Opinion ID: 455926
Heading Depth: 1
Heading Rank: 3

Heading: analysis of the test data submitted on petrocoal

Text: 42 We now turn to petitioners' challenges to the sufficiency of the emissions data which was submitted on Petrocoal and the reasonableness of the EPA's determination, based upon its evaluation of the data, that Petrocoal will not cause or contribute to a vehicle's failure to meet the applicable emission standards over its useful life. 43
44 The EPA determined that American Methyl had met the burden established by section 211(f)(4) to qualify for a waiver provided the concentration of methanol in the finished fuel does not exceed 12 percent, by volume, the concentration of total alcohols in the fuel does not exceed 15 percent, by volume, the ratio of methanol to four-carbon alcohols in the finished fuel does not exceed 6.5 to 1 by volume.... Petrocoal Waiver, 46 Fed.Reg. at 48,97 6. Petitioners, however, contend that the record is inconclusive as to whether this maximum concentration fuel was ever tested. See Brief for MVMA at 34. 19 The EPA in its brief concedes that the record does not appear to support these limits, and asks the court for a remand in order to reconsider the appropriate limits. Brief for EPA at 15; see also id. at 16 (the record does not appear to support key elements of the waiver). While we agree with intervenor American Methyl's assertion that we are not bound by the EPA's concession but may make our own independent judgment as to whether the concession is warranted, our own review has uncovered nothing which persuades us that the EPA's concession is unwarranted. 20 45 Emissions data on Petrocoal were provided from three sources. See Characterization Report--Anafuel Unlimited, J.A. at 232, 233-34. American Methyl, in support of its waiver request for the use of Petrocoal, submitted back-to-back Federal Test Procedure (FTP) data on eight 1970 or later model year light duty vehicles. General Motors tested four 1980 or later model year vehicles using samples supplied by American Methyl containing 10 percent total alcohols. The EPA's Office of Mobile Source Air Pollution arranged for testing of four 1979 and later model year vehicles using samples supplied by American Methyl containing 13 percent total alcohols. 46 It is uncontested that neither the fuel tested by GM nor by the EPA contained the maximum concentration limits of total alcohols or the maximum percentage ratio of methanol to C-4 alcohols allowed by the waiver. Whether the fuel tested by American Methyl contained the maximum concentrations is a matter of controversy. American Methyl's waiver application reported that the fuel it tested contained 15% of [American Methyl's] proprietary oxygenated hydrocarbon. Anafuel Unlimited, Application for Waiver (Feb. 20, 1981), J.A. at 1, 6. No other information, such as the ratio of methanol to C-4 alcohols, is provided. GM in its comments raised the issue that American Methyl had informed GM that the additive contained non-alcohol as well as alcohol hydrocarbons, thus GM asserted that the fuel tested by American Methyl may have contained a total alcohol content of less than 15 percent. See Comments of General Motors Corporation on the Anafuel Unlimited Application for a Fuel Additive Waiver (July 6, 1981) (GM Comments), J.A. at 121, 124, 127, 132. This issue was not addressed in the Administrator's decision. The EPA now concedes that its conclusion that the Petrocoal samples tested by [American Methyl] contained 15% alcohol [citing the Characterization Report, J.A. at 234-35] might have been in error. Brief for EPA at 15 n. 21. We find no clear and unequivocal verification in the record that the fuel tested by American Methyl contained the maximum concentration levels or percentage ratio permitted by the waiver. 21 Hence, as the EPA concedes, the record does not support the maximum limits allowed by the waiver. Moreover, the fact the worst case fuel might not have been tested casts doubt on the confidence we may place in any of the test results on Petrocoal cited to support the waiver decision. 47 American Methyl filed a supplemental brief in this case asserting that we should reject the EPA's concession that the record does not support the maximum alcohol limits and percentage ratio specified in the waiver because this court determined in American Methyl that this very concession was a make-weight and red herring. See Supplemental Brief for Intervenor American Methyl at 5-9. We find that the court's statements in American Methyl are limited to the context of that case and have no bearing on the validity of the EPA's representations regarding the state of the record evidence supporting the original waiver decision for Petrocoal. 