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ENGINE MANUFACTURERS ASSOCIATION v. U.S. ENVIRONMENTAL PROTECTION AGENCY AND CAROL M. BROWNER </h1> <p class="docCourt"> </p> <p> July 12, 1996 </p> <p class="case-parties"> <b>ENGINE MANUFACTURERS ASSOCIATION, ON BEHALF OF CERTAIN OF ITS MEMBERS, PETITIONER<br><br>v.<br><br>U.S. ENVIRONMENTAL PROTECTION AGENCY AND CAROL M. BROWNER, ADMINISTRATOR, U.S. ENVIRONMENTAL PROTECTION AGENCY, RESPONDENTS HERTZ EQUIPMENT RENTAL CORPORATION AND INGERSOLL-RAND, INTERVENORS</b><br><br> </p> <div class="caseCopy"> <div class="facLeaderBoard"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACLeaderBoard */ google_ad_slot = "8524463142"; google_ad_width = 728; google_ad_height = 90; //--> </script> <script type="text/javascript" src=""> </script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p><br> Before: Ginsburg, Rogers and Tatel, Circuit Judges.</p></div> <div class="numbered-paragraph"><p> Rogers, Circuit Judge</p></div> <div class="numbered-paragraph"><p> FOR PUBLICATION</p></div> <div class="numbered-paragraph"><p> FOR THE DISTRICT OF COLUMBIA CIRCUIT</p></div> <div class="numbered-paragraph"><p> Argued December 5, 1995</p></div> <div class="numbered-paragraph"><p> Consolidated with 94-1559, 94-1560, 94-1561, 94-1564, 94-1566, 94-1567, 94-1568, 94-1569</p></div> <div class="numbered-paragraph"><p> On Petitions for Review of Orders of the Environmental Protection Agency</p></div> <div class="numbered-paragraph"><p> Opinion for the Court filed by Circuit Judge Rogers.</p></div> <div class="numbered-paragraph"><p> Opinion concurring in part and dissenting in part filed by Circuit Judge Tatel.</p></div> <div class="facAdFloatLeft"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACContentLeftSkyscraperWide */ google_ad_slot = "1266897617"; google_ad_width = 160; google_ad_height = 600; //--> </script> <script type="text/javascript" src=""></script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p> Two different sets of consolidated petitions challenge two final rules on emissions from nonroad engines and vehicles adopted by the Environmental Protection Agency ("EPA") to implement sections 209(e) and 213 of the Clean Air Act, 42 U.S.C. Section(s) 7401-7671q (1994) ("CAA"), as revised by the amendments of 1990, Pub. L. No. 101-549, 104 Stat. 2399. Nonroad engines are internal combustion engines that are used in a wide variety of off-highway equipment including lawnmowers, bulldozers, and locomotives. In the first set of petitions, the Engine Manufacturers Association and others ("EMA") challenge the EPA's determination of the scope of preemption of state regulation under Section(s) 209(e). In the second set of petitions, the National Mining Association and others ("NMA") challenge the EPA's decision to regulate very large (greater than 750 horsepower) engines used in mining equipment, as well as the EPA's decision to regulate smoke, hydrocarbon, carbon monoxide, and particulate matter emissions, under Section(s) 213. Finding the EPA's interpretations of Section(s) 209(e) to be permissible with one exception, we grant the EMA petitions only in part. Concluding that the EPA's regulatory actions under Section(s) 213 were within its discretion and not arbitrary or capricious, we deny the NMA petitions.</p></div> <div class="numbered-paragraph"><p> I. The Clean Air Act Statutory Scheme.</p></div> <div class="numbered-paragraph"><p> The CAA makes "the States and the Federal Government partners in the struggle against air pollution." General Motors Corp. v. United States, <a>496 U.S. 530</a>, 532 (1990). The basic structure of this partnership has not changed since it was established by the Air Quality Act of 1967, Pub. L. No. 90-148, 81 Stat. 485 ("1967 Act"), and the Clean Air Amendments of 1970, Pub. L. No. 91-604, 84 Stat. 1676 ("1970 amendments"). See generally American Petrol. Inst. v. Costle, 665 F.2d 1176 (D.C. Cir. 1981), cert. denied, <a>455 U.S. 1034</a> (1982). The 1967 Act required the states to set ambient air quality standards for each air quality control region, establishing permissible levels of concentration for various pollutants. <a href="#D*fn1" name="S*fn1">*fn1</a> Congress also