LOIS 

### 1. SCIllFFER Assistant Attorney General Environment & Natural Resources Division United StatesDepartment ofJustice ROBERT R. HOMIAK DAVID ROCHLIN Environmental Enforcement Section Environment andNaturalResources Division United StatesDepartment ofJustice 999 18th Street, Suite 945 North Denver, Colorado 80202 Telephone: (303) 312-7353 PAULM. WARNER, United StatesAttorney (#3389) ERIC A. OVERBY, Assistant United States Attorney (#7761) 185 South State Street, #400 Salt Lake City, Utah 84111 Telephone: (801) 524-5682 Attorneys for the United States ofAmerica IN THEUNITED STATES DISTRICT COURT FORTHEDISTRICT OF UTAH UNITED STATES OF AMERICA, ) Civil ActionNo. ) 1:97-CV-0144-ST Plaintiff, ) 

### ) v. ) 

### ) PHITLIPS PETROLEUM COMPANY, ) Judge Ted Stewart ) Defendant. )


### UNITED STATES' MOTIONFOR SUMMARY JUDGMENT

Pursuantto Rule 56 ofthe UtahRules ofCivil Procedure, Plaintiff, the United States respectfully moves the Court for Summary Judgment in the above-captioned matter. This motion is supported by the memorandum in supportfiled concurrently herewith.

### DATED: December 1999 

### Respectfully submitted, LOIS J. 

### SCHIFFER AssistantAttorneyGene.ral 

### Environment andNatural

### Resources Division U.S. DepartmentofJustice 

# BY.1<JLlb 

# t**t4~1Yw'I~** ROBERTR. 

### HOMIAK Trial 

### Attomey 

### DA 

### VII> ROCHLlN SpecialDOl Attorney EnvironmentalEnforcement Section Environment and Natural

### Resources Division U.S. Departmentof1ustice 999 lStb 

### Street, Suite 900-N Denver, 

### Colorado 80202 (303) 312-7353 

### PAULM. WARNER United States Attorney Districtof

### Utah 

### ERIC OVERBY AssistantUnited States Attorney DistrictofUtah 18S South State Street


# . 

# . SUlte440 

### SaltLake 

### City, Utah 84111 (801) 325-3233

-2­LOIS J. SCHIFFER Assistant Attorney General Environment & NaturalResources Division United StatesDepartment ofJustice
. ROBERT R. HOMIAK DAVIDROCHLIN Environmental Enforcement Section Environment and NaturalResources Division United StatesDepartment ofJustice 999 18th Street, Suite 945 North Denver, Colorado 80202 Telephone: (303) 312-7353 PAUL M. WARNER, United States Attorney (#3389) ERIC A. OVERBY, Assistant United States Attorney (#7761) 185 South State Street, #400 SaltLake City, Utah 84111 Telephone: (801) 524-5682 Attorneys for theUnited States ofAmerica INTHEUNITED STATES DISTRICT COURT FORTHE DISTRICT OF UTAH UNITED STATES OF AMERICA, ) Civil Action No. ) 1:97-CV-0144-ST Plaintiff, ) ) v. ) 

### ) PHILLIPS PETROLEUM COMPANY, ) Judge Ted Stewart 

### ) Defendant. )


### UNITED STATES' MEMORANDUM IN SUPPORT

OFITS MOTIONFORSUMMARY JUDGMENT

### TABLE OF CONTENTS TABLE OF AUTHORITIES 

### a INTRODUCTION 

### i UNDISPUTED FACTS 

### ii A. FACTS RELATED TO THE ISSUE OF THE SRUEMISSIONLIMlT AVERAGINGTIME 

### ii B. FACTS RELATED TO THE ISSUE OF THE SRU EFFICIENCY REQUIREMENT 

### xvii C. FACTS RELATED TO THE ISSUE OF EPA'S RIGHT TO DETERMINE AVOIDABILITY OF BREAKDOWNFOR PURPOSES OF FEDERAL ENFORCEMENT xx**ARG~NT** , .. 1 STANDARD OF REVIEW 1 

### A. PHILLIPS IS SUBJECT TO ANEVER-TO-BE-EXCEEDED HOURLYLIMIT
.. 3 1. INTRODUCTION 3 2. THE STATE CONSISTENTLY ESTABLISHED HOURLYLIMITS FOR THESRU 4 3. UTAH'S REGULATIONS OF OTHER SOURCES IN THE SIP SHOWS IT SET AN HOURLYLIMIT FORPHILLIPS 9 4. THE STATE'S OWNWITNESSES AGREED THAT THE APPROVAL ORDERS ESTABLISHHOURLYLIMITS 11 5. PHILLIPS ITSELF RECOGNIZED THAT THE APPROVAL ORDERS ESTABLISHED HOURLYLIMlTS 13 6. WHAT THE STATEMAYHAVE "INTENDED" IS IRRELEVANT TO THIS PHASE OF THE PROCEEDINGS 20 7. NO UNFAIRNESS TO PHILLIPS RESULTS FROM THE ENFORCEMENT OF 

### MT HOURLY LIMlT 22 A8. SOUND PUBLIC POLICYREQUIRES THAT EPABEABLE TO ENFORCE THE SIP AS WRITTEN 23 B. PHILLIPS IS REQUIRED TO ACHIEVE 95% EFFICIENCY AT ITS SRU ONA DAJI.,Y BASIS 24 1. THE 

### JULy 1995 APPROVAL ORDERIS CLEAR ONITS FACE 24 2. THE STATE'S WITNESSES AND A KEYPHILLIPS EMPLOYEEHAVE TESTIFIED THAT 95% EFFICIENCY MUST BEMAINTAINED ONA DAJI.,Y BASIS 26 C. UTAH'S JUDGMENTS REGARDING THE AVOIDABILITY OF BREAKDOWNS ARE NOTBINDING ONEPAFORTHEPURPOSES OF FEDERAL ENFORCEMENT 28 1. THEUTAHEXCESS EMISSIONS BREAKDOWN RULE DOES NOT PREVENT EPAFROMEXERCISINGINDEPENDENT JUDGMENT ABOUT WHICHBREAKDOWNS ARE AVOIDABLE 28 2. NOTHINGPREVENTS EPAFROMEXERCISINGINDEPENDENT JUDGMENT ABOUT WHICH CEM BREAKDOWNS ARE AVOIDABLE
.. 31 CONCLUSION 33

BTABLE OFAUTHORITIES FEDERAL CASES

. American Cyanamid Co. v. US. EPA, 810 F.2d 493,496 (5th Cir. 1987) 29

American Lung Ass'n orN. 

### I. v. Kean, 670 F. Supp. 1285, 1291 

### (D.N.I. 1987) 29 Anderson v. Liberty Lobby, Inc., 477 US. 242 (1986) 1 Bragdon v. Abbott, 524 US. 624,625 (1998) 29 Chevron, US.A. v. Natural Resources Defense Council, 467 US. 837, 844 (1984) 2 Duquesne Light Co. v. U.S. EPA, 698 F.2d 456,471 (D.C. Cir. 1983) 23 FDIC v. Canfield, 967 F. 2d 443 (10th Cir. 1992) 24 NavistarInternational Transportation Co. v. EPA, 858 F. 2d 282, 284 (6th Cir. 1988) 2 Train v. NRDC, 421 U.S. 60(1975) 10 US. West, Inc. v. FCC, 182 F. 3d 1224 (10th Cir. 1999) 2 Union Electric Co. v. EPA, 515 F.2d 206,211 (8th Cir. 1975), aff'd 427 US. 246 (1976)
..... 2 United States v. Congoleum Corp., 635 F. Supp 174, 177 n.4 (E.D. Pa. 1986) 3 United States v. Ford Motor Co., 814 F.2d 1099, (6th Cir.) cert. denied, 484 US. 822 (1987) 23 United States. v. SCM Corp., 615 F. Supp. 411,419 (D. Md. 1985) 30 United States v. VistaPaint Corp., 42 ERC 2020, 1996 WL 477053, 15 (C.D. Calif. 1996), aff'd 129 F. 3d 129 (9th Cir. 1997), cert. denied,119 St. Ct. 53 (1998) 30,31 Unitek Environmental Services, Inc. and Unitek Solvent Services, Inc. v. Hawaiian Cement, 27 ELR 20483 (D. Haw. 1997) 33



