For use in ENVL417-Environmental Law
Markups and annotations added
All other users refer to original source at:: 636 F.2D 1267, 205 U.S.APP.D.C. 139

A review regulations of promulgated by the Administrator of the United States Environmental Protection Agency. The Court of Appeals held that:
(1) no substantial evidence supported the administrative determination to classify certain polychlorinated biphenyl uses as "totally enclosed" and therefore exempt;
(2) no substantial evidence supported the administrative decision to exclude from regulation all materials containing concentrations of PCBs below 50 ppm;
(3) substantial evidence supported the administrative determination to allow continued use of eleven nontotally enclosed uses.

In this case the Environmental Defense Fund (EDF) petitions for review of regulations, issued by the U. S. Environmental Protection Agency (EPA), that implement section 6(e) of the Toxic Substances Control Act (TSCA).(FOOTNOTE 1 ) That section of the Act provides broad rules governing the disposal, marking, manufacture, processing, distribution, and use of a class of chemicals called polychlorinated biphenyls (PCBs).(FOOTNOTE 2)

EDF seeks review of three aspects of the regulations.(FOOTNOTE 3) First, it challenges the determination by EPA that certain commercial uses of PCBs are "totally enclosed," a designation that exempts those uses from regulation under the Act. Second, it claims that the EPA acted contrary to law when it limited the applicability of the regulations to materials containing concentrations of PCBs greater than fifty parts per million (ppm). Third, EDF challenges the decision by EPA to authorize the continued use of eleven non-totally enclosed uses of PCBs.

From our examination of the record, we find that there is no substantial evidence to support the EPA determination to classify certain PCB uses as "totally enclosed." We also find that there is no substantial evidence in the record to support the EPA decision to exclude from regulation all materials containing concentrations of PCBs below fifty ppm. Accordingly, on these first two points, we hold unlawful and set aside the challenged regulations, and remand to EPA for further proceedings consistent with this opinion. We find, however, that there is substantial evidence in the record to support the EPA determination to allow continued use of the eleven non-totally enclosed uses. Accordingly, on this third point, we uphold the EPA regulations.

A. Polychlorinated Biphenyls Polychlorinated biphenyls (PCBs) have been manufactured and used commercially for fifty years for their chemical stability, fire resistance, and electrical resistance properties. They are frequently used in electrical transformers and capacitors. However, PCBs are extremely toxic to humans and wildlife. The extent of their toxicity is made clear in the EPA Support Document (FOOTNOTE 4) accompanying the final regulations, in which the EPA Office of Toxic Substances identified several adverse effects resulting from human and wildlife exposure to PCBs. Epidemiological data and experiments on laboratory animals indicate that exposure to PCBs pose carcinogenic and other risks to humans. Experimental animals developed tumors after eating diets that included concentrations of PCBs as low as 100 parts per million (ppm). Experiments on monkeys indicate that diets with PCB concentrations of less than ten ppm reduce fertility and cause still births and birth defects. Other data show that PCBs may adversely affect enzyme production, thereby interfering with the treatment of diseases in humans. Support Document, supra note 4, at 9-18. EPA has found that PCBs will adversely affect wildlife as well as humans. Concentrations below one ppb (part per billion) are believed to impair reproductivity of aquatic invertebrates and fish. Some birds suffered "severe reproductive failure" when fed diets containing concentrations of only ten ppm of PCBs. Id. at 19. Because PCBs collect in waterways and bioaccumulate in fish,(FOOTNOTE 5) fish-eating mammals run a special risk of adverse effects. Such mammals may have "significantly higher concentrations of PCBs in their tissues than the aquatic forms they feed on." Id. at 36.

EPA estimates that by 1975 up to 400 million pounds of PCBs had entered the environment. Approximately twenty-five to thirty percent of this amount is considered "free," meaning that it is a direct source of contamination for wildlife and humans. The rest, "mostly in the form of industrial waste and discarded end use products, is believed to be in landfill sites and thus constitutes a potential source of new free PCBs." Id. at 33-34.(FOOTNOTE 6) Other significant sources of PCBs include atmospheric fallout and spills associated with the use or transportation of PCBs. Id. at 29.

