Husqvarna AB v. Environmental Protection Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 17, 2001 Decided June 29, 2001

No. 00-1270

Husqvarna AB; Husqvarna Forest and Garden Company;
Frigidaire Home Products-Specialty Power,
Petitioners

v.

Environmental Protection Agency,
Respondent

John Deere Consumer Products, Inc.,
Intervenor

On Petition for Review of an Order of the
Environmental Protection Agency

Nancy S. Bryson argued the cause for the petitioners.

Pamela S. Tonglao, Attorney, United States Department of
Justice, argued the cause for the respondent. John C. Cru-
den, Acting Assistant Attorney General, United States De-

partment of Justice, and John T. Hannon and Michael W.
Thrift, Attorneys, United States Environmental Protection
Agency, were on brief for the respondent.

Richard E. Ayres argued the cause for the intervenor.

Before: Henderson, Tatel and Garland, Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge: The petition-
ers, Husqvarna AB et al. (Husqvarna), seek review of the
Phase 2 Emission Standards for New Nonroad Spark-Ignition
Handheld Engines promulgated by the respondent, the U.S.
Environmental Protection Agency (EPA), under the authority
of section 213 of the Clean Air Act (CAA), 42 U.S.C. s 7547.
Husqvarna contends that the final rule is arbitrary and
capricious because the EPA failed to select the emission
standards that represent the best balance of the factors
identified in CAA section 213. It also maintains that the
regulatory alternative chosen by the EPA is not supported by
substantial evidence in the record. Finally, Husqvarna alleg-
es procedural error stemming from inadequate notice and
opportunity to comment. Because each of these arguments
lacks merit, we deny Husqvarna's petition.

I. Background

In 1990 the Congress amended the CAA and added section
213, which authorizes the EPA to set emissions standards for
"nonroad engines and vehicles." Pub. L. No. 101-549, 104
Stat. 2399 (1990). Section 213 required the EPA to adopt
emission standards by 1993 and to revise them as appropriate
thereafter. The EPA missed the statutory deadline and a
lawsuit to enforce the statute was filed, which has resulted in
the district court's monitoring of the EPA's compliance. See
Sierra Club v. Whitman, Civ. No. 93-0124 (D.D.C. filed Jan.
19, 1993).

In establishing emission standards, the EPA created two
categories of small spark-ignition (SI) engines: nonhandheld

and handheld.1 The EPA further divided handheld engines
into three classes--Classes III, IV and V--based on engine
size, with Class III encompassing the smallest and Class V
the largest handheld engines. The domestic handheld engine
industry includes 22 manufacturers, including Husqvarna,
Stihl, John Deere, Shindaiwa, Kawasaski, Echo, Ryobi and
Honda, which manufacture a total of 186 engine families.2
These manufacturers primarily use two-stroke engines in
handheld products because of their high power-to-weight
ratios and low cost. A two-stroke engine is an internal
combustion engine that accomplishes the operations of intake,
compression, expansion and exhaust in two piston strokes
rather than four.

The EPA has regulated emissions from handheld engines
in two phases. See 58 Fed. Reg. 55, 033, 55,034 (Oct. 25,
1993). In Phase 1, the EPA proposed short-term new engine
standards based in part on standards California had adopted
for similar engines. In January 1998 the EPA proposed
Phase 2 emission standards for handheld engines that were
slightly more stringent than those in Phase 1. 63 Fed. Reg.
3950, 3953-55, 3958-59, 3964-71, 4009-4013 (Jan. 27, 1998).
The proposed Phase 2 standards were expected to reduce
hydrocarbons (HC) and oxides of nitrogen (NOx) emissions
by 30 per cent beyond Phase 1 standards by the year 2025.3
63 Fed. Reg. 4001. The proposal called for a reduction in
emissions for Class III, IV and V engines to 210, 172 and 116

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1 Nonhandheld engines tend to be large and include engines
that power lawnmowers and garden tractors. Handheld engines
are smaller and are used in equipment such as chainsaws, leaf
blowers and weed trimmers.