### a

### FEDERAL STATUTES 42 US.C. §§7401 II 

### 42 U.S.C. §7409 ' ii 

### 42 US.C. §7410(a)(2) iii 

### 42 US.C. §7410(k) " iii, 

### 2 42 US.C. §7410(k)(5) 29 42 US.c. §7410(p) 29 42 US.c. §7413(e) 21 42 U.S.C. §7413(e)(1) 30 42 U.S.C. §7414 , ix 42 U.S.C. §7502(c)(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. XVlll FEDERAL REGULATIONS 

### 40 C.F.R. §50.6 ii 

### 40 C.F.R. 

### Part 51 31,32 57 Fed. Reg. 60149 , iv 59 Fed. Reg. 35036 iv, vi, 4,7 59 Fed. Reg. 35042 4 59 Fed. Reg. 35044 vii
REGULATIONS 

### UACRR307-1-4.7 (1992) XX,28 UACR 307-1-4.6.3 32

b

### I. INTRODUCTION This case involves air pollution from the refinery which is owned and operated by Defendant Phillips Petroleum Company ("Phillips") in Woods Cross, Utah. Such air pollution is regulated by the federal Clean Air Act ("the Act"). The issues in Phase I ofthis proceedingl
concern theproperinterpretation ofthe Utah State Implementation Plan ("SIP"), which was approved pursuant to the Act, and various permits (which Utah calls "Approval Orders") issued to Phillips pursuant to the SIP. Defendant portrays this case as one in which the company is "caught in a regulatory 'no man's land"' between the U.S. Environmental Protection Agency ("EPA") and the State ofUtah Department ofEnvironmental Quality ("State" or "DEQ"V On the contrary, this case is about a facility which has been operated for several years in a haphazard manner, in violation ofvarious environmental requirements established to protect public health. Once EPAbegan acting to correct the company's careless behavior, Phillips concocted a number ofpost hoc explanations of why its excess emissions and large number ofemissions monitor breakdowns should not be considered violations. High State officials have generally adoptedPhillips' suggestions (with
some notable dissent from lower-level personnel, detailed below), despite the plain language of the SIP and the permits which conflicts with Phillips' interpretations. Becausethere are no issues ofmaterial fact in dispute, the United States is entitled to judgment as a matter oflaw that: 1) the SIP and Approval Orders issued to Phillips require that the Woods Cross refinery meet hourly sulfur dioxide limits at the Sulfur Recovery Unit ("SRU");

1 See Exhibit 1, Order ofBifurcation, filed May26, 1999.
2 See, Phillips' second Motion for Partial Summary Judgment, p. v.2) Phillips is required to meet or exceed 95% efficiency at its SRU every day; and 3) Utah's judgments regarding the avoidability ofbreakdowns are notbinding onEPAfor purposes of federal enforcement. 

### II. UNDISPUTED FACTS Pursuant to DUCiv. R. 56-1, theUnited States sets forth the following undisputed facts
as a foundation on which this Motion should be considered. 

### A. FactsRelated to the Issue ofthe SRU Emission LimitAveraging Time 1. TheUnited Statesbrought this action against Phillips under the federal Clean Air Act. 3 Pursuant to §109 ofthe Act,4 EPAhas set National Ambient Air Quality Standards ("NAAQS") for various airpollutants, including particulate matter. The NAAQS for particulate matteris called the PMlO NAAQS because particles 10 microns or smaller in diameter are being regulated. This is the size ofparticles which can be inhaled into the human lungs and cause health problems. EPA adopted the PMlO NAAQS in 1987, establishing annual and daily limits of50 and 150 micrograms per cubic meter, respectively. S 2. Ifa portion (or all) ofa State exceeds the NAAQS for a particular pollutant, the Act requires the State to develop a plan, called a State ImplementationPlan or "SIP," to show howthe NAAQS will be met and maintained. 6 The Act gives EPAthe responsibility of

3 42 US.C. §§7401 etseq.
4 42 US.C. §7409.
S 40 C.F.R. §50.6.
6 42 US.C. §7410.
11reviewing the State's proposed SIP to ensurethat it meets the criteria in §110(a)(2) ofthe Act, 42 U.S.C. §7410(a)(2).7 Thus Congress gave the Statetheinitial choice ofwhat control strategyto employ in cleaning up its air but gave EPAthe role ofoversight, to be
sure that theNAAQS would actuallybe attained. 3. In the late 1980's, ambient air monitors showed that Salt Lake and Utah counties were not meetingthePMIO NAAQS, for as many as twenty days per year, especially in the winter. In 1989 three citizen groups filed a lawsuit against EPA. 8 The plaintiffs claimed that, becausethe State had failed to submit a PMIO SIP within the time allowed by the Act, the duty to issue such a plan had devolved to EPA. The parties signed a settlement agreement in January 1990 which called for submittal ofa SIP by UtahtoEPA, orEPApromulgation ofaFederal Implementation Plan, ifnecessary, by December 31, 1991. The settlement allowed the State to maintain the SIP development lead but emphasized EPNs involvement and technical oversight.9 4. There were many contributors to the PMIO problem along theWasatchFront, but the State determined that among others, the five petroleum refineries, including Phillips, would be required to reduce their emissions ofsulfur dioxide in orderto meet thePMlO NAAQS. In the atmosphere, sulfur dioxide sometimes converts into SUlfates, a type ofPM10' especially in relatively cold, damp conditions such as occur in the SaltLake area in the winter. It is also during the winter that the WasatchFrontis most likely to experience air temperature
7 42 U.S.C. §741O(k).

8 Preservation Council et at. v. Reilly, Civil Action No. 89-C-262-G (D. Utah).
9 Exhibit 2 at 2-3.
111inversions, correlated with low winds, trapping PMlO and otherpollution in the metropolitan area and increasing the probability ofNAAQS exceedances.Io 5. The Governor sent Utah's PMlO submittal to EPAfor approval in November 1991. EPA proposed approval ofthe plan in 199211 and issued its final approval in July 

### 1994.12 By virtue ofthe 1994 approval, the SIP became federal law. 6. The SIP requires that Phillips and the otherrefineries operate sulfur recoveryunits to reduce sulfur dioxide emissions.I3 However, for Phillips (and for some other sources), the 1991 submittal did not establish a fully-developed SRUemission limit. Instead, the submittal contained a "placeholder" showing an hourly limit but with no number specified,
as follows:
. The following Non-Emissions Cap sources shall be regulated individually for S02 at the following emission limits: Point Source tons/yr 

## ******** SRUTail Gas Incinerator (limits tobe established during Section 3.1 review)I4 (Emphasis added) Section 3.1 ofthe Utah Air Conservation Regulations (which were also made part ofthe SIP submittal) provides the procedurefor setting emission limits in Approval Orders.
10 Exhibit 3 (SIP Technical SupportDocument) at 40-45.
11 57 Fed. Reg. 60149, December 18, 1992. 12 Exhibit 4,59 Fed. Reg. 35036, July 8, 1994.
13 PMlO SIP, App. A, §2.2.00. The complete SIP is attached as Exhibit 5 14 Id. at App. A, §2.2.00(2)(D).
IV7. The provision ofthe SIP which immediately follows the "placeholder" provision also refers to an "hourly" limit: Stacktesting to determine hourly, daily, and annual compliance for the "non-cap" sources described in number 2D, above, shaH be performed as directed in condition number 5below
. . . .IS (Emphasis added) 8. "Condition 5" reiterates the fact that an hourly limit for the SRUwas to be established: 5. Stack TestingRequirements: The foHowing point sources have been required to comply with various emission rates and concentrations in the paragraphs preceding. The foHowing is [sic] summary ofthe testing methods and frequencies appropriate to each point source. 