directed the states to adopt implementation plans explaining how they would improve the air quality to meet the standards they had established. <a href="#D*fn2" name="S*fn2">*fn2</a> The 1970 amendments transferred authority to set the standards, now known as national ambient air quality standards (NAAQSs), from the states to the EPA. <a href="#D*fn3" name="S*fn3">*fn3</a> The states were to submit state implementation plans (SIPs) for achieving the NAAQSs to the EPA for approval. <a href="#D*fn4" name="S*fn4">*fn4</a> Thus, the states had the "primary responsibility" for improving air quality, <a href="#D*fn5" name="S*fn5">*fn5</a> although the EPA significantly influenced the process by setting the NAAQSs and testing proposed SIPs against detailed statutory criteria.</p></div> <div class="numbered-paragraph"><p> The CAA contemplated that the states would carry out their responsibility chiefly by regulating stationary sources, such as factories and power plants. Both before and after the 1977 amendments, Pub. L. No. 95-95, 91 Stat. 685, many of the statutory requirements for SIPs related to the regulation of stationary sources. <a href="#D*fn6" name="S*fn6">*fn6</a> Penalties for failing to attain air quality standards also focused on stationary sources, for example by restricting construction of new stationary sources in areas that failed to meet a NAAQS. <a href="#D*fn7" name="S*fn7">*fn7</a> When Congress considered the 1990 amendments, it did so against a history of detailed state regulation of stationary sources, backed up by the threat of curtailed construction of these economically important installations. In contrast to federally encouraged state control over stationary sources, regulation of motor vehicle emissions had been a principally federal project. See generally Motor Vehicle Mfg. Ass'n v. New York State Dep't of Envtl. Conserv., <a>17 F.3d 521</a>, 524-27 (2d Cir. 1994) ("MVMA"); Motor & Equip. Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 1095, 1101-03, 1108-11 (D.C. Cir. 1979) ("MEMA"), cert. denied, <a>446 U.S. 952</a> (1980). The regulatory difference is explained in part by the difficulty of subjecting motor vehicles, which readily move across state boundaries, to control by individual states. Congress had another reason for asserting federal control in this area: the possibility of 50 different state regulatory regimes "raised the spectre of an anarchic patchwork of federal and state regulatory programs, a prospect which threatened to create nightmares for the manufacturers." MEMA, 627 F.2d at 1109. Two years after authorizing federal emissions regulations, therefore, Congress preempted the states from adopting their own emissions standards. <a href="#D*fn8" name="S*fn8">*fn8</a> The Second Circuit has referred to this preemption as "the cornerstone" of Title II, the portion of the CAA that governs mobile pollution sources. MVMA, 17 F.3d at 526.</p></div> <div class="numbered-paragraph"><p> In spite of Congress' determination to protect manufacturers from multiple emissions standards, see MEMA, 627 F.2d at 1109 (citing S. Rep. No. 403, 90th Cong., 1st Sess. 33 (1967)), California was granted an exemption from the Section(s) 209(a) preemption. <a href="#D*fn9" name="S*fn9">*fn9</a> Congress recognized that California was already the "lead[er] in the establishment of standards for regulation of automotive pollutant emissions" at a time when the federal government had yet to promulgate any regulations of its own. MEMA, 627 F.2d at 1109 n.26 (quoting S. Rep. No. 192, 89th Cong., 1st Sess. 5 (1965)). California's Senator Murphy convinced his colleagues that the entire country would benefit from his state's continuing its pioneering efforts, California serving as "a kind of laboratory for innovation." Id. at 1109, 1110 n.31, 1111. This function was enhanced by the 1977 amendments, which permitted other states to "opt in" to the California standards by adopting identical standards as their own. <a href="#D*fn10" name="S*fn10">*fn10</a> Thus, motor vehicles must be either "federal cars" designed to meet the EPA's standards or "California cars" designed to meet California's standards. MVMA, 17 F.3d at 526-27. Rather than being faced with 51 different standards, as they had feared, or with only one, as they had sought, manufacturers must cope with two regulatory standards under the legislative compromise embodied in Section(s) 209(a).