Filed: Jun. 05, 2020
Latest Update: Jun. 05, 2020
Summary: 18-2121-ag (L) Natural Resources Defense Council, Inc. and State of Vermont v. United States Environmental Protection Agency UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2019 Argued: November 20, 2019 Decided: June 5, 2020 Docket Nos. 18-2121-ag; 18-2670-ag NATURAL RESOURCES DEFENSE COUNCIL, INC., STATE OF VERMONT, Petitioners, — v. — UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ANDREW R. WHEELER, IN HIS CAPACITY AS ADMINISTRATOR OF THE U.S. ENVIRONMENTAL PROTECTION AGENC
Summary: 18-2121-ag (L) Natural Resources Defense Council, Inc. and State of Vermont v. United States Environmental Protection Agency UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2019 Argued: November 20, 2019 Decided: June 5, 2020 Docket Nos. 18-2121-ag; 18-2670-ag NATURAL RESOURCES DEFENSE COUNCIL, INC., STATE OF VERMONT, Petitioners, — v. — UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ANDREW R. WHEELER, IN HIS CAPACITY AS ADMINISTRATOR OF THE U.S. ENVIRONMENTAL PROTECTION AGENCY..
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18-2121-ag (L)
Natural Resources Defense Council, Inc. and State of Vermont v. United States Environmental Protection Agency
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2019
Argued: November 20, 2019 Decided: June 5, 2020
Docket Nos. 18-2121-ag; 18-2670-ag
NATURAL RESOURCES DEFENSE COUNCIL, INC., STATE OF VERMONT,
Petitioners,
— v. —
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ANDREW R.
WHEELER, IN HIS CAPACITY AS ADMINISTRATOR OF THE U.S. ENVIRONMENTAL
PROTECTION AGENCY,
Respondents.
B e f o r e:
WALKER, LYNCH, and SULLIVAN, Circuit Judges.
Petitioners Natural Resources Defense Council, Inc., and the State of
Vermont seek review of certain provisions of a rule promulgated by the United
States Environmental Protection Agency, pursuant to the Toxic Substances
Control Act, 15 U.S.C. § 2607(b)(10), that requires manufacturers to report
information about their use of mercury. In particular, petitioners argue that three
exemptions for categories of manufacturers and importers are unlawful. We
agree with respect to the exemption from all reporting requirements for those
who import products containing a mercury-added component, but reject
petitioners’ challenges to the other exemptions. Accordingly, we GRANT
REVIEW of and VACATE 40 C.F.R. § 713.7(b)(2) but DENY REVIEW of 40 C.F.R.
§§ 713.7(b)(3) (exempting manufacturers of products containing mercury-added
components from all reporting requirements) and 713.9(a) (exempting
manufacturers or importers of large quantities of mercury from certain reporting
requirements).
GABRIEL DALY, Natural Resources Defense Council, New York,
NY (Katherine Desormeau, Natural Resources Defense
Council, San Francisco, CA; Sarah C. Tallman, Natural
Resources Defense Council, Chicago, IL, on the brief), for
Petitioner Natural Resources Defense Council, Inc.
Justin E. Kolber, Assistant Attorney General, for Thomas J.
Donovan, Jr., Attorney General for the State of Vermont,
Montpelier, VT, for Petitioner State of Vermont.
ANDREW S. COGHLAN, Trial Attorney, Environmental Defense
Section, Environment and Natural Resources Division,
United States Department of Justice, Washington, D.C.
(Jeffrey Bossert Clark, Assistant Attorney General,
Jonathan D. Brightbill, Deputy Assistant Attorney
General, Erin Koch, U.S. Environmental Protection
Agency, Washington, D.C. on the brief), for Respondents.
Ellen F. Rosenblum, Attorney General of Oregon, Benjamin
Gutman, Solicitor General, Oregon, Steven Novick,
Special Assistant Attorney General, Oregon, William
Tong, Attorney General of Connecticut, Clare E.
Connors, Attorney General of Hawaii, Aaron Frey,
2
Attorney General of Maine, Brian E. Frosh, Attorney
General of Maryland, Maura Healey, Attorney General
of Massachusetts, Gurbir S. Grewal, Attorney General of
New Jersey, Josh Shapiro, Attorney General of
Pennsylvania, Peter F. Neronha, Attorney General of
Rhode Island, Robert W. Ferguson, Attorney General of
Washington, Max Kieley, Assistant Attorney General,
Minnesota, for Amici Curiae Oregon, Connecticut,
Hawaii, Massachusetts, Maine, Maryland, Minnesota
(by and through its Minnesota Pollution Control
Agency), New Jersey, Pennsylvania, Rhode Island, and
Washington.
GERARD E. LYNCH, Circuit Judge:
In 2016, Congress amended the Toxic Substances Control Act of 1976
(“TSCA”) to require the U.S. Environmental Protection Agency (“EPA”) to “carry
out and publish” a triennial “inventory of mercury supply, use, and trade in the
United States.” 15 U.S.C. § 2607(b)(10)(B). In 2018, EPA promulgated the Mercury
Reporting Rule (“Reporting Rule”). As relevant here, the Reporting Rule requires
“[a]ny person who manufactures (including imports)” mercury or a “mercury-
added product” to report information on their products, see 40 C.F.R. §§ 713.7(a),
(b), 713.9; it also exempts certain categories of manufacturers and importers from
various reporting obligations. Three of those exemptions are at issue in this case.
3
Under § 713.7(b)(2) and (b)(3), importers and manufacturers, respectively, of
products that contain a mercury-added product as a component are exempt from
all reporting requirements. Under § 713.9(a), persons who manufacture or import
elemental mercury or mercury compounds in significantly large amounts are
exempt from certain reporting requirements.
Petitioners Natural Resources Defense Council, Inc., (“NRDC”) and the
State of Vermont (“Vermont”) (together, “petitioners”) challenge those three
exemptions from the Reporting Rule as unlawful agency action. As explained
below, we find that the exemption for importers of products containing mercury-
added components is an unlawful interpretation of the TSCA, because it lacks a
reasoned explanation. We find that the exemption for manufacturers of products
with mercury-added components and the exemption for high-volume
manufacturers are lawful in light of Congress’s directive to “not require
reporting which is unnecessary or duplicative.” 15 U.S.C. § 2607(a)(5)(A). We
therefore GRANT REVIEW of and VACATE the exemption codified at 40 C.F.R.
§ 713.7(b)(2) and DENY REVIEW of the exemptions codified at 40 C.F.R.
§§ 713.7(b)(3) and 713.9(a).
4
BACKGROUND
I. Uses and Dangers of Mercury
Mercury is a naturally occurring element. It is also a potent neurotoxin that
does not degrade over time, making it both a significant public health threat and
a danger to the environment. One way that mercury enters the environment is
through the manufacture, use, and disposal of products that contain mercury.
Mercury released through those processes converts biologically into
methylmercury, the element’s most toxic form, which bioaccumulates in wildlife.