2 An engine family is a grouping of engines within a manufac-
turer's product line. Engines within the same family must be
identical in several respects, including combustion cycle, number of
cylinders, engine class, catalyst type, fuel required and useful life.
40 C.F.R. s 90.116(c), (d)(1)-(10).

3 HC and NOx contribute to the formation of tropospheric
ozone through a complex series of reactions. Both short-term and
prolonged exposure to ozone at levels common in many cities has
been linked to a number of health problems. See 65 Fed. Reg.
24,268, 24,295 (Apr. 25, 2000).

grams per kilowatt-hour (g/kWhr),4 respectively. In response
to the proposal, the EPA received input from manufacturers
indicating that lower emission levels were feasible. See 63
Fed. Reg. 66,081, 66,082-83 (Dec. 1, 1998).5 And in late 1998
a portion of the handheld engine industry suggested that it
would support final HC+NOx standards of 72 g/kW-hr for
Classes III and IV and 87 g/kW-hr for Class V (72-72-87).

On December 2, 1998 John Deere Consumer Products, Inc.
(Deere), which appeared as an intervenor before this court,
recommended that the EPA consider stricter Phase 2 stan-
dards in light of its recent development of "compression wave
technology" (CWT), which promised to significantly reduce
emissions from handheld engines. CWT uses compressed air
to improve fuel injection in the combustion chamber of a two-
stroke engine, resulting in almost all of the fuel being com-
busted. Deere stated that CWT was adaptable to all sizes of
two-stroke engines and could meet a 72 g/kW-hr HC+NOx
standard in 2001.

On July 28, 1999 the EPA published a Supplemental Notice
of Proposed Rulemaking (Supplemental Proposal), which pro-
posed emission limits of 50 g/kW-hr for Classes III and IV
with phase-in between 2002 and 2006 and an emission limit of
72 g/kW-hr for Class V with phase-in between 2004 and 2008.
64 Fed. Reg. 40,940 (July 28, 1999). In addition to CWT, the
Supplemental Proposal identified three other technologies--
stratified scavenging,6 miniature four-stroke engines7 and cat-

__________
4 Grams per kilowatt-hour (g/kW-hr) is used to measure the
mass of pollutants (grams) emitted per quantum of work (kW-hr)
the engine performs.

5 "Lower" emission levels equate to stricter standards and
presumably cleaner air.

6 Stratified scavenging is a technique that lowers emissions
from two-stroke engines by using pure air, instead of a mixture of
fuel and air, to expel exhaust gases following combustion. The air
also serves as a buffer that prevents the air/fuel mixture from
escaping the exhaust port.

7 A miniature four-stroke engine performs the internal combus-
tion process using four strokes of the piston as opposed to the two

alysts8--that could be utilized by manufacturers to meet the
Phase 2 standards. The Supplemental Proposal also con-
tained an averaging, banking and trading (ABT)9 program to
give handheld engine manufacturers flexibility in meeting the
more stringent Phase 2 standards. 64 Fed. Reg. 40,951.
Under the proposed program, manufacturers would declare a
family emission limit (FEL) for each engine family. See
supra note 2. Manufacturers need only ensure that average
emissions from all of their engine families meet the emission
standards for the given model year. They could also gener-
ate bankable emission credits based on the differences be-
tween the FEL and the Phase 2 standards for the applicable
model year.

Many manufacturers, including Husqvarna, commented on
the Supplemental Proposal. The public comment period
closed on September 17, 1999, although the EPA agreed to
consider additional comments filed within 30 days therefrom.
It also continued to meet with interested manufacturers after
the close of the comment period. The final Phase 2 emission
standards for handheld SI engines were published on April
25, 2000. 65 Fed. Reg. 24,268. In the final rule, the EPA
adopted the 50-50-72 HC+NOx emission standards proposed
in the Supplemental Proposal, but with an implementation
schedule of four years instead of the five as proposed. The
decision rested on the EPA's determination that "rapid tech-

__________
used in two-stroke engines. Due to their larger size, four-stroke
engines, which produce lower HC+NOx emissions due to their
lower scavenging losses, have until recently been limited to ground-
supported applications such as lawnmowers.

8 Catalysts are small devices that are added to an engine to
oxidize or convert unburned hydrocarbons after they exit the en-
gine's combustion chamber.

