Senior Circuit Judge: Title II of the Clean Air

Act, 42 U.S.C. s 7521 et seq. (1955), sets up a program for

the regulation of both motor vehicles and their fuels in order

to reduce harmful emissions. Section 206 charges the Environmental Protection Agency with testing new motor vehicles

to ensure that each vehicle's emissions will comply with

federal emissions standards throughout its "useful life." 42

U.S.C. s 7525(a)(1). Section 206(d) says that the agency

"shall by regulation establish methods and procedures for

making tests under this section." Id. s 7525(d) (emphasis

added).

In a rulemaking pursuant to s 206, the EPA adopted a

Compliance Assurance Program or "CAP 2000." 64 Fed.

Reg. 23,906 (1999). CAP 2000 does not, however, set out

"methods and procedures for making tests." Rather, it establishes a framework for automobile manufacturers to develop their own tests, to be used once the EPA gives approval,

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case-by-case, after private proceedings with each manufacturer.

Petitioner Ethyl manufactures and markets fuel and lubricant additives for use in motor vehicles. It argues that CAP

2000 violates the Act because it provides for test procedures

and methods to be vetted in individual closed proceedings

rather than in a notice-and-comment rulemaking. And it

claims to be injured because the mechanism adopted by the

EPA deprives it of the opportunity to observe the rulemaking

process and thus gain information useful in its efforts both to

develop and improve its products and to key them to the

certification tests. For the reasons given below we grant the

petition.

* * *

Before a manufacturer may introduce a new motor vehicle

into commerce, it must obtain an EPA certificate indicating

compliance with the requirements of the Act and applicable

regulations. It submits an application containing test data

and other information specified by the EPA, which issues a

certificate if the manufacturer has shown, among other

things, that the vehicle's emissions control systems will

achieve compliance with emissions standards over the vehicle's full useful life. See 40 CFR s 86.1848-01.

Critical here is the question of the control systems' possible

deterioration over time. Before 1993 EPA had had a durability test that called for prototype vehicles to be driven over a

50,000-mile course known as the Automobile Manufacturers

Association ("AMA") driving cycle. 58 Fed. Reg. 3994, 3995/1

(1993). In 1993 it adopted a "revised durability program" or

"RDP" that retained that test "as the standard EPA-defined

procedure." Id. But the RDP regulations also permitted

automobile companies to develop alternative test methods and

procedures provided that they (a) obtained EPA approval for

each such test and (b) performed in-use testing to verify the

accuracy of the emissions deterioration predictions made by

their tests. See id. at 3995. The EPA did not adopt these

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tests through rulemaking but simply approved them on a

case-by-case basis.

In May 1999 the EPA replaced RDP with CAP 2000.

These regulations eliminate the AMA driving cycle as an

EPA-defined test method. Instead, the program available as

an alternative in 1993-99, under which manufacturers are to

develop their own emissions durability test methods and

procedures, has become the sole method. Thus, rather than

promulgating methods and procedures for durability testing

itself, the EPA now requires, through CAP 2000, that "[t]he

manufacturer shall propose" a durability program. 40 C.F.R.

s 86.1823-01. Each manufacturer is required to obtain EPA

approval for its tests, and must verify its results through inuse testing.

Manufacturer-proposed tests under CAP 2000 must (a)

"effectively predict the expected deterioration of candidate inuse vehicles over their full and intermediate useful life," and

(b) be "consistent with good engineering judgment."

40 C.F.R. s 86.1823-01(a). Within these criteria, the

manufacturer-developed mileage accumulation procedures are

to be

based upon whole-vehicle full-mileage accumulation,

whole-vehicle accelerated mileage accumulation (e.g.,

where 40,000 miles on a severe accumulation cycle is

equivalent to 100,000 miles of normal in-use driving),

bench aging of individual components or systems, or

other approaches approved by the Administrator.

40 C.F.R. s 86.1823-01(a)(1)(ii). The "bench aging" referred

to is a system whereby components are removed from the

vehicle and tested for durability separately. 40 C.F.R.

s 86.1823-01(a)(1)(B).

In adopting this system of individualized test approval, the

EPA explicitly found that "rulemaking for each durability

program is not required." 64 Fed. Reg. at 23,914/3. It also

said, in a response to petitions for reconsideration by Ethyl,

that public participation in the certification process would

interfere with the process of reviewing manufacturers' submissions "because of the large amount of information claimed

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confidential" and that, because the process was annual, the

use of notice-and-comment procedures would be "administratively burdensome." August 23, 2001 Response to Ethyl

Corporation Petitions Denying Reconsideration of Three EPA

regulations: CAP 2000, Heavy Duty Gasoline, and OBD/IM,

EPA Air Docket A-96-50, No. VI-C-03, 39.

Ethyl challenges not only CAP 2000 but also regulations

governing the certification of heavy duty vehicles and engines, 65 Fed. Reg. 59,896 (2000), which incorporate the CAP

2000 regulations by reference, and EPA's denial of its various

petitions for reconsideration, 66 Fed. Reg. 45,777 (2001).