Methylmercury exposure in wildlife can cause death, reduced fertility, slowed
development and growth, and abnormal behavior that affects survival. Human
exposure occurs primarily from the ingestion of mercury through the
consumption of fish and shellfish. Elevated methylmercury levels in the
bloodstreams of young children and fetuses have been found to adversely affect
cognitive development. Studies also suggest that mercury exposure may affect
humans’ reproductive, renal, cardiovascular, and hematologic health.
Mercury has long been used in a wide range of industrial processes and as
an ingredient in many familiar products. Historically, mercury has been used in
products including batteries within watches, toys, and cameras; paint; pesticides;
5
cosmetics and skin care products; pharmaceuticals; vaccines; dental amalgam;
fluorescent, neon, and ultraviolet lamps used in car headlights, street lights, neon
signs, commercial lighting, and tanning beds; thermometers, blood pressure
cuffs, and other medical devices; and switches and relays used in pumps,
appliances, and industrial machinery. Since 1980, largely due to increased
awareness of the environmental and health dangers of mercury, the use of
mercury-added products in the United States has decreased by over 97 percent.
Nevertheless, mercury-added products including batteries, lamps, dental
amalgam, and switches and relays continue to be sold extensively in the United
States.
Since at least 2006, EPA has made the reduction of mercury-related risks an
agency priority. The United States is a party to the Minamata Convention, an
international agreement that seeks to protect human health and the environment
from the effects of mercury contamination. State governments have also been
instrumental to the reduction of mercury use nationwide, by enacting legislation
that restricts the production and sale of mercury-added products, regulates their
disposal, and implements labeling requirements. Thirteen states, including
Vermont, have formed a coalition of state environmental agencies, the Interstate
6
Mercury Education and Reduction Clearinghouse (“IMERC”), which manages an
interstate reporting system for manufacturers and a related database of
information on mercury use.
II. Statutory Background
The TSCA authorizes EPA to regulate the use of “chemical substances and
mixtures . . . whose manufacture, processing, distribution in commerce, use, or
disposal may present an unreasonable risk of injury to health or the
environment.” 15 U.S.C. § 2601(a)(2); see also
id. § 2605(a). The statute directs EPA
to promulgate rules requiring manufacturers and processors of chemical
substances to maintain records of their use of such substances and report that
information to EPA. See
id. § 2607(a)(1)(A), (B).
In 2016, Congress enacted the Frank R. Lautenberg Chemical Safety for the
21st Century Act, which amended the TSCA by adding (among other things)
specific directives with respect to mercury. Section 8(b)(10) of the amended TSCA
provides that “[n]ot later than April 1, 2017, and every 3 years thereafter, the
Administrator shall carry out and publish in the Federal Register an inventory of
mercury supply, use, and trade in the United States.” 15 U.S.C. § 2607(b)(10)(B). It
directs EPA, in doing so, to “identify any manufacturing processes or products
7
that intentionally add mercury” and to “recommend actions, including proposed
revisions of Federal law or regulations, to achieve further reductions in mercury
use.”
Id. § 2607(b)(10)(C).
The statute also includes a directive to manufacturers, calling on “any
person who manufactures mercury or mercury-added products or otherwise
intentionally uses mercury in a manufacturing process” to “make periodic
reports to the Administrator, at such time and including such information as the
Administrator shall determine by rule” in order “[t]o assist in the preparation of
the inventory under subparagraph (B).”
Id. § 2607(b)(10)(D)(i). The TSCA’s
definitions provision makes clear that the “manufacture” of a chemical substance
includes manufacturing, producing, or “import[ing] [it] into the customs territory
of the United States.”
Id. § 2602(9).
The statute directs EPA to “avoid duplication” by “coordinat[ing] the
reporting under this subparagraph with [IMERC].”
Id. § 2607(b)(10)(D)(ii). It
further provides that, in carrying out this section of the TSCA, EPA “shall, to the
extent feasible[,]” “not require reporting which is unnecessary or duplicative”
and “minimize the cost of compliance with this section and the rules issued
thereunder on small manufacturers and processors.”
Id. § 2607(a)(5), (A), (B).
8
III. Regulatory Background
In accordance with the amended TSCA’s requirements, EPA published its
initial inventory of mercury supply, use, and trade in 2017. Because EPA had not
yet promulgated a rule that directed manufacturers to report mercury use for
inclusion in the triennial inventory, its 2017 inventory drew exclusively on
publicly available data, which EPA acknowledged was “notably limited in
applicability to certain aspects of supply, use, and trade” and “in some cases []
outdated.” J. App’x 440. For that reason, EPA concluded that it was “premature”
to “identify any manufacturing processes or products that intentionally add
mercury” or to “recommend actions . . . to achieve further reductions,” as
required by the TSCA.
Id. (quoting 15 U.S.C. § 2607(b)(10)(C)).
On June 27, 2018, EPA published the Mercury Reporting Rule (“Reporting
Rule”) in the Federal Register. See Mercury; Reporting Requirements for the
TSCA Mercury Inventory, 83 Fed. Reg. 30,054 (June 27, 2018); 40 C.F.R. pt. 713.
The Reporting Rule “specifies reporting and recordkeeping procedures . . . for
certain manufacturers (including importers) and processers of mercury” in order
to facilitate EPA’s statutorily mandated publication of a triennial mercury
inventory. 40 C.F.R. § 713.1(a). The reporting requirements apply to “[a]ctivities
9
undertaken with the purpose of obtaining an immediate or eventual commercial
advantage” involving the “[i]mport” or “[m]anufacture (other than import)” of
either mercury or mercury-added products, or the “[i]ntentional use of mercury
in a manufacturing process,” as well as related activities such as the
“[d]istribution in commerce, including domestic sale or transfer,” “[s]torage,”
and “[e]xport” of mercury.
Id. § 713.1(b). Information must be reported for both
“[e]lemental mercury” and “mercury compound[s].”
Id. § 713.5.
The Reporting Rule requires that “[a]ny person who manufactures
(including imports) mercury” or “a mercury-added product,” aside from
specified categories of exempted persons, “must report.”
Id. § 713.7. Those who
are not required to report include, inter alia, manufacturers who do not seek a
commercial advantage and persons “engaged only in the generation, handling, or
management of mercury-containing waste.”
Id. § 713.7(a)(1), (b)(1), (a)(3). Under
§ 713.7(b), the following categories of persons are also excused from all of the
rule’s reporting requirements:
(2) A person engaged only in the import of a product that
contains a component that is a mercury-added product; or
(3) A person engaged only in the manufacture (other than
import) of a product that contains a component that is a
10
mercury-added product who did not first manufacture
(including import) the component that is a mercury-added
product.
Both of these provisions concern products that contain mercury only
within a component (“assembled products”). A watch that contains, as one
constituent part, or “component,” a mercury-added battery, is an assembled
product; so, too, is a car with a mercury-added lamp in its headlight. By contrast,
a mercury-added component – in the above examples, a battery or lamp that
contains mercury – is not itself an assembled product.1 Under § 713.7(b)(2), an
importer of an assembled product, manufactured abroad, is exempt from the
requirements of the Reporting Rule. Under § 713.7(b)(3), a domestic
manufacturer of an assembled product is also exempt, so long as it does not also
manufacture the mercury-added component. Thus, a domestic entity that either
manufactures or imports a watch with a mercury-added battery need not report
to EPA, so long as that entity does not also import or manufacture the mercury-
added battery itself.