</p></div> <div class="numbered-paragraph"><p> The pre-1990 CAA, then, extensively treated both stationary sources, which were principally a state responsibility, and motor vehicles, which were principally the shared responsibility of the EPA and California. Nonroad sources were not expressly mentioned, although it appears that some large states had started to regulate a few nonroad sources in their attempts to meet the NAAQSs. <a href="#D*fn11" name="S*fn11">*fn11</a> It was not until the 1990 amendments that Congress chose to define and regulate nonroad sources, and it is the EPA's interpretation and application of those amendments that are challenged here.</p></div> <div class="numbered-paragraph"><p> The several phrases on whose construction these petitions turn are but tiny pieces of the 1990 amendments, a legislative feat whose massiveness and complexity "beggar[] description." MVMA, 17 F.3d at 525. Congress did not, however, alter the basic structures of Titles I and II, governing the federal-state partnership over attainment of the NAAQSs and control of motor vehicle emissions, respectively. Title I continues to focus both state regulatory efforts and disincentives to nonattainment on stationary sources. <a href="#D*fn12" name="S*fn12">*fn12</a> The new permitting regime of Title V <a href="#D*fn13" name="S*fn13">*fn13</a> and the acid rain provisions of Title IV <a href="#D*fn14" name="S*fn14">*fn14</a> also direct the states' attention to their traditional regulation of stationary sources. Although the amendments require a clean fuel vehicles program in serious, severe and extreme nonattainment areas, <a href="#D*fn15" name="S*fn15">*fn15</a> the thrust of state compliance efforts continues to be on stationary sources.</p></div> <div class="numbered-paragraph"><p> The mobile source provisions of Title II also continue the basic pre-1990 regime, with the amendments adding detail and refinements. See William H. Rodgers, Jr., Environmental Law: Air and Water Section(s) 3.1D (Supp. 1995). For the first time, however, Congress extended federal regulation under Title II to nonroad pollution sources. The amendments altered the definitional section of Title II, adding definitions of "nonroad engine" <a href="#D*fn16" name="S*fn16">*fn16</a> and "nonroad vehicle" <a href="#D*fn17" name="S*fn17">*fn17</a> and changing the definition of "manufacturer" to include the manufacturing or assembling of new nonroad vehicles or new nonroad engines. <a href="#D*fn18" name="S*fn18">*fn18</a> Under Section(s) 213, the EPA was required to study emissions from nonroad sources <a href="#D*fn19" name="S*fn19">*fn19</a> and, if statutory triggers were met, to promulgate standards for the emission of various pollutants from new nonroad sources. <a href="#D*fn20" name="S*fn20">*fn20</a> As it had done with respect to motor vehicles, Congress not only authorized the EPA to regulate nonroad sources but also preempted state regulation. The 1990 amendments added Section(s) 209(e)(1), which expressly preempted the states from adopting standards or other requirements relating to emissions from two specific categories of nonroad sources. <a href="#D*fn21" name="S*fn21">*fn21</a> "In the case of any nonroad vehicles or engines other than those referred to in" 209(e)(1), the EPA was required in Section(s) 209(e)(2) to authorize California to adopt standards and other requirements relating to emissions, under similar conditions to those governing the motor vehicle preemption waiver; again, as with the motor vehicle preemption waiver, other states could then opt in to the California standards. <a href="#D*fn22" name="S*fn22">*fn22</a></p></div> <div class="numbered-paragraph"><p> II.