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Sierra Club v. Environmental Proctection Agency

January 13, 2004


On Petition for Review of an Order of the Environmental Protection Agency

Before: Henderson, Tatel, and Roberts, Circuit Judges.

The opinion of the court was delivered by: Roberts, Circuit Judge

Argued October 10, 2003

Petitioner Sierra Club challenges the Environmental Protection Agency's promulgation, pursuant to Section 112 of the Clean Air Act, of regulations governing the emission of hazardous air pollutants from primary copper smelters. This is the latest in a series of challenges to rulemakings establishing emission standards for hazardous air pollutants in various industries under the Clean Air Act, see, e.g., Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855 (D.C. Cir. 2001) (hazardous waste combustors); National Lime Ass'n v. EPA, 233 F.3d 625 (D.C. Cir. 2000) (portland cement manufacturing facilities); Sierra Club v. EPA, 167 F.3d 658 (D.C. Cir. 1999) (medical waste incinerators); Appalachian Power Co. v. EPA, 135 F.3d 791 (D.C. Cir. 1998) (electric utility boilers). We review such challenges under a familiar test and may set aside the standards only if we find them to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 42 U.S.C. § 7607(d)(9)(A); see Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41 (1982). "The 'arbitrary and capricious' standard deems the agency action presumptively valid provided the action meets a minimum rationality standard." Natural Res. Def. Council, Inc. v. EPA, 194 F.3d 130, 136 (D.C. Cir. 1999). After considering Sierra Club's arguments and reviewing the record, we reject its challenges to the rulemaking in this case and conclude that EPA's emission standards are not arbitrary, capricious, an abuse of discretion, or contrary to law. We therefore deny the petition for review.

I. Background

A. Statutory Background

In 1970, Congress enacted Section 112 of the Clean Air Act (CAA), Pub. L. No. 91-604, § 112, 84 Stat. 1676, 1685 (1970), in an effort to reduce hazardous air pollutants (HAPs). See Natural Res. Def. Council, Inc. v. EPA, 824 F.2d 1146, 1148 (D.C. Cir. 1987); H.R. Rep. No. 101-490, pt. 1, at 150 (1990) (House Report). The statute defined HAPs as "air pollutant[s] - which in the judgment of the Administrator cause[ ], or contribute[ ] to, air pollution which may reasonably be anticipated to result in an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness." Clean Air Act Amendments of 1977, Pub. L. No. 95-95, § 401(c), 91 Stat. 685, 791 (1977). Section 112 required EPA to publish a list containing "each hazardous air pollutant for which [it] intends to establish an emission standard," and then -- within a specified period -- either to promulgate an emission standard or to explain why the particular HAP is in fact not hazardous. § 112(b)(1)(A)-(B), 84 Stat. at 1685. EPA followed a risk-based analysis to set emission standards under the statute, meaning that EPA considered levels of HAPs at which health effects are observed, factored in an "ample margin of safety to protect the public health," and set emission restrictions accordingly. § 112(b)(1)(B), 84 Stat. at 1685; see Cement Kiln Recycling Coalition, 255 F.3d at 857 ( CKRC ).

This approach proved to be disappointing. See S. Rep. No. 101-228, at 3 (1989) (Senate Report) ("Very little has been done since the passage of the 1970 [CAA] to identify and control hazardous air pollutants."). In part because of uncertainty over appropriate levels of protection under a risk-based regime, and "unrealistic" time frames mandating proposed standards 180 days after listing a pollutant as hazardous, little progress was made. Id. at 132. From 1970 to 1990, EPA listed only eight HAPs, establishing emission standards for seven of them. Id. at 131; House Report, at 322. As the House Committee on Energy and Commerce summarized the progress of limiting HAP emissions under Section 112: "Listing decisions have been few and far between. - No decision -- is the history of this program." House Report, at 151 (quoting a Nov. 7, 1983 Committee hearing). The Senate counterpart was more understated but the verdict was essentially the same: "Attainment of the health-based air quality standards has proven more difficult than anticipated-" Senate Report, at 3.

The ineffectiveness of the risk-based approach created a "broad consensus that the program to regulate [HAPs] under section 112 of the Clean Air Act should be restructured to provide EPA with authority to regulate - with technologybased standards." Id. at 133 (emphasis added). In response, Congress passed the Clean Air Act Amendments of 1990, Pub. L. No. 101-549, 104 Stat. 2531 (1990) (1990 Amendments or Amendments), to "strengthen and expand the Clean Air Act" through a "technology-based - program." House Report, at 144. The 1990 Amendments made two "fundamental changes" to Section 112 in order to implement the technology-based approach. Senate Report, at 133. First, rather than look to EPA to identify and list HAPs, Congress did it itself, establishing a list of 191 HAPs requiring emission standards. See 42 U.S.C. § 7412(b). Second, the Amendments established an emission standards implementation process "based on the maximum reduction in emissions which can be achieved by application of best available control technology." Senate Report, at 133; see CKRC, 255 F.3d at 857.

