# Unite d States Court of Appe als

F O R T HE D I S T R

I C T O F C O L U M B I A

C I RC U I T

Arg ued F ebrua

ry 10, 2017 Dec ided J uly 18, 2017

No. 15-1246

S I E R R A C L U B A N D C A L I F O R

N I A C O M M

U N I TI E S A G A I N S T T O X I C S , P E TI TI O N E R S

v.

E N V I R O N M E N TA L P R O TE C TI O N A G E

N C Y A N D E. S C O TT P R

U I TT , A D M I

N I S TR A TO R , U.S. E N V I R O N M E N TA L P R O TE C TI O

N A G E N C Y , R E S P O N D E

N TS

On Petition for Review of F inal Action of the United States Environmental Protec tion Age ncy

Neil Gormley arg

ued the cause for petitioners. Wit h him on the brief s was Jame

s S. Pew

.

Eileen T. McD onough
, At t o rney , U.S. Depa rtment of J ustice, argued the cause for responde nts. Wit h her on the brief

was John C. Cruden
, Assistant Attorney Gene ral, was on the brief.

Jeffrey A. Knight and Bryan M. Stoc kton wer e on the brief for amicus curi ae Coalition for Clean Air I mplementation in support of re spondents.2

Be fore : R O G E R S and M I L L E TT , Circuit Judges
, and S E N TE L L E , Senior Circuit Judge

. Opinion for the Co u rt fi led by Senior Circuit Judge S E N TE L L E

.

S E N TE L L E , Senior Circuit Judge : Sierra Club and California Communi ties Ag ainst Tox ics (collec tively “Sierra Club”) petition for revie w of the Environmental Protection Age ncy ’s ( “ E PA ” ) d e te rmination that EPA had satisfied its responsibilitie s under 42 U.S.C. § 7412(c) (6) to establish “maximum achie vable control technolog y ” (“MACT” ) standards for emissions of

cer tain hazardous air

pollutants (“ HAPs”). Petitioners c ontend that as to t h re e of the HAPs, EPA arbitra rily relied upon standards set previously to regulate other emissions without justify ing its decision to trea t t h o se previously regulated emissions as “s u rr og ates” for the § 7412(c) (6) HAPs. EPA

moves the court to dismiss the petition as untimely and disputes it substantivel y

. Be cause we conclude that the petition is not untimely and that EPA did not adequately respond to petitioners’ co m ments raising the issues conce rning the use of surrog acy in the administrative proce eding s, we deny the motion to dismiss and order the matter rema nded to EPA for further proce eding s.

I . BA CKGROUND

Congr ess enac ted the current version of § 7412 as part of the Clean Air Ac t Amendments of 1990 to further its orig inal intent, “ to r educe hazardous air pollutants.” See Sierra Club v

. EPA
, 353 F.3d 976, 979 (D.C. Cir. 2 0 04). I n g ener al, that

s ec t ion require s MACT standards for “major source [s] ” of ai r pollutants, that is to say , those with potential to emit ten tons or

more of a single HAP or twenty -five tons or more of a combination of HAPs per y ear

. S ee 42 U.S.C. § 7412(a) (1)3
(desc ribing major source s); see also § 7412(d). Congres s single d out a ca teg ory of specific pollutants of a particula rly hazardous nature for specia l trea tment under § 7412(c) (6). Wit h respe ct to those pollutants, Congr ess require d EPA, as pertinent to this petition, to regulate emissions of seven specific hazardous air pollutants more stringe ntly than the statute require d for pollutants in g ener al. Specifica lly
, EPA was require d to list cate g ories and subcate g ories of source s of such HAPs

acc ounting f

or at least 90% of the ag g reg ate emissions of e ach. See § 7412(c) (6). EPA was further require d to establish and subject these listed source s to MACT standards, see id
., even if it would have otherwise had discretion to a pply a less-string ent standard to any ar ea source s on the list, see § 7412(d)( 5). The statute specific all y require d EPA to conclude these duties by November

15, 2000. § 7412(c) (6).

