TSG Inc v. US EPA

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
8-8-2008
TSG Inc v. US EPA
Precedential or Non-Precedential: Precedential
Docket No. 07-1116
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-1116
TSG INCORPORATED,
Petitioner
v.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent
On Petition for Review from an
Applicability Determination of the
United States Environmental Protection Agency
Argued April 17, 2008
Before: SCIRICA, Chief Judge,
AMBRO and FISHER, Circuit Judges.
(Filed: August 8, 2008)
Bart E. Cassidy (Argued)
Katherine L. Vaccaro
Manko, Gold, Katcher & Fox
401 City Avenue, Suite 500
Bala Cynwyd, PA 19004
Attorneys for Petitioner
David Gunter (Argued)
Thomas A. Lorenzen
United States Department of Justice
Environmental Defense Section
P.O. Box 23986
Washington, DC 20026-3986
Attorneys for Respondent
OPINION OF THE COURT
FISHER, Circuit Judge.
TSG, Inc. (“TSG”) filed this petition to challenge the
validity of the Environmental Protection Agency’s (“EPA”)
Applicability Determination, which found that TSG was a fabric
“finishing operation” under Subpart OOOO of the National
Emission Standards for Hazardous Air Pollutants (“NESHAP”).
TSG argues that its fabric treating process should not be
required to abide by the finishing operation standards and should
instead qualify as a coating operation under the regulations. For
the reasons that follow, we conclude that the EPA did not
2
clearly err when it classified TSG as a finishing operation.
Therefore, we will deny the petition for review and uphold the
EPA’s determination.
I. BACKGROUND
Petitioner TSG is a “commission fabric coater” with
facilities in Pennsylvania and North Carolina. It receives fabrics
from other entities, including “jobbers, importers, and interior
decorators,” and treats these fabrics to enhance qualities such as
“water repellancy, stain resistance, and fire repellancy” and to
meet other such specifications or requirements. TSG claims its
process and business model can be contrasted with that used by
large, vertically integrated mills, which typically apply
“aqueous-based stain repellant coatings.” Such large mills are
able to use this method because of their familiarity with their
fabric, as the aqueous-based method can potentially harm some
fabrics. Because TSG deals with a variety of non-uniform and
unfamiliar fabrics, it uses a solvent-based process.
In TSG’s process, stain-repellant chemicals are diluted in
a solvent, trichloroethene (“TCE”), which is then sprayed onto
the fabric as it passes through the spraying machinery. This
method allows TSG to process many different fabric weights,
widths, colors, and constructions, as the solvent is generally
gentler on a wider variety of fabrics than is a water-based
system. As TSG characterizes it, the solvent acts as a “carrier”
for the stain-repellant chemicals as they are sprayed onto the
fabric and then evaporates when the fabric passes through the
heating and drying machinery. A solvent recovery system then
captures the evaporated solvent for reuse.
3
Congress enacted the Clean Air Act (“CAA”) “to protect
and enhance the quality of the Nation’s air resources so as to
promote the public health and welfare and the productive
capacity of its population.” 42 U.S.C. § 7401(b)(1). Under the
CAA, the administrator of the EPA (“Administrator”) “shall
promulgate regulations establishing emissions standards” for
each category of sources of “hazardous air pollutants” (“HAP”).
Id. § 7412(d)(1).
On May 29, 2003, the EPA promulgated a NESHAP for
the category of new and existing fabric and textile operations
involved in “coating, printing, slashing, dyeing, and finishing.”
68 Fed. Reg. 32,172 (May 29, 2003) (codified at 40 C.F.R.
§ 63.4280 et seq. (Part 63, Subpart OOOO)). Subpart OOOO
further divided these operations into the subcategories of
“coating and printing,” “slashing,” and “dyeing and finishing,”
setting different emission standards for each of these
subcategories. 40 C.F.R. § 63.4281; Id. § 63.4290; Id., Table 1.
“Coating” is defined as
“the application of a semi-liquid coating material
to one or both sides of a textile web substrate.
Once the coating material is dried (and cured, if
necessary), it bonds with the textile to form a
continuous solid film for decorative, protective, or
functional purposes. Coating does not include
finishing where the fiber is impregnated with a
chemical or resin to impart certain properties, but
a solid film is not formed.”
Id. § 63.4371. “Finishing” is defined as
4
“the chemical treatment of a textile (e.g., with
resins, softeners, stain resist or soil release agents,
water repellants, flame retardants, antistatic
agents, or hand builders) that improves the
appearance and/or usefulness of the textile
substrate.”
Id.