9 Averaging means the exchange of emission credits within a
manufacturer's product line. Banking refers to the retention of
emission credits for use in future model year averaging or trading.
Trading involves the exchange of emission credits between engine
manufacturers that can then be used for averaging, banked for
future use or traded again. 63 Fed. Reg. 3972.

nological advances" in the handheld engine industry warrant-
ed a more expeditious implementation. 65 Fed. Reg. 24,274.
While noting that "not all of the technologies ... have yet
been demonstrated in mass-produced production engines op-
erated under typical in-use conditions," the EPA identified
the following technologies as likely to meet the newly adopted
standards: Class III (CWT & low-medium efficiency catalyst;
stratified scavenging with lean combustion & medium-high
efficiency catalyst; four-stroke), Class IV (CWT; CWT & low
efficiency catalyst; stratified scavenging with lean combustion
& medium efficiency catalyst; four-stroke) and Class V
(CWT; four-stroke; stratified scavenging with lean combus-
tion). 65 Fed. Reg. 24,274-79. The EPA explained that
changes in equipment design could allay safety concerns
about the use of catalysts. 65 Fed. Reg. 24,278-79. It also
determined that the Phase 2 standards were cost-effective.
65 Fed. Reg. 24, 296-300. Finally, the EPA revised the ABT
program to avoid a delay in the shift to cleaner engines. 65
Fed. Reg. 24,282-84. Husqvarna challenges all of these parts
of the final rule.

II. Analysis

"Our analysis is guided by the deference traditionally given
to agency expertise, particularly when dealing with a statuto-
ry scheme as unwieldy and science-driven as the Clean Air
Act." Appalachian Power Co. v. EPA, 135 F.3d 791, 801-02
(D.C. Cir. 1998); see Baltimore Gas & Elec. Co. v. NRDC,
462 U.S. 87, 103 (1983) (reviewing court must be "at its most
deferential" when agency is "making predictions, within its
area of special expertise, at the frontiers of science"). Under
section 307(d)(9) of the CAA, we reverse agency action found
to be "arbitrary, capricious, an abuse of discretion, or other-
wise not in accordance with law." 42 U.S.C. s 7607(d)(9)(A).
Questions of statutory interpretation are governed by the
familiar two-step test set forth in Chevron, U.S.A., Inc. v.
NRDC, 467 U.S. 837, 842-43 (1984). The court first asks
"whether Congress has directly spoken to the precise ques-
tion at issue," in which case it "must give effect to the
unambiguously expressed intent of Congress." Id. If the

"statute is silent or ambiguous with respect to the specific
issue," the court moves to the second step and defers to the
agency's interpretation as long as it is "based on a permissi-
ble construction of the statute." Id. at 843. We will strike
down the rulemaking for procedural error "only if the errors
were so serious and related to matters of such central rele-
vance to the rule that there is a substantial likelihood that the
rule would have been significantly changed if such errors had
not been made." CAA s 307(d)(8); 42 U.S.C. s 7607(d)(8).

In challenging the EPA's handheld engine Phase 2 emis-
sion standards, Husqvarna raises three claims. First, it
asserts that the EPA's choice of the 50-50-72 emission stan-
dards contravenes the best balance requirement of CAA
section 213. Second, it maintains that the final rule is
arbitrary and capricious because it is not supported by sub-
stantial evidence in the record. Finally, it argues that the
EPA failed to comply with the procedural requirements of
CAA section 307(d).

A. CAA Section 213

Section 213(a)(3) of the CAA requires the EPA to promul-
gate standards that "shall achieve the greatest degree of
emission reduction achievable through the application of tech-
nology which the Administrator determines will be available
for the engines or vehicles to which such standards apply,
giving appropriate consideration to the cost of applying such
technology within the period of time available to manufactur-
ers and to noise, energy, and safety factors associated with
the application of such technology." 42 U.S.C. s 7547(a)(3).
Husqvarna maintains that the 50-50-72 emission standards
do not represent the "best balance" of these factors for the
industry. We disagree that a "best balance" of the kind
Husqvarna contemplates is required. The EPA did not devi-
ate from its statutory mandate or frustrate congressional will
by placing primary significance on the "greatest degree of
emission reduction achievable" and by considering cost, noise,
energy and safety factors as important but secondary factors.
The overriding goal of the section is air quality and the other
listed considerations, while significant, are subordinate to that