Manufacturers and importers who are subject to the Reporting Rule’s
1
For purposes of this analysis, we assume that batteries contained within
watches and lamps contained within car headlights are not themselves
“assembled products” made up of multiple constituent parts.
11
requirements generally must report the quantities of mercury, in pounds, that
they have manufactured, imported, exported, stored, and distributed in
commerce over relevant time periods.
Id. § 713.9(b). But here, too, the Reporting
Rule makes exceptions for certain manufacturers and importers: “Persons who
manufacture (including import) mercury in amounts greater than or equal to
2,500 pounds (lbs.) for elemental mercury or greater than or equal to 25,000 lbs.
for mercury compounds for a specific reporting year must report” only the
quantities stored and distributed in commerce, and not the quantities
manufactured, imported, or exported.
Id. § 713.9(a). Although it may seem
counterintuitive to exempt persons who manufacture or import the most mercury
from regulations designed to survey the extent of mercury usage, EPA already
requires that these same manufacturers and importers report under another EPA
regulation that predates the Mercury Reporting Rule.2
2
That regulation, the Chemical Data Reporting Rule (“CDR Rule”), promulgated
in 2011, requires persons who export or manufacture mercury “in an amount of
25,000 lb . . . or more (or in an amount of 2,500 lb . . . or more for [elemental
mercury]) . . . at any one site during any calendar year” to report the amounts of
mercury they have manufactured and exported. 40 C.F.R. § 711.15(b), (b)(3)(iii),
(iv). The CDR Rule specifies that the category of “manufacturers” “includ[es]
importers.” See
id. § 711.15(b).
12
DISCUSSION
NRDC and Vermont timely petitioned this Court for review of the Mercury
Reporting Rule. See 15 U.S.C. § 2618(a). Specifically, petitioners seek review of
three provisions that excuse categories of manufacturers and importers from the
rule’s reporting requirements: (1) the exemption for manufacturers of assembled
products with mercury-added components, 40 C.F.R. § 713.7(b)(3); (2) the
exemption for importers of assembled products with mercury-added
components, 40 C.F.R. § 713.7(b)(2); and (3) the partial exemption (in the form of
curtailed reporting requirements) for high-volume manufacturers and importers,
40 C.F.R. § 713.9(a).
As explained below, we conclude that the exemptions for assembled
product manufacturers and high-volume manufacturers are reasonable in light of
Congress’s directive to EPA to avoid requiring duplicative or unnecessary
reporting. We therefore deny review of §§ 713.7(b)(3) and 713.9(a). However, we
find that EPA has failed to provide a reasoned explanation for the exemption for
assembled product importers. For that reason, we grant review of § 713.7(b)(2)
and vacate that provision.
13
I. Standing
Before addressing the merits of petitioners’ arguments, we must first
consider the threshold question of their standing to challenge the lawfulness of
the Mercury Reporting Rule. EPA does not challenge petitioners’ standing to
bring this appeal. Nevertheless, “[t]he question of standing is not subject to
waiver: ‘We are required to address the issue . . . even if the parties fail to raise
the issue before us.’” Cooper v. U.S. Postal Serv.,
577 F.3d 479, 489 (2d Cir. 2009)
(internal alterations omitted) (quoting United States v. Hays,
515 U.S. 737, 742
(1995)). The “irreducible constitutional minimum of standing contains three
elements. First, the plaintiff must have suffered an injury in fact. . . . Second, . . .
the injury has to be fairly traceable to the challenged action of the defendant. . . .
Third, it must be likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision.” Lujan v. Defs. of Wildlife,
504 U.S. 555, 560-61
(1992) (internal quotation marks and alterations omitted).
Petitioners NRDC and Vermont both assert that they have Article III
standing on the basis of expected informational deficits. They contend that the
challenged exemptions from the Reporting Rule will create gaps in EPA’s
published mercury inventories, and that they will be injured by their lack of
14
access to the information that would otherwise fill those gaps. “The law is settled
that a denial of access to information qualifies as an injury in fact where a statute
(on the claimants’ reading) requires that the information be publicly disclosed
and there is no reason to doubt [petitioners’] claim that the information would
help [petitioners].” Campaign Legal Ctr. & Democracy 21 v. Fed. Election Comm’n,
952 F.3d 352, 356 (D.C. Cir. 2020) (internal quotation marks omitted); see also Fed.
Election Comm’n v. Akins,
524 U.S. 11, 21-22 (1998); Pub. Citizen v. Dep’t of Justice,
491 U.S. 440, 449 (1989). Here, because “there is no reason to doubt” that (1)
“access to additional information about [mercury] manufactured or [imported] in
the United States will promote” NRDC’s advocacy efforts and Vermont’s law
enforcement efforts, and (2) “a decision by this [C]ourt to vacate or require
reconsideration of the rule would remedy th[e] asserted harm by requiring the
disclosure of additional information,” petitioners have established standing
under Article III. See Envtl. Def. Fund v. EPA,
922 F.3d 446, 452-53 (D.C. Cir. 2019).
Both NRDC and Vermont allege a particularized interest in the information
captured by EPA’s mercury inventory, including the information that would be
collected from assembled product importers, assembled product manufacturers,
and high-volume manufacturers absent the challenged provisions. NRDC alleges
15
that it relies on information about mercury use to support its practice of
advocating for mercury reductions, and that the exemptions pose an obstacle to
effective advocacy. Vermont alleges that the exemptions will affect its ability to
enforce state laws that restrict the sale and use, mandate notification and
labeling, and regulate the disposal of mercury-added products.
Petitioners also allege that the challenged provisions unlawfully exempt
from reporting obligations groups of manufacturers and importers from whom
EPA is required to collect information under the amended TSCA. If that claim is
correct, the challenged provisions of the Reporting Rule will improperly omit
information that, under the statute, ought to be publicly disclosed in reports to
the agency and in the agency’s published inventory and that will help NRDC in
its advocacy efforts and Vermont in its law enforcement efforts. We are satisfied
that NRDC and Vermont have alleged an injury in fact. Petitioners’ asserted
injuries are further fairly traceable to the alleged omissions of information, in the
sense that they would not suffer from the asserted informational deficit absent
the challenged reductions in reporting and disclosure. The vacatur of the
challenged provisions would redress those injuries by requiring that exempted
groups of manufacturers and importers report under the Reporting Rule, so that
16
information pertaining to their use of mercury would be reflected in EPA’s
published inventories. Petitioners have therefore established standing under
Article III.
II. Legal Standard
“We evaluate challenges to an agency’s interpretation of a statute that it
administers within the two-step Chevron deference framework.” Catskill
Mountains Chapter of Trout Unlimited, Inc. v. EPA,
846 F.3d 492, 507 (2d Cir. 2017)
(citing Lawrence + Mem’l Hosp. v. Burwell,
812 F.3d 257, 264 (2d Cir. 2016)); see
Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc.,
467 U.S. 837, 842-43 (1984). At
Chevron Step One, we ask “whether Congress has directly spoken to the precise
question at issue.”