TSG did not comment on the proposed rulemaking during
the notice and comment period. Instead, TSG requested, by a
letter dated June 23, 2005, that the EPA develop “an alternative
MACT [maximum achievable control technology] standard for
its textile operations.” TSG asserted that the stringency of the
finishing operation requirements, if applied to TSG, would
likely require it to cease operation. TSG acknowledged that
“[o]n its face, TSG’s application of stain-repellent chemicals
constitutes a ‘finishing operation’” but stated that because TSG
uses a chemical solvent rather than a water-based solution, it
should not be subject to “finishing operation” emission
standards. The EPA requested more information to make its
determination, but TSG did not respond until June 30, 2006. In
order to obtain the necessary information, the EPA contacted the
Pennsylvania Department of Environmental Protection
(“PDEP”), which faxed additional information regarding TSG’s
processes from its records of TSG’s state permit application.
On November 8, 2006, based on the information it had
gathered, the EPA issued an Applicability Determination. The
EPA concluded that TSG’s operations were “finishing
operations” for purposes of Subpart OOOO. The EPA
5
determined that the TSG process impregnates textile fibers with
a stain repellant without resulting in the formation of a solid
film, so it is a “finishing,” rather than a “coating” operation.
The EPA also determined that the chemical solvent used by
TSG was not merely a “carrier” of materials, but itself a
“finishing material.” The EPA stated that its decision was based
on the current MACT standard and noted that TSG was
permitted to petition the EPA to develop a different standard.
TSG received the decision on November 16, 2006. This petition
for review followed.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction to review a final action of the EPA
under 42 U.S.C. § 7607(b)(1) (“A petition for review of . . . any
. . . final action of the Administrator under this chapter . . .
which is locally or regionally applicable may be filed only in the
United States Court of Appeals for the appropriate circuit.”). To
be a final action, the EPA’s Applicability Determination must
comply with the requirements of Bennett v. Spear, 520 U.S. 154,
177-78 (1997). “First, the action must mark the consummation
of the agency’s decisionmaking process-it must not be of a
merely tentative or interlocutory nature. And second, the action
must be one by which rights or obligations have been
determined, or from which legal consequences will flow.” Id.
(internal citations and quotation marks omitted). As the parties
concede, and as the facts detailed above indicate, the Bennett
requirements have been met here. The EPA’s action was the
consummation of the decisionmaking process. It determined
that TSG was a finishing operation and was therefore obligated
to abide by a particular HAP control standard. Thus, the EPA’s
6
Applicability Determination is a final agency action and we
have jurisdiction to consider TSG’s petition. See Star Enter. v.
Envtl. Prot. Agency, 235 F.3d 139 (3d Cir. 2000).
We review an administrative agency’s interpretation of
its own regulations for plain error, deferring to the agency’s
construction of the regulation’s language, unless it is plainly
erroneous or inconsistent with the regulation. Beazer E., Inc. v.
Envtl. Prot. Agency, 963 F.2d 603, 606-07 (3d Cir. 1992)
(internal citations and quotation marks omitted).
“While we apply the ‘plainly erroneous’ standard
of review where the meaning of the words in the
regulation is in doubt or subject to different
interpretations, we are not at liberty to allow the
agency to imply language that does not exist in
the regulation. We acknowledge the complex
nature of environmental statutes and regulations
and the specialized knowledge necessary to
construe them, and therefore, subject to these
limitations, defer to the EPA’s interpretations of
its own regulations.”
Id.; see also Star Enter., 235 F.3d at 147.
III. DISCUSSION
The crux of TSG’s argument is that there are operational
differences between its process for imbuing fabrics with stain-
resistant qualities and those processes generally used by large,
vertically integrated mills. TSG argues that despite these
7
differences, it has been unfairly and arbitrarily lumped into the
“finishing operation” category because, in promulgating the
regulation, the EPA primarily considered the processes used by
the larger mills. More specifically, TSG asserts that because it
uses a solvent-based process for treating its fabric, whereas most
large mills generally use an aqueous-based process, TSG should
not be considered a “finishing operation” under the regulations.
In addition, TSG asserts, it more closely fits the definition of a
“coating operation.” TSG makes a number of arguments based
on the language of the regulations and the intent of the EPA, and
it finally argues that, in any case, the EPA did not have enough
information to make the determination that it did.
A.
