Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01091/USCOURTS-caDC-97-01091-0/pdf.json

Parties Involved:
Arizona Public Service Company
Petitioner
Environmental Protection Agency
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 6, 1997 Decided February 13, 1998 

No. 96-1497

APPALACHIAN POWER COMPANY, ET AL.,

PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

PUBLIC SERVICE ELECTRIC & GAS COMPANY, ET AL.,

INTERVENORS

Consolidated with

No. 97-1091

On Petitions for Review of an Order of the 

Environmental Protection Agency

F. William Brownell argued the cause for petitioners 

Appalachian Power Company, et al., with whom Henry V. 

Nickel and Craig S. Harrison were on the briefs.

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Thomas Sayre Llewellyn argued the cause for petitioner 

Arizona Public Service Company, with whom George Y. Sugiyama and Michael B. Wood were on the briefs. Munford P. 

Hall II entered an appearance.

Scott J. Jordan and Wendy L. Blake, Attorneys, United 

States Department of Justice, argued the cause for respondent, with whom Lois J. Schiffer, Assistant Attorney General, 

and Dwight C. Alpern, Attorney, Environmental Protection 

Agency, were on the brief.

Richard E. Ayres, John H. Sharp, and John H. Cheatham 

III were on the brief for intervenor Natural Gas Supply 

Association, et al.

Harold P. Quinn, Jr., was on the brief for intervenor 

National Mining Association.

Andrew J. Gershon and J. Jared Snyder, Assistant Attorneys General, State of New York, Brian J. Comerford, Assistant Attorney General, State of Connecticut, Edward G. 

Bohlen, Assistant Attorney General, Commonwealth of Massachusetts, Jeffrey A. Meyers, Assistant Attorney General, 

State of New Hampshire, and David Rocchio, Assistant Attorney General, State of Vermont, were on the brief for amici 

curiae New York, Connecticut, Massachusetts, New Hampshire, and Vermont. Lisa M. Burianek, Assistant Attorney 

General, State of New York, entered an appearance.

Before: WALD, HENDERSON, and GARLAND, Circuit Judges.

Opinion for the Court filed PER CURIAM.

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PER CURIAM1: This case revisits Title IV of the Clean Air 

Act ("the Act"), which, inter alia, directs the Environmental 

Protection Agency ("EPA") to promulgate limits on the emission of nitrogen oxides from various electric utility boilers. 

In Alabama Power Co. v. EPA, 40 F.3d 450 (D.C. Cir. 1994), 

we invalidated the first set of these emission limits as exceeding EPA's statutory authority.2 We are now presented with 

a challenge by a number of electric utilities and industry 

groups 3to the next group of nitrogen oxides emission limits 

promulgated under the Act: a more stringent revision of the 

first set of emission limits and a new set of emission limits for 

a second group of boilers. This time, we uphold the bulk of 

the challenged rule, concluding that EPA has not exceeded its 

authority and cognizant of the deference due to an agency 

dealing with largely scientific and technical matters. We 

vacate, however, the portion of the final rule that reclassifies 

certain retrofitted cell burner boilers as wall-fired boilers and 

remand it to EPA for reconsideration or a more adequate 

justification.

I. BACKGROUND

Among the 1990 amendments to the Clean Air Act, 42 

U.S.C. § 7401 et seq. (1994), was Title IV, which was designed 

to reduce the adverse effects of acid deposition (more commonly known as "acid rain") from the atmosphere by limiting 

the allowable emissions of sulfur dioxide (SO2) and nitrogen 

oxides (NOx), two principal sources of acidic compounds. See

42 U.S.C. § 7651 (1994) (congressional findings and purposes). Electric utilities such as Appalachian Power contribute to NOx emissions through the burning of coal, which 

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1

Judge Wald authored the Introduction and Parts I, II.A, II.C, 

and III. Judge Garland authored Parts II.B and II.D.

2 EPA subsequently repromulgated these limits in accordance 

with our opinion. See Acid Rain Program; Nitrogen Oxides Emission Reduction Program, 60 Fed. Reg. 18,751 (1995).

3 Because the named petitioner on this appeal is Appalachian 

Power Company, we refer to the petitioners as a groupexcept for 

Arizona Public Service Company, which has appealed separately

as "Appalachian Power."

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releases nitric oxide (NO) that reacts with elements in the air 

to form nitrogen dioxide (NO2) and other harmful pollutants. 

In 1990, electric utility emissions constituted approximately 

32 percent of total annual NOx emissions. See Acid Rain 

Program; Nitrogen Oxides Emission Reduction Program, 61 

Fed. Reg. 67,112, 67,112 (1996). In order to encourage a 

reduction in NOx emissions, Title IV directs EPA to set NOx

emission limits for two groups of coal-fired electric utility 

boilers and divides those boilers into two additional groups 

for the purpose of setting compliance deadlines. A boiler 

therefore may be a "Group 1 boiler" 4or a "Group 2 boiler," 5

depending on its type, and may be a "Phase I boiler" or a 

"Phase II boiler," depending on when it is subject to emissions limitations.6 There are both Group 1 boilers and Group 

2 boilers in each of the compliance phases.

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4 Group 1 comprises tangentially fired boilers and dry bottom 

wall-fired boilers other than those applying cell burner technology. 

See 42 U.S.C. § 7651f(b)(1) (1994). A tangentially fired boiler's 

burners are located in the corner of the furnace, while a wall-fired 

boiler's burners are located along the furnace wall. Alabama 

Power, 40 F.3d at 452 n.1.

5 Group 2 comprises wet bottom wall-fired boilers, cyclone boilers, 

cell burners, and "all other types of utility boilers." See 42 U.S.C. 

§ 7651f(b)(2) (1994). Wet bottom boilers are characterized by a 

high internal temperature that converts ash into molten slag, which 

collects in a tank at the bottom of the furnace. Cyclone boilers are 

a type of wet bottom boiler in which the fuel and air are burned in 

horizontal, water-cooled cylinders called "cyclones." Cell burners 

are dry bottom boilers that have arrays of two or three closely 

spaced circular burners, forming a "cell," mounted on the wall of 

the furnace. Vertically fired boilers contain conventional circular 

burners or coal and air pipes oriented downward rather than 

horizontally, as in wall-fired boilers. Acid Rain Program; Nitrogen 

Oxides Emission Reduction Program, 61 Fed. Reg. 1442, 1456 

(proposed Jan. 19, 1996).

6 The terms are derived from the statutory scheme regarding 

limits on SO2 emissions. See 42 U.S.C. § 7651f(a) (1994). In this 

scheme, boilers subject to the limitations in Phase I, see 42 U.S.C. 

§ 7651c (1994), must comply with the limits by January 1, 1995; 

boilers subject to the limitations in Phase II, see 42 U.S.C. § 7651d 

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One method of reducing NOx emissions is to retrofit coalfired boilers with an emission control device. For Group 1 

boilers, such a device commonly consists of what is termed 

"low NOx burner technology," which, as we noted in Alabama 

Power, is an emission control method that limits the amount 

of oxygen available to react with the nitrogen in the coal and 

thus reduces the amount of nitrogen oxides formed. Alabama Power, 40 F.3d at 452 n.3. The emissions from Group 

2 boilers are more difficult to reduce, and thus Group 2 

boilers are retrofitted with a greater variety of emission 

controls, including selective catalytic reduction,7selective noncatalytic reduction,8

gas reburning,9and plug-in and non-plugin retrofits.10 Each control method can achieve varying levels 

of NOx emissions reduction.

As we noted in Alabama Power, Congress intended in 

enacting Title IV "to tie the obligation of utilities to meet the 

NOx emission limit to the use of low NOx burners." Alabama 

Power, 40 F.3d at 455. To this end, section 407(b)(1) requires 

that the Group 1 limits be set at a maximum of 0.45 pounds 

per million British thermal units ("lb/mmBtu") for tangential-

__________

(1994), must comply by January 1, 2000. Failure to adhere to the 

prescribed limitations results in a fine. See 42 U.S.C. § 7651j(a) 

(1994).

7 Selective catalytic reduction involves adding ammonia to the flue 

gas of the burner, which then passes through a catalyst, turning the 

NOxinto molecular nitrogen and water. 61 Fed. Reg. at 1458.

8 Selective noncatalytic reduction injects a reducing agent into the 

flue gas that reacts with the NOxin the gas to form molecular 

nitrogen and water. Id.

9 Gas reburning involves the diversion of part of the primary fuel 

heat input to a location above the main burners. As flue gas passes 

through this area, part of the NOxformed is converted to molecular 

nitrogen. Id.

10 Installing non-plug-in combustion controls on cell burners involves replacing the portion of the wall containing the cell with a 

new wall containing widely spaced low NOx burners. Plug-in controls, by contrast, replace the cells with low NOx burners, maintaining the original cell configuration. Id. at 1457-58.

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ly fired boilers and 0.50 lb/mmBtu for dry bottom wall-fired 

boilers, unless EPA finds that these rates cannot be achieved 

using "low NOx burner technology," a term not explicitly 

defined in the statute. The limits, which were to be set by 

May 15, 1992, would then apply to Group 1, Phase I boilers 

starting on January 1, 1995. 42 U.S.C. § 7651f(b)(1). EPA 

was permitted to revise the Group 1 limits by January 1, 

1997, to apply to Phase II boilers if it determined that "more 

effective low NOx burner technology [was] available." 42 

U.S.C. § 7651f(b)(2).11 If no such revision were undertaken 

by January 1, 1997, the limits established for the Group 1, 

Phase I boilers were to go into effect for the Group 1, Phase 

II boilers. EPA was also required to set by January 1, 1997, 

the NOx emission limits for Group 2 boilers. These limits 

were to be based "on the degree of reduction achievable 

through the retrofit application of the best system of continuous emission reduction, taking into account available technology, costs and energy and environmental impacts; and which 

is comparable to the costs of nitrogen oxide controls" set for 

the Group 1, Phase I boilers. 42 U.S.C. § 7651f(b)(2).

On March 22, 1994, well past its statutory deadline, EPA 

promulgated the Group 1, Phase I emission limits. See Acid 

Rain Program; Nitrogen Oxides Emission Reduction Program, 59 Fed. Reg. 13,538 (1994). The final rule defined "low 

NOx burner technology" to include overfire air, another emission control method, as well as low NOx burners themselves.12

We invalidated the rule as inconsistent with EPA's statutory 

directive, holding that the term "low NOx burner technology" 

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11 The statute provides that boilers subject to the Phase I emission limits set pursuant to section 407(b)(1) of the Act will not be 

subject to any revised limits. See 42 U.S.C. § 7651f(b)(2).

12 Like low NOx burners, overfire air, as we noted in Alabama 

Power, reduces the amount of oxygen available to react with the 

nitrogen in the coal and thus limits the formation of NOx. It 

accomplishes this by removing oxygen from around the burner and 

reintroducing it to the boiler through a port above the burner. 

Alabama Power, 40 F.3d at 452 n.3.

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was an "unambiguous reference to low NOx burners" that did 

not permit EPA to include additional control methods. Alabama Power, 40 F.3d at 455. EPA subsequently revised the 

1994 regulations on April 13, 1995, to eliminate references to 

overfire air and established limits of 0.45 lb/mmBtu for 

tangentially fired boilers and 0.50 lb/mmBtu for wall-fired 

boilers, limits identical to those provided for in the statute. 

See 60 Fed. Reg. at 18,763; 42 U.S.C. § 7651f(b)(1). To 

account for the delay in promulgation, the compliance date for 

Group 1, Phase I boilers was moved to January 1, 1996. 60 

Fed. Reg. at 18,763.

The rule at issue here, issued on December 19, 1996, 

promulgates the next set of emission limits under the statutory scheme: the revised NOx emission limits for Group 1, 

Phase II boilers as well as the NOx emission limits for Group 

2 boilers. 61 Fed. Reg. at 67,112. EPA revised the Group 1 

limits after determining, as required by section 407(b)(2), that 

boilers with low NOx burners were achieving lower emission 

levels than the limits promulgated in 1995 and therefore that 

more effective low NOx burner technology was available. 

(This determination was the result of a regression analysis in 

which EPA constructed equations capturing the reduction 

achieved by Group 1, Phase I boilers and applied these 

equations to the uncontrolled emission rates of Group 1, 

Phase II boilers.) In establishing the Group 2 emission 

limits, EPA interpreted its statutory directive to require a 

comparison of the cost-effectiveness of Group 2 controls and 

low NOx burner technology and thus promulgated emission 

limits for Group 2 boilers based on control technologies that 

were shown to be as cost-effective in reducing NOx emissions 

as low NOx burner technology. In addition, relying on section 407(a), which states that a boiler becomes an "affected 

unit" for purposes of the NOx emission limits at the same 

time it becomes an affected unit for purposes of the SO2

emission limits (established elsewhere in Title IV), EPA set 

January 1, 2000, as the date by which compliance with the 

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new limits must be achieved.13 Finally, EPA determined that 

certain retrofitted cell burner boilers should be reclassified 

from Group 2 to Group 1, thereby subjecting them to the 

stricter emission limits applicable to the latter group.