Chevron, 467 U.S. at 842. If Congress’s directive is
unambiguous, both the agency and the courts are bound by that mandate.
Id. at
842-43. If, instead, “the statute if silent or ambiguous with respect to the specific
issue,” the analysis proceeds to Chevron Step Two.
Id. at 843; see also Catskill
Mountains, 846 F.3d at 507. At that step, “the question for the court is whether the
agency’s answer is based on a permissible construction of the statute.”
Chevron,
467 U.S. at 843.
In evaluating reasonableness at Chevron Step Two, “we will accord
17
deference to the agency’s interpretation of the statute so long as it is supported by
a reasoned explanation, and ‘so long as the construction is a reasonable policy
choice for the agency to make.’” Catskill
Mountains, 846 F.3d at 507 (quoting Nat’l
Cable & Telecomms. Ass’n v. Brand X Internet Servs.,
545 U.S. 967, 986 (2005)).
Because “a statute’s ambiguity constitutes an implicit delegation from Congress
to the agency to fill in the statutory gaps,” the agency’s interpretation must only
be reasonable, and need not be the sole permissible or even most reasonable
interpretation of the statute.
Id. at 520 (quoting FDA v. Brown & Williamson
Tobacco Corp.,
529 U.S. 120, 159 (2000)); see also Entergy Corp. v. Riverkeeper, Inc.,
556 U.S. 208, 218 (2009).
When a petitioner challenges the procedure by which an agency engaged
in rulemaking, rather than the substance of the rule, we assess whether the
agency’s “action, findings, and conclusions” are “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law,” pursuant to the
Administrative Procedure Act. 5 U.S.C. § 706(2), (2)(A). Challenges to agency
procedure are evaluated under the standard set out in Motor Vehicle
Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile
Insurance Co.,
463 U.S. 29, 43 (1983). Under that standard, we defer to an agency’s
18
determinations so long as the agency “give[s] adequate reasons for its decisions,”
in the form of a “‘satisfactory explanation for its action including a rational
connection between the facts found and the choice made.’” Encino Motorcars, LLC
v. Navarro,
136 S. Ct. 2117, 2125 (2016) (quoting State
Farm, 463 U.S. at 43).
“State Farm and Chevron provide for related but distinct standards for
reviewing rules promulgated by administrative agencies.” Catskill
Mountains, 846
F.3d at 521. “Much confusion” stems from the fact that “both standards purport
to provide a method by which to evaluate whether an agency action is ‘arbitrary’
or ‘capricious,’ and . . . often, though not always, take the same factors into
consideration.”
Id. at 522. The Supreme Court and this Court have clarified that
the reasonableness of “[a]n agency’s initial interpretation of a statutory provision
should be evaluated only under the Chevron framework,” which looks to whether
the interpretation is substantively reasonable.
Id. at 521; see also Verizon Commc’ns
Inc. v. FCC,
535 U.S. 467, 502 n.20 (2002). By contrast, “State Farm is used to
evaluate whether a rule is procedurally defective as a result of flaws in the
agency’s decisionmaking process” and applies, inter alia, “when an agency
changes its interpretation of a particular statutory provision.” Catskill
Mountains,
846 F.3d at 521, 523.
19
The Mercury Reporting Rule is EPA’s initial interpretation of § 8(b)(10) of
the TSCA, as amended by Congress in 2016. See 15 U.S.C. § 2607(b)(10); see also
Frank R. Lautenberg Chemical Safety for the 21st Century Act, Pub. L. No. 114-
182, § 8(b), 130 Stat. 448, 475 (2016). Petitioners assert that the exemptions for
importers and manufacturers of assembled products contained in 40 C.F.R.
§ 713.7(b)(2) and (b)(3) contravene the TSCA and thus exceed EPA’s rulemaking
authority. These are substantive challenges to EPA’s initial act of statutory
interpretation through rulemaking. Accordingly, we review the reasonableness of
§ 713.7(b)(2) and (b)(3) under Chevron. Petitioners challenge the partial exemption
for high-volume manufacturers contained in 40 C.F.R. § 713.9(a) both as an
unreasonable interpretation of the TSCA and as the product of flawed
rulemaking procedures. Accordingly, we evaluate their substantive challenge to
§ 713.9(a) under Chevron and their procedural challenge to that provision under
State Farm.
III. Exemptions for Importers and Manufacturers of Assembled
Products
Petitioners contend that the reporting exemptions for importers and
manufacturers of assembled products, codified at 40 C.F.R. § 713.7(b)(2) and
20
(b)(3), are unlawful because they contravene Congress’s clear statutory directive
that manufacturers of mercury or mercury-added products report to EPA. See 15
U.S.C. § 2607(b)(10)(D)(i). EPA argues that these exemptions are within the scope
of its broad authority, as delegated by Congress, to determine what reporting is
necessary to complete the statutorily required inventory, and that they are
consistent with the TSCA’s letter and purpose.
A. Chevron Step One
Petitioners first assert that the TSCA unambiguously requires that EPA
mandate reporting from importers and domestic manufacturers of assembled
products that contain mercury only within a component, thereby rendering the
reporting exemptions for such persons irreconcilable with the statute’s plain
meaning. They rely principally on the TSCA’s language providing that “[t]o
assist in the preparation of the inventory . . . , any person who manufactures
mercury or mercury-added products . . . shall make periodic reports to the
Administrator.” 15 U.S.C. § 2607(b)(10)(D)(i). We conclude that this language
does not unambiguously foreclose the exemptions at 40 C.F.R. § 713.7(b)(2) and
(b)(3).
Petitioners argue that the TSCA unambiguously requires all manufacturers
21
of mercury or mercury-added products to report, and that importers and
manufacturers of assembled products with mercury-added components are
indisputably “person[s] who manufacture[] . . . mercury-added products.” 15
U.S.C. § 2607(b)(10)(D)(i). The TSCA expressly defines “[t]he term ‘manufacture’”
to include importation, see
id. § 2602(9), and EPA concedes that the term
“mercury-added product” unambiguously includes assembled products in which
mercury exists solely in a component, such as a watch with a mercury-added
battery or a car with mercury-added lamps in its headlights. Thus, there is no
question that importers and domestic manufacturers of such assembled products
are encompassed within the category of “any person who manufactures mercury
or mercury-added products.” 15 U.S.C. § 2607(b)(10)(D)(i).
We conclude, however, that the TSCA does not unambiguously direct EPA
to require reporting from every manufacturer of a mercury-added product.
Petitioners contend that “any person,” as used in the TSCA, clearly means “all
persons,” and that the verb “shall” underscores the mandatory nature of such
persons’ obligation to report — and thus, necessarily, the mandatory nature of
EPA’s obligation to require that such persons report. They therefore contend that
the plain meaning of the TSCA is that EPA must require reporting from all
22
persons “who manufacture[] mercury or mercury-added products.”
Id.
But Congress also directs EPA, in the very same section of the TSCA (and
using the same mandatory “shall”) “not [to] require reporting which is
unnecessary or duplicative,”
id. § 2607(a)(5)(A), “to the extent feasible,”
id.
