Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-95-01538/USCOURTS-caDC-95-01538-0/pdf.json

Parties Involved:
Environmental Protection Agency
Respondent
OZ Technology Incorporated
Petitioner

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 2, 1997 Decided November 21, 1997 

No. 95-1538

OZ TECHNOLOGY INCORPORATED,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

Consolidated with

No. 96-1393

On Petitions for Review of Orders of the 

Environmental Protection Agency

David H. Leroy argued the cause for petitioner, with 

whom Charles B. Lempesis was on the briefs.

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 1 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Michael J. Zevenbergen, Trial Attorney, U.S. Department 

of Justice, argued the cause for respondent, with whom Lois 

J. Schiffer, Assistant Attorney General, Karen L. Egbert,

Attorney, and Jan M. Tierney, Attorney, Environmental 

Protection Agency, were on the brief.

Before: EDWARDS, Chief Judge, SENTELLE and RANDOLPH, 

Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS, Chief Judge: Section 612(c) of the Clean Air Act 

("CAA" or "Act") instructs the Administrator of the Environmental Protection Agency ("EPA" or "agency") to promulgate 

rules that prohibit the replacement of ozone-depleting compounds with substances "which [she] determines may present 

adverse effects to human health or the environment." 42 

U.S.C. § 7671k(c) (1994). In the instant case, EPA designated Petitioner OZ Technology Inc.'s ("OZ") product HC-12a as 

an unacceptable substitute for CFC-12 (an ozone-depleting 

substance commonly known as "freon") for end-uses other 

than industrial process refrigeration. 60 Fed. Reg. 31,092, 

31,098 (1995). In so doing, EPA effectively banned HC-12a 

for those end-uses. See 40 C.F.R. § 82.174 (1996). Subsequently, EPA rejected a request by OZ, filed pursuant to 

regulations implementing section 612(d) of the Act, seeking to 

remove HC-12a from the list of unacceptable substitutes and 

add it to the list of acceptable substitutes. 61 Fed. Reg. 

51,018 (1996). OZ then petitioned for review, challenging 

EPA's initial decision to put HC-12a on the unacceptable list 

and the agency's subsequent refusal to amend the list.

On the record at hand, we must reject the petition for 

review. As EPA found, OZ failed in this case to submit valid 

data supporting its claim that HC-12a should be added to the 

list of acceptable substitutes. In light of OZ's acknowledgment that HC-12a was flammable, and EPA's previous decision prohibiting a very similar compound manufactured by 

OZ for the same end-uses, EPA's actions banning HC-12a 

reasonably satisfied its obligation under section 612 to reduce 

overall risk to human health and the environment.

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 2 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

I. BACKGROUND

A. The Statutory and Regulatory Regime

Title VI of the CAA, as amended in 1990, requires the 

phase-out of CFC-12 and other substances that have the 

capability of depleting the stratospheric ozone layer. 42 

U.S.C. §§ 7671-7671q (1994). Section 612 of the Act instructs EPA to regulate replacement substances to reduce 

overall risk to human health and the environment. 42 U.S.C. 

§ 7671k(c). Section 612(c) requires EPA to publish a list of 

the substitutes prohibited for specific uses and a list of the 

substitutes that are safe alternatives for specific uses. Id.

Section 612(d) of the Act grants any person the right to 

petition EPA to add a substance or to delete a substance from 

either of the lists published pursuant to section 612(c). 42 

U.S.C. § 7671k(d).

EPA promulgated regulations to implement section 612, 

known as the Significant New Alternatives Policy ("SNAP") 

program. 59 Fed. Reg. 13,044, 13,147 (1994) (codified at 40 

C.F.R. pt. 82). Under the SNAP program, any person who 

has developed a substitute for an ozone-depleting substance 

must notify EPA before introducing the substitute into interstate commerce. 40 C.F.R. § 82.176(a). The person must 

submit information concerning, among other things, the likely 

end-uses and flammability of the proposed substitute. Id.

