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Natural Resources Defense Council v. Environmental Protection Agency

United States Court of Appeals, District of Columbia Circuit

April 18, 2014

NATURAL RESOURCES DEFENSE COUNCIL, PETITIONER
v.
ENVIRONMENTAL PROTECTION AGENCY AND GINA MCCARTHY, IN HER OFFICIAL CAPACITY AS ADMINISTRATOR, U.S. ENVIRONMENTAL PROTECTION AGENCY, RESPONDENTS; CEMEX, INC., ET AL., INTERVENORS

Argued October 24, 2013

On Petitions for Review of Final Actions of the United States Environmental Protection Agency.

James S. Pew and Seth L. Johnson argued the causes for petitioners. With them on the briefs were John Walke, Meleah Geertsma, and Avinash Kar.

Matthew R. Oakes, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the brief were Robert G. Dreher, Acting Assistant Attorney General, and Steven E. Silverman, Attorney, U.S. Environmental Protection Agency. Daniel R. Dertke and T. Monique Peoples, Attorneys, U.S. Department of Justice, entered appearances.

Carter G. Phillips argued the cause for intervenors. With him on the briefs were Roger R. Martella Jr., Timothy K. Webster, Ryan C. Morris, William M. Bumpers, Debra J. Jezouit, Michael B. Schon, Deborah E. Jennings, Chet M. Thompson, Beth S. Ginsberg, Jason T. Morgan, Ashley C. Parrish, Cynthia A.M. Stroman, and Richard G. Stoll.

Russell S. Frye and Richard G. Stoll were on the brief for amici curiae SSM Coalition, et al. in support of respondents.

Before: KAVANAUGH and SRINIVASAN, Circuit Judges, and EDWARDS, Senior Circuit Judge. Opinion for the Court filed by Circuit Judge KAVANAUGH.

OPINION

Page 1056

Kavanaugh, Circuit Judge

Portland cement is the key ingredient in concrete. The basic process for making Portland cement is much the same today as it was when the material was first developed nearly 200 years ago. Cement manufacturers pulverize limestone and minerals, and then heat those raw materials to several thousand degrees. The resulting substance, called clinker, is then cooled and ground into a fine gray powder. This powder -- called Portland cement -- is later combined with sand, rocks, and water to make concrete.

The grinding and heating involved in cement manufacturing has an unfortunate side effect: It releases into the air a number of hazardous air pollutants, most notably mercury, hydrochloric acid, hydrocarbons, and particulate matter. This case concerns EPA's efforts to develop rules under the Clean Air Act to limit emissions of those pollutants from cement plants.

Page 1057

In a previous decision, we considered EPA's first attempt to create emission standards for the cement industry, and we found the agency's action arbitrary and capricious. See Portland Cement Association v. EPA, 665 F.3d 177, 398 U.S.App. D.C. 397 (D.C. Cir. 2011). Following our ruling, EPA went back to the drawing board and developed the emission standards at issue here, the 2013 Rule.

Several environmental organizations, including the Natural Resources Defense Council and the Sierra Club, have petitioned for review of the 2013 Rule, arguing primarily that certain aspects of the Rule contravene the Clean Air Act. They also challenge EPA's decision to create an affirmative defense for private civil suits in which plaintiffs sue sources of pollution and seek penalties for violations of emission standards. EPA's affirmative defense would be available to defendants in cases where an " unavoidable" malfunction had resulted in impermissible levels of emissions.

We conclude that the emissions-related provisions of EPA's 2013 Rule are permissible but that the affirmative defense for private civil suits exceeds EPA's statutory authority. We therefore grant the petitions in part and vacate the portion of the Rule pertaining to the affirmative defense. We deny the petitions in all other respects.

I

Section 112 of the Clean Air Act, 42 U.S.C. § 7412, requires EPA to establish technology-based emission standards for major sources of certain hazardous air pollutants. Emission standards must reflect " the maximum degree of reduction in emissions" that EPA determines is " achievable," taking into consideration " the cost of achieving such emission reduction, and any non-air quality health and environmental impacts and energy requirements." 42 U.S.C. § 7412(d)(2). The resulting standards are commonly known as the " maximum achievable control technology," or " MACT" standards. See National Lime Association v. EPA, 233 F.3d 625, 630, 344 U.S.App. D.C. 97 (D.C. Cir. 2000).

EPA uses a two-step process for establishing MACT standards. The agency begins by setting a minimum stringency level, or " floor," based on the results achieved by the best-performing similar sources. See 42 U.S.C. § 7412(d)(3). Once EPA sets the statutory floor, it then determines, considering cost and the other factors listed in Section 112(d)(2), whether a more restrictive standard is " achievable," and if so then adopts that standard. EPA calls these stricter requirements " beyond-the-floor" standards. Sierra Club v. EPA, 479 F.3d 875, 877, 375 U.S.App. D.C. 228 (D.C. Cir. 2007).

When EPA sets an emission standard, it also determines a schedule for compliance with that standard. For existing sources, EPA must " provide for compliance as expeditiously as practicable, but in no event later than 3 years after the effective date" of the emission standard. 42 U.S.C. § 7412(i)(3)(A).

In 2010, pursuant to its Section 112 authority, EPA promulgated National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry and Standards of Performance for Portland Cement Plants, 75 Fed. Reg. 54,970 (Sept. 9, 2010). That 2010 Rule set or revised emissions limits for mercury, hydrogen chloride, total hydrocarbons (a surrogate for organic hazardous air pollutants such as benzene and formaldehyde), and particulate matter (a surrogate for certain non-mercury metals). Cement plants would be required to comply with the new standards beginning in September 2013. 75 Fed. Reg. at 54,993.

Page 1058

In addition to establishing emission standards, the 2010 Rule created an affirmative defense in private civil suits when violations of the standards occurred because of " unavoidable" malfunctions. See id. at 54,993, 55,053. The affirmative defense replaced a previous EPA policy creating an exemption from emissions limitations during malfunction events. In a prior decision, this Court struck down that exemption because it was inconsistent with the requirement that emission standards apply continuously. See Sierra Club v. EPA, 551 F.3d 1019, 1027-28, 384 U.S.App. D.C. 96 (D.C. Cir. 2008).

Industry groups petitioned this Court for review and we found the 2010 Rule arbitrary and capricious and remanded to EPA. We ruled specifically that, in calculating the floor for MACT purposes, EPA had arbitrarily included in its dataset information from cement kilns properly classified as commercial incinerators, which are regulated under a separate provision of the Act. See Portland Cement Association v. EPA, 665 F.3d 177, 186-89, 398 U.S.App. D.C. 397 (D.C. Cir. 2011).

In our 2011 decision, however, we did not vacate the emission standards set forth in the 2010 Rule or stay its implementation pending EPA's reconsideration process, stating that " it is unlikely that significant changes will be made ...


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