M u ch activity followed, both administratively and i n litigation. Although petitioners devote much ink to a reha sh of the y ear s of proce eding s, we will descr ibe the intervening events brief l y , wi th only enoug h detail to support our decision in the p rese nt controve rsy

. As mentioned, i n addition to the c re at i o n of MACT standards, § 7412 require d EPA to perf orm the preliminary duty of l isting sources of the seven specific HAPs. See § 7412(c) (6). “I

n 1998 EPA published its conclusion that it had satisfied” that preliminary duty

. Sierra Club v. EPA
, 699 F.3d 530, 531 (D.C. Cir. 2012). Sierra Club petitioned this court for review of that deter

mination. We dismiss ed the p et ition as prema ture, deter

mining that the Clean Air Act “pre cluded revie w of the ag ency ’s source -listing under § [7412] (c) (6) until the ag ency had issued emissions standards there under

. . . .” Id. (explaining Sierra Club v. EPA
, No. 98-1270, 1998 WL 849408, at *1 (D.C. Cir. Nov. 24, 1998), in which we d i s missed the petition, rely ing on 42 U .S.C. § 7412(e)(4) ).4

There afte r, when EPA failed to meet the November 2000 statutory deadline for promu l g ating the (c) (6) list and MACT standards, Sierr a Club broug ht a district c ourt ac tion to compel compliance with the statute, whi ch ultimately led to our 2012 decision in Sierra Club

. After the district court had order ed the ag enc y to comply with its statutory duties, EPA issued a deter mination that it had “complete d suffic ie nt standards to meet the 9 0 perc ent requirement” of § 7412(c) (6). Sierra Club
, 699 F.3d at 532 (citation omitted). Sierra Club petitioned for revie w. Then, as now, EP A m oved for dismiss al of the petition as untimely

. We disag ree d. Id. at 532-34. We also conclude d that EPA had not complied with its duty to provide t h e p er i od of notice and comment. Id. at 534-35. We va cate d and rema nded for f urther pr ocee dings. Id. at 535.

There afte r, EPA beg an administ rative proce eding s which ultimately led to the final rule under revie w. More specific ally
, at the time of o u r re m and, the order that Sierra Club had obtained from t h e d i strict court was still outstanding. Sierra Club moved the district court to enforce its prior order with respe ct to sever al of the § 7412(c) (6) HAPs. Sierra Club v. McCarthy
, 61 F. Supp. 3d 35, 38-39 (D.D.C. 2014). The district court, perc eiving that EPA had not complied with its prior order
, “dire ct[e d ] EPA to initiate a proce ss of notice and comment rulemaking befor e it reissues or, after consideration of the

c o m m e n t s s u b m i t t e d
, r e c o n s i d e r s o r m o d i f i e s i t s Deter mination.” Id. at 41. The court require d that the final action “inc l u d e a statement explaining its basis” and require d EPA to “re spond to the com ments that it rec eive[d].” Id. Subsequently
, EPA published the notice of rulemaking and final rulemaking that Sierra Club contests as arbitra ry and capr icious in this case.

Ex pressing its intent to compl y with the district court’s order
, EPA issued this notice of proposed rulemaking ent itled5
“Completion of Requirement to Pro m ulga te Emissions Standar d s , ” 79 Fe d. Reg

. 74,656 (De c. 16, 2014) (“Propose d Deter mination”). The notice expressly provided for comments, as required in the di strict court’s 2014 o rder

. Sierra Club filed

co m m ents. As pertinent to the prese nt controve rsy , EPA’s proposed rule included three HAPs upon which Sierra Club’s comments and prese nt petition focus: poly chlorinate d bipheny ls ( “ P C B s ” )
, p o l y c y c l i c o r g a n i c m a t t e r ( “ P O M ” )
, a n d hexachlorobenzene (“H CB”)

.