Appalachian Power and petitioner Arizona Public Service 

Company now seek review of these portions of the final rule, 

claiming that EPA's actions both exceeded its statutory authority and were arbitrary and capricious.14

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13 The emission limits established by the final rule were 0.40 

lb/mmBtu for tangentially fired boilers; 0.46 lb/mmBtu for dry 

bottom boilers; 0.68 lb/mmBtu for cell burners; 0.86 lb/mmBtu for 

cyclones larger than 155 megawatts of electricity ("MWe"); 0.84 

lb/mmBtu for wet bottom boilers larger than 65 MWe; and 0.80 

lb/mmBtu for vertically fired boilers. EPA determined that each of 

these limits would be achievable by 85 to 90 percent of the 

applicable boiler population. 61 Fed. Reg. at 67,113-14.

14 Appalachian Power appended five exhibits to its reply brief 

that it asserts buttress arguments made in its opening brief. Four 

of the exhibits appear to consist of manipulations of EPA's statistical models prepared by Appalachian Power's consultant at least 

four months after the final rule was issued. Because these exhibits 

were never submitted to EPA, they are excluded from the record 

for judicial review. See 42 U.S.C. § 7607(d)(7)(A) (1994); American 

Petroleum Inst. v. Costle, 609 F.2d 20, 22 (D.C. Cir. 1979). Appalachian Power contends that the exhibits could not have been submitted during the rulemaking because EPA did not disclose its methodology early enough in the process. Even if this were true, under 

such circumstances the statute requires that the materials first be 

raised with the agency through a petition for reconsideration. See

42 U.S.C. § 7607(d)(7)(B) (1994); American Petroleum Inst. v. 

Costle, 665 F.2d 1176, 1191 (D.C. Cir. 1981) (quoting H.R. REP. NO. 

95-294, at 323 (1977)) (" '[T]he Agency must first be given an 

opportunity to pass on the significance of the materials and determine whether supplementary proceeding[s] are called for or not.' "). 

The virtue of this requirement is readily apparent in this case: 

Because the four documents were appended to a reply brief with 

virtually no explication and without opportunity for agency response, we are unable to evaluate their accuracy or significance. A 

fifth document appended to Appalachian Power's reply brief is a 

Department of Energy memorandum commenting on a draft of 

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II. DISCUSSION

A. The Group 1, Phase II Emission Limits

Appalachian Power's first challenge is to EPA's statutory 

authority to revise the Group 1 emission limits, which is 

bounded by the requirement that the agency must determine 

that "more effective low NOx burner technology is available." 

See 42 U.S.C. § 7651f(b)(2). EPA argues that a plain reading 

of this language reveals that it may revise the Group 1 

emission limits if performance data show that available technology can achieve lower emission limits. It contends that 

because Congress required the agency to evaluate the capabilities of low NOx burner technology when setting the initial 

Group 1 limits, Congress must have intended that EPA would 

reevaluate those capabilities in deciding whether to revise 

those limits. Appalachian Power argues, however, that "more 

effective" technology refers to a change in burner design and 

not merely to a proven increase in the effectiveness of 

existing burners. Because EPA has not provided evidence 

that "more effective" burners than those justifying the April 

1995 limits exist, Appalachian Power argues, the revised rates 

must be vacated as contrary to the statute.

Because resolution of this question turns on the interpretation of the statutory phrase "more effective low NOx burner 

technology," the two-step Chevron framework governs our 

analysis. Under Chevron, we must first consider, having 

studied the statutory text and the legislative history, "whether Congress has directly spoken to the precise question at 

issue. If the intent of Congress is clear, that is the end of the 

matter; for the court, as well as the agency, must give effect 

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EPA's final rule. As the statute makes clear, such interagency 

comments are not part of the record for judicial review. See 42 

U.S.C. § 7607(d)(7)(A); Sierra Club v. Costle, 657 F.2d 298, 404 

n.519 (D.C. Cir. 1981). Accordingly, we grant EPA's motion to 

strike the five exhibits.

Appalachian Power's challenge to the rule's NOx allowance program, see 40 C.F.R. § 76.16 (1997), has been mooted by our 

granting of EPA's motion to vacate and remand this portion of the 

rule.

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to the unambiguously expressed intent of Congress." Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 842-43 (1984); see also Ohio v. United States 

Dep't of the Interior, 880 F.2d 432, 441 (D.C. Cir. 1989). If 

Congress has not directly addressed the precise question at 

issue, "the question for the court is whether the agency's 

answer is based on a permissible construction of the statute," 

Chevron, 467 U.S. at 843that is, whether it is "reasonable in 

light of the Act's text, legislative history, and purpose." 

Southern Calif. Edison Co. v. FERC, 116 F.3d 507, 511 (D.C. 

Cir. 1997).

Chevron's first step does not take us very far. There is 

nothing in the statutory section at issue or in the legislative 

history to suggest what Congress meant by "more effective 

low NOx burner technology" or, more specifically, whether 

the phrase can encompass varied applications of existing 

controls as well as new controls. The word "technology," for 

example, is a chameleon word, capable of many meanings, but 

here even its context does not help us to identify a precise 

meaning. Elsewhere in the Act, "technology" is defined as 

comprising "methods, systems, and techniques," which lends 

support to EPA's interpretation, see, e.g., 42 U.S.C. § 7479(3) 

(1994) (defining "best available control technology" as an 

emission limitation achievable through "application of production processes and available methods, systems, and techniques"), but this single reference cannot suffice to determine 

Congress's intent with respect to low NOx burners.

The legislative history also provides few clues as to the 

breadth of the phrase. Although the 1990 amendments to the 

Act were ultimately the product of a conference committee, 

the language in section 407(b)(2) was derived largely from the 

Senate bill. During debate on the bill, several senators 

referred to "low NOx burner technology" as the standard by 

which other emission control methods would be judged, but 

none of these senators elaborated on what the phrase included. See, e.g., 136 CONG. REC. 35,627 (1990) (statement of Sen. 

Cochran) ("[U]tilities will be allowed to comply with nitrogen 

oxide reduction requirements through the application of lowNOx burner technology. This technology is a reasonable, 

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cost-effective method which has proven to be successful in 

achieving significant NOxreductions."); 136 CONG. REC. 5046 

(1990) (statement of Sen. Lott) (emission rates are based on 

"the application of low-NOx burner technology, a much more 

reasonable and cost-effective method proven to successfully 

achieve significant NOxreductions"). Similarly, the conference report accompanying the final version of the bill notes 

simply that "[t]he NOxreductions from existing units mandated under section 407 are to be accomplished by use of 

conventional, available burner technology ('low-NOx' burners)," H.R. CONF. REP. NO. 101-952, at 344 (1990), a declaration 

that does not aid us in divining whether the phrase "more 

effective low NOx burner technology" implies a change in 

burner.

Because our search for Congress's intent has been less 

than fruitful, we go on to decide, under the second step of the 

Chevron analysis, whether EPA's interpretation of the phrase 

"more effective low NOx burner technology" to encompass 

improved performance of existing burners is reasonable. We 

believe that it is. As we have noted, it is evident that 

Congress intended that low NOx burner technology serve as a 

benchmark for emission limits promulgated under Title IV, so 

to the extent that the rule derived from EPA's interpretation 

does not require technology beyond low NOx burners, that 

rule would not be inconsistent with the intent of the statute. 

EPA's interpretation is also consistent with the concern with 

achievability that motivates the section. See, e.g., 42 U.S.C. 

§ 7651f(b)(1) (EPA may set higher emission limits than those 

provided by statute if statutory rates are not achievable); id.

§ 7651f(b)(2) (Group 2 emission limits must be based on 

achievable degree of reduction). In other words, it is a fair 

interpretation to read Congress's directive that more effective 

technology be available as authorizing more stringent limits 

only if those limits are achievable in practice. Moreover, the 

fact that Congress did not simply require a determination 

that "more effective low NOx burners" existed suggests that 

"more effective low NOx burner technology" refers to something beyond the burner hardware itself. If this were not the 

case, we would expect to find some evidence to the contrary 

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in the legislative history; we find none, and Appalachian 

Power is unable to point us toward any.

We addressed a similar issue with respect to the Clean Air 

Act in International Harvester Co. v. Ruckelshaus, 478 F.2d 

615 (D.C. Cir. 1973). At issue was a provision of the Act that 

authorized a one-year exemption from an emission-level requirement if, inter alia, "the applicant has established that 

effective control technology, processes, operating methods, or 

other alternatives are not available." Id. at 624 (quoting 42 

U.S.C. § 1857f-1(b)(5)(D)(iii) (1970)). We rejected the petitioners' argument that EPA's determination of whether technology was "available" must be based solely on "technology in 

being as of the time of the application." Rather, we held that 

EPA was justified in determining what technology would be 

considered "available" based on predicted improvements in 

existing technology, "subject to the restraints of reasonableness." Id. at 628-29. See also Portland Cement Ass'n v. 

Ruckelshaus, 486 F.2d 375, 391-92 (D.C. Cir. 1973) (in determining "achievable" emission limits, EPA may make reasonable projection based on existing technology). We can find 

no significant difference between a determination that "available" technology includes predicted improvements in existing 

technology and a determination that "more effective" technology includes actual improved performance in existing technology. We thus think it reasonable, as a preliminary matter, 

for EPA to find that "more effective low NOx burner technology" exists if improved performance for already-existing 

burners can be shown.

Appalachian Power next argues that even if "more effective 

low NOx burner technology" is given the meaning we approve 

today, EPA has failed to show that boiler performance has 

improved. EPA asserts that its regression analysis shows 

that boilers retrofitted with low NOx burners can achieve 

lower emission levels than the limits deemed adequate by the 

1995 rule. This improvement in performance, EPA contends, 

may be attributable to a number of improvements in the 

effectiveness of the technology surrounding low NOx burners, 

including the accumulated experience of boiler operators, 

improved operating practices, more advanced burner tuning 

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and management software, and improved automation. Appalachian Power challenges this conclusion, arguing that the 

revised limits set by the rule require technology beyond the 

capability of low NOx burners. Because Appalachian Power's 

challenge, although framed in the most general of terms, is at 

root a challenge to EPA's analytical model, we must consider 

whether the use of that model was arbitrary and capricious. 

See 42 U.S.C. § 7607(d)(9) (1994) (authorizing reversal of 

actions under the Act found to be "arbitrary, capricious, an 

abuse of discretion, or otherwise not in accordance with law"). 

Our analysis is guided by the deference traditionally given to 

agency expertise, particularly when dealing with a statutory 

scheme as unwieldy and science-driven as the Clean Air Act. 

As we have previously noted, so long as EPA "acted within its 

delegated statutory authority, considered all of the relevant 

factors, and demonstrated a reasonable connection between 

the facts on the record and its decision," we will not interfere 

with its conclusion. Ethyl Corp. v. EPA, 51 F.3d 1053, 1064 

(D.C. Cir. 1995).

Statistical analysis is perhaps the prime example of those 

areas of technical wilderness into which judicial expeditions 

are best limited to ascertaining the lay of the land. Although 

computer models are "a useful and often essential tool for 

performing the Herculean labors Congress imposed on EPA 

in the Clean Air Act," Sierra Club, 657 F.2d at 332, their 

scientific nature does not easily lend itself to judicial review. 

Our consideration of EPA's use of a regression analysis in 

this case must therefore comport with the deference traditionally given to an agency when reviewing a scientific analysis within its area of expertise without abdicating our duty to 

ensure that the application of this model was not arbitrary. 

As we have noted, it is only when the model bears no rational 

relationship to the characteristics of the data to which it is 

applied that we will hold that the use of the model was 

arbitrary and capricious. See American Iron & Steel Inst. v. 

EPA, 115 F.3d 979, 1005 (D.C. Cir. 1997); Chemical Mfrs. 

Ass'n v. EPA, 28 F.3d 1259, 1265 (D.C. Cir. 1994). Therefore, while we will examine each step of EPA's analysis to 

satisfy ourselves that the agency has not departed from a 

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rational course, we will not take it upon ourselves, as nonstatisticians, to perform our own statistical analysisa job more 

properly left to the agency to which it was delegated.

EPA's determination of the revised Group 1 emission rates 

involved four steps: (1) the construction of a database consisting of Group 1, Phase I boilers already employing low NOx

burner technology; (2) the derivation of two equations (one 

each for tangentially fired boilers and wall-fired boilers) that 

captured the percent reduction in emissions from the uncontrolled emission rates achieved by the boilers in the database; 

(3) the application of these equations to the uncontrolled 

emission rates of Group 1, Phase II boilers; and (4) the 

setting of emission rates for Group 1, Phase II boilers based 

on the range of data resulting from the application of the 

equations. We examine each of these steps in turn.

1. Construction of the Database

EPA began its determination of whether the Group 1 limits 

should be revised by constructing a computerized database 

consisting of all known boilers that had installed only low NOx

burners 15 subsequent to November 15, 1990 (the date the 

amendments to the Act were enacted),16 and for which there 

existed at least 52 days of data measured by continuous 

emission monitors ("CEMs").17 This database consisted ini-

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15 Our ruling in Alabama Power prevented EPA from interpreting "low NOx burner technology" as constituting any control method in addition to low NOx burners.

