`
`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
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`
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`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,
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`2
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`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
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`(“TSCA”) to require the U.S. Environmental Protection Agency (“EPA”) to “carry
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`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
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`Reporting Rule (“Reporting Rule”). As relevant here, the Reporting Rule requires
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`“[a]ny person who manufactures (including imports)” mercury or a “mercury-
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`added product” to report information on their products, see 40 C.F.R. §§ 713.7(a),
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`(b), 713.9; it also exempts certain categories of manufacturers and importers from
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`various reporting obligations. Three of those exemptions are at issue in this case.
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`3
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`Under § 713.7(b)(2) and (b)(3), importers and manufacturers, respectively, of
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`products that contain a mercury-added product as a component are exempt from
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`all reporting requirements. Under § 713.9(a), persons who manufacture or import
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`elemental mercury or mercury compounds in significantly large amounts are
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`exempt from certain reporting requirements.
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`Petitioners Natural Resources Defense Council, Inc., (“NRDC”) and the
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`State of Vermont (“Vermont”) (together, “petitioners”) challenge those three
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`exemptions from the Reporting Rule as unlawful agency action. As explained
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`below, we find that the exemption for importers of products containing mercury-
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`added components is an unlawful interpretation of the TSCA, because it lacks a
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`reasoned explanation. We find that the exemption for manufacturers of products
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`with mercury-added components and the exemption for high-volume
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`manufacturers are lawful in light of Congress’s directive to “not require
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`reporting which is unnecessary or duplicative.” 15 U.S.C. § 2607(a)(5)(A). We
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`therefore GRANT REVIEW of and VACATE the exemption codified at 40 C.F.R.
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`§ 713.7(b)(2) and DENY REVIEW of the exemptions codified at 40 C.F.R.
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`§§ 713.7(b)(3) and 713.9(a).
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`4
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`BACKGROUND
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`I.
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` Uses and Dangers of Mercury
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`Mercury is a naturally occurring element. It is also a potent neurotoxin that
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`does not degrade over time, making it both a significant public health threat and
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`a danger to the environment. One way that mercury enters the environment is
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`through the manufacture, use, and disposal of products that contain mercury.
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`Mercury released through those processes converts biologically into
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`methylmercury, the element’s most toxic form, which bioaccumulates in wildlife.
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`Methylmercury exposure in wildlife can cause death, reduced fertility, slowed
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`development and growth, and abnormal behavior that affects survival. Human
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`exposure occurs primarily from the ingestion of mercury through the
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`consumption of fish and shellfish. Elevated methylmercury levels in the
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`bloodstreams of young children and fetuses have been found to adversely affect
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`cognitive development. Studies also suggest that mercury exposure may affect
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`humans’ reproductive, renal, cardiovascular, and hematologic health.
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`Mercury has long been used in a wide range of industrial processes and as
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`an ingredient in many familiar products. Historically, mercury has been used in
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`products including batteries within watches, toys, and cameras; paint; pesticides;
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`cosmetics and skin care products; pharmaceuticals; vaccines; dental amalgam;
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`fluorescent, neon, and ultraviolet lamps used in car headlights, street lights, neon
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`signs, commercial lighting, and tanning beds; thermometers, blood pressure
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`cuffs, and other medical devices; and switches and relays used in pumps,
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`appliances, and industrial machinery. Since 1980, largely due to increased
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`awareness of the environmental and health dangers of mercury, the use of
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`mercury-added products in the United States has decreased by over 97 percent.
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`Nevertheless, mercury-added products including batteries, lamps, dental
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`amalgam, and switches and relays continue to be sold extensively in the United
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`States.
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`Since at least 2006, EPA has made the reduction of mercury-related risks an
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`agency priority. The United States is a party to the Minamata Convention, an
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`international agreement that seeks to protect human health and the environment
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`from the effects of mercury contamination. State governments have also been
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`instrumental to the reduction of mercury use nationwide, by enacting legislation
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`that restricts the production and sale of mercury-added products, regulates their
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`disposal, and implements labeling requirements. Thirteen states, including
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`Vermont, have formed a coalition of state environmental agencies, the Interstate
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`6
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`Mercury Education and Reduction Clearinghouse (“IMERC”), which manages an
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`interstate reporting system for manufacturers and a related database of
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`information on mercury use.
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`II.
