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Related Practices
Related Practices

D.C. Circuit Upholds EPA’s Residual Risk Standard for the HON

Beveridge & Diamond, P.C., June 11, 2008

On June 6, 2008, the D.C. Circuit Court of Appeals upheld EPA’s decision not to impose more stringent requirements under the Hazardous Organic NESHAP (“HON”), finding that EPA reasonably interpreted its obligations to issue residual risk standards and revised MACT standards under Section 112(f) and 112(d)(6) of the Clean Air Act (“CAA” or the “Act”).  NRDC v. EPA, No. 07-1053 (June 6, 2008). 

Section 112 of the CAA requires EPA to issue technology-based “MACT” standards to control emissions of hazardous air pollutants (“HAPs”) from a variety of different types of industries.  Then, eight years after a MACT standard is promulgated, EPA is required to do take two further steps: (1) evaluate the “residual risk” remaining within that source category after the installation of MACT controls, and issue revised standards to protect the public health with an “ample margin of safety”; and (2) revise the technology-based MACT standard as necessary to reflect recent technological developments.  CAA § 112(f), (d)(6). 

Although the earliest MACT standards were promulgated more than a decade ago, EPA only recently began to reassess and update them.  The HON represents one of EPA’s first efforts under both § 112(f) and
§ 112(d)(6).  In its final rule, EPA concluded that no additional controls were required under either a residual risk standard or an updated MACT standard.  71 Fed. Reg. 76,603 (2006).  As EPA explained, the existing rules ensured that no individual would face a lifetime cancer risk greater than 100-in-1,000,000; since EPA had previously determined in earlier rulemakings that this level of exposure provided an “ample margin of safety,” the Agency determined that no additional controls were necessary under § 112(f).  EPA further reviewed the available control technology, and concluded that there had been no technological developments that compelled a more stringent MACT standard under § 112(d)(6).

NRDC challenged EPA’s decision in the D.C. Circuit, arguing that it was invalid for three reasons: (1) the language of the CAA require more stringent residual risk rules whenever the lifetime cancer risk exceeds 1 in 1,000,000; (2) EPA improperly considered costs in its technology review; and (3) EPA acted arbitrarily and capriciously, because it relied on faulty data.  The Court rejected all three of these arguments.

First, the Court turned to the residual risk argument.  While it agreed with NRDC that Section 112(f)(2)(A) requires EPA to “promulgate standards” whenever the lifetime risk exceeds 1 in 1,000,000, the Court noted that that provision does not specify what those standards must require.  The Court further noted that other language in § 112(f)(2)(A) and (f)(2)(B) seem to indicate that those standards must be based not on the 1 in 1,000,000 limit sought by NRDC, but instead on EPA’s prior interpretation of what constitutes an “ample margin of safety” – that is, 100 in 1,000,000.  Thus, because EPA’s HON rule was within this previous upper-bound risk, the Court found that EPA’s decision not to impose additional requirements was reasonable under Chevron v. NRDC, 467 U.S. 837 (1984).

Next, the Court addressed NRDC’s argument that EPA’s technological update inappropriately considered costs, because the initial MACT standard for equipment leaks had excluded “leakless components.”  The Court agreed that, in setting the MACT “floor,” EPA may not consider costs.  Thus, the Court noted that EPA’s initial MACT standard may have been improper.  The Court also noted, however, that the time to challenge that initial standard had long-since passed.  Accordingly, the Court limited its review to whether additional new technologies had been developed since the initial promulgation of the HON.  EPA concluded that they had not been; because NRDC provided no evidence to the contrary, the Court upheld EPA’s decision that no new controls were necessary.

Finally, the Court turned to the substance of EPA’s review.  NRDC argued that EPA’s residual risk assessment was fundamentally flawed, because it was based on industry-supplied data, which NRDC argued was incomplete and unreliable.  Here, the Court demonstrated a significant unwillingness to second-guess the manner in which EPA elected to review the standard, phrasing the “sole question” as “whether EPA has acted reasonably, not whether it has acted flawlessly.”  Because EPA provided a reasonable basis for relying on industry-provided data, the Court determined that the Agency’s decision was not arbitrary and capricious.

We anticipate that the NRDC decision will likely have far-reaching ramifications, because the HON was one of EPA’s “test cases” under the residual risk rule.  One can only hope that the D.C. Circuit’s approval of EPA’s approach to these rules will provide a degree of certainty to the many residual risk rules that EPA will be required to complete over the next few years.

For further information, please contact Laura McAfee at (410) 230-1330 or lmcafee@bdlaw.com, or David Friedland at (202) 789-6047, or dfriedland@bdlaw.com

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