16 EPA considered only post-1990 retrofits because it believed 

that Congress implicitly incorporated the then-current state of 

burner technology into the Act's amendments. See 61 Fed. Reg. at 

1443. Appalachian Power does not challenge this conclusion.

17 A CEM is used "to sample, analyze, measure, and provide, by 

readings taken at least once every 15 minutes, a permanent record 

of emissions, expressed in pounds per hour (lb/hr) for sulfur dioxide 

and in pounds per million British thermal units (lb/mmBtu) for 

nitrogen oxides." 40 C.F.R. § 72.2 (1997). Both EPA and industry 

commenters believed that 52 days constituted the minimum number 

of days of data needed for a valid analysis. See 61 Fed. Reg. at 

67,124.

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tially of 24 wall-fired boilers and 9 tangentially fired boilers. 

61 Fed. Reg. at 67,121. In response to the recommendations 

of several commenters that various boilers be included in or 

excluded from this database, EPA formalized and expanded 

its selection criteria into Data Quality Objectives ("DQOs")

"rigorous and precisely defined rule tables" used to select 

candidates for the database. Id. at 67,122. Application of 

the DQOs resulted in a new database consisting of 39 wallfired boilers and 14 tangentially fired boilers, a result that 

EPA believed would "increase[ ] the overall representativeness of the database." Id. at 67,123-24.

EPA then considered the lowest average NOx emission rate 

each boiler in the database had sustained for at least 52 days 

when CEM data were available (the "low NOx period"). To 

take into account the fact that the emissions rate immediately 

after low NOx burner installation might not be representative 

of a boiler's emissions rate at full operating capacity, EPA 

also analyzed emission rates for a time period beginning 30 

days after resumption of operation after installation until the 

end of the available CEM data as well as for a time period 

beginning with the first hour of the low NOx period until the 

end of the available CEM data. Id. at 67,125.18 In response 

to comments that suggested that the 52-day period alone was 

insufficient to determine actual emission rates, EPA selected 

for the final rule the time period beginning with the first hour 

of the low NOx period until the end of the available CEM data 

(the "post-optimization period") as the basis for assessing low 

NOx burner performance.19 Id. at 67,126.

__________

18 EPA also developed "load-weighted annual average NOx emission rates" to take into account the fact that the low NOx period 

may not adequately capture seasonal variations in demand for 

power and found these rates to be "essentially the same as or lower 

than" the average emission rates for the low NOx period. 61 Fed. 

Reg. at 67,125.

19 Appalachian Power's argument that EPA unreasonably limited 

its analysis to the 52-day period is thus unfounded. In any event, 

the use of the post-optimization period seems eminently rational 

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As part of its procedural challenge to the rule, Appalachian 

Power argues that EPA violated the rulemaking requirements of the Act by not disclosing the DQOs until the final 

rule, apparently invoking the Act's requirement that EPA's 

notice of proposed rulemaking ("NPRM") include, inter alia,

"the methodology used in obtaining the data." 42 U.S.C. 

§ 7607(d)(3)(B) (1994). We disagree. While it is true that 

the DQOs did not appear in the NPRM in precisely the same 

form or to the same extent as they did in the final rule, it is 

not the case that any significant DQO appeared for the first 

time in the final rule. In the NPRM, EPA listed two criteria 

that governed selection of boilers for the database: (1) whether units had installed only low NOx burners and had installed 

them after the date of enactment of the 1990 amendments 

and (2) whether post-retrofit hourly emission rate data, measured by CEMs and sustained for at least a 52-day period, 

was available. 61 Fed. Reg. at 1443-44. The DQOs in the 

final rule include these criteria as well as the following: (1) 

the database would be limited to Group 1 boilers; (2) boilers 

for which low NOx burner design, installation, and/or operations were known to be seriously flawed would be excluded; 

(3) boilers would have to have a pre-retrofit uncontrolled 

emission rate based on quality-assured data; (4) New Source 

Performance Standards boilers 20 or boilers using Powder 

River Basin coal would be excluded because they could more 

easily meet low NOx emission limits than other boilers. 61 

Fed. Reg. at 67,122 (Table 3). With the exception of criterion 

(1), which merely defines the database, the DQOs that appeared explicitly for the first time in the final rule were all 

intended to exclude faulty or overly optimistic data. Appala-

__________

given the alternatives: Using solely the 52-day period would, as 

Appalachian Power argues, rely on too little data, and using the 

entire post-retrofit period after the 30-day break-in period would 

give inordinate weight to data arising from a time when a boiler was 

not operating at its optimal performance level.

20 New Source Performance Standard boilers are new coal-fired 

utility boilers on which construction began after August 17, 1971, 

and which are subject to the New Source Performance Standards 

contained in 40 C.F.R. pt. 60. 61 Fed. Reg. at 67,121.

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chian Power does not and, we think, could not contend that it 

would have challenged these quality-control DQOs had they 

been presented in full in the proposed rule. There is therefore no basis for us to conclude, as we must to invalidate the 

rule for procedural errors, that the addition of these DQOs in 

the final rule was "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. § 7607(d)(8) 

(1994). By including all the database criteria in the NPRM 

that could possibly have been subject to adverse comment, 

EPA has complied with its statutory directive to include "the 

methodology used in obtaining the data."

Moreover, we can find no apparent defects in the database 

itself. In constructing the database for the final rule, EPA 

applied the DQOs not only to those boilers used in the 

proposed rule analysis but also to those boilers that commenters requested that EPA consider as well as to additional 

boilers identified by EPA as using low NOx burner technology. This resulted in the addition of 20 boilers to the database 

(which ultimately contained a total of 39 wall-fired boilers and 

14 tangentially fired boilers 21). 61 Fed. Reg. at 67,123-24. 

In this respect, EPA has identified all likely candidates for 

the boiler database as well as been responsive to comments.22

Appalachian Power's assertion that the emission rates reflect 

__________

21 Although the relatively small number of tangentially fired 

boilers might be cause for looking more closely at the regression 

analysis for this subgroup, see Daniel L. Rubinfeld, Reference Guide 

on Multiple Regression, in REFERENCE MANUAL ON SCIENTIFIC 

EVIDENCE 415, 454 (1994) (noting that 30 data points are typically 

seen as sufficient for regressions with a small number of explanatory variables), Appalachian Power has not controverted EPA's assertion that the database is representative of the entire boiler population.

22 We therefore reject Appalachian Power's assertion that EPA's 

enlargement of the database post-proposal constituted a procedural 

violation. As we noted in International Harvester, 478 F.2d at 632 

n.51, it would be unproductive to insist that an agency "learn from 

the comments on its proposals only at the peril of starting a new 

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boilers employing beyond-burner technology is not supported 

by the record.

2. Construction of the Equations

Using the database, EPA constructed two linear regression 

equations, one for wall-fired boilers and one for tangentially 

fired boilers, that captured the percent reduction in emissions 

with low NOx burner technology as a function of the uncontrolled emission rate. As EPA noted in the preamble to the 

final rule, the use of a regression model rather than a simple 

extrapolation from the low NOx burner database would enable 

EPA better to predict the effect of installing low NOx burner 

technology on Phase II boilers. See 61 Fed. Reg. at 67,130.

It is commonly understood that the more variables that are 

included in a regression analysis, the more likely it is that the 

model describes accurately the phenomenon it is being used 

to explain.23 As the Supreme Court has noted in the employment discrimination context, "the omission of variables from a 

regression analysis may render the analysis less probative 

than it otherwise might be," but it does not render the 

analysis completely devoid of value. Bazemore v. Friday, 478 

U.S. 385, 400 (1986). Nevertheless, a number of commenters, 

Appalachian Power among them, argued that EPA's analysis 

failed to take into account several operational factors associated with low NOx burners, including normal aging and wear of 

__________

procedural round of commentary." So long as the final rule promulgated by the agency is a "logical outgrowth" of the proposed 

rulethat is, if "the purposes of notice and comment have been 

adequately served," Fertilizer Inst. v. EPA, 935 F.2d 1303, 1311 

(D.C. Cir. 1991)we will find no procedural violation. EPA's action 

between proposal and promulgation, which served only to bolster 

the validity of the model by increasing the amount of data upon 

which it was based, certainly satisfies this standard.

23 Cf. National Lime Ass'n v. EPA, 627 F.2d 416, 431 n.46 (D.C. 

Cir. 1980): "[T]o be achievable, we think a uniform standard must 

be capable of being met under most adverse conditions which can 

reasonably be expected to recur and which are not or cannot be 

taken into account in determining the 'costs' of compliance."

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equipment, increased particulate emissions, auxiliary equipment design, and furnace configuration, all of which arguably 

could have an effect on the level of NOx emissions. EPA 

responded to this concern by using the post-optimization 

period rather than the 52-day period for analysis, which it 

believed would "reasonably account for variation in operating 

conditions among Group 1 boilers." EPA Response to Comments at 63.24 "The claim that there are various problems 

due to aging of equipment that have not yet been encountered," the agency continued, "is speculative and unsupported." Id.

While EPA's response could have been more extensive, it 

does not suggest that the agency's use of the regression 

models was arbitrary and capricious. As we have previously 

noted, the party challenging the use of such a model "cannot 

undermine a regression analysis simply by pointing to variables not taken into account that might conceivably have pulled 

the analysis's sting." Koger v. Reno, 98 F.3d 631, 637 (D.C. 

Cir. 1996) (dicta). See also Segar v. Smith, 738 F.2d 1249, 

1277 (D.C. Cir. 1984) (noting that where there is no reason to 

conclude that the omitted variable correlates with the dependent variable, the omission will not affect the validity of the 

analysis). Rather, that party must identify clearly major 

variables the omission of which renders the analysis suspect. 

This conclusion, derived from employment discrimination 

cases, holds equally true in this context, even more so because of the deference due to an agency's scientific analysis. 

Neither the commenters before EPA nor Appalachian Power 

here before us has offered any data to support the assertion 

that additional factors not accounted for in EPA's regression 

analysis would have a significant effect on NOx emissions. 

The regression equations were constructed based on the data 

available or reasonably predictable at the time of the final 

rule; to require EPA to take into account variables for which 

__________

24 This document, containing EPA's responses to comments submitted during the rulemaking process, was incorporated by reference in the preamble to the final rule. See 61 Fed. Reg. at 67,120.

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no data existed would be to require that it engage in precisely 

the type of arbitrary rulemaking the Act forbids.

3. Application of the Equations to the Uncontrolled 

Emission Rates of Phase II Boilers

The next step of EPA's analysis was to calculate, through 

the application of the regression equations developed to the 

uncontrolled rates of the Phase II boilers,25 the NOx emission 

rate each Phase II boiler could be expected to achieve 

through a low NOx burner retrofit. Appalachian Power's 

primary challenge to this step of the analysis is that the 

results generated by the regression equation are faulty because they do not include the uncertainty inherent in the 

calculationin other words, the true reduction in NOx emissions associated with a particular retrofit might be somewhat 

greater than or less than the amount yielded by the regression equation. As a result, Appalachian Power contends, 

because EPA based its revised emission limits on what represents the midpoint between the uncertainty boundaries, the 

predicted emission levels are based on levels achievable by 

only 50 percent of the Phase II boilers.

Although Appalachian Power's assertion that the results 

are subject to some uncertainty is correct, we do not believe 

its complaint constitutes a telling critique of EPA's analysis. 

In any regression analysis, the line described by the regression equation represents the best possible fit to the data; 

some points will necessarily be plotted above the line and 

some will fall below the line (except in the rare circumstance 

in which the line is a perfect fit to the data). While each data 

point will be associated with some residual (the difference 

__________

25 EPA noted in the preamble to the proposed rule that the Group 

1, Phase II database of uncontrolled emission rates contained 

information for only 69 percent of the Phase II population. 61 Fed. 

Reg. at 1449. While a more complete database would have been 

preferable, EPA determined by comparison of boiler size and age 

that the Phase II database "adequately represents the entire Phase 

II population." Id. Appalachian Power has not suggested that this 

is not the case.

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between actual and fitted values), so long as this residual is 

within acceptable statistical limits, the fact that some data 

points necessarily fall below the line does not render the 

regression analysis invalid. As we have noted in similar 

circumstances, "[t]hat the model does not fit every application 

perfectly is no criticism; a model is meant to simplify reality 

in order to make it tractable." Chemical Mfrs., 28 F.3d at 

1264. To invalidate a model simply because it does not 

perfectly fit every data point "would be to defeat the purpose 

of using a model." Id. at 1265. Appalachian Power does not 

suggest in its argument before us that the uncertainty surrounding the data points is statistically unacceptable, only 

that it exists.26 We would not deem that sufficient to label 

EPA's model arbitrary and capricious.