goal. Cf. American Petroleum Inst. v. EPA, 52 F.3d 1113,
1120 (D.C. Cir. 1995). The record indicates that the EPA
considered each of the factors listed in section 213 and
nothing suggests that "the agency abandoned its obligation to
balance the statutory factors and select the best balance for a
predominant segment of industry from the alternatives before
it." Appellant Br. 37 (emphasis original). Contrary to Husq-
varna's claim, the EPA did not single out a single engine
technology and use it as a benchmark to set standards.
Rather, it set the emission standards with four different
engine technologies in mind. Cf. NRDC v. Thomas, 805 F.2d
410, 424 (D.C. Cir. 1986) (rejecting petitioner's claim that
EPA must determine which engine can achieve greatest
emission reduction and then ratchet standard up to account
for cost and other factors).

Husqvarna argues that the EPA's failure to consider incre-
mental cost-effectiveness illustrates its erroneous interpreta-
tion of section 213. Section 213, however, simply directs the
EPA to consider cost. Although the EPA considered margin-
al cost-effectiveness in promulgating marine engine emission
regulations, it has not done so in promulgating any other
standards under section 213. Moreover, the EPA identified
industry-specific factors in the marine engine rulemaking that
suggested an incremental cost-effectiveness analysis would be
particularly significant to the EPA's choice among various
alternative standards. 61 Fed. Reg. 52,088, 52,098 (Oct. 4,
1996). The EPA did consider the cost-effectiveness study
submitted by Husqvarna during the public comment period,
JA 1885-88, but rejected it as a basis to conclude that the
cost of the 50-50-72 standard was unreasonable. Because
section 213 does not mandate a specific method of cost
analysis, we find reasonable the EPA's choice to consider
costs on the per ton of emissions removed basis. See 65 Fed.
Reg. 24,300. And there is no dispute that the EPA consid-
ered cost in this manner in weighing the factors under section
213.

Husqvarna also complains that the changes in the ABT
program set forth in the final rule demonstrate improper
balancing under section 213. The record, however, indicates

just the opposite. It was the EPA's consideration of the
factors listed in section 213, notably the mandate to consider
the greatest degree of emission reduction achievable, that led
to the changes in the ABT program. We find nothing
unreasonable about the EPA's conclusion that the ABT pro-
gram as proposed risked undermining the final rule by unnec-
essarily delaying the introduction of cleaner engine technolo-
gies. 65 Fed. Reg. 24, 284.

In sum, we defer to the EPA's selection of emission stan-
dards under section 213. The record shows that the EPA
reasonably arrived at what it determined was the best regula-
tory standard by ascertaining the greatest degree of emission
reduction achievable while giving appropriate consideration to
cost, noise, energy and safety factors.

B. Substantial Evidence

CAA section 213 is a technology-forcing standard. See 42
U.S.C. s 7547(a)(3); 42 U.S.C. s 7547(b). In construing simi-
lar language included in CAA section 202, we explained in
NRDC v. Thomas that the mere fact that the provisions "seek
to promote technological advances while also accounting for
cost does not detract from their categorization as technology-
forcing standards." 805 F.2d at 428 n.30. The "Congress
intended the agency to project future advances in pollution
control capability. It was 'expected to press for development
and application of improved technology rather than be limited
by that which exists today.' " NRDC v. EPA, 655 F.2d 318,
328 (D.C. Cir. 1981) (quoting S. Rep. No. 91-1196, at 24
(1970)). Husqvarna acknowledges that the statute is technol-
ogy-forcing but challenges whether EPA projections of future
advances in pollution control capability are supported by
substantial evidence. It asserts that the EPA (1) selected
emission standards that are not technologically feasible and,
in so doing, (2) failed to consider costs, (3) did not adequately
address safety issues and (4) provided no rational explanation
for the phase-in period selected. We find these claims with-
out merit.

