NATURAL RESOURCES DEFENSE COUNCIL, INC., STATE OF VERMONT v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ANDREW R. WHEELER, IN HIS CAPACITY AS ADMINISTRATOR OF THE U.S. ENVIRONMENTAL PROTECTION AGENCY
Docket Nos. 18-2121-ag; 18-2670-ag
United States Court of Appeals, Second Circuit
August Term, 2019
Argued: November 20, 2019 Decided: June 5, 2020
18-2121-ag (L)
Nаtural Resources Defense Council, Inc. and State of Vermont v. United States Environmental Protection Agency
Before: 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,
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, 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 Curiаe 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.”
Under
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,
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; 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 оf 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 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
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.”
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).”
The statute directs EPA to “avoid duplication” by “coordinat[ing] the reporting under this subparagraph with [IMERC].”
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 “idеntify any manufacturing processes or products that intentionally add mercury” or to “recommend actions . . . to achieve further reductions,” as required by the TSCA.
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);
The Reporting Rule requires that “[a]ny person who manufactures (including impоrts) mercury” or “a mercury-added product,” aside from specified categories of exempted persons, “must report.”
(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 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 battеry or lamp that contains mercury – is not itself an assembled product.1 Under
Manufacturers and importers who are subject to the Reporting Rule‘s 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.
NRDC and Vermont timely petitioned this Court for review of the Mercury Reporting Rule. See
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 оr unnecessary reporting. We therefore deny review of
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 thеy will be injured by their lack of 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 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 disclosurе. 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 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 deference to the agency‘s interpretation of the statute so long as it is supported by a
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.
”State Farm and Chevron provide for related but distinct standards for reviewing rules promulgated by administrative agencies.” Catskill Mountains, 846 F.3d at 521. “Muсh 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.
The Mercury Reporting Rule is EPA‘s initial interpretation of
III. Exemptions for Importers and Manufacturers of Assembled Products
Petitioners contend that the reporting exemptions for importers and manufacturers of assembled products, codified at
(b)(3), are unlawful because they contravene Congress‘s clear statutory directive that manufacturers of mercury or mercury-added products report to EPA. See
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.”
Petitioners argue that the TSCA unambiguously requires all manufacturers 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.”
We conclude, however, that the TSCA does not unambiguously direct EPA to require rеporting 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 persons “who manufacture[] mercury or mercury-added products.”
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,”
Because the TSCA does not unambiguously mandate that EPA require reporting from every manufacturer of a mercury-added product, EPA‘s exemptions in
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 directivе 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 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
Congress directed EPA both to collect rеports from “any person who manufactures . . . mercury-added products” and “not [to] require reporting which is unnecessary or duplicative.”
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 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
2. Exemption for Importers of Assembled Products
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 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 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
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
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 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
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 рosition. 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 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,”
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
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 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.”
EPA аlso 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
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 еxport 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 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 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
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
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
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 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 bе 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.”
Petitioners argue that requiring high-volume manufacturers to report (without exemption) under both rules would not be duplicative, because the two rules operate on different schedules for data collection.10
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
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.”
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,”
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 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 interрretation of EPA‘s obligation “not [to] require reporting which is . . . duplicative,”
CONCLUSION
For the reasons stated above, we DENY REVIEW of the exemption for manufacturers of assembled products with mercury-added components at