</p></div> <div class="numbered-paragraph"><p> EMA challenges three aspects of the EPA's Section(s) 209(e) rulemaking: (1) the adoption of a "showroom-new" definition of "new" under Section(s) 209(e)(1), rather than a date-certain definition; (2) the interpretation of 209(e)(2) to preempt state regulation of only "new" nonroad engines and vehicles, rather than to preempt state regulation of all nonroad engines and vehicles, "new" and non-"new," not covered in Section(s) 209(e)(1); and (3) the interpretation of Section(s) 209(e)'s ban on state "standards and other requirements" not to reach the states' so-called "in-use" regulations.</p></div> <div class="numbered-paragraph"><p> A. Background of the EMA petitions.</p></div> <div class="caseAdCopy"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* Fac2Copy2 */ google_ad_slot = "0998899327"; google_ad_width = 300; google_ad_height = 250; //--> </script> <script type="text/javascript" src=""> </script> </div> <div class="numbered-paragraph"><p> In its notice of proposed rule making for Section(s) 209(e), the EPA proposed to define "new" consistently with the statutory definition of "new motor vehicle" in Section(s) 216 of the CAA. <a href="#D*fn23" name="S*fn23">*fn23</a> Therefore, the preemption of Section(s) 209(e)(1) would be limited to vehicles and engines for which the legal or equitable title had never been transferred to the ultimate purchaser. <a href="#D*fn24" name="S*fn24">*fn24</a> This definition was retained in the final rule, with an amendment to cover leased vehicles and engines. <a href="#D*fn25" name="S*fn25">*fn25</a> The final rule also limited the Section(s) 209(e)(2) implied preemption to "new" sources. <a href="#D*fn26" name="S*fn26">*fn26</a> In this respect, the final rule differed from the notice of proposed rulemaking, which would have preempted state standards over new and non-new sources. Even though the NPRM proposed to extend the implied preemption of Section(s) 209(e)(2) to non-new sources, however, the EPA said that "[f]or engines which are no longer `new,' states will be able to adopt regulations such as fuel quality specifications, operational mode limitations, and measures that limit the use of nonroad engines or equipment." <a href="#D*fn27" name="S*fn27">*fn27</a> This is the genesis of the dispute over "in-use" regulations. The final rule, which limited preemption to new sources, necessarily continued to permit in-use regulations, which by definition apply only to non-new sources.</p></div> <div class="numbered-paragraph"><p> Following publication of the NPRM, EMA and other commenters argued unsuccessfully that "new" should mean either that the engine or vehicle was manufactured after the effective date of the 1990 amendments, or that the engine had yet to be rebuilt. EMA claimed that Allway Taxi Inc. v. City of New York, 340 F. Supp. 1120 (S.D.N.Y.) (interpreting 209(a) motor vehicle preemption), aff'd, <a>468 F.2d 624</a> (2d Cir. 1972), showed that the states could not regulate new motor vehicles the moment after they were purchased-even though the statute explicitly limited the preemption to showroom-new motor vehicles. Rather, state emissions controls must be sufficiently delayed from the original sale that the burden of compliance would not fall on the manufacturer:</p></div> <div class="numbered-paragraph"><p> We do not say that a state or locality is free to impose its own emission control standards the moment after a new car is bought and registered. That would be an obvious circumvention of the Clean Air Act and would defeat the congressional purpose of preventing obstruction to interstate commerce. The preemption sections, however, do not preclude a state or locality from imposing its own exhaust emission control standards upon the resale or reregistration of the automobile. Nor do they preclude a locality from setting its own standards for the licensing of vehicles for commercial use within that locality. Such regulations would cause only minimal interference with interstate commerce, since they would be directed primarily to intrastate activities and the burden of compliance would be on individual owners and not on manufacturers or distributors.