As to eac h of the three HAPs, Sie rra Club contends that EPA’s fi nal rule does not comply with the require ments of § 7412(c) (6) that as t o ever y pollutant cover ed by the section, EPA must provide sufficie nt standards for the cate g ories and subcate g ories of “sourc es acc ounting for not less than 90 perc ent

o f the ag g reg ate emissions of eac h such pollutant

. . . . ” 4 2 U.S.C. § 7412 (c )( 6 ). I n terms of the issues prese rved by petitioners for revie w in this proce eding
, Sierra Club’s main argument is that the ag ency i mproperly relied on “surr og ates.” That i s t o say , rathe r than issuing new specific standards, the ag ency relied on p re v i ously set emission limit s for another hazardous air pollutant or compound, “which serve s as a surrog ate for the t arge ted section [7412] (c) (6) [pol lutant] .” Proposed Deter

mination, 79 Fe d. R eg. at 74,677. After

rec eiving petitioners’ co m ments on its proposed rule, EPA published the final rul e now under revie w: “Completion of Requirement to Promulga te Emissions Standards,” 80 Fe d. Reg

. 31,470 (June 3, 20 1 5 ) (codifie d at 40 C.F.R. pt. 63) (“F inal Deter mination”).

Sierra Club filed the prese nt petition. EPA moved to d i smiss the petition as untimely

. For the rea sons set fort h below, we deny the motion to d i s miss and g rant rema nd for further proce eding s.6

I I . ANAL YSI S

A. Standard of

Review

EPA ’s fi n al rule is subject to judicial revie w under 42 U.S .C. § 7607(b)( 1). We revie w such final rules under the standards of t h e Adm inistrative Procedur e Act, 5 U.S.C. § 706(2), and will set the rule aside if it is “ar bitrary
, capr icious,

an abuse of discretion, or otherwise not in acc ordanc e with law.” Id. § 706(2)( A). I nsofar as the ag ency has interpre ted the Clean Ai r Act, we apply the standard of Chevron, U.S.A., Inc. v. NRDC
, 467 U.S. 837 (1984). That is, if “the intent of Congr ess is clea r,” that is the end of the analy sis

. Id

. at 843-45. I f it is ambig uous, then we ask if th e age ncy ’s interpre tation is

rea sonable, a

nd if so, we uphold the ag ency ’s construc tion. Id. I n the prese nt controve rsy , petitioners ’ ch alleng e is direc ted to the decisions of EPA, not pri m ar ily to its interpre tation of the statute.

B. Timeliness

EPA’s m o tion to dismiss is based on the argument that Sierra Club’ s o b

j ec tions to the standards used in the final deter minat i o n are actua lly challeng es to “the adequacy of the pre- exis ting standards
, ” t hat is, the MACT standards with respe ct to the surrog ate pol l u t an t s

. Resp’ts’ Br

. at 37. EPA relies on the judicial revie w provision of the Cle an Air Act, which provides that any petition for re v iew of the Administrator’s promulg ation of standards “shall be filed within six ty day s from the date notice of such promulg ation, approva l,

or action appea

rs in the Fe dera l Reg ister

. . . .” 42 U.S.C. § 7607(b)( 1). We note that the statute furth er p ro vides an exception “if such petition i s b ased solely on g rounds arising afte r such six tieth day ,” and that any such petition “shall be filed within si x t y d ay s afte r such g rounds arise.” Id. For rea sons7

simil ar to those set forth by us in Sierra Club v. EPA , 699 F.3d 530, we a g ree with petitioners.

I n the prior decision, we held that “[i] f Sierra Club i s

corr ect

. . . the ag ency

action Sierra

Club challeng es is only

the Deter mination, wh ich (in its view) repur posed previous rul emaking s to satisfy EPA’s § [7412] (c) (6) obligations,” making the challeng e “timely ” as it “ could not be broug ht at all until afte r EPA identified the rules that it believed satisfied its responsibilities under § [7412] (c) (6).” Sierra Club
, 699 F.3d at 534.