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`Statutory Background
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`The TSCA authorizes EPA to regulate the use of “chemical substances and
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`mixtures . . . whose manufacture, processing, distribution in commerce, use, or
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`disposal may present an unreasonable risk of injury to health or the
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`environment.” 15 U.S.C. § 2601(a)(2); see also id. § 2605(a). The statute directs EPA
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`to promulgate rules requiring manufacturers and processors of chemical
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`substances to maintain records of their use of such substances and report that
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`information to EPA. See id. § 2607(a)(1)(A), (B).
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`In 2016, Congress enacted the Frank R. Lautenberg Chemical Safety for the
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`21st Century Act, which amended the TSCA by adding (among other things)
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`specific directives with respect to mercury. Section 8(b)(10) of the amended TSCA
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`provides that “[n]ot later than April 1, 2017, and every 3 years thereafter, the
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`Administrator shall carry out and publish in the Federal Register an inventory of
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`mercury supply, use, and trade in the United States.” 15 U.S.C. § 2607(b)(10)(B). It
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`directs EPA, in doing so, to “identify any manufacturing processes or products
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`7
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`that intentionally add mercury” and to “recommend actions, including proposed
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`revisions of Federal law or regulations, to achieve further reductions in mercury
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`use.” Id. § 2607(b)(10)(C).
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`The statute also includes a directive to manufacturers, calling on “any
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`person who manufactures mercury or mercury-added products or otherwise
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`intentionally uses mercury in a manufacturing process” to “make periodic
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`reports to the Administrator, at such time and including such information as the
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`Administrator shall determine by rule” in order “[t]o assist in the preparation of
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`the inventory under subparagraph (B).” Id. § 2607(b)(10)(D)(i). The TSCA’s
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`definitions provision makes clear that the “manufacture” of a chemical substance
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`includes manufacturing, producing, or “import[ing] [it] into the customs territory
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`of the United States.” Id. § 2602(9).
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`The statute directs EPA to “avoid duplication” by “coordinat[ing] the
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`reporting under this subparagraph with [IMERC].” Id. § 2607(b)(10)(D)(ii). It
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`further provides that, in carrying out this section of the TSCA, EPA “shall, to the
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`extent feasible[,]” “not require reporting which is unnecessary or duplicative”
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`and “minimize the cost of compliance with this section and the rules issued
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`thereunder on small manufacturers and processors.” Id. § 2607(a)(5), (A), (B).
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`III. Regulatory Background
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`In accordance with the amended TSCA’s requirements, EPA published its
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`initial inventory of mercury supply, use, and trade in 2017. Because EPA had not
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`yet promulgated a rule that directed manufacturers to report mercury use for
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`inclusion in the triennial inventory, its 2017 inventory drew exclusively on
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`publicly available data, which EPA acknowledged was “notably limited in
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`applicability to certain aspects of supply, use, and trade” and “in some cases []
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`outdated.” J. App’x 440. For that reason, EPA concluded that it was “premature”
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`to “identify any manufacturing processes or products that intentionally add
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`mercury” or to “recommend actions . . . to achieve further reductions,” as
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`required by the TSCA. Id. (quoting 15 U.S.C. § 2607(b)(10)(C)).
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`On June 27, 2018, EPA published the Mercury Reporting Rule (“Reporting
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`Rule”) in the Federal Register. See Mercury; Reporting Requirements for the
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`TSCA Mercury Inventory, 83 Fed. Reg. 30,054 (June 27, 2018); 40 C.F.R. pt. 713.
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`The Reporting Rule “specifies reporting and recordkeeping procedures . . . for
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`certain manufacturers (including importers) and processers of mercury” in order
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`to facilitate EPA’s statutorily mandated publication of a triennial mercury
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`inventory. 40 C.F.R. § 713.1(a). The reporting requirements apply to “[a]ctivities
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`undertaken with the purpose of obtaining an immediate or eventual commercial
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`advantage” involving the “[i]mport” or “[m]anufacture (other than import)” of
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`either mercury or mercury-added products, or the “[i]ntentional use of mercury
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`in a manufacturing process,” as well as related activities such as the
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`“[d]istribution in commerce, including domestic sale or transfer,” “[s]torage,”
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`and “[e]xport” of mercury. Id. § 713.1(b). Information must be reported for both
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`“[e]lemental mercury” and “mercury compound[s].” Id. § 713.5.
