# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 3, 2013 Decided August 20, 2013

No. 11-1131

N ATIONAL A SSOCIATION OF C LEAN W ATER A GENCIES

, P ETITIONER

v.

E NVIRONMENTAL P ROTECTION A GENCY AND G INA
M C C ARTHY

, A DMINISTRATOR

, EPA,

R ESPONDENTS

M AX W EST E NVIRONMENTAL S YSTEMS

, I NC

., ET AL

., I NTERVENORS

Consolidated with 11-1167, 11-1185, 12-1236, 12-1237

On Petitions for Review of a Final Rule of the United States Environmental Protection Agency

Jeffrey A. Knight argued the cause for petitioners/respondents-interven ors National Association of Clean Water Agencies, et al. With him on the briefs were Peter H. Wyckoff and Steven A. Hann

.2

James S. Pew argued the cause for petitioner Sierra

Club. With him on the briefs was Jonathan A. Wiener

.

Lisa Sharp argued the cause for intervenor MaxWest Environmental Systems Inc. With her on the briefs was D.

Cameron Prell

.

Michele L. Walter and Martha C. Mann , Attorneys, U.S. Department of Justice, argued the causes and filed the brief for respondents.

Jonathan A. Wienerargued the cause for respondentintervenor Sierra Club. With him on the brief was James S.

Pew

.

Steven A. Hann

, Jeffery A. Knight , and Peter H. Wyckoff were on the brief for respondents-intervenors National Association of Clean Water Agencies, et al.

Before: G ARLAND

, Chief Judge , B ROWN

, Circuit Judge , and S ENTELLE

, Senior Circuit Judge

.

Opinion for the Court filed by Senior Circuit Judge

S ENTELLE

.

S ENTELLE

, Senior Circuit Judge : In March 2011, the Environmental Protection Agency (“EPA”) issued a final rule establishing emission sta ndards for sewage sludge incinerators under § 129 of the Clean Air Act, 42 U.S.C. §

7429. See Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Sewage Sludge Incineration Units, 76 Fed. Reg. 15,372 (Mar. 21, 2011). Determining that sewa ge sludge incinerators were “solid waste incineration unit[s] ” as defined in § 129(g)(1),3

the EPA promulgated “maximum achievable control technology” (“MACT”) standards for two subcategories of sewage sludge incinerators.

The Clean Air Act cabins EP A’s discretion in setting MACT standards, requiring EPA to base the standards on the emissions achieved by the be st-performing existing

incinerators. See 42 U.S.C. § 7429(a)(2). But acting under pressure of a court order to es tablish the MACT standards by a set deadline, EPA took a targ eted approach to collecting

emissions data and used several different methods to estimate

the emissions levels achieve d by existing incinerators. See 76 Fed. Reg. at 15,386.

The petitioners challenge several different aspects of the rulemaking. Petitioners National Association of Clean Water Agencies and Hatfield Township Municipal Authority (collectively, “NACWA”) ch allenge EPA’s authority to regulate sewage sludge incine rators under § 129, asserting that sewage sludge incinerators do not fall within the scope of § 129(g)(1)’s definition of “so lid waste incineration unit.”

Petitioners NACWA and Sierra Club seek review of the sewage sludge incinerator em ission standards, challenging several aspects of EPA’s methodology for estimating the emission levels achieved by the best performing units. In addition to these petitioners, MaxWest Environmental Systems, developer of a propr ietary biosolids management process, intervenes to challenge EPA’s treatment of its technology in the sewage sludge incinerator rule.

For the reasons stated below, we deny NACWA’s petition for review as to EPA’s authority to regulate sewage sludge incinerators under § 129. As to the petitioners’ challenges to EPA’s methodology in setting emission standards, we agree that in some respects EPA has not4

adequately established that its estimations are reasonable, and so remand parts of the sewage sludge incinerator rule to EPA for further proceedings without vacating the current standards. We otherwise deny the petitions for review, and will not consider intervenor MaxWest’s arguments as they are not within the scope of issues raised by the petitioners.

I. BACKGROUND

A. Statutory Background

The Clean Air Act requires EPA to set emission standards for polluting sources “to protect and enhance the quality of the Nation’s air resources.” 42 U.S.C. § 7401(b)(1). Section 112 of the Clean Air Act, 42 U.S.C. § 7412, requires EPA to set emission standards for a list of hazardous air pollutants emitted by major sources and area

sources. Id. § 7412(d). Section 129 is more specific, directing EPA to establish emissi on standards for a list of nine pollutants emitted by solid waste incineration units. Id. § 7429(a). Subject to certain excep tions not relevant to this case, § 129 defines a “solid wa ste incineration unit” as “a distinct operating uni t of any facility which combusts any

solid waste material from commercial or industrial establishments or the genera l public (including single and multiple residences, hotels, and motels).” Id. § 7429(g)(1).

Under § 129, the standards established by EPA must reflect “the maximum degree of reduction” in the emissions of a list of pollutants 1 that EPA, “taking into consideration the

1 Specifically, § 129 requires EPA to set numerical emission limitations for: “particulate matter (total and fine), opacity (as appropriate), sulfur dioxide, hydroge n chloride, oxides of nitrogen, carbon monoxide, lead, cadmium, mercury, and dioxins and dibenzofurans.” § 129(a)(4).5

cost of achieving such emi ssion reduction, and any non-air quality health and environmental impacts and energy requirements, determines is achievable for new or existing units” in each category of sources. Id. § 7429(a)(2). EPA

refers to these standards as the “maximum achievable control technology” standards, abbreviate d as the MACT standards. Northeast Maryland Waste Disposal Authority v. EPA , 358 F.3d 936, 939–40 (D.C. Cir. 2004).

Congress set parameters govern ing EPA’s establishing of the MACT standards, which EPA has implemented through a two-step process. First, EPA sets a baseline level of stringency for emissions controls known as the MACT floor. For new units, the MACT floor is the level of emissions control “that is achieved in pr actice by the best controlled similar unit,” as determined by EPA. 42 U.S.C. § 7429(a)(2). For existing units, the MACT floor is “the average emissions limitation achieved by the best performing 12 percent of units” in each category. Id. Second, EPA determines whether more stringent “beyond-the- floor” MACT standards are achievable, taking into consider ation the factors listed in § 129(a)(2).

The Clean Air Act makes promulgating MACT standards under § 112 and § 129 mutually exclusive. Id. § 7429(h)(2). Although the statutory directive on setting MACT standards is virtually identical under § 112 and § 129, EPA’s decision to regulate a source under one section rather than the other has practical consequences. For exam ple, the list of pollutants for

which EPA must set MACT sta ndards differs between the two

sections. Compare id. § 7412(b) (list of hazardous air pollutants), with id. § 7429(a)(4) (list of nine pollutants for

which EPA must set MACT standards for solid waste incinerators). The stringenc y of regulation for sources

covered under these sections can also differ, depending on the6

type of source. Under § 129, all solid waste incinerators within § 129(g)(1)’s definition of “solid waste incineration unit” are subject to the MACT standards that EPA establishes for that category of incinerator. See id. § 7429(a). In contrast, the MACT standard s established under § 112 are mandated only for “major sources,” defined as sources that have the potential to emit ten t ons per year or more of any hazardous air pollutants, or twenty -five tons per year or more of any combination of hazardous air pollutants. See id. § 7412(a)(1), (d)(5).

For sources that are not “major sources”—defined in § 112(a)(1) as “area sources”—EPA is given the discretion to establish standards providing “for the use of generally available control technologies or management practices . . . to reduce emissions of hazardous air pollutants.” Id. § 7412(d)(5). The generally av ailable control technology standard is not governed by th e same statutory requirements as the MACT standard, givi ng EPA more flexibility in regulating area sources. Because EPA determined in 2002 that no sewage sludge incinerator emitted hazardous air pollutants at such a level as to qualify as a major source, the generally available control tec hnology standard would apply to sewage sludge incinerators if EPA regulated them under §

112. See National Emission Standards for Hazardous Air

Pollutants: Revision of Source Category List Under Section 112 of the Clean Air Act, 67 Fed. Reg. 6,521, 6,523. (Feb. 12, 2002). Sewage sludge incine rators also would not be subject to monitoring and siting review requirements, which are mandated by § 129 but not by § 112. See 42 U.S.C. § 7429(a)(3), (c).7

B. Regulatory Background

Publicly-owned treatment works, owned by municipalities or regional au thorities, are responsible for managing all sewage that enters into the sanitary sewer system. Publicly-owned treatment works first treat the wastewater, creating sewage sludge in the process, then use various methods to dispose of the sewage sludge. Many publicly-owned treatment works use sewage sludge incinerators to dispose of sewa ge sludge. EPA’s inventory of sewage sludge incinerators stood at 204 at the time of the rulemaking. 76 Fed. Reg. at 15,387.

EPA proposed emission standards for sewage sludge incinerators in October 2010, a sserting its authority under § 129 to regulate “other categorie s of solid waste incineration

units.” See 75 Fed Reg. at 63,263; 42 U.S.C. § 7429(a)(1)(E). EPA began to develop these stan dards after the District Court for the District of Columbia determined that EPA was failing to discharge its non-discretiona ry duty under provisions of § 112, and ordered EPA to do so. See 75 Fed. Reg. at 63,264. Although the specific § 112 obliga tions with which EPA had failed to comply are not relevant to this petition, the district court determined that § 112 required EPA to set emission standards for sewage sludge incinerators. 2 See Sierra Club v.

Jackson , 1:01-CV-1537, EFC No. 84 at 23 (D.D.C. filed Aug. 2, 2006); Sierra Club v. Jackson , 1:01-CV-1537, ECF No. 150 at 6–8 (D.D.C. filed Jan. 20, 2011). After granting EPA multiple motions to extend the deadline for issuing sewage

2 The § 112 obligations were to identify and regulate certain area sources that account for 90 percent or more of aggregate air emissions of 30 hazardous air pollutants identified by EPA under § 112(k)(3)(B)(i)–(ii). See Sierra Club v. Jackson , No. 1:01-CV1537, ECF No. 80 (D.D.C. filed Mar. 31, 2006); see also 42 U.S.C. § 7412(c)(3), (k)(3)(B).8

sludge regulations, the district court ultimately required EPA to promulgate the final ru le by February 21, 2011. Id. , ECF No. 150, at 25.

1. Proposed Rule

On October 14, 2010, EPA issued a proposed rule proposing emission standards for sewage sludge incinerators.

See Standards of Performance fo r New Stationary Sources &

Emission Guidelines for Exis ting Sources: Sewage Sludge Incineration Units, 75 Fed. Reg. 63,260. In the preamble, EPA explained that although it ha d stated in other rules its intent to regulate sewage sl udge incinerators under § 112, it was proposing to regulate sewage sludge incinerators under § 129 in light of our ruling in Natural Resources Defense

Council v. EPA , 489 F.3d 1250 (D.C. Cir. 2007). See id. at 63,263 (citing Standards of Perf ormance for New Stationary Sources and Emission Guidelines for Existing Source: Other Solid Waste Incineration Units, 70 Fed. Reg. 74,870 (Dec. 16, 2005)).

In the proposed rule, EPA es tablished two subcategories of sewage sludge incinerators: multiple hearth incinerators

and fluidized bed incinerators. Id. at 63,268. EPA found that these were the only two types of incinerators used to combust sewage sludge, and determined subcategorization was

warranted because the combusti on design for these two types of incinerators varied significantly. Id

.

In proposing the MACT standa rds for the subcategories of incinerators, EPA extensiv ely discussed the methodology it

used to derive the MACT floors. See id. at 63,269–75. To select which units to survey for emissions data, EPA identified units equipped with the control tech nology that it

believed would achieve the lowe st emissions possible for the9

§ 129 pollutants. Id. at 63,270. EPA stated that using control technologies to select best-p erforming units was sufficient because municipalities were already required to limit the concentration of pollutants in sewage sludge under Clean Water Act regulations. Id. (citing 40 C.F.R. pt. 503). These preexisting regulations, EPA expl ained, caused incinerators to “burn a relatively homogeneous waste,” thus rendering control technologies a suitable proxy for targeting the bestperforming units from which to collect emissions data. Id.

For its dataset, EPA surveyed 9 municipalities, and supplemented the results of that study with data from State environmental agencies’ public databases, yielding emissions information from 5 fluidized bed incinerators and 20 multiple hearth incinerators, although EPA acknowledged that not every test contained information on all nine § 129 pollutants.

Id. Because 12 percent of the existing incinerator population

based on EPA’s then-current count of incinerators was 7 fluidized bed incinerators and 20 multiple hearth incinerators, EPA acknowledged that it did “not have actual emissions test data for the population of units that represent the bestperforming 12 percent,” for every pollutant. Because EPA interpreted § 129 to require a MACT floor dataset representative of the best -performing 12 percent of incinerators, EPA concluded it needed to determine whether its data from fewer than 12 pe rcent of incinerators could represent the best-per forming 12 percent. Id.

EPA addressed this issue by explaining that it could use “statistical techniques to determine the minimum number of

observations needed to accurate ly characterize the distribution of the best performing 12 pe rcent of units in each subcategory.” Id .; see Memorandum from Eastern Research Group, Inc. to Amy Hambrick, U.S. EPA, at 7–9 (Jan. 2011) (“Revised MACT Floor Memo”). Based on this statistical10

analysis, EPA concluded that it had coll ected enough

observations to conclude that the dataset it used met “the

minimum size needed to char acterize the population of 12 percent of the best-performing units for all pollutants, when late-arriving data are included.” 75 Fed. Reg. at 63,271. Nevertheless, EPA requested “that commenters provide

additional emissions stack test data and supporting documentation, as that may enable us to establish a final MACT floor based on a more complete data set.” Id. at 63,270.

The proposed rule also di scussed EPA’s methods for addressing variability in the em issions data it collected. EPA bases its MACT standards on short-term emissions test data, which are not always “representative of the range of operating conditions that the best-performi ng facilities face on a day-today basis.” Id. at 63,269. Therefore, EPA believed it needed to account for variability in emissions performance. Id. EPA explained that for two or more tests at a single incinerator under what appear to be the same operating conditions, “[v]ariations in emissions may be caused by different settings for emissions testing equipment, different field teams conducting the testing, differen ces in sample handling or different laboratories analyzing the results.” Id. And emissions may even vary within a single test, as each test comprises at least three separate test runs, and each test run captures only a snapshot of an incinerator’s performance. Id.

To address this variability, EPA proposed using a statistical tool it terms the “uppe r prediction limit.” For future observations of emissions from an incinerator, the upper prediction limit “is the upper end of a range of values that will, with a specified degree of confidence, contain the next (or some other pre-specified) randomly selected observation from a population.” Id. Thus, a 99 percent confidence-level11

upper prediction limit “represents the value which one can expect the mean of future 3-run performance tests from the best-performing 12 percent of sources to fall below, with 99 percent confidence, based upon the results of the independent sample of observations from the same best-performing

sources.” Id. at 63,271.

EPA’s proposed MACT floor methodology also addressed “non-detect data,” wh ich are emission testing data too low for the testing equipment to accurately detect. Id. at 63,272. Rather than estimate that non-detect data was at the “method detection level,” i.e. , “the minimum concentration of a pollutant that can be measured with confidence that the level is greater than zero,” EPA Br. at 61 n.20, EPA used a

different test to determine the MACT floor. Id . at 63,273. Under the test, EPA multiplied what it termed the “representative method detection level” by three, and compared that value to the MA CT floor that EPA calculated using all data, including non-detect data. Id. If three times the representative method detec tion level was less than the calculated MACT floor, EPA woul d conclude that the MACT floor calculation adequately addressed measurement variability; if not, EPA would use the three-times value “to

ensure that the MACT floor emission limit accounts for measurement variability and imprecision.” Id.

For new source MACT floors, EPA explained that it

would base the floors “on the best-performing single source for each regulated pollutant, with an appropriate accounting for emissions variability.” Id. at 63,274. Thus, EPA identified the lowest emitting in cinerator with at least three test runs, and applied the 99 percent upper prediction limit.

Id. While EPA proposed a new source MACT floor for fluidized bed incinerators, it did not propose a new source MACT floor for multiple hearth incinerators. Id. at 63,272.12

Instead, it proposed that all new incinerators—including multiple hearth incinerators—meet the emission limits for the best-performing fluidized bed incinerator, explaining that industry information suggested th at future units constructed would likely be fluidized bed incinerators and that industry

information demonstrated that new fluidized bed incinerators

“have more efficient combustion characteristics resulting in

lower emissions.” Id. at 63,272, 63,274.

In discussing whether to se t “beyond-the-floor” MACT standards for existing sources, EPA determined that for most of the § 129 pollutants, no a dditional contro l technologies

were available that would cost -effectively reduce emissions.

