ELR Citation: ELR 20490
No(s). s. 82-2282 et al (D.C. Cir. Apr 22, 1983)

The court affirms in part and vacates in part the Environmental Protection Agency's (EPA's) regulations limiting lead content in gasoline produced by small refiners, ruling that the final standard of 1.10 grams per leaded gallon (gplg) and the past production requirement in the definition of "small refinery" are valid, but that the interim 1.90-gplg standard and the past ownership requirement are not valid. EPA had issued lead content regulations setting a 0.5-gram-per-gallon (gpg) standard, which was a pooled average of all gas produced by a refinery, for large refiners, and setting a sliding-scale standard for small refineries until October 1, 1982, when small refiners also had to meet the 0.5-gpg standard. But before that standard went into effect, EPA proposed and promulgated a rule changing the standard to a stricter 1.10 gplg for all refiners, giving small refiners extra time to meet the standard, but imposing a 1.90-gplg interim standard. EPA also tightened the definition of "small refinery."

Initially, the court rules that EPA complied with §211(g)(2) of the Clean Air Act, which authorizes EPA to regulate small refiners after October 1, 1982, if it takes into account past experience under the sliding-scale standard. The language and the legislative history support the conclusion that EPA must consider, but not make specific findings concerning, such experience. Also, the court rules that EPA may issue lead content regulations under §211(c) that are stricter than necessary to meet the national ambient air quality standards (NAAQS) for lead. While both §108, governing NAAQS, and §211 direct EPA to protect public health and welfare, nothing in §211 prohibits EPA from setting different substantive standards for fuel additives than for ambient air quality.

Next, the court clarifies the standards of judicial review it must apply to the lead rules. As to the final standard, the court rules that EPA's decision to impose a uniform 1.10-gplg standard is supported by substantial evidence in the record. The court concludes that the record supports EPA's conclusion that further reduction in gasoline lead will have significant health benefits. However, EPA failed to explain adequately the health basis for choosing the 1.10-gplg standard rather than some other standard, but because EPA justified the 1.10-gplg standard on other grounds, that was not reversible error. The record also supports EPA's conclusion that small refiner lead use is a health hazard in both urban and rural areas. The court upholds EPA's determination that the 1.10-gplg standard is feasible for small refiners. EPA properly assumed in its aggregate model that small refineries would engage in interrefinery trading of blending components to meet the standard. The court agrees that equity and efficiency favor a uniform standard and that EPA has adequately explained its policy choice.

Next, the court rules that EPA considered an appropriate range of alternatives to the lead rule in its analysis under the Regulatory Flexibility Act, which requires agencies to analyze alternatives to minimize economic impacts on small entities. The court also rules that the July 1, 1983, effective date for the 1.10-gplg standard is reasonable. Finally, the court rules that while EPA improperly added information to the record too late into the comment period to allow for effective comments, the petitioners failed to show that there is a substantial likelihood that the rule would have significantly changed had they been given an opportunity to comment.

However, the court invalidates the 1.90-gplg interim standard for small refiners. First, it rules that EPA's failure to give proper notice of the interim standard is reversible error under §307(d)(8) of the Act. EPA failed to clarify in the proposed rule that 1.90 gplg was within the range of proposed alternatives or that the interim standard was to be effective immediately. Nor does the record support EPA's conclusion that small refiners could meet the interim standard at reasonable costs. In vacating the standard, the court does not reinstate the old rule, but leaves it to EPA to promulgate a temporary rule that is stricter than the old rule but not as strict as the new interim rule.

The court rejects in part EPA's definition of "small refinery" in the final rule. It rules that petitioners received adequate notice that EPA would express the definition in terms of past production rather than capacity. However, the court vacates that part of the rule that excludes refineries owned by a large refiner during any period after July 1, 1981, because EPA failed to provide adequate notice in the proposed rule and because EPA failed to explain its choice of July 1, 1981, as a cutoff date. The court leaves in force that part of the rule that requires that a small refinery not be currently owned or controlled by a large refinery.

Finally, the court rules that §211(f)(5) prohibits judicial stays of agency action under §211(f) but not under other provisions of §211. Therefore, its stay of the past ownership requirement was valid.

[Related decisions are reported at 13 ELR 20390 and 20391 — Ed.]

Counsel are listed at 13 ELR 20391.

Before WILKEY, WALD, and MIKVA, Circuit Judges.