§ 82.178(a)(3), (9). With respect to flammability, the submitter must provide the flash point and flammability limits of the 

product, as well as information on the procedures used for 

determining the flammability limits. Id. § 82.178(a)(9). If a 

substitute is flammable, "the submitter must analyze the risk 

of fire resulting from the use of [the] substitute and assess 

the effectiveness of measures to minimize such risk." Id.

"For substitutes that will be used in consumer applications, 

documentation of testing results conducted by independent 

laboratories should be submitted, where available." Id.

Once the information submitted to EPA is "adequate to 

support analysis of the submission," id. § 82.180(a)(3), the 

agency decides, based on the information submitted and any 

other information available to EPA, whether the substitute is 

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 3 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

acceptable, unacceptable, or acceptable subject to certain use 

restrictions for the proposed end-uses. Id. § 82.180(b). 

Where EPA proposes to list a substitute as unacceptable for 

certain end-uses, EPA follows notice-and-comment rulemaking procedures. Id. § 82.180(a)(8)(ii). If EPA then determines that a substitute is unacceptable for a specific end-use, 

the SNAP program prohibits replacing ozone-depleting substances with the substitute proposed for that end-use. Id.

§ 82.174(b)-(d). Under section 612(d) of the Act, any person 

may petition EPA to amend existing listing decisions or to 

add a new substance to any of the SNAP lists. Id. § 82.184.

B. EPA's Designation of HC-12a as Unacceptable

OZ has developed a substance called HC-12a as a substitute for CFC-12. HC-12a has end-use applications in refrigeration and air conditioning, including motor vehicle air conditioning systems and household refrigerators and freezers. In 

March 1994, OZ began marketing HC-12a. Petitioner's Br. 

at 13. Soon thereafter, EPA informed OZ that it was required under SNAP to submit a notice of intent to introduce 

HC-12a into interstate commerce. Id. at 14. OZ sent documentation to EPA in a purported effort to comply with the 

SNAP notice requirement. Joint Appendix ("J.A.") 

853-76. In September 1994, however, EPA formally proposed to list HC-12a (identified as Hydrocarbon Blend B) as 

an unacceptable substitute for CFC-12 for end-uses other 

than industrial process refrigeration. 59 Fed. Reg. 49,108, 

49,112 (1994).

OZ subsequently submitted comments to EPA, along with 

documentation to initiate a petition under section 612(d). The 

gist of OZ's position was that EPA should delete HC-12a 

from the "proposed unacceptable" list and add it to the list of 

acceptable substitutes. Because EPA had not promulgated a 

final rule on HC-12a, the documentation submitted by OZ to 

support a 612(d) petition was accepted as an additional comment on the proposal. See EPA's Supplemental Response To 

Comments On The Proposal To Find HC-12a Unacceptable, 

July 18, 1996 ("July 1996 Decision Doc."), J.A. 766. Later in 

the comment period, other documents concerning the flammaUSCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 4 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

bility risks of HC-12a were submitted to EPA, either by OZ 

or by other parties on its behalf. See Letter from Charles B. 

Lempesis to EPA, June 5, 1995, J.A. 897-99 (listing submissions); Attachment to Letter from EPA to OZ, August 30, 

1996 ("August 1996 Decision Doc."), J.A. 784 (identifying 

additional submissions). On June 13, 1995, EPA took final 

action listing HC-12a as an unacceptable substitute for enduses other than industrial process refrigeration, citing concern about flammability. 60 Fed. Reg. at 31,098.

Prior to the action on HC-12a, EPA had designated as 

unacceptable a very similar product of OZ, namely OZ-12. 

OZ-12 (identified as Hydrocarbon Blend A) was included on 

the unacceptable list because of concerns over flammability 

and the lack of an adequate risk assessment showing that 

OZ-12 could be used in end-uses other than industrial process 

refrigeration. 59 Fed. Reg. 13,044, 13,082, 13,122-24 (1994). 