Id. at 63,275, 63,277. For mercury, EPA concluded that using activated carbon injection with some form of particulate matter control for multiple hearth incinerators would be a cost-effective option for achie ving beyond-the-floor emission reductions, noting that these co mbined control technologies

would also control for dioxins and dibenzofurans. Id. at 63,276–77. For fluidized bed incinerators, EPA concluded that “[i]n light of the technica l feasibility, costs, energy, and nonair quality health and envir onmental impacts” discussed in the rule, it was not reasonable to establish beyond-the-floor MACT standards for new and existing fluidized bed

incinerators. Id. at 63,277.

EPA also proposed monitori ng requirements for all new and existing sewage sl udge incinerators. Id. at 63,277–82. In relevant part, EPA proposed initial and annual emissions performance tests for most pol lutants, with continuous monitoring as an alternative, and control device parameter monitoring for certain control technologies. Id. at 63,277. EPA specifically required cont inuous emissions monitoring for carbon monoxide on new sewage sludge incinerators, although continuous emissions monitoring for carbon13

monoxide remained optional fo r existing inci nerators, and optional for all other pollutants. Id. at 63,278, 63,281.

2. Final Rule

EPA promulgated the final rule setting emission limits for sewage sludge incinerators on March 21, 2011. 76 Fed. Reg. 15,372. The final rule remain ed substantially similar to the proposed rule, regulating sewage sludge incinerators under § 129 and generally adopting the methodology for setting the MACT floors stat ed in the proposed rule. Id. at 15,382–92.

The final rule did contain a few substantive changes. While EPA had proposed setti ng all new incinerator MACT floors on the best-performing flui dized bed incinerator, in the

final rule it decided to set a separate MACT floor for new multiple hearth incinerators. Id. at 15,384. EPA explained that it had been persuaded by comments pointing out that under the proposed regulations, any source that exceeded a

threshold in modification cost s would be considered a new

unit. See 40 C.F.R. § 60.4775 (defining a new sewage sludge incinerator as a unit that “[ c]ommenced modification after September 21, 2011”); 40 C.F.R. § 60.4930 (defining modification as “a change to an existing [sewage sludge incinerator] later than September 21, 2011 and that meets one of two criteria”). Because it did not want to discourage municipalities from mo difying multiple hearth incinerators, and because there was otherwise no technical reason why municipalities could not build new multiple hearth incinerators, EPA explained it decided to establish separate new incinerator MACT floors. 76 Fed Reg

. at 15,384.

In setting the new multiple hearth incinerator MACT floors, EPA’s upper prediction limit analysis on what it14

deemed the best-performing multiple hearth incinerators yielded MACT floors for two pollutants that were less stringent ( i.e. , a higher emission limit) than what it had calculated for existing multiple hearth incinerators. EPA set the new multiple hearth incinerator floors for these two pollutants—hydrogen chloride and sulfur dioxide—at the same level as existing multiple hearth incinerator floors, reasoning that new incinerator MA CT floors could not be less stringent than existing incinerator MACT floors. Id. at 15,388–89.

EPA also deviated from the proposed rule by deciding not to set beyond-the-floor standards for any pollutants. Id. at 15,380. In the final rule, EPA e xplained that the cost of requiring the additional contem plated control technology to reduce mercury was $80,000 to $100,000 per pound removed,
and that, based on this cost a nd other factors, it determined that beyond-the-floor standard s were no longer appropriate.

Id. at 15,394.

EPA also made minor changes to its MACT floor dataset, such as reducing its inventor y of incinerato rs to 204, and consequently, reducing the numbers of incinerators needed to represent 12 percent to 18 multiple hearth incinerators and 8

fluidized bed incinerators. Id. at 15,387. Although the reduction in inventory decreased the number of incinerators necessary to represent 12 percent, EPA still did not have emissions data from 12 percent of incinerators for certain pollutants. While commenters attempted to supplement that dataset by submitting emissions stack test data that EPA requested in the proposed rule, EP A rejected that data because

commenters had not substantia ted it with emission test

reports. Id

.15

In the final rule, EPA candidl y noted that its MACT floor methodology—including the emissi ons testing dataset from less than 12 percent of incinerators—was motivated in part by the impending court-ordered dead line to establish emission standards. EPA explained th at “given the court-ordered deadline for EPA to issue the final [sewage sludge incinerator] rule, it was not possible to undertake the timeconsuming process of sending an [information collection request] to all the affected [sewage sludge incinerators] consistent with the requirements of the [Paperwork Reduction Act].” Id. at 15,386.

EPA also responded to comment s criticizing EPA for not using data available to it to set MACT floors, including data about variability in sewage sludge metal concentrations collected from the Clean Water Act regulations. EPA responded that the upper prediction limit and its survey of

units from nine different stat es adequately accounted for variability. Id. at 15,391. EPA further st ated that it “did not have sufficient information at pr oposal to consider if it were appropriate to incorporate variability based on sludge content,” explaining that the data commenters submitted was not adequately supported and therefore insufficient to clarify the effect of sewage sludge variability on emissions. Id.

Sierra Club and NACWA filed petitions for

reconsideration of EPA’s final rule. EPA denied both petitions. See 77 Fed Reg. 25,087 (Apr. 27, 2012). Sierra Club filed a petition for review in this court. NACWA, joined by the Hatfield Township Municipal Authority, also filed a petition for review. We have consolidated all petitions for

review.16

II. NACWA’S AND SIERRA CLUB’S PETITIONS

FOR REVIEW

A. EPA’ S A UTHORITY T O R EGULATE S EWAGE S LUDGE
I NCINERATORS

We first address NACWA’s contention that EPA violated the Clean Air Act by setting emission standards for sewage sludge incinerators under § 129 rather than § 112. Specifically, NACWA asserts that § 129(g)(1)’s definition of “solid waste incineration unit” excludes sewage sludge

incinerators.

Section 129(g)(1) defines a so lid waste incineration unit as “a distinct operating unit of any facility which combusts any solid waste material from commercial or industrial establishments or the genera l public (including single and multiple residences, hotels, and motels).” 42 U.S.C. § 7429(g)(1). In interpreting the phrase “solid waste material from commercial or industrial establishments or the general public,” EPA explained in its final rule that “[s]ewage sludge clearly originates from th e general public, including

residential and commercial faci lities. Simply because the waste is treated at a [publicly-owned treatment work] prior to combustion does not change the original source of the sewage sludge.” 76 Fed. Reg. at 15,383.

In contrast to EPA’s interpretation, NACWA argues that the words “from . . . the gene ral public” “refer only to the proximate source of the solid waste material in question,” covering, for example, trash a municipality collects from a house and transports to a muni cipal incinerator, but not a waste product that the municipa lity itself creates. NACWA

Br. at 21–22. Because the se wage sludge incinerated by a publicly-owned treatment wo rk is the pr oduct of the treatment17

of domestic sewage, NACWA asserts that sewage sludge comes from the publicly-owned treatment work, and not “from . . . the general public” that produces the domestic

sewage. Id. at 19

Because NACWA asks us to review EPA’s construction of § 129 as authorizing EPA to regulate sewage sludge incinerators under the category of “other . . . solid waste incineration units,” see 76 Fed. Reg. at 15,383 (citing 42 U.S.C. § 7429), we apply Chevron v. NRDC to determine whether EPA is entitled to deference in its interpretation. See 467 U.S. 837, 842 (1984). Under Chevron , we first determine whether the statute unambiguously forbids EPA’s interpretation. Id. at 842–43. If the statute is silent or ambiguous, we then question whet her EPA’s interpretation is based on a permissible constr uction of the statute. Id. at 843.

At first glance, the definition of solid waste incineration units in § 129(g)(1) appears ambiguous, a reality even NACWA acknowledges. See NACWA Br. at 21 (“Read alone, the word ‘from’ does not reveal whether it refers to the proximate source of the material or whether it refers instead to a distant ‘original’ source of the material.”); see also Oral Arg. Tr. at 5:19–23, 7:4–10, 10:5–19 (conceding that, without any other context, § 129 “woul d carry the meaning that EPA has ascribed to it”). Among th e dictionary definitions of “from” is “a function word to indicate the source or original or moving force of something: as . . . the place of origin, source, or derivation of a mate rial or immaterial thing.”

W EBSTER ’ S T HIRD N EW INTERNATIONAL D ICTIONARY 913 (1981). Thus, W.B. Yeats may proclaim, “All creation is [from] conflict,” and not neces sarily mean that creation springs directly from conflict ra ther than through intermediate consequences of conflict, while one who states that a man “took a dime [from] his pocket” could only be understood to18

mean that the dime originated from a specific location on a specific person. Id . Because the word “from” in § 129(g)(1) may be susceptible to either sense of the word, we agree with both parties that the phrase “f rom . . . the general public,” standing alone, is textually ambiguous. Cf. Environmental Defense Fund v. EPA , 167 F.3d 641, 652 (D.C. Cir. 1999) (Williams, J., dissenting) (explaining that the phrase “comes from” is ambiguous—for example, “A layabout who says he ‘comes from a hardworking family’ can be telling the truth even if all his relatives are dead.”).

But textual ambiguity is not the end of the matter, as we have held that “a statute may foreclose an agency’s preferred interpretation despite such textual ambiguities,” an analysis we undertake by “exhaust[ing] the traditional tools of statutory construction to determine whether a congressional act admits of plain meaning.” Catawba County v. EPA , 571 F.3d 20, 35 (D.C. Cir. 2009); Arizona Public Service Co. v.

EPA , 211 F.3d 1280, 1287 (D.C. Cir. 2000). Thus, although both NACWA and EPA acknowledge § 129(g)(1)’s apparent textual ambiguity, both parties also argue that the statute unambiguously resolves in thei r favor. EPA relies on our opinion in NRDC v. EPA , 489 F.3d 1250 (D.C. Cir. 2007), in which we interpreted the definition of “solid waste

incineration unit” to be ve ry broad, while NACWA relies primarily on the words surroundi ng “from” and on the overall

structure of the Clean Air Act and the Clean Water Act.

We begin with NACWA’s argument that “from . . . the general public” requires a proxima te cause interpretation, lest the words “general public” become superfluous. NACWA

asserts that because all waste has its origin in the general public at some point, Congress could have simply defined a solid waste incinerator as “a unit . . . which combusts any

solid waste material” wit hout having to add “from19

commercial or industrial establishments or the general public.” See 42 U.S.C. § 7429(g)(1). Bu t even if we take as

true NACWA’s assertion that all solid waste “originates” from the general public, and NACWA’s assertion that EPA’s interpretation of § 129(g )(1) would therefore cover all units that incinerate solid waste (e xcept those specifically excluded in § 129(g)(1)), the “‘preferen ce for avoiding surplusage

constructions is not absolute.’” Amoco Products Co. v.

Watson , 410 F.3d 722, 734 (D.C . Cir. 2005) (quoting Lamie v.

U.S. Trustee , 540 U.S. 526, 536 (2004)). In some cases, redundancy may reflect the broad purpose of a congressional

statute. See Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon , 515 U.S. 687, 698 n.11 (1995).

Although defining a covered in cinerator as one that

combusts solid waste “from commercial or industrial establishments or the genera l public” suggests some limitation on the coverage of § 129(g)(1 ) based on the source of the waste, the extent of that lim itation is unclear. Congress may

have intended to define solid waste incinerators to exclude specific categories of incine rators beyond the express exceptions listed in § 129(g)(1); for example, incinerators combusting waste directly produced by state or local government sources. But it also may have intended to give the definition of § 129(g)(1) a br oad scope, with “the general public” functioning as something ak in to a catchall. Thus, the fact that the three broad categor ies of sources of solid waste listed in § 129(g)(1)—commercial and industrial establishments, and the general public— may be surplusage under EPA’s original source interpretation does not unambiguously mean that Congress intended for the word “from” to have NACWA’s proximate source interpretation. In any event, if Congress i ndeed unambiguously intended to exclude municipal sewage sludge incinerators from the definition of § 129(g)(1), it chose a strange way to go about it.20

NACWA also asserts as factually incorrect EPA’s statement that “[s]ewage sludge clearly originates from the general public, including residential and commercial facilities,” arguing that sewage sludge does not “originate” until a publicly-owned treatment work treats raw sewage. NACWA Br. at 22–24. In suppor t of this argument, NACWA cites EPA regulations in whic h EPA recognized that sewage sludge results from wastewater tr eatment and is distinct from domestic sewage, and to a Cl ean Water Act provision from which one may infer that the production of sewage sludge is, by statutory definition, part of a publicly-owned treatment

work. See 33 U.S.C. § 1292(2)(A); 40 C.F.R. §§ 60.4930, 60.5250; Joint Appendix 986–87.

NACWA’s argument, however, fails to address how EPA’s original source interpretation of “from”— i.e. , that the general public is a “but-for” cau se of sewage sludge—renders the treatment facility that crea tes sewage sludge relevant. For example, one could say “bread comes from fields of wheat,” and be understood, or say “bread comes from the baker,” and

also be understood. The fact that several intermediate processes had to occur to produce the bread—transporting wheat from the field, adding di fferent ingredients to produce dough, or heating the dough in an oven—does not negate the validity of a sentence that uses “from” to link the bread to the source of an important ingredient. As we noted above,

W EBSTER ’ S

, supra 17, at 913, at least one dictionary defines

“from” as a function word us ed to indicate, among other meanings, “the place of origin , source or derivation of a material or immaterial thing.” (emphasis added). Thus, the fact that the sewage sludge may not exist in that form until treated at a publicly-owned treatment work does not unambiguously invalidate EPA’s original source interpretation that sewage sl udge is from the general public,21

even if EPA’s interpretation is some steps removed. While it

is also true that other EPA re gulations recognize that sewage sludge is distinct from domestic sewage, these regulations are not dispositive of EPA’s interp retation of § 129(g)(1). Put differently, the fact that EPA de termined in other regulations that sewage sludge and domestic sewage are distinct does not preclude EPA from recognizing th at sewage sludge would not exist but for domestic sewage, and does not prevent EPA from interpreting “from . . . the general public” as meaning the original, but-for source of sewage sludge.

In addition to its textual ar guments, NACWA asserts that EPA’s interpretation of § 129(g)(1 ) conflicts with § 112(e)(5), which states that EPA “shall pr omulgate standards pursuant to subsection (d) of this section applicable to publicly owned treatment works (as defined in title II of the Federal Water Pollution Control Act) not later than 5 years after November 15, 1990.” NACWA argues that wh en § 112(e)(5) is read in conjunction with the Clean Water Act, which NACWA claims defines publicly-owned treatment works to include sewage sludge incinerators, EPA must establish emission standards for the entirety of a publicly-owned treatment work pursuant to § 112(d). Because EPA may only establish

emission standards for a source exclusively under either § 112(d) or § 129(a), see 42 U.S.C. § 7429(h)(2), NACWA maintains that § 112(e)(5) suppo rts its interp retation that Congress did not intend for EP A to regulate sewage sludge incinerators under §129(g)(1).

We agree with EPA, however , that § 112(e)(5) is simply a timing provision, and does not prevent EPA from regulating aspects of a publicly-owned treatment work to which more specific provisions apply. See FTC. v. Manager

, Retail Credit

Co.

, Miami Branch Office , 515 F.2d 988, 993 (D.C. Cir. 1975) (“The principle that a specific statutory provision22

prevails over a more general provision is es tablished beyond question.”). If we accept EPA’s interpretation of “from . . . the general public,” § 129 would govern sewage sludge incinerators, and the exclusivity provision of § 129(h)(2) would render § 112 not “appl icable to” sewage sludge incinerators, leaving no conflict between the texts. Thus, the

overall structure of the Clean Air Act does not unambiguously require NACWA’s interpretation of the word “from.”

In fact, when EPA issued its rule proposing emission standards for publicly-owned treatment works as required by § 112(e)(5), it established standa rds for certain processes at publicly-owned treatment works while deciding to regulate sewage sludge incinerators under § 129, a decision that went unchallenged at the time. See National Emission Standards for Hazardous Air Pollutants: Publicly Owned Treatment Works, 63 Fed. Reg. 66,084, 66087 (Dec. 1, 1998) (Proposed Rule); 64 Fed. Reg. 57,572 (Oct . 26, 1999) (Final Rule). Though EPA’s decision in 1998 to regulate sewage sludge incinerators under § 129 does not prove that its interpretation is correct in the present, the fact that it established standards for other processes within publicly-owned treatment works under its § 112 authority demonstrates that sewage sludge incinerators are not the only aspect of a publicly-owned treatment work to which § 112 may be “applicable.” See 40 C.F.R. Part 63, Subpart VVV.

We therefore conclude that the traditional tools of statutory construction do not demonstrate that § 129(g)(1) unambiguously excludes sewage sludge incinerators. But we also disagree with EPA that our opinion in NRDC v. EPA , 489 F.3d 1250 (D.C. Cir. 2007), unambiguously resolves § 129(g)(1) in EPA’s favor.23

In NRDC , we heard challenges to an EPA rule that

defined “commercial or industr ial waste” to include solid

waste combusted at incinerato rs that did not provide for energy recovery or operated without energy recovery. Id. at 1258 (citing 70 Fed. Reg. at 55,572). Defining “commercial

or industrial waste” in this wa y effectively created exceptions to the definition of “solid waste incineration unit” beyond

those written in the statute. Id . We vacated and remanded EPA’s rule, rejecting its argument that it was resolving an ambiguity created by Congress’s failure to define

“commercial or i ndustrial waste.” Id. As we explained, Congress’s use of the word “a ny” in the definitional phrase

“ any facility which combusts any solid waste from

commercial or industrial estab lishments” rendered the phrase clear and unambiguous, and EPA had no authority to create exceptions not explicitly listed in the statute through its

definition of “commercial or industrial waste.” See id. at
1259–60.