Congress established a two-phase approach for setting HAP emission standards under the 1990 Amendments. See National Lime, 233 F.3d at 629. During the first phase, EPA must promulgate technology-based emission standards for categories of sources that emit HAPs. 42 U.S.C. § 7412(d); Senate Report, at 148. These emission standards are to be based not on an assessment of the risks posed by HAPs, but instead on the maximum achievable control technology (MACT) for sources in each category. Senate Report, at 148 ("The MACT standards are based on the performance of technology, and not on the health and environmental effects of hazardous air pollutants."). The standards, at a minimum, must reflect the emissions limitation achieved by the best-performing sources in a particular category (here, primary copper smelters). The idea is to set limits that, as an initial matter, require all sources in a category to at least clean up their emissions to the level that their best performing peers have shown can be achieved. See 42 U.S.C. § 7412(d)(3); National Emission Standards for Hazardous Air Pollutants for Primary Copper Smelting; Final Rule, 67 Fed. Reg. 40,478, 40,479 (June 12, 2002) (codified at 40 C.F.R. pt. 63) (Final Rule).

The second phase then returns to a risk-based analysis. That phase -- which occurs within eight years after Section 7412(d) MACT standards are promulgated -- requires EPA to consider whether residual risks remain that warrant more stringent standards than achieved through MACT. 42 U.S.C. § 7412(f). EPA must determine whether such standards are required "in order to provide an ample margin of safety to protect public health - or to prevent - an adverse environmental effect." Id. § 7412(f)(2)(A); see also Senate Report, at 155 ("[The Amendments] require[ ] [EPA] to protect against all significant environmental effects when setting residual risk standards in the second phase.").

The issues in this case focus on the first phase of emission standards promulgation. Within that phase, there are two steps. Step one requires EPA to establish what has come to be known as the MACT floor -- the minimum level of reduction required by statute. For existing sources, EPA sets the MACT floor at "the average emission limitation achieved by the best performing 5 sources" in a category "with fewer than 30 sources." 42 U.S.C. § 7412(d)(3)(B). Once EPA has set the MACT floor, it may then impose stricter standards -- so-called "beyond-the-floor" limits -- if the Administrator determines them to be achievable after "taking into consideration the cost - and any non-air quality health and environmental impacts and energy requirements." Id. § 7412(d)(2); see CKRC, 255 F.3d at 858. These "beyond-the-floor" limits in phase one under Section 7412(d)(2) are distinct from the risk-based limits to be set eight years later under Section 7412(f)(2) during phase two.

B. Regulatory Background

In 1998, EPA announced proposed emission standards for primary copper smelters and initiated notice-and-comment procedures. See National Emission Standards for Hazardous Air Pollutants for Source Categories: National Emission Standards for Primary Copper Smelters, 63 Fed. Reg. 19,582 (Apr. 20, 1998) (Proposed Rule). When EPA presented the Proposed Rule, six primary copper smelters operated in the United States. Id. at 19,583/3. During the public comment period, four of them suspended operations. Final Rule, 67 Fed. Reg. at 40,479/3. The rulemaking only concerned those primary copper smelters that use "batch copper converters." Id.

Such smelters produce copper from raw copper ore, which typically contains less than one percent copper. Proposed Rule, 63 Fed. Reg. at 19,583. At the mine site, copper sulfide ore is processed into copper concentrate -- a form of copper ore with a higher copper content. After shipping to the primary copper smelter, the copper concentrate is further processed into a slurry and mixed with "fluxes" -- materials that facilitate the formation of a slag containing impurities from the ore. The further refined concentrate is placed in a copper concentrate dryer to remove some of the moisture content, and the copper concentrate then moves to the flash smelting furnace, where it is heated (at almost 1,830 degrees Fahrenheit) until molten.

In the molten state, most of the remaining impurities form into a slag. The slag is lighter than the molten copper, so it rises to the surface and is removed to a slag cleaning vessel or a slag pile (depending on the primary smelter). The molten copper then moves to the batch converter, which removes any remaining impurities by blowing oxygen through the molten copper, forming additional slag that is skimmed off. That process of blowing and skimming is repeated until the copper is 96 to 98 percent pure.