This is not, certainly, like the case in Sierra Club, in which 

we rejected a 92 percent sulfur removal rate that was based 

solely on evidence that "only one commercial scale plant and 

one small pilot unit can almost but not quite meet the 

standard." 657 F.2d at 363. In this case, 23 of 39 wall-fired 

boilers and 9 of 14 tangentially fired boilers in Group 1, Phase 

I can currently meet the revised limits. 61 Fed. Reg. at 

67,123-24 (Tables 4 and 5). Because the statute requires only 

a determination that more effective low NOx burner technology is "available" for a class of boilers, the fact that, as 

__________

26 One way to assess the "fit" of a particular model is by its R2

value. R2is a measure of the percentage of variation in the 

dependent variable that is accounted for by the explanatory variableshere, the degree of reduction in emissions explained by the 

installation of low NOx burners. The range of values for R2is 

between 0 and 1; the closer R2is to 1, the more the change in the 

dependent variable is explained by the explanatory variables. 

Chemical Mfrs. Ass'n v. EPA, 870 F.2d. 177, 215 n.139 (5th Cir. 

1989). The R2value for the wall-fired boiler equation was 0.731, 

while the R2value for the tangentially fired boiler equation was 

0.707. 61 Fed. Reg. at 67,133. While "[a]s a general rule, courts 

should be reluctant to rely solely on a statistic such as R2to choose 

one model over another," Rubinfeld, supra, at 457; see also Segar,

738 F.2d at 1282 n.27, it cannot be said from these values that 

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Appalachian Power claims, some individual boilers cannot 

currently meet the revised limits does not serve to invalidate 

the rule.

4. Determination of the Limitation

Finally, EPA used the rates resulting from the regression 

equations to determine "reasonably achievable emission limitation[s]" 27 for Phase II boilers. 61 Fed. Reg. at 67,130. 

Appalachian Power asserts, however, that the predicted controlled emission rates of many boilers are so close to the 

emissions limits that any error in the prediction would render 

these boilers in violation of the limits. In addition, it claims 

that many utilities typically attempt to overcontrol emissions 

so that any fine tuning of the boiler will not bring the boiler 

over the emission limit. If the rule deems this "overcontrolled" emissions level achievable, Appalachian Power claims, 

utilities will be penalized for anticipating control difficulties. 

For both these reasons, Appalachian Power argues that EPA 

should have included a compliance margin in the NOx emission limits.

Again, we find this challenge insufficient to vacate the rule. 

The first reason that this is so is a statutory one: The Act 

permits EPA to revise the emissions limitations upon a 

finding that "more effective low NOx burner technology is 

available." 42 U.S.C. § 7651f(b)(2). The fact that these 

boilers can achieve lower emission levels with low NOx burner 

technologyeven if they depend on a cushion between those 

levels and the emissions limitsdemonstrates that the statutory requirement has been satisfied. Moreover, as EPA has 

noted in the preamble to the final rule, boiler owners who 

fear that tuning may send them over the allowable limits may 

use the alternative emission limitations ("AEL") and averaging options provided in the Act to ensure that their total NOx

emissions from all affected units comply with EPA regula-

__________

EPA's use of this statistical model represented unreasoned decisionmaking.

27 EPA defined a "reasonably achievable" limit as one that could 

be met by 85 to 90 percent of the relevant boiler population. 61 

Fed. Reg. at 67,136.

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tions.28 61 Fed. Reg. at 67,136. Finally, we note, as EPA 

has pointed out, that the limit applies to a unit's average 

annual emission rate rather than to a monthly or a daily 

emission rate. This means that a boiler may overemit on 

some days and underemit on others and still be deemed in 

compliance with its emission limit. Given these various options, there is no reason that EPA's failure to build a compliance margin into the limits themselves should render them 

arbitrary and capricious. We therefore reject Appalachian 

Power's challenge on this front, as with its other substantive 

challenges to the Group 1, Phase II limits.

Undaunted, Appalachian Power and intervenor National 

Mining Association ("NMA") mount an additional procedural 

challenge to the Group 1, Phase II limits: namely, that EPA 

justified its revision of the rates based on public health and 

welfare concerns not authorized in the statute.29 See 61 Fed. 

Reg. at 67,160-61. We do not find this argument persuasive. 

The statute provides that EPA "may revise" (emphasis added) the limitations if it determines that more effective technology is available. We have noted that when a statute uses 

the permissive "may" rather than the mandatory "shall," "this 

choice of language suggests that Congress intends to confer 

some discretion on the agency, and that courts should accordingly show deference to the agency's determination. However, such language does not mean the matter is committed

__________

28 Under the AEL provision, EPA may authorize an emission 

limitation less stringent than that promulgated if it determines that 

a particular boiler cannot meet the applicable limitation despite the 

installation and proper operation of the appropriate control technology. See 42 U.S.C. § 7651f(d) (1994). Under the emissions averaging provision, the owner or operator of two or more affected units 

may petition to have the emission rates for those units averaged in 

order to meet the emissions limit. See 42 U.S.C. § 7651f(e) (1994).

29 In an attempt to present evidence of the ongoing debate over 

whether environmental concerns warrant more stringent limits, 

NMA appended several items to its brief that were not before EPA 

during the rulemaking process. Because these items are not part 

of the record on review, see 42 U.S.C. § 7607(d)(7)(A), we grant 

EPA's motion to strike the attachments.

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exclusively to agency discretion." Dickson v. Secretary of 

Defense, 68 F.3d 1396, 1401 (D.C. Cir. 1995) (emphases in 

original). Here, it is clear that EPA's discretion is not 

boundless because section 407(b)(2) requires that EPA determine that more effective low NOx burner technology is available before it is permitted to revise the Group 1 emission 

limits. There is no indication, however, that Congress intended to further limit EPA's discretion to revise the Group 1 

limits once such a determination has been made. Our conclusion is supported by the fact that section 407(b)(2) provides 

that EPA "shall" establish the Group 2 emission limits by 

January 1, 1997, but "may" revise the Group 1 limits by the 

same date. See 42 U.S.C. § 7651f(b)(2). The use of both 

words in the same statutory subsectionas well as the section's further reference to the applicability of "the revised 

emission limitations, if any" (emphasis added)implies that 

Congress intended that EPA's discretion to revise the Group 

1 limits be broader than its discretion to set the Group 2 

limits.

Ethyl Corp., relied on by Appalachian Power, is not to the 

contrary. In Ethyl Corp., we considered a statute that 

provided that EPA, " 'upon application of any manufacturer of 

any fuel or fuel additive, may waive' " a prohibition against 

introducing certain fuel additives into commerce upon a finding that "the fuel additive does not cause or contribute to a 

failure of vehicles to meet emission standards." 51 F.3d at 

1055, 1058 (quoting 42 U.S.C. § 7545f(4) (1988 & Supp. V 

1993)). The statute also provided that if EPA did not act 

either to grant or to deny a waiver application within 180 

days, the waiver would be treated as granted. See id. at 1059 

(quoting 42 U.S.C. § 7545(f)(4)) ("If the Administrator has 

not acted to grant or deny an application under this paragraph within one hundred and eighty days of receipt of such 

application, the waiver authorized by this paragraph shall be 

treated as granted."). EPA found that Ethyl had established 

the factual finding but denied its waiver application for public 

health reasons. We held that in the context of the entire 

statute, the statutory language stating that EPA "may waive" 

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tion referred to EPA's discretion "to either act affirmatively, 

granting or denying a waiver, or not to act, and instead, to let 

the 180-day limit run." Id. As a result, we held that once 

the factual standard was met, EPA's discretion extended only 

to the decision as to whether the waiver would occur through 

EPA's action or EPA's inaction. Here, by contrast, there is 

no statutory language that provides a more limited definition 

of the phrase "may revise." There is not, as in Ethyl Corp., a 

provision that once the requisite factual finding is made, the 

Group 1 limits will be revised even if EPA chooses not to act 

affirmatively to do so. Section 407(b)(2) states simply that 

EPA "may revise" the Group 1 emission limits downward if it 

determines that more effective low NOx burner technology is 

available, limited only by the provision that the new emission 

limits, "if any," will not apply to boilers already regulated in 

Phase I. Given the lack of alternative interpretations, we 

cannot conclude that the word "may" has the same effect as it 

did in Ethyl Corp., that is, that it gives EPA discretion only 

to choose the avenue by which revised emission limits will be 

promulgated. Rather, we believe that "may revise" refers to 

EPA's discretion to revise the Group 1 limits at all even after 

the requisite finding on more effective low NOx burner technology has been made. For EPA to justify this decision in 

part by referring to the environmental concerns of the Act, 

see 61 Fed. Reg. at 67,119-20; EPA Response to Comments 

at 281, was not arbitrary and capriciousindeed, it would 

have been arbitrary for EPA to offer no justification, and 

Appalachian Power has not suggested other considerations 

that would have been more consonant with the statutory 

framework.30

__________

30 In fact, it is difficult to see how Appalachian Power has been 

injured by EPA's consideration of public health and welfare concerns. EPA referred to these factors only in determining whether 

it should, in its discretion, impose the limits that it had already 

determined were justified under the statutory criterion. If EPA 

had believed that it could not take these considerations into account, 

the result would have been identical: EPA would have imposed the 

same limits Appalachian Power now challenges.

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In any event, it is clear, contrary to Appalachian Power's 

argument, that EPA has sufficiently justified its decision to 

revise the Group 1 emission limits apart from environmental 

concerns. Appalachian Power is correct that the burden is on 

EPA to justify the change from the 1995 emission limits, 

which the agency agreed were "aggressive," see 60 Fed. Reg. 

at 18,758-59, "[b]ut that justification need not consist of 

affirmative demonstration that the status quo is wrong; it 

may also consist of demonstration, on the basis of careful 

study, that there is no cause to believe that the status quo is 

right, so that the existing rule has no rational basis to support 

it." Center for Auto Safety v. Peck, 751 F.2d 1336, 1349 (D.C. 

Cir. 1985). As EPA has noted, the 1995 emission limits were 

based on data from periods only until 1992, while the current 

limits incorporated additional data from as recently as 1996. 

See 61 Fed. Reg. at 67,120; EPA Response to Comments at 

27-28. This increase in available data, and the more stringent limits that analysis of that data generated, were sufficient for EPA to conclude that "there is no cause to believe 

that the status quo [i.e., the 1995 emission limits] is right." 

Because we find nothing irrational in that determination, we 

uphold the revised Group 1 NOx emission limits.

B. The Group 2 Emission Limits

By contrast to the boilers in Group 1, the boilers in Group 2 

are not necessarily amenable to retrofitting with low NOx

burners. For this reason, Congress did not require EPA to 

base its Group 2 emission limits on that single control technology. Instead, in section 407(b)(2), Congress instructed 

EPA to base the Group 2 emission rates on

the degree of reduction achievable through the retrofit 

application of the best system of continuous emission 

reduction, taking into account available technology, costs 

and energy and environmental impacts; and which is 

comparable to the costs of nitrogen oxides controls set 

[for Group 1 boilers].

42 U.S.C. § 7651f(b)(2). Appalachian Power challenges 

EPA's interpretation of this statutory language, an interpretation that informed the methodology the agency used to set 

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the Group 2 emission limits. In addition, even assuming the 

validity of that interpretation, Appalachian Power challenges 

the reasonableness of the methodology EPA employed. We 

reject both challenges.

1. Statutory Interpretation of Section 407(b)(2)

EPA believes that the statutory provision is ambiguous, 

both in its specific words and in their grammatical arrangement. Although ambiguous, EPA concludes that the best 

reading of the key statutory phrase, "comparable to the costs 

of," directs it to conduct a comparison of the costeffectiveness of those control technologies available for Group 

2 boilers with the cost-effectiveness of the NOx controls 

required for Group 1 boilers (i.e., low NOx burner technology). And it reasons that the provision as a whole instructs it 

to base the Group 2 limits on the degree of emissions 

reduction achievable by those Group 2 technologies that 

compare favorably in cost-effectiveness with low NOx burner 

technology. For these purposes, EPA measures costeffectiveness in dollars per ton of NOx

removed ($/tonremoved).31

Appalachian Power, by contrast, argues that the language 

of the statutory provision is unambiguous. It contends that 

the language requires a comparison of the costs of producing 

electrical output using control technologies that can be used 

__________

31 Appalachian Power charges that EPA's interpretation of "comparable cost" changed between April 1995 and its promulgation of 

the final rule at issue here. Appalachian Power notes that in April 

1995, EPA said that in selecting Group 2 controls it would "consider 

only those systems ... that ... are comparable in cost to the 

average cost in constant dollars of low NOx burner technology 

applied to Group 1 ... as determined in section 3 below." 60 Fed. 

Reg. at 18,776 (emphasis added). The charge of change-of-position 

is unfair, however, because the first sentence of the "section 3" 

referred to in the quotation uses the same measurement of comparable cost EPA used in the final rule: "The Administrator will use 

the procedures ... specified in this section to estimate the average 

cost-effectiveness (in annualized $/ton NOxremoved) of installed low 

NOx burner technology applied to Group 1, Phase I boilers." Id.

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in Group 2 boilers with the costs of producing electrical 

output using low NOx burner technology in Group 1 boilers. 

Those costs, it argues, should be measured in dollars per 

kilowatt ($/kw) and dollars per kilowatt hour ($/kwh). In 

Appalachian Power's view, only those Group 2 technologies 

that compare favorably to low NOx burner technology by this 

measure may be considered in setting the Group 2 limits.

Once again, Chevron's first step does not take us very far. 