Because the resolution of the present issue depends on

the role of the word “from” in this statute, however, our discussion about the broad scope of § 129(g)(1)’s definition of “solid waste incineration unit” based on the word “any” is largely irrelevant. As we noted in NRDC , “The word ‘any’ is usually understood to be all inclusive,” 489 F.3d at 1257 (internal citation omitted), and EPA presented no compelling reason “why ‘any’ should not mean ‘any.’” Id. at 1260 (internal citation omitted). In contrast, “from” is susceptible to different meanings and renders § 129(g)(1) ambiguous— even when viewed in light of th e traditional tools of statutory

construction—such that either NACWA’s or EPA’s interpretation of § 129(g )(1) is plausible.

Having determined that the ph rase “from . . . the general public” is ambiguous under Chevron step one, we now apply24

Chevron step two to determine whether EPA’s interpretation “is based on a permissible cons truction of the statute.”

Chevron , 467 U.S. at 843. If EP A’s “choice represents a reasonable accommodation of conflicting policies that were committed to [EPA]’s care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one Congress would

have sanctioned.” Id. at 845 (internal quotation marks omitted).

NACWA first asserts that EPA’s interpretation of § 129(g)(1) is unreasonable under Chevron step two because EPA advanced a new rationale for its interpretation of § 129(g)(1) for the first time in its denial of reconsideration to NACWA. Specifically, NACWA cites EPA’s reasoning that its conclusion on the coverage of § 129(g)(1) “is based on a reasonable interpretation of two provisions of the [Clean Air Act], so as to give both meani ng,” and that “it is reasonable for the EPA to consider both pr ovisions and to conclude that . . . section 129(g)’s all-en compassing definition of solid waste incineration unit requi res regulation” under § 129. Joint Appendix 1092 (EPA’s letter denying NACWA’s petition for reconsideration). NACWA argues that EPA’s explanation is irrational not only because EPA allegedly

raised it for the first time in th e denial of reconsideration, but also because it amounts to a conclusory statement and

because it fails to consid er the importance of other

environmental statutes. We find these arguments unconvincing. EPA explained in it s final rule that it viewed § 112(e)(5) as merely a timing provi sion, and further stated that to interpret § 112(e)(5) more broadly “would conflict with section 129(g) and with the DC Circuit’s [ sic ] interpretation of section 129(g).” 76 Fe d. Reg. at 15,383. EPA’s reasoning in denying NACWA’s petition for reconsideration is not only consistent with its reasoning in the final rule, but also a25

reasonable interpretation of the statute for the reasons we have just explained.

Second, NACWA argues EPA’s construction of § 129(g)(1) is unreasonable because it ignores legislative history and the policies underl ying the Clean Water Act’s provisions on sewage sludge in cineration. NACWA contends

that the discussion of wastewater treatment facilities in the legislative history of § 112, a nd the absence of any reference to sewage sludge or sewage sludge incinerato rs in § 129, demonstrate that Congress in tended EPA to regulate all aspects of publicly-owned treatment works only under § 112. But though the legislative history on § 112 mentions wastewater treatment plants—an unsurprising fact in the context of a section stating th e date by when EPA must issue § 112(d) emission standards applicable to publicly-owned

treatment works—NACWA has cited no language in the legislative history pertaining to sewage sludge incinerators.

We need not determine whet her legislative history can generally suffice to render an ag ency’s interpretation invalid

at Chevron step two. Nothing in the legislative history cited by NACWA suggests that Congress would not have sanctioned EPA’s interpretation of § 129(g)(1) as including sewage sludge incinerators or EPA’s interpretation of § 112(e)(5) as being a timing provision.

NACWA also contends that one of the congressional objectives of the Clean Water Act is to “maintain[] local flexibility and control over the means for managing sewage sludge,” and that adopting EP A’s interpretation of § 129 would usurp local contro l. NACWA Br. at 27–28; see 33 U.S.C. § 1345(e) (“The determination of the manner of disposal or use of sludge is a lo cal determination . . . .”). We agree with EPA, however, that this argument is largely

irrelevant to whether it reas onably interpre ted § 129.26

Establishing MACT standards fo r sewage sludge incinerators does not, as a purely legal matter, remove local control over which method of sewage sludge dis posal to use. Even if the presumably increased costs associated with emission

standards would affect a munici pality’s decision on how to dispose of sewage sludge, 33 U.S.C. § 1345(e) is not so strongly worded as to complete ly insulate a municipality’s decision-making process from EPA rulemaking.

To sum, we conclude that the phrase “from . . . the general public” is ambiguous. B ecause EPA’s original source interpretation of that phrase is permissible, we give deference to its interpretation of the definition of “solid waste incineration unit,” and uphold its authority to establish emission standards for sewage sludge incinerators under §

129.

B. C HALLENGES TO THE MACT F LOOR M ETHODOLOGY

Petitioners NACWA and Sierra Club both challenge the adequacy of EPA’s methodology in determining the MACT floors for existing units. Both challenge EPA’s decision to set

MACT floors on emissions data from less than 12 percent of sewage sludge incinerators, albe it on different legal theories.

See NACWA Br. at 32–37 (asserti ng that EPA’s failure to

base MACT floors on less than 12 percent of incinerators violates § 129); Sierra Club Br. at 28–30 (asserting that

EPA’s failure to base MACT fl oors on less than 12 percent of incinerators is arbitrary and capricious).

Both petitioners also criticize distinct but related aspects of EPA’s rulemaking. Sierra Club contends that EPA’s method of selecting the best performers based on control technology is unlawful and arbitr ary, pointing to other factors that may influence emission levels. See Sierra Club Br. at27

18–23. NACWA argues that EPA fa iled to demonstrate that the data it used to set MACT floors represented the performance of the best-performing sewage sludge incinerators, contending that EPA failed to consider variability in sewage sludge contents and its effect on emission levels and that the upper prediction limit does not account for that variability. See NACWA Br. at 38–42. Sierra Club also challenges EP A’s use of the upper prediction limit, arguing that EPA does not demonstrate th at the upper prediction limit represented the “average emissions limitation achieved” and was therefore unlawful and arbitrary. Beyond these related arguments, Sier ra Club argues that EPA’s method for accounting for non-detect data is flawed.

In promulgating the MACT standards for sewage sludge incinerators, EPA took a differe nt approach than it has in other MACT standard regulations that have come before us on petitions for review. First, EPA collected its MACT floor

dataset— i.e. , the emission levels of “the best performing 12 percent of units” for the existing incinerator MACT floors— by targeting the sewage sludge incinerators it believed to employ the best air pollution co ntrol technology for emissions testing. See 75 Fed. Reg. at 63,269–70. Second, after it had collected emissions data for the MACT floor dataset, EPA applied a statistical analysis , which it termed the “upper prediction limit,” to acc ount for variability. See 75 Fed. Reg. at 63,269, 63,271 (explaining that EPA “must exercise its judgment, based on an evaluation of the relevant factors and available data, to determine the level of emissions control that has been achieved by the best performing [sewage sludge incinerators] under variab le conditions.”).

Both steps in this approach involved several different estimations and assumptions. For example, because EPA chose to limit its information collection requests to nine28

municipalities, it had to estimate which sewage sludge

incinerators would have the lo west emissions, which it chose to do based on the air pollu tion control technology the

incinerators used. See 75 Fed. Reg. at 63,270. And because EPA’s limited emission testing did not yield data for 12 percent of incinerators for every pollutant, it used a statistical technique to estimate whether a dataset of fewer than 12 percent of incinerators could estimate the best-performing 12 percent of incinerators. Id. Because every test did not produce usable data, EPA used an approximation to account for emissions test data too low to be accurately measured by monitoring equipment. Id. at 63,272. EPA al so estimated the variability of the sewage sl udge incinerato rs—what they would achieve under a range of operating conditions—by applying the upper prediction limit. Id. at 63,271.

We have accorded Chevron deference to EPA’s interpretation of § 129 as a llowing it to estimate MACT floors, noting that the requirement that the existing unit floors “not be less stringent than the average emissions limitation achieved by the best performing 12 percent of units” does not, on its own, dictate “how the performance of the best units is

to be calculated.” Sierra Club v. EPA , 167 F.3d 658, 661–62 (D.C. Cir. 1999). Although EP A would ideally set MACT floors by surveying all existing incinerators and identifying the best-performing 12 percent of units with hard data, we have not required EPA to go that far, recognizing that “EPAtypically has wide latitude in determining the extent of datagathering necessary to solve a problem.” Id. at 662; see also

id. at 661 (noting that Sierra Cl ub, in arguing that case, had “disavowed any interpretation that would require measuring the performance of every la st unit”); Oral Arg. Tr. at 53:25– 54:9 (statement from EPA’s at torney stating, “EPA in a perfect world would have data from all 204 units”). Instead, we explained that the plain meaning of § 129(a)(2) does not29

“exclude estimation, either by sampling or by some other

reliable means.” Sierra Club , 167 F.3d at 662. But we have not given EPA free rein in its estimation techniques. EPA

“must demonstrate with subs tantial evidence — not mere

assertions” that its estimation “allows a reasonable inference as to the performance of the top 12 percent of units.” Id. at 663; Northeast Maryland Waste Disposal Authority , 358 F.3d at 954 (internal quotation marks omitted).

Relying on Sierra Club ’s holding that EPA may estimate “the average emissions limitation achieved by the best performing 12 percent” without violating the Clean Air Act, we have often held EPA’s attempts to estimate the performance of the top 12 percent un its to be lawful in theory. But we have often held that, in practice, EPA could not support the assumptions underlying its estimations with substantial evidence. For example, in Sierra Club , EPA based existing medical waste incinera tor MACT floors on emission limits established by state regulations, assuming that “all [medical waste incinerators ] are . . . achieving their [regulatory] limits.” Id. at 663 (second alteratio n in original). Although we held that EPA coul d, in theory, use regulatory data as a proxy, EPA’s use of the data in that case to estimate the performance of the top 12 percent was arbitrary and capricious because the state emi ssion limits were substantially higher than emissions from an uncontrolled incinerator, rendering the regulatory data a meaningless proxy for

emission levels from medical waste incinerators. See id. at 663–64 (explaining that while the average emission level from uncontrolled incinerators was 2,770 parts per million volume, the average of the stat e emission limits appeared to be 5,227 parts per million volume); see also Northeast Maryland Waste Disposal Authority , 358 F.3d at 953–54 (rejecting EPA’s use of state emission levels for the same

reason as in Sierra Club ).30

In Sierra Club , we also discussed a method EPA used to

set new incinerator MACT floor s, which are required to be “no less stringent than the emi ssions control that is achieved in practice by the best controlled similar unit.” See 167 F.3d at 664–65; 42 U.S.C. § 7429(a)(2). In setting new incinerator MACT floors, EPA had chosen what it believed to be the

most effective control technol ogy used by an incinerator in each category, identified the highest level of emissions ( i.e.

, worst) recorded by any incinerator using that technology, and then increased that value by 10 percent. Sierra Club , 167 F.3d at 665. Selecting the cont rol technology used by sources with the lowest emission levels and then setting MACT floors at the levels achieved by the worst performing source, which we termed the “MACT approach” in later cases, was supposed to account for the fact that the best-controlled similar unit will not consistently achieve the same emission

level. See Cement Kiln Recycling Coaliation v. EPA , 255 F.3d 855, 861 (D.C. Cir. 2001). In other words, as we explained in Sierra Club , it is reasonable to expect that the

incinerator on which the MACT floors are based should be able to “achieve” the MACT floor “in practice,” which it could not do unless “achieved in practice” meant “achieved

under the worst foreseeable circum stances.” 167 F.3d at 665. But though EPA may account for variability and set MACT

floors at the emission levels achieved by the be st-controlled source under the worst foreseeable circumstances, we

concluded in Sierra Club that EPA had not adequately explained why adopting the MA CT approach would achieve that goal, and remanded the medical waste incinerator MACT

standards to EPA for fu rther clarification. Id.

In later cases, we addressed EPA’s attempts to expand its MACT approach to developing existing source MACT floors.

See National Lime Ass’n v. EPA , 233 F.3d 625, 632 (D.C. Cir.31

2000); Cement Kiln , 255 F.3d at 859; Sierra Club v. EPA , 479 F.3d 875, 879–880, 882–83 (D.C. Cir. 2007) (“ Brick

MACT ”). For example, in Cement Kiln , EPA identified the best-performing 12 percent of sources by emission levels,

identified the control techno logy used by sources with emission levels equivalent to or lower than the median of that 12 percent, and then set the MA CT floor at the worst emission level achieved by any source usin g that control technology.

255 F.3d at 859. As in Sierra Club , EPA’s rationale in setting the MACT floors on the worst performer using MACT technology was to account for va riability in the emission levels “achieved” by the be st-performing 12 percent. See id. at 862, 865–66. While we explained this approach could be lawful in theory if, for example, control technology was completely or significantly determinative of a source’s emission levels, we neverthele ss concluded that EPA had not adequately demonstrated with substantial evidence that its

estimation was reasonable. Id. at 863–66. Because factors apart from air pollution cont rol technology could affect emission levels, we concluded th at EPA’s assumption that the worst-performing unit could re present the best-performing

units was flawed. Id. at 866; see also Brick MACT , 479 F.3d at 882 (“Given Cement Kiln ’ s holding that EPA may not use emission levels of the worst performers . . . without a demonstrated relationship between the two, we conclude that

the emission floors . . . viol ate the [Clean Air Act].”); id. at 883 (“EPA’s decision to ba se floors exclusively on technology even though non- technology factors affect emission levels violates the [Clean Air Act].”).

As these cases demonstrate, establishing MACT floors is no simple task. Determining the best performing sources is not even as straightforward as simply collecting emission test data from all incinerators and ranking them, as incinerators that have low emission levels one day may have very high32

emission levels under the worst foreseeable conditions (for example, if an incinerator experiences a spike in sludge pollutant concentrations during certain times of the year). Recognizing that vari ability in the perform ance of sources canmake identifying the best-performing sources based on shortterm emissions data a nearly impossible task, we have upheld

EPA’s estimation of MACT floors in at least one case. In

Mossville Environmental Action Now v. EPA , 370 F.3d 1232 (D.C. Cir. 2004), EPA explained that great variability in emissions among sources it sought to regulate made comparing sources and selecting the best-performing units virtually impossible, and so se t the MACT standards for the pollutant at issue at the level of preexisting EPA emission

standards. See id. at 1240 (“With compar isons between plants impossible, and emission variations not related to technological performance, the EPA claims it was unable to select the best [performing] s ources.”). Because EPA pointed

out that the source with the ove rall lowest long-term emission of the pollutant at issue barely satisfied the preexisting emission standards, we upheld EPA’s estimation that its preexisting emission standards fo r that pollutant reasonably represented the average emission levels of that pollutant for the best-performing units. Id. at 1242.

With this background in mind, we turn to the petitioners’ challenges to the MACT fl oor methodology EPA used in setting emission standards for se wage sludge incinerators. As we explained, EPA’s approach to setting MACT floors had essentially two steps: (a) determining the best-performing sewage sludge incinerators and gathering data; and (b) applying the upper prediction limit to the collected dataset to account for variability.

To determine the best-performing incinerators, EPA, mindful of our holding in past MACT floor cases, has devised33

a different approach than it ha s in other rulemaking we have reviewed. First, EPA identified the incinerators it believed

would have the lowest emissions based on the ty pe of unit and installed air pollution contro ls. 75 Fed. Reg. at 63,270. EPA

then conducted emission tests from these incinerators to develop its MACT floor dataset, which it supplemented with data from state environmental agency public databases. Id. Because some test runs yielded emissions data at a level that EPA’s testing equipment could not accurately measure, EPA developed a method for incorpor ating this non-detect data.

Id. at 63,273.

This method of using tec hnology to set MACT floors differs from the “MACT approach” discussed in Cement Kiln

and Brick MACT . In those cases, EPA had first identified the sources with the lowest emissions, then identified the primary emission control technology used by those sources, and then

set the MACT floors based on sources that used that technology. See Cement Kiln , 255 F.3d at 859; Brick MACT

, 479 F.3d at 879. In contrast, EPA has, in this rulemaking, selected which sewage sludge inci nerators to survey based on their control technology, wit hout first determining their

emission levels relative to other sources. See Revised MACT Floor Memo at 6 (“To select the surveyed owners, EPA reviewed the inventory of [sew age sludge incinerators] for the control devices being operated, a nd identified a subset of units expected to have the lowest emissions based on the type of unit and the installed air po llution controls.” (emphasis added)).

