Court Opinion

ID: 185414
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:41+00
Date Added: 2024-06-11T17:26:15.710444
License: Public Domain

254 F.3d 195 (D.C. Cir. 2001)
Husqvarna AB;  Husqvarna Forest and Garden Company;  Frigidaire Home Products-Specialty Power, Petitionersv.Environmental Protection Agency, RespondentJohn Deere Consumer Products, Inc., Intervenor
No. 00-1270
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 17, 2001Decided June 29, 2001

On Petition for Review of an Order of the Environmental Protection Agency
Nancy S. Bryson argued the cause for the petitioners.
Pamela S. Tonglao, Attorney, United States Department of  Justice, argued the cause for the respondent.  John C. Cruden, Acting Assistant Attorney General, United States Department of Justice, and John T. Hannon and Michael W.  Thrift, Attorneys, United States Environmental Protection  Agency, were on brief for the respondent.
Richard E. Ayres argued the cause for the intervenor.
Before:  Henderson, Tatel and Garland, Circuit Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge:

1
The petitioners, Husqvarna AB et al. (Husqvarna), seek review of the  Phase 2 Emission Standards for New Nonroad Spark-Ignition  Handheld Engines promulgated by the respondent, the U.S.  Environmental Protection Agency (EPA), under the authority  of section 213 of the Clean Air Act (CAA), 42 U.S.C.   7547. Husqvarna contends that the final rule is arbitrary and  capricious because the EPA failed to select the emission  standards that represent the best balance of the factors  identified in CAA section 213.  It also maintains that the  regulatory alternative chosen by the EPA is not supported by  substantial evidence in the record.  Finally, Husqvarna alleges procedural error stemming from inadequate notice and  opportunity to comment.  Because each of these arguments  lacks merit, we deny Husqvarna's petition.

I. Background

2
In 1990 the Congress amended the CAA and added section  213, which authorizes the EPA to set emissions standards for  "nonroad engines and vehicles."  Pub. L. No. 101-549, 104  Stat. 2399 (1990).  Section 213 required the EPA to adopt  emission standards by 1993 and to revise them as appropriate  thereafter.  The EPA missed the statutory deadline and a  lawsuit to enforce the statute was filed, which has resulted in  the district court's monitoring of the EPA's compliance.  See  Sierra Club v. Whitman, Civ. No. 93-0124 (D.D.C. filed Jan.  19, 1993).

3
In establishing emission standards, the EPA created two  categories of small spark-ignition (SI) engines:  nonhandheld and handheld.1  The EPA further divided handheld engines  into three classes--Classes III, IV and V--based on engine  size, with Class III encompassing the smallest and Class V  the largest handheld engines.  The domestic handheld engine  industry includes 22 manufacturers, including Husqvarna,  Stihl, John Deere, Shindaiwa, Kawasaski, Echo, Ryobi and  Honda, which manufacture a total of 186 engine families.2 These manufacturers primarily use two-stroke engines in  handheld products because of their high power-to-weight  ratios and low cost.  A two-stroke engine is an internal  combustion engine that accomplishes the operations of intake,  compression, expansion and exhaust in two piston strokes  rather than four.

4
The EPA has regulated emissions from handheld engines  in two phases.  See 58 Fed. Reg. 55, 033, 55,034 (Oct. 25,  1993).  In Phase 1, the EPA proposed short-term new engine  standards based in part on standards California had adopted  for similar engines.  In January 1998 the EPA proposed  Phase 2 emission standards for handheld engines that were  slightly more stringent than those in Phase 1.  63 Fed. Reg.  3950, 3953-55, 3958-59, 3964-71, 4009-4013 (Jan. 27, 1998). The proposed Phase 2 standards were expected to reduce  hydrocarbons (HC) and oxides of nitrogen (NOx) emissions  by 30 per cent beyond Phase 1 standards by the year 2025.3 63 Fed. Reg. 4001.  The proposal called for a reduction in  emissions for Class III, IV and V engines to 210, 172 and 116  grams per kilowatt-hour (g/kWhr),4 respectively.  In response  to the proposal, the EPA received input from manufacturers  indicating that lower emission levels were feasible.  See 63  Fed. Reg. 66,081, 66,082-83 (Dec. 1, 1998).5  And in late 1998  a portion of the handheld engine industry suggested that it  would support final HC+NOx standards of 72 g/kW-hr for  Classes III and IV and 87 g/kW-hr for Class V (72-72-87).