The statute does not define the phrase "comparable to the 

costs of." As discussed below, we agree with EPA that the 

words in the phrase are ambiguous, see 61 Fed. Reg. at 

67,138, and that the provision as a whole is grammatically 

awkward, see id. at 67,139. And although the legislative 

history does not definitively address the meaning of the 

phrase, we also agree with EPA that that history is supportive of the agency's interpretation.

To begin, both sides agree that the meaning of the word 

"cost" is the "price paid for a thing." App. Pwr. Br. at 33; 

EPA Br. at 34. Moreover, both agree that, depending upon 

the context, that "thing" could be either the amount of 

pollution removed ($/ton-removed) or the amount of electricity produced ($/kw or $/kwh). Indeed, the word "costs" is 

used in two places in section 407(b)(2), and perhaps the best 

evidence of the essential ambiguity of the word is that each 

side adopts the other's definition for one of the two uses. 

Appalachian Power argues that $/ton-removed is the appropriate way to define "costs" when they are "tak[en] into 

account" in determining "the best system of continuous emission reduction." App. Pwr. Br. at 32. It insists, however, 

that only $/kw and $/kwh will do for the key phrase, "comparable to the costs of nitrogen oxides controls." Id. at 33; 

App. Pwr. Reply Br. at 8. EPA would use the two definitions 

in precisely the opposite places. See EPA Br. at 35.

Turning to the grammatical structure of the statutory 

provision, Appalachian Power argues that its definition for 

the key phrase is "plainly" required because of the context in 

which the phrase is used. It contends that the antecedent of 

the word "which," in the phrase "which is comparable to the 

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costs of nitrogen oxides controls," is the phrase "the best 

system of continuous emission reduction." On this reading, it 

argues that EPA's job is to base emission limits on "the best 

system of continuous emission reduction ... which is comparable to the costs of nitrogen oxide controls." When comparing the costs of one system of controls to those of another, it 

argues, the appropriate comparison is the cost of producing 

electrical power.

Even if we were to adopt this view of the provision's 

grammar, it would be hard to conclude that Appalachian 

Power's definition is "plain." The syntax for which Appalachian Power argues simply does not resolve the question of 

"costs for what?" Although one certainly could compare the 

"costs" of two systems by comparing their costs for producing 

electrical output, one could also reasonably compare their 

costs for removing tons of pollution.

Moreover, we cannot agree that Appalachian Power's view 

of the provision's grammar is the only reasonable one. As 

EPA notes, to read the phrase "best system" as the antecedent of the word "which" would require deletion of both the 

semicolon and the word "and" that separate the two parts of 

the statutory provision. See 61 Fed. Reg. at 67,139. In 

EPA's view, the better reading is that the antecedent of 

"which" is the phrase "the degree of reduction achievable." 

On this reading, EPA urges, Congress contemplated that the 

agency would base Group 2 limits

on the degree of reduction (1) which can be reached 

through the best system of NOxreduction, taking into 

account available technology, costs and energy and environmental impacts[;] and (2) which is "comparable to the 

costs" of [low NOx burner] technology.

EPA Br. at 6 (emphases added). The only way to determine 

the degree of NOxreduction that can be achieved in Group 2 

boilers at costs comparable to the costs of low NOx burner 

technology, EPA argues, is to consider the relative costs of 

controls per ton of NOxremoved. EPA contends that when 

one focuses on "degree of reduction" as the antecedent, 

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rather than on "best system," cost-effectiveness becomes the 

natural measurement to apply.

EPA's grammatical construction is plausible. But it is no 

more plausible than that of Appalachian Power because it, 

too, requires editing of the congressional text. This time, 

rather than make a deletion, we would need to make an 

addition. As noted in italics above, we would need to add the 

word "which," so that it appears twice rather than only once, 

in order to create a parallel construction that makes "the 

degree of reduction" the antecedent of both of the numbered 

phrases. The need to make that addition, however, only 

highlights its absence in the actual text and confirms the 

essential ambiguity of section 407(b)(2)'s key phrase.

Finding nothing dispositive in the statute's language or 

grammar, we look next to the legislative history for guidance. 

Appalachian Power argues that EPA's construction is inconsistent with the purpose of section 407(b)(2), which, Appalachian Power contends, was to ensure that the dollar "cost of 

controls" to owners of Group 2 boilers would not exceed the 

dollar "cost of controls" imposed on owners of Group 1 

boilersi.e., not exceed the cost of low NOx burners. We 

find little support in the legislative history, however, for 

Appalachian Power's view of the section's purpose. To the 

contrary, although we cannot say that the legislative history 

is dispositive, it does contain considerable support for EPA's 

view that cost-effectiveness is an appropriate measure of 

comparison, even if it is not the only appropriate measure.

Appalachian Power correctly notes that the language of 

section 407(b)(2) that directs EPA to set Group 2 emission 

limits, including the key phrase "comparable to the costs of," 

comes from the Senate bill. Compare 42 U.S.C. 

§ 7651f(b)(2), with Clean Air Act Amendments of 1990, 

S. 1630, 101st Cong. § 407(b)(2) (1990) (Senate bill), reprinted 

in COMMITTEE ON ENV'T & PUB. WORKS, U.S. SENATE, A LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 

4641 (1993) [hereinafter "LEGISLATIVE HISTORY"]. By contrast, 

the House version of the bill prevented EPA from regulating 

certain Group 2 boilers unless EPA, inter alia, found methUSCA Case #97-1091 Document #330693 Filed: 02/13/1998 Page 30 of 54
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ods "available for reducing emissions from such boilers that 

are as cost effective as the application of low nitrogen oxides 

burner technology in the case of [Group 1] boilers." Clean 

Air Act Amendments of 1990, S. 1630, 101st Cong. § 506(a)-

(c) (1990) (House bill) (emphasis added), reprinted in LEGISLATIVE HISTORY, at 2277. Appalachian Power contends that the 

conference committee's adoption of the Senate version

which did not use the phrase "cost effective" found in the 

House versionwas tantamount to a rejection of the concept 

of cost-effectiveness. We disagree.

As a general matter, courts often have noted the difficulty 

of determining the significance of Congress's unexplained 

modification of language in earlier drafts of legislation, and 

have found that such modification does not necessarily indicate Congress's rejection of the substance of the earlier 

language. See, e.g., Seatrain Shipbuilding Corp. v. Shell Oil 

Co., 444 U.S. 572, 594-95 (1980); Edison Elec. Inst. v. EPA, 2 

F.3d 438, 451 (D.C. Cir. 1993). The two phrases at issue 

here"comparable to the costs of" and "cost effective"are 

not incompatible. It is possible that Congress regarded the 

two as synonymous, and that the conference committee simply adopted the Senate's formulation over that of the House.

Elements of the legislative history of the enacted version 

support this reading. Perhaps most persuasive is Congress's 

direction, in the conference report on the final bill, that EPA 

should base emission limits for Group 2 boilers on "methods 

that are available for reducing emissions from such boilers 

that are as cost effective as the application of low nitrogen 

oxide burner technology to [Group 1] boilers." H.R. CONF.

REP. NO. 101-952, at 344 (emphasis added). Moreover, the 

conference report incorporates a section of the Senate report 

on an earlier Senate bill. That report equated the phrase 

"cost-effectiveness"as measured by $/ton-removedwith 

the phrase "comparable to the cost of":

Also favoring the cost-effectiveness of [section 407] is the 

development of new, lower-expense technologies.... 

[The] decreasing cost for selective catalytic reduction 

(SCR) may lower the expense of initial NOxreductions 

even further. For example, SCR has long been viewed 

as prohibitively expensive, but recent dramatic declines 

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in cost have brought the per-ton-removed price of this 

technology down to as low as $600.... This is comparable to the cost of conventional control methods like low 

NOx burners....

S. REP. NO. 101-228, at 332-33 (1989) (emphases added). The 

Senate report also noted that with the NOx emission limits, 

the Senate "intended to compel utilities to do no more than 

make the most cost-effective reductions." Id. at 332 (emphasis added).32

Appalachian Power's general point, that Congress was concerned that the "costs" for Group 2 boilers be comparable to 

the "costs" for Group 1 boilers, is plainly correct. But there 

is no support for Appalachian Power's contention that Congress intended $/kwh to define the word in the second part of 

section 407(b)(2), while expecting $/ton-removed to define it in 

the first. Congress simply did not make the fine distinctions 

that the parties make here between different methods of 

measuring "costs." Indeed, when introducing the amendment that led directly to section 407(b)(2), various Senators 

referred interchangeably to the terms "cost-effectiveness," 

"low cost," and "not unreasonably expensive." See, e.g., 136 

CONG. REC. 5045 (1990) (statement of Sen. Chafee); 136 CONG.

REC. 5045-46 (1990) (statement of Sen. Baucus); 136 CONG.

REC. 5046 (1990) (statement of Sen. Lott). And during the 

floor debates on the conference report, Senator Burdick

conferee and Chair of the Senate Committee on Environment 

and Public Worksagain equated "cost" and "cost-effective," 

stating that the Group 2 limits were to be set

only if the costs of such reductions are as cost effective 

as reductions from installation of low NOx burners on 

__________

32 Although Senate Report No. 101-228 used the phrase "comparable to the cost of"and used it synonymously with costeffectivenessthe version of the Senate bill that was the subject of 

this report did not itself contain the phrase. However, the conference committee report on the final bill, which did contain the 

phrase, stated that: "Section 407(b)(2) is intended to incorporate a 

portion of ... S. Report 101-228, that the NOx emission control 

technology requirements for [Group 2 boilers] are to reflect the 

relative difficulty of controlling NOx emissions from these boilers." 

H.R. CONF. REP. NO. 101-952, at 344. While it is not entirely clear 

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other types of boilers.... This provision is carefully 

worded to make cost considerations the determinative 

factor in consideration of NOxreductions from [Group 2] 

boilers.

136 CONG. REC. 36,029 (1990) (statement of Sen. Burdick).

In sum, we draw the same conclusion regarding the phrase 

"comparable to the costs of" in the 1990 amendments as the 

Supreme Court drew regarding the term "stationary source" 

in the 1977 amendments to the Act: neither the statutory 

language nor the legislative history is dispositive of the 

meaning of the term. See Chevron, 467 U.S. at 861-62.

Moving then to Chevron's second step, we must consider 

whether EPA's decision to interpret the statute as contemplating a comparison of cost-effectiveness is reasonable. In 

light of the above discussion, there is little left to say. Given 

the ambiguous syntax and the multiple meanings that both 

parties concede may be assigned to the word "costs," we 

cannot conclude that EPA's decision to use $/ton-removed as 

the measurement of costs is unreasonable. Moreover, as our 

review of the legislative history suggests, although EPA's 

interpretation may not be required by that history, it surely 

is consistent with and supported by it. We thus conclude that 

EPA's construction of section 407(b)(2) is a permissible one.

2. Challenges to EPA's Methodology for Determining 

Emission Limits 33

Having concluded that it would base Group 2 emission 

limits on the capabilities of those Group 2 control technologies 

comparable in cost-effectiveness to low NOx burner technology, EPA developed a test for making such comparisons. 

EPA found that it could not rely on a comparison of median 

or mean costs alone, because the $/ton-removed cost for a 

given control technology, including low NOx burners, varied 

widely from boiler to boiler even within the same category of 

boiler, and had different cost ranges for different categories 

__________

tended to incorporate, Senate Report 101-228's entire discussion of 

the "Nitrogen Oxides Emission Reduction Program" spans less 

than two pages and includes the quotations set forth in the text.

33 We discuss here only those elements of EPA's methodology 

relevant to the challenges made by Appalachian Power and intervenor NMA.

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of boilers. See 61 Fed. Reg. at 67,138, 67,143 (Table 12). 

For this reason, EPA determined that it needed a more 

comprehensive statistical approach. See id. at 67,138.

First, EPA excluded the cost-effectiveness figures for boilers in the top and bottom 10 percent of cost-effectiveness, so 

that neither the lowest nor the highest cost projects would 

skew the comparison. See id. at 67,143 (Table 13); see also 

EPA Response to Comments at 91-92 (Joint Appendix 

("J.A.") 216-17).34 Next, EPA determined that the 

cost-effectiveness of using a given type of Group 2 control 

technology for a specific category of Group 2 boiler (a 

technology/category combination) was comparable to the 

cost-effectiveness of using low NOx burners in Group 1 boilers, if the median $/ton-removed cost of that Group 2 

technology/category combination: (1) did not exceed by more 

than one-third the overall median $/ton-removed cost for low 

NOx burners in Group 1 boilers, and (2) did not exceed the 

individual medians for both of the categories of Group 1 

boilers.35 See id. at 67,138, 67,143. Finally, EPA required 

__________

34 Appalachian Power asserts that EPA excluded only the high 

cost projects. The indicated record citations make clear that this 

assertion is incorrect.