Even after selectively identifying and collecting data from incinerators, EPA did not collect data on every § 129 pollutant from 12 percent of sources. For example, while EPA estimated in the final rule that it would need data on eighteen multiple hearth incinerators to meet the 12 percent34

requirement, the number of multiple hearth incinerators for which it had data (including supplemental reports from state environmental agency databases) ranged from nineteen to five incinerators depending on the pollutant. See Revised MACT

Floor Memo at 7. Believing that § 129(a)(2) required it to have data representative of at least 12 percent of incinerators, EPA devised a method of estimating whether a limited dataset could be representative of th e best-performing 12 percent of units. Specifically, EPA applied a statistical analysis on the underrepresented pollutant datasets to estimate whether it had enough observations from testing in cinerators to represent the best-performing 12 percent of incinerators. See 75 Fed. Reg. 63,270; Revised MACT Floor Me mo at 7–8. Applying this statistical analysis to its MA CT floor dataset yielded an estimate of an estimate; in other words, the limited dataset to which EPA was applying this statistical analysis was itself already the result of EPA’s es timating the best performers based on control technology.

After it had collected its da taset, EPA applied the upper prediction limit to estimate variability in sewage sludge incinerator emissions, stating its belief that the MACT floors had to be set at such a level that the best-performing incinerators “can expect to meet ‘every day and under all operating conditions.’” 75 Fed. Reg. at 63,269 (quoting

Mossville Environmental Action Now , 370 F.3d at 1241–42). We will address challenges to EPA’s estimations in the following order: (1) whether EP A may use control technology as a proxy for best-performing incinerators; (2) whether EPA did not adequately account for variability in the characteristics of sewage sludge fed into the sewage sludge incinerators, and whether it may account for va riability with the upper prediction limit; (3) whether EPA may apply a statistical equation to determine whether EP A had a sufficient dataset to be representative of the best -performing 12 percent; and (4)35

whether EPA may incorporate non-detect data by comparing

calculated MACT floors to a value that is three times the representative detection level.

1. Identifying the best-perfo rming incinerators based on control technology

We first address Sierra Club’s challenge to EPA’s selection of the best-performi ng units based on the type of unit and installed air pollu tion control technology. In addressing Sierra Club’s argument that EPA did not establish that non-technology factors do not affect emissions, we admit some confusion over whether NACWA is also arguing that EPA acted arbitrarily in its se lection of best performers by failing to account for variability, or whet her its argument is that EPA failed to account for the variability experienced by the best-performing units it selected. See NACWA Br. at 39 (“Commenters argued that EPA’s targeted selection of nine [publicly-owned treatment work s] based solely on type of pollution control makes it impossible for EPA to assume that the data are representative of the best-performing [sewage sludge incinerators] across the entire category.”) (citing NACWA Comments, Joint Appendix 24–25). But see NACWA Br. at 41 (“Because these data show the great variability of these pollutant s, commenters urged EPA to determine the emission rates achieved by the best-performing sources under the full range of operating conditions.”). The closeness of these two arguments is hardly surprising given that variability in incinerator operating conditions may make the “best performing 12 percen t of units” a moving target, particularly when EPA uses emission levels as the metric for “best performing.” But while both NACWA’s and Sierra Club’s arguments on this point share a similar element— EPA’s alleged failure to account for sewage sludge variability makes its MACT floor methodology arbitrary and36

capricious—Sierra Club focuses on EPA’s assumption about control technology installed on the incinerator, while NACWA focuses on EPA’s assump tions about the effect of sewage sludge characteristics on emission levels. Because these contentions are different in kind, we will address them separately.

We begin with Sierra Cl ub’s allegation that EPA’s estimate of the best-perform ing 12 percent of units is unlawful and arbitrary. In argu ing that this estimate is unlawful, Sierra Club relies on Cement Kiln , asserting that EPA’s estimation technique can be upheld only if air pollution control technologies are “the only factor determining emission levels.” Id. (quoting 255 F.3d at 863). Because EPA conceded that some non-technology factors affected emission levels, even accounting for Clean Water Act Part 503 regulations, see 75 Fed. Reg. at 63,270, Sierra Club argues that EPA’s method of estimating is per se unlawful.

Sierra Club reads our holding in Cement Kiln too strictly. Later in our opinion in Cement Kiln , we explained that “if [EPA] can demonstrate with substantial evidence – not mere assertions – that MACT technology significantly controls emissions, or that factors other than the control have a negligible effect, the MACT approach could be a reasonable means of satisfying the statute’ s requirements.” 255 F.3d at 866 (emphases added). Unsu rprisingly, EPA cited this portion of our opinion when responding to Sierra Club’schallenge to using control technology as a proxy for the bestperforming incinerators. EPA Br . at 55. Sierra Club asserts that EPA cannot justify its approach under this softer standard, arguing that the signifi cant/negligible standard is

dicta. See Sierra Club Reply Br. at 3–4.37

While Sierra Club may be correct that this statement is dicta, we now elevate it to holding. First, our statement in

Cement Kiln that the MACT appro ach would satisfy the statute “if pollution cont rol technology were the only factor determining emission levels” wa s a direct quote from our opinion in National Lime , where the statement was itself dicta. 255 F.3d at 863 (quoting National Lime , 233 F.3d at 633); see National Lime , 233 F.3d at 633 (summarizing an argument made by Sierra Club th at we could not consider because it was not properly raised). Moreover, in Cement

Kiln , we did not rely on the presence of any other factor influencing emission levels to hold that EPA’s MACT approach failed to satisfy the statutory requirements for setting MACT floors, instead resting our holding on the bases

that several non-control fact ors could influence emission levels, and that EPA’s difficulty in quantifying these factors was no excuse for failing to demonstrate its estimate was

reasonable. Cement Kiln , 255 F.3d at 863–65.

Second, if we are to give a ny substance to EPA’s ability

to estimate the best performing units based on control technology, we must allow EPA to use air pollution control technology as a proxy for emission levels even if the

correlation between control tec hnology and emission levels is imperfect because non-control factors have a negligible effect on emissions. This is so because an estimate, by definition, will not accurately account for every variable that may affect

emissions. W EBSTER ’ S

, supra 17, at 778 (defining “estimate” as meaning “to judge the value, worth, or significance of: esp : to arrive at (a value judgment that is often valid but incomplete , approximate, or tentativ e)”) (emphasis added). Were we to adopt the strict standard Sierra Club argues applies, we would effectively be prohibiting EPA from using this estimation technique, as we find it impossible to imagine any situation where there is a perfect correlation between38

control technology and emissions. See Cement Kiln , 255 F.3d at 871 (“[W]e do not expect th e impossible of the [EPA]. Floors need not be perfect mirro rs of the best performers’ emissions.”). Thus, the fact that air pollution control technology is not the only fact or affecting emission levels

does not render EPA’s use of c ontrol technologies to identify best performers per se unlawful.

EPA, however, must still demonstrate that its estimate is reasonable. In justifying its approach of “specifically [seeking] emissions data from those municipalities that have installed and operate more than one of the controls that EPA identified as achieving the mo st reductions possible for the Section 129 pollutants,” EPA Br. at 56, EPA points to Clean Water Act regulations on se wage sludge disposal as accounting for non-control technology factors. See 40 C.F.R. Part 503, Subpart E. These regu lations include a requirement that incinerators comply with Clean Air Act emission standards for beryllium and mercury, see 40 C.F.R. § 503.43(a)–(b), and set limits for the average daily concentrations of lead, cadmi um, and other metals in the sewage sludge that is fed into an incinerator. See 40 C.F.R. § 503.43(c)–(d). EPA explained in the rulemaking, and now before us, that sewage sludge incinerators “receive a more homogenous type of waste to burn,” and that because of the Part 503 standards sewage sludge incinerators “are already incorporating management prac tices and measures to reduce waste and limit the concentration of pollutants in [sewage sludge].” See Revised MACT Floor Me mo at 6–7; 75 Fed. Reg. at 63,270.

It is true that EPA has pointed to some evidence of reduced variability among sewage sludge incinerators, a showing EPA failed to make in other MACT floor cases. See

, e.g. , Sierra Club , 167 F.3d at 662–64 (concluding that39

assumption that States would set emission limits at a level near what incinerators achieved in practice to be unsupported and contradicted by the record); Cement Kiln , 255 F.3d at 865 (determining that EPA did not attempt to support its assumption that emission levels were solely dependent on control technologies, instead explaining that for some pollutants, the “factors other than technology that affect

emissions . . . are difficult to quantify for the definition of MACT”) (internal quotation marks omitted). Nevertheless,

EPA concedes “that there is some variation of Section 129 pollutants present in the waste that is burned at individual sewage sludge incinerators.” EPA Br. at 58. The question

thus remains: can EPA demonstrate with substantial evidence

that some variation in pollutants has a negligible effect on sewage sludge incinerators, or that non-technology factors aside from sewage sludge content have a negligible effect on

emissions?

Sierra Club argues that EPA has not made that demonstration, pointing out that EPA’s assumption does not

account for the fact that incinera tor emissions are “affected by the fuels they use, the age a nd design of the individual unit, the specific quality and age of control devices at individual units, the training and skill of th e operators, and the care with which they run individual units .” Sierra Club Br. at 18–19 (internal quotation marks omitted) . We found this argument persuasive in Cement Kiln

, see 255 F.3d at 862–65, and again agree with Sierra Club here. The fact that publicly-owned treatment works are already re quired to limit pollutant concentrations in sewage sludge before incineration does not

establish that other variations in the operatio n of sewage sludge incinerators and the air pollution control technology they use will have only a negligible effect in emissions. Without evidence that air po llution control technology will achieve substantially the same performance across40

incinerators without regard to the particular incinerator on which it is installed, EPA has made only a “mere assertion” that its regulations account fo r non-technology factors and that the type of air pollution control technology used by an incinerator is significantly de terminative of emissions. See 76 Fed. Reg. at 15,392; Cement Kiln , 255 F.3d at 866.

Sierra Club also argues that variations in sewage sludge pollutant content are a factor a ffecting emission levels apart

from the air control technol ogy in use by a sewage sludge incinerator. Responding to EPA’ s arguments that the Part 503 regulations already require public ly-owned treatment works to “apply[] non-technology measures to reduce emissions” and therefore produce a more homoge nous waste, Sierra Club argues that “[e]ven if correct, these arguments merely show

that the units EPA selected as best performers have varying sludge inputs and that these inputs affect sewage sludge incinerators’ emissions less than they affect emissions from other categories of incinerators.” Sierra Club Br. at 19. Although this is a fair point, it is more relevant to NACWA’s argument that EPA failed to account for variability in sewage sludge pollutants when collecting its dataset, a point we address more comprehensively in the following section.

Suffice it to say, unless EPA can demonstrate that the relatively reduced variations in sewage sludge characteristics have a negligible effect on emi ssions, Sierra Club’s argument that non-technology factors affect emissions seems even more

meritorious. See Cement Kiln , 255 F.3d at 864 (citing, in support of its holding, an EPA technical memorandum in

which EPA observed that the va riability in emissions among sources using MACT technology “indicate[d] that the air pollution control device system type . . . may not be the only important consideration affecti ng [dioxin/furan] control; other factors such as combustion quality and waste composition

. . .41

may also be of importance.”) (emphasis added) (second alteration in original). As we will discuss in the next section,

EPA has alluded to evidence that may demonstrate a low correlation between sewage sludge characteristics and

emissions. See Joint Appendix 1095 (Letter Denying NACWA’s Petition for Reconsideration) (citing data gathered during EPA’s information collectio n request that showed that “the contents of . . . pollutant s in the sludge itself has little relationship to the emissions of the pollutants, because these pollutants are removed by the control devices.”). But as we will also discuss in the following section, citing this evidence for the first time in denying a petition for reconsideration may be an insufficient basis upon which to defend EPA’s position that its Part 503 regulations account for non-technology

factors.

To bolster its argument that non-technology factors have a non-negligible effect on emi ssion levels, Sierra Club points

out that some incinerators EPA did not survey for data collection reported superior pe rformance to those EPA did survey, undercutting EPA’s assumption that control technology is the only factor c ontrolling emission levels. For example, Sierra Club cites comments submitted by Palo Alto, which reported that its program of reducing mercury inputs was effective in reducing merc ury emissions to a level far below the existing unit MACT floor, and which was not included in the best-per forming 12 percent. See Joint Appendix 628–29. Sierra Club also notes that the supplemental data EPA took from state environmental agency public databases showed emission levels lower than those EPA decided to survey—a fact EPA candidly acknowledges.

See 76 Fed. Reg. 15,387 (“For some pollutants, the emissions from these supplemental test reports were lower than those from the nine [surveyed] sources.”). This is evidence, Sierra42

Club argues, that EPA’s estimate of the best performers based on control technology is arbi trary and capricious.

EPA responds that it did not have to consider the Palo Alto incinerator’s reported emission level, because Palo Alto failed to comply with EPA’s in struction in the proposed rule to provide “supporting documentation” when submitting

additional emissions stack test data in its comments. See 75 Fed. Reg. at 63,270. Because EPA could not verify the accuracy of Palo Alto’s asserted emission levels, EPA explains that it was unable to draw any correlation between Palo Alto’s sewage sludge management practices and a reduction in mercury emissions. In the past, we have upheld EPA’s rejection of data it determined deficient, explaining that we give substantial deference to an agency’s expert scientific judgment. Similarly, when EPA requests that

commenters substantiate their re ported emission test data, and they do not comply, EPA “[is] not obligated under its policy” to compare its collected results with the unsubstantiated data

that commenters submit. See Edison Electric Institute v. EPA

, 2 F.3d 438, 448 (D.C. Cir. 1993) Id. at 449. Thus, we agree

with EPA that it deserves de ference for its decision not to draw any correlations between Palo Alto’s change in management practice and a re duction in mercury emissions

based on the data submitted.

EPA, however, does not respond to Sierra Club’s argument that the fact that randomly sele cted incinerators from state environmental agency databases had emission

levels lower than those from the incinerators EPA chose to survey based on technology dem onstrates that EPA’s use of control technology is unreasonable. Instead, it explains that the supplemental information from state environmental agency databases “included emissions test data from facilities/units that met the same criteria EPA used in issuing43

information collection requests, i.e. , units with more than one of the controls that EPA identified as achieving the most reductions possible for the Section 129 pollutants.” EPA Br. at 56–57; compare Joint Appendix 979 (listing incinerators

from which EPA collected emissions test data and the control technologies they used), with Joint Appendix 1012–1040 (listing incinerator emission test data collected from state environmental agency databases along with control technologies used). But EPA did not state this rationale in the rulemaking, and we cannot “accept appellate counsel’s post
hoc rationalizations for agency action.” Motor Vehicles Manufacturer’s Ass’n v. State Farm Mutual Auto Insurance

Co. , 463 U.S. 29, 50 (1983). And befo re this court, EPA does not claim that it specifically searched state environmental agency databases for data from sewage sludge incinerators

that use what it considered the best-performing technology, explaining only that the suppl emental data “included”

emissions data from facilities that had one or more of the controls identified. Even taking as true that the incinerators for which EPA had data in supplemental testing used similar air pollution controls as the incinerators it selected, the fact that similarly-controlled incinerators achieve lower emission levels suggests that non-t echnology factor s have a nonnegligible effect on emission levels.

Therefore, we agree with Sierra Club that EPA has not

demonstrated with substantia l evidence that non-control technology factors apart from sewage sludge content, like variations in age, design, or operation of the incinerators themselves, would have a negligible effect on incinerator emissions. That EPA’s suppl emental test reports show superior performance to the incinerators EPA chose for information collection requests is strong evidence that the

type of air pollution control t echnology used itself is not significantly determinative of emissions. Nevertheless,44

because EPA may be able to explain why non-control technology factors have a neglig ible effect on emissions and why the data it used from supplemental test reports outperform the units it identif ied as best, we remand this portion of the rulemaking to EPA for further explanation without vacating the MA CT floor regulations.

2. Accounting for variability

We now address NACWA’s and Sierra Club’s challenges to EPA’s method of accounting for variability. In the proposed rule, EPA explained th at it was accounting for intraunit variability using a statistical tool it termed the upper prediction limit, and was relyi ng on the Part 503 regulations to account for variability in sewage sludge pollutant

concentration between incinerators. See 75 Fed. Reg. at 63,270–71. Because the upper pred iction limit is not a straightforward method of accounting for variability, we first

review and elaborate on this concept. The 99 percent upper prediction limit “represents the value which one can expectthe mean of future 3-run performance tests from the bestperforming 12 percent of sources to fall below, with 99 percent confidence, based upon the results of the independent sample of observations from th e best-performing sources.” 75 Fed. Reg. at 63,271. EPA calcu lated the upper prediction limit using the following formula:

ݐ݅݉݅ܮ	݊݋݅ݐ݁݀݅ܿݎܲ	ݎ݁݌݌ܷ

ൌ	ݔ ̅ ൅ݐ ሺ 0.99, ݊ െ 1 ሻ ൈ ඨ

ݏ ଶ ൈ ൬ 1

݊ ൅ 1

݉ ൰

In this formula, n represents the numb er of test runs ( i.e. , the sample size), m represents the number of test runs in a compliance average, ݔ ̅ represents the mean, s represents the45

standard deviation ( i.e. , a value representing how much variation exists from the mean within a dataset), and t (0.99,

n –1) represents a value called the t-statistic, which is a

number based on the number of test runs and EPA’s desired 99 percent significance. Id. Because of the role of the

standard deviation in this form ula, greater variation within a dataset will produce a higher upper prediction limit. And because EPA incorporated the upper prediction limit into its analysis by setting th e MACT floor at the level of the upper prediction limit (unless its methodology for addressing nondetect data, which we will discuss below, yielded a higher result), a higher upper prediction limit means a higher MACT

floor.