5
On December 2, 1998 John Deere Consumer Products, Inc.  (Deere), which appeared as an intervenor before this court,  recommended that the EPA consider stricter Phase 2 standards in light of its recent development of "compression wave  technology" (CWT), which promised to significantly reduce  emissions from handheld engines.  CWT uses compressed air  to improve fuel injection in the combustion chamber of a twostroke engine, resulting in almost all of the fuel being combusted.  Deere stated that CWT was adaptable to all sizes of  two-stroke engines and could meet a 72 g/kW-hr HC+NOx  standard in 2001.

6
On July 28, 1999 the EPA published a Supplemental Notice  of Proposed Rulemaking (Supplemental Proposal), which proposed emission limits of 50 g/kW-hr for Classes III and IV  with phase-in between 2002 and 2006 and an emission limit of  72 g/kW-hr for Class V with phase-in between 2004 and 2008. 64 Fed. Reg. 40,940 (July 28, 1999).  In addition to CWT, the  Supplemental Proposal identified three other technologies-stratified scavenging,6 miniature four-stroke engines7 and cat alysts8--that could be utilized by manufacturers to meet the  Phase 2 standards.  The Supplemental Proposal also contained an averaging, banking and trading (ABT)9 program to  give handheld engine manufacturers flexibility in meeting the  more stringent Phase 2 standards.  64 Fed. Reg. 40,951. Under the proposed program, manufacturers would declare a  family emission limit (FEL) for each engine family.  See  supra note 2.  Manufacturers need only ensure that average  emissions from all of their engine families meet the emission  standards for the given model year.  They could also generate bankable emission credits based on the differences between the FEL and the Phase 2 standards for the applicable  model year.

7
Many manufacturers, including Husqvarna, commented on  the Supplemental Proposal.  The public comment period  closed on September 17, 1999, although the EPA agreed to  consider additional comments filed within 30 days therefrom. It also continued to meet with interested manufacturers after  the close of the comment period.  The final Phase 2 emission  standards for handheld SI engines were published on April  25, 2000.  65 Fed. Reg. 24,268.  In the final rule, the EPA  adopted the 50-50-72 HC+NOx emission standards proposed  in the Supplemental Proposal, but with an implementation  schedule of four years instead of the five as proposed.  The  decision rested on the EPA's determination that "rapid tech nological advances" in the handheld engine industry warranted a more expeditious implementation.  65 Fed. Reg. 24,274. While noting that "not all of the technologies ... have yet  been demonstrated in mass-produced production engines operated under typical in-use conditions," the EPA identified  the following technologies as likely to meet the newly adopted  standards:  Class III (CWT & low-medium efficiency catalyst; stratified scavenging with lean combustion & medium-high  efficiency catalyst;  four-stroke), Class IV (CWT;  CWT & low  efficiency catalyst;  stratified scavenging with lean combustion  & medium efficiency catalyst;  four-stroke) and Class V  (CWT;  four-stroke;  stratified scavenging with lean combustion).  65 Fed. Reg. 24,274-79.  The EPA explained that  changes in equipment design could allay safety concerns  about the use of catalysts.  65 Fed. Reg. 24,278-79.  It also  determined that the Phase 2 standards were cost-effective. 65 Fed. Reg. 24, 296-300.  Finally, the EPA revised the ABT  program to avoid a delay in the shift to cleaner engines.  65  Fed. Reg. 24,282-84.  Husqvarna challenges all of these parts  of the final rule.