## ****** C. SulfurRecovery Unit Tail-gas Incinerator Limitations Test Method Frequency S02 XXX Ib/hr CEM Continuous XXXppmv limits shaH be established through section 3.1 UACR16 (Emphasis added) "CEM" in the "Test Method" column indicates that a "continuous emission monitor" is required. As the name suggests, a CEM is used to measure emissions on a very frequent basis, with tenreadings every hour, which can thenbe averaged to determine anhourly number. 17

IS Id. at A, §2.2.00(2)(E).
16 Id. at App. A, §2.2.00(5).
17 Exhibit 6, Deposition ofConrad Jenson at 563-565.
v9. Nowhere in the PMlO SIP is there any indicationthat S02 emissions from thePhillips SRU
are to be averaged over a 24-hourperiod. There are examples, however, ofindividual emission points at other sources for which 24-hour averages were specified,18 showing that whenUtah wanted to establish a 24-hour average, it knew how to do so. By far the most common type ofemission limit in the PMlO SIP, though, is hourly limits. 19 10. Following the submission ofthe plan to EPA, DEQissued Approval Orders to Phillips and other refineries which filled in the "placeholders," that is, they specified numbers to accompany the pounds per hour averaging time contained in the SIP. DEQ issued an Approval Order to Phillips in July 1992 which established 75.16 lbs./hr. as the SRU S02 emission limit.20 In October 1992DEQ issued a revised Approval OrdertoPhillips which increased the SRUlimit to 95.29 Ibs./hr.21 Neither ofthe 1992Phillips Approval Orders contains a 24-hour average for SRU S02 emissions.

18 See, Exhibit 5 at App. A, §2.2.V.B.l.B (Kennecott smelter main stacklimited to 5700Ibs./hr. ofS02, "24 hour average (calendar day)"; App. A, § 1.2.F.2.K (Geneva Steel coke. plant SRU and coke oven gas limited to 104.5Ibs./hr. ofS02"averaged over 24 hours using CEM"); and App. A, §2.2.M.2.B.2 (Englehard Stack#6 limited to 51 lbs./hr. ofS02 "Averaged over 24 hr"). 19 Id. There are dozens ofthese. Representative examples appear on pages 6, 11, 15,20, 24,29,31,32,34,37,38, 102 and 110 oftheUtah County portion ofAppendix A and on pages 15, 16, 18,25,29,30,37,40,42,45, 55, 61, 73, 77, 97, 100, 113, 118, 121, 127, 128, 136, 144, 150, 153, 161, 184, 191 and 202 ofthe Davis and Salt Lake Counties portion ofAppendix A. 20 Exhibit 7. 21 Exhibit 8.
VI11. EPA published its approval ofthe SIP in the Federal Register in July 1994. 22 In its approval, EPA explicitly tooknotice ofthe Approval Orders, discussed the relationship of the Approval Orders to the 1991 SIP submittal and gave notice ofwhat would be effective
as a matter offederal law: Since State adoption ofthis PMlO SIP, the Statehas been finalizing the permit conditions for stationary sources. EPAhas discussed and advised the State on the need to ensure consistency withthe State's permits and the federally-enforceable SIP. The State's permit program is in the federally-approved SIP. The final approval to the PMlO SIP will also make the emission limitations for the stationary sources federally enforceable. 

### EPA is giving notice that should different emission limitations exist, EPA will enforce the more stringent ofthe two (or more) emission limitations. EPAmust have assurance that the attainment demonstration ofa nonattainment area plan is maintained. The less stringent emission limitation may not provide that assurance without a reanalysis ofthe attainment demonstration. 

### Itis, therefore, critical that the State maintain consistent emission limitations in the permits and in the federally-approved nonattainment-area plan. EPA has agreed to allow the Stateto update the emission limitations section ofthe SIP once a year, i.e., by September ofeach year beginning 1993. The tracking ofthis effort will be documented annually in the EPNState agreement. 23 (Emphasis added.) Later in the sameFederal Register notice, EPA restates some ofthese ideas: 

### The State must update its SIPfor changes to these emission limitations, especially for stationary sources. EPA and the State agree that such updates (which are SIP Revisions) will occur each September, as appropriate. 

### Should differences exist between emission limitations, EPA will enforce, as necessary, the most stringentlimitation.24

22 Exhibit 4, 59 Fed. Reg. 35036, July 8, 1994.
23 Id. at 35042 (Columns 1-2), July 8, 1994.

24 Id. at 35044 (Column 1), July 8, 1994. VII(Emphasis added.) By these statements, EPAnotified the State, the regulated sources and the public that the emission limitations in the 1992 Approval Orders (among others) were being incorporated
as part ofthe SIP and that any changes to those limits would need to be processed as SIP reVlsIons. 12. During 1982 and 1983, Phillips installed its SRU and CEM. The CEMpassed its accuracy test in 1994 and, beginning in September 1994, Phillips employed the certified CEMto
measure SRU emissions, reporting excess emissions on an hourly basis every calendar quarter for about three years to the State.2S Norman Erikson, one ofthe State inspectors with responsibility for assessing Phillips' SRUcompliance, read those quarterly reports and understood the SRUlimit to have an hourly basis.26 He, in turn, prepared reports analyzing Phillips' compliance on an hourly basis and sent those to Phillips, which did not protest his analysis.27 In fact, it is quite clear that the Phillips employee in charge of gathering the SRU data and preparing the excess emission reports, Frankie Wood-Black, believed thatthe S02limit was an hourly one. In many internal electronic mail messages and other documents sentbeforeEPAbegan suggestingthat violations had occurred, Dr. Wood-Black explicitly refers to an hourly permit limit for the SRu.28

2S Exhibit 9, Deposition ofFrankie Wood-Black, at 641-642 and 647. 26 Exhibit 10, Deposition ofNormanErikson, at 83-84. 27 Exhibit 9, Deposition ofFrankie Wood-Black, at 651-653. 28**See,~,** Exhibit 11, at 1, (there are 12 similar reports with similar oridentical language); Exhibit 12 at 3; Ex. 9, Deposition ofFrankie Wood-Black, at 706-707; Exhibit 13 at 3; and Exhibit 14, Letterfrom FrankieWood-Blackto MikeBeheshti at 2.
Vlll13. In July 1995 DEQ issued arevised Approval Order to Phillips which raised the SRU S02 emission limit to 114.42Ibs./hr.29 The 1995 Phillips Approval Order does not contain a 24-hour average for SRU S02 emissions. The DEQ staffengineer who wrote the 1995 pennit, testifying for the StateunderRule 30(b)(6), stated that he understood the Approval Orders to contain hourly limits: Q: Butyour understanding is that when thePhillips approval orders were written, they incorporated pounds per hour emission limits for S02 from the SRU? A: Yes. The notice ofintent that came in, the information was in pounds per hour. The emission ofS02 from the SRU was in pounds perhour, and that is the way that was entered into the 1995 pennit, I believe.30 14. On November 7, 1996, EPA sent Phillips a Request for Information under §114 ofthe Ace1 seeking, among other things, the SRU S02 excess emission reports which Phillips had been sending to Utah. 32 Phillips responded by letter ofDecember 9, 1996, raising many objections to the Request and supplying the reports, but nowhere in the letter did Phillips suggest that the emissions which its own reports listed on an hourly basis should be averaged over 24 hours.33 Instead Phillips focuses on the State's supposedly exclusive right tojudgethe avoidability ofbreakdowns and the relationship between Utah

29 Exhibit 15, at 8. 30 Exhibit 16, Deposition ofMike Beheshti, at 15. 31 42 U.S.C. §7414. 32 Exhibit 17, at page 2, item 5. 33 Exhibit 18, Letter from Richard Walsh to LeeHanley.
IXand EPA. 34 In addition, Phillips threatens EPA, stating, "
... EPA's posture is contrary to current law and, ifpursued, will subjectEPAto legal challenge and severe political scrutiny. ,,35 15. In January 1997, Norman Erikson, the State inspector, drafted a Notice ofViolation ("NOV") for excess emissions ofS02 from the SRUduring the third calendar quarter of 1996. 36 Mr. Erikson testified that he understood the limit to be an hourly one, based on Phillips' own quarterly Excess Emission Reports. 37 However, Mr. Erikson's supervisor, JeffDean, told Mr. Erikson that the NOV "wasn't going to be issued. ,,38 Mr. Dean testified that no NOVwas warrantedbecause it was a daily limit. 39 Mr. Dean also testified that he had been aware since 1994 that Mr. Erikson was evaluating Phillips' compliance on
an hourly basis and yet had never suggested to Mr. Erikson that the data should be analyzed on a daily basis. 40 Even Mr. Dean seemed to think there was some possibility that the StateNOVbased on hourly averaging might end up being issued, because he wrote, "Norm, hang onto these NOVsjustin case" onthe draft which Mr. Erikson had