For existing incinerators, EPA did not apply the upper prediction limit to each 3-run te st for each incinerator, but instead applied it to the entire dataset it collected for a pollutant. See id. ; see , e.g. , Revised MACT Floor Memo Attachment B-8. For example, when setting the MACT floor for sulfur dioxide, for which EPA had 63 test runs, EPA calculated the upper prediction limit using a sample size of 63, a mean and standard deviati on based on all 63 test runs, a desired 3-run compliance averag e, and a desired confidence level of 99 percent. See 75 Fed. Reg. at 63,271; Revised

MACT Floor Memo Attachment B-8. The resulting value calculated by the upper prediction limit appears to represent, with 99 percent confidence, the value EPA predicts a 3-run average from an imaginary incinerator—representative of the mean and variation among the best-performing 12 percent

incinerators—could achieve. Pr edicting the value that a “3- run average” will fall below appears confusing at first glance—but we note that the focus of the upper prediction limit is on the average, and not the values of the three runs used to derive that future average. Thus if the upper prediction limit ( i.e. , MACT floor) were 5, it would not matter46

whether the 3-run test was 5-5- 5, or 1-5-9, as both 3-run tests average to 5. Designing the upper prediction limit this way appears to give incinerators testing for compliance with the MACT standards some leeway in variations among emissions

between test runs. See 75 Fed. Reg. at 63,269.

During the comment period Sierra Club, but not NACWA, challenged EPA’s use of the upper prediction limit.

See Joint Appendix 608. Alt hough NACWA did not criticize the upper prediction limit as a method for addressing variability in its comments, it did assert that EPA failed to account for variability in se wage sludge characteristics resulting from regional a nd seasonal variability. See id. 670– 72. NACWA also challenged EPA’s use of the Clean Water Act Part 503 regulatory data in its rulemaking, asserting that EPA’s assumption that sewage sludge was homogenous was demonstrably false based on that data. For example, NACWA pointed out that th e monthly average lead concentration in sewage sludge in January 2009 was 62.23 mg/dry kg for southerly incinerators and 97.00 mg/dry kg for westerly incinerators, while the monthly average lead concentration in July 2009 was 123.14 mg/dry kg for southerly incinerators and 218.55 mg/dry kg for westerly

incinerators. Id. 671. NACWA argued that because EPA regulations required publicly-owne d treatment works to report this data to EPA, s ee 40 C.F.R. § 503.48, EPA had access to the data and should have used it during rulemaking to account for variability. Id. 671–72. Moreover, NACWA noted that the Part 503 regulations did not even address all § 129 pollutants. See id. 672.

In the final rule, EPA defended its use of the upper prediction limit against Sierra Club’s criticisms. See 76 Fed. Reg. at 15,389. In response to NACWA’s comments, EPA explained that it collected emissi ons data from nine different47

facilities in nine different stat es, claiming that these facilities

were “located in a mix of northern, southern, eastern, and western states,” each with its “own unique sludge

characteristics from different residential and commercial populations.” Id. at 15,391. EPA stated that it felt the dataset

had “sufficient variation in re gions, climates and populations” to “adequately incorporate[] variability in wastewater treatment systems across the U. S.,” and that it had “also incorporated variability using the [upper prediction limit].”

Id.

Both petitioners now challe nge EPA’s use of the upper prediction limit to account fo r variability among sewage sludge incinerators. Sierra Club contends that the upper prediction limit is unlawful as applied to existing incinerator datasets because it does not represent the “average” emissions limitation achieved by the be st-performing 12 percent of incinerators, a fact inconsistent with EPA’s statements that the upper prediction limit is “based on” an average. Sierra Club asserts that the upper pr ediction limit is unlawful as applied to new sources as we ll, stating that “the upper prediction limit is not an estimate of what the best unit actually ‘achieved in practice.’” Sierra Club Br. at 25.

Sierra Club also argues that EPA’s use of the upper prediction limit is arbitrary and capricious because EPA does not provide an explanation of how the upper prediction limit represents the emissions level achieved by the best performing units under the worst reasonably foreseeable conditions. To support its arbi trary and capricious argument, Sierra Club points to the f act that, by applying the upper prediction limit, EPA calculated a MACT floor for the bestcontrolled unit that was higher than the floor based on the average emissions limitations ac hieved by the top 12 percent

of units. See 76 Fed. Reg. at 15,388–89. Sierra Club also48

alleges that EPA has been inc onsistent with its use of the upper prediction limit, using the upper prediction limit to set the MACT floors but not using it to identify incinerators in the first place.

NACWA does not challenge EPA’s use of the upper prediction limit as broadly as Sierra Club, explaining that “using the 99 [percent] [upper prediction limit] method to account for variability in em ission performance is not prohibited by statute, nor is it unreasonable, provided EPA uses representative data from the congressionally required 12 [percent] of units.” NACWA Intervenor Br. at 7. Instead, NACWA challenges EPA’s justification that the upper prediction limit adequately a ccounts for variability in a

dataset that itself is not reflect ive of the variety of conditions in which sewage sludge incinerators operate, asserting that “the [upper prediction limit] cannot account for variability among [sewage sludge incinerators] unless the underlying data are representative of the category as a whole.” In other words, NACWA argues that because EPA failed to take into account regional and seasonal variability in sewage sludge pollutant concentrations and fa iled to use the Part 503 data showing variability in sewage sludge characteristics in its analysis, EPA produced a limited dataset that was notrepresentative of the “emission rates achieved by the bestperforming sources under the full range of operating

conditions.” NACWA Br. at 41.

EPA’s responses to both Sierra Club’s and NACWA’s arguments are somewhat conclusory, relying primarily on its explanation in the Revised MA CT Floor Memo rather than addressing the petitioners’ lega l arguments. Responding to Sierra Club, EPA asserts that it did not “simply ‘pick a number’” in setting the upper prediction limit, and explains that the reason why some new incinerator MACT floors were49

higher than existing incinerator MACT floors was because of the smaller datasets with great er variation. EPA Br. at 52. EPA argues that NACWA’s criticism of the upper prediction limit is “overly simplistic,” explaining that “EPA’s use of the [upper prediction limit] to account for variability also addressed any emissions variab ility due to differences in sludge content,” and that if NACWA’s approach were accepted, “it would account for variability in sludge content on top of the variability in em ission levels that are already accounted for through the [upper prediction limit].” EPA Br.

at 50–51.

Before stepping into the morass of arguments on the upper prediction limit, we take a moment to revisit the statutory source of EPA’s oblig ation to set MACT floors. Section 129(a)(2) requires existi ng MACT floors to be no less stringent than “the average emissions limitation achieved by the best performing 12 percent of units.” As we noted in

Sierra Club , “this phrase on its own says nothing about how the performance of the best un its is to be calculated.” 167 F.3d at 661. In the past, we have primarily relied on Sierra

Club when reviewing MACT standards to state that EPA can reasonably estimate the performance of the best units. But underlying Sierra Club ’s holding is also the proposition that, because EPA can interpret ambiguous statutes under Chevron

, EPA can decide what value th e MACT floors are supposed to represent, as long as that decision is a reasonable interpretation of the statute. See id. at 661–62.

In this case, EPA has expl ained that its “long-standing interpretation [of section 129] is that the combination of section 129(a)(4), requiring numerical standards for each enumerated pollutant, and sect ion 129(a)(2), requiring that

each such standard be at least as stringent as the MACT floor, supports that floors be derived for each pollutant based on the50

emissions levels achieved for each pollutant.” 75 Fed. Reg. at 63,269. And in the final rule, EPA clarified that it was “using

lowest emissions limitation as the measure of best performance.” 76 Fed. Reg. at 15,389.

But even with these explicit interpretations of § 129(a)(2) as guidelines, the phrase “average emissions limitation achieved by the best performing 12 percent of units” could be interpreted several different ways, with several different

variations of what the MACT fl oor is supposed to represent. For example, and without prejudging the legality of these different interpretations, EPA could interpret the “average emissions limitation achieved by the best performing 12 percent of units” to mean the average of the emission levelsachieved by the best-performing units based on EPA’s shortterm emission test data, without regard to the range of conditions under which the incinerators operate. In that case, the MACT floors would simply be an average of the emissions data EPA collected from the best-performing units.

The phrase could also mean the average of the emission levels that each best-perform ing unit achieved under the worst

foreseeable circumstances. If EPA were to take this interpretation, it would seem sensible to determine the population of the best-performing units based on which units

achieve the lowest emissi on levels under the worst foreseeable conditions, and then average those emission

levels.

Based on EPA’s method of determining MACT floors in this case and its response to Sierra Club’s comments, however, it seems EPA has adopt ed yet another interpretation of the phrase “average emissions limitation achieved by the best performing 12 percent of un its.” In the final rule, EPA cited Sierra Club’s comments that § 129(a)(2)51

“unambiguously requires EPA to set floors reflecting the ‘average’ emission level achieved by the best sources” and that “although EPA may consider variability in estimating an individual source’s actual pe rformance over time, nothing in the [Clean Air Act] or the cas e law even suggests that EPA may account for differences in performance between sources except as § 129 provides, by aver aging the emission levels achieved by the sources in the top 12 percent.” 76 Fed. Reg. at 15,389. EPA responded that “[b]ecause the [upper prediction limit] represents the value which we can expect the mean ( i.e. , average) of three fu ture observations (3-run average) to fall below, based upon the results of the independent sample size from the same population, the [upper prediction limit] reflects average emissions.” Id.

It is not clear to us, however, that the “average emissions limitation achieved by the best performing 12 percent” would refer to the future average of a 3-run test that EPA predicts a source in the best-performing 12 percent will fall below with 99 percent confidence. Instead, the word “average” as referred to in the standard for existing unit MACT floors seems to mean the average emissions limitation that the existing population of the best-performing 12 percent of incinerators has achieved, not the average of a future 3-run test conducted for compliance purposes.

This is not to say that th e upper prediction limit, which EPA applied to the average of the emission levels recorded while testing the best-perform ing 12 percent, would violate the statutory standard establis hed in § 129. Under its method, EPA seems to have effectively modeled an imaginary

incinerator based on the short-term emissions test data from

incinerators in what EPA c onsiders the best-performing 12 percent of units. Using the aver age, the standard deviation of the dataset, and the number of data points, EPA claims its52

statistical formula models, w ith 99 percent confidence, the upper limit of what that imaginary incinerator would achieve

based on the distribution of th e dataset. Given that EPA

believes that it must set MACT floors “that the best performing sources can meet ‘every day and under all operating conditions,’” it seems pl ausible to state that this predicted emission level represents the “average emissions limitation achieved by the best performing 12 percent of

units.” See 75 Fed. Reg. at 63,269 (quoting Mossville

Environmental Action Now , 370 F.3d at 1241–42).

EPA has not interpreted “average emissions limitation achieved” this way, however, and because we “may not supply a reasoned basis for th e agency’s action that the agency itself has not given,” we can only adjudge EPA’s interpretation based on essentially one sentence from the Federal Register. Bowman Transportation

, Inc. v. ArkansasBest Freight System

, Inc. , 419 U.S. 281, 285–86 (1974); see 76 Fed. Reg. at 15,389. The need for further explanation is especially acute when EPA’s approach of using the upper prediction limit and its interpretation of “average emissions limitation achieved” are both departures from the approaches EPA has taken in setting MACT floors in earlier cases. As to the interpretation of “average” specifically, EPA has not previously interpreted the phrase “average emissions limitation achieved” to refer to the average of a future 3-runtest, but instead the average emissions levels of the bestperforming 12 percent of sources for which EPA had data (or the average of the proxies EPA used to estimate those emission levels). See Sierra Club , 167 F.3d at 661 (“[EPA] selected the 12 percent of the incinerator population subject to the strictest controls and set the floor level for the subcategory by averaging the emissions limitations governing those incinerators.”); National Lime , 233 F.3d at 630 (“To set existing source emission floors, EPA . . . . identified the53

technology used by the median pl ant out of the best twelve percent of plants for which it had information and set the existing source emission floor at the emission level of the worst performing plant in its database using that technology.”); Cement Kiln , 255 F.3d at 859 (explaining that for existing sources, EPA iden tified the best-performing 12 percent of sources, then identified the emission control technology used by sources with em ission levels equivalent to or lower than the median of the best-performing 12 percent,

and then set the MACT floor at the worst emission level achieved by any source using that technology); Northeast Maryland Waste Disposal Authority , 358 F.3d at 953 (“For each pollutant, EPA calculated the MACT floor by averaging the most stringent 12% of state permit limits in each class.”).

Although EPA may be able to justify its novel interpretation that “average” m eans the average of a future 3- run compliance test, one sentence in the Federal Register is not enough of a basis to upho ld EPA’s new approach to incorporating variability agai nst arbitrary and capricious review. Accordingly, on remand, we expect EPA to clarify how the upper prediction lim it represents the “average emissions limitation achieved by the best performing 12 percent.” See Sierra Club , 167 F.3d at 664 (remanding EPA’s MACT floor determination, because “[i]t is possible that EPA may be able to explain it”).

We now turn to Sierra Club’s related challenge to the upper prediction limit as arbitr ary because “EPA provides no support for the notion that the upper predictio n limit for the single best-performing unit re flects that unit’s actual performance, even under the ‘worst reasonably foreseeable’

circumstances.’” Sierra Club Br . at 26. While it is true that EPA did not even use the ph rase “worse foreseeable circumstances” in its rulemaking, it did explain its belief that54

it must set MACT floors that the “best performing sources can expect to meet ‘every day and under all operating

conditions.’” 75 Fed. Reg. at 63,269 (quoting Mossville

Environmental Action Now , 370 F.3d at 1241–42). Not only are these standards approximate ly equivalent, EPA is not

wedded to our “worse foreseeable circumstances” interpretation of “achieved in practice.” See Sierra Club , 167 F.3d at 665 (explaining that “E PA would be justified in setting the floors at a level that is a reasonable estimate of the performance of the ‘best cont rolled similar unit’ under the worst reasonably foreseeable circumstances,” adding “we use the subjunctive because it is not clear from the record that the agency was doing this”). More substantively, EPA’s citation

to Mossville Environmental Action Now in the same section as EPA’s description of the uppe r prediction limit may be enough to reasonably discern EPA’s justification for the upper prediction limit, even if EPA ha s not directly stated how it justifies the upper prediction li mit as a method for accounting for variability in light of the Cl ean Air Act and our case law. See Bowman Transportation , 419 U.S. at 286.

Although it may be sufficiently clear that EPA’s prediction of the best-performing incinerators’ upper limit represents standards these incinerators can “meet every day and under all operating conditio ns,” EPA has not clearly explained how the upper predic tion limit itself operates to predict this value with su fficient accuracy. In the Brick

MACT case, we held that EPA’s use of the MACT approach

violated the Clean Air Act because “it . . . failed to show that the emission levels achieved by the worst performers using a given pollution control device act ually predict the range of emission levels achieved by the best performers using that

device.” 479 F.3d at 882. Si milarly, EPA provides little explanation on how the upper prediction limit can actually predict the upper limit EPA expect s the best-performing unit55

or units to achieve. As Sierra Club pointed out, the upper prediction limit’s predictive ability does appear somewhat doubtful when it produces a higher MACT floor for an

incinerator with raw test data ranging from 0.31 to 2.26 than for a group of incinerators with raw test data ranging from

0.31 to 40.32 and a mean of 9.38. See Revised MACT Floor Memo Attachment B-8 (Sulfur di oxide emissions test data for existing multiple hearth incinerator floor); id. Attachment D-8 (Sulfur dioxide emissions test data for new multiple hearth incinerator floor). As EPA stated in explaining this apparently illogical result, a sm aller dataset may have greater variability, and thus a higher upper prediction limit. But if the upper prediction limit can vary so much depending on the size of the dataset, EPA should explain on remand why the upper prediction limit is a reasonable es timate of what an incinerator

would achieve under the worst foreseeable conditions for incinerators with smaller datasets. Put differently, if collecting more data has such a significant effect on the upper prediction limit, presumably producing a more accurate

estimate of what that incinera tor would “achieve in practice,” EPA should explain why the upper prediction limit could still be considered accurate given a small dataset.