The same rea soning applies here

. S i er ra Club ag ain challeng es the prese nt deter mination th at E P A had satisfied § 7412(c) (6) throug h its promulg ation of MACT standards for surrog ate emissions rathe r than for the listed (c)(6 ) HAPs themselves. That issue could not be revie wed pri o r to the issuance of the final rule now befor e us. Petitioners could not raise those obj ec t ions until the final rule employ ing the surrog ates was rele ased. Petitioners do not, for example, attack
t h e adequa cy of the listi ng or standards with respe ct t o an y surrog ate pollutant, but only the repur posing of standards for satisfac tion of t he § 7412(c) (6) require ments with respe ct to PCBs, POM, an d HCB. I t is there fore clea r t hat our rea soning in Sierra Club applies equally to the prese nt case

. Sierra Club’s p re s en t challeng e to the interac tion of the surrog acy decisions with the 90% (c) (6) require ments is timely
, and th e m o tion to dismiss will be denied.

C. The Substantive Petiti on

We wish to make clea

r at the outset that the question befor e

us is the narrow one of t he adequac y of EP A’s jus t i fica tion for
t h e u s e of surrog ates. I nsofar as the parties char acte rize this petition as a chall en ge t o the achie vement of the 90%8
requir em ent, that question rises or falls with surrog acy

. EPA has published a purported 90% listi ng

. Howeve r, the adequa cy of the MACT standards for the 90% require ment relies upon the propriety of the u s e o f t h e surrog ates. As to those issues, peti t i o n ers’ challeng e is timely

. This does not deter mine whether i t i s meritorious. Petitioners raised their objections to the use of the surrog ates in comments. We have fre quently held i n various contexts that, in APA revie w, we will often fi n d ag ency decisions arbitra

ry or capr icious wher e the ag ency has fa i l ed to respond to major substantive comments. See Pu b

. Citi zen, Inc. v. FAA
, 9 8 8 F.2d 186, 197 (D.C. Cir. 1993) (citations omitted); see also NRDC v. E PA , 859 F.2d 156, 188- 89 (D.C. Cir. 1988) . I n this case, the ag ency ’s response s to the comments con s isted principally of the same timeliness arg ument

we reje cted above. Ther efore, if we conclude that the substantive comments raised meritorious issues unanswe red by EPA, then we must re mand for f urther pr ocee dings.

We have in the past approve d the use of surrog ates by EPA. We have ruled that “EPA m ay u s e a surrog ate to regulate hazardous poll utants if it i s ‘reasonable ’ t o do so.” Nat’l Lime Ass’n v. EPA
, 233 F.3d 625, 637 (D.C. Cir. 2 0 0 0) (citation omitted). T h er ef

o re , Sierra Club does not argue, nor do we hold, that sur

rog ates may not be used. The que stion is whether the cur rent use of

surrog ates is re asonable

.
This Court has identified three potential tests for evaluating the sufficie ncy of a surrog acy desig nat ion. National Lime “e s t abli shed a three -par

t analy sis for deter

mining whether the

use of [a particula

r s u rrog ate] for HAPs is rea sonable

. . . .” Sierra Club
, 353 F.3d at 984. That three -par t test require s EPA to deter mine if (1) the rele vant hazardous air pollutant is invariably prese nt in the proposed surrog ate; (2) control technolog ies for the proposed surrog ate indiscriminately captur e the rele vant HAP along with other pollutants; and (3) the control9

of th e s u rrog ate is the only means by which fac iliti es achie ve reduc tions in emissions of the hazardous air pollutant. See id. ;

