On Petition for Review of an Order of the Environmental Protection Agency
Before: Edwards, Sentelle, and Tatel, Circuit Judges.
The opinion of the court was delivered by: Edwards, Circuit Judge
In November 2002, the Environmental Protection Agency ("EPA" or "Agency") issued a final rule establishing emissions standards for snowmobiles and certain other "nonroad" vehicles. See Control of Emissions From Nonroad Large Spark-Ignition Engines, and Recreational Engines (Marine and Land-Based), 67 Fed. Reg. 68,242 (Nov. 8, 2002). The snowmobile standards at issue in this case - promulgated under § 213 of the Clean Air Act ("CAA" or "Act"), 42 U.S.C. § 7547 (2000) - regulate emissions of three pollutants: carbon monoxide ("CO"), hydrocarbons ("HC"), and oxides of nitrogen ("NOfnx").
The CO standard was adopted under § 213(a)(3). Under this provision, EPA must regulate CO and certain ozoneprecursor emissions from a category of engines if, and only if, the Agency finds that such emissions "cause, or contribute to" CO or ozone concentrations in more than one area that has failed to attain the relevant national ambient air quality standard ("NAAQS"). Where the Agency makes such a finding - as it did for snowmobiles with respect to CO emissions - it must adopt standards reflecting "the greatest degree of emission reduction achievable" through the application of technology that "will be available," taking cost and other factors into account.
EPA regulated HC and NOfnx emissions under § 213(a)(4), which is directed at pollution problems other than CO and ozone. This provision authorizes EPA - upon making certain findings - to adopt such standards as the Agency "deems appropriate," again based on technology that will be available and taking cost and other factors into account. Of crucial importance for this case, § 213(a)(4) only permits regulation of "emissions not referred to in" § 213(a)(2), which expressly mentions emissions of CO, volatile organic compounds, and NOfnx.
The Agency based its standards on the expected application of two "advanced" technologies to snowmobiles: direct injection two-stroke engines and four-stroke engines. EPA estimated that compliance with the final phase of its standards - effective in 2012 - would require the use of these engines in 70% of all new snowmobiles. The Agency found that broader application would not be possible by 2012, because of resource constraints on manufacturers and the magnitude of the investment required to apply the technologies to the wide variety of snowmobile models on the market.
Petitioner International Snowmobile Manufacturers Association ("ISMA") challenges EPA's authority to promulgate the standards. ISMA argues that EPA lacks authority to issue the CO standard, because the Agency's finding that snowmobiles contribute to CO pollution in more than one area that has failed to attain the NAAQS is based on an impermissible interpretation of the statute and is arbitrary and capricious. ISMA claims, in addition, that the statute bars EPA from regulating HC and NOfnx emissions under § 213(a)(4), because those emissions are "referred to" in § 213(a)(2).
Petitioners Bluewater Network and Environmental Defense (collectively "Bluewater") challenge what they consider to be the excessive leniency of the standards. Bluewater's principal claim is that EPA's determination that advanced technologies cannot be applied to all new snowmobiles by 2012 is premised on an impermissible interpretation of the statute and is arbitrary and capricious. Bluewater also raises a host of other challenges to the regulation, including the claim that EPA improperly refused to base its standards on the application of catalyst technology.
We grant in part and deny in part each of the two petitions for review. First, we hold that EPA acted within its statutory authority in promulgating the CO and HC standards under § 213(a)(3) and (a)(4), respectively. Accordingly, we reject ISMA's challenges to those standards. However, we agree with ISMA that EPA lacks authority to regulate NOfnx emissions under § 213(a)(4), because such emissions are "referred to" in § 213(a)(2). We therefore vacate the NOfnx standard.
In response to Bluewater's petition, we remand the CO and HC standards for EPA to clarify the analysis and evidence upon which the standards are based. Specifically, we direct EPA to clarify (1) the statutory and evidentiary basis of the Agency's assumption that the standards must be sufficiently lenient to permit the continued production of all existing snowmobile models, and (2) the analysis and evidence underlying the Agency's conclusion that advanced technologies can be applied to no more than 70% of new snowmobiles by 2012. We reject Bluewater's remaining claims.
