Tuesday, June 19, 2012

Mack Trucks, Inc. & Volvo Group v. U.S. EPA

Jun 12: In the U.S. Court of Appeals, D.C. Circuit, Case Nos. 12-1077, 12-1078, 12-1099. On Petitions for Review of a Final Rule of the United States Environmental Protection Agency. The Appeals Court explains that in January 2012, U.S. EPA promulgated an interim final rule (IFR) to permit manufacturers of heavy-duty diesel engines to pay nonconformance penalties (NCPs) in exchange for the right to sell noncompliant engines. EPA took the action without providing formal notice or an opportunity for comment, invoking the "good cause" exception provided in the Administrative Procedure Act (APA). The Appeals Court ruled, "Because we find that none of the statutory criteria for 'good cause' are satisfied, we vacate the IFR."
    In 2001, pursuant to Section 202 of the Clean Air Act, EPA enacted a rule requiring a 95 percent reduction in the emissions of nitrogen oxide from heavy-duty diesel engines.By delaying the effective date until 2010, EPA gave industry nine years to innovate the necessary new technologies. Most manufacturers of heavy-duty diesel engines, including Petitioners Mack and Volvo, invested hundreds of millions of dollars to develop a technology called "selective catalytic reduction" which meets the requirements. One manufacturer, Navistar, took a different approach and pursued a technology of "exhaust gas recirculation," which proved less successful and does not meet the requirement.
    In an effort to allow Navistar to continue selling its engines, without formal notice and comment, hurriedly promulgated the IFR on January 31, 2012, pursuant to its authority under 42 U.S.C. § 7525(g), to make NCPs available to Navistar. Petitioners each requested administrative stays of the IFR, protesting that EPA lacked good cause within the meaning of the APA. Petitioners also objected to the substance of the NCP, arguing that EPA misapplied its own regulatory criteria for determining when such a penalty is warranted. Navistar intervened on behalf of EPA, and claimed that Petitioners lacked standing to challenge the IFR.
    In summing up the case, the Appeals Court offered two observations: (1) "NCPs are meant to be a temporary bridge to compliance for manufacturers that have 'made every effort to comply.' United States v. Caterpillar, Inc., 227 F. Supp. 2d 73, 88 (D.D.C. 2002). As EPA itself has explained, NCPs are not designed to bail out manufacturers that voluntarily choose, for whatever reason, not to adopt an existing, compliant technology. . . Based solely on what EPA has offered in the IFR, it at least appears to us that NCPs are likely inappropriate in this case." (2) "As it is presented in the IFR, we are highly skeptical that the penalty and upper limit provided for in this NCP satisfy this congressional demand to protect compliant manufacturers."
    Following its observations, the Appeals Court concludes, "That being said, EPA is certainly free to make whatever findings it deems appropriate in the pending final rulemaking -- subject, of course, to this Court's review. For now, therefore, we simply hold that EPA lacked good cause for not providing formal notice-and-comment rulemaking, and accordingly vacate the IFR and remand for further proceedings."
    Access the complete opinion (click here). [#Air, #CADC]
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