</p></div> <div class="numbered-paragraph"><p> Id. at 1124. Therefore, EMA commented, even if the EPA wanted to create a parallel regime for nonroad engines and vehicles, it should not adopt a definition of "new" that ended preemption at the moment of title transfer. The EPA noted these concerns, which of course would apply equally to the statutory definition of "new motor vehicle," and stated in the final rule that it expected courts to apply Allway Taxi's reasoning to the EPA's definition of "new nonroad engine." <a href="#D*fn28" name="S*fn28">*fn28</a></p></div> <div class="numbered-paragraph"><p> B. The EMA Petitions.</p></div> <div class="numbered-paragraph"><p> Before addressing the merits of the EMA petitions, we must first dispose of two procedural issues raised by the parties. First, EMA asks us to vacate the portion of the final rule limiting the implied preemption of Section(s) 209(e)(2) to new nonroad sources since the NPRM did not propose such a limitation. However, the court has long recognized that a final rule that is a "logical outgrowth" from the notice of proposed rulemaking does not violate the notice requirement of the Administrative Procedure Act, 5 U.S.C. Section(s) 553(b) (1994). <a href="#D*fn29" name="S*fn29">*fn29</a> See, e.g., Connecticut Light and Power Co. v. Nuclear Reg. Comm'n, 673 F.2d 525, 533 (D.C. Cir.), cert. denied, <a>459 U.S. 835</a> (1982), and cases cited; see also Methodist Hosp. of Sacramento v. Shalala, 38 F.3d 1225, 1237-38 (D.C. Cir. 1994). Here, the notice of proposed rulemaking announced that the preemption under Section(s) 209(e) was at issue. 56 Fed. Reg. at 45,866. It also announced that the EPA proposed to construe Section(s) 209(e) parallel to Section(s) 209(b) (motor vehicles). Id. at 45,869. This sufficed to imply an intention to treat the scope of preemption similarly. Under these circumstances, there is no basis for vacating this part of the rule.</p></div> <div class="numbered-paragraph"><p> The EPA, in contrast, requests that we dismiss EMA's challenge to the EPA's decision to permit states to adopt in-use regulations. The NPRM contained a sentence, quoted above, in which the EPA proposed to permit states to adopt such regulations in spite of the Section(s) 209(e)(2) preemption. None of the EMA petitioners challenged this proposal during the notice and comment period. The EPA argues that EMA is therefore precluded from challenging the in-use aspect of the final rule. Congressmen Dingell and Bruce, however, did challenge the proposal in a letter to the Administrator:</p></div> <div class="numbered-paragraph"><p> The fact that title is transferred to the ultimate purchaser and the vehicle or engine is "in use" or used does not suddenly give the States a power to impose standards or requirements relating to emission controls because of that transfer.... If such items as "fuel quality specifications, operational mode limitations, and measures that limit the use of nonroad engines or equipment" are in reality standards or requirements controlling emissions, they are not allowed any more than they were before title passed.</p></div> <div class="numbered-paragraph"><p> In the final rule, while not referring to the Congressmen's criticism on this point, the EPA discussed at length why it believed Section(s) 209(e)(2) did not preempt in-use regulations. <a href="#D*fn30" name="S*fn30">*fn30</a></p></div> <div class="numbered-paragraph"><p> As noted previously, the Section(s) 209(e) rulemaking is not governed by the special standards of Section(s) 307(d) of the CAA. Under the common law doctrine of exhaustion of remedies, EMA may raise the issue here, even if it did not raise it during the rulemaking itself, so long as the agency actually considered the issue. NRDC v. EPA, 824 F.2d 1146, 1150-52 (D.C. Cir. 1987) (in banc). Cf. ASARCO, Inc. v. FERC, 777 F.2d 764, 773-74 (D.C. Cir. 1985) (Natural Gas Act). Because the Congressmen directly challenged the agency on the very point that EMA raises in its petition for review, and the EPA defended its position at some length in the final rule, EMA is not barred from arguing the issue now. We therefore turn to the merits of the EMA petitions.