II. Analysis

8
"Our analysis is guided by the deference traditionally given  to agency expertise, particularly when dealing with a statutory scheme as unwieldy and science-driven as the Clean Air  Act."  Appalachian Power Co. v. EPA, 135 F.3d 791, 801-02  (D.C. Cir. 1998);  see Baltimore Gas & Elec. Co. v. NRDC,  462 U.S. 87, 103 (1983) (reviewing court must be "at its most  deferential" when agency is "making predictions, within its  area of special expertise, at the frontiers of science").  Under  section 307(d)(9) of the CAA, we reverse agency action found  to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."  42 U.S.C.   7607(d)(9)(A). Questions of statutory interpretation are governed by the  familiar two-step test set forth in Chevron, U.S.A., Inc. v.  NRDC, 467 U.S. 837, 842-43 (1984).  The court first asks  "whether Congress has directly spoken to the precise question at issue," in which case it "must give effect to the  unambiguously expressed intent of Congress."  Id.  If the "statute is silent or ambiguous with respect to the specific  issue," the court moves to the second step and defers to the  agency's interpretation as long as it is "based on a permissible construction of the statute."  Id. at 843.  We will strike  down the rulemaking for procedural error "only if the errors  were so serious and related to matters of such central relevance to the rule that there is a substantial likelihood that the  rule would have been significantly changed if such errors had  not been made."  CAA   307(d)(8);  42 U.S.C.   7607(d)(8).

9
In challenging the EPA's handheld engine Phase 2 emission standards, Husqvarna raises three claims.  First, it  asserts that the EPA's choice of the 50-50-72 emission standards contravenes the best balance requirement of CAA  section 213.  Second, it maintains that the final rule is  arbitrary and capricious because it is not supported by substantial evidence in the record.  Finally, it argues that the  EPA failed to comply with the procedural requirements of  CAA section 307(d).

A. CAA Section 213

10
Section 213(a)(3) of the CAA requires the EPA to promulgate standards that "shall achieve the greatest degree of  emission reduction achievable through the application of technology which the Administrator determines will be available  for the engines or vehicles to which such standards apply,  giving appropriate consideration to the cost of applying such  technology within the period of time available to manufacturers and to noise, energy, and safety factors associated with  the application of such technology."  42 U.S.C.   7547(a)(3). Husqvarna maintains that the 50-50-72 emission standards  do not represent the "best balance" of these factors for the  industry.  We disagree that a "best balance" of the kind  Husqvarna contemplates is required.  The EPA did not deviate from its statutory mandate or frustrate congressional will  by placing primary significance on the "greatest degree of  emission reduction achievable" and by considering cost, noise,  energy and safety factors as important but secondary factors. The overriding goal of the section is air quality and the other  listed considerations, while significant, are subordinate to that

11
goal.  Cf. American Petroleum Inst. v. EPA, 52 F.3d 1113,  1120 (D.C. Cir. 1995).  The record indicates that the EPA  considered each of the factors listed in section 213 and  nothing suggests that "the agency abandoned its obligation to  balance the statutory factors and select the best balance for a  predominant segment of industry from the alternatives before  it."  Appellant Br. 37 (emphasis original).  Contrary to Husqvarna's claim, the EPA did not single out a single engine  technology and use it as a benchmark to set standards. Rather, it set the emission standards with four different  engine technologies in mind.  Cf. NRDC v. Thomas, 805 F.2d  410, 424 (D.C. Cir. 1986) (rejecting petitioner's claim that  EPA must determine which engine can achieve greatest  emission reduction and then ratchet standard up to account  for cost and other factors).

12
Husqvarna argues that the EPA's failure to consider incremental cost-effectiveness illustrates its erroneous interpretation of section 213.  Section 213, however, simply directs the  EPA to consider cost.  Although the EPA considered marginal cost-effectiveness in promulgating marine engine emission  regulations, it has not done so in promulgating any other  standards under section 213.  Moreover, the EPA identified  industry-specific factors in the marine engine rulemaking that  suggested an incremental cost-effectiveness analysis would be  particularly significant to the EPA's choice among various  alternative standards.  61 Fed. Reg. 52,088, 52,098 (Oct. 4,  1996).  The EPA did consider the cost-effectiveness study  submitted by Husqvarna during the public comment period,  JA 1885-88, but rejected it as a basis to conclude that the  cost of the 50-50-72 standard was unreasonable.  Because  section 213 does not mandate a specific method of cost  analysis, we find reasonable the EPA's choice to consider  costs on the per ton of emissions removed basis.  See 65 Fed.  Reg. 24,300.  And there is no dispute that the EPA considered cost in this manner in weighing the factors under section  213.