TSG first argues it is not a “finishing operation” because
TCE, the solvent that it uses in treating fabrics with anti-stain
agents, is not a “finishing material” under the regulations. In
doing so, TSG conflates two distinct issues: whether TSG’s
operation constitutes “finishing” as defined in Subpart OOOO,
and whether TCE is a “finishing material.” TSG makes no
argument that its process, which indisputably involves treatment
of fabrics with anti-stain agents, is not “finishing” as defined by
the regulations. “Finishing” is defined as the “chemical
treatment of a textile . . . that improves the appearance and/or
usefulness of the textile substrate,” and specifically includes
“stain resist or soil release agents.” 40 C.F.R. § 63.4371.
Based on the plain language of this definition, we cannot
conclude that the EPA clearly erred in determining that TSG’s
operations fit within the definition of “finishing.”
8
Despite this, TSG proceeds to argue that TCE is not a
“finishing material,” and therefore that TSG’s operation cannot
be a “finishing operation.” This argument is something of a
non-sequitur, as there is no authority for the proposition that all
materials used in a finishing operation must fall under the
definition of finishing materials. Regardless, the EPA did not
clearly err in its determination that TCE is, in fact, a finishing
material.
The regulations define finishing materials as
“the purchased substances (including auxiliaries
added to the finish to improve the finishing
process or the characteristics of the finished
textile) that are applied individually or as
mixtures to textile substrates to impart desired
properties.”
Id. TSG asserts that in its process the solvent acts only as a
carrier for the application of other materials to the fabric, and
technically the solvent itself has not been “applied” to the fabric
as required by the regulation, because it later evaporates.
The EPA has not clearly erred in declining to construe
the term “applied” so narrowly in this context. We therefore
defer to the EPA’s determination that under the plain language
of the regulation, the solvent, as used in TSG’s process, is a
“finishing material.” It is undisputed that the solvent is a
“substance[]” that is part of a “mixture[],” and it is sprayed onto
“textile substrates to impart desired properties,” in this case,
anti-stain properties. According to the Oxford English
9
Dictionary, to “apply” is “[t]o lay or spread (esp. a soft or liquid
substance, as paint, ink, etc.) on to a surface.” OED Online
(2008), available at http://dictionary.oed.com.
Merriam-Webster similarly defines it as “to lay or spread on [as
in] varnish.” Webster’s Third New International Dictionary 110
(1981). Absent from these definitions is any requirement that to
be “applied,” a substance must adhere permanently to the
substance to which it has been applied.
We agree with the EPA’s determination that “[t]he
solvent that TSG uses to dilute stain repellent finishes is a
transfer agent that is added to the finish as an auxiliary to
improve the finishing process, and therefore, is a finishing
material.” As the regulation states, the definition of finishing
materials “includ[es] auxiliaries,” so long as they are “added to
the finish to improve the finishing process.” 40 C.F.R.
§ 63.4371. TSG itself states in its initial letter to the EPA that
its solvent mixtures “are used to improve the efficiency of the
application process.” As TSG has acknowledged that the
solvent has been added as “carrier” to improve the process, the
EPA has not clearly erred in determining that it meets the
criteria for being considered an auxiliary. Therefore, the solvent
used in TSG’s operation is by definition a “finishing material.”
B.
TSG next argues that its operation should not have been
classified as a “finishing operation” because it more closely fits
the definition of a “coating operation.” As stated previously,
“coating” is defined as
10
“the application of a semi-liquid coating material
to one or both sides of a textile web substrate.
Once the coating material is dried (and cured, if
necessary), it bonds with the textile to form a
continuous solid film for decorative, protective, or
functional purposes.”
Id. It is not disputed that TSG’s operation sprays the solvent
mixture over one side of the fabric substrate in order to achieve
a functional purpose, but this is not in itself sufficient to qualify
it as a coating operation. In addition, to constitute “coating,” a
“continuous solid film” must be formed, and the process may
not “impregnate” the fabric with chemicals. See id. (“Coating
does not include finishing where the fiber is impregnated with
a chemical or resin to impart certain properties, but a solid film
is not formed.”).
Based on the information provided by PDEP and TSG,
the EPA determined that “the TSG process impregnates textile
fibers with a stain repellent to impart stain repellent properties,
and does not result in formation of a solid film.” The EPA
therefore concluded that TSG was not a coating operation, but
rather a finishing operation. Although TSG now argues that its
process does, in fact, result in a continuous solid film, and that
this occurs “without impregnating the fiber,” TSG provides no
support in the record for this assertion. It relies solely on a fax
from PDEP, which generally describes TSG’s process, but does
not make any reference to the formation of a continuous solid
11
film, coating, or finishing.1 In light of the foregoing, we
conclude that the EPA has not clearly erred in determining that
TSG is a finishing operation and not a coating operation.2
1
TSG also cites an EPA Technical Support Document,
relied upon by the EPA in the promulgation of Subpart OOOO,
for the proposition that its operation is a coating operation. This
document is, however, not part of the administrative record in
this case. Even if we were to consider it, it does little to support
TSG’s contentions. While it generally explains the sort of
operations that the EPA considered designating as “coating”
operations, it does not provide support for TSG’s argument that
its particular process forms a solid film or does not impregnate
the fibers. Because the final regulation is determinative of what
constitutes “coating,” the Technical Support Document does not
place the EPA’s Applicability Determination in doubt.
