Opinion ID: 186132
Heading Depth: 4
Heading Rank: 1

Heading: Subcategorization

Text: Both Industry Petitioners and EPA contend that our opinion in Davis County Solid Waste Management v. EPA, 101 F.3d 1395 (D.C. Cir. 1996), governs the question of subcategorization authority — although each side draws a different lesson from that case. Accordingly, we begin with a brief recap of Davis. As noted above, EPA promulgated an earlier round of standards to regulate municipal waste combustion in 1995. See 60 Fed. Reg. 65,387. Unlike the 2000 Rule, which applies only to the category of small (250 tpd or less) MWC units and which subcategorizes that category based on aggregate plant capacity, the 1995 Rule categorized units based on aggregate plant capacity. As a consequence, the 1995 Rule grouped a number of small MWC units with individual capacities of less than 250 tpd into the same category as large units with individual capacities greater than 250 tpd, because those small units were located at facilities with aggregate capacities greater than 250 tpd. Id. In Davis, we found the 1995 Rule unlawful, concluding that the Clean Air Act created two 8 This is so, Industry Petitioners contend, because Class I units have more efficient pollution control systems than the smaller Class II units. By creating a subcategory of better-performing units, and calculating the MACT floor on that basis, the resulting standard is more stringent than it would be if EPA grouped all MWCs in the small MWC unit category together and calculated one MACT floor for all of them. This is especially true, petitioners continue, because if EPA were to establish one MACT floor for all small MWC units, the Agency would have to include in its calculation ‘‘very small’’ units — those with capacities of less than 35 tpd — a group that is currently unregulated. See supra note 5. On the other hand, were EPA to adopt Industry Petitioners’ view, Class II units as well as below-35 tpd units would be subject to more stringent controls than they are under the 2000 Rule. Respondent’s Br. at 25–26. Indeed, according to EPA, a MACT floor applicable to all small MWCs would be stricter than most Class II units and below35 tpd units could feasibly achieve. Id. at 26 & n.29. 10 separate ‘‘categories of MWC units based on unit capacity, units with unit MSW capacities above 250 tons/day and units with unit MSW capacities of 250 tons/day or less.’’ 101 F.3d at 1410. In support, we relied on the fact that § 129(a)(1) imposed ‘‘different dates by which the standards for large and small MWC units must be promulgated,’’ and that it therefore ‘‘separately define[d] these two types of MWC units.’’ Id. at 1403.9 Although the only question in Davis was the lawfulness of including both large and small units within the same category, the opinion contains dicta upon which each side has seized regarding the question of subcategorization. EPA focuses on the Davis court’s suggestion — repeated four times in the opinion — that the Agency may ‘‘exercise[ ] its discretion to distinguish among units within a category and create[ ] subcategories of small units, for which it can then calculate MACT floors and standards separately.’’ Id. at 1408; see also id. at 1404–05, 1405 n.11, 1409 n.12, 1411. EPA reads this statement as advising that, while the Agency is obligated to categorize MWCs based on unit capacity, it remains free to subcategorize the small unit category based on other factors. See Respondent’s Br. at 27; see also 64 Fed. Reg. at 47,237 (quoting passage from Davis and concluding that the court’s decision allows EPA to exercise its discretion to set MACT floors based on subcategories of small units). In opposition, Industry Petitioners maintain — ‘‘[w]ith all due respect’’ to the Davis court — that the above-quoted material ‘‘is directly at odds with’’ other sentences in the same opinion. Reply Br. at 5. In particular, petitioners rely on Davis’ statement that, ‘‘in order to promulgate emissions standards, the EPA must first calculate the MACT floors, and the EPA cannot calculate the MACT floors until it has studied the emissions levels of all units in the relevant category,’’ as barring EPA from 9Under 42 U.S.C. § 7429(a)(1), EPA was to promulgate standards for MWC units with capacities of more than 250 tpd by November 15, 1991, but did not have to promulgate standards for MWC units with capacities of 250 tpd or less until November 15, 1992. 11 calculating MACT floors based on anything other than a category-wide basis. Davis, 101 F.3d at 1404. Given that Davis — which did not involve subcategorization within a category at all, but rather an attempt by the Agency to collapse two statutory categories into one — contains no holding on the subcategorization question at issue here, we see little to be gained by striving to reconcile its dicta. Instead, we look directly to the relevant statutory language in order to determine whether EPA’s action was authorized. That language is contained in § 129(a)(2) of the Clean Air Act, which, with sentence numbers inserted for ease of subsequent discussion, states as follows: Emissions standard [1] Standards applicable to solid waste incineration units promulgated under TTT this section shall reflect the maximum degree of reduction in emissions of [listed air pollutants] 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 units in each category. [2] The Administrator may distinguish among classes, types (including mass-burn, refuse-derived fuel, modular and other types of units), and sizes of units within a category in establishing such standards. [3] The degree of reduction in emissions that is deemed achievable for new units in a category shall not be less stringent than the emissions control that is achieved in practice by the best controlled similar unit, as determined by the Administrator. [4] Emissions standards for existing units in a category may be less stringent than standards for new units in the same category but shall not be less stringent than the average emissions limitation achieved by the best performing 12 percent of units in the categoryTTTT 42 U.S.C. § 7429(a)(2). In brief summary: § 129(a)(2)’s first sentence directs EPA to set overall emission standards that (inter alia) reflect the maximum degree of achievable emissions reduction (‘‘beyond-the-floor’’ MACT levels); the second 12 sentence grants EPA discretion to distinguish among units within a category in establishing emission standards; the third sentence instructs EPA that emission standards for new units must ‘‘not be less stringent than’’ a specified level (the new-unit MACT ‘‘floor’’); and the fourth sentence instructs the Agency that emission standards for existing units must ‘‘not be less stringent than’’ a (different) specified level (the existing-unit MACT ‘‘floor’’). Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), governs our review of Industry Petitioners’ claim that the 2000 Rule conflicts with § 129(a)(2). As the Supreme Court has recently explained, under Chevron ‘‘we must decide (1) whether the statute unambiguously forbids the Agency’s interpretation, and, if not, (2) whether the interpretation, for other reasons, exceeds the bounds of the permissible.’’ Barnhart v. Walton, 535 U.S. 212, 218 (2002). Industry Petitioners contend that the 2000 Rule cannot survive the first step of the Chevron inquiry. We disagree, concluding that the Rule survives both steps of Chevron because the statutory language is ambiguous, and the Agency’s interpretation is reasonable. See Barnhart v. Thomas, 124 S. Ct. 376, 380 (2003). In support of its Chevron argument, Industry Petitioners focus on § 129(a)(2)’s fourth sentence. That sentence states that emissions limitations for existing units ‘‘shall not be less stringent than the average emissions limitation achieved by the best performing 12 percent of units in the category.’’ 42 U.S.C. § 7429(a)(2) (emphasis added). By its plain terms, petitioners insist, this provision requires EPA to calculate one MACT floor for all existing units in the small MWC category. The problem with this argument is that it reads the fourth sentence of § 129(a)(2) in isolation, as if it were the only sentence in the section rather than the final sentence of four. As the Supreme Court has instructed, ‘‘the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’’ Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809 (1989); see National R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407, 417 13 (1992). And when we follow that instruction and look — as EPA does — at the second sentence of § 129(a)(2), we find express authorization for the Agency to ‘‘distinguish among classes, types TTT, and sizes of units within a category in establishing such standards.’’ 42 U.S.C. § 7429(a)(2) (emphasis added). Petitioners contend that EPA cannot rely on the second sentence of § 129(a)(2) for authorization because, in their view, that sentence permits subcategorization only after MACT floors are calculated. That is so, they argue, because the second sentence refers to subcategorization in the setting of ‘‘such standards,’’ which petitioners read as pertaining only to the beyond-the-floor levels described in the bulk of the section’s first sentence. On that reading, subcategorization is permissible in setting beyond-the-floor levels, but not in setting the floors themselves. But Industry Petitioners’ reading is not the only reasonable way to read § 129(a)(2). It is, of course, possible that the second sentence’s use of the phrase ‘‘such standards’’ refers to the first sentence as a whole. But another valid reading is that ‘‘such standards’’ refers merely to the opening phrase of the first sentence: ‘‘standards applicable to solid waste incineration promulgated under TTT this section.’’ And that phrase can be read as encompassing both the beyond-thefloor requirements of the balance of the first sentence and the floor requirements of the third and fourth sentences. Read in this fashion, the second sentence authorizes the Agency to distinguish among units ‘‘within a category’’ during all stages of the MACT standard-setting process described in the section. The order of the sentences in § 129(a)(2) further supports EPA’s view that the second sentence does not only authorize subcategorization after MACT floors are established. Indeed, the second sentence, which expressly permits subcategorization, precedes the two sentences that mandate the establishment of MACT floors. And it is certainly reasonable to conclude that a statutory provision that authorizes an agency to take a particular action contemplates that such 14 action will be taken before — rather than after — another action that is not even mentioned until a subsequent provision. Thus, if one reads the sentences of § 129(a)(2) in order, the second sentence appears to contemplate that EPA may first distinguish among units in a category, and then apply the resulting subcategories when setting MACT floors. See Holloway v. United States, 526 U.S. 1, 6 (1999) (‘‘In interpreting the statute at issue, ‘[w]e consider not only the bare meaning’ of the critical word or phrase ‘but also its placement and purpose in the statutory scheme.’ ’’ (quoting Bailey v. United States, 516 U.S. 137, 145 (1995))). Finally, still further support for EPA’s view is provided by close attention to § 129(a)(2)’s third sentence, which immediately follows the authorization to subcategorize and directs the Agency to establish MACT floors for new units. That sentence states that ‘‘for new units in a category,’’ the MACT floor ‘‘shall not be less stringent than the emissions control that is achieved in practice by the best controlled similar unit.’’ 42 U.S.C. § 7429(a)(2) (emphasis added). The word ‘‘similar’’ may reasonably be read as referring to a unit that is in the same subcategory. Indeed, to find otherwise would work the disfavored result of giving the word ‘‘similar’’ no effect. See TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001); Duncan v. Walker, 533 U.S. 167, 174 (2001). And, if EPA can group ‘‘similar’’ units together in setting the MACT floor for new units, then Industry Petitioners’ central contention — that the (second) subcategorization sentence must be limited to beyond-the-floor calculations — cannot be sustained. In sum, we conclude that § 129(a)(2) is at least ambiguous on the question of whether EPA may subcategorize the small unit category when establishing MACT floors for MWCs, and that the Agency’s construction of the section as permitting such subcategorization is permissible.10 10 In a footnote, Industry Petitioners argue that an altogether different provision of the Clean Air Act shows that Congress knew how to explicitly grant EPA discretion to set MACT floors for subcategories when it wanted to do so. Petitioners’ Br. at 13 n.6. 15