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`The Reporting Rule requires that “[a]ny person who manufactures
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`(including imports) mercury” or “a mercury-added product,” aside from
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`specified categories of exempted persons, “must report.” Id. § 713.7. Those who
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`are not required to report include, inter alia, manufacturers who do not seek a
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`commercial advantage and persons “engaged only in the generation, handling, or
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`management of mercury-containing waste.” Id. § 713.7(a)(1), (b)(1), (a)(3). Under
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`§ 713.7(b), the following categories of persons are also excused from all of the
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`rule’s reporting requirements:
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`(2) A person engaged only in the import of a product that
`contains a component that is a mercury-added product; or
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`(3) A person engaged only in the manufacture (other than
`import) of a product that contains a component that is a
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`mercury-added product who did not first manufacture
`(including import) the component that is a mercury-added
`product.
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`Both of these provisions concern products that contain mercury only
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`within a component (“assembled products”). A watch that contains, as one
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`constituent part, or “component,” a mercury-added battery, is an assembled
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`product; so, too, is a car with a mercury-added lamp in its headlight. By contrast,
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`a mercury-added component – in the above examples, a battery or lamp that
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`contains mercury – is not itself an assembled product.1 Under § 713.7(b)(2), an
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`importer of an assembled product, manufactured abroad, is exempt from the
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`requirements of the Reporting Rule. Under § 713.7(b)(3), a domestic
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`manufacturer of an assembled product is also exempt, so long as it does not also
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`manufacture the mercury-added component. Thus, a domestic entity that either
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`manufactures or imports a watch with a mercury-added battery need not report
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`to EPA, so long as that entity does not also import or manufacture the mercury-
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`added battery itself.
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`Manufacturers and importers who are subject to the Reporting Rule’s
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`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.
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`requirements generally must report the quantities of mercury, in pounds, that
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`they have manufactured, imported, exported, stored, and distributed in
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`commerce over relevant time periods. Id. § 713.9(b). But here, too, the Reporting
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`Rule makes exceptions for certain manufacturers and importers: “Persons who
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`manufacture (including import) mercury in amounts greater than or equal to
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`2,500 pounds (lbs.) for elemental mercury or greater than or equal to 25,000 lbs.
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`for mercury compounds for a specific reporting year must report” only the
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`quantities stored and distributed in commerce, and not the quantities
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`manufactured, imported, or exported. Id. § 713.9(a). Although it may seem
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`counterintuitive to exempt persons who manufacture or import the most mercury
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`from regulations designed to survey the extent of mercury usage, EPA already
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`requires that these same manufacturers and importers report under another EPA
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`regulation that predates the Mercury Reporting Rule.2
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`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).
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`DISCUSSION
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`NRDC and Vermont timely petitioned this Court for review of the Mercury
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`Reporting Rule. See 15 U.S.C. § 2618(a). Specifically, petitioners seek review of
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`three provisions that excuse categories of manufacturers and importers from the
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`rule’s reporting requirements: (1) the exemption for manufacturers of assembled
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`products with mercury-added components, 40 C.F.R. § 713.7(b)(3); (2) the
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`exemption for importers of assembled products with mercury-added
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`components, 40 C.F.R. § 713.7(b)(2); and (3) the partial exemption (in the form of
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`curtailed reporting requirements) for high-volume manufacturers and importers,
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`40 C.F.R. § 713.9(a).
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`As explained below, we conclude that the exemptions for assembled
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`product manufacturers and high-volume manufacturers are reasonable in light of
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`Congress’s directive to EPA to avoid requiring duplicative or unnecessary
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`reporting. We therefore deny review of §§ 713.7(b)(3) and 713.9(a). However, we
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`find that EPA has failed to provide a reasoned explanation for the exemption for
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`assembled product importers. For that reason, we grant review of § 713.7(b)(2)
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`and vacate that provision.
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`I.
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`Standing
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`Before addressing the merits of petitioners’ arguments, we must first
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`consider the threshold question of their standing to challenge the lawfulness of
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`the Mercury Reporting Rule. EPA does not challenge petitioners’ standing to
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`bring this appeal. Nevertheless, “[t]he question of standing is not subject to
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`waiver: ‘We are required to address the issue . . . even if the parties fail to raise
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`the issue before us.’” Cooper v. U.S. Postal Serv., 577 F.3d 479, 489 (2d Cir. 2009)
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`(internal alterations omitted) (quoting United States v. Hays, 515 U.S. 737, 742
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`(1995)). The “irreducible constitutional minimum of standing contains three
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`elements. First, the plaintiff must have suffered an injury in fact. . . . Second, . . .