13
Husqvarna also complains that the changes in the ABT  program set forth in the final rule demonstrate improper  balancing under section 213.  The record, however, indicates just the opposite.  It was the EPA's consideration of the  factors listed in section 213, notably the mandate to consider  the greatest degree of emission reduction achievable, that led  to the changes in the ABT program.  We find nothing  unreasonable about the EPA's conclusion that the ABT program as proposed risked undermining the final rule by unnecessarily delaying the introduction of cleaner engine technologies.  65 Fed. Reg. 24, 284.

14
In sum, we defer to the EPA's selection of emission standards under section 213.  The record shows that the EPA  reasonably arrived at what it determined was the best regulatory standard by ascertaining the greatest degree of emission  reduction achievable while giving appropriate consideration to  cost, noise, energy and safety factors.

B. Substantial Evidence

15
CAA section 213 is a technology-forcing standard.  See 42  U.S.C.   7547(a)(3);  42 U.S.C.   7547(b).  In construing similar language included in CAA section 202, we explained in  NRDC v. Thomas that the mere fact that the provisions "seek  to promote technological advances while also accounting for  cost does not detract from their categorization as technologyforcing standards."  805 F.2d at 428 n.30.  The "Congress  intended the agency to project future advances in pollution  control capability.  It was 'expected to press for development  and application of improved technology rather than be limited  by that which exists today.' "  NRDC v. EPA, 655 F.2d 318,  328 (D.C. Cir. 1981) (quoting S. Rep. No. 91-1196, at 24  (1970)).  Husqvarna acknowledges that the statute is technology-forcing but challenges whether EPA projections of future  advances in pollution control capability are supported by  substantial evidence.  It asserts that the EPA (1) selected  emission standards that are not technologically feasible and,  in so doing, (2) failed to consider costs, (3) did not adequately  address safety issues and (4) provided no rational explanation  for the phase-in period selected.  We find these claims without merit.

16
First, substantial evidence supports the EPA's determination that the Phase 2 standards can be achieved through the application of the identified technologies--CWT, stratified  scavenging, miniature four-stroke engines and catalysts.  The  record indicates that these engine technologies are already  capable of meeting an emission limit of 72 g/kW-hr, with the  four-stroke engine technology currently meeting the 50 g/kWhr standard.  The EPA found that the two-stroke technologies--CWT and stratified scavenging--can also currently  meet the 50 g/kW-hr standard with the addition of a catalyst. Husqvarna offers no theoretical objections to the technologies' capacity to meet the emission standards within the  phase-in period.  " 'In the absence of theoretical objections to  the technology, the agency need only identify the major steps  necessary for development of the device, and give plausible  reasons for its belief that the industry will be able to solve  these problems in the time remaining.  The EPA is not  required to rebut all speculation that unspecified factors may  hinder "real world" emission control.' "  Thomas, 805 F.2d at  434 (quoting NRDC, 655 F.2d at 334).  Husqvarna criticizes  the performance of the various engine technologies but cannot show that the remaining issues related to design, implementation, mass production, performance, heat and weight  cannot be solved through innovation and equipment redesign. It also questions the adequacy of the time period to solve  these issues.  Substantial evidence, however, supports the  EPA's determination that the continued rapid development of  engine technologies makes it probable that CWT, stratified  scavenging, four-stroke engine and catalyst technologies will  enable manufacturers to comply with the emission standards  within the phase-in period.  See 65 Fed. Reg. 24,274-81.

17
Second, substantial evidence supports the EPA's cost determinations.  The EPA sought comment on and considered a  significant body of cost data, including an incremental costeffectiveness study submitted by Husqvarna.  JA 1883-93. The EPA calculated the cost per engine and measured the  cost-effectiveness of the final Phase 2 standards, in dollars  per ton of emissions reduction, against the Phase 1 baseline. 65 Fed. Reg. 24,299-300.  Its calculation of $560 per ton of  HC+NOx removed, with fuel savings, falls within the range  of other nonroad mobile source regulations under Title II. See 63 Fed. Reg. 56,968, 56,990-91 (Oct. 23, 1998) (nonroad  compression-ignition engines);  64 Fed. Reg. 73,300, 73,325-26  (Dec. 29, 1999) (SI recreational marine engines).