34 Id. at 5-10.
35 Id. at 5.
36 Exhibit 10, Deposition ofNormanErikson, at 82-84.
37 Id. See, also, id. at 169.
38 Id. at 86-87.
39 Exhibit 19, Deposition ofJeffDean, at 53-54.
40 Id. at 54-55.
xprepared.41 Apparently the ultimate decision maker was an even higher level official, Mr. MarvinMaxell, who was in charge ofcompliance matters for the Division ofAir Quality.42 16. Mr. Dean further testified that the supposed 24-hour average does not appear anywhere in the 1995 Approval Order.43 He also said that when he received the draft NOVhe did not look at the Approval Order, hejustrelied on his general understanding that it was a daily limit.44 Finally, he testified that he was not aware ofanyone from the compliance section consulting with the permits section to determine what the latter group thought the SRU averaging time was in thePhillips' Approval Order.4s This was in spite ofMr. Maxell's pronouncementthat U[i]fthere's a problem with the approval order, ifit conflicts with the SIP orjustifit's vague,U then the compliance staffshould consult withthe permit writer to learn that person's understanding ofthe applicable requirement.46 17. On March 6, 1997, EPAissued an NOVto Phillips alleging, among otherthings, that Phillips had exceeded the SRU S02 emission limits in the 1992 and 1995 Approval Orders for substantial periods oftime during 1994-96.47 EPA issued theNOV after discussing the
excess emissions in some detail with the State at a meeting on October 7, 1996. At the

41 Exhibit 10, Deposition ofNorman Erikson, at 92. 42 Exhibit 19, Deposition ofJeffDean, at 61. 43 Id. at 73-75. 44 Id. at 75.
4S Id. 46 Exhibit 20, Deposition ofMarvMaxell, at 25. 47 Exhibit 21, EPANOV, DocketNo. CAA(113)VIII-96-13, at paragraphs 2-5.
Xlmeeting, DEQ claimed only that the excess hourly emissions were all due to unavoidable breakdowns ofcontrol equipment, notthat there was a 24-hour average which applied to the SRU S02 emission limit.48 18.
.OnMarch 20, 1997, the company and EPAmet to discuss the allegations in theNOV. The parties agreed that the contents ofthat meeting would be kept confidential based on the theory that the meeting could be considered settlement negotiations. 19. On March 24, 1997, Phillips wrote to DEQ, requesting a "Final Determination of Compliance" for the Woods CrossRefinery.49 Among otherthings, Phillips sought a "Final finding and determinationthat all excess emissions from the Refinery SRU from June 1, 1994 to June 30, 1996 were unavoidable and do not warrant aNotice of Violation" and a "Final finding and determinationthat Phillips is in compliance with Utah regulations and law, including the Utah State Implementation Plan, orunder any applicable agreed order, that relate to or limit excess emissions from theRefinery SRU "so Nowhere in the March 24, 1997 letter does Phillips suggest that there was a 24-hour average which applied to the SRU S02 emission limit. 20. Utah responded promptly, issuing an "Administrative Determination" on April 9, 1997.s1 The Administrative Determination "confirms that a final administrative determination has
48 Exhibit 22, Notestakenby Statefacilitator. 49 Exhibit 23, Letterfrom Richard Walsh to Ursula Trueman, March 24, 1997.
so Id. at 3, items 4 and 5.
S1 Exhibit 24. The AdministrativeDetermination is signed by Ursula Trueman as Executive Secretary ofthe Utah Air Quality Board, butthere is nothing in the record to suggest that the Board considered Phillips' request for a "Final Determination," which was sent to DEQ.
Xllbeen made that no Notice ofViolation was warranted for reported excess emissions of sulfur oxides
... for the time period from July, 1994, to June, 1996,
.... ,,52 There is no mention ofa 24-hour average figuring into the State's determination. In fact, there is no explanation whatsoever ofwhy the State chose to excuse the excess emissions which Phillips had reported. 21. Phillips'lawyer wrote to DEQ onMay 1, 1997, requesting confirmation by the Statethat the SRU S02 emission limit averaging time was 24 hours, not one hour.53 To facilitate the State's response, Phillips even supplied a draft ofa letter backto the company.54 DEQ
was able to respond very quickly, sending the confirmation Phillips sought on May 6.55 TheMay 6 letter states clearly that the limit is a daily one. What is not clear is thebasis for that conclusion. The letter cites Condition 6 ofthe 1995 Approval Orderbut does not explain what aspect ofCondition 6 demonstrates a daily (or 24 hour) average for the SRU The letter also cites "SectionIX, Part H.2, Subsection C (Compliance Demonstration) ofthe SIP", butPlaintiffdoes not recognize that citation as referring to any part ofthe SIP as it was approved in 1994. The State was probably referring to Appendix A, §2.1.M.C, but that section discusses the daily limit for the refinery as a whole, not the emission limit for the SRUitself.

52 rd. at**~3.** 53 Exhibit 25, letter from Richard Walsh to Ursula Trueman, May 1, 1997. 54 Exhibit 26, draft letter from Ursula Trueman toRichard Walsh, with fax coverpage from Richard Walsh toMarvMaxell, May 1, 1997. 55 Exhibit 27, letter from Ursula Trueman to Richard Walsh, May 6, 1997.
Xl1122. EPAissued a revised NOVto Phillips onAugust 13, 1997.56 The main effect ofthe revision was to update the previous NOVto include laterviolations. 23
. Various discussions among the State, Phillips and EPA during the summer and fall of 1997 failed to dispel the disagreements regarding the applicable law and Phillips' liability. In support ofits IIclient II company,57 DEQ sent anotherlettertoPhillips onNovember 20, 1997.58 That letter stated: IIAt the time the SIP was written, it was determined that daily emission limits would be established. This was absolutely the clear intent ofthe staffwho wrotethe SIP, thebasis ofournegotiations with all oftheindustrial sources in developing the SIP, and the intent ofthe Air Quality Board who approved the SIP.1159 24. On November 25, 1997, the United States filed a complaint against Phillips in this court. Plaintiffalleged, among otherthings, that "Phillips exceeded the hourly limit" on "over 1000 occasions.1160 25. OnJanuary 7, 1998, Bill Reiss and NormErikson ofDEQ appeared before theUtah Air Quality Board ("UAQB") to discuss issues related to the Phillips refinery. Mr. Reiss first refers to lithe hourly limit.1161 In explaining why the "hourly limit" should be considered to

56 Exhibit 28, EPANOV, DocketNo. CAA(113)VIII-97-09. 57 See Exhibit 29, deposition ofJohnBlanchard, Statepermit writer testifying as Rule 30(b)(6) witness, at 207-8. 58 Exhibit 30, letter from UrsulaTruemanto Anthony Benedict, November 20, 1997. 59 ld. at p. 1,**~4.** (Bolding added. Italics in original.) 60 Original complaint, paragraphs 25, 34 and 35. 61 Exhibit 31at 3.
XlVbe subject to an unwritten 24-hour average, 

### Mr. Reiss notes thatthe Approval Order issued to Phillips specifies 24-hour averaging for emissions ofPMlO and nitrogen oxides.62 He then points out, "So its [sic] only for the S02limitwhere we've seen any deviation with any ofthe SIP limits for any ofthe five refineries.,,63 Mr. Reiss goes on, "As such, its [sic] the opinion ofbothDAQ [the Division ofAir Quality within the Department of Environmental Quality] and Phillips Petroleum Company that our approval order has in
essence misstated the intent ofthe 

### SIP. ,,64 The UAQB took no action regarding the Phillips Approval Order at the meeting, although Phillips' second Motion for Partial Summary Judgment in this case suggests otherwise.65 26. On March 18, 1998, DEQ sent Phillips a Notice ofIntent to revise the 1995 Approval Order.66 The notice explains that the proposed revised Approval Orderwould change the pounds per hour limit to one expressed in tons per day. The cover letter characterizesthe change as a "correction."67 In his deposition as a Rule 30(b)(6) witness for the State, the permit writer, Mike Beheshti, testified that he was instructed to make this correction by his second-level supervisor, Cheryl Heying.68 He also testified that he felt under pressure
62 Id. 63 Id.