* * *

The EPA argues that we need not reach the merits because, it says, Ethyl lacks both Article III and "prudential"

standing. We think it has both.

As is well known, Article III requires a party seeking

judicial relief to show (1) that it has suffered an "injury in

fact"; (2) that the injury is caused by or fairly traceable to

the challenged actions of the defendant; and (3) that it is

likely that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561

(1992).

Ethyl's assertions of injury fall into two categories. First,

as we've already mentioned, it says that as a manufacturer of

additives for motor vehicle fuels it has an interest in understanding the test methods and procedures by which the EPA

certifies new motor vehicles. CAP 2000's provision for

closed-door adoption of emission test procedures deprives

Ethyl of information that might well help it develop and

improve its products with an eye to conformity to emissions

needs.

Second, Ethyl says that CAP 2000 deprives it of information that might be useful for securing EPA approval for its

own fuel additive products under the Act. It points in

particular to s 211(f), which prohibits use of any fuel or fuel

additive that is not "substantially similar" to the fuels used to

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certify vehicles under s 206, unless a waiver is obtained from

EPA. See 42 U.S.C. s 7545(f).

EPA's response to this focuses almost entirely on Ethyl's

asserted interest in the s 211(f) waiver process, completely

ignoring its interest in obtaining information about vehicle

certification for present-day research and development of

products that will be judged (by both the government and

consumers) according to their effect on vehicle emissions.

The Supreme Court has made clear, however, that a denial of

access to information can work an "injury in fact" for standing purposes, at least where a statute (on the claimants'

reading) requires that the information "be publicly disclosed"

and there "is no reason to doubt their claim that the information would help them." Federal Election Comm'n v. Akins,

524 U.S. 11, 21 (1998). Here, against Ethyl's fairly detailed

description of how the information that open rulemaking

proceedings provide would prove useful to it, the EPA offers

little more than a vague shrug of skepticism.

Because Article III standing is clear from Ethyl's informational and market interests in the vehicle-testing program, we

need not address the interest based on its need to seek

variances under s 211(f).

To show "prudential" standing, Ethyl must fall within the

"zone of interests" protected or regulated by the Act. See

Bennett v. Spear, 520 U.S. 154, 162 (1997). The test is not a

particularly demanding one, Clarke v. Securities Industry

Association, 479 U.S. 388, 399 (1987), and includes not only

those challengers expressly mentioned by Congress, but also

unmentioned potential challengers that Congress would have

thought useful for the statute's purpose (whose challenges

thereby support an inference that Congress would have intended eligibility). See Hazardous Waste Treatment Council

v. EPA, 861 F.2d 277, 283 (D.C. Cir. 1988). It excludes

parties whose interests are not consistent with the purposes

of the statute in question. See Clarke, 479 U.S. at 399. As a

manufacturer of fuel additives seeking an open process for

testing the emissions control systems whose character may

affect the efficacy of its products, Ethyl's interests appear

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congruent with those of the statute, i.e., the development of

products that will reduce harmful air pollutants. Indeed, this

court has long recognized the interdependence between motor

vehicle certification under the Act (the process at stake here)

and fuel regulations (under which Ethyl is a direct regulatee).

See e.g., Lubrizol Corp. v. EPA, 562 F.2d 807, 810 (D.C. Cir.

1977); Amoco Oil Co. v. EPA, 501 F.2d 722, 737 (D.C. Cir.

1974). The case is not unlike National Cottonseed Products

Association v. Brock, 825 F.2d 482, 489-492 (D.C. Cir. 1987),

where we found standing for a manufacturer whose respirators had been assigned a low rating by an agency supervising

conditions in a workplace for which the respirators were a

potential means of compliance. We treated the respirator

seller's interest, and that of the regulated firms, as " 'two

sides of the same coin.' " Id. at 491 (quoting FAIC Sec., Inc.

v. United States, 768 F.2d 352, 359 (D.C. Cir. 1985)).

On to the merits: As we said, s 206(d) of the Act states

that the administrator "shall by regulation establish methods

and procedures for making tests under this section." 42

U.S.C. s 7525(d). Although special provisions govern review

under the Act, here the relevant provisions are the same as

under the Administrative Procedure Act. We are to reverse

the challenged EPA actions if they are "arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with

law" or "in excess of statutory jurisdiction, authority, or

limitations." 42 U.S.C. s 7607(d)(9)(A), (C).

CAP 2000 does not, as s 206 directs, "establish methods

and procedures for making tests," and it is the only "regulation" in the picture. Instead, it provides criteria for individual automobile manufacturers to develop their own test methods and procedures, which the EPA approves in a process

that does not involve rulemaking.

Conceivably s 206(d)'s requirement that EPA use regulation to "establish methods and procedures for making tests"

could be squared with the record by reading "making tests"

as referring to devising the tests rather than conducting

them. Thus Congress would be mandating that the EPA use

regulations merely to set up a system for picking tests (which

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might then be picked any old way) rather than mandating the

use of regulations to decide how the tests themselves should

be conducted. But nothing in the context of the provision

suggests that the "establish[ment]" under s 206(d) is to be so

remote from the actual process of conducting tests, and it is

hard to see any congressional purposes that would be served

by such a requirement. Indeed, neither in the administrative

proceedings nor before us has the EPA invoked such a

reading.