18
Third, contrary to Husqvarna's claim, the record illustrates  that the EPA considered safety issues.  It considered the  problem of heat associated with the use of catalysts and it  proposed engine and equipment redesign to overcome the  problem.  65 Fed. Reg. 24,278-79.  The EPA also investigated manufacturers' claims that replacing two-stroke engines  with four-stroke engines would increase the weight of certain  handheld equipment.  It found their fears largely unwarranted and determined that four-stroke engine technology was  feasible in Class IV and some Class V applications.  65 Fed.  Reg. 24,277.

19
Finally, substantial evidence supports the phase-in period  selected.  CAA section 213(b) states that "[s]tandards under  this section shall take effect at the earliest possible date  considering the lead time necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such  period and energy and safety."  42 U.S.C.   7547(b).  For  the final Phase 2 standards, the EPA determined that the  schedule of declining emission standards, to be phased in  from 2002 to 2005 for Class III and IV and from 2004 to 2007  for Class V, provides adequate time for manufacturers' transition to cleaner engine technologies.  The final rule basically  shortened the implementation schedule from the five years  proposed in the Supplemental Proposal to four years.  In so  doing the EPA was responding to several commentators who  sought the shorter time frame to avoid delay in the transition  to cleaner technologies.  The EPA also considered the potential hardships on manufacturers of engine families with an  annual production level of fewer than 5000 units and provided  them additional lead time.  65 Fed. Reg. 24,289.  Additionally, the EPA implemented an ABT program to give all manufacturers flexibility in meeting the implementation schedule; the program permits manufacturers to produce some engines  that do not meet the standards so long as they can generate  or obtain offsetting credits from engines certified below the standards.  65 Fed. Reg. 23,282-84.  These provisions manifest that the EPA followed the congressional mandate embodied in CAA section 213(b).  42 U.S.C.   7547(b).

20
Accordingly, we conclude that the final rule is supported by  substantial evidence.

C. Procedural Errors

21
Section 307(d)(9) of the CAA provides that a court may  reverse agency action if it was promulgated "without observance of procedure required by law, if (i) such failure to  observe such procedure is arbitrary or capricious, (ii) the  requirement of paragraph (7)(B) has been met, and (iii) the  condition of the last sentence of paragraph (8) is met."  42  U.S.C.   7607(d)(9)(D).  Paragraph 7(B) limits judicial review  to objections "raised with reasonable specificity during the  period for public comment," or on reconsideration if "it was  impracticable to raise such objection within such time ... and  if such objection is of central relevance to the outcome of the  rule."  42 U.S.C.   7607(d)(7)(B).  Finally, the last sentence  of section 307(d)(8) provides that "[i]n reviewing alleged  procedural errors, the court may invalidate the rule only if  the errors were so serious and related to matters of such  central relevance to the rule that there is a substantial  likelihood that the rule would have been significantly changed  if such errors had not been made."  42 U.S.C.   7607(d)(8).