§ 2607(a)(5). That provision not only authorizes, but also requires, EPA to exempt
certain manufacturers from otherwise applicable reporting requirements, where
requiring the reporting would be “unnecessary or duplicative.” In short, the
TSCA requires all persons who manufacture mercury or mercury-added
products to “make periodic reports to the Administrator,” but such persons are
required to report only “such information as the Administrator shall determine
by rule.” 15 U.S.C. § 2607(b)(10)(D)(i). And the Administrator may determine
what needs to be reported, if anything, provided that the determination comports
with the statutory goal of facilitating the inventory while avoiding reports that
are unnecessary for that purpose or duplicative.
Because the TSCA does not unambiguously mandate that EPA require
reporting from every manufacturer of a mercury-added product, EPA’s
exemptions in 40 C.F.R. § 713.7(b)(2) and (b)(3) for certain manufacturers of
mercury-added products — specifically, those who import into or manufacture
23
within the United States assembled products with mercury added only to a
component — do not directly contravene the TSCA’s plain meaning.
At the same time, however, the statutory language does not
unambiguously authorize or require those specific exemptions. It presumptively
mandates reporting by all manufacturers and importers, to the extent necessary
to accomplish the purposes of the statute, with the exception that EPA should not
require unnecessary or duplicative reporting. Because the statute does not
directly address the specific question of reporting by manufacturers or importers
of products with mercury-added components, whether the exemptions from
reporting such products are appropriately granted in light of the directive to
avoid the unnecessary or duplicative is not answerable based on the language of
the statute. Rather, the appropriateness of these exemptions must be addressed at
Chevron Step Two, based on the reasonableness of the agency’s rationale for
granting them.
B. Chevron Step Two
Because the TSCA is “silent or ambiguous” on the question of whether
EPA’s exemption of manufacturers and importers of assembled products
containing mercury-added components from its reporting requirements is
24
appropriate in light of its obligation to avoid requiring “unnecessary or
duplicative” reports, we must determine whether the exemptions are “based on a
permissible construction of the statute.”
Chevron, 467 U.S. at 843. In doing so,
“we ask whether the agency’s action is arbitrary, capricious, or manifestly
contrary to the statute.” Cooling Water Intake Structure Coal. v. EPA.,
905 F.3d 49,
65 (2d Cir. 2018) (internal quotation marks omitted). “[W]e will accord deference
to the agency’s interpretation of the statute so long as it is supported by a
reasoned explanation . . . .” Catskill
Mountains, 846 F.3d at 507. “Even under this
deferential standard, however, agencies must operate within the bounds of
reasonable interpretation.” Michigan v. EPA,
135 S. Ct. 2699, 2707 (2015) (internal
quotation marks omitted). “[A]n agency interpretation that is inconsistent with
the design and structure of the statute as a whole does not merit deference.” Util.
Air Regulatory Grp. v. EPA,
573 U.S. 302, 321 (2014) (internal citation, quotation
marks, and alteration omitted).
1. Exemption for Manufacturers of Assembled Products
40 C.F.R. § 713.7(b)(3) exempts from reporting requirements “[a] person
engaged only in the manufacture (other than import) of a product that contains a
component that is a mercury-added product who did not first manufacture
25
(including import) the component that is a mercury-added product.” Under this
provision, a domestic manufacturer of assembled products is exempt from
reporting requirements if the only mercury in its product is within a component
that was imported or manufactured by another entity. A manufacturer who
produces or imports the component itself is not exempt. In other words, an
assembled product manufacturer is exempt from reporting on the mercury
present in a component of its product only if some other manufacturer or
importer previously introduced that mercury-added component into the U.S.
market. Significantly, in that situation, the person or entity that manufactured or
imported the component would be required to report that activity.
Congress directed EPA both to collect reports from “any person who
manufactures . . . mercury-added products” and “not [to] require reporting
which is unnecessary or duplicative.” 15 U.S.C. § 2607(b)(10)(D)(i), (a)(5)(A).
Where two different manufacturers engage with the same mercury-added
component — because, for example, one produces the component and the other
adds it to an assembled product — it is reasonable for EPA to deem it
“unnecessary or duplicative” to require both manufacturers to report. No
provision of the Reporting Rule exempts either importers or domestic
26
manufacturers of mercury-added components. Because the Reporting Rule
requires that any person who introduces a mercury-added component to the U.S.
market (either by importing or by producing it) is required to report on that
component, EPA will have information about the nature and extent of the use of
mercury in such component products. For example, once a manufacturer or
importer of batteries reports on the presence of mercury in its product, that
mercury is accounted for within EPA’s triennial inventory, and EPA may
reasonably decline to require additional reporting from the domestic watchmaker
who uses those batteries as a component in its watches.
Petitioners argue that EPA exaggerates the administrative burden that
“double counting” imposes on the agency and that it elides meaningful
distinctions in the data that would be gathered from component-makers (or
component importers) and assembled product manufacturers who use those
components. But even if those arguments are meritorious, they speak only to
whether EPA’s interpretation is optimal from a policy perspective, and not to
whether this exemption is “within the bounds of reasonable [statutory]
interpretation.”
Michigan, 135 S. Ct. at 2707 (internal quotation marks omitted).
Whether or not the exemption for certain assembled product manufacturers was
27
the most reasonable way of interpreting EPA’s obligation to require reporting
insofar as it is not duplicative, it is certainly a reasonable interpretation. See
Entergy
Corp., 556 U.S. at 218.3
We therefore deny review of 40 C.F.R. § 713.7(b)(3).
2. Exemption for Importers of Assembled Products
40 C.F.R. § 713.7(b)(2) exempts from reporting requirements “[a] person
engaged only in the import of a product that contains a component that is a
mercury-added product.” Under this provision, an importer of assembled
products is exempt from reporting requirements if mercury is present only
within a “component” of the imported product. Thus, for example, the
exemption covers an importer of foreign-made watches that contain mercury
within their batteries (and nowhere else), but not a person who imports those
same batteries as a stand-alone product.
Unlike § 713.7(b)(3), discussed above, the reporting that would occur
absent this exemption would not be duplicative. In the case of an assembled
3
Thus, we do not suggest that EPA was required to adopt the exemption in 40
C.F.R. § 713.7(b)(3). If EPA had determined that the additional information that
would be captured by requiring reporting now exempted would further the
statutory goal and would not be duplicative, we would be presented with a
different question not at issue in this case, and on which we express no view.
28
product made by a domestic manufacturer, the mercury-added component will
have been reported by the manufacturer or importer of the component. But with
respect to an assembled product manufactured abroad that contains mercury-
added components that are themselves produced outside the United States (as
opposed to components manufactured domestically, then exported and
integrated into assembled products abroad before being imported), no other
entity is required to report the mercury in the component, and no portion of the
Mercury Reporting Rule accounts for the mercury present in the components of
the assembled products manufactured abroad.4 The importers exempted by
§ 713.7(b)(2) are the very persons who introduce that mercury into the U.S.
market. Thus, EPA cannot (and does not try to) rationalize this exemption on the
theory that it eliminates redundant reporting. Nor does it argue, on the basis of
4
EPA suggests that it will draw on information from the IMERC database to
ensure that its inventory accounts for mercury use that will not be reported
pursuant to the exemption for assembled product importers. But EPA does not
explain how information collected by IMERC, a coalition of only thirteen states,
sufficiently accounts for the presence of mercury in components of imported
assembled products nationwide. Indeed, in 2017, EPA itself acknowledged that it
could not rely on IMERC and other public data to “develop a complete
inventory,” J. App’x at 441, in part because “if a company sells products only in
states other than IMERC Notification states, then the company does not report to
IMERC.” J. App’x at 443.