2
Although TSG argues that it is a “coating operation,” it
repeatedly refers to itself as a “finishing operation” in its
correspondence with the EPA. TSG’s letter of June 23, 2005,
states that “TSG is requesting a the development of an alternate
MACT standard for its textile finishing operations” and later, in
describing its process, notes that “[w]hen finishing fabrics, TSG
does not use a water-based . . . system.” While it is
acknowledged that there is some overlap in the definitions of
“coating” and “finishing,” these statements further undermine
TSG’s attempt to characterize its operation as a “coating
operation” for purposes of this appeal.
12
C.
In addition to its arguments that it does not qualify as a
finishing operation based on the text of the regulation, TSG
argues that its solvent-based processes are not finishing
operations because finishing operations are aqueous-based
processes, as conceived of by the EPA itself. In its Summary of
Public Comments, the EPA states that “[s]lashing and dyeing
and finishing operations are aqueous processes, and therefore,
the cleaning materials and preparation activities used in these
operations do not contain HAP.” The EPA reiterates this
statement in the preamble to Subpart OOOO. In addition, a
Technical Support Document relied on by the EPA in
promulgating Subpart OOOO notes that “[t]he coatings applied
by facilities . . . can be classified as solvent-borne and water-
borne, with the vast majority of the coatings applied being
solvent-borne.”3
TSG argues that these statements illustrate that in
promulgating the regulations, the EPA based the control
standard required for “finishing” and “coating” operations on
the assumption that finishing operations were generally
aqueous-based, and the that coating operations were generally
solvent-based. TSG speculates that the EPA did not account for
solvent-based finishing operations like TSG, which uses a
“process unique in the textile finishing industry.” In its
Applicability Determination, the EPA acknowledges that
3
This document is not part of the administrative record.
However, even if we were to consider it, it would not change the
outcome here for the reasons explained below.
13
“[u]nlike the water-based systems typically used in the textile
finishing industry, TSG uses a solvent-based system in which
stain-repellent chemicals are diluted with solvent.” However,
for the reasons already stated, the EPA nonetheless determined
that TSG was a “finishing operation” under the regulations.
TSG concludes that the EPA erred in its Applicability
Determination because, in promulgating Subpart OOOO, the
EPA intended that the more stringent finishing operation
requirements would apply to aqueous-based finishing
operations, not solvent-based operations such as TSG’s. This
argument is without merit. At no time does TSG argue that any
of the terms used in the regulations are ambiguous, nor does it
challenge the regulations themselves. Therefore, regardless of
the EPA’s purported intention to differentiate between solvent-
based and aqueous-based operations, we are left with the plain
language of the regulations as actually promulgated. The
definitions of coating and finishing do not differentiate between,
or even mention, aqueous- and solvent-based processes.
As stated previously, we exercise a deferential standard
of review where an agency is interpreting the meaning of its
own regulation, and will not disturb the agency’s determination
unless it is “plainly erroneous []or inconsistent with the
regulation.” Beazer, 963 F.2d at 606. Under this stringent
standard of review, the agency’s interpretation of the definitions
of coating and finishing operations is neither plainly erroneous
nor inconsistent with the regulation. TSG’s argument that the
EPA should read the regulations to imply a difference between
aqueous- and solvent-based processes must then necessarily fail,
as the regulations do not include this language. The EPA’s
14
interpretation and application of Subpart OOOO must be based
on the plain language of that regulation, not what it might have
intended. See Beazer, 963 F.2d at 607 (“[W]e are not at liberty
to allow the agency to imply language that does not exist in the
regulation”); Bethlehem Steel Corp. v. Occupational Safety &
Health Review Comm'n, 573 F.2d 157, 161 (3d Cir. 1978)
(“[T]he [agency] should not strain the plain and natural meaning
of words in a standard to alleviate an unlikely and
uncontemplated hazard. The responsibility to promulgate clear
and unambiguous standards is upon the Secretary. The test is
not what he might possibly have intended, but what he said.”).