22
Husqvarna contends that the EPA failed to comply with  section 307(d)(3)(a) of the CAA, which requires that a notice  of proposed rulemaking "be accompanied by a statement of  its basis and purpose" and "include a summary of [ ] the  factual data on which the proposed rule is based."  42 U.S.C.    7607(d)(3).  It also argues that the agency failed to comply  with section 307(d)(4)(B)(i), which dictates that "all written  comments and documentary information on the proposed rule  received from any person for inclusion in the docket during  the comment period shall be placed in the docket."  42 U.S.C.    7607(4)(B)(i).  Husqvarna alleges that these failures denied  it sufficient opportunity to comment on the relevant technologies as well as on the ABT program as it appeared in the final  rule.  We find these claims without merit.  First, the Supplemental Proposal specifically referred to the technologies that  would serve as the basis of the 50-50-72 emission standards--CWT, miniature four-stroke engines, stratified scavenging and catalysts.  Husqvarna and other manufacturers  had ample opportunity to comment on the technologies.  In  fact, the bulk of Husqvarna's substantive claims revolves  around the EPA's treatment of the comments they in fact  submitted.  The EPA even extended the time to accept public  input until 30 days after close of the public comment period to  provide manufacturers like Husqvarna with more opportunity  to comment.  Second, Husqvarna had opportunity to comment on the proposed ABT program.  The final ABT provisions were a logical outgrowth of those proposed in the  Supplemental Proposal, even though they were in part based  on comments received during the 30 day extension period. See Small Refiner Lead Phase-Down Task Force v. EPA,  705 F.2d 506, 546-47 (D.C. Cir. 1983);  United Steelworkers of  Am. v. Marshall, 647 F.2d 1189, 1221 (D.C. Cir. 1980).  The  Supplemental Proposal gave Husqvarna fair notice of the  subjects and issues involved in formulating the ABT program. Likewise, the four-year phase-in period was a logical outgrowth of the proposed five-year implementation schedule. Finally, even if the EPA committed procedural error, Husqvarna failed to show it was "so serious and related to matters  of such relevance to the rule that there is a substantial  likelihood that the rule would have been significantly changed  if such error[ ] had not been made."  42 U.S.C.   7607(d)(8). Husqvarna was unable to establish a substantial likelihood  that the rule would have been significantly changed if it had  had an expanded opportunity to comment.  Accordingly, we  find Husqvarna's claims of procedural error without merit.

III. Conclusion

23
In sum, we reject Husqvarna's substantive and procedural  challenges to the Phase 2 Emission Standards for New  Nonroad Spark-Ignition Handheld Engines.10  Accordingly,

24
Denied.

Notes:

1
  Nonhandheld engines tend to be large and include engines  that power lawnmowers and garden tractors.  Handheld engines  are smaller and are used in equipment such as chainsaws, leaf  blowers and weed trimmers.

2
  An engine family is a grouping of engines within a manufacturer's product line. Engines within the same family must be  identical in several respects, including combustion cycle, number of  cylinders, engine class, catalyst type, fuel required and useful life. 40 C.F.R.   90.116(c), (d)(1)-(10).

3
  HC and NOx contribute to the formation of tropospheric  ozone through a complex series of reactions. Both short-term and  prolonged exposure to ozone at levels common in many cities has  been linked to a number of health problems.  See 65 Fed. Reg.  24,268, 24,295 (Apr. 25, 2000).

4
  Grams per kilowatt-hour (g/kW-hr) is used to measure the  mass of pollutants (grams) emitted per quantum of work (kW-hr)  the engine performs.

5
  "Lower" emission levels equate to stricter standards and  presumably cleaner air.

6
  Stratified scavenging is a technique that lowers emissions  from two-stroke engines by using pure air, instead of a mixture of  fuel and air, to expel exhaust gases following combustion.  The air  also serves as a buffer that prevents the air/fuel mixture from  escaping the exhaust port.

7
  A miniature four-stroke engine performs the internal combustion process using four strokes of the piston as opposed to the two  used in two-stroke engines.  Due to their larger size, four-stroke  engines, which produce lower HC+NOx emissions due to their  lower scavenging losses, have until recently been limited to groundsupported applications such as lawnmowers.

8
  Catalysts are small devices that are added to an engine to  oxidize or convert unburned hydrocarbons after they exit the engine's combustion chamber.

9
  Averaging means the exchange of emission credits within a  manufacturer's product line.  Banking refers to the retention of  emission credits for use in future model year averaging or trading. Trading involves the exchange of emission credits between engine  manufacturers that can then be used for averaging, banked for  future use or traded again.  63 Fed. Reg. 3972.

10
  In light of our disposition we have no occasion to consider,  and accordingly dismiss as moot, the EPA's motion to strike and for the reasons set forth in this opinion, the petition for  review is portions of Husqvarna's reply brief and Deere's motion for leave to  file a supplemental exhibit.