Responding to the dangers associated with the use of PCBs and other toxic chemicals, Congress in 1976 enacted the Toxic Substances Control Act (TSCA), Pub.L.No.94-469, 90 Stat. 2003 (1976). Although the Act is generally designed to cover the regulation of all chemical substances, section 6(e) refers solely to the disposal, manufacture, processing, distribution, and use of PCBs. No other section of the Act addresses the regulation of a single class of chemicals. The special attention accorded to PCBs in the Toxic Substances Control Act resulted from the recognized seriousness of the threat that PCBs pose to the environment and human health. During the debate over the Senate version of the Act, Senator Nelson, the author of the amendment adding the PCB subsection to the Senate bill, noted that PCBs were widespread in the environment and that they posed significant potential dangers to human health and to wildlife.(FOOTNOTE 7) In the House of Representatives, Congressman Dingell introduced a similar amendment to the House version of the Toxic Substances Control Act,(FOOTNOTE 8) not only because PCBs posed great dangers to the natural and human environments, but also because "the history of EPA is not one of vigorous and quick action." (FOOTNOTE 9)

A. Criteria for the "Unreasonable Risk" Determination ... Using the criteria set forth in subsection 6(c)(1),(FOOTNOTE 18) the Administrator found that eleven non-totally enclosed uses did not present an unreasonable risk. On the basis of these findings, EPA authorized the continued use of the eleven non-totally enclosed uses here in dispute.(FOOTNOTE 19) In attacking these use authorizations, EDF claims that the Administrator employed the wrong criteria in making his determinations concerning "unreasonable risk." (FOOTNOTE 20) ... Because there is no compelling evidence to support the position advanced by EDF, and because of the deference that we must accord an agency's reasonable interpretation of its statute, [citations omitted], we conclude that the statute does not preclude the EPA from using the subsection 6(c)(1) criteria in making the unreasonable risk determinations under 6(e)(2) (B). Moreover, because the expression "unreasonable risk of injury to health or the environment" is left undefined in section 6(e), the Administrator was required to give some meaning to it. Since the 6(c)(1) criteria obviously pertain to factors of "unreasonable risk," it was entirely appropriate for EPA to consider such criteria in ascribing a meaning to the use authorization provision in 6(e)(2)(B). EDF has shown nothing to indicate otherwise. In fact, EDF does not really contest use of the first three criteria in 6(c)(1) i. e. the effects on health and on the environment, and the availability of substitutes. Rather, EDF's primary focus is on the fourth criterion in 6(c) (1), relating to the economic consequences of the authorization. Yet, EDF's objections to the "economic consequences" criterion cannot stand in the face of section 2(c) of the Act, which expressly requires the Administrator to consider such factors. (FOOTNOTE 23) Furthermore, the particular economic factors that EPA took into account were plainly reasonable.(FOOTNOTE 24) The Administrator did not simply propose to consider the effect of the ban on industry, but also the effects on "the national economy, small business, technological innovation, the environment, and public health." See note 18, supra. This formulation, which considers a broad range of benefits and costs of the ban and use authorization, is entirely consistent with the section 2(c) requirement that the Administrator consider the economic and social impact on his actions. Because the 6(c)(1) criteria fulfill an express mandate of the statute and reflect a reasonable interpretation of an ambiguous phrase, we conclude that the Administrator did not err in choosing those criteria to make the unreasonable risk determinations under 6(e)(2)(B).(FOOTNOTE 25)