64 Id. (Emphasis added.) 65 SeePhillips' Motion at xvii, paragraph 25, last sentence. 66 Exhibit 32. 67 Id. (Emphasis added.) 68 Exhibit 16, at 35.
xvto make the change quickly.69 Hefurther testified that Ms. Heying's professed rationale for**~aking** the change was that proper application ofthe SIP language would make this a reasonable change. 70 However, Mr. Beheshti was not able to identify any language in the SIP that supported 24-hour averaging for the SRU. 71 After reviewing the various relevant SIP provisions, Mr. Beheshti testified that the daily limits in the SIP for the refinery as a whole would not preclude the State from setting hourly limits for the SRU.n Further, Mr. Beheshti testified that he believed the SRUlimits in the pre-1998 Approval Orders
were based on an hourly averaging time. 73 Finally, Mr. Beheshti confirmed that a change in the SRU averaging time from one hour to 24 hours would inevitably be a relaxation of the emission limit and that such a relaxation could allow greater emissions.74 27. No public notice and opportunity for comment accompanied the March 1998 Intent to Approve. There is no provision in the UtahAir Conservation Regulations for making changes to Approval Orders without going through the required notice and opportunity for comment procedures contained in Section 3.1. 75 Furthermore, Section 3.2.4 empowers only "the Committee" (now presumably the Utah Air Quality Board) to make

69 Id. at 36.
70 Id.
71 Id. at 36-39.
72 Id. at43.
73 Id.

74 Id. at 50.
75 UACRR307-1-3.1. (1992).
XVIchanges to pennit limits, and then only after concludingthat the adjustments do not affect attaining the applicable NAAQS.76 There is nothing in the record to indicate that the UAQB conducted the necessary analysis to support a finding that the revised limit will not affect achieving theNAAQS. 28. On April 17, 1998, EPA sent Utah a letter explaining in detail why the SRU change proposed in theMarch 18 Intent to Approve would be improper. 77 29. Despite the uncertainty in the permit writer's mind as tothe rationale for the change and despite the deviation from the required procedurefor amending an Approval Order, on April 20, 1998, DEQ issued arevised permit to Phillips containing a tons per day SRU S02 emission limit. 78 Utah has nottried to make any other changestothe SRU S02 emission limit since April 1998. B. 

### Facts Related to the Issue ofthe SRUEfficiency Requirement 1. Section 

### A, above, is incorporated here by reference. 2. "RACT" refers to Reasonably Available Control Technology, which is required by the Clean Air Act for areas which are not attaining aNAAQS. 79 TheUtah PMlO SIP states, "The basic RACT applied to all refineries was: a sulfur removal unit/plant (SRU) that will
remove 95% ofthe sulfur from the streams fed to it
.... ,,80 Similarly, the refinery section

76 UACRR307-1-3.2.4. (1992).

77 Exhibit 33.
78 Exhibit 34.

79 42 U.S.C. §7502(c)(I).
80 Exhibit 5, Utah PMlO SIP, §9.A.6(3)(b)(ii) [at 43].
XVIiofthe SaltLakelDavis counties portion ofAppendix A requires, "sulfur removal units/plants (SRU) that are at least 95% effective in removing sulfur from the streams fed to the unit
.... "81 3. The cover letterto the October 1992 Approval Orderrefers to 95% as the amount that must beremoved.82 4. Section 5.C.2 ofthe 1995 Phillips Approval Order contains the following requirement: "Appropriate adjustments to the SRU operation parameters shall bemade to ensure 95%+ efficiency on a daily basis."83 Section 5.C goes onto give details ofPhillips' additional obligations ifSRU efficiency drops below 95%. In summary, ifa daily SRU emission limit is exceeded (that is, 24 times the maximum hourly limit allowed by the SIP and Approval Order), a mass balance oftheinputs and outputs to and from the SRUmust beperformed within five days to determine SRU efficiency. Furthermore, the refinery must report the problem to the State. Finally, the refinery must isolate the problem within five days and make a permanent repair ormodification within fifteen days ofdiscovery.84 5. InJuly 1998, the United States filed an Amended Complaint in this action, adding three counts related to Phillips' failures to operatethe SRU at or above 95% efficiency.85 In its

81 Id. at, Appendix A, §2.1.M.A [at 5]. 82 Exhibit 8, October 29, 1992 Approval Order at 1. 83 Exhibit 15 at 6. (Emphasis added.) 84 Id.
8S Amended Complaint, paragraphs 42-53.
XVlllAnswer, Phillips denied thatthere was any violation for failure to maintain 95% efficiency.86 6. IntheRule 30(b)(6) deposition ofthe State, three witnesses testified thatPhillips had an obligation to achieve 95% efficiency orbetter every day.87 7. Even a key former Phillips employee understood the 1995 Approval Orderto require the SRUto achieve 95% efficiency on a daily basis. Walter Kramer, one ofthe Phillips staff charged with the responsibility ofdeveloping the relevant portion of the 1995 Approval Order, testified as follows: 

### Q: In negotiating this language with the state, was there any discussion about whether Phillips had to meet the 95-percent efficiency requirement on a continuousbasis? A: I believe the intent was to meet the 95 percent on a daily basis. The 95-percent efficiency, that is. Q: Is that something thatyou discussed with the state? A: Yes, sir. Q: And that would have been Bill Reiss and Montie Keller? A: Yes, sir. gg 8. Mr. Kramer's successor, FrankieWood-Black, also recognized the obligation to meet 95%
on a continuing basis. She wrote to the Statepermit writer: "
... Phillips understands

86

### ~swer to Amended Complaint at paragraphs 42-53. 87 Exhibit 16, Deposition ofMike Beheshti at 29-30; Exhibit 35, Deposition ofWilliam Reiss at 16 and 164; and Exhibit 36, Deposition ofMontie Keller at 344-45. 88 Exhibit 37, Deposition ofWalter Kramer at 133. See, also, id. at 68 and 143. XIXthat the SRU is to meet both conditions

- the 95% removal rate and the pound per hour limitation.,,89


### C. Facts Related to the Issue 

### ofEPA's Right to DetermineAvoidabiiity 

### ofBreakdowns for Purposes ofFederal Enforcement 1. Sections A and B, above, are incorporated here by reference. 2. The SIP and the Approval Orders require that Phillips "install, calibrate, maintain and operate a continuous S02 emissions monitoring system on the Sulfur Recovery Unit Incinerator stack.,,90 That monitoring system is the sole means for measuring Phillips' SRU S02 emissions, and thus it is critical to determining whetherPhillips violates its SRU emission limitations. As described in Section B, above, it is also critical to determining violations ofthe SRU efficiency requirements. 3. UACR §4.7, which is part ofthe SIP, provides an exemption for emissions which result from an unavoidable breakdown.91 This exemption is limited, however: "Breakdowns that are caused entirely orin part by poormaintenance, careless operation, or any other preventableupset condition orpreventable equipment breakdown shall not be considered unavoidable breakdown [sic]."92 Thus careful scrutiny is required to know whether emissions during a breakdown are to be considered violations. No provision ofthe SIP or

89 Exhibit 14, Letterfrom Frankie Wood-Black toMike Beheshti, May 30, 1995. 90 SeeExhibit 8 [10/92 Approval Order] at §16 and Exhibit 15 [95 Approval Order] at §20. 91 UACRR307-1-4.7 (1992). 92 Id.
:xx:the Approval Orders, all ofwhich are federally enforceable, provides for exclusive review by the State ofsuch situations to determine avoidability ofbreakdowns. 4. There is no provision in the SIP or the Approval Orders which states that CEM downtime
can be excused due to unavoidable breakdowns.