35 The effect of this latter prong was to require that the median 

$/ton-removed cost for any Group 2 technology/category combination not exceed the median $/ton-removed cost of whichever of the 

two Group 1 boiler categories had the higher median cost. See 61 

Fed. Reg. at 67,138; EPA Br. at 43 n.22. At various places, both 

EPA and Appalachian Power misstate this prong and its consequences, effectively reading it as requiring that the median $/tonremoved cost for any Group 2 technology/category combination not 

exceed the median for either category of Group 1 boilershence 

that it be less than the lower of the two categories. See 61 Fed. 

Reg. at 67,138; App. Pwr. Br. at 36, 39. EPA acknowledges its 

misstatement, but notes that it was not used in the calculation of 

the actual Group 2 emission limits. See EPA Br. at 43 n.22; 61 

Fed. Reg. at 67,143. Appalachian Power's misreading explains its 

incorrect contention that on the basis of EPA's own methodology 

the costs for two categories of Group 2 boilers (cyclones and wet 

bottom, wall-fired) are not comparable to the costs for Group 1.

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that the 90th percentile of the $/ton-removed cost range for 

Group 2 technology/category combinations not exceed the 

90th percentile of the $/ton-removed cost range for low NOx

burners in Group 1 boilers. See id. at 67,138.

Using this cost-comparison test and further calculations, 

EPA selected appropriate control technologies and an emission limit for each of the four statutory categories of Group 2 

boilers, see 42 U.S.C. § 7651f(b)(2)(A)-(D) (wet bottom wallfired boilers; cyclones; units applying cell burner technology; 

and "all other types of utility boilers"). It concluded that it 

could not set emission limits at all for two types of boilers in 

the catch-all fourth category because no control technology 

met the comparability test. See id. at 67,114. And it concluded that one kind of control technology was not costeffective for two types of boilers, and so could not be used in 

setting emission limits for those boilers. See id. at 67,143.

Appalachian Power does not propose an alternative to the 

methodology EPA employed for setting the Group 2 emission 

limits. Instead, it and intervenor NMA charge that various 

elements of EPA's methodology are arbitrary and capricious, 

are unsupported by the record, or were used without following the Act's procedural requirements, and that we therefore 

must overturn the emission limits generated by EPA's methodology. Although we have considered and find all of petitioners' and intervenor's myriad arguments in this area lacking in merit, we discuss below only the more important of 

them.

a. Significance of Cost as a Factor in Selection of Controls. "Even assuming that Congress required EPA to compare the cost-of-tons reduced," Appalachian Power argues, 

EPA's comparison "is unlawful because it does not make cost 

a significant, much less a determinative factor." App. Pwr. 

Br. at 37. Appalachian Power contends that this is the result 

of EPA's choice of methodology, because when one uses a 

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fraction that divides costs by tons-removed, the fraction is 

"driven" by the denominator. Id. at 37-38. The proof that 

this is so assertedly is in the results that EPA's comparison 

test produces: the "costs" of the controls EPA has selected 

for Group 2, Appalachian Power claims, are "three to seven 

times higher than the costs of [low-NOx] burners." Id. at 37-

38 & n.119.

On its face, this is a difficult argument to understand. The 

key is to recognize that the argument actually mischaracterizes itself: it does not assume, as it claims, that the relevant 

"costs" are $/ton-removed, but rather assumes they are 

$/kwh. When Appalachian Power says the "costs" of the 

Group 2 controls are three to seven times the costs of Group 

1 low NOx burners, it can say so only by measuring those 

costs by $/kwhwhich is what it does. See id. at 38 n.119. 

Hence, in this argument Appalachian Power does not assume 

the validity of the measurement EPA has chosen, but simply 

relitigates, in different terms, the same argument we have 

rejected above.

b. Weight Given to Smaller Boilers. Appalachian Power 

contends that EPA manipulated its methodology to give 

unfair weight in Group 1 to smaller, underutilized boilers that 

are not cost-effective to retrofit with any controls, while 

giving more weight in Group 2 to larger, higher-utilized, and 

therefore more cost-effective boilers. This unfair comparison 

was made, Appalachian Power asserts, in order to ensure that 

high $/ton-removed Group 2 technologies would still be comparable to Group 1 controls.

We see no evidence of this manipulation. Instead, as we 

have noted, EPA made a number of statistical adjustments, 

and in particular excluded figures for boilers in the top and 

bottom 10th percentiles, precisely to ensure that neither the 

lowest nor the highest cost projects skewed the comparison. 

See EPA Response to Comments at 91-92 (J.A. 216-17). The 

agency's decisions not to impose limits on two types of Group 

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comparability test, and to exclude from consideration one 

kind of Group 2 control technology because it was too costly 

for two types of Group 2 boilers, are further evidence that 

EPA did not intentionally manipulate its methodology in 

order to ensure that expensive Group 2 controls would appear 

cost-effective.36

c. Calculation of Cost-Effectiveness of Low-NOx Burners.

Appalachian Power argues that EPA artificially inflated the 

costs of Group 1 controls, as compared to Group 2 controls, 

by not excluding from its database "a few extraordinarily 

high-cost" boilers in one of the two Group 1 categories 

(tangentially fired boilers). It contends that a total of ten 

specific Group 1 units (located at the Conemaugh, Shawville, 

and Joppa power plants) actually employ both low NOx

burners (the only required Group 1 technology) and technology "beyond low NOx burners." It also contends that in 

calculating the costs of these units, EPA arbitrarily attributed 

most of the overall project costs to the low NOx burners. 

Similarly, Appalachian Power argues that another two Group 

1 units were "high-cost outliers" that should have been excluded from the database because they use a "novel burner" 

with extraordinarily high costs.

We have carefully considered the record with respect to 

these charges, but find little with which to work. Some of 

Appalachian Power's arguments appear to be incorrect factually. The allocation of costs between low NOx burners and 

additional technology in some of the questioned units, for 

__________

36 Appalachian Power also argues that for boilers of similar size 

and utilization, the $/ton-removed costs for two kinds of Group 2 

controls are higher than the $/ton-removed costs for Group 1 

controls. As EPA replies, however, the statute does not require 

that "comparability" be established on a size-of-boiler basis. The 

statistical parameters set by EPA and noted above reflect a reasonable attempt by the agency to account for the range of costs of 

different control technologies operating in different sizes and categories of boilers.

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example, was based on estimates provided by the utilities 

themselves. See J.A. 1828-68; EPA Response to Comments 

at 91 (J.A. 216). Although the allocation in the other units 

was based on EPA's own estimates, see EPA Response to 

Comments at 90-91 (J.A. 215-16), Appalachian Power does 

not explain the manner in which it was "arbitrary." And 

there is simply a factual dispute between Appalachian Power 

and EPA as to whether the burners in the remaining two 

units are "novel" or not. Compare App. Pwr. Br. at 41, with

EPA Response to Comments at 352-53, 358-59 (J.A. 475-76, 

481-82). We will not substitute our judgment for EPA's in 

this highly technical area. See Troy Corp. v. Browner, 120 

F.3d 277, 283 (D.C. Cir. 1997).

d. Calculation of the Cost-Effectiveness of Gas Reburn.

On the other side of the equation, Appalachian Power argues 

that EPA artificially depressed the cost of one particular 

Group 2 control technologygas reburnby using national 

rather than regional projections of an important element of 

its cost, namely the price of natural gas. It also contends 

that gas reburn is not truly an "available" technology, because it has been used only in two small boilers in the United 

States. Hence, Appalachian Power contends, EPA's predictions of the cost of this Group 2 technology are arbitrary. 

The statute bars us from considering the first argument 

because it was not raised with the agency during the rulemaking. See 42 U.S.C. § 7607(d)(7)(B); EPA Br. at 50-51. 

The second argument is answered adequately by EPA's reliance on experience with gas reburn in boilers outside the 

United States, see EPA Response to Comments at 206-07 

(J.A. 330-31); J.A. 1904-06. Nothing in the statute bars 

EPA from considering such data.

e. Calculation of Cost-Effectiveness of Selective Catalytic 

Reduction. Appalachian Power also launches an attack on 

the methodology used to determine the cost-effectiveness of 

another Group 2 technology, selective catalytic reduction 

("SCR"). In order to assess the cost-effectiveness of SCR, 

EPA had to determine the predicted use of boilers in the year 

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2000. To do this, it employed a statistical model known as 

the Integrated Planning Model ("IPM") and conducted a 

number of runs of the model using varying assumptions. As 

we have noted in Part II.A above, our consideration of EPA's 

use of computer models proceeds with considerable deference 

to the agency's expertise. See American Iron & Steel Inst.,

115 F.3d at 1005; Chemical Mfrs. Ass'n, 28 F.3d at 1264-65.

Appalachian Power contends that EPA did not give sufficiently early notice of the assumptions it would use in the 

IPM, nor of the results of a June 1996 run of the model in 

which SCR proved less cost-effective than in the April run 

that was used in developing the final rule. The IPM's 

predictions for boiler utilization in the year 2000, as well as 

the final assumptions of the model and the results of the 

contested June 1996 modeling run, were not placed in the 

rulemaking docket until November 22, 1996two and a half 

weeks before EPA signed the final rule on December 10, 

1996.37 Although the two-and-a-half week notice period is 

certainly short, under the circumstances of this rulemaking 

discussed below, we find it adequate. Cf. Natural Resources 

Defense Council v. Thomas, Inc., 838 F.2d 1224, 1242-43 

(D.C. Cir. 1988) (finding two-week comment period adequate).

In its January 1996 proposed rule, EPA initially announced 

that it would use a model called the Coal and Electric 

Utilities Model ("CEUM") to predict boiler utilization in the 

year 2000. However, commenters, including some of the 

utilities petitioning here, submitted criticisms of the CEUM 

while noting advantages of the IPM. See J.A. 1409, 1416-17; 

61 Fed. Reg. at 67,143; EPA Response to Comments at 94-

100, 354-58 (J.A. 219-25, 477-81). EPA concluded that it 

should use the IPM instead because it had been used by 

__________

37 Although Appalachian Power initially contended that it did not 

learn this information until December 1996, at oral argument its 

counsel did not contest that it had the information as of November 

22, 1996.

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numerous major utilities, again including some petitioning 

here, for their own planning purposes, see EPA Response to 

Comments at 95 (J.A. 220). In April 1996, at a public forum 

on a related regulatory initiative, EPA provided documentation of how the model was used and of actual model runs, and 

requested comments. Again, commenters, including some 

petitioning here, made submissions and the agency made 

further adjustments to the model's assumptions. In April, 

the agency conducted a run of the model incorporating these 

changes and then used it to formulate the final rule at issue 

here. Subsequently, EPA made additional changes in the 

model's assumptions, and then reran the model in June. See 

id. at 95-96, 354 (J.A. 220-21, 477). In September, EPA met 

again on the related initiative with some of the petitioners 

here, and further explained the IPM. See id. at 354 (J.A. 

477). And on November 22, the IPM's final assumptions and 

predictions, as well as the results of the contested June 1996 

modeling run, were placed in the rulemaking docket.

Viewed in this context, as part of a series of refinements in 

the agency's model in response to the suggestions of commenters, we conclude that the relatively short period available for 

further submissions at the end of the rulemaking was reasonable. The agency's use of the IPM in these circumstances 

constituted a "logical outgrowth" of its original proposal. See 

Fertilizer Inst., 935 F.2d at 1311. Hence, we find no procedural violation.

Moreover, as we have previously noted, even if the late 

filing of the final IPM materials had constituted procedural 

error, we may invalidate a Clean Air Act rule for procedural 

errors "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. 

§ 7607(d)(8). Yet, Appalachian Power does not even expressly make this assertion. We interpret its point about the June 

1996 run as implying that if Appalachian Power had known 

about it earlier, it would have called it to EPA's attention, and 

that as a consequence EPA would not have used SCR in 

determining the Group 2 rates. The flaw in this argument is 

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that EPA did not need Appalachian Power's help to learn of 

the results of its own modeling run. Nor did EPA ignore 

those results. EPA conducted a sensitivity analysis of the 

differences between the April and June runs, in order to 

determine whether the differences were sufficiently significant to affect the final rule. See EPA Response to Comments 

354-55 (J.A. 477-78). Based on that analysis, EPA concluded 

that the April run provided a reasonable basis for establishing 

the limits in the final rule, and that using the June run would 

not significantly change those limits. See id. at 357 (J.A. 

480). Although EPA set out its sensitivity analysis in detail 

in its final Response to Comments, see id. at 355-360 (J.A. 

478-83), Appalachian Power has not attempted to identify any 

defect in that analysis, and hence cannot establish that earlier 

docketing of the June run would have led to a significant 

change in the final rule.

In addition to attacking the IPM, Appalachian Power also 

challenges what it characterizes as "other assumptions" relating to SCR. Again, Appalachian Power gives us little with 

which to work. It lists a number of asserted flaws in EPA's 

methodology which, it says, are merely "examples" of the 

agency's bias in favor of this technology. But EPA adequately responded to each of these challenges during the rulemaking,38 and Appalachian Power provides no basis for question-

__________

38 Appalachian Power argues, "for example," that EPA's model 

excluded from the calculation of Group 2 costs the cost of so-called 

"scope adders"other work completed at the same time as the 

installation of NOx control equipment. The exclusion was appropriate, however, because scope adders are usually not part of the NOx

reduction effort, and, in any event, these costs were excluded from 

the calculation of both Group 2 and Group 1 costs. See 61 Fed. 