While it is true that we “owe particular deference to EPA when its rulemakings rest upon matters of scientific and statistical judgment within th e agency’s sphere of special competence and statutory jurisdiction,” American Coke &

Chemicals Institute v. EPA , 452 F.3d 930, 941 (D.C. Cir. 2006), EPA must still articula te a “rational connection

between the facts found and the choice made.” Burlington

Truck Lines

, Inc. v. United States , 371 U.S. 156, 168 (1962). Because we are already remanding the upper prediction limit, we encourage EPA to elaborate how the statistical formula it uses can predict the upper limit of incinerator emissions. We are hesitant to rubber-stamp EPA’s invocation of statistics56

without some explanation of the underlying principles or reasons why its formulas woul d produce an accurate result, particularly when the “f acts found”—the MACT floor

datasets—demonstrate flaws in the formula.

We now turn to NACWA’s arguments that EPA failed to account for variability in sewa ge sludge characteristics, beginning with NACWA’s argument that the upper prediction limit cannot account for this sort of variability. See NACWA Br. at 39; EPA Br. at 51 (“EPA’ s use of the [upper prediction limit] to account for variability also addressed any emissions variability due to differences in sludge content.”). Before discussing NACWA’s challe nges to EPA’s method of accounting for variability, however, we take a moment to note a distinction NACWA appears to draw in its brief, in which it argues that its analyses on the Part 503 data “demonstrate that there is significant variability in metals concentrations among [publicly-owned treatment works] and within a [publicly owned treatment work].” NA CWA Br. at 42. As we will explain below, we agree with NACWA that under the rationale EPA expressed dur ing rulemaking regarding variability, EPA should have a ccounted for variability in sewage sludge characteristics within a publicly-owned treatment work or better expl ained why that variability was irrelevant. It is unclear, how ever, whether EPA needed to account for variability among publicly-owned treatment

works.

First, we agree with NACWA that EPA has not adequately explained how th e upper prediction limit can address variability in sewa ge sludge characteristics, particularly given the context in which it described the upper prediction limit in the proposed rule and the Revised MACT Floor Memo. EPA explained in the proposed rule and in its

Revised MACT Floor Memo that “[t]he types of variability57

that EPA attempts to acc ount for include operational

distinctions between and within tests at the same unit.” 75 Fed. Reg. at 63,269; Revised MACT Floor Memo at 4–5. As to existing incinerator MACT fl oors, EPA stated that “[b]y including multiple emissions tests from units with a test average in the top 12 percent, EPA can evaluate intra-unit variability of emissions tests ove r time, considering variability in control device performance, unit operations, and fuels fired during the test. . . . [T]he [uppe r prediction limit] was used for the [sewage sludge incinerato r] MACT floor variability analysis.” 75 Fed. Reg. at 63,271; Revised MACT Floor

Memo at 11–12. These statements appear to contradict EPA’s implied position in the final rule (and express position on petition for review) that the uppe r prediction limit can account for more than intra-unit variability. See 76 Fed. Reg. at 15,391 (explaining, in response to NACWA’s comments that EPA failed to account for variability in sewage sludge characteristics, that in addition to collecting emissions information from facilities in nine different states, “[w]e have also incorporated variability using th e [upper prediction limit].”); EPA Br. at 51.

Not only is EPA contradict ory on whether the upper prediction limit accounts for more than intra-unit variability, NACWA’s argument that the unde rlying dataset must already be representative of vari ability in sewage sludge characteristics before applyi ng the upper prediction limit is persuasive, at least as applied to variability within a publiclyowned treatment work. Assuming that NACWA’s summary of monthly average sewage sludge pollutant concentrations in its comments is accurate, short- term emissions testing done in January when the monthly average lead concentration is lowest may not be representativ e of incinerators’ performance in July, when the monthly average lead concentration is

almost double. See Joint Appendix 671 (NACWA58

Comments). If sewage sludge incinerator emissions increase based on sewage sludge polluta nt concentrations, then it would seem to follow that the average emission levels of sewage sludge incinerators in July would be higher than the average in January. Cf. Sierra Club , 167 F.3d at 666 (“The EPA does not deny that the waste stream reductions the Sierra Club calls for would reduce pollution. The less mercury in, the less mercury out, and the less chlorinated plastic in, the less HCl out.”). And assuming that the standard deviation does not change from month-to -month, it would also follow that the upper prediction limit, and thus the MACT floor, would be higher for a dataset ba sed on July emission testing.

As with the other aspects of the upper prediction limit, however, EPA may be able to explain and clarify on remand its position on whether the upper prediction limit can account for variability in sewage sludge content. EPA may also be able to explain why NACWA is incorrect in asserting that EPA needs to base its upper prediction limit on a representative datase t. Alternatively, EPA could adopt an interpretation of “average emissions limitation achieved by the best performing 12 percent of units” that does not require

EPA to determine what the be st-performing units achieve

under the worst foreseeable conditions.

Having determined that EPA did not make clear whether the upper prediction limit accounts only for intra-unit variability, we now turn to NACWA’s remaining and related arguments on EPA’s variability analysis. We start first with NACWA’s argument that EPA fail ed to demonstrate that its MACT floor dataset represen ted the best-performing 12 percent of incinerators because it failed to adequately account for variability in sewage sl udge characterist ics. NACWA maintains that sewage sludge char acteristics can vary not only by geographic region, but also by seasons, differences in59

wastewater treatment technologi es, and the sanitary wastes

received from the communitie s served by publicly-owned

treatment works. See Joint Appendix 671 (summarizing month-to-month variability in sewage sludge pollutant concentrations based on Part 503 data); id. at 1075 (summarizing the minimum, ma ximum, median, and 25th and 75th percentile sewage sludge pollutant concentration for several different publicly-own ed treatment works operating sewage sludge incinerators). Moreover, NACWA criticizes EPA for not factoring sewage sludge variability into its MACT floor methodology, noting that EPA has had twenty years of data on sewage sludge from the Part 503 regulations, which require regulated entitie s to report information about pollutant concentrations to EPA. See 40 C.F.R. § 503.48.

NACWA argues that this limited testing is problematic, implying that if EPA used a limited dataset that is not representative of th e full range of conditions experienced by sewage sludge incinerators, and set MACT floors on that dataset without accounting for th e significant variation in sewage sludge, it could underestimate the emissions limitation achieved by the best-performing incinerators. For example, if the concentration of a pollutant in sewage sludge is lower in the winter but higher in the summer, basing MACT floors only on a dataset of emission te sts taken during the winter

would underestimate the emissions limitation achieved under

the worst foreseeable conditions. Relatedly, if sewage sludge pollutant concentrations are naturally higher at a sewage sludge incinerator in one region versus another incinerator in a different region, NACWA appear s to assert that EPA must

account for these variations in its dataset.

EPA, in addition to respondi ng that the upper prediction limit accounts for variability, as serts that NACWA “fails to explain how the alleged variations in the metals content in60

sludge affects the emissions performance of the best performing units.” Instead, EPA contends, “NACWA simply points to data submitted under the [Clean Water Act] Part 503 regulations without demonstr ating whether and how the pollutant content of sludge affect s emissions.” EPA Br. at 51. EPA further explains that “a ir pollution control devices generally used by the best performing sewage sludge incinerators result in signifi cant pollutant re ductions between the incoming sludge feed and outgoing emissions,” and thus that “any differences in pollutant concentrations in the sludge feed should have minimal impact on emissions because the pollutants contained in the sludge feed itself are removed by air pollution control devices.” Id.

EPA did not cite to the record in its brief for these factual

assertions. Nor are these assertions in the final rule’s section responding to NACWA’s comments on this point, in which EPA responded not that there was a low correlation between emissions and sewage sludge po llutant concentrations, but instead that “[w]e requested additional information in the [notice of proposed rulemaking], but did not receive adequate sampling data from the best-performing sources.” 76 Fed. Reg. at 15,391. Upon review of th e record, the only place we could find support for EPA’s factua l assertion was in its letter denying NACWA’s petition for r econsideration. There, EPA explained that it had collected sludge content data at the same time as the emissions tests, and that because it found a “high reduction in pollutant levels between incoming sludge and

emissions due to add-on contro ls, the variation in the lead content in the sludge . . . di d not affect the emissions performance of those sources.” Joint Appendix 1095 (Letter Denying NACWA’s Petition for Reconsideration).

But even assuming that EPA intended to rely on this assertion in defending its rule making on the cu rrent petition61

for review, it is not clear to us that a rationale offered for the first time in a petition for recons ideration is sufficient to be a ground upon which we can judge the propriety of EPA’s

action. We could find no case discussing the propriety of judging an agency’s action based on a statement made for the first time in a denial of a petition for reconsideration, but it seems to be a weak basis for upholding agency action. This is particularly true when a peti tioner has raised an objection during the comment period th at gave an agency the opportunity to respond to the objection before the denial of

reconsideration. See 76 Fed. Reg. at 15,391 (summarizing several statements from commenters, including that “emissions from [sewage sludge incinerators] are affected not just by control technology but al so by other fact ors including the contents of the sludge that a unit is burning,” and that “the proposed standards does [ sic ] not take into account that [mercury, cadmium, lead, hydr ogen chloride and sulfur dioxide] emissions are a functi on of the sludge content of [mercury, cadmium, lead], chlorine, and sulfur”). A purpose of notice-and-comment provisions under the APA (and presumably of the more elaborate procedural safeguards in § 307 of the Clean Air Act) is “to ensure that affected parties have an opportunity to participate in and influence agency decision making at an early stage, when the agency is likely to give real consideration to alternative ideas.” New Jersey, Department of Environmental Protection v. EPA , 626 F.2d 1038, 1049 (D.C. Cir. 1980). By waiting until the petition for reconsideration to respond to a comment that had been raised during the comment period, EPA de prives the affected party of the opportunity to respond to EPA’s rationale and influence agency action at an earlier stage. Thus, just as we will not entertain an argument raised for the first time in a reply brief to prevent sandbagging of appell ees and respondents, we are

reluctant to affirm based on a f actual assertion raised for the first time in an agency’s denial of a petition for62

reconsideration when the agency had an opportunity to raise that point at an earlier point in the rulemaking process. See Mohamad v. Rajoub , 634 F.3d 604, 608 (D.C. Cir. 2011). On remand, however, EPA may el aborate upon and explain the data that led it to conclude a low correlation between sewage sludge concentrations and emissi ons, using that conclusion to support the reasonableness of its estimate if it finds that approach appropriate.

Because EPA did not provide evidence during rulemaking that there was a low correlation between sewage sludge pollutants and actual em issions, we address EPA’s argument that NACWA did not establish a correlation between sewage sludge pollutant contents and emissions. EPA is mistaken in putting the burden of establishing this

correlation on NACWA. While EPA could arguably have interpreted § 129(a)(2) in a wa y that does not require it to account for variability, in whic h case NACWA would need to argue why EPA’s interpretation is not “based on a permissible construction of the statute,” Chevron , 467 U.S. at 843, having decided to account for variability, and having decided to estimate that variability, EPA bears the burden of demonstrating with substantial evidence that its estimate is

reasonable. See Northeast Maryland Waste Disposal Authority , 358 F.3d at 954. If EPA is arguing its estimated

MACT floors are reasonable ba sed on the assumption that its

limited dataset allows it to account for th e worst foreseeable conditions because sewage sludg e variability will have a negligible effect on emissions , EPA, and not NACWA, bears the burden of demonstrating that this assumption is correct.

EPA’s related argument that NACWA “failed to demonstrate why data from more units across more states during different times of the y ear would have led to a better determination of the best perf ormers, why the representative63

data that EPA did collect prevented EPA from reasonably determining the best performers, or how consideration of [Clean Water Act] Part 503 data or stack test data would have changed the results” suffers from similar flaws. EPA Br. at 52. Although EPA did not have to consider emissions stack test data that commenters submitted without appropriate documentation, see supra at 42, we disagree with EPA that

NACWA has the burden of s howing why more data would better determine best performers. It seems self-evident that more data from a broader span of time would have helped support (or defeat) EPA’s assumptions about the extent to which sewage sludge variability a ffects emission levels, and if EPA wanted to justify a limited dataset from a smaller timespan as being representative, it, and not NACWA, bears the burden of making that demonstration. Moreover, EPA’s argument that NACWA did not demonstrate how more data would have prevented EPA from reasonably determining the best performers is unavailing. The representative data EPA collected did not prevent or assi st it from determining the bestperformers, as EPA had already determined the bestperforming incinerators based on control technology with no additional input from NACWA re quired. In fact, calling the data “representative” implies th at EPA believes it targeted the best performers even regardle ss of what the data actually

showed.

While we agree with NACWA that EPA may have been unduly dismissive of the fact th at there is significant sewage sludge variability within a publicly-owned treatment work,

NACWA’s claim that EPA mu st account for variability

among publicly-owned treatment works raises statutory issues beyond the scope of the issues NA CWA raised in its petition for review. Specifically, by asserting that EPA must account for variability among publicly-owned treatment works because the publicly-owned treatment works have limited64

control over the pollutant con centration in their sewage sludge, NACWA appears to be urging a different interpretation of the “average emissions limitation achieved by the best performing 12 percen t of units” than the one EPA has adopted.

In this rulemaking EPA explai ned that it “is using lowest

emissions limitation as the meas ure of best performance.” 76 Fed. Reg. at 15,389. Thus, by arguing that EPA must account for variability in sewage sludge content over which a publicly-owned treatment work has no control, NACWA is essentially requesting that EPA adopt a different interpretation of the phrase “average emissions limitation achieved by the best performing 12 percent of units.” For example, if an incinerator, through bad luck, receives 100 units of pollutants in its sewa ge sludge, and manages to emit only 50 units of pollutants, it could be said to be a better performer than an incinerato r that receives, through good luck, only 30 units but emits 25 units of pollutants. But under EPA’s interpretation of “best performing,” the reduction in

emissions from uncontrolled conditions to controlled

conditions is irrelevant—the be st-performing incinerators are those that emit the lowest levels of pollutants, and so the

incinerator with an emission leve l of 25 would be the better performer. Where EPA explains that a best performer is determined by its emission level, apparently in absolute terms, the logical consequence of NAC WA’s argument is that the “best performing” incinerators must be those that are the most effective at removing pollutants from incinerated waste before emitting pollutants from the stack. In fact, NACWA expressly states its desire for a different interpretation in its comments on the proposed rule, ex plaining that “[w]ithout the use of long-term data to support the level of emission standards, this variability makes numeric technology-based limits impractical and infeas ible and should provide EPA65

strong motivation to look to othe r regulatory opti ons.” Joint Appendix 671. Relatedly, NACWA’s comments also urged EPA to apply a “variability fact or,” based on the variability in sewage sludge characteristic s, to the stack test data.

While it may be true that a publicly-owned treatment work’s obligation to manage all sewage that enters into the sanitary sewer system distingui shes it from commercial or

industrial incinerators that have more control over what waste they combust, this fact does not present a unique scenario in setting MACT floors. As a c oncurring opinion noted in the

Brick MACT case, there seems to be a paradox in § 112’s directions on setting MACT standards (which is almost identically worded to § 129). See 479 F.3d at 884–85 (Williams, J., concurring). Specifically, the statute “calls for

emissions standards that are the most stringent that EPA finds to be ‘achievable,’ taking into account a variety of factors including cost,” while also requi ring that “the standards ‘shall not be less stringent’ than the emission control that have been ‘achieved in practice.’” Id. at 884 (internal ci tations omitted). Thus, implicit in the statute’s requirements is that the standard for what is achievable will be more stringent than the floors that are based on past achievement. Id. But if meeting the floors is prohibitively costly for an incinerator “because of conditions specific to those plants ,” for example, because “the required technology cannot, given local inputs whose use is essential, achieve the floor,” th en it would seem that what some plants have achieved is not achievable for other plants. As applied here, where incinera tors have limited control over sewage sludge that can vary significantly in its pollutant concentrations, this criticism of the MACT standards seems especially pointed.

Even if this were true, however, NACWA has not argued that § 129 requires EPA to account for variability in sewage66

sludge inputs among publicly-owned treatment works, or that EPA’s interpretation of the statute as basing “best performers” on the “lowest emission levels” is impermissible. Nor has NACWA argued that EPA acted ar bitrarily or capriciously by not basing MACT floors on a mo re “sewage sludge-diverse” dataset or by not applying a variability factor to account for variations in sewage sludge characteristics. Moreover, NACWA’s urging that EPA adopt a variability factor may put EPA in conflict with its own interpretation of what “best performing” means. If EPA app lies a variability factor, based on the heaviest sewage sludge pollutant concentrations experienced by publicly-owned treatment works, to an incinerator for which it has already estimated emission levels under the worst foreseeable circumstances, the MACT floor could no longer be said to re flect what that incinerator “achieved.” Instead, applying a variability factor would be akin to EPA’s approach in other cases to set MACT floors

based on the emissions of the worst performer using MACT technology, which EPA attempted to justify “by claiming that floors must be achievable by all sources using MACT technology.” Cement Kiln , 255 F.3d at 861. While we have recognized the paradox in requiri ng all incinerators to comply

with a floor based on what some incinerators achieved in the past but which may be unachieva ble to other incinerators, we have roundly rejected an inte rpretation of § 129 that would require EPA to set the MACT floors at levels achievable by

all sources. See Brick MACT , 479 F.3d at 880 (“‘EPA may

not deviate from section 7412(d)(3) ’s requirement that floors reflect what the best performers actually achieve by claiming

that floors must be achievab le by all sources using MACT technology.’”) (quoting Cement Kiln , 255 F.3d at 861).