TSG’s argument is further undermined by the fact that it
refers to itself as a finishing operation in its initial letter to the
EPA and never as a coating operation. TSG goes so far as to
admit that “[o]n its face, TSG’s application of stain-repellant
chemicals constitutes a ‘finishing’ operation covered by the
regulations.” As the EPA suggests, TSG’s most appropriate
course of action would have been to submit a comment to the
EPA during the notice and comment period after the regulation
was proposed, noting that solvent-based finishers would have
difficulty meeting the stringent emissions limitations in the
proposed regulations, and advocating for a recognition of the
distinction between solvent-based and aqueous-based operations
in the regulations themselves.
In addition, as the EPA informed TSG in its Applicability
Determination, it was “address[ing] the issue of applicability
only,” not TSG’s request for an alternative MACT standard. As
the EPA then advised TSG, TSG may petition the Office of Air
Quality Planning and Standards, the office that initially
15
promulgated Subpart OOOO, to request that different standards
be developed for solvent-based, as opposed to aqueous-based,
finishing operations. See 5 U.S.C. § 553(e) (“Each agency shall
give an interested person the right to petition for the issuance,
amendment, or repeal of a rule.”). However, the question
whether it is appropriate for the EPA to modify its rule and
differentiate between solvent-based and aqueous-based finishing
processes is not before us, and we will not speculate with
respect to this question. The only question properly before us is
whether the EPA has plainly erred in its interpretation and
application of Subpart OOOO’s plain language to TSG in its
determination that TSG qualified as a finishing operation. For
the reasons set forth above, we conclude that the determination
was not plainly erroneous or inconsistent with the statute.
D.
TSG’s final argument is that the EPA erred in issuing the
Applicability Determination because the information it
possessed was insufficient to support its conclusion that TSG’s
operation was a finishing operation. TSG argues that the EPA
should have issued a determination that it did not have sufficient
information, rather than determining that TSG was a “finishing
operation.” The linchpin of this argument is TSG’s assertion
that the EPA itself admitted that it did not have sufficient
information to provide a response to TSG’s August 3, 2005
letter reiterating its request for an alternative MACT. TSG
points to the EPA’s statement in the Applicability
Determination:
16
“In response to your August 3, 2005 letter, we
examined the applicability of Subpart OOOO to
the TSG process. However, we did not feel that
there was enough information included with your
submittal to provide a response.”
TSG’s argument is flawed for a number of reasons. First,
TSG has mischaracterized EPA’s statements in the Applicability
Determination. As the EPA explains, it declined to reach a
determination when it concluded that there was insufficient
information, and instead requested additional information.
When that information was not forthcoming in a timely manner,
the EPA obtained supplemental information from PDEP
regarding the nature of TSG’s processes. The EPA then reached
its conclusion that TSG was a finishing operation “[b]ased on
TSG’s letter and the supplemental information provided by the
state.” As the rest of the Applicability Determination clearly
states, although the EPA concluded that it did not have enough
information to make a determination at the time that it received
TSG’s initial letter on August 3, 2005, it concluded that it had
since gathered sufficient evidence to make a determination by
the time it issued the Applicability Determination on
November 8, 2006. Therefore, there is no merit to TSG’s
argument that the EPA admitted that it ultimately did not
possess sufficient information to make a determination.
TSG next argues that the information that the EPA relied
on is “not dispositive of the issue of whether TSG’s fabric
coating processes are finishing operations under Subpart
OOOO.” TSG’s argument is conclusory. TSG does not explain
why the PDEP information is not dispositive of the question. It
17
does not describe any of the ways in which the information that
the EPA relied on was insufficient, nor does it indicate what sort
of information TSG might have provided that would have
resulted in a different determination. To the contrary, the
information on which the EPA relied reveals that TSG’s process
applies stain resistant chemicals to various fabrics, and
therefore, as described previously, comports with the definition
of finishing operation. Accordingly, we conclude that the EPA
had sufficient information to determine that TSG was a finishing
operation.
IV. CONCLUSION
For the foregoing reasons, we conclude that the EPA did
not clearly err in determining that TSG’s operation constituted
a finishing operation under Subpart OOOO, nor is the
determination inconsistent with the regulations. Therefore, we
will deny the petition for review.4
4
As noted in footnotes 2 and 3, supra, TSG has relied on
certain documents not contained in the administrative record.
Upon motion, TSG requested that these documents be included
in the record on appeal. As we have determined that TSG’s
reliance on these documents does not alter our holding in this
case, we will deny this motion as moot.
18