B. Application of the Criteria

EDF's final attack on the use authorizations is that the Administrator did not properly apply his own criteria in making the unreasonable risk determinations. Here, too, we reject EDF's position.(FOOTNOTE 26) Petitioner's reply brief, p. 33 n.1. Because use in microscopy mounting medium, research and development, and pigments also involves small amounts of PCBs or short authorization periods, see Preamble to Final Ban Regulations, 44 Fed.Reg. 31,535-37 (1979), we assume that EDF does not challenge these authorizations. We note, however, that our review of the record finds substantial evidence supporting the Administrator's decision to authorize those uses. As a result, we restrict our discussion in the text to the servicing of transformers and electromagnets, and the use and servicing of railroad transformers. EPA's use authorizations for servicing non-railroad transformers and electromagnets are predicated in part on its determination that non- railroad transformers and electromagnets are totally enclosed. See id. at 31,530, 31,536. Because of our disposition of EDF's challenge to the Administrator's decision finding that these classes of uses are totally enclosed, see section V, infra, the present discussion applies only to transformers and electromagnets that are actually totally enclosed. The standard of judicial review for rules promulgated under section 6(e) is expressly set forth in subsection 19(c)(1)(B)(i): "the court shall hold unlawful and set aside such rule if the court finds that the rule is not supported by substantial evidence in the rulemaking record." 15 U.S.C. s 2618(c)(1)(B)(i). Evidence includes "any matter in the rulemaking record." Id. The substantial evidence standard (FOOTNOTE 27) mandated by the Act is generally considered to be more rigorous than the arbitrary and capricious standard normally applied to informal rulemaking.(FOOTNOTE 28) Under the substantial evidence standard, a reviewing court must give careful scrutiny to agency findings and, at the same time, accord appropriate deference to administrative decisions that are based on agency experience and expertise. Because administrative decisions often involve judgments based on incomplete or even conflicting scientific data, the agency "may have to fill gaps in knowledge with policy considerations." AFL-CIO v. Marshall, 617 F.2d 636, 651 (D.C.Cir.1979). Consequently, reviewing courts "must examine both factual evidence and the agency's policy considerations set forth in the record." Id. The court's role in reviewing regulations is to ensure public accountability "by requiring the agency to identify relevant factual evidence, to explain the logic and the policies underlying any legislative choice, to state candidly any assumptions on which it relies, and to present its reasons for rejecting significant contrary evidence and argument." United Steelworkers of America v. Marshall, --- F.2d ----, ----, No. 79-1048 (D.C.Cir. Aug. 15, 1980). With these general guidelines in mind, we review EPA's PCB use authorizations. ... In an attempt to reduce the costs of compliance and the risks associated with exposure to PCBs, the Administrator created two categories for transformers PCB-contaminated transformers (containing PCB concentrations between fifty and 500 ppm) and PCB transformers (containing PCB concentrations greater than 500 ppm). Because the Administrator found that proper protective clothing and good management practices should reduce PCB exposure to "very low levels," the regulations permit routine servicing of PCB transformers and electromagnets. Preamble to Final Ban Regulations, 44 Fed.Reg. 31,531 (1979).(FOOTNOTE 29) Additionally, the Administrator heard uncontradicted evidence that a prohibition of routine servicing would significantly increase the chances of catastrophic transformer failure, presenting "far greater risks to health and the environment than that associated with the minimal PCB exposure during routine servicing." Id. However, the Administrator found that the rebuilding of PCB transformers and electromagnets (i. e. non-routine servicing) risks greater exposure to PCBs due to leaks, spillage, or volatilization of the dielectric. The Administrator also found that a prohibition against "any servicing (including rebuilding) of PCB Transformers that involves removing the coils from the casing ... will cost about $12 million the first year and steadily less each year thereafter." Id. Applying these findings to the 6(c) (1) criteria, the Administrator ruled that continued routine servicing, without rebuilding, and not involving the removal of coils, would present no unreasonable risk of injury.(FOOTNOTE 30) The uncontradicted evidence and the explication of policy considerations in the present record is sufficient to uphold the use authorization for routine servicing of PCB transformers and electromagnets. ... Because they contain lower concentrations of PCBs, PCB-contaminated transformers present correspondingly smaller risks associated with exposure. Accordingly, the Administrator found that routine servicing of PCB-contaminated transformers presents no unreasonable risk of injury. Furthermore, because ninety-nine percent of all large transformers are PCB-contaminated transformers, a prohibition on rebuilding could cause "extremely high" costs. Id. Balancing these factors, the Administrator concluded that there was no unreasonable risk associated with the rebuilding or other extensive servicing of PCB-contaminated transformers. Through these two classifications the Administrator has sought to encourage users to convert to PCB-contaminated transformers by draining their PCB transformers and refilling them with some other dielectric fluid. Only after converting the transformers can users rebuild their transformers, thereby reducing operating costs. Thus, the Administrator has created an incentive to dispose of PCBs without imposing extraordinary costs on industry. These policy considerations and findings reflect the criteria outlined in subsection 6(c) (1). Because the Administrator has carefully articulated his policy judgments, and because there is substantial evidence in the record to support his findings, we uphold the use authorization for PCB-contaminated transformers. The Administrator's authorization of the use and servicing of railroad transformers also reflects a proper balancing of the subsection 6(c)(1) criteria. Because of the strenuous conditions under which they operate, railroad transformers often leak PCBs onto railroad beds,(FOOTNOTE 31) risking exposure to the environment and to workers and other persons near rail lines. On the other hand, nearly 1,000 of these transformers are currently used in railroad engines. A flat prohibition of their use would produce "an unacceptably severe curtailment of railroad service." Id. at 31,532. In order to balance the social and economic impact of a prohibition against the risks to health and the environment, the Administrator sought a solution that would permit continued use while promoting conversion to non-PCB dielectric fluid. In reaching his solution, the Administrator considered the ninety million dollars in costs associated with immediate conversion to non-PCB dielectrics and the undermined safety risks associated with fire and explosion in using non-PCB dielectrics. Consequently, EPA issued regulations requiring railroads to reduce the concentration of PCBs in railroad transformers to six percent (60,000 ppm) by 1982, and to 1,000 ppm by 1984. This timetable, EPA believes, will give it sufficient time to evaluate the risks associated with use of non-PCB fluids, and will also substantially reduce the costs of compliance. Id. at 31,533. It is clear that the Administrator has properly applied the 6(c)(1) criteria in making the unreasonable risk determinations. Where scientific knowledge is incomplete, EPA has set forth specific policy considerations explaining the final regulations. Finding substantial evidence in the record to support the Administrator's findings, we uphold the authorizations for railroad transformers.(FOOTNOTE 32)