xxi

# m. ARGUMENT TheUnited States is entitled to summaryjudgment on each ofthe three bifurcated legal issues becausethe "pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, ifany, showthat there are no genuine issues as to any material facts", and the United States is entitled tojudgment as a matter oflaw." Fed. R. Civ. P. 56(c). Whether a fact is "material" is determined by the substantive law, in this case the Clean Air Act. Summary judgment is appropriate here because no reasonable trier offact could find for the non-moving party. See, Andersonv. Liberty Lobby, Inc. 477 U.S. 242 (1986). The material facts set forth in theUnited States' statement are not in genuine dispute. Accordingly, summaryjudgment on each ofthe three bifurcated issues is appropriate. Standard ofReview The legal issues in dispute herein all concern the proper interpretation ofthe UtahPMlO SIP. Section 110 ofthe Clean Air Act, 42 U.S.C. §7410 requires that each State develop a State Implementation Plan ("SIP") that is designed to ensure that air quality within the State meets certain standards, known as National Ambient Air Quality Standards, or "NAAQS", that are designed to protectthe public health. Ifthe State fails to develop such a plan, then EPAis charged with the duty ofpromulgating the plan itself The specific criteria that each SIP must meet are set forth in Section 110 ofthe Act. Section 110 ofthe Act gives the Statethe responsibility in the first instance ofdetermining how much emissions must be reduced in a particular region to ensure that the air quality meets the NAAQS, and determining precisely how those reductions should be achieved. As long as the State can establish that the mix ofemissions limitations it has selected is adequate to ensure -1­attainment, EPAis not authorized to insist upon different limits. Butwhile the State is given considerable authority in the SIP development process to establish emissions limitations, ultimately its proposed SIP must be approved by EPA, 93 This is not a "rubber stamp" approval process. Rather, Section 110 requires that EPAensure that the proposed emissions cutbacks are, in fact, sufficient to attain the NAAQS, that the SIP requirements are legally enforceable, and that other criteria established by the Act are met. As the federal courts time and again have ruled, upon approval by EPAthe SIP becomes federal law, subject to thejurisdiction ofthe federal courts. See, e.g., Union Electric Co. v. EPA, 515 F.2d 206,211 (8th Cir. 1975), aff'd. 427 US. 246 (1976) ("Upon approval ofpromulgation ofa State ImplementationPlan, the requirements thereofhave the force and effect offederal law
.... "); Navistar International Transportation Co. v. EPA, 858 F. 2d 282,284 (6th Cir. 1988) ("Emission limits pursuant to SIP are enforceable as federal law
.... "). The structure ofthe Clean Air Act and applicable case law require that ifthe State and EPAhave conflicting interpretations ofa SIP in the context ofa federal enforcement action, EPA's interpretation ofthe SIP must be accorded deference. See Chevron, US.A, v. Natural Resources Defense Council, 467 US. 837, 844 (1984); US. West. Inc. v. FCC, 182 F. 3d 1224 (lOth Cir. 1999) (Court defers to agency interpretation ifit is reasonable.) As observed by one court: [I]fa provision ofthe [SIP] were subject to two possible interpretations, the interpretation given to the provisionby the EPAis the proper interpretation. This is because the otherinterpretation was not approved by the EPAand did not properly become a provision of[the] SIP.

93 42 U.S.C. §7410(k). -2­United Statesv. Congoleum Corp., 635 F. Supp 174,177 n.4 (E.D. Pa. 1986), recon. denied in part, granted in part, 646 F. Supp 1142 (E.D. Pa. 1986). In this case, Phillips challenges EPA's interpretation ofthe Utah SIP relating to three discrete issues: 1. whether the 1992 and 1995 Approval Orders required Phillips to comply with a never-to-be-exceeded hourly limit at its SRU, orwhether it is allowed to average its emissions
over a 24-hour period; 2. whetherPhillips is required to achieve 95% efficiency at its SRU on each and every day ofoperation; and 3. whether, in approving the SIP, EPA delegated to the State the authority to make determinations, that are legally binding on the United States, that certain ofPhillips' violations wereunavoidable and, therefore, legally excused. Applying the deferential standard ofreview that the Supreme Court articulated in Chevron, it is clear that EPA's interpretation oftheUtah SIP provisions is reasonable. But even ifone accorded no deference to EPA, its interpretation should still prevail. On each ofthe three bifurcated issues, the position advanced by the United States is completely consistent with the clear wording ofthe SIP, whereas theposition advanced byPhillips and (for issue number 1, the State, also) is not. Thus, an award ofsummaryjudgmentis appropriate.



### A. Phillips is Subjectto A Never-to-be-Exceeded Hourly Limit 1. Introduction The United States contends that the October 1992 and July 1995 Approval Orders issued by the State clearly and unambiguously set forth emissions limits thatPhillips must meet at its

-3­SRU during each hour ofoperation.94 Phillips' position on this issue is not clear. At times, Phillips appears to argue thatthe Approval Orders in fact provide for the daily averaging of emissions. At othertimes, Phillips appears to concede that the Orders require hourly compliance, but argues thatthe State always intended to allow for 24-hour averaging, and that the State's intent should be given effect. This latterposition has also been adopted by the State ofUtah in correspondence sent to EPA seeking tojustify its modification ofPhillips' Approval Orderterms. As is set forth below, the plain language ofthe Utah PMlO SIP, and the Approval Orders issued pursuant to that SIP require that the SRU meet an hourly limitation. Beyond the plain language ofthe Approval Orders, thetestimony ofthe State's own employees confirms that the Orders provide for hourly limits. Moreover, Phillips' own operations in the relevant time period suggest that even it knew that it was subject to an hourly limit. Forthese reasons, the United States is entitled to summaryjudgment on the first bifurcated issue. 2. The State Consistently Established HourlyLimits for the SRU From 1991 until 1998, the State ofUtah repeatedly established emissions limitations for the Phillips SRUthat were expressed as hourly limits. In drafting its proposed SIP limits for Phillips, the State differentiated betweentwo distinct categories ofsources within the refinery. In

94 As set forth more fully in the United States' Response to Phillips' Second Motion for Partial Summary Judgment at footnote 11, the October 1992 and July 1995 Approval Orders do not have the same status as a matter offederal law. The October 1992 Order had been reviewed by EPApriorto the time that it approved theUtah PMlO SIP, and the limits therein were incorporated by reference into the SIP. See, 59 Fed. Reg. 35036, 35042 (July 8, 1994). The July 1995 Order was never submitted to EPAas a proposed SIP revision and, therefore, does not modify the legally applicable emissions limitations for the Phillips SRU As was also set forth in ourResponse, it is the position ofthe United States that the 1998 Approval Order does not modify the applicable SIP requirements because, among otherreasons, it was never submitted to EPA, and approved by EPAas a SIP revision. -4­Section 2.2.00.2.B, the State listed 27 separate emissions sources that were to be regulated collectively. These units were referred to as the "capped" sources. Emissions from these sources
were computed based upon the amount offuel combusted, and were to be determined daily.95 In addition to the "capped" sources, which were grouped together and given a collective emissions limitation, the State also provided that certain sources were to have individual emissions limits established. Section 2.2.00.2.D, entitled "Individual Point SourceLimitation" provided: 

### SOz emissions limits shall be individually set for each point source not designated as being in the emissions cap. The following Non-Emissions Cap Sources shall be regulated individually for 

### SOz at the following emission limits: Point Source tons/yr SRU Tailgas Incinerator (limits to be established during Section 3.1 review)96 Becausethe individual SRU had not been constructed at thetime the SIP was proposed, there
were no numerical limits set forth for the unit. Rather, the SIP set forth three "placeholders," which the State proposed to fill in with specific numerical values at a later date pursuant to Section 3.1 oftheUtah Administrative Code. These placeholders were expressed in terms of "pounds per hour," "tons peryear" and "parts per million volume." There was no "placeholder" to indicate that the State would also set forth an emissions limit for the SRU that was expressed in tons per day orthat expressly specified 24-hour averaging.