48 In American Methyl, this court held that the EPA had no inherent authority to reconsider or revoke a waiver under section 211(f)(4) but must instead proceed to prohibit or regulate the fuel under section 211(c). American Methyl, 749 F.2d at 831. The court explicitly stated that the issue of the validity of the original waiver was not before the court. Id. at 837. In American Methyl, the EPA conceded that it could not revoke a waiver under section 211(f)(4) if correctly granted, but argued that it could revoke a waiver under section 211(f)(4) if, upon re-examination, the record was found insufficient to support the waiver. Id. Accordingly, the EPA asserted that the Petrocoal waiver was not correctly granted initially because the maximum alcohol levels and percentage ratio were not supported in the record. 22 The court determined, however, that the EPA's actions and the chronology of events leading up to the proposed revocation demonstrated that the EPA's real impetus for initiating the proposed revocation was new evidence relating to Petrocoal's effect on evaporative emissions of hydrocarbons and not any purported defects in the original waiver. Id. The court then went on to characterize the EPA's assertion of deficiencies in the record supporting the original waiver grant as make-weights and red herrings. Id. at 837-38. Contrary to American Methyl's contention, however, the court characterized the EPA's claims that it sought revocation due to the incorrectness of the original waiver as make-weights and red herrings, not because the claims per se lacked merit, but because they lacked merit as purported reasons for the proposed revocation proceeding. 49 The court's purpose in discussing the relevant issues in American Methyl was to demonstrate that since the proposed revocation was motivated by new evidence, not past error, the revocation would be unwarranted even on the EPA's own view of the statute. Id. at 838 (EPA's primary reason for revoking American Methyl's waiver does not relate to a defect in the original grant; thus under the EPA's own interpretation of its powers, a revocation proceeding is not warranted in this case.). This finding was clearly not essential to the court's decision, since the court held that the EPA had no authority to revoke a waiver pursuant to section 211(f) regardless of whether or not the waiver was correctly granted in the first instance. In sum, we find that the dicta in American Methyl cited by intervenor American Methyl has no bearing on our evaluation of whether the maximum alcohol levels and percentage ratio specified in the Petrocoal waiver are supported by the record. 50
51 Having determined that Petrocoal was expected to have an instantaneous effect on emissions, the EPA analyzed the emissions data on Petrocoal using the Paired Difference Test, the Sign of the Difference Test, and the Deteriorated Emissions Test. See supra note 9. All three tests examine the emissions effect of the waiver fuel with respect to the following pollutants: hydrocarbon (HC), carbon monoxide (CO), and oxides of nitrogen (NOx ). The EPA reported the test results on the combined data from the eight vehicles tested by American Methyl, the four vehicles tested by GM, and the four vehicles tested by the EPA. 52 As discussed earlier, the Deteriorated Emissions Test is the test used in lieu of 50,000-mile durability data to determine whether the waiver fuel will cause a vehicle to fail to meet the applicable emission standards over its useful life. 23 See supra note 11 (describing test). The number of vehicles whose projected 50,000-mile emission values exceeded the applicable emission standards using Petrocoal were: 53 HC ........ 1 out of 16 CO ........ 1 out of 16 NO subx ... 2 out of 16 54 Petrocoal Waiver, 46 Fed.Reg. at 48,978. The Deteriorated Emissions Test is designed to provide a 90 percent probability of failure of the test if 25 percent or more of the vehicle fleet tested would fail to meet emission standards using the waiver fuel or fuel additive. Id. For a sample of 16, as here, the failure of two or more vehicles to meet the emission standards constitutes a failure of the test. Id. at 48,979. Thus, Petrocoal failed the Deteriorated Emissions Test for Nox emissions. 