Melting rocks and minerals at nearly 2,000 degrees Fahrenheit not surprisingly produces exhaust gas, which EPA refers to as "off-gases." There are two types of off-gases generated by the smelting process: (1) process emissions and (2) fugitive emissions. Process emissions are the primary exhaust gas streams generated by copper dryers, smelting furnaces, slag cleaning vessels, and batch converters. These gas streams are captured and routed to control devices before being emitted into the atmosphere. Fugitive emissions are off-gases that escape from the primary exhaust gas streams, entering the atmosphere without going through emissions control. The off-gases from smelting copper sulfide ore contain concentrated sulfur dioxide -- so much that some offgases are routed to an adjacent plant producing sulfuric acid. The off-gases also contain metallic impurities -- including lead and arsenic -- that had been trapped in the ore but are released during smelting in the form of particulate matter (PM) in the off-gases. These metallic impurities released during the smelting process are the HAPs that are the focus of the subject rulemaking. See id. at 19,584-85.

Copper smelters use several different methods of PM control to regulate process emissions. Exhaust streams from copper dryers are vented to either a baghouse or an electrostatic precipitator (ESP) to reduce PM emissions. Id. at 19,593. Smelting furnaces vent primary exhaust gases to adjacent sulfuric acid plants that remove PM by routing the gas stream first through an ESP and then through a wet scrubber. Id. at 19,594. Two of the smelters involved in this rulemaking operate slag cleaning vessels, venting the exhaust gases to wet scrubbers to reduce PM emissions. Id. at 19,595. Batch converters route emissions to adjacent plants, baghouses, and ESPs for PM control. Id. at 19,597.

After surveying the technology used at the various locations, EPA determined that copper smelters used PM control devices to reduce HAP emissions. EPA accordingly set standards for HAP emissions in terms of PM, rather than setting individual limits for each HAP. Because the control devices operate by reducing PM as a whole, EPA set numerical limits in terms of PM for each type of primary gas stream. To control fugitive emissions, EPA set an opacity-based standard -- a standard that limited emissions by measuring the amount of light passing through emissions vented from certain smelter exhaust points other than a primary exhaust stack. The idea was that HAPs contained in process emissions would be regulated through limits on PM, while fugitive HAPs -- the ones that "leaked out" through ceiling exhaust fans and the like -- would be regulated through opacity-based limits, which would also help ensure that emissions went through the control devices. EPA's Final Rule also mandated the use of parameter monitoring to ensure the proper functioning of the required PM control devices. Such monitoring tests whether PM control devices operate as they are supposed to under a specific parameter previously determined to ensure compliance with emission standards. EPA estimated that the regulatory regime set forth in its Final Rule would reduce HAP emissions from copper smelters nationwide by 23 percent. Final Rule, 67 Fed. Reg. at 40,478.

Sierra Club did not comment on the proposed emission standards, and none of the entities that did have challenged the Final Rule. Sierra Club nonetheless challenges the Final Rule on several grounds: (1) EPA's MACT determination is unlawful and arbitrary and capricious; (2) EPA's decision to use PM as a surrogate for HAPs is not reasonable; (3) EPA failed adequately to explain its decision to use PM as a surrogate; and (4) the opacity-based standard is not a proper emission standard. Sierra Club also challenges EPA's refusal to impose beyond-the-floor limits and the agency's alleged failure to take into account non-air quality health and environmental impacts. In addition, Sierra Club challenges the monitoring requirement as inadequate and claims that EPA violated the Endangered Species Act by issuing the Final Rule without undertaking the inter-agency consultations required by that Act.

II. Challenges to EPA's MACT Determinations

A. PM as a Surrogate

In National Lime, this court confirmed that "EPA may use a surrogate to regulate pollutants if it is 'reasonable' to do so." 233 F.3d at 637. Sierra Club does not dispute this proposition as a general matter, see Reply Br. at 4 n.2, but raises two broad objections to the use of PM as a surrogate for HAPs in this particular rulemaking. First, Sierra Club contends that EPA has set standards on the basis of what PM control can achieve, violating the statutory requirement that the minimum standards be based on what the best performing sources actually achieve. Second, Sierra Club contends that using PM as a surrogate is not "reasonable" under the criteria set forth in National Lime. We address each contention in turn.

1. Lawfulness of PM as a Surrogate

During the notice-and-comment period, EPA responded to an objection to the use of PM as a surrogate by stating that the CAA "does not prohibit us from using an appropriate surrogate pollutant for individual HAP species to confirm the proper use of MACT." EPA, National Emission Standards for Hazardous Air Pollutants (NESHAP) for Primary Copper Smelters -- Background Information for Promulgated Standards 2-2 (2001) (EPA Background Document). Sierra Club seizes upon that explanation to argue that EPA has violated Section 7412(d)(3) by setting surrogate emission standards to confirm the proper use of a chosen technology, instead of basing standards on what the best sources achieve with respect to HAP emissions control. Reply Br. at 2. Sierra Club contends that copper smelters achieve HAP emission reductions not just through PM control, but by altering ore inputs as well. Because EPA promulgated the emission standards based only on PM control without ...

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