Reg. at 67,144-45, 67,147; EPA Response to Comments at 172-74 

(J.A. 296-98). Appalachian Power also contends that rather than 

obtain site-specific cost information from the electrical utilities, 

EPA's model used a statistical technique known as "power law 

scaling" to estimate the capital costs for larger boilers based on 

actual data from smaller boilers in the same category. But the 

technique, which also is employed by electric utilities, see EPA 

Response to Comments at 135-37, 351-52 (J.A. 259-261, 474-75); 

J.A. 680-84, is reasonable because EPA used it where the data 

offered by the utilities consisted of estimates that were insufficiently supported, see 61 Fed. Reg. at 67,148-49; EPA Response to 

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ing the agency's assumptions regarding SCR in any larger 

sense.

Finally, Appalachian Power contends that EPA did not 

select SCR or gas reburn as a basis for the emission limit for 

wet bottom boilers until the announcement of the final rule. 

Although Appalachian Power is correct that SCR and gas 

reburn were not specifically proposed for wet bottom boilers, 

the agency's proposed rule did solicit comments regarding the 

use of both technologies in such boilers. See 61 Fed. Reg. at 

1464, 1474 (gas reburn); id. at 1457 (SCR). Commenters 

clearly understood that these technologies were under consideration, as the agency received comments on them from 

several sources, see J.A. 905-09, 1063-81; 61 Fed. Reg. at 

67,150-51; EPA Response to Comments at 232-36, 360 (J.A. 

356-60, 483), including some of the utilities petitioning here, 

see J.A. 989-91, 1004-116, 1169-72. As we have noted, this 

kind of agency modification of a proposed rule, in response to 

the comments it solicited and received on alternative possibilities, complies with the requirements of administrative law. 

See Natural Resources Defense Council, 838 F.2d at 1242; 

Small Refiner Lead Phase-Down Task Force v. EPA, 705 

F.2d 506, 547 (D.C. Cir. 1983).

f. Subcategorization of Boiler Types. Appalachian Power 

challenges EPA's failure to adopt a proposal to regulate as 

separate subcategories, or to exclude from regulation altogether, those Group 1 and 2 boilers where retrofitting allegedly could damage the units or only be accomplished at high 

cost. As EPA notes, however, the statute establishes specific 

categories of boilers (two Group 1 categories and four Group 

2 categories, see supra notes 4-5), and does not contemplate 

further subcategorization or boiler-by-boiler treatment. EPA 

states that it has no evidence to support the claim that boilers 

__________

Comments at 174-87 (J.A. 298-311). As yet another "example," 

Appalachian Power contends that EPA assumed a price for ammonia, consumed in large quantities during the SCR process, that 

appears lower than the price reported by the utilities. EPA 

correctly points out that the disparity is due to the fact that EPA's 

price was expressed in 1990 dollars. See EPA Response to Comments at 176-77, 185 (J.A. 300-01, 309).

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in Appalachian Power's proposed subcategories cannot in 

general achieve the same emission rates as other boilers in 

the statutory categories, see EPA Response to Comments at 

67 (J.A. 192), and Appalachian Power has offered nothing to 

justify disturbing this agency conclusion. EPA further notes 

that its statistical methodology took account of the range of 

cost-effectiveness of boilers within categories, and that the 

remedy for the owner of an individual unit that cannot 

achieve category limits is to request an alternative emission 

limit under 42 U.S.C. § 7651f(d), or to seek permission to 

average emissions from several units under 42 U.S.C. 

§ 7651f(e). See EPA Response to Comments 67, 254 (J.A. 

192, 378). EPA's response to this proposal is reasonable, and 

its rejection of the proposal is neither arbitrary nor capricious.

g. Consideration of Environmental Impacts in Setting 

Limits. Finally, intervenor NMA argues that EPA improperly relied on an irrelevant factorthe environmental impacts 

of the rulewhen setting the NOx emission limits for Group 2 

boilers. This argument is answered, however, by the plain 

language of section 407(b)(2), which requires EPA to consider 

environmental impacts. See 42 U.S.C. § 7651f(b)(2) (directing EPA to set emission limits and "base such rates on the 

degree of reduction achievable through the retrofit application of the best system of continuous emission reduction, 

taking into account available technology, costs and energy 

and environmental impacts ....") (emphasis added).39

__________

39 NMA also argued that "the Coal Industry did not know until 

the final rule" that EPA intended to consider the adverse environmental effects of NOx

in setting emission rates. NMA Br. at 13. 

In fact, EPA gave notice in its initial proposal that it intended to do 

so. See 61 Fed. Reg. at 1442, 1453-55. Nor do we find support for 

NMA's brief, unfleshed-out allegation that even if EPA were entitled to consider environmental impacts, it did so unreasonably. See 

NMA Br. at 9-10. EPA moved to strike NMA's entire argument 

regarding the consideration of environmental factors in setting 

Group 2 limits, on the ground that no petitioner had raised it. 

Although the question is close, there is much to be said for EPA's 

contention that intervenor NMA impermissibly has enlarged the 

issues before this court. See, e.g., Public Serv. Co. of Colo. v. 

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In sum, finding none of petitioners' challenges to the Group 

2 emission limits persuasive, we uphold the limits EPA established for boilers in that Group.

C. The Compliance Deadline

Appalachian Power also challenges EPA's assertion that, 

pursuant to section 407(a), the new emission limits must be 

met by January 1, 2000. Section 407(a) provides:

On the date that a coal-fired utility unit becomes an 

affected unit pursuant to sections 7651c [Phase I sulfur 

dioxide requirements], 7651d [Phase II sulfur dioxide 

requirements], [or] 7651h [repowered sources] of this 

title, or on the date a unit subject to the provisions of 

section 7651c(d) or 7651h(b) of this title, must meet the 

SO2reduction requirements, each such unit shall become 

an affected unit for purposes of this section and shall be 

subject to the emission limitations for nitrogen oxides set 

forth herein.

42 U.S.C. § 7651f(a). Because a Phase I "affected unit" 

(defined as "a unit that is subject to emission reduction 

requirements or limitations under this subchapter," 42 U.S.C. 

§ 7651a(2) (1994)) must come into compliance with sulfur 

dioxide emissions limits by January 1, 1995, and because a 

Phase II affected unit must comply by January 1, 2000, EPA 

stated in the final rule that the deadline for compliance with 

the new NOx emission limits for Group 1, Phase II boilers and 

for Group 2 boilers would be January 1, 2000. See 61 Fed. 

Reg. at 67,154. Appalachian Power argues, however, that 

section 407(a) does not require such a deadlinethat, in fact, 

the only statutory deadline is that included in the last sentence of section 407(b)(1), which states that "[a]fter January 

1, 1995, it shall be unlawful" for Group 1, Phase I boilers to 

emit NOxin excess of the established emission rates. See 42 

U.S.C. § 7651f(b)(1). As a result, Appalachian Power argues, 

__________

FERC, 91 F.3d 1478, 1488 n.3 (D.C. Cir. 1996), cert. denied sub 

nom. Amoco Prod. Co. v. Public Serv. Co. of Colo., 117 S. Ct. 1723 

(1997); Time Warner Entertainment Co. v. FCC, 56 F.3d 151, 202 

(D.C. Cir. 1995), cert. denied, 116 S. Ct. 911 (1996). However, since 

EPA easily prevails on the merits of NMA's argument, we see no 

harm to EPA in denying its motion.

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EPA must otherwise justify its decision to establish a compliance deadline of January 1, 2000.

Before reaching the merits of this argument, we must first 

dispose of a procedural issue. Appalachian Power's comment 

on the compliance deadline during the notice-and-comment 

period argued that, unlike other statutory sections, section 

407(b)(2) contains no date after which "it shall be unlawful" to 

exceed the emission limitations set under the section. Appalachian Power's current argument points out the anomaly of 

construing the "plain language" of the statute as establishing 

a compliance date for Group 2, Phase I boilers given that 

these boilers become "affected units" in 1995, while the Group 

2 limits are not required to be promulgated until 1997. EPA 

seizes on the difference between these two challenges to 

argue that because Appalachian Power failed to raise its 

current argument before EPA during the notice-andcomment period, its challenge should be considered waived. 

We disagree. It is true that under the Act, only an objection 

to a rule or procedure that was raised with "reasonable 

specificity" during the comment period may be raised during 

judicial review. 42 U.S.C. § 7607(d)(7)(B). But the word 

"reasonable" cannot be read out of the statute in favor of a 

hair-splitting approach. In other words, the Act does not 

require that precisely the same argument that was made 

before the agency be rehearsed again, word for word, on 

judicial review. The purpose of the exhaustion requirement 

is to ensure that the agency is given the first opportunity to 

bring its expertise to bear on the resolution of a challenge to 

a rule. See, e.g., Fertilizer Inst., 935 F.2d at 1312-13 (citing 

Cutler v. Hayes, 818 F.2d 879, 890-91 (D.C. Cir. 1987)) 

(discussing general exhaustion requirement). So long as 

EPA has considered the particular challenge raised on judicial review, it is of no import whether that challenge is 

phrased in exactly the same way in each forum. Appalachian 

Power's argument regarding the compliance deadline during 

the comment periodin substance, if not in form, the same 

objection now raisedwas sufficient to put EPA on notice of 

a challenge to its claim that it was bound by the statute in 

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setting the compliance date for the Group 1, Phase II boilers 

and the Group 2 boilers at January 1, 2000.

EPA's reliance on Ohio v. EPA, 997 F.2d 1520 (D.C. Cir. 

1993), is therefore unavailing. In that case, we rejected the 

petitioners' contention that a comment challenging EPA's 

definition of "onsite" as limited to contiguous areas was 

sufficient to raise a challenge to EPA's proposed treatment of 

noncontiguous but reasonably related facilities as a single 

site, noting that "this minimal reference to the contiguity 

issue is so tangential to the principal thrust of the comment 

that it cannot fairly be said to have been presented to EPA 

for resolution." Id. at 1550. This case is distinguishable 

from Ohio, in which two distinct actions were challenged: 

EPA's treatment of contiguous areas as "onsite" and EPA's 

treatment of reasonably related noncontiguous areas as a 

single site. Here, both challenges were directed at a single 

claim: that EPA had no discretion in setting the compliance 

date.

Even if Appalachian Power could be deemed not to have 

raised this argument before the agency, we have noted that 

EPA "retains a duty to examine key assumptions as part of 

its affirmative 'burden of promulgating and explaining a nonarbitrary, non-capricious rule' " and therefore that "EPA 

must justify that assumption even if no one objects to it 

during the comment period." Small Ref. Lead Phase-Down 

Task Force, 705 F.2d at 534-35 (quoting National Lime, 627 

F.2d at 433). Because the compliance date for a particular 

rule would almost certainly be included with these "key 

assumptions," we are not prohibited from considering Appalachian Power's argument.

Given that the issue is properly before us, we go on to 

decide whether EPA's conclusion that the statute requires a 

January 1, 2000, compliance date is valid. EPA argues that 

because Phase II units must meet the SO2requirements by 

January 1, 2000 (see 42 U.S.C. § 7651d(a)), section 407(a), by 

using the SO2 deadline as the deadline for NOx compliance, 

also requires a deadline of January 1, 2000. Appalachian 

Power challenges this conclusion, arguing that pursuant to 

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this logic, the compliance date for Group 2, Phase I boilers 

would be January 1, 1995 (the date on which they became 

"affected units" for SO2), a date prior to the promulgation of 

the emission limits at issue. Rather, Appalachian Power 

argues, section 407(a) identifies which units are subject to the 

NOx program, not when they must comply with regulations 

issued under the section. Because Congress set a compliance 

date of January 1, 1995, for Group 1, Phase I boilers and did 

not set any other deadlines in the section, Appalachian Power 

argues that Congress left it to EPA's discretion to set a 

compliance date for the remaining boilers.

We are presented with a question of statutory interpretation, so once again we conduct a Chevron analysis to determine, first, whether Congress has spoken on the issue of the 

compliance deadline for Group 1, Phase II units and Group 2 

units, and, second, if Congress has not so spoken, whether 

EPA's selection of a January 1, 2000, deadline was a reasonable interpretation of the statutory scheme.

A careful reading of section 407 leads us to the conclusion 

that Congress did not include a specific compliance date for 

NOx emission limits promulgated under section 407(b)(2). 