95 Exhibit 5 at § 2.2.00.2.CA provides as follows: Total 24-hour S02 emissions for the sources included in the emissions cap shall be calculated by adding the daily results ofthe above 

### SOz emissions equations for natural gas, plant gas and fuel oil combusted. Results shall be tabulated every day.
96 Id. at App. 

### A, §2.2.00.2.D. (Emphasis added.) -5­The State's differing treatment ofthe "capped" sources, and those point sources for which individual emissions limits were to be established suggests a conscious intent to regulate certain emissions sources within the refinery differently from others. Significantly, for purposes ofthis motion, the absence ofany placeholder that established 24-hour averaging for the SRU should be contrasted with otherportions ofthePhillips SIP, which did make it clearthat emissions wereto be looked at on a 24-hourbasis. 97 The failure to include any "placeholder" expressed in terms of "tonsper day" or denoting 24-hour averaging showsthat the Phillips SRU was to be regulated on
an hourlybasis. 98 In addition to the language ofthe proposed SIP itself, the fact that the State consistently issued Approval Ordersthat filled in the "placeholders" with hourly values makes it clearthat it intended to regulate the SRU on an hourly basis. The State first filled in the "placeholder" language for the SRU in its July 1992 Approval Order. This Approval Order set forth a limit for the SRU of76.16 lbs./hr. In setting this limit, the State simply adopted the emission limitation that Phillips itselfproposed when it submitted its August 2, 1991 Notice ofIntent to construct the SRU. In thatNotice, Phillips proposed an S02 emissions limitation for the SRU of76.2 lbs./hr.

97 Id. at §2.2.00.2.A 

### (1)and (2) (tons per day S02limits set for refinery as a whole); §2.2.00.C (1) (24-hour averaging used to establish emissions from certain "capped" sources)
98 There is nothing unique about the State'streatment ofPhillips. The sections ofthe SIP dealing with the Amoco, Chevron, Crysen and Flying J refineries each differentiated between "capped" sources and those for which individual limits wereto be established. In addition tothe "placeholders," the SIP also set forth stacktesting requirements for the SRU. These requirements also referred to an hourly limit. See, Undisputed FactsNos. 7 and 8. 

### -6­and an annual limit of317 tons per year. 99 Nowhere in theNotice ofIntent does Phillips propose
an emissions limitation for the SRUthat is expressed as a daily, or 24-hour, average limit. Shortly afterthe State had issued the July 1992 Approval Order, Phillips soughtto change the emissions limits for the SRU Thus, on October 12, 1992, Phillips wrote to the State proposing a revised limit of95.29 lbs./hr. for the SRU100 Once again, the limits thatPhillips itselfproposed were set forth on an hourly basis, with no mention ofcorresponding daily or24­ hour averaged limits. This limit, 95.29 lbslhr, was accepted by the State and embodied in an October29, 1992 Approval Order. Thatthe Stateviewed the new limit as an hourly one is made clear in the first paragraph ofthe Order which states: "Condition 5.E.2 has been changed to show
a change from 96% to 95% controlby changing the allowable S02 emissions in pounds per hour."101 This October 1992 Approval Order was transmitted toEPAfor review and approval. EPA accepted the limits contained in the October 1992 Approval Order, and incorporated them by reference, when it approved the Utah SIP in July 1994.102

99 Exhibit 38, August 2, 1991 letter from Max Staples (signed by Waiter Kramer) to the State, transmitting Phillips' Notice ofIntentto construct the SRU The proposed emission limitations are set forth at Tables 5-2 and 5-3 (located between pages 10 and 11 ofPhillips' Notice). 100 See Exhibit 39, October 12, 1992 letter from Max Staples to the State. 101 See Exhibit 8 (October 1992 Approval Order) at 1. Emphasis added. 102 ThatEPAaccepted the limits set forth in the October 1992 Approval Order as being the federally enforceable SIP limits is made clear in EPA'sFederal Register Notice approving the SIP. See Exhibit 4, 59 Fed. Reg. 35036,35042 ("Since State adoption ofthis PMlO SIP, the State has been finalizing the permit conditions for stationary sources....The final approval to the PMlO SIP will also make the emission limitations for the stationary sourcesfederally enforceable"). -7­The October 1992 Order was revised again by the State in July 1995, pursuant to another request from Phillips. The July 1995 Approval Order set forth a table that listed "average" and "maximum" emissions, both ofwhich are expressed in terms ofpounds per hour, for various pieces ofequipment. Forthe SRU, the "maximum allowable emissions" were 114.42 pounds per hour. 103 The State'suse ofthe phrase "MaximumEmissions lbs/hr" could not be clearer. The Stateintended that the SRU never emit more than 114.42 pounds ofS02in any given hour. To interpretthis table as allowing Phillips to emit more than 114.42 pounds ofsulfur dioxide in any given hour, provided that the 24-hour average stayed below 114.42 pounds completely reads out the "MaximumEmissions" column. The table also set forth a limit for the total emissions allowed from the SRU on an annual basis. Again, however, the July 1995 Approval Order does not set forth any emission limitation for the SRU that is expressed in terms of"tons per day" orthat expressly refers to the concept of24-hour averaging. This chronology clearly establishes that boththe State and Phillips believed that the SRU
was toberegulated on an hourly basis. The language ofthe SIP proposed by the State in 1991 established that emissions limits for the SRU would be established on an hourly basis, with no mention ofdaily or 24-hour averaged limits. Onthree separate occasions thereafter, Phillips itself proposed limits for its SRU expressed in terms ofan hourly limit, and three times the State

103 SeeExhibit 15, July 1995 Approval Order, at 7, Condition 6.A. The Approval Order actually contains two tables, with one setting limits to be applied prior toPhillips' installation ofa Fluid Catalytic Cracking Unit ("FCC") and the other setting limits that applied after the installation oftheFCC. The limits set forth for the SRU remain unchanged. More importantly, however, is the fact that for some sources, i.e., the TCC Furnace and the CO Boiler, the Order sets forth different average and maximum limits depending upon whetherPhillips was processing regular orflux crude. Forthe SRU, the average and maximum values remain the same: 114.42 lbs./hr. -8­accepted Phillips' proposals and established hourly limits for the SRU Had eitherthe State or Philips believed that 24-hour averaging was tobe applied at the SRU, they had multiple opportunities to embody this concept in an Approval Order. Theirrepeated failure to do so makes it clearthatthey understood that an hourly limitation was being established. 3. Utah'sRegulation ofOther Sources in the SIP Shows It Set an HourlyLimit for Phillips In addition to the clear language ofPhillips' Approval Orders, the State'streatment of other sources shows that it clearly understood how to establish emissions limitationsthat set forth daily or 24-hour averaged limits. Forexample, in Section 2.2.F ofthe SIP, the State established emission limitations for the Centrex Corporationthat set both hourly and 24-hour averagevalues for particular pieces ofequipment. Thus, for the Rotary Kiln #3 Baghouse Vent, the State established a one hour limit for NOx of98 lblhr and a "24 hr rolling avg" of70 Iblhr.104 Other examples ofthe State's expression ofa24 hour average abound: for the Kennecott smelter main stack, the State established a limit of5,700 lbs/hr "24-hour average (calendar day)"lOS; for the Geneva Steel coke plant SRU a limit of 104.5 lbs/hr "averaged over 24 hours using CEM"; and for theEngelhard Stack#6, a limit of51 lbslhr "averaged over 24 hourS.,,106 The examples set forth above, each ofwhich clearly and unambiguously provide for a daily
or24-hour averaging time, demonstratebeyond doubt that the State was familiar with the concept

104 SeeExhibit 5, Utah SIP at App. A §2.2.F.2.A and B. In subsectionB, the Stateused the same nomenclature to establish limits for the #4 Baghouse Vent. These limits were'126lblhr as an hourly limit and 90 lblhr "24 hr rolling avg." lOS Id. at App. 