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`the injury has to be fairly traceable to the challenged action of the defendant. . . .
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`Third, it must be likely, as opposed to merely speculative, that the injury will be
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`redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61
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`(1992) (internal quotation marks and alterations omitted).
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` Petitioners NRDC and Vermont both assert that they have Article III
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`standing on the basis of expected informational deficits. They contend that the
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`challenged exemptions from the Reporting Rule will create gaps in EPA’s
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`published mercury inventories, and that they will be injured by their lack of
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`access to the information that would otherwise fill those gaps. “The law is settled
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`that a denial of access to information qualifies as an injury in fact where a statute
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`(on the claimants’ reading) requires that the information be publicly disclosed
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`and there is no reason to doubt [petitioners’] claim that the information would
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`help [petitioners].” Campaign Legal Ctr. & Democracy 21 v. Fed. Election Comm’n,
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`952 F.3d 352, 356 (D.C. Cir. 2020) (internal quotation marks omitted); see also Fed.
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`Election Comm’n v. Akins, 524 U.S. 11, 21-22 (1998); Pub. Citizen v. Dep’t of Justice,
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`491 U.S. 440, 449 (1989). Here, because “there is no reason to doubt” that (1)
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`“access to additional information about [mercury] manufactured or [imported] in
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`the United States will promote” NRDC’s advocacy efforts and Vermont’s law
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`enforcement efforts, and (2) “a decision by this [C]ourt to vacate or require
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`reconsideration of the rule would remedy th[e] asserted harm by requiring the
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`disclosure of additional information,” petitioners have established standing
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`under Article III. See Envtl. Def. Fund v. EPA, 922 F.3d 446, 452-53 (D.C. Cir. 2019).
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`Both NRDC and Vermont allege a particularized interest in the information
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`captured by EPA’s mercury inventory, including the information that would be
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`collected from assembled product importers, assembled product manufacturers,
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`and high-volume manufacturers absent the challenged provisions. NRDC alleges
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`that it relies on information about mercury use to support its practice of
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`advocating for mercury reductions, and that the exemptions pose an obstacle to
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`effective advocacy. Vermont alleges that the exemptions will affect its ability to
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`enforce state laws that restrict the sale and use, mandate notification and
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`labeling, and regulate the disposal of mercury-added products.
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`Petitioners also allege that the challenged provisions unlawfully exempt
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`from reporting obligations groups of manufacturers and importers from whom
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`EPA is required to collect information under the amended TSCA. If that claim is
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`correct, the challenged provisions of the Reporting Rule will improperly omit
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`information that, under the statute, ought to be publicly disclosed in reports to
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`the agency and in the agency’s published inventory and that will help NRDC in
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`its advocacy efforts and Vermont in its law enforcement efforts. We are satisfied
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`that NRDC and Vermont have alleged an injury in fact. Petitioners’ asserted
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`injuries are further fairly traceable to the alleged omissions of information, in the
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`sense that they would not suffer from the asserted informational deficit absent
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`the challenged reductions in reporting and disclosure. The vacatur of the
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`challenged provisions would redress those injuries by requiring that exempted
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`groups of manufacturers and importers report under the Reporting Rule, so that
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`information pertaining to their use of mercury would be reflected in EPA’s
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`published inventories. Petitioners have therefore established standing under
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`Article III.
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`II.
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`Legal Standard
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`“We evaluate challenges to an agency’s interpretation of a statute that it
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`administers within the two-step Chevron deference framework.” Catskill
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`Mountains Chapter of Trout Unlimited, Inc. v. EPA, 846 F.3d 492, 507 (2d Cir. 2017)
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`(citing Lawrence + Mem’l Hosp. v. Burwell, 812 F.3d 257, 264 (2d Cir. 2016)); see
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`Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). At
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`Chevron Step One, we ask “whether Congress has directly spoken to the precise
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`question at issue.” Chevron, 467 U.S. at 842. If Congress’s directive is
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`unambiguous, both the agency and the courts are bound by that mandate. Id. at
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`842-43. If, instead, “the statute if silent or ambiguous with respect to the specific
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`issue,” the analysis proceeds to Chevron Step Two. Id. at 843; see also Catskill
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`Mountains, 846 F.3d at 507. At that step, “the question for the court is whether the
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`agency’s answer is based on a permissible construction of the statute.” Chevron,
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`467 U.S. at 843.