The snowmobile industry is relatively concentrated, with four manufacturers producing 99% of all snowmobiles, or "sleds," sold in the United States. These manufacturers offer various types of sleds designed for different applications - including high-performance trail riding, high-performance offtrail riding, mountain riding, touring, and entry-level riding - with multiple engine models available for each type. As a result, most of the major manufacturers offer 30 to 50 different engine-snowmobile model combinations. Highperformance models, with very high power-to-weight ratios, dominate current sales. See 67 Fed. Reg. at 68,273.
The vast majority of snowmobiles now on the market use carbureted two-stroke engines. In comparison with fourstroke engines, carbureted two-stroke engines generally are simpler in design and have lower manufacturing costs. They also burn an air-fuel mixture that is comparatively rich in fuel. This makes them less fuel-efficient than four-stroke engines, but gives them a higher power-to-weight ratio, allows them to start more easily in cold weather, and permits them to run at cooler temperatures (which reduces engine wear) - all important advantages for snowmobiles. See 65 Fed. Reg. 76,797, 76,803-04 (Dec. 7, 2000) (advance notice of proposed rulemaking).
Because of their design characteristics, carbureted twostroke engines emit comparatively high levels of CO and HC, see id., both of which can contribute to harmful air pollution. Elevated CO levels can cause a number of health problems associated with reduced delivery of oxygen to the body's tissues, including impairment of visual perception, work capacity, manual dexterity, learning ability, and performance of complex tasks. 67 Fed. Reg. at 68,245. HC emissions can, inter alia, cause visibility impairment (or "haze") due to fine particulate matter ("PM") pollution; specifically, HC emissions contain fine PM and can also contribute to the formation of "secondary" fine PM in the atmosphere. Id. at 68,254.
Like virtually all internal combustion engines, snowmobile engines emit volatile organic compounds ("VOCs") - most of which are hydrocarbons - and NOfnx. VOCs and NOfnx are the primary precursors of ground-level ozone, which can cause a number of severe respiratory problems. 65 Fed. Reg. at 76,798. Ground-level ozone is formed through a complex chemical reaction of VOCs and NOfnx in the atmosphere. Because this reaction occurs only in the presence of heat and sunlight, elevated ground-level ozone concentrations are primarily a warm-weather phenomenon. See id.
Recognizing the significant and growing role of unregulated emissions from "nonroad" engines in causing air pollution, Congress enacted § 213 of the Clean Air Act as part of the 1990 amendments to the Act. See Pub. L. No. 101-549, § 222, 104 Stat. 2399, 2500-02 (1990) (codified at 42 U.S.C. § 7547); see also S. REP. No. 101-228, at 103-04 (1989) (discussing the policy rationale for regulating nonroad engine emissions). Section 213 authorizes EPA to set emissions standards for "nonroad engines and vehicles," a broad grouping including farm and construction equipment, lawn and garden equipment, airport service equipment, marine engines, and recreational vehicles such as off-road motorcycles, allterrain vehicles, and snowmobiles.
Under § 213's multi-step scheme, EPA must first complete a study to determine whether emissions from nonroad engines "cause, or significantly contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. § 7547(a)(1). Based on the results of this study, EPA must then determine whether emissions of CO, NOfnx, and VOCs from new and existing nonroad vehicles or engines collectively are "significant contributors to ozone or carbon monoxide concentrations in more than 1 area which has failed to attain the national ambient air quality standards [NAAQS] for ozone or carbon monoxide." 42 U.S.C. § 7547(a)(2). (For convenience, we refer to areas which have failed to attain the NAAQS as "nonattainment areas.")