Rather, the EPA seeks to defend CAP 2000 by treating the

issue as involving simply the level of specificity or generality

at which it was supposed to act, citing American Trucking

Associations v. Department of Transportation, 166 F.3d 374

(D.C. Cir. 1999) (agency to promulgate by regulation safety

rating "requirements" and means to determine whether carriers had met the requirements), and New Mexico v. EPA, 114

F.3d 290 (D.C. Cir. 1997) (agency to promulgate "criteria" for

a certification process). In those cases, as Congress had not

specified the level of specificity expected of the agency, we

held that the agency was entitled to broad deference in

picking the suitable level. See American Trucking, 166 F.3d

at 379-80; New Mexico, 114 F.3d at 294. But here Ethyl's

challenge is not that the EPA was too general in establishing

test procedures by regulation, but that it didn't establish

them by regulation at all.

EPA's failure to act by regulation is thus similar to, and

controlled by, our decision in MST Express v. Department of

Transportation, 108 F.3d 401 (1997), which preceded American Trucking and involved the same statutory requirement of

proceeding by regulation in setting safety requirements for

common carriers. Rather than promulgate regulations stating the means for determining whether carriers met the

safety fitness requirements, the agency had simply required a

carrier to "demonstrate that it has adequate controls in place"

to ensure compliance with the substantive requirements, and

had developed a "safety fitness rating methodology." Id. at

402, 403. This methodology provided agency inspectors with

detailed guidelines for evaluating a motor carrier's safety

rating--but it was not the product of notice-and-comment

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rulemaking. See id. at 403. We found that the agency had

"failed to carry out its statutory obligation to establish by

regulation a means of determining whether a carrier has

complied with the safety fitness requirements." Id. at 406.

EPA's error here is similar.

There may, of course, be cases in which it is hard to

distinguish between promulgations of (1) vaguely articulated

test procedures (which would be reviewed deferentially under

such cases as American Trucking) and (2) procedures for

later development of tests (invalid under MST Express).

Both, after all, necessarily imply a later (or at least different)

proceeding in which the agency will fill in details. In this

case, however, one can distinguish on the basis of the language used by the agency. With CAP 2000, the EPA does

not claim to have itself articulated even a vague durability

test. Rather, CAP 2000 requires that "[t]he manufacturer

shall propose a durability program" for EPA approval. 40

C.F.R. s 86.1823-01(a). It thus falls on the forbidden side of

the line.

The EPA also defends CAP 2000 on grounds that seem to

flout the evident congressional purpose. First, it argues that

because it has chosen to approve test procedures only for one

model year at a time, proceeding by regulation would be

administratively burdensome. Obviously this cannot overcome a clear congressional command. Further, it is true only

in the sense that an open procedure--the very thing mandated by Congress--is less convenient than a closed one. It may

be. Other parties may raise questions or find fault in procedures that look fine to the agency and the auto makers. But

Congress has already made the trade-off. Nothing in our

opinion requires that EPA use only a "one-size-fits-all" test

method. All that is required is that it establish its procedures, no matter how variegated, "by regulation."

Finally, both EPA and the auto manufacturers who intervene on its behalf argue that the approach of CAP 2000 is

necessary because of the presence of what the manufacturers

believe to be "confidential business information" ("CBI"). If

the EPA were to establish test methods and procedures by

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regulation, they say, important CBI might become public,

allowing competitors to "back engineer" their products. See

Tr. of Oral Argument at 29-30. Moreover, they argue that

the sheer "amount of claimed confidential business information would significantly reduce the usefulness of public notice

and an opportunity to comment upon manufacturers' durability programs." EPA Br. at 44.

It is hard to know what to make of this argument. First

and foremost, s 208(c) provides that the administrator may

protect the confidentiality of "methods or processes entitled

to protection as trade secrets." 42 U.S.C. s 7542(c). Especially given this available remedy, it seems to us a complete

non sequitur to suggest that because a procedure (the rulemaking mandated by s 206(d)) may involve some protectable

CBI, the entire procedure should be short-circuited and replaced with a cluster of closed bargaining sessions between

the EPA and each manufacturer. Congress obviously expected that rulemakings would proceed despite the existence of

CBI that would require protection under s 208(c). Plainly

the theory provides no basis for disregarding the congressional command.

* * *

CAP 2000, rather than constituting an EPA establishment

"by regulation" of "methods and procedures for making

tests," as required by s 206(d), is instead a promulgation of

criteria for the later establishment of such methods and

procedures by private negotiation between the EPA and each

regulated auto maker. So it is "not in accordance with law."

We therefore vacate the CAP 2000 program and remand the

case to the EPA with instructions to establish test methods

and procedures by regulation.

So ordered.

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