While section 407(a) does state that the date that a boiler 

becomes "subject to" any NOxlimitations is the same date 

that it becomes an affected unit for purposes of SO2 emission 

limitationsJanuary 1, 1995, for Phase I units and January 1, 

2000, for Phase II unitswe do not interpret the phrase 

"subject to" to mean "must be in compliance with." To do so 

would render the last sentence of section 407(b)(1), which 

establishes a compliance date of January 1, 1995, for Group 1, 

Phase I boilers, superfluous. Because we should refrain from 

interpreting a statutory provision in a way that creates 

surplusage, see, e.g., Motor and Equipment Mfrs. Ass'n, Inc. 

v. EPA, 627 F.2d 1095, 1108 (D.C. Cir. 1979), we conclude 

that the inclusion of a specific compliance date in section 

407(b)(1) means that the phrase "subject to" in section 407(a) 

cannot refer to compliance. (This conclusion does not, however, render the phrase meaningless; rather, it may mean 

simply that each boiler becomes subject to regulation under 

the NOx program at the same time it becomes subject to the 

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SO2 program; once subject to regulation, a boiler is required 

to meet the compliance date of any NOx emission limits 

promulgated.) As a result, because section 407(b)(2) does not 

specify a compliance date, it would appear that Congress did 

not intend to set a compliance date for these boilers. This 

conclusion is bolstered by the fact that reading a compliance 

date into section 407(a) would, as Appalachian Power points 

out, result in the requirement that Group 2, Phase I boilers 

comply in 1995 with a regulation not promulgated until 1997. 

We cannot conclude that Congress desired such an absurd 

result.

Because our reading of the statute reveals a gap to be filled 

by EPA, we next determine, under the second step of the 

Chevron analysis, whether EPA's resolutiondesignating 

January 1, 2000, as the compliance date for both Group 1, 

Phase II boilers and all Group 2 boilersis reasonable.40 We 

believe that it is. A compliance date of January 1, 2000, 

provides utilities with at least two years of lead time to 

prepare for compliance, a period at least twice as long as the 

preparation time for the 1995 emission limits and one that 

"reflects the relative difficulty of controlling NOxfor [Group 

__________

40 As Appalachian Power notes, we have previously held that 

"when an agency's decision rests on a supposed mandate by Congress and the agency is later determined to be wrong as to the 

mandate, a remand may be required for it to exercise its discretion 

on the issue." General Motors Corp. v. National Highway Traffic 

Safety Admin., 898 F.2d 165, 171 (D.C. Cir. 1990). In this case, 

however, remand would be an exercise in futility because EPA has 

already stated in the preamble to the final rule that even if the 

compliance-date provisions are considered to be ambiguous, "the 

Agency maintains that its interpretation is reasonable." 61 Fed. 

Reg. at 67,155 n.24. It is evident that EPA considered environmental concerns as an alternative reason for setting the compliance 

deadline at January 1, 2000. See, e.g., EPA Response to Comments 

at 270 (delaying compliance beyond January 1, 2000, would cause 

"unnecessary environmental harm"). Thus, this is not a case in 

which EPA has "stopped at text and history without weaving into 

the calculus policy and administrative concerns," General Motors,

898 F.2d at 172, which might compel us to remand.

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2] technologies," S. REP. NO. 101-228, at 332. In addition, 

January 1, 2000, is the date by which the Phase II boilers 

must comply with the SO2limits and is the last such compliance date explicitly mentioned in Title IV (save for section 

409(b)(1), which permits an extension of the compliance date 

for repowered sources from January 1, 2000, to December 31, 

2003, see 42 U.S.C. § 7651h(b)(1) (1994)). Given these considerations, we can find no reason to conclude that a January 1, 

2000, compliance date is unreasonable, and thus we decline to 

vacate this portion of the rule.

D. The Classification of Retrofitted Cell Burner Boilers

In this part we consider the proper classification of one 

kind of dry bottom wall-fired boiler (hereinafter, "wall-fired 

boiler"), known as a "cell burner." In such a boiler, two or 

three closely-spaced burners are clustered in "cells," which 

are placed on opposing walls. Under section 407(b), a wallfired boiler is classified as Group 1, unless it is a unit 

"applying cell burner technology," in which case it is classified 

as Group 2. Compare 42 U.S.C. § 7651f(b)(1)(B), with 42 

U.S.C. § 7651f(b)(2)(C). The classification is important to the 

boiler's owner, because the Group 1 emission limit for wallfired boilers is stricter than the Group 2 limit for cell burners.

In issuing its final rule, EPA concluded that retrofitting a 

cell burner with "non-plug-in" NOx controls "convert[s]" the 

cell burner to a wall-fired boiler. See EPA Response to 

Comments at 129 (J.A. 253). The agency determined that 

cell burners that were retrofitted prior to the date of enactment of the 1990 amendments (November 15, 1990) should 

therefore be classified as Group 1, wall-fired boilers and 

subject to the more stringent limit. However, EPA permitted those cell burners retrofitted after the date of enactment 

to remain subject to the more lenient limit applicable to 

Group 2.

As a consequence of EPA's classification decision, petitioner Arizona Public Service Company ("APS") has two identical 

boilers, one retrofitted in 1989 (Unit 4) and one retrofitted in 

1991 (Unit 5), that are subject to very different emission 

limits. APS charges that the classification of a retrofitted 

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cell burnerand particularly its Unit 4as a wall-fired boiler 

is arbitrary and capricious. It also contends that the distinction EPA made between retrofitted cell burners, based on the 

date of their retrofitting, is arbitrary and capricious.

We agree that on the present record EPA has not justified 

its classification of retrofitted cell burners as wall-fired boilers, and hence vacate and remand the issue to the agency for 

further consideration. Because we conclude that EPA has 

not justified the classification of any retrofitted cell burner as 

a wall-fired boiler, we do not consider whether EPA's effort 

to distinguish between retrofits based on the date of retrofitting was also arbitrary.41

The question whether a retrofitted cell burner can properly 

be classified as a wall-fired boiler turns upon whether a 

retrofitted unit is still a unit "applying cell burner technology." 42 U.S.C. § 7651f(b)(1)(B). Neither party contends 

that this question can be resolved under Chevron's step one. 

We agree that neither the statutory language nor the statute's structure unambiguously decides the issue. There also 

is no indication in the legislative history that Congress considered the question of the effect of a retrofit on the appropriate 

classification of a cell burner. This is a case in which 

Congress "has not directly addressed the precise question at 

issue," Chevron, 467 U.S. at 843, and we therefore proceed to 

Chevron's step two.

Under step two, the question is whether the agency's 

interpretation of the statute is reasonable when measured 

against the statute's language, legislative history and purpose. EPA argues that its classification of a retrofitted cell 

burner as no longer "applying cell burner technology" is 

reasonable. In a "non-plug-in" retrofit, portions of the wall 

that held the clustered burners are removed, and more widely 

__________

41 We do note, however, that EPA made the distinction at least in 

part to benefit utilities like APS, so that some of their units would 

continue within Group 2. Having concluded that all cell burners 

retrofitted with non-plug-in controls are essentially wall-fired boilers, the agency nonetheless agreed to keep those retrofitted after 

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spaced burners are installed. EPA argues that once this is 

accomplished, the salient feature of a cell burnerthe clustering of burners in cellshas disappeared, and that thereafter the boiler is wall-fired for all intents and purposes.42

APS contends, and we agree, that the interpretive question 

is not simply what the retrofitted boiler looks like ("cellular" 

or not), but whether it retains the attributes that Congress 

relied upon in placing cell burners in Group 2. APS argues 

that Congress placed in Group 2 those boilers whose NOx

emissions were more difficult to control. The conference 

report on the Act's amendments supports this view, see H.R.

CONF. REP. NO. 101-952, at 344, and the remaining legislative 

history contains no indication of any other rationale Congress 

may have had.

Using this indication of congressional intent, APS argued in 

the rulemaking that cell burners have a number of relevant 

characteristics, besides the clustering of the burners. Such 

boilers were designed in the 1960s with the purpose of 

concentrating heat in a smaller space. As a consequence, the 

salient physical features are small boiler size as well as the 

location of the burners. The small size, APS argued, leads to 

a higher burner zone release rate ("BZRR") in such a boiler, 

even when the burners are unclustered via retrofitting. See 

APS Comments at 15-16 (J.A. 1038-39). And BZRR, APS 

__________

1990 within Group 2, contending, in part, that this would provide 

utilities with an incentive to retrofit as a way to reduce NOx

emissions. See EPA Response to Comments at 129 (J.A. 253).

42 This issue may be one of dwindling significance. Although 

APS retrofitted its units with "non-plug-ins," the only technology 

then available, in the future utilities likely will be able to retrofit 

cell burners with "plug-ins," which replace the existing burners with 

low NOx burners while maintaining the original cell configuration. 

See 61 Fed. Reg. at 1457-58. EPA has not contended that a plug-in 

retrofit converts a cell burner into a wall-fired boiler. Id.

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contended, is the driving force behind the high NOx emission 

levels of cell burners. See id. at 15-17 (J.A. 1038-40).43

Moreover, APS argued, the proof that retrofitted cell burners are not the functional equivalent of wall-fired boilers is in 

their performance. Retrofitted cell burners have much higher emission rates than wall-fired boilers. In fact, APS contended, of the four retrofitted cell burners in the country, 

only two can achieve the Group 1 emission limit for wall-fired 

burners. And those two should not be considered, APS 

further argued, because they achieve the Group 1 limit only 

by using overfire air as well as low NOx burners. See id. at 

15 (J.A. 1038). We agree that the fact that no retrofitted cell 

burner can achieve the Group 1 emission limit using the only 

technology Congress authorized for setting that limit (low 

NOx burner technology) is evidence that retrofitted cell burners are not the functional equivalent of wall-fired boilers, as 

measured by congressional concerns.

In the rulemaking, EPA's only response to APS's contention about the salience of small boiler size and its relationship 

to BZRRs was to say that APS did "not provide[ ] any 

__________

43 EPA's appellate counsel argues that although the agency 

agrees with APS that Congress placed cell burners within Group 2 

because of the greater difficulty of controlling their NOx emissions, 

Congress attributed this difficulty to the cellular configuration and 

not to the high BZRR. As support, EPA cites a report the 

Department of Energy presented to Congress prior to the passage 

of the 1990 amendments. That report stated that the configuration 

of the burners in cells "results in combustion conditions that 

produce high NOx emissions." OFFICE OF CLEAN COAL TECH., DEP'T 

OF ENERGY, COMPREHENSIVE REPORT TO CONGRESS CLEAN COAL TECHNOLOGY PROGRAM: FULL-SCALE DEMONSTRATION OF LOW-NOx CELL 

BURNER RETROFIT, at 1 (1990) (J.A. 493). APS notes, however, that 

the same report also refers to the relationship between small boiler 

size, and correlative high BZRR and increased NOxformation. See 

id. at 10 (J.A. 502). Moreover, EPA offers no evidence that 

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information supporting [this] claim." EPA Response to Comments at 129 (J.A. 253). This assertion is contradicted by the 

rulemaking record. See APS Comments at 15-17 (J.A. 1038-

40).44 Nor can we find any evidence that EPA responded at 

all to APS's comment that the only retrofitted cell burners 

capable of meeting the more stringent emission limit are 

those boilers that also use overfire air technology. This 

failure to respond adequately to key questions about the 

reasonableness of the agency's position requires a remand. 

See Motor Vehicles Mfrs. Ass'n v. State Farm Mut. Auto. 

Ins. Co., 463 U.S. 29, 43 (1983).

On appeal, EPA counsel contends that the fact that few if 

any retrofitted cell burners can meet the wall-fired limit does 

not mean the limit is invalid. That, EPA argues, simply puts 

them in the same category as the 12 percent of all wall-fired 

boilers that cannot achieve the standard. As we have agreed 

above, the statute does not require that EPA set limits so 

that all boilers in a category can achieve them. One problem 

with EPA's argument here, however, is that it is an impermissible post hoc rationalization of appellate counsel. See, e.g., 

Unbelievable, Inc. v. NLRB, 118 F.3d 795, 809 n.3 (D.C. Cir. 

1997). The larger problem is that it assumes the point that is 

at issue, i.e., that the retrofitted cell burners are wall-fired 

boilers. If they are, then EPA is correct that any individual 

unit's inability to meet the Group 1 limit does not invalidate 

the standard as a whole. But APS points to these units' 

inability to achieve the Group 1 limit not as part of an attack 

on the overall standard, but rather as evidence that EPA's 

effort to equate retrofitted cell burners and wall-fired boilers 

is invalid. EPA, even through its counsel, does not answer 

this argument.

__________

Congress relied on or was aware of this report when enacting the 

1990 amendments.

44 On appeal, EPA also takes issue with APS's data on BZRRs. 

As EPA did not raise this objection during the rulemaking, we 

reject it now as an impermissible post hoc rationalization, see 

Unbelievable, Inc. v. NLRB, 118 F.3d 795, 809 n.3 (D.C. Cir. 1997), 

but pass no judgment on its merit upon remand.

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Because EPA has not adequately justified its treatment of 

retrofitted cell burners as wall-fired boilers, we vacate and 

remand the issue to the agency for reconsideration or a more 

adequate justification.

III. CONCLUSION

For the foregoing reasons, we uphold EPA's NOx emission 

limits for the Group 1, Phase II boilers, the emission limits 

for the Group 2 boilers, and the compliance date of January 1, 

2000, as neither exceeding EPA's statutory authority under 

Title IV of the Clean Air Act nor arbitrary and capricious. 

We thus deny Appalachian Power's petition for review in its 

entirety. However, we grant APS's petition for review, vacate EPA's classification of certain retrofitted cell burners as 

wall-fired boilers as arbitrary and capricious, and remand to 

the agency for reconsideration or a more adequate explanation.

It is so ordered.

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