</p></div> <div class="numbered-paragraph"><p> Our standard of review for both the EMA and the NMA petitions follows a familiar path. The court will uphold the EPA's final rule "[i]f EPA acted within its delegated statutory authority, considered all of the relevant factors, and demonstrated a reasonable connection between the facts on the record and its decision." Ethyl Corp. v. EPA, 51 F.3d 1053, 1064 (D.C. Cir. 1995). <a href="#D*fn31" name="S*fn31">*fn31</a> On issues of statutory interpretation, "[i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, U.S.A., Inc. v. NRDC, Inc., <a>467 U.S. 837</a>, 842-43 (1984). But "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843. Thus, the court need only find "that the EPA's understanding of this very "complex statute' is a sufficiently rational one to preclude a court from substituting its judgment for that of EPA." Chemical Mfrs. Ass'n. v. NRDC, <a>470 U.S. 116</a>, 125 (1985) (Clean Water Act). See also Chevron, 467 U.S. at 848 (1977 CAA amendments are "lengthy, detailed, technical, complex and comprehensive"). Because EMA directs its arguments to Chevron step one, that also is the primary focus of our discussion.</p></div> <div class="numbered-paragraph"><p> 1. The definition of "new."</p></div> <div class="numbered-paragraph"><p> In the absence of a statutory definition, the EPA chose to define "new" in Section(s) 209(e)(1) to mean that the engine or vehicle has not been sold to the ultimate purchaser or put into use. EMA refers to this definition, which closely parallels the definition of "new motor vehicle" in Section(s) 216(3), as a "showroom-new" definition because it defines an engine or vehicle as no longer "new" once it has left the retail showroom. EMA maintains that Congress intended "new" to mean that the engine or vehicle was not in existence on the effective date of the 1990 amendments. Any engine or vehicle manufactured after that date-certain would therefore always be "new," even after it had been put into operation. In sum, the EPA decided that the states could not regulate the categories of equipment defined in Section(s) 209(e)(1) until it had been sold to the ultimate user, regardless of when the equipment was manufactured, while EMA believes Congress intended that the states could not ever regulate any such equipment, either before or after sale, so long as the equipment was manufactured after 1990.</p></div> <div class="numbered-paragraph"> <p> Although EMA presents various reasons why the EPA's definition of "new" should not survive Chevron review, none is convincing. EMA first maintains that Congress' failure to define "new nonroad engine" and "new nonroad vehicle" compels the conclusion that these terms do not have a meaning analogous to "new motor vehicle," and "new motor vehicle engine," which are statutorily defined. Section 209(a) preempts state standards for motor vehicles: "No State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to this part." <a href="#D*fn32" name="S*fn32">*fn32</a> Section 216(3) defines "new motor vehicle" as "a motor vehicle the equitable or legal title to which has never been transferred to an ultimate purchaser" and "new motor vehicle engine" as "an engine in a new motor vehicle or a motor vehicle engine the equitable or legal title to which has never been transferred to the ultimate purchaser." <a href="#D*fn33" name="S*fn33">*fn33</a> In the 1990 amendments, Congress added definitions of "nonroad engine" and "nonroad vehicle" to Section(s) 216, but did not define "new nonroad engine" or "new nonroad vehicle" in a provision analogous to Section(s) 216(3). EMA relies on this omission, contending that if Congress had meant "new nonroad engine" in Section(s) 209(e) to have a parallel definition to "new motor vehicle" in Section(s) 209(a), it would have inserted that definition in ...</p> </div> </div> </div> <div id="caseToolTip" class="caseToolTip" style="display: none;"> <div class="toolTipHead"> </div> <div class="toolTipContent"> <p> Our website includes the first part of the main text of the court's opinion. To read the entire case, you must purchase the decision for download. With purchase, you also receive any available docket numbers, case citations or footnotes, dissents and concurrences that accompany the decision. Docket numbers and/or citations allow you to research a case further or to use a case in a legal proceeding. Footnotes (if any) include details of the court's decision. 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