29
any data in the administrative record, that such reporting would be
“unnecessary” because the quantity of mercury introduced into the American
marketplace by such imports is de minimis – indeed, it is difficult to see how it
would be possible to know that without the very reporting that the exemption
eschews.
Instead, EPA advances two other rationales for the reasonableness of this
exemption. It relies principally on the theory that Congress had no interest in
reporting from importers of assembled products with mercury-added
components, because such importers are too attenuated from the intentional
addition of mercury into the products.5 In the alternative, it argues that the
exemption is reasonable because it relieves importers of the undue burden of
complying with reporting obligations. For the reasons discussed below, we find
neither of these rationales persuasive and conclude that the importer exemption
is not a reasonable interpretation of the TSCA. We therefore grant review of 40
C.F.R. § 713.7(b)(2).
5
EPA also asserts this rationale in support of § 713.7(b)(3), discussed above.
Because we find that provision reasonable in light of EPA’s obligation not to
require duplicative reporting, we discuss this rationale only in relation to
§ 713.7(b)(2).
30
a. Intentionality Rationale
EPA argues that the exemption for importers of assembled products with
mercury-added components is reasonable because it is consistent with the
TSCA’s focus on manufacturers who use mercury intentionally. The TSCA calls
on EPA to “identify any manufacturing processes or products that intentionally
add mercury” and requires periodic reporting from “any person who
manufactures mercury or mercury-added products or otherwise intentionally uses
mercury in a manufacturing process.” 15 U.S.C. § 2607(b)(10)(C)(i), (D)(i)
(emphases added). EPA infers from that language that Congress intended for it
to require reporting only from manufacturers whose use of mercury in their
products or processes was deliberate. Because the persons exempted under 40
C.F.R. § 713.7(b)(2) import assembled products of which merely a component
contains mercury, EPA views such persons as categorically “unintentional” with
respect to the presence of mercury in their products.
We are not persuaded. As a practical matter, the Reporting Rule
necessarily can generate reports only from individuals or entities who know that
their products contain mercury. An importer cannot report information about
mercury in its product if it is unaware of that mercury’s existence. So long as the
31
importer knows that its product contains mercury, however, it acts intentionally
with respect to the presence of that mercury in its product, and the introduction
of that mercury into the United States market. As a categorical matter, an
importer of cars with mercury-added lamps in their headlights is no less
“intentional” about the presence of mercury in its product than an importer of
the lamps themselves: assuming that both importers are aware of the mercury’s
presence, the fact that one imports the component on its own and the other
imports it within an assembled product is irrelevant to question of their
comparative intentionality. And Congress clearly did not intend to exempt
importers altogether, given that it specifically defined the term “manufacture” to
include “import.” See 15 U.S.C. § 2602(9).
Moreover, if EPA were correct that importers described in § 713.7(b)(2) are
categorically unintentional and therefore fall outside the universe of persons
from whom Congress intended EPA to collect reports, it would follow that EPA
lacks statutory authority to require such importers to report. As EPA’s counsel
clarified at oral argument, however, that is not EPA’s position. Rather, EPA
maintains that it could, if it chose to, require importers of assembled products
with mercury-added components to report. Its contention that Congress intended
32
for it to exclude such importers is therefore untenable.
To the contrary, Congress’s instruction to EPA to create and publish “an
inventory of mercury supply, use, and trade, in the United States,” 15 U.S.C.
§ 2607(b)(10)(B), evinces its affirmative interest in cataloguing both the nature
and extent of mercury use in the United States economy. Congress made clear
that it intends EPA to collect and publish information on mercury use in products
that are imported, as well as those that are manufactured domestically. See
id.
§ 2602(9). To carry out its obligations under the TSCA, EPA must publish in its
inventory information regarding the types and quantities of imported products
that contain mercury; it must therefore require reports from all importers of such
products, absent an alternative source of information that renders such reporting
unnecessary or duplicative. EPA cannot accurately estimate the volume of
mercury introduced into the United States market within imported products if it
declines to catalogue a potentially significant swath of those products.
Furthermore, if EPA does not collect data from all importers of assembled
products, its inventory may omit entire categories of imported products that
contain mercury-added components, if similar products either are not
manufactured in the United States or are manufactured here without the use of
33
mercury. The record before us contains no information regarding the existence or
non-existence of any such categories of product. But that is exactly the point:
without a reporting requirement, one can only speculate about how significant or
insignificant the potential omissions may be. There is no reasonable basis for EPA
to conclude either that Congress did not care about imported assembled products
with mercury-added components, or that the quantity of such products or the
amount of mercury they contain is de minimis.
b. Compliance Burden Rationale
EPA also asserts that the exemption at § 713.7(b)(2) is based on a desire to
avoid imposing an undue burden on covered importers. EPA seems to invoke
three distinct kinds of costs related to compliance with the Reporting Rule: (1) the
cost of actual compliance, i.e., the costs to importers of filing reports; (2) the cost
of compliance determination, i.e., the burden of inquiring into the presence of
mercury in one’s products to determine if the reporting requirements apply; and
(3) the cost of inadvertent noncompliance, i.e., penalties for failing to file required
reports.
None of these burdens is unique to importers of assembled products with
mercury-added components. EPA’s estimates of compliance costs distinguish
34
only between the initial reporting cycle and subsequent reporting cycles; the
record contains no estimate that draws a distinction between the costs imposed
on different kinds of regulated persons to support its assertion of divergent
burdens. Beyond the bare assertion that compliance burdens weigh more heavily
in this context, EPA fails to establish that any of these burdens apply with special
force or are otherwise “undue” as applied to the importers subject to the
exemption.
At oral argument, EPA alternatively framed its concern for the cost of
actual compliance as an effort to protect small “mom and pop” importers whose
limited financial means might make compliance with the Reporting Rule
particularly burdensome. Oral Argument at 33:38-36:00. Had EPA categorically
exempted small businesses on this theory, we might well find such an exemption
reasonable. Indeed, the TSCA instructs EPA that it “shall, to the extent feasible
. . . minimize the cost of compliance with this section and the rules issued
thereunder on small manufacturers and processors.” 15 U.S.C. § 2607(a)(5), (B).
But EPA expressly determined during its rulemaking process that “small
businesses are not exempt from reporting requirements.” Mercury; Reporting
Requirements for the TSCA Mercury Inventory, 83 Fed. Reg. at 30,069. It
35
determined instead that it would fulfill its obligation to minimize compliance
burdens on small entities by developing tailored reporting instructions and
offering technical assistance and other specialized guidance. Furthermore,
nothing in the record suggests that assembled product importers subject to the
exemption in § 713.7(b)(2) are more likely to be small entities than any other class
of regulated manufacturers or importers. Accordingly, we can discern no basis in
the administrative record from which to conclude that the choice to excuse
importers, large and small, of products with mercury-added components from all
reporting requirements is rationally related to a desire to avoid imposing undue
burdens on small businesses.