55 The Administrator acknowledged Petrocoal's failure for NOx emissions but nevertheless granted the waiver stating: 56 In this case, Petrocoal just fails (by one vehicle) this Test for NOx . Nevertheless, because the failure was borderline, i.e., small changes to the test criteria would result in a pass, coupled with the small increase in NOx emissions found in Test 1, I conclude that this problem is not significant enough to warrant a disapproval of the waiver request. In reaching this conclusion, I considered all the information before me including the EEA report submitted by Anafuel. 57 Id. Hence, although the EPA has established specific statistical criteria for determining whether a fuel will cause a vehicle to exceed emission standards, the Administrator determined that it was appropriate to deviate from those criteria and grant a waiver for Petrocoal despite its clear failure of the Deteriorated Emissions Test for Nox emissions. As far as we know, based on the information supplied by the parties and our own research, the EPA has never before granted a waiver in spite of a fuel's failure to pass the Deteriorated Emissions Test. Indeed, given the straightforward nature of the Deteriorated Emissions Test coupled with the fact that the test itself is conducted in lieu of actual 50,000-mile durability data, based on the a priori assumption that the fuel will have only an instantaneous effect, we find it difficult to conceive of any circumstances which would justify deviating from the established criteria. 24 While we do not totally reject the possibility that the Administrator might in some other instance be able to articulate a reasoned explanation for deviating from the established criteria, she certainly has not done so in this case. At oral argument, even the EPA, while arguing that the Administrator could deviate from the established criteria given a reasoned explanation, conceded that the Administrator gave no such reasoned explanation in this case. 58 The EPA's criteria provide specific cut-off points based on sample size for determining whether a fuel will cause a vehicle to exceed emission standards for each pollutant. The fact that Petrocoal failed for NOx emissions on the basis of the minimum number of vehicles constituting a failure (i.e., 2 out of 16) and thus small changes to the test criteria would result in a pass, id., does not in our view provide any reasoned explanation for why this failure--albeit marginal--should not be regarded as a failure. There is no question that if the test criteria were changed, Petrocoal could pass the test. The question is why a special exception should be made to accommodate Petrocoal's failure under the established test criteria. Equally unavailing is the Administrator's notation that the Paired Difference Test indicated only a small increase in NOx emissions. The point of the Deteriorated Emissions Test is to project, in the absence of actual 50,000-mile durability data indicating the emissions degradation resulting over the vehicle's useful life, whether the identified increase due to the use of Petrocoal will cause the vehicle to exceed emission standards at any point during its useful life. In sum, we find that the Administrator has failed to articulate any plausible reason why the established test criteria do not accurately reflect the emissions effects due to Petrocoal. 25 59 The EPA may not grant a section 211(f)(4) waiver unless the applicant has established that the fuel will not cause or contribute to the failure of any emission control device to achieve compliance with emission standards over the useful life of the vehicle. See supra p. 390. The EPA's alcohol-gasoline waiver guidelines expressly state: Where the potential for such harm is evidenced, the applicant has the burden of proving that such harm will not occur. Guidelines for Section 211(f)(4) Waivers for Alcohol-Gasoline Blends, 43 Fed.Reg. at 24,132. Certainly, Petrocoal's failure for NOx emissions indicates a potential for harmful emission effects absent some reasoned explanation to the contrary. The Administrator may not simply subjectively without a reasoned explanation conclude that a failure of the EPA's established criteria is not significant. Section 211(f)(4) speaks in terms of a failure to achieve compliance with the emission standards. We find nothing in the Act or its legislative history to support the Administrator's added gloss that the relevant question is whether the fuel will cause or contribute to a significant failure. See Petrocoal Waiver, 46 Fed.Reg. at 48,977. We conclude that on the record in this case the Administrator acted arbitrarily, capriciously, and abused her discretion in granting the Petrocoal waiver despite Petrocoal's failure of the Deteriorated Emissions Test for NOx emissions.