First, substantial evidence supports the EPA's determina-
tion that the Phase 2 standards can be achieved through the

application of the identified technologies--CWT, stratified
scavenging, miniature four-stroke engines and catalysts. The
record indicates that these engine technologies are already
capable of meeting an emission limit of 72 g/kW-hr, with the
four-stroke engine technology currently meeting the 50 g/kW-
hr standard. The EPA found that the two-stroke technolo-
gies--CWT and stratified scavenging--can also currently
meet the 50 g/kW-hr standard with the addition of a catalyst.
Husqvarna offers no theoretical objections to the technolo-
gies' capacity to meet the emission standards within the
phase-in period. " 'In the absence of theoretical objections to
the technology, the agency need only identify the major steps
necessary for development of the device, and give plausible
reasons for its belief that the industry will be able to solve
these problems in the time remaining. The EPA is not
required to rebut all speculation that unspecified factors may
hinder "real world" emission control.' " Thomas, 805 F.2d at
434 (quoting NRDC, 655 F.2d at 334). Husqvarna criticizes
the performance of the various engine technologies but can-
not show that the remaining issues related to design, imple-
mentation, mass production, performance, heat and weight
cannot be solved through innovation and equipment redesign.
It also questions the adequacy of the time period to solve
these issues. Substantial evidence, however, supports the
EPA's determination that the continued rapid development of
engine technologies makes it probable that CWT, stratified
scavenging, four-stroke engine and catalyst technologies will
enable manufacturers to comply with the emission standards
within the phase-in period. See 65 Fed. Reg. 24,274-81.

Second, substantial evidence supports the EPA's cost de-
terminations. The EPA sought comment on and considered a
significant body of cost data, including an incremental cost-
effectiveness study submitted by Husqvarna. JA 1883-93.
The EPA calculated the cost per engine and measured the
cost-effectiveness of the final Phase 2 standards, in dollars
per ton of emissions reduction, against the Phase 1 baseline.
65 Fed. Reg. 24,299-300. Its calculation of $560 per ton of
HC+NOx removed, with fuel savings, falls within the range
of other nonroad mobile source regulations under Title II.

See 63 Fed. Reg. 56,968, 56,990-91 (Oct. 23, 1998) (nonroad
compression-ignition engines); 64 Fed. Reg. 73,300, 73,325-26
(Dec. 29, 1999) (SI recreational marine engines).

Third, contrary to Husqvarna's claim, the record illustrates
that the EPA considered safety issues. It considered the
problem of heat associated with the use of catalysts and it
proposed engine and equipment redesign to overcome the
problem. 65 Fed. Reg. 24,278-79. The EPA also investigat-
ed manufacturers' claims that replacing two-stroke engines
with four-stroke engines would increase the weight of certain
handheld equipment. It found their fears largely unwarrant-
ed and determined that four-stroke engine technology was
feasible in Class IV and some Class V applications. 65 Fed.
Reg. 24,277.

Finally, substantial evidence supports the phase-in period
selected. CAA section 213(b) states that "[s]tandards under
this section shall take effect at the earliest possible date
considering the lead time necessary to permit the develop-
ment and application of the requisite technology, giving ap-
propriate consideration to the cost of compliance within such
period and energy and safety." 42 U.S.C. s 7547(b). For
the final Phase 2 standards, the EPA determined that the
schedule of declining emission standards, to be phased in
from 2002 to 2005 for Class III and IV and from 2004 to 2007
for Class V, provides adequate time for manufacturers' transi-
tion to cleaner engine technologies. The final rule basically
shortened the implementation schedule from the five years
proposed in the Supplemental Proposal to four years. In so
doing the EPA was responding to several commentators who
sought the shorter time frame to avoid delay in the transition
to cleaner technologies. The EPA also considered the poten-
tial hardships on manufacturers of engine families with an
annual production level of fewer than 5000 units and provided
them additional lead time. 65 Fed. Reg. 24,289. Additional-
ly, the EPA implemented an ABT program to give all manu-
facturers flexibility in meeting the implementation schedule;
the program permits manufacturers to produce some engines
that do not meet the standards so long as they can generate
or obtain offsetting credits from engines certified below the

standards. 65 Fed. Reg. 23,282-84. These provisions mani-
fest that the EPA followed the congressional mandate embod-
ied in CAA section 213(b). 42 U.S.C. s 7547(b).

