Opinion ID: 4539367
Heading Depth: 2
Heading Rank: 3

Heading: High-Volume Manufacturer Exemption

Text: Petitioners also contend that the partial exemption at 40 C.F.R. § 713.9(a) for “[p]ersons who manufacture (including import) mercury in amounts greater than or equal to 2,500 pounds (lbs.) for elemental mercury or greater than or equal to 25,000 lbs. for mercury compounds” is unlawful. Section 713.9(a) provides that persons who manufacture mercury in amounts at or above the specified quantities must report only the amounts of mercury “stored” and “distributed in commerce,” whereas all other manufacturers must also report the 41 amounts manufactured, imported, and exported. Compare id. § 713.9(a), with id. § 713.9(b). EPA contends that it designed § 713.9(a) to avoid duplicating the reports that it already requires and collects from high-volume manufacturers under the CDR Rule. See 40 C.F.R. pt. 711. Petitioners argue that this partial exemption in § 713.9(a) is both the product of a flawed decision-making process and contrary to the TSCA. For the reasons explained below, we disagree and deny review of § 713.9(a).
“[W]here a litigant brings both a State Farm challenge and a Chevron challenge to a rule, and the State Farm challenge is successful, there is no need for the reviewing court to engage in Chevron analysis. . . . In other words, if an interpretive rule was promulgated in a procedurally defective manner, it will be set aside regardless of whether its interpretation of the statute is reasonable. If the rule is not defective under State Farm, though, that conclusion does not avoid the need for a Chevron analysis . . . .” Catskill Mountains, 846 F.3d at 522. We therefore begin by assessing petitioners’ challenge to EPA’s rulemaking procedures. Petitioners contend that EPA based § 713.9(a) on an irrational cost-benefit analysis: it allegedly chose to forgo important informational benefits in order to 42 save high-volume manufacturers from the minimal costs of complying with some (but not all) reporting requirements. But EPA disclaims reliance on cost-benefit analysis, arguing that the partial exemption is based entirely on its finding that requiring full reporting under both the Reporting Rule and CDR Rule would be duplicative. The record supports EPA’s assertion that it relied on a finding that the two rules would yield comparable information, absent some exemption. The CDR Rule requires that “any person who . . . manufactured (including imported) for commercial purposes” at least 25,000 pounds of mercury compound or 2,500 pounds of elemental mercury must report the “total annual volume [of mercury] . . . domestically manufactured or imported at each site,” as well as “the volume used on site and the volume directly exported.” 40 C.F.R. § 711.15, (b)(3)(iii), (b)(3)(iv); see id. § 711.8(a)(2), (b). The Reporting Rule provides that “[p]ersons who manufacture (including import) mercury in amounts” of at least 25,000 pounds of mercury compound or 2,500 pounds of elemental mercury must report the quantities “stored” and “distributed in commerce,” but not the total amounts “manufactured,” “imported,” or “exported.” Id. § 713.9(a), (b). Petitioners argue that requiring high-volume manufacturers to report 43 (without exemption) under both rules would not be duplicative, because the two rules operate on different schedules for data collection.10 Because of the different reporting timelines, three out of every four mercury inventories that EPA publishes will include less recent data from high-volume manufacturers than from other reporting entities. But discrepancies in the timing of reporting do not undermine EPA’s conclusion that the content of the two sets of reports would be sufficiently comparable to render the reports duplicative. The Reporting Rule’s exemption applies to exactly the same manufacturers who are subject to the CDR Rule’s reporting requirement, and it exempts them from reporting information that closely tracks that which the CDR Rule requires them to report. Thus, EPA’s reliance on Congress’s mandate to avoid requiring duplicative reporting, where feasible, see 15 U.S.C. § 2607(a)(5), is “a satisfactory 10 The TSCA requires that EPA publish its mercury inventory every three years, beginning in 2017. 15 U.S.C. § 2607(b)(10)(B). The Mercury Reporting Rule, designed to facilitate that triennial inventory, sets out a reporting and publication schedule under which the most recent data reflected in the inventory is data from two calendar years prior. (In other words, the inventory published in 2020 will include data through calendar year 2018; the inventory published in 2023 will include data through calendar year 2021.) 40 C.F.R. § 713.17. The CDR Rule requires that manufacturers report every four years, beginning in 2016, on mercury use through the preceding calendar year. (Thus, in 2020 manufacturers will report data from 2016-2019.) Id. § 711.20. 44 explanation for its action” that includes “a rational connection between the facts found and the choice made.” Encino Motorcars, 136 S. Ct. at 2125 (quoting State Farm, 463 U.S. at 43). We therefore do not find § 713.9(a) to be arbitrary or capricious as a result of defective rulemaking processes.
Petitioners also challenge § 713.9(a) as an unreasonable interpretation of TSCA’s directions that “any person who manufactures mercury or mercuryadded products . . . shall make periodic reports” and that EPA “shall, to the extent feasible . . . not require reporting which is unnecessary or duplicative.” 15 U.S.C. § 2607(b)(10)(D)(i), (a)(5), (A). Because this claim pertains to the reasonableness of EPA’s initial interpretation of the amended TSCA, we evaluate the provision under the Chevron framework. See Catskill Mountains, 846 F.3d at 521. Our analysis at the first step of the Chevron inquiry mirrors that which we applied, above, to the assembled product provisions. Contrary to petitioners’ claims, the TSCA’s requirement that “any person who manufactures mercury or mercury-added products . . . shall make periodic reports,” 15 U.S.C. § 2607(b)(10)(D)(i), does not preclude EPA from determining what information is 45 required, id., or from creating exemptions for categories of manufacturers or importers of mercury from making reports that it reasonably determines would be unnecessary or duplicative, id. § 2607(a)(5)(A). Furthermore, the exemption for high-volume manufacturers is partial rather than categorical: manufacturers subject to the exemption are still obligated to report some information under the Reporting Rule. See 40 C.F.R. § 713.9(a). Therefore, even if the TSCA did preclude EPA from completely exempting manufacturers who meet its definition, it is far from clear that it would also foreclose § 713.9(a). The provision is not unambiguously contrary to the statute. Nor does the TSCA unambiguously require this specific partial exemption for high-volume manufacturers: the TSCA makes no mention of the CDR Rule, and EPA might have reasonably determined that reports from manufacturers subject to the CDR Rule were necessary to its inventory, notwithstanding those manufacturers’ preexisting reporting obligations. Accordingly, we conclude at Chevron Step One that § 713.9(a) is neither unambiguously precluded nor required by the statutory text. At Chevron Step Two, we examine whether § 713.9(a) is “based on a permissible construction of the statute.” Kilgour v. SEC, 942 F.3d 113, 122 (2d Cir. 2019) (internal quotation marks omitted). Petitioners argue that the amounts of 46 mercury manufactured, imported, and exported can vary considerably from year to year. But notwithstanding this variance, petitioners do not establish that the asynchrony between the reporting obligations under the Reporting Rule and the CDR Rule will so significantly distort the results of the triennial inventory as to make the Reporting Rule’s partial exemption for high-volume manufacturers unreasonable. Considering the substantial overlap between the information that highvolume manufacturers must report under the CDR Rule and the information that the same manufacturers would be required to report under the Reporting Rule, absent § 713.9(a), we find that the partial exemption for such reporters is a reasonable interpretation of EPA’s obligation “not [to] require reporting which is . . . duplicative,”15 U.S.C. § 2607(a)(5)(A), “to the extent feasible,”id. § 2607(a)(5). Accordingly, we deny review of 40 C.F.R. § 713.9(a).