In processing the application for OZ-12, EPA officials explained to OZ, in at least one meeting, four letters, and a 

phone conversation, what was required in a valid risk assessment. J.A. 811-15, 819-20, 825-26.

EPA's decision to designate HC-12a as unacceptable coincided with the agency's rejection of a section 612(d) petition 

submitted by OZ for OZ-12, requesting that EPA delete OZ12 from the unacceptable list and add it to the acceptable list. 

60 Fed. Reg. 49, 407 (1995). On July 25, 1995, EPA wrote a 

letter to OZ stating that the company's submissions regarding 

the flammability risks of HC-12a were inadequate for the 

same reasons that the company's submissions for OZ-12 were 

inadequate. J.A. 770. In an attachment to another letter 

which EPA sent to OZ that same day, EPA explained at 

length why the company's submissions regarding the flammability risks of OZ-12 were insufficient to warrant listing the 

compound as an acceptable substitute. Response to OZ 

Technology, Inc. Petition To Find OZ-12 Acceptable ("July 

1995 Decision Doc."), J.A. 772-79. EPA's communications 

with OZ in July 1995 did not explain why additional documentation submitted by OZ for HC-12a but not for OZ-12 also 

was insufficient to warrant listing HC-12a as acceptable.

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 5 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

On August 14, 1995, OZ petitioned the United States Court 

of Appeals for the Ninth Circuit for judicial review of EPA's 

June 13, 1995 action listing HC-12a as an unacceptable 

substitute. The petition was transferred to this court, which 

granted EPA's motion to remand the administrative record. 

See Order Granting Motion for Voluntary Remand of the 

Record (Apr. 23, 1996). During the remand period, EPA 

addressed some of the documentation that had been submitted by OZ for HC-12a but not for OZ-12. See July 1996 

Decision Doc., J.A. 766-69 (addressing Exhibits T through Z 

of OZ's November 1994, section 612(d) petition for HC-12a).

C. EPA's Denial of OZ's Section 612(d) Petition Regarding HC-12a

In December 1995, after OZ sought judicial review of 

EPA's final rule designating HC-12a as an unacceptable 

substitute, OZ submitted another petition to the agency pursuant to section 612(d), requesting that EPA list HC-12a as 

acceptable. ("1995 Petition"). EPA rejected the 1995 Petition, 61 Fed. Reg. 51,018 (1996), and issued a full response to 

the many documents submitted by OZ covering HC-12a. See

August 1996 Decision Doc., J.A. 784-810. EPA concluded 

that OZ had not submitted a "scientifically valid, comprehensive risk assessment" that would justify changing the designation of HC-12a from unacceptable to acceptable. EPA Letter, August 1996, J.A. 780. OZ petitioned for judicial review 

of this determination, and this court granted the parties' joint 

motion to consolidate the two petitions for review. See Order 

Granting Joint Motion to Consolidate (Oct. 29, 1996).

II. DISCUSSION

This court may grant a petition challenging an action of 

EPA under section 612 of the Act if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance 

with law." 42 U.S.C. § 7607(d)(9)(A) (1994). This provision 

commands essentially the same standard of review as the 

analogous provision contained in the Administrative Procedure Act, 5 U.S.C. § 706 (1994). Ethyl Corp. v. EPA, 51 F.3d 

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 6 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

1053, 1064 (D.C. Cir. 1995). And, as the Supreme Court has 

made clear, the arbitrary and capricious standard has certain 

clear parameters:

The scope of review under the "arbitrary and capricious" 

standard is narrow and a court is not to substitute its 

judgment for that of the agency. Nevertheless, the 

agency must examine the relevant data and articulate a 

satisfactory explanation for its action including a "rational connection between the facts found and the choice 

made." In reviewing that explanation, we must "consider whether the decision was based on a consideration of 

the relevant factors and whether there has been a clear 

error of judgment." Normally, an agency rule would be 

arbitrary and capricious if the agency has relied on 

factors which Congress has not intended it to consider, 

entirely failed to consider an important aspect of the 

problem, offered an explanation for its decision that runs 

counter to the evidence before the agency, or is so 

implausible that it could not be ascribed to a difference in 

view or the product of agency expertise. The reviewing 

court should not attempt itself to make up for such 

deficiencies; we may not supply a reasoned basis for the 

agency's action that the agency itself has not given. We 

will, however, "uphold a decision of less than ideal clarity 

if the agency's path may reasonably be discerned."

Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983) (citations and footnote omitted). It is 

also well understood that "[t]he rationale for deference is 

particularly strong when the EPA is evaluating scientific data 

within its technical expertise." International Fabricare Inst. 

v. USEPA, 972 F.2d 384, 389 (D.C. Cir. 1992).

OZ contends that EPA acted arbitrarily and capriciously in 

initially designating HC-12a as an unacceptable substitute for 

CFC-12 for all end-uses other than industrial process refrigeration, and in rejecting OZ's 1995 Petition. Petitioner's Br. 

at 24. According to OZ, EPA's decision was contrary to the 

documentation submitted in support of HC-12a. Id. at 24-25. 

OZ also argues that EPA acted unlawfully in failing to 

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 7 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

provide guidance on the kind of data or risk analysis that the 

company was required to submit, beyond the documentation 

that was offered, in order for EPA to decide that HC-12a was 

safe under the CAA. Id. at 26-28.

EPA responds that OZ had the burden of demonstrating 

through a scientifically valid risk analysis that HC-12a did 

not pose unacceptable flammability risks under CAA section 

612(c). EPA also asserts that it reasonably determined that 

OZ failed to submit an adequate risk analysis, and that the 

agency therefore justifiably declined to decide whether the 

risks posed by HC-12a in fact were acceptable under the Act. 

Respondent's Br. at 16-22. We substantially agree with EPA 

on both counts. Given OZ's acknowledgment that its product 

is flammable, as well as EPA's mandate to regulate under 

section 612 to reduce overall risk to human health, EPA's 

actions with respect to HC-12a were reasonable.

Documents submitted on behalf of OZ to EPA recognized 

the flammability of HC-12a. See Draft Test ProtocolPhase 

I, J.A. 886 ("OZ ... produces a propane-based flammable 

refrigerant designated as HC-12a."). Moreover, before considering OZ's submissions for HC-12a, EPA already had 

designated a very similar compound, OZ-12, as unacceptable 

because of flammability concerns. Given these circumstances, OZ was required to submit data on HC-12a, analyzing "the risk of fire resulting from the use of such a substitute and assess[ing] the effectiveness of measures to minimize 

such risk." 40 C.F.R. §§ 82.178(a)(9), 82.184(c). The regulations make it clear that EPA was fully justified in rejecting 

OZ's section 612(d) petition when the company failed to 

supply adequate data to support that petition:

If the petition is inadequately supported, the Agency will 

query the petitioner to fill any data gaps before the 90-

day review period begins, or may deny the petition 

because data are inadequate.

Id. § 82.184(d)(4) (emphasis added).

OZ claims that EPA was obligated to conduct its own tests 

on HC-12a before determining that it was unacceptable for 

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 8 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

OZ's intended end-uses. This position finds no support in the 

statute. OZ sought to introduce into the market a product 

with known risks to human health and the environment. In 

light of the statutory mandate of section 612, it is hardly 

surprising that EPA's regulations require the company to 

submit data defining the risk and assessing the effectiveness 

of measures to minimize the known dangers.

Arguably, during the proceedings involving OZ's products, 

EPA officials could have been more forthcoming in responding to OZ's requests for clarification on the contents of the 

required documentation. However, it is clear from the record 

that EPA stated in no uncertain terms that OZ was obligated 

to quantify data on the flammability of HC-12a, and to use 

scientifically valid studies, in order to enable the agency to 

consider listing the compound as an acceptable substitute for 

all end-uses. See, e.g., July 1995 Decision Doc., J.A. 772-79. 