Accordingly, we conclude that the final rule is supported by
substantial evidence.

C. Procedural Errors

Section 307(d)(9) of the CAA provides that a court may
reverse agency action if it was promulgated "without observ-
ance of procedure required by law, if (i) such failure to
observe such procedure is arbitrary or capricious, (ii) the
requirement of paragraph (7)(B) has been met, and (iii) the
condition of the last sentence of paragraph (8) is met." 42
U.S.C. s 7607(d)(9)(D). Paragraph 7(B) limits judicial review
to objections "raised with reasonable specificity during the
period for public comment," or on reconsideration if "it was
impracticable to raise such objection within such time ... and
if such objection is of central relevance to the outcome of the
rule." 42 U.S.C. s 7607(d)(7)(B). Finally, the last sentence
of section 307(d)(8) provides that "[i]n reviewing alleged
procedural errors, the court may invalidate the rule only if
the errors were so serious and related to matters of such
central relevance to the rule that there is a substantial
likelihood that the rule would have been significantly changed
if such errors had not been made." 42 U.S.C. s 7607(d)(8).

Husqvarna contends that the EPA failed to comply with
section 307(d)(3)(a) of the CAA, which requires that a notice
of proposed rulemaking "be accompanied by a statement of
its basis and purpose" and "include a summary of [ ] the
factual data on which the proposed rule is based." 42 U.S.C.
s 7607(d)(3). It also argues that the agency failed to comply
with section 307(d)(4)(B)(i), which dictates that "all written
comments and documentary information on the proposed rule
received from any person for inclusion in the docket during
the comment period shall be placed in the docket." 42 U.S.C.
s 7607(4)(B)(i). Husqvarna alleges that these failures denied
it sufficient opportunity to comment on the relevant technolo-
gies as well as on the ABT program as it appeared in the final
rule. We find these claims without merit. First, the Supple-

mental Proposal specifically referred to the technologies that
would serve as the basis of the 50-50-72 emission stan-
dards--CWT, miniature four-stroke engines, stratified sca-
venging and catalysts. Husqvarna and other manufacturers
had ample opportunity to comment on the technologies. In
fact, the bulk of Husqvarna's substantive claims revolves
around the EPA's treatment of the comments they in fact
submitted. The EPA even extended the time to accept public
input until 30 days after close of the public comment period to
provide manufacturers like Husqvarna with more opportunity
to comment. Second, Husqvarna had opportunity to com-
ment on the proposed ABT program. The final ABT provi-
sions were a logical outgrowth of those proposed in the
Supplemental Proposal, even though they were in part based
on comments received during the 30 day extension period.
See Small Refiner Lead Phase-Down Task Force v. EPA,
705 F.2d 506, 546-47 (D.C. Cir. 1983); United Steelworkers of
Am. v. Marshall, 647 F.2d 1189, 1221 (D.C. Cir. 1980). The
Supplemental Proposal gave Husqvarna fair notice of the
subjects and issues involved in formulating the ABT program.
Likewise, the four-year phase-in period was a logical out-
growth of the proposed five-year implementation schedule.
Finally, even if the EPA committed procedural error, Husq-
varna failed to show it was "so serious and related to matters
of such relevance to the rule that there is a substantial
likelihood that the rule would have been significantly changed
if such error[ ] had not been made." 42 U.S.C. s 7607(d)(8).
Husqvarna was unable to establish a substantial likelihood
that the rule would have been significantly changed if it had
had an expanded opportunity to comment. Accordingly, we
find Husqvarna's claims of procedural error without merit.

III. Conclusion

In sum, we reject Husqvarna's substantive and procedural
challenges to the Phase 2 Emission Standards for New
Nonroad Spark-Ignition Handheld Engines.10 Accordingly,

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10 In light of our disposition we have no occasion to consider,
and accordingly dismiss as moot, the EPA's motion to strike

and for the reasons set forth in this opinion, the petition for
review is

Denied.

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portions of Husqvarna's reply brief and Deere's motion for leave to
file a supplemental exhibit.