But while we conclude that NACWA has not argued a legal basis for why EPA should account for variability in sewage sludge characteristics among publicly-owned67

treatment works, we are somewhat confused by EPA’s defense of its variability analysis in the final rule, particularly given its statement that it is using the “lowest emissions

limitation as the measure of best performance.” 76 Fed. Reg. at 15,389. In the proposed rule, EPA made no mention of deriving a dataset representative of variability among publicly-owned treatment works. See 75 Fed. Reg. at 63,269– 72. But in the final rule, EP A responded to comments that EPA did not adequately account fo r variability by explaining that it had “gathered [emissions information] from nine

different facilities located in nine different states” and that the facilities surveyed, when “combined together,” “represent sufficient variations in regions, climates and po pulations that adequately incorporates variab ility in wastewater treatment systems across the U.S.” 76 Fed. Reg. at 15,389. “[V]ariations in regions, clim ates and populations,” however, seem irrelevant in the hunt for the lowest emitting

incinerators. See id. If EPA did consider sewage sludge incinerators to be a unique type of incinerator and did seek to develop a dataset that was geographically and demographically diverse, then it should reconcile that goal with its statement that the best-performing units are the lowest emitting. And if EPA does seek to develop a dataset representative of variab ility among sewage sludge incinerators, it needs to address NACWA’s contentions that

some of its MACT floors ar e not actually geographically representative. See NACWA Br. at 33–34 (demonstrating

that fluidized bed incinerato r MACT floors were based only on publicly-owned treatment works in Michigan, Minnesota, Pennsylvania, and North Carolina).

To sum, while we determine that EPA’s use of the upper prediction limit may be lawful, we are remanding this portion of its rulemaking for further e xplanation on the issues of how the upper prediction limit repres ents the “average emissions68

limitation achieved,” how the upper prediction limit is a reasonable method of predicti ng the upper limit of the bestperforming incinerators, and how the upper prediction limit accounts for variability in incine rator performance when it is not based on a dataset represen tative of the best-performing incinerators under the worst-performing conditions. We

further conclude that NACWA’s arguments that EPA must consider variability in sewage sludge characteristics among publicly-owned treatment works are meritless because NACWA has not argued any lega l basis invoking either the statutory language or arbitrary-and-capricious review why EPA is compelled to account for that sort of variability. But

because EPA’s discussion of its efforts to create a representative dataset seems in conflict with its assertion that the best-performing incinerators are those with the lowest emission levels, we also remand for EPA to reconcile this point.

3. Adequacy of the MACT floor dataset

We now address Sierra Cl ub’s and NACWA’s argument that EPA unlawfully and arbitrar ily set certain MACT floors on datasets comprising less than 12 percent of the population of sewage sludge incinerators. In its rulemaking, EPA candidly admitted its data collection efforts yielded a dataset that comprised less than 12 percent of existing incinerators for certain pollutants. See 75 Fed. Reg. at 63,270 (“EPA does not

have actual emissions test data for the population of units that represent the best-performing 12 percent . . . .”). EPA

nevertheless concluded that the lack of data for at least 12 percent of incinerators did not prevent it from setting MACT floors, as it had “conducted a stat istical analysis to verify the minimum number of observations needed to accurately characterize the distribution of the 12 percent of units in each category,” and had determined that the data it used “m[et] or69

exceed[ed] the number of observations necessary to provide an accurate representation of that data.” 76 Fed. Reg. at 15,387. EPA’s only explanation for why its use of this technique was appropriate wa s that “emission data are normally distributed [ i.e. , on a bell curve], or can be transformed to be normally distributed.” Revised MACT

Floor Memo at 8.

On petition for review, NACWA argues that EPA’s

failure to collect sufficient da ta violates § 129, which, unlike § 112, requires EPA to set th e MACT floor on the top 12 percent of performing units wit hout the qualifier “for which

the Administrator has emissions information.” Compare 42 U.S.C. § 7429(a)(2), with id. § 7412(d). Thus, NACWA asserts, EPA may not extrapolat e information about the “best performing units” from less than 12 percent of such units in light of Congress’s unqualified directive on setting solid

waste incinerator MACT floors.

NACWA is incorrect that EPA’s decision to set MACT floors on less than 12 percent of data is per se unlawful. In concluding that the law allows EPA to estimate the “average emissions limitation achieved by the best performing 12 percent of units,” we have not determined any requirement that EPA have at least a representative sample of 12 percent of the population of incinerators . Instead, we have explained that the existing incinerator MACT floor standard “does not by its plain meaning exclude es timation either by sampling or by some other reliable means .” Sierra Club , 167 F.3d at 662 (emphasis added). Thus, the fact that EPA does not possess data directly collected from 12 percent of incinerators does not make its estimate inherently unlawful. Cf. Mossville

Environmental Action Now , 370 F.3d at 1241 (allowing EPA to use one data point—EPA ’s preexisting emission

standard—to establish an ex isting source MACT floor,70

because the preexisting standard was “just barely satisfied by the plant with the lowest overall long term [emission of the pollutant at issue]”).

While NACWA simply asserts EPA cannot lawfully set existing incinerator MACT floor s on fewer than 12 percent of incinerators, Sierra Club goes further and argues that EPA acted arbitrarily and capricious ly in setting MACT floors representative of the best pe rforming 12 percent on less than 12 percent of data. Sierra Club contends that EPA fails to

demonstrate or even claim that “emissions from the units for which it has data are representative of emissions from the ones for which it lacks data,” repeating its argument that

incinerators for which EPA l acks data may be achieving

lower emission levels than those for which it has data. Sierra Club. Br. at 29. This appears to be the equivalent of arguing that EPA cannot compound its error in estimating the best performing 12 percent by assuming that an imperfect dataset can represent other potentially superior incine rators that

should be included in th e top 12 percent.

The point that errors in one estimate will be further compounded by another estimate is a fair one. If the MACT technology approach to selecting best performing incinerators was 75 percent accurate, and EPA’s statistical equation represented a larger sample si ze with 80 per cent accuracy, each estimate, alone, may be sufficiently reasonable. But if EPA combined the two and applied an 80 percent accurate formula to a 75 percent accurate estimate of best performers based on technology, the underl ying result may be too imprecise to be considered reas onable. And this does not even

account for the fact that EP A’s MACT floor methodology layers another estimate—the upper prediction limit—to account for variability.71

Sierra Club is also corre ct that EPA has “base[d] estimates of the performance of one group of units on the performance of a different gr oup without demonstrating that this approach yields accurate es timates.” Sierra Club Br. at 29. EPA did so in this case by using a statistical formula for determining the minimum number of observations necessary to adequately characterize the population of the best performing 12 percent of un its, which is as follows:

݊ ൌ ܼܰ ଶ ݍ݌

ܧ ଶ ሺ ܰെ1 ሻ ൅ ܼ ଶ ݍ݌

Revised MACT Floor Memo at 8. In this formula, n represents the minimum number of observations required, N represents the population size, Z represents a value associated with a specific confidence level, E represents the level of precision or error tolerance, p represents the degree of variability in observations, and q represents one minus p . We

note that none of the variables in this formula are fixed or based on the dataset, aside from N , the population size, leaving EPA to select the value for most variables; in this case, a 90% confidence level, a precision level of 20%, and a degree of variability of 0.5. Revised Mact Floor Memo at 8–

9.

The flexibility in defining variables in this formula is of some concern, as the reasonableness of EPA’s statistical extrapolation depends on variable s for which EPA sets values. Our confidence in this statistical methodology is hardly heartened by the fact that the minimum number of observations EPA calculated (11 fo r fluidized bed incinerators and 14 for multiple hearth incinerators), were both just one shy of the number of observati ons EPA actually collected for the pollutant with the least amount of test data (12 for fluidized bed incinerators and 15 for multiple hearth72

incinerators). Revised MACT Floor Memo at 9. To illustrate

how much the result can var y, had EPA chosen a precision level of 15% instead of 20%, the minimum number of observations required for fluidi zed bed incinerators would

have increased from 11 to 14. Changing the specific

confidence level from 90% to 95% 3 increases the minimum

number of observations from 11 to 13. 4 To EPA’s credit, it chose a value for variability that would maximize the number of observations required, and e xplained it chose that value to

overestimate the number of mi nimum observations needed.

Revised MACT Floor Memo at 8–9. But for the rest of the variables, EPA selected valu es which could have been determinative of the validity of its dataset without explaining why it selected those numbers. That EPA could have determined the statutory sufficiency of its dataset by choosing

values does not mean that EPA did so, but at a minimum EPA must explain why it chose the values it did. “[A]n agency may not pluck a number out of th in air when it promulgates rules in which percentage terms play a critical role.” WJG Telephone Co. v. FCC , 675 F.2d 386, 388–89 (D.C. Cir. 1982).

3 In entering values into EPA’s statistical equation, we assumed a

Z-score for a 95% confidence level as 1.960. See http://people.richland.edu/james/lecture/m170/ch08-int.html (noting the 90% confidence level Z-score is 1.645, the same used by EPA to calculate the minimum number of observations required in its MACT floor analysis); see Revised MACT Floor Memo at 8.

4 As in Sierra Club , we note that “[o]ur observations are based on our own analysis of EPA’s data , and we may have omitted some crucial step in the process.” 167 F.3d at 664. But as we also noted

in Sierra Club , and will explain in more detail, this “exercise highlights the need for additional explanation even if our calculation is wrong.” Id.73

In addition to not explaining why it chose the values it did for its statistical equation, EPA has not clarified how this

statistical method can allow a lim ited dataset to approximate a larger portion of the populati on. In laying out the equation, EPA cited a study titled “Sample Size Requirements for Studying Small Populations in Gerontology Research” from the journal “Health Services Outcomes Research Methodologies.” S ee Revised MACT Floor Memo at 8, 18. But EPA provided no justificati on for how this equation could allow it to extrapolate the best performing 12 percent from an insufficient dataset, other than to state, “Because the emission data are normally distribute d, or can be transformed to normally distributed . . . a st atistical technique can be employed to determine the minimum number of observations needed to accurately characteri ze the distributio n of the best performing 12 percent of units.” Revised MACT Floor Memo at 8. As we explained with th e upper prediction limit, while it is true that we “owe particular deference to EPA when its rulemakings rest upon matters of scientific and statistical judgment within the agency’s sphere of special competence and statutory jurisdiction,” EP A must still articulate a

“rational connection between th e facts found a nd the choice

made.” Burlington Truck Lines , 371 U.S. at 168; American

Coke & Chemicals Institute , 452 F.3d at 941. If EPA chooses

to use statistics as a shortcut for meeting th e Congressional mandate to set MACT floors, it must justify its statistical analysis with greater detail than “a statistical technique can be employed” when “data [are] nor mally distributed.” Although

EPA does not need to fill the Fe deral Register with treatises on statistics, it must specify in greater detail why the equation it is using can accomplish the pu rpose for which EPA is using the equation. This is not only required as part of EPA’s obligation to demonstrate the reasonableness of its estimates with substantial evidence, but also to prevent an agency from74

using opaque statistical justificat ion to cover a deficiency in

its dataset.

As with the upper prediction limit, EPA’s use of this statistical technique is not unlawful as long as EPA can

demonstrate with substantia l evidence why it reasonably estimates the performance of inci nerators for which it has no

data. Because this demonstrat ion requires more detail than EPA gave here, we remand this portion of the rulemaking for further explanation on why EPA can use this formula to estimate gaps in its data a nd an explanation of why EPA

chose the variables it did.

4. Incorporating non-detect data

Sierra Club challenges EPA’ s method of accounting for

certain emissions data that wa s not quality-assured. When collecting data on certain pollutants from sewage sludge incinerators, EPA encount ered “non-detect data”— i.e.

, emission levels too low to register in an emissions test. See Revised MACT Floor Memo at 14–15. In the rulemaking, EPA explained that it would us e a two-part test based on the method detection level, which is the “minimum concentration of a pollutant that can be meas ured with confidence that the level is greater than zero.” EPA Br. at 61 n.20; Revised

MACT Floor Memo at 14–15.

Because the method detecti on level varies depending on several factors, EPA first established a value it termed the “representative method detecti on level,” which it defined as “the highest test-specific met hod detection level reported in a data set that is also equal to or less than the average emission

calculated for the data set.” Revised MACT Floor Memo at 14–15. In other words, if a specifi c emissions test registered a non-detect at a value higher than the average emission level,75

EPA excluded it as a candidate for the representative method detection level to “minimiz[e] the effect of a test[] with an inordinately high method detection level.” Id.

The second step in incorporat ing non-detect data was to multiply the representative me thod detection level by three and compare it to the calculated floor emission limit for that pollutant. Id. EPA’s rationale for choosing to multiply the representative method detection level by three, rather than using the method detection leve l itself, was to reduce the effect of measurement imprecisi on. EPA explained that at

values around the method dete ction level, measurement imprecision is around 40 to 50 percent. Id. at 14. As values

increase above the method de tection level, the testing becomes more accurate, with around 10 to 15 percent measurement imprecision at th ree times the method detection

level. Id.

If the calculated emission limit was greater than the representative method detect ion level times three, EPA concluded that its calculation adequately addressed measurement variability, and th us would set the calculated

emission limit as the MACT floor. Id. If the calculated emission level was less than the representative method detection level, EPA concluded that its calculation did not adequately account for measur ement variabil ity, and the representative method detec tion level would become the

MACT floor. Id. EPA used this method to set the four out of the forty MACT floors it established for sewage sludge

incinerators. See Revised MACT Floor Memo at 19.

Sierra Club argues that EP A’s method of incorporating

non-detect data is unlawful b ecause it does not reflect what the best performers actually achieve, as required by § 129(a)(2). See Brick MACT , 479 F.3d at 880 (interpreting §76

112). Sierra Club also cont ends that the three times representative method detection level value is not a

reasonable estimate of the emi ssion levels achieved by an incinerator when a test pr oduces non-detect data.

We agree with EPA that its method of incorporating nondetect data is reasonable, and not arbitrary or capricious. We do not expect EPA to perform the impossible, s ee Cement

Kiln , 255 F.3d at 871, and that includes recording emission levels that are not accurately detectable with its current emissions testing technology. As EPA explains the issue, emission levels from zero up to some value above the method

detection level cannot be stated with accuracy. Because any emission level EPA selects at that point will necessarily be an estimate, EPA adopted a met hod to account for measurement imprecision that has a rational ba sis in the correlation between

increased emission values and increased testing precision.

Although Sierra Club argued in its comments that EPA should have at the very least assumed that non-detect data was at the detection limit, it did not offer any evidence that EPA was incorrect in explaining why, given the measurement imprecision at the method detec tion level, a n on-detect test run would always yield emissi ons data below the method detection level. Because we owe significant deference to EPA in areas of its technical expe rtise, we reject Sierra Club’s challenge to EPA’s method of addressing non-detect data.77

C. S ETTING C ERTAIN N EW M ULTIPLE H EARTH
I NCINERATOR MACT F LOORS AT E XISTING M ULTIPLE
H EARTH I NCINERATOR MACT F LOOR E MISSION
L EVELS

Although EPA had explained in its proposed rule that it was proposing new incinerator MACT floors for all sewage sludge incinerators based only on fluidized bed incinerator emission data, in the final rule it set separate new incinerator MACT floors for both subcategor ies in response to industry

commenters. See 76 Fed. Reg. at 15,384. When EPA applied the upper prediction limit to the best performing multiple hearth incinerator for each po llutant, however, it yielded new multiple hearth incinerato r MACT floors for hydrogen

chloride and sulfur dioxide th at were higher than than the existing multiple hearth incinerator MACT floors. See 76 Fed. Reg. at 15,388–89. Reasoning that new incinerator

MACT floors could not be le ss stringent than existing incinerator MACT floors, EPA set the new multiple hearth

incinerator MACT floors for hydrogen chloride and sulfur dioxide at the existing multiple hearth incinerator MACT

floors. See id.

Sierra Club challenges th is decision, arguing, among other things, that this decision does not at all attempt to satisfy § 129(a)(2)’s requirement that the new incinerator MACT floor be set at the level the best-controlled units actually achieved. But because we are remanding the portions of EPA’s rulemaking establishing the upper prediction limit, in part to further explain why th e upper prediction limit is a reasonable estimate given that it can fluctuate so much depending on variability, we declin e to consider Sierra Club’s challenge at this time.78

D. B EYOND

- THE -F LOOR S TANDARDS

In the final rule, EPA explaine d that it chose not to adopt beyond-the-floor standards for existing incinerators, primarily

based on its determination that additional control technologies would not be cost-effective, and mentioned nothing about setting beyond-the-floor standard s for new incinerators. 76 Fed. Reg. at 15,394. Sierra Club challenges EPA’s

determination not to set be yond-the-floor standards for existing units based on cost-e ffectiveness considerations. Sierra Club also challenges EPA’s decision not to set beyondthe-floor standards for new multiple hearth incinerators even though it provided no comment on th is issue, explaining that because EPA did not adopt new multiple hearth incinerators MACT floors until the final rule it was impracticable to do so.