Moreover, OZ was put on notice of the requirement of a 

comprehensive risk analysis, as well as the contents of such 

an analysis, from the company's prior efforts to have the 

agency designate OZ-12 an acceptable substitute. EPA officials met with OZ about OZ-12, J.A. 811-13, and sent several 

letters to OZ outlining the contents of a risk analysis. Id. at 

811-15, 819-20, 825-26. For particular proposed end-uses for 

OZ-12, EPA referred OZ to testing guidelines produced by 

the Society of Automotive Engineers, which the agency stated 

were acceptable. Id. at 811, 814. Thus, EPA did not leave 

OZ completely without direction.

In addition, a private consultant recommended to OZ the 

contents of what might have constituted an acceptable risk 

analysis for OZ-12. Letter from Bryant Consulting to Gary 

Lindgren, President, OZ Technology, Inc., October 12, 1993, 

J.A. 816. OZ conceded at oral argument that it did not 

undertake the procedures recommended by the consultant 

and did not ask EPA whether the recommended risk analysis 

would suffice to allow the agency to make an affirmative 

decision about any of its products under SNAP and the CAA. 

Although OZ may at times have felt stonewalled by EPA, OZ 

had only itself to blame for not pursuing leads offered by 

EPA officials and the outside consultant.

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 9 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Thus, the principal focus of our inquiry is on EPA's contention that it reasonably determined that OZ failed to submit a 

valid risk analysis of HC-12a. During the course of its 

dealings with OZ, EPA produced three documents that, in 

increasing detail, explained why the data submitted by OZ 

were insufficient. See July 1995 Decision Doc., J.A. 772-79; 

July 1996 Decision Doc., J.A. 766-69; August 1996 Decision 

Doc., J.A. 780-810. For example, EPA pointed out that OZ's 

submissions analyzed refrigerants that were less flammable 

than HC-12a, or used a smaller charge of refrigerant than 

would be used in actual practice, or both, J.A. 773, 791; that 

the submissions failed to analyze all of the risks posed by the 

end-uses in question, id. at 773, 790-91; and that the submissions failed to quantify risks at all, or attempted to do so with 

unrealistically low assumptions unsupported by empirical 

data. Id. at 776-78, 795, 805-06.

Given the comprehensive scope of EPA's responses to OZ's 

submissions and OZ's utter lack of explanation as to how 

EPA's responses might be inaccurate or unfounded, we hold 

that EPA's determination that OZ failed to carry its burden 

under SNAP was justified. See Ethyl Corp., 51 F.3d at 1059 

(holding, under another provision of the CAA, that "[t]here is 

no doubt that [EPA] has the authority to make the factual 

determination of whether an applicant has submitted enough 

data ... to satisfy the applicable standards, and a reviewing 

court must respect this role") (citing Ethyl Corp. v. EPA, 541 

F.2d 1, 36-37 (D.C. Cir. 1976) (en banc)). Under the circumstances in this case, EPA was not required to render an 

affirmative decision that HC-12a was either safe or unsafe 

under the Act. It was enough for the agency to find that the 

company had failed to address the known risk of flammability 

in a scientifically valid, comprehensive risk analysis.

In short, we hold that EPA did not act arbitrarily and 

capriciously in designating Petitioner's product HC-12a an 

unacceptable substitute to CFC-12 for end-uses other than 

industrial process refrigeration under CAA section 612(c) and 

SNAP. We also hold that EPA did not act arbitrarily and 

capriciously in rejecting Petitioner's subsequent request under CAA section 612(d) and SNAP to remove HC-12a from 

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 10 of 11
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

the unacceptable list for the above-mentioned end-uses and 

add the compound to the acceptable list.

III. CONCLUSION

For the reasons discussed above, OZ's petitions for review 

are denied.

So ordered.

USCA Case #95-1538 Document #310587 Filed: 11/21/1997 Page 11 of 11