### A, §2.2.Y.1.B 106 Id. at App. 

### A, §1.2.F.2.K (Geneva Steel); §2.2.M.2.B.2 (Engelhard) -9­of24 hour averaging, and knew how to apply that concept in theregulation ofcertain ofits
sources. When onejuxtaposes those provisions against the dozens ofinstances, including Phillips, in which the State setforth hourly limits with no averaging times expressed, the only logical conclusion that can be drawn is thatthe State consciously determined to establish different averaging times for some sources than others,107 and that, for the Phillips SRU, thatthe State intended to impose an hourly limit. Moreover, it is clear from an examination ofthe SIP itselfthat, by far the most common type ofemissions limit established by the State was an hourly one. There are literally dozens of instances in whichthe State set forth emissions limits for its sources expressed in terms of "pounds perhour", compared with the relatively few that expresslyprovide for 24-hour averaging. 108 Thus, there is nothing unusual about reading the emissions limits for the Phillips as being hourly in nature, as that is howthe State chose to regulate most ofits sources. 109
107 There is nothing infirm about the State's decision to provide different averaging times for different sources. As the Supreme Court noted in Train v. NRDC, 421 U.S. 60, 79 (1975) a state is free to adopt whatever mix ofemissions limitations it desires, provided the SIP provides for the attainment ofthe standards: Under 

### § 110(a)(2), the Agency is required to approve a state plan which provides for the timely attainment and subsequent maintenance ofambient air standards, and which also satisfies that section's other general requirements. The Act gives the Agency no authority to question the wisdom ofa State's choices ofemission limitations ifthey are part ofa plan which satisfies the standards of

### § 11O(a)(2)
.... Emphasis in original. 108 See examples listed in UndisputedFact#9, and the footnotes cited therein. 109 Thus, the State's letterto Phillips, dated November 20, 1997, asserting that daily limits formed the basis for negotiation with all ofthe industrial sources [Undisputed FactNo. 23] is at odds with thelanguage ofthe SIP itself, which clearly regulated the majority ofsources on an hourly, rather than a daily basis. -10­4. The State's Own Witnesses Agreed that the Approval OrdersEstablish Hourly Limits Testimony by the State's own witnesses provides even further support for the proposition that the October 1992 and July 1995 Approval Orders set forth hourly limits. For example, Bill Reiss ofthe UtahDEQ noted at a January 7, 1998 meeting ofthe Utah Air Quality Board that the approval order issued to Phillips "misstated the intent ofthe SIP" by not providing for the averaging ofemissions on a 24-hourbasis. 110 Later, testifying for the State pursuant to Fed. R. Civ. P. 30(b)(6), Mr. Reiss again acknowledged that the concept of24-hour averaging was not explicit in the order: Q. So, the State always meant there to be a 24-hour average. Itjust didn't say it very well in the approval orders.

A. Yeah, that's my understanding. I think you can punch the calculator keys and
come up with those numbers and convince yourselfthat they're still preserved. However, they don't appear explicitly in the approval order. 111

Moreover, MikeBeheshti, the State engineer who actually drafted the July 1995 Approval Order, likewise testified that the limits thathe placed in the Order were hourly values, and that Phillips had a duty to comply with these limits on an hourly basis. 112 Thus, the State's

110 See Undisputed FactNo. 25.

111 Exhibit 35, Deposition ofBill Reiss at 146.
112 Exhibit 16, Deposition ofMike Beheshti at 15. -11­own testimony makes it clear that the emissions limits for the SRU, as expressed in the October 1992 Approval Orderthat the State drafted and submitted to EPA, was an hourly limit. 1l3 In addition to thetestimony ofits own witnesses, the State'streatment ofone ofthe other refineries, Chevron U.S.A., further demonstrates its realization that the limits set forth for the Phillips SRU were hourly maximums. OnAugust 11, 1995, the State issued an Approval Order to Chevron establishing an emission limitation for the Chevron SulfurPlant Incinerator of 177.3 Ib/hr. 114 On March 21, 1996, the State issued a revised orderto Chevron, which changed the limits for the incineratorto 2.128 tons/day. In the Abstract accompanying the revised Order, the State noted that the revised order "reflects changesto the sulfur dioxide emission limitation from the Sulfur Removal Unit. The previous limitation was stated in pounds perhour. This limitation is being changed to pounds per day
.... "115 The State's decision to issue a revised Orderto Chevron clearly reflects its understanding that the August 1995 Approval Order imposed an hourly limit on the Chevron SRU. The nomenclature that the State used in the August 1995 Approval Order is precisely the same as thatused in thePhillips Orders, i.e., "lbs./hr." Just as the

113 By virtue oftheir designation as Rule 30(b)(6) witnesses, the testimony ofMr. Reiss and Mr. Beheshti represent the testimony ofthe State ofUtah. Even ifMr. Beheshti had not been designated pursuantto Rule 30(b)(6), his testimony would be particularly compelling, inasmuch as it was he who drafted the terms ofthe 1995 Approval Order. Additional support for the propositionthat the State knew this was an hourly limit may be found in the notestaken ofa meeting betweenEPA and the State on October 7, 1996. During this meeting, the State claimed thatthe alleged violations were all the result ofunavoidable malfunctions, and not that the applicable limit was a daily one. See, Undisputed Fact No. 17.
114 See, Exhibit 40 (Chevron Approval Orders)
115 Id. at March 21, 1996 Approval Order, pp 3 and 7. Indeed, the State took a similar action on behalfofPhillips, changing the lbs./hr. limit to one expressed in terms oftons/day. The State termed this change a "correction." SeeExhibit 32. -12­State itselfrecognized that Chevron was subject to an hourly limit, this Court should reach the
same conclusion for Phillips. 116 5. Phillips ItselfRecognized That the Approval Orders Established HourlyLimits It is clear that, at least from 1995 until EPAnotified Phillips ofits intent to bring this enforcement action, Phillips' employees behaved as though they believed that the SRU was subject to an hourly limit. This is made clearfrom the instructions that were given to the SRU operators, the reports that Phillips filed with the State concerning its compliance status, the reports that Phillips filed whenever it experienced excess emissions to the atmosphere and, finally, from the internal e-mails produced in discovery. Although Phillips now argues that the hourly limits in its permit were for reporting purposes only (and not compliance), this position is at odds with the way in which the Companybehaved during the relevant time frames. 117 This behavior suggests very strongly that the company itselfknew that it was subject to an hourly limitation under the October 1992 and July 1995 Approval Orders. 118

116 In citing the March 1996 Approval Orderfor Chevron, the United States does not concede that such orderwas effective to amend the SIP limits for Chevron. TheMarch 1996 Chevron Approval Orderwas never submitted to EPA as a SIP revision. Accordingly, for the same reasons specified in ourResponse to PhillipsMotion for Partial Summary Judgment the State's Order does not amend theUtah SIP. The validity ofthe Chevron Order, however, is not at issue in this litigation.

117 See Exhibit 9, Deposition ofDr. FrankieWood Black at 637.
118 David Prey, a former employee ofthe State and affiant on behalfofPhillips, succinctly summed upjust how obvious it is that Phillips was subject to an hourly limit: 

### Q. Youjusttestified to the effect that you know that Phillips knows it has an hourly limit. I wonder howyou knew that? A. Theyjustread their approval language, I imagine. It's all they would have to do to know that. 

### -13­Dr. Frankie Wood-Black was an environmental specialist at theWoods Cross Refinery from October 1994through at least May 1998. As part ofherjob, Dr. Wood-Blackhandled Clean Air Act permitting for the facility as well as emissions reporting to the State. It was also herresponsibility to advise operating personnel at theplant at to what legal requirements they had to meet. 119 Ininforming plant operators ofthe legal requirements applicable to the SRU, Dr. Wood-Black stressed that the unit needed to operate so as to meet an hourly limit. 120 Indeed, to

Exhibit 41, Deposition ofDavid J. Prey.
119 See Exhibit 9 (excerpts from deposition ofFrankie Wood-Black) at 607 (employment dates), 595-97 (duties).
120 SeeExhibit 6 (deposition ofConrad Jenson). Mr