EPA also suggests that any compliance cost imposed on an importer of
assembled products is undue, because it interprets the TSCA “to only require the
identification of the types of products where mercury is intentionally added.” 83
Fed. Reg. at 30,065 (emphasis in original). EPA reasons that the reports collected
from manufacturers and importers of mercury-added components will provide it
with sufficient information on the types of assembled products (and components
included therein) that contain mercury. In other words, EPA knows that some
imported watches contain mercury in their batteries because it requires reporting
36
from importers of the batteries themselves; therefore, on this theory, it is not
necessary for importers of watches that contain mercury-added batteries also to
report.
Even if we assume (without accepting) that EPA may reasonably interpret
the TSCA to permit inventories that enumerate only “types” of mercury use, and
not quantities of mercury used,6 it does not follow that reporting from assembled
product importers would be unnecessary to such inventories. It is entirely
possible that foreign manufacturers might use mercury-added components in
“types” of assembled products that domestic manufacturers do not, and export
those assembled products to the United States. And if U.S. manufacturers do not
independently use the mercury-added components contained within those
imported assembled products, those foreign-made mercury-added components
6
While we do not find it necessary to assess the reasonableness of this
interpretation of the meaning of “inventory,” we note that it appears to be
inconsistent with other aspects of EPA’s interpretation of the TSCA, such as the
Reporting Rule’s requirement that manufacturers report the “[a]mount of
mercury” used. See 40 C.F.R. § 713.9. If the task assigned to EPA were as limited
as its argument here suggests, the reporting requirements imposed on other
covered importers and manufacturers would be greatly reduced. As with the
desire to limit the burdens on small businesses, the purported authorization to
catalogue only the types of products that contain mercury has not been applied
by EPA across the board, but is brought out only in support of this particular
exemption.
37
might not be imported separately, for use in products assembled in the United
States. An accurate inventory of “types” of mercury use would therefore need to
include information on imported assembled products with mercury-added
components. Without that information, the inventory might well omit “types” of
assembled products that contain mercury only in their imported forms and
“types” of mercury-added components that are not produced domestically and
are imported only when integrated into assembled products.7 We therefore reject
the premise that reporting by assembled product importers exempted under
§ 713.7(b)(2) is unnecessary to EPA’s fulfillment of Congress’s mandate and thus
unduly burdensome.
EPA similarly fails to support its assertion that assembled product
importers would be unduly burdened by the cost of determining whether they
7
Of course, the existence and number of any such products is speculative. Once
again, however, EPA cites no information that would support a conclusion that
such products do not exist, or that the amount of mercury that might be
introduced into the United States through such products is too small to justify a
reporting requirement. Its argument is entirely abstract, premised on the
proposition that Congress only wanted an inventory of types of products,
coupled with the conclusory assertion that reporting on imported products with
mercury-added components would not further such a limited inquiry. It is thus
EPA’s rationale that must be classified as speculative, and based purely on
assumptions not supported by the record.
38
must report, because they are unlikely (at least as compared to other
manufacturers and importers) to know whether the products they import contain
mercury. EPA notes that its overall estimate of compliance costs includes the cost
of compliance determination, but it does not specifically identify how much of its
overall estimate is attributable to that aspect of compliance. Without record
evidence that supports EPA’s theory, we cannot see how the task of determining
whether one’s product contains mercury imposes anything more than a minor
burden. Some regulated persons may already know that their product contains
mercury, either because they added it to the product or because they were told;
other regulated persons may need to inquire of the manufacturer or supplier
from whom they acquire products, components, or materials whether those items
contain mercury. The latter group admittedly bears a “burden” that the former
group does not, but it is merely the burden of asking a question. And there is no
particular reason to assume that importers of products with multiple components
(say, automobiles) will find it any more difficult to ask their foreign supplier
whether those products include mercury-added components than importers of
products that will ultimately be used as components of larger or more
complicated products here in the United States (for example, lamps used in
39
automobile headlights), who are not exempted from that burden.8
Finally, EPA suggests that the cost of inadvertent noncompliance may
unduly burden importers of assembled products with mercury-added
components, because the TSCA provides for both civil and criminal penalties for
persons who fail to comply with reporting obligations.9 But the TSCA imposes
criminal penalties for noncompliance only on persons who “knowingly or
willfully violate[]” the statute, and it instructs EPA to take into account “the
nature, circumstances, extent, and gravity of the violation” and the violator’s
“ability to pay” and “degree of culpability,” among other factors, in
administering civil penalties. See 15 U.S.C. § 2615(b)(1), (a)(1), (a)(2)(B). Thus,
inadvertent violators are exempt from criminal penalties and exposed to civil
penalties only inasmuch as EPA determines them to be culpable. The specter of
undue penalties for inadvertent violators therefore amounts to a spurious
8
We also see no reason to assume that importers exempted under § 713.7(b)(2)
are particularly unlikely to know that their products contain mercury. Many such
importers may be affiliates of the foreign manufacturers who produced the
mercury-added component; others may be sufficiently aware of the specifications
of the products they import to know the chemicals that those products contain.
9
This rationale again assumes, without support, that importers who are
exempted under § 713.7(b)(2) are particularly unlikely to know that their
products contain mercury.
40
concern that EPA will itself misapply the statutory standard and impose
unreasonable penalties on this particular category of importers.
We cannot discern any reasoned basis for EPA to exempt importers of
assembled products with mercury-added components from the Reporting Rule’s
requirements. The reporting that would occur absent § 713.7(b)(2) would not be
contrary to congressional intent; nor would it be duplicative, unnecessary, or
unduly burdensome. We conclude that the importer exemption codified at
§ 713.7(b)(2) is not “supported by a reasoned explanation” and therefore does not
demand deference. See Catskill
Mountains, 846 F.3d at 507. We therefore grant
review of this provision and set it aside.
IV. High-Volume Manufacturer Exemption
Petitioners also contend that the partial exemption at 40 C.F.R. § 713.9(a)
for “[p]ersons who manufacture (including import) mercury in amounts greater
than or equal to 2,500 pounds (lbs.) for elemental mercury or greater than or
equal to 25,000 lbs. for mercury compounds” is unlawful. Section 713.9(a)
provides that persons who manufacture mercury in amounts at or above the
specified quantities must report only the amounts of mercury “stored” and
“distributed in commerce,” whereas all other manufacturers must also report the
41
amounts manufactured, imported, and exported. Compare
id. § 713.9(a), with
id.
§ 713.9(b). EPA contends that it designed § 713.9(a) to avoid duplicating the
reports that it already requires and collects from high-volume manufacturers
under the CDR Rule. See 40 C.F.R. pt. 711.
Petitioners argue that this partial exemption in § 713.9(a) is both the
product of a flawed decision-making process and contrary to the TSCA. For the
reasons explained below, we disagree and deny review of § 713.9(a).