If EPA makes a finding of significant contribution for nonroad engines under § 213(a)(2), the Agency is required under § 213(a)(3) to promulgate standards for those individual "classes or categories" of new nonroad engines whose emissions, in EPA's judgment, "cause, or contribute to" CO or ozone concentrations in more than one CO or ozone nonattainment area. 42 U.S.C. § 7547(a)(3). These standards must
achieve the greatest degree of emission reduction achievable through the application of technology which [EPA] determines will be available ..., 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.
Id. In setting these standards, EPA is directed to "first consider standards equivalent in stringency to standards for comparable [onroad] motor vehicles or engines (if any)" regulated under § 202 of the Act. Id.
Section 213(a)(4) provides EPA with an alternative basis of regulatory authority. Under this provision, if EPA determines that nonroad engine emissions "not referred to" in § 213(a)(2) "significantly contribute to air pollution which may reasonably be anticipated to endanger public health or welfare," EPA may promulgate emissions standards it "deems appropriate" for individual categories or classes of nonroad engines that EPA determines "cause, or contribute to, such air pollution." 42 U.S.C. § 7547(a)(4). These standards likewise must be based on technology that EPA determines will be available, giving appropriate consideration to cost, noise, energy, and safety factors. Id.
In November 1991, EPA completed the "Nonroad Engine and Vehicle Emission Study" called for in § 213(a)(1). Based on this study, EPA made a final determination pursuant to § 213(a)(2) that emissions from nonroad engines significantly contribute to CO and ozone concentrations in more than one nonattainment area. 59 Fed. Reg. 31,306, 31,307 (June 17, 1994). EPA further found, under § 213(a)(4), that PM emissions from nonroad engines significantly contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. See id. at 31,318.
On December 7, 2000, EPA issued a final finding under § 213(a)(3) that emissions from the category of large sparkignition ("large-SI") engines and the lesser included category of land-based recreational vehicles (which includes snowmobiles, off-road motorcycles, and all-terrain vehicles) each contribute to ozone and CO concentrations in more than one nonattainment area. 65 Fed. Reg. 76,790, 76,791 (Dec. 7, 2000). EPA also found, pursuant to § 213(a)(4), that the large-SI and land-based recreational vehicle categories each contribute to PM air pollution that may reasonably be anticipated to endanger the public health or welfare. Id. EPA indicated that it would consider further whether it should regulate snowmobile emissions of ozone precursors, because ozone is less of a concern during cold weather, when snowmobiles are used. Id.
On November 8, 2002, EPA promulgated a final rule establishing emissions standards for large-SI engines and land-based recreational engines, including snowmobiles. 67 Fed. Reg. 68,242 (Nov. 8, 2002) ("Final Rule"). Only the snowmobile exhaust emissions standards are at issue in this case. The Final Rule established a CO emissions standard for snowmobiles pursuant to § 213(a)(3). In discussing the need for this standard, EPA referred to its December 2000 finding that the land-based recreational vehicle category - in which snowmobiles are included - contributes to CO concentrations in more than one CO nonattainment area. Id. at 68,248. EPA further found that, even when considered separately from other land-based recreational vehicles, snowmobiles contribute to such pollution. Id. at 68,248-49. The Agency determined that regulation of snowmobile emissions of ozone precursors under § 213(a)(3) was inappropriate, because snowmobiles are operated in cold weather and are therefore unlikely to contribute to ozone pollution. See Summary and Analysis of Comments ("SAC") at II-24, V-31, reprinted in Joint Appendix ("J.A.") 92, 110; see also 66 Fed. Reg. 51,098, 51,154 (Oct. 5, 2001) (notice of proposed rulemaking).
EPA promulgated HC and NOfnx emissions standards under § 213(a)(4). The Agency found that snowmobile emissions contribute significantly to haze in a number of relatively pristine protected areas, known under the CAA as "Class I" areas, including at least eight national parks. 67 Fed. Reg. at 68,252-54. This phenomenon is the result of increased ambient concentrations of fine PM. Id. EPA offered two grounds for regulating snowmobile HC emissions as a means of controlling fine PM pollution. First, HC emissions themselves contain fine PM and contribute to the formation of secondary fine PM in the atmosphere. Id. at 68,254. Second, EPA determined that HC emissions provide a good proxy for regulating fine PM emissions from snowmobiles, because the technologies for reducing HC emissions also reduce PM emissions and direct regulation of PM is more difficult. Id. Although the rule is unclear on this point, EPA appeared to base its authority to regulate NOfnx emissions under § 213(a)(4) on its finding that NOfnx contributes to the formation of secondary PM. See id. at 68,254 n.30, 68,255.