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`In evaluating reasonableness at Chevron Step Two, “we will accord
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`17
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`deference to the agency’s interpretation of the statute so long as it is supported by
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`a reasoned explanation, and ‘so long as the construction is a reasonable policy
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`choice for the agency to make.’” Catskill Mountains, 846 F.3d at 507 (quoting Nat’l
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`Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 986 (2005)).
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`Because “a statute’s ambiguity constitutes an implicit delegation from Congress
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`to the agency to fill in the statutory gaps,” the agency’s interpretation must only
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`be reasonable, and need not be the sole permissible or even most reasonable
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`interpretation of the statute. Id. at 520 (quoting FDA v. Brown & Williamson
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`Tobacco Corp., 529 U.S. 120, 159 (2000)); see also Entergy Corp. v. Riverkeeper, Inc.,
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`556 U.S. 208, 218 (2009).
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`When a petitioner challenges the procedure by which an agency engaged
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`in rulemaking, rather than the substance of the rule, we assess whether the
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`agency’s “action, findings, and conclusions” are “arbitrary, capricious, an abuse
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`of discretion, or otherwise not in accordance with law,” pursuant to the
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`Administrative Procedure Act. 5 U.S.C. § 706(2), (2)(A). Challenges to agency
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`procedure are evaluated under the standard set out in Motor Vehicle
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`Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile
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`Insurance Co., 463 U.S. 29, 43 (1983). Under that standard, we defer to an agency’s
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`determinations so long as the agency “give[s] adequate reasons for its decisions,”
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`in the form of a “‘satisfactory explanation for its action including a rational
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`connection between the facts found and the choice made.’” Encino Motorcars, LLC
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`v. Navarro, 136 S. Ct. 2117, 2125 (2016) (quoting State Farm, 463 U.S. at 43).
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`“State Farm and Chevron provide for related but distinct standards for
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`reviewing rules promulgated by administrative agencies.” Catskill Mountains, 846
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`F.3d at 521. “Much confusion” stems from the fact that “both standards purport
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`to provide a method by which to evaluate whether an agency action is ‘arbitrary’
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`or ‘capricious,’ and . . . often, though not always, take the same factors into
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`consideration.” Id. at 522. The Supreme Court and this Court have clarified that
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`the reasonableness of “[a]n agency’s initial interpretation of a statutory provision
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`should be evaluated only under the Chevron framework,” which looks to whether
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`the interpretation is substantively reasonable. Id. at 521; see also Verizon Commc’ns
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`Inc. v. FCC, 535 U.S. 467, 502 n.20 (2002). By contrast, “State Farm is used to
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`evaluate whether a rule is procedurally defective as a result of flaws in the
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`agency’s decisionmaking process” and applies, inter alia, “when an agency
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`changes its interpretation of a particular statutory provision.” Catskill Mountains,
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`846 F.3d at 521, 523.
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`The Mercury Reporting Rule is EPA’s initial interpretation of § 8(b)(10) of
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`the TSCA, as amended by Congress in 2016. See 15 U.S.C. § 2607(b)(10); see also
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`Frank R. Lautenberg Chemical Safety for the 21st Century Act, Pub. L. No. 114-
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`182, § 8(b), 130 Stat. 448, 475 (2016). Petitioners assert that the exemptions for
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`importers and manufacturers of assembled products contained in 40 C.F.R.
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`§ 713.7(b)(2) and (b)(3) contravene the TSCA and thus exceed EPA’s rulemaking
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`authority. These are substantive challenges to EPA’s initial act of statutory
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`interpretation through rulemaking. Accordingly, we review the reasonableness of
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`§ 713.7(b)(2) and (b)(3) under Chevron. Petitioners challenge the partial exemption
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`for high-volume manufacturers contained in 40 C.F.R. § 713.9(a) both as an
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`unreasonable interpretation of the TSCA and as the product of flawed
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`rulemaking procedures. Accordingly, we evaluate their substantive challenge to
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`§ 713.9(a) under Chevron and their procedural challenge to that provision under
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`State Farm.
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`III.