A. Adequacy of Rulemaking Procedure
“[W]here a litigant brings both a State Farm challenge and a Chevron
challenge to a rule, and the State Farm challenge is successful, there is no need for
the reviewing court to engage in Chevron analysis. . . . In other words, if an
interpretive rule was promulgated in a procedurally defective manner, it will be
set aside regardless of whether its interpretation of the statute is reasonable. If the
rule is not defective under State Farm, though, that conclusion does not avoid the
need for a Chevron analysis . . . .” Catskill
Mountains, 846 F.3d at 522. We therefore
begin by assessing petitioners’ challenge to EPA’s rulemaking procedures.
Petitioners contend that EPA based § 713.9(a) on an irrational cost-benefit
analysis: it allegedly chose to forgo important informational benefits in order to
42
save high-volume manufacturers from the minimal costs of complying with some
(but not all) reporting requirements. But EPA disclaims reliance on cost-benefit
analysis, arguing that the partial exemption is based entirely on its finding that
requiring full reporting under both the Reporting Rule and CDR Rule would be
duplicative.
The record supports EPA’s assertion that it relied on a finding that the two
rules would yield comparable information, absent some exemption. The CDR
Rule requires that “any person who . . . manufactured (including imported) for
commercial purposes” at least 25,000 pounds of mercury compound or 2,500
pounds of elemental mercury must report the “total annual volume [of mercury]
. . . domestically manufactured or imported at each site,” as well as “the volume
used on site and the volume directly exported.” 40 C.F.R. § 711.15, (b)(3)(iii),
(b)(3)(iv); see
id. § 711.8(a)(2), (b). The Reporting Rule provides that “[p]ersons
who manufacture (including import) mercury in amounts” of at least 25,000
pounds of mercury compound or 2,500 pounds of elemental mercury must report
the quantities “stored” and “distributed in commerce,” but not the total amounts
“manufactured,” “imported,” or “exported.”
Id. § 713.9(a), (b).
Petitioners argue that requiring high-volume manufacturers to report
43
(without exemption) under both rules would not be duplicative, because the two
rules operate on different schedules for data collection.10 Because of the different
reporting timelines, three out of every four mercury inventories that EPA
publishes will include less recent data from high-volume manufacturers than
from other reporting entities. But discrepancies in the timing of reporting do not
undermine EPA’s conclusion that the content of the two sets of reports would be
sufficiently comparable to render the reports duplicative.
The Reporting Rule’s exemption applies to exactly the same manufacturers
who are subject to the CDR Rule’s reporting requirement, and it exempts them
from reporting information that closely tracks that which the CDR Rule requires
them to report. Thus, EPA’s reliance on Congress’s mandate to avoid requiring
duplicative reporting, where feasible, see 15 U.S.C. § 2607(a)(5), is “a satisfactory
10
The TSCA requires that EPA publish its mercury inventory every three years,
beginning in 2017. 15 U.S.C. § 2607(b)(10)(B). The Mercury Reporting Rule,
designed to facilitate that triennial inventory, sets out a reporting and publication
schedule under which the most recent data reflected in the inventory is data from
two calendar years prior. (In other words, the inventory published in 2020 will
include data through calendar year 2018; the inventory published in 2023 will
include data through calendar year 2021.) 40 C.F.R. § 713.17. The CDR Rule
requires that manufacturers report every four years, beginning in 2016, on
mercury use through the preceding calendar year. (Thus, in 2020 manufacturers
will report data from 2016-2019.)
Id. § 711.20.
44
explanation for its action” that includes “a rational connection between the facts
found and the choice made.” Encino
Motorcars, 136 S. Ct. at 2125 (quoting State
Farm, 463 U.S. at 43). We therefore do not find § 713.9(a) to be arbitrary or
capricious as a result of defective rulemaking processes.
B. Reasonableness of § 713.9(a)
Petitioners also challenge § 713.9(a) as an unreasonable interpretation of
TSCA’s directions that “any person who manufactures mercury or mercury-
added products . . . shall make periodic reports” and that EPA “shall, to the
extent feasible . . . not require reporting which is unnecessary or duplicative.” 15
U.S.C. § 2607(b)(10)(D)(i), (a)(5), (A). Because this claim pertains to the
reasonableness of EPA’s initial interpretation of the amended TSCA, we evaluate
the provision under the Chevron framework. See Catskill
Mountains, 846 F.3d at
521.
Our analysis at the first step of the Chevron inquiry mirrors that which we
applied, above, to the assembled product provisions. Contrary to petitioners’
claims, the TSCA’s requirement that “any person who manufactures mercury or
mercury-added products . . . shall make periodic reports,” 15 U.S.C.
§ 2607(b)(10)(D)(i), does not preclude EPA from determining what information is
45
required,
id., or from creating exemptions for categories of manufacturers or
importers of mercury from making reports that it reasonably determines would
be unnecessary or duplicative,
id. § 2607(a)(5)(A). Furthermore, the exemption for
high-volume manufacturers is partial rather than categorical: manufacturers
subject to the exemption are still obligated to report some information under the
Reporting Rule. See 40 C.F.R. § 713.9(a). Therefore, even if the TSCA did preclude
EPA from completely exempting manufacturers who meet its definition, it is far
from clear that it would also foreclose § 713.9(a). The provision is not
unambiguously contrary to the statute. Nor does the TSCA unambiguously
require this specific partial exemption for high-volume manufacturers: the TSCA
makes no mention of the CDR Rule, and EPA might have reasonably determined
that reports from manufacturers subject to the CDR Rule were necessary to its
inventory, notwithstanding those manufacturers’ preexisting reporting
obligations. Accordingly, we conclude at Chevron Step One that § 713.9(a) is
neither unambiguously precluded nor required by the statutory text.
At Chevron Step Two, we examine whether § 713.9(a) is “based on a
permissible construction of the statute.” Kilgour v. SEC,
942 F.3d 113, 122 (2d Cir.
2019) (internal quotation marks omitted). Petitioners argue that the amounts of
46
mercury manufactured, imported, and exported can vary considerably from year
to year. But notwithstanding this variance, petitioners do not establish that the
asynchrony between the reporting obligations under the Reporting Rule and the
CDR Rule will so significantly distort the results of the triennial inventory as to
make the Reporting Rule’s partial exemption for high-volume manufacturers
unreasonable.
Considering the substantial overlap between the information that high-
volume manufacturers must report under the CDR Rule and the information that
the same manufacturers would be required to report under the Reporting Rule,
absent § 713.9(a), we find that the partial exemption for such reporters is a
reasonable interpretation of EPA’s obligation “not [to] require reporting which is
. . . duplicative,”15 U.S.C. § 2607(a)(5)(A), “to the extent feasible,”
id. § 2607(a)(5).
Accordingly, we deny review of 40 C.F.R. § 713.9(a).
CONCLUSION
For the reasons stated above, we DENY REVIEW of the exemption for
manufacturers of assembled products with mercury-added components at 40
C.F.R. § 713.7(b)(3) and the partial exemption for high-volume manufacturers at
40 C.F.R. § 713.9(a), and we GRANT REVIEW of and VACATE the exemption for
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importers of assembled products with mercury-added components at 40 C.F.R.
§ 713.7(b)(2).
48