60 The petitioners also contend that the Administrator's conclusion that the increased evaporative emissions caused by Petrocoal could be controlled by controlling the volatility of the blended fuel was arbitrary and capricious. See Brief for MVMA at 45. The Administrator, in the Petrocoal waiver decision, stated that the relationship between fuel volatility characteristics (primarily the Front End Volatility Index (FEVI)) and evaporative emissions had been clearly established for fuels composed entirely of hydrocarbon components and had been demonstrated to apply for fuels containing some relatively small percentages of the oxygenated hydrocarbons TBA, MTBE and Oxinal. Petrocoal Waiver, 46 Fed.Reg. at 48,977. Although noting that the data available on Petrocoal at the higher percentages of alcohol was incomplete, the Administrator concluded that the relationship between fuel volatility and evaporative emissions appeared to hold for Petrocoal based on the data in the record with respect to Petrocoal's FEVI and evaporative emissions. 61 The Administrator in past waiver decisions has consistently relied on the assumption that fuel volatility restrictions will adequately control evaporative emission increases; generally, however, the assumption has been supported by at least some confirmatory test data on the fuel at issue. See, e.g., Oxinal Waiver, 44 Fed.Reg. at 37,076; MTBE Waiver, 44 Fed.Reg. at 12,245; TBA Waiver, 44 Fed.Reg. at 10,532. While we harbor some doubts as to the wisdom of the Administrator's application of this assumption in the specific case of Petrocoal with its higher methanol, total alcohol, and oxygen content, we decline to find the Administrator's action arbitrary and capricious. The data cited by MVMA indicating that controlling volatility will not solve the evaporative emissions problem caused by Petrocoal was submitted as a supplement to MVMA's petition for administrative reconsideration. See Brief for MVMA at 48 & n. 38. While this new data may indicate that the Administrator's reliance on the assumed relationship between fuel volatility and evaporative emissions was in error, this evidence was not in the record at the time the waiver was granted, and thus we will not rely on it to undercut the Administrator's conclusions on review. See American Petroleum Inst. v. Costle, 665 F.2d 1176, 1186 n. 3 (D.C.Cir.1981), cert. denied, 455 U.S. 1034, 102 S.Ct. 1737, 72 L.Ed.2d 152 (1982).
62 Finally, petitioners argue that the Administrator erred in concluding that Petrocoal does not present materials compatibility or driveability problems. See Brief for MVMA at 49-56. The Administrator observes in the Petrocoal waiver decision that both materials compatibility and driveability are important criteria in evaluating a waiver request. See Petrocoal Waiver, 46 Fed.Reg. at 48,977. Materials incompatibility can contribute or cause the failure of vehicles to meet either their exhaust or evaporative emission standards ... because a fuel ... may cause changes in the components in carburetors or fuel systems which exceed the tolerances specified by the manufacturer. Id. Driveability information is important because poor driveability can directly result in increased emissions due to constant misfires and repeated stalling, and possibly lead to tampering with the emission controls of the vehicle. Id. The Administrator concluded that based on the information developed in the record that Petrocoal presented neither materials compatibility problems nor significant driveability problems affecting emissions. 63 Since we have already found on the basis of petitioners' other challenges that the Administrator acted arbitrarily, capriciously, and abused her discretion in granting the Petrocoal waiver, we find it unnecessary to determine expressly whether the Administrator also acted arbitrarily and capriciously in concluding that Petrocoal resulted in no significant materials compatibility or driveability problems. 26 We are compelled, however, to express our doubts about the adequacy of the Administrator's findings with respect to materials compatibility problems. The EPA, itself, has recognized that materials compatibility is a particularly salient concern with methanol blends. See supra p. 394. Yet, the record data on materials compatibility problems associated with Petrocoal is rendered suspect by the lack of any unequivocal evidence that the effects of the worst case fuel allowed by the waiver were ever tested. See supra p. 397. Nor do we find the mere presence in Petrocoal of a proprietary inhibitor, which purportedly inhibits materials compatibility problems, a sufficient basis for concluding that materials compatibility will not be a problem in the absence of data supporting the actual effectiveness of the inhibitor. 27