See 75 Fed. Reg. at 63,272 (deciding to set all new sewage sludge incinerator MACT floors at the level of the bestperforming fluidized bed in cinerators); 42 U.S.C. § 7607(d)(7)(B).

1. Deciding not to set beyond-the-floor standards for existing units

In challenging EPA’s decision not to set be yond-the-floor standards for existing units, Sierra Club argues that § 129(a)(2) “unambiguously require s the ‘maximum’ degree of

reduction that can be achieved considering cost and other statutory factors.” Sierra Cl ub Br. at 36. Allowing EPA to determine whether a cost-per-t on reduction is appropriate, Sierra Club asserts, would give EPA greater discretion than § 129 allows, as Congress requires more from EPA in § 129 than to undertake a cost-benefit analysis. But in arguing that EPA abused its discretion in determining the maximum degree of reduction in emissions that is achievable for sewage sludge incinerators, “ taking into consideration the cost of79

achieving such emission reduction ,” Sierra Club must clear a high bar, as we are at our most deferential when an agency is “making predictions, within its area of special expertise, at the

frontiers of science.” See Husqvarna AB v. EPA , 254 F.3d 195, 199 (D.C. Cir. 2001) (quoting Baltimore Gas & Electric

Co. v. NRDC , 462 U.S. 87, 103 (1983)).

EPA argues that § 129(a)(2) does not require it to establish a beyond-the-floor stan dard regardless of costs, explaining that we have upheld a similar cost-effectiveness analysis in the past based on a similarly-worded statute. See Husqvarna , 254 F.3d at 200 (requiring EPA to promulgate

standards that “shall achieve the greatest degree of emission reduction achievable through th e application of technology which [EPA] determines will be available for the engines or

vehicles to which such standa rds apply, giving appropriate

consideration to the cost of applying such technology within the period of time available to manufacturers and to noise, energy, and safety factors associ ated with the application of such technology”) (quoting 42 U.S.C. § 7547(a)(3)). We agree. In Husqvarna , we explained that because the similarly

worded statute did not “manda te a specific method of cost analysis, we find reasonable th e EPA’s choice to consider costs on the per ton of em issions removed basis.” Id. (citing 65 Fed. Reg. 24,300). This applies equally here to EPA’s decision to consider costs on the per pound of mercury

emissions removed basis.

Sierra Club also asserts that EPA’s cost-effectiveness analysis is arbitrary and capricious because EPA only considered the cost of propos ed beyond-the-floor technology options in reductions of mercur y, without also considering the benefit that these proposed tec hnology options would have in reducing other pollutants. Bu t in the proposed rule, EPA

estimated the emission reduc tions to both dioxins and80

mercury from different contro l technology options , attributing the cost solely to mercury because “99.9 percent of the emissions reduction [from applying beyond-the-floor technologies] is associated with [mercury].” 75 Fed. Reg. at 63,277. In the final rule, EPA evaluated adding a fabric filter

in combination with the be yond-the-floor technologies it discussed in its proposed rule, and again attributed reductions solely to mercury. 76 Fed. Reg. at 15,393–94. Although EPA did not explain in the final ru le why it did not consider the cost in terms of pounds removed of other pollutants, its failure to do so was not arbitrary and capricious, particularly given that Congress gave EPA broad discretion in considering whether to go beyond-the-floor. See 42 U.S.C. § 7429(a)(2).

Finally, Sierra Club argues that EPA violated § 129 because it did not consider “methods and technologies for removal or destruction of pollu tants before . . . combustion” as required by § 129(a)(3). As evidence that pre-combustion methods can significantly reduce emission levels, Sierra Club again cites Palo Alto’s comment s in which the city described its source control program. This program involved “assist[ing] in authoring California legislation that eliminated mercury in thermometers, certain switches, and novelty items”; “requir[ing] amalgam sepa rators at dental facilities”; and operating “an ongoing drop-off program for all types of mercury-containing equipment.” Joint Appendix 628–29 (Palo Alto Comments).

EPA responds that § 129 “does not authorize EPA to regulate the sources of sewage sludge under the [Clean Air Act], and no commenter cited any authority to th e contrary,” which was the same position it explained to commenters. EPA Br. at 73; see Joint Appendix 1011. Because § 129(a)(3) is ambiguous as to the extent of pre-combustion emission reduction methods EPA should consider, and because Palo81

Alto’s program goes far beyond th e scope of activities that occur at publicly-owned treatment works and their sewage sludge incinerators, we uphold EPA’s decision not to consider source control in its beyond-the- floor analysis as a reasonable interpretation of § 129.

2. Deciding not to set beyond-the-floor standards for new multiple hearth incinerators

EPA asserts that Sierra Cl ub has waived the issue of beyond-the-floor standards for new multiple hearth incinerators by failing to comment on this issue. We agree. The Clean Air Act’s judicial re view provision limits judicial review to objections “raised with reasonable specificity during the period for public comment.” 42 U.S.C. § 7607(d)(7)(B). If it was “imp racticable to raise such objection within such time” and the “objection is of central

relevance to the outcome of the rule,” an objecting party may petition for reconsideration and we may review a denial of that petition. 42 U.S.C. § 7607( d)(7)(B). If a petitioner has not satisfied 42 U.S.C. § 7607(d)(7)(B)’s exhaustion requirements in raising its obje ctions before EPA, we do not have jurisdiction to hear th at objection on a petition for

review. Portland Cement Ass’n v. EPA , 665 F.3d 177, 185 (D.C. Cir. 2011).

In promulgating the sewage sludge incinerator rule, EPA explained in the proposed ru lemaking that while it was proposing that all new incinera tor MACT floors be based on data from the best-performing fl uidized bed incinerator, it was “aware that owners and operato rs with modified [multiple hearth] units may have concerns regarding meeting the new source limits.” 75 Fed. Reg. at 63,272. In light of that, EPA “request[ed] comment on th[e ] proposed approach,” even providing a proposal of potenti al MACT floor emission limits82

“[t]o assist commenters with th eir evaluation of the proposal.”

Id.

EPA’s request for comment and proposed new multiple

hearth incinerator MACT floors put Sierra Club on notice that EPA was seriously considering deviating from its proposed new incinerator MACT floors for new multiple hearth incinerators. Although the poten tial MACT standards for new multiple hearth incinerators we re more stringent than the

MACT standards EPA ultimatel y adopted, Sierra Club had EPA’s MACT floor dataset, which included raw data from

emissions test and a list of th e control devices used by the units EPA considered the best performing. Compare 75 Fed. Reg. at 63,272 (tabulating proposed new multiple hearth incinerator MACT standards), with 76 Fed. Reg. at 15,388–89 (tabulating final new multiple hearth incinerator MACT standards); see Joint Appendix 607 (S ierra Club comments citing EPA’s MACT floor analysis and commenting on EPA’s dataset).

While it is true that “we do not require telepathy,” and are reluctant to require advo cates for affected groups to anticipate every contingency le st we encourage strategic vagueness by agencies, we neve rtheless “require some degree of foresight on the part of commenters.” Portland Cement

Ass’n , 665 F.3d at 186. Because Sierra Club was on notice that EPA was considering setting new multiple hearth

incinerator MACT floors and because it had access to the dataset EPA would use in setting new multiple hearth incinerator floors, we conclude that it was practicable for

Sierra Club to comment on be yond-the-floor standards for new multiple hearth incinerator MACT floors. Accordingly, we will not consider Sierra Club’s argument regarding new multiple hearth incinerator beyond-the-floor standards. See 42 U.S.C. § 7607(d)(7)(B).83

E. S UBCATEGORIZING S EWAGE S LUDGE I NCINERATORS

NACWA challenges EPA’s decision to create only two subcategories for sewage sl udge incinerators. In its rulemaking, EPA proposed sub categorizing sewage sludge incinerators into multiple hearth and fluidized bed incinerators, and proposed no other categories or

subdivisions. See 75 Fed. Reg. at 63,268. EPA invited comment on whether other combustor designs were used at sewage sludge incinerators, requesting emissions information from stack tests conducted on those designs. Id.

Commenters responded and re quested that EPA further subcategorize “based on size of the [sewage sludge incinerator], type of sewage sludge incinerated, limited use units, and distance over which the [incinerator] would need to transport its sludge for dispos al.” 76 Fed. Reg. at 15,384. But EPA adopted only the two subcategories it proposed, explaining that it did “not have data to support distinguishing units based on class, type, or size,” and that “[w]ithout such information,” it did “not have a basis for concluding that these types of units should be based in a different subcategory.” Id.

NACWA challenges EPA’s decision not to subcategorize further, asserting that it had identified “back-up and emergency” sewage sludge incinerators, and other unique categories, that would have a difficult time meeting the sewage sludge incinerator rule’s testing obligations. As its legal basis, NACWA asserts that EPA failed to respond adequately to its substantiv e comment, as required under 42 U.S.C. § 7607(d)(6)(B), and that EPA’s claim that it did not have data is arbitrary because commenters had submitted information about these special-use sewage sludge

incinerators.84

We agree with EPA that its decision to create subcategories only for multiple hearth and fluidized bed incinerators was not arbitrary or capricious. We have held that EPA has authority to subcategorize within Congressionally mandated cate gories under § 129(a)(2). See Northeast Maryland Waste Disposal Authority , 358 F.3d at

946–47. We have also held th at EPA’s subcategorization authority under § 112 involves an expert determination, placing a heavy burden on a challenger to overcome

deference to EPA’s “articulated rational connection between

the facts found and the choice made.” NRDC v. EPA , 489 F.3d 1364, 1375 (D.C. Cir. 2007).

EPA’s decision here appear s well within its expert determination. Perhaps recognizing the deference we owe EPA in its decision to subcategorize, NACWA does not challenge EPA’s authority to do so, but instead asserts procedural challenges. We do not find these challenges meritorious. EPA rationally st ated its policy to require

emission information from stack tests on the combustion designs that commenters wanted EPA to accommodate into a separate subcategory. Although NACWA identified different classes of incinerators and discussed differences in sewage sludge variability that it felt justified further subcategorization, it does not c ite any emissions information from stack tests it submitted for the special-circumstance sewage sludge incinerators for which it desired subcategorization. EPA “was not obligated under its policy” to create new subcategories or to offer a further response on NACWA’s request for further sub categorization, and we will uphold its decision not to creat e additional subcategories beyond the multiple hearth and fluidized bed incinerators.

See Edison Electric Institute , 2 F.3d at 449.85

F. M ONITORING

Section 129(c) requires incine rator operators “to monitor

emissions from the unit at the point at which such emissions are emitted into the ambient air . . . and at such other points as

necessary to protect public health and th e environment,” and “to monitor such other parameters relating to the operation of the unit and its pollution cont rol technology” as EPA deems appropriate. In the final rule, EPA required all new and existing sewage sludge incinerators to “demonstrate initialand annual compliance with the emission limits using EPAapproved emission test methods .” 76 Fed. Reg. at 15,377. EPA gave existing incinerato rs the option of continuous emissions monitoring in lieu of initial and annual tests, and required continuous parameter monitoring. Id. For new incinerators, EPA made con tinuous emissions monitoring mandatory for carbon monoxide, and optional for other pollutants in lieu of initial a nd annual emissions testing, and required continuous parameter monitoring. Id.

Sierra Club argues that EPA violates the statute by only requiring parameter monitoring and not mandating continuous emissions monitoring for all pollutants on all incinerators. EPA responds that Congress gave it the discretion to require parameter monitoring as appropria te, and that its combination of initial and annual emissions testing combined with parameter monitoring serves to meet § 129’s monitoring requirement. We agree with EPA that § 129(c)(1) does not require continuous emissions monitoring and that its monitoring requirements in the se wage sludge incinerator rule satisfy § 129’s statutory requirement.

Under 42 U.S.C. § 7661c, EPA “may by rule prescribe procedures and methods for determining compliance and for monitoring and analysis of po llutants regulated under this86

Act, but continuous emissions monitoring need not be required if alternative methods are available that provide sufficiently reliable and timely information for determining compliance.” 42 U.S.C. § 7661c(b). Although this section appears to clarify the Clean Air Act’s mandate that EPA’s permit programs include monitoring and reporting requirements, it is evidence s upporting EPA’s interpretation of § 129’s monitoring requirement as requiring assurance of compliance with emission standards, but not continuous emissions monitoring. Sierra Club provides no legal authority to the contrary. Determining whether specified testing and monitoring requirements assure compliance with EPA’s emission standards “requires a high level of technical expertise,” and because Sierra Club has not given us any reason to doubt that EPA’s requirements will effectively assure compliance, “we must defer to the informed

discretion” of EPA. National Lime , 233 F.3d at 635 (quoting Marsh v. Oregon Natural Resources Council , 490 U.S. 360, 377 (1989)).

III. MAXWEST’S INTERVENTION

MaxWest Environmental Systems, the developer of a “proprietary biosolids management process that converts biosolids into syngas,” used in units MaxWest terms as “gasifiers,” challenges EPA’s tr eatment (or lack thereof) of gasifiers in the final rule. See Intervenor MaxWest Br. at 1–2, 9–21. EPA asserts several grounds why we need not reach MaxWest’s arguments, including that MaxWest lacks standing and that the issues it raises are outside the scope of those raised by the petitioners.

“[B]ecause Article III standing is a prerequisite to a federal court’s exercise of ju risdiction,” we “cannot proceed at all in any cause” unless we first determine that a party87

seeking to be heard has satisfied the three-part test of Lujan

. Sinochem International Co. v. Ma lay International Shipping Corp. , 549 U.S. 422, 430 (2007); New England Power

Generators Ass’n v. FERC , 707 F.3d 364, 368 (D.C. Cir. 2013). But while we cannot assu me hypothetical jurisdiction

to decide the merits of a cas e, we have leeway “to choose among threshold grounds for denying audience to a case on the merits” because “jurisdiction is vital only if the court proposes to issue a judgment on the merits.” Sinochem , 549 U.S. at 431 (internal alteration omitted) (quoting Intec USA

, L.L.C. v. Engle , 467 F.3d 1038, 1041 (7th Cir. 2006)). Thus,

we need not resolve MaxWest’s standing to intervene if we can dispose of its interventi on on another threshold ground that does not require us to reach the merits of MaxWest’s

arguments. See id. (explaining that a federal court need not determine whether it has jurisdiction when deciding, for example, not to exercise suppl emental jurisdiction over state law claims on discretionary gr ounds or to abstain under Younger v. Harris ).

The alternative threshold ground for rejecting MaxWest’s intervention is that MaxWest’s issues are outside the scope of those raised by NACWA. None of the six petitioners’ briefs

filed in this case mention MaxW est’s gasification process. When we allowed MaxWest to intervene out of time, we

warned it that “an interveni ng party may join issue only on a matter that has been brought before the court by another party.” NACWA v. EPA , No. 11-1131, Doc. 1344244 at 2 (D.C. Cir. filed Nov. 28, 2011) (citing Beethoven.com LLC v. Librarian of Congress , 394 F.3d 939, 946 (D.C. Cir. 2005)). MaxWest has not heeded our warning. Its bare assertion that

it modeled its statement of issues after NACWA’s does not change the fact that its substantive arguments are unrelated to the issues raised by NACWA and Sierra Club. See MaxWest88

Reply Br. at 8–10. Therefore, we will not consider MaxWest’s arguments.

IV. CONCLUSION

For the foregoing reasons, we remand to EPA portions of its rule for further explanati on without vacating the current MACT standards. Specifically, we direct EPA to clarify why

its Clean Water Act Part 503 re gulations control for other non-technology factors. We also direct EPA to clarify issues related to its upper prediction limit and variability analysis. In particular, EPA should expl ain why the up per prediction limit represents the “average emissions limitation achieved by the best performing 12 percen t of” incinerators; why the upper prediction limit reasona bly estimates the worst foreseeable operating conditions; and why the upper prediction limit can account fo r more than intra-unit variability, as EPA claimed it could on petition for review. Finally, we direct EPA to elaborate on how it can use a

statistical method to determine whether a limited dataset is representative of incinerators for which it has no data, and to explain why it chose the variables it did for that statistical analysis. 5

In all other respects, we uphold EPA’s rule against the petitioners’ challenges. Because the issues MaxWest raised in

its intervenor brief are outsi de the scope raised by the petitioners, we do not c onsider its arguments.

So ordered

.

5 We do not, of course, mean to suggest that EPA is bound to reach the same conclusion upon reexamination of the record for purposes of explanation. Should EPA find itself unable to support its conclusions, it is, of course, free to reach different ones.