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`Exemptions for Importers and Manufacturers of Assembled
`Products
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`Petitioners contend that the reporting exemptions for importers and
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`manufacturers of assembled products, codified at 40 C.F.R. § 713.7(b)(2) and
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`20
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`Case 18-2121, Document 149-1, 06/05/2020, 2855514, Page21 of 48
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`(b)(3), are unlawful because they contravene Congress’s clear statutory directive
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`that manufacturers of mercury or mercury-added products report to EPA. See 15
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`U.S.C. § 2607(b)(10)(D)(i). EPA argues that these exemptions are within the scope
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`of its broad authority, as delegated by Congress, to determine what reporting is
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`necessary to complete the statutorily required inventory, and that they are
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`consistent with the TSCA’s letter and purpose.
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`A.
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`Chevron Step One
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`Petitioners first assert that the TSCA unambiguously requires that EPA
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`mandate reporting from importers and domestic manufacturers of assembled
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`products that contain mercury only within a component, thereby rendering the
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`reporting exemptions for such persons irreconcilable with the statute’s plain
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`meaning. They rely principally on the TSCA’s language providing that “[t]o
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`assist in the preparation of the inventory . . . , any person who manufactures
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`mercury or mercury-added products . . . shall make periodic reports to the
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`Administrator.” 15 U.S.C. § 2607(b)(10)(D)(i). We conclude that this language
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`does not unambiguously foreclose the exemptions at 40 C.F.R. § 713.7(b)(2) and
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`(b)(3).
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`Petitioners argue that the TSCA unambiguously requires all manufacturers
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`21
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`Case 18-2121, Document 149-1, 06/05/2020, 2855514, Page22 of 48
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`of mercury or mercury-added products to report, and that importers and
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`manufacturers of assembled products with mercury-added components are
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`indisputably “person[s] who manufacture[] . . . mercury-added products.” 15
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`U.S.C. § 2607(b)(10)(D)(i). The TSCA expressly defines “[t]he term ‘manufacture’”
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`to include importation, see id. § 2602(9), and EPA concedes that the term
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`“mercury-added product” unambiguously includes assembled products in which
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`mercury exists solely in a component, such as a watch with a mercury-added
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`battery or a car with mercury-added lamps in its headlights. Thus, there is no
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`question that importers and domestic manufacturers of such assembled products
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`are encompassed within the category of “any person who manufactures mercury
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`or mercury-added products.” 15 U.S.C. § 2607(b)(10)(D)(i).
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`We conclude, however, that the TSCA does not unambiguously direct EPA
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`to require reporting from every manufacturer of a mercury-added product.
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`Petitioners contend that “any person,” as used in the TSCA, clearly means “all
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`persons,” and that the verb “shall” underscores the mandatory nature of such
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`persons’ obligation to report — and thus, necessarily, the mandatory nature of
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`EPA’s obligation to require that such persons report. They therefore contend that
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`the plain meaning of the TSCA is that EPA must require reporting from all
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`22
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`Case 18-2121, Document 149-1, 06/05/2020, 2855514, Page23 of 48
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`persons “who manufacture[] mercury or mercury-added products.” Id.
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`But Congress also directs EPA, in the very same section of the TSCA (and
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`using the same mandatory “shall”) “not [to] require reporting which is
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`unnecessary or duplicative,” id. § 2607(a)(5)(A), “to the extent feasible,” id.
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`§ 2607(a)(5). That provision not only authorizes, but also requires, EPA to exempt
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`certain manufacturers from otherwise applicable reporting requirements, where
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`requiring the reporting would be “unnecessary or duplicative.” In short, the
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`TSCA requires all persons who manufacture mercury or mercury-added
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`products to “make periodic reports to the Administrator,” but such persons are
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`required to report only “such information as the Administrator shall determine
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`by rule.” 15 U.S.C. § 2607(b)(10)(D)(i). And the Administrator may determine
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`what needs to be reported, if anything, provided that the determination comports
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`with the statutory goal of facilitating the inventory while avoiding reports that
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`are unnecessary for that purpose or duplicative.
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`Because the TSCA does not unambiguously mandate that EPA require
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`reporting from every manufacturer of a mercury-added product, EPA’s
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`exemptions in 40 C.F.R. § 713.7(b)(2) and (b)(3) for certain manufacturers of
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`mercury-added products — specifically, those who import into or manufacture
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`23
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`Case 18-2121, Document 149-1, 06/05/2020, 2855514, Page24 of 48
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`within the United States assembled products with mercury added only to a
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`component — do not directly contravene the TSCA’s plain meaning.
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`At the same time, however, the statutory language does not
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`un