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Pillsbury Winthrop Shaw Pittman LLP 2300 N Street, NW I Washington, DC 20037-1122 1 tel 202.663.8000 1 fax 202.663.8007

Peter Wyckoff Phone: 202.663.8856 peter.wyckoff@pillsburylaw.com



### March 10, 2011

VIA EMAIL AND FIRST-CLASS MAIL


### Peter Tsirigotis, Director Sector Policies and Programs Division Mail Drop D205-01 U.S. Environmental Protection Agency Research Triangle Park, NC 27771

Re: Grandfather Exemptions for Kilns in Brick MACT Rulemaking

Dear Mr. Tsirigotis:

I am writing on behalf of the Brick Industry Association (BIA) to ask EPA to include a "grandfather" exemption in its upcoming proposal of MACT standards for the Brick and Structural Clay Products Manufacturing (BSCP) category. Such an exemption is one way to mitigate the impact of a decision by EPA, if it occurs, to base the stringency of the upcomingMACT proposal partly on reductions engendered by the vacated Brick MACT standard — the socalled "MACT-on-MACT" approach, which BIA regards as unfair and unlawful. I understand that BIA and your staff are exploring other ways of mitigating the impact of that approach.

BACKGR4UND

BIA very much appreciated the confirmation in Janet McCabe's letter of December 8, 2010, to Susan Miller that: "EPA seeks to avoid creating circumstances where any future rule would result in replacement of technology rather than optimization of that technology or incremental performance improvements through additional controls." Grandfathering is a readily available regulatory tool for keeping the eventual MACT standards for BSCP units firom forcing the unwarranted replacement of one control technology with another.

According to BIA, many, if not all, of the existing major-source tunnel kilns that were required by the 2003 Brick MACT standard to install control technologies, such as DLAs, remain subject to Title V permit conditions requiring the continued operation of those control technologies, even though the D.C. Circuit vacated that standard in 2007. Indeed, EPA has keptMr. Peter Tsirigotis

March 10, 2011 Page 2

the 2003 standard in the Code of Federal Regulations without any indication that it has been vacated, perhaps in an attempt to buttress those Title V permit conditions. See 40 CFR §§ 63.8380 et seq. In any event, the upcoming Brick MACT might be stringent enough to require those same kilns to remove the existing technology and substitute more stringent controls, such as DFFs. Grandfathering is well suited to prevent such a"replacement of technology," to use Ms. McCabe's wording.

LEGAL BASIS FOR A GRANDFATHER EXEMPTION

EPA llas authority, and indeed a legal obligation, to protect tunnel kilns in those circumstances. The logic fiom a legal standpoint is as follows:

Although the Clean Air Act (CAA) expressly authorizes the D.C. Circuit to review and overturn a MACT standard, it is silent on the parameters EPA must follow in responding to a mandate of the D.C. Circuit that, as is customary, simply vacates and remands the standard. Certainly, there is nothing in the CAA that explicitly requires EPA to apply a replacement MACT standard retroactively to kilns that in effect have remained subject to the vacated standard through the operation of the Title V permitting prograrn. While the vacatur of a MACT standard might be seen as returning EPA to the status quo ante with respect to the dictates of section 112, this view fails to take into account the practical reality that, as is the case with the vacated Brick MACT, the original promulgation did happen and did have real world impacts, such as engendering the installation of control equipment and continued enforcement through Title V permitting. Congress in fashioning section 112 simply did not address that contingency explicitly.

In these circumstances, where there is a gap in the statutory fabric, EPA may fashion its own regulatory parameters so long as the parameters reasonably reflect and accommodate the language, structure and purposes of the CAA. See genej-ally Whitman v. Amef-ican TYuckingAssociations, Inc., 531 U.S. 457 (2001); Clzevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984). As you know, grandfather exemptions are a common feature of EPA's PSD/NSR regulations, in pai

- t because of the absence in the CAA of specific direction on the retroactive application of new or different permitting requirements. See, e.g., Citizens to Save Spencer -County v. EPA, 600 F.2d 844 (D.C. Clr. 1979). See also EDF v. EPA, 82 F.3d 451, 455-56 (D.C. Cir. 1996) (upholding a grandfather exemption built into EPA's regulation tmpleinenting section 176 SIP conformity requirements).

• Moreover, the federal courts in construing federal statutes have established a strong presumption against retroactivity, which presumption can be overcome only by express statutory language requiring retroactive application of the rule in question. See Landgraf v. USI Film Pfroducts, 511 U.S. 244, 280 (1994). Here, as mentioned, there is no such express statutory language in the CAA.Mr. Peter Tsirigotis

March 10, 2011 Page 3

Many years ago, the D.C. Circuit approved in part a grandfather exemption in EPA's

stack height rule because the relevant portion of the CAA was also silent on retroactivity. In doing so, it pointed to the criteria that had emerged in other cases for justifying agency decisions on prospective versus retrospective application of rules. See Sierra Club v. EPA, 719 F.2d 436, 467-68 (1983). Those criteria provide a"safe harbor" framework for structuring a grandfathering exemption for a MACT standard that is a replacement for a vacated MACT standard. Also, they clearly call for granting grandfather status to the kilns still subject de facto to the 2003 Brick MACT standard through Title V permitting.

In 1994, EPA adopted into a rule implementing section 612 of the CAA a grandfathei - exemption that explicitly employs those criteria. See 59 Fed. Reg. 13044, 13152 (40 CFR §82.184(c)). The exemption remains in effect. See 40 CFR §82.184(c) (2010). Thus, EPA plainly regards the criteria as a sound basis for administering "grandfather" protections.

• In sum, given the silence of the CAA on the vacatur situation, the strong judicial distaste for the retroactive application of new rules, and the criteria applied by the 1983 Sierra Club decision, the D.C. Circuit can be expected to uphold a grandfather exemption for kilns that installed controls in reliance on the 2003 Brick MACT standard and have been required through Title V to keep them in operation despite the vacatur.

BIA would be grateful to hear the reactions of you and your staff to the idea presented here of a grandfather exemption. The prospect of such an exemption would help to allay the strong fears of the brick industry that the upcoming Brick MACT might be overly stringent and rigid. If you have any questions, please let me know. Thank you.

Sincerely, 

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Peter H. Wyckoff

cc: Scott Fulton (EPA-OGC) Janet McCabe (EPA-OAR) Susan Miller (BIA) Terry Schimmel (BIA) Jeff Telander (EPA-OAQPS)