Opinion ID: 796659
Heading Depth: 4
Heading Rank: 1

Heading: Cost-Cost Compliance Alternative

Text: 84 As already noted, a variance may be available to a facility pursuant to 40 C.F.R. § 125.94(a)(5)(i) if the facility's compliance costs would be significantly greater than the costs considered by the Agency in establishing the applicable performance standards. This variance requires a calculation of compliance costs based on the suite of BTA technologies that the EPA has identified and promulgated in the final Rule. 69 Fed.Reg. at 41,644-46. We remand this provision because (1) the EPA did not give interested parties the requisite notice and opportunity to challenge the variance by failing to identify cost data for actual, named facilities, as opposed to model facilities, until after the notice and comment period had ended, Sprint Corp., 315 F.3d at 371, and (2) the variance is expressly premised on the validity of the BTA determination, 23 which itself has been remanded for further explanation, see, e.g., Solite Corp. v. U.S. EPA, 952 F.2d 473, 494-95 (D.C.Cir.1991) (remanding rule where the underlying grounds for its promulgation had been remanded to the EPA for procedural defects); cf. Chenery, 318 U.S. at 87-88, 63 S.Ct. 454 (a rule may only be upheld on the grounds that the agency proffers). 85 In the Rule's proposal, the EPA indicated that it had estimated compliance costs for 539 model plants based on factors such as fuel source, mode of electricity generation, existing intake technologies, waterbody type, geographic location, and intake flow. 67 Fed.Reg. at 17,144. An accompanying technical development document set forth the Agency's cost calculation methodology for these model plants and listed the compliance cost estimates for each of the 539 model plants. The proposal indicated that a facility must determine which model plant [it] most closely resembles in order to identify the costs considered by the Agency in establishing the national performance standards. See id. The EPA subsequently published in the Federal Register a so-called Notice of Data Availability (NODA) in which it explained that it had changed its methodology for estimating the model plants' compliance costs. Proposed Regulations to Establish Requirements for Cooling Water Intake Structures at Phase II Existing Facilities; Notice of Data Availability; Proposed Rule, 68 Fed.Reg. 13,522, 13,527 (Mar. 19, 2003). Accompanying documents explained in greater detail the costing methodology and cost data underlying the revised approach. The revised proposal, however, did not depart from the model plant approach. The final Rule, by contrast, assigned cost estimates to specific, named facilities rather than model facilities. 69 Fed.Reg. at 41,670-82. The Agency explained in the preamble to the final Rule that the EPA will adjust facility-specific costs pursuant to a multiple-step calculation formula to arrive at a final estimated cost the EPA considers a comparison for purposes of the cost-cost variance. Id. at 41,644-47. 86 The EPA acknowledges that it did not disclose in the proposal or the NODA specific facility names in connection with cost data and explains that it failed to do so because it needed to protect certain confidential business information (CBI) and had not developed during the proposal stage a means to protect that information while still providing cost data to the public. We accept the EPA's argument that masking the facility names did not prevent interested parties from commenting on the methodology and general cost data underlying the EPA's approach because the NODA explained the costing methodology and because the general cost data, while not identified by the Agency as relating to actual, specific facilities, was made available to interested parties. Nat'l Wildlife Fed., 286 F.3d at 564-65 (holding that the EPA cannot be faulted for lack of notice in not releasing CBI data). We are persuaded, however, that the release of information and request for comments on the EPA's new approach to developing compliance cost modules via the NODA did not afford adequate notice of the costs associated with specific facilities promulgated in the final Rule. 87 We have previously stated that [n]otice is said not only to improve the quality of rulemaking through exposure of a proposed rule to comment, but also to provide fairness to interested parties and to enhance judicial review by the development of a record through the commentary process. Nat'l Black Media Coalition v. FCC, 791 F.2d 1016, 1022 (2d Cir.1986). 88 While a final rule need not be an exact replica of the rule proposed in the Notice, the final rule must be a `logical outgrowth' of the rule proposed. Id. The test that has been set forth is whether the agency's notice would fairly apprise interested persons of the subjects and issues of the rulemaking. Id. (citation and internal quotation marks omitted). 24 Agencies accordingly are not permitted to use the rulemaking process to pull a surprise switcheroo. Envtl. Integrity Project, 425 F.3d at 996. 89 Here, only the final Rule identified facilities by name in estimating compliance costs. Interested parties therefore could not comment on the basis for particular facilities' cost figures that the EPA established. This is problematic because the availability of a variance turns on the relationship between the costs estimated in the Rule and those that a specific facility establishes in a permit proceeding. The EPA focuses on the notice it gave of its intended methodology for calculating the costs the Agency considered, but ignores the overriding importance of the cost estimates for a particular facility in determining whether a site-specific cost-cost variance is appropriate. Thus, the EPA should have afforded notice and an opportunity to challenge the cost estimates for specific facilities and not simply an opportunity to comment on the EPA's methodology and general cost data. 25 We remand this variance for inadequate notice and because of our remand of the BTA determination.