see also U.S. Sugar Corp. v. EPA
, 830 F.3d 579, 628 (D.C. Cir. 2016) (The re asonable ness inquiry “re quires the surrog ate’ s emissions to share a close rela tionship with the emissions of the [t arg et hazardous air pollutant] .”); Mossville Envtl. Action Now

v. EPA
, 370 F.3d 1232, 1242 (D.C. Cir. 200 4 ) (The

re as onablene ss inquiry “mer ely require s ‘that there [be] a

corr elation betwee n [t he surrog ate and the targ et hazardous air pollutants] .’” (quoting Nat’l Lime
, 233 F.3d at 639)). Apply ing
t h o s e s tandar ds, in Sierra Club
, we held that the use o f a surrog ate was rea sonable. Sierra Club
, 353 F.3d at 984-85. Even if the surrogat es i n the prese nt case are differ ent than a specific surrog ate considere d in Sierra Club or in National Lime
, the three -par

t test is nonetheless instructive.

I n this context, as in the prior case s, EPA must demonstrate the rea s o n ab l en ess of the use of a particula r surrog ate in a specific context. Althoug h EPA provided some explanation of the surrog acy rela tionships in this case , see Proposed Deter mination, 79 Fe d. Reg

. at 75,677-80, EPA failed to respond adequate ly to comments disputing t hose e x p l anations. I n the proposed deter

mination, EPA admi t s that “in some standards promulg ated prior to [i ts] development of the baseline emissions inventory

. . . , the EPA d i d not alway s explain the surrog acy rela tionship.” Proposed Deter mination, 79 Fe d. Reg

. at 74,678; see also Final Deter mination, 80 Fe d. Reg

. at 31,471- 72 (final deter

mination noting that pro p o s ed deter mination

ex plained the surrog ate standards)

. I n the final deter mination, it then proce eds to provide brief in fo rm ati on on the newly “explained” surrog acy rela tionships but does n o t substantively respond to comments on those purported expla n at ions, urg ing instead t h at t he rele vant standards had not been reope ned and thus could not be substantively challeng ed. De spite comments urg ing that EPA’s surrog acy claims neede d additional ana l y s is10

and data i n support to establish their rea sonablene ss, EPA responde d that such comments “mischar act erize[d] ” its “propose d deter

mination,” as “the leg itimacy of t he st andar ds” it relied on is “fa

r outside the scope of the proposed” deter mination

. Final Deter

mination, 80 Fe d. Reg

. at 31,477. Thus, EPA did not need “to re spond to those comments.” Id.

EP A cannot hide behind the established nature of the standards it uses when it applies new surrog acy rela tions hips. By admitting that “the proposed deter mination in some instances clar ifies the surrog acy rela tionship,” E P A makes irrele vant its p o i n t that “the proposal does not discuss or attest to t h e substance of the s tandar ds previously promulg ated.” See Final Deter mination, 80 Fe d

. R eg. at 31,480. In its admission, EPA belies its own claim that the deter mination was “only

. . . t h e mathematica l and technica l basis for the EPA’s calc ulation.” Id. P ro v i d ing brand- new clar ification o f s o m e s u rr o gac y rela tionships nece ssarily re n d ere d it substantive and EPA’s failure to explain s u fficiently these newly “cla rified” rela tionships and respond to the associate d comments dooms the

curr ent deter

mination. Whil e the parties make other arguments, all are either restate ments o f the propositions contained in the major i ssue or do not war rant separa te di scussion. We wish to make clea

r that we ar e n o t holding that EPA’s decision is substantively incorre ct. I ndeed we ex press no opinion on that subject. We simply rema nd the matter to EPA for further proce eding s, which should include the ex p l anations omitted from the pr esent de termination.

CONCL USI ON

For the rea sons set forth above, we conclude t h at E PA failed to explain its proposed relianc e on surrog ates and thus its deter mination does not satisfy 4 2 U. S.C. § 7412(c) (6). We there fore hold that Sierra Club’s timely petition for re view is

Granted in part

.