EPA based its emissions standards on two "advanced" technologies that it determined would be available for snowmobiles in the foreseeable future: (1) direct injection ("DI") two-stroke engines, which replace air-fuel carburetion with direct injection of fuel into the cylinder, and (2) four-stroke engines. Id. at 68,272. The Agency predicted that DI twostroke engines could reduce HC emissions by 70-75% and CO emissions by 50-70%. Four-stroke engines could reduce HC emissions by 70-95%, and could reduce CO emissions by 50- 80% for low-power applications and 20-50% for high-power applications. Id. EPA did not view either technology as obviously superior. DI two-stroke engines would likely produce lower CO emissions than comparably powered fourstroke engines, but four-stroke engines would yield greater reductions in HC emissions. Four-stroke engines would likely produce more pure power, whereas DI two-stroke technology might be preferable for applications requiring a powerful, but lighter and more compact, engine. Id.
In setting emissions standards, EPA framed the regulatory question as "how broadly [these] technolog[ies] can be practically applied across the snowmobile fleet in the near term, taking into account factors such as the number of engine and snowmobile models currently available, and the capacity of the industry to perform the research and development efforts required to optimally apply advanced technology to each of these models." Id. at 68,273. EPA concluded that, "at least in theory," there was no purely technological barrier to the application of these technologies to all new snowmobiles by 2012. Id. However, the Agency identified a number of factors that would limit the speed with which such technologies could be applied to all snowmobiles models, including resource constraints on manufacturers, the fact that not all manufacturers produce their engines in-house, and the design and development work required to optimize advanced technologies for each model. Id.
Taking these factors into account, the final rule requires that snowmobile engines meet successively more stringent emissions standards in three phases. In Phase 1, manufacturers would be required to reduce CO and HC emissions by 30% relative to current baseline emissions. Half of all snowmobile sales would have to meet the Phase 1 standards by model year 2006, and all would have to meet them by model year 2007. EPA estimated that compliance with the Phase 1 standards would require application of advanced technologies to approximately 10% of new snowmobiles, with cleaner carburetion and other technologies applied to the remainder. Id. at 68,271.
In Phase 2, effective for the 2010 model year, manufacturers would be required to achieve a 50% reduction in HC emissions relative to baseline and a 30% reduction in CO emissions relative to baseline. Id. at 68,273. In Phase 3, effective for the 2012 model year, manufacturers must achieve a nominal 50% reduction relative to baseline for both CO and HC. This standard requires percentage reductions in CO and HC that together add up to 100%, e.g., 60% for HC and 40% for CO. However, emissions for each pollutant may not exceed the level permitted under the Phase 2 standards. Id. at 68,274. EPA predicted that the Phase 2 and 3 standards would require application of advanced technologies to 50% and 70% of new snowmobiles, respectively, with less advanced technologies applied to the remainder. Id. at 68,271, 68,273. The Phase 3 standards also require engines to meet a NOfnx standard (actually a HC v NOfnx standard), which caps NOfnx emissions at or near existing levels. Id. at 68,274.
The three-phase scheme is summarized in the following table:
EPA noted that it believed that it would be feasible at some point after 2012 to apply advanced technologies to all new snowmobiles and that catalysts or other exhaust aftertreatment devices might become available at some future time. The Agency stated that it had considered setting a standard reflecting application of advanced technologies to 100% of new snowmobiles, but did not believe that this was feasible by 2012. EPA indicated that in the future it would consider promulgating more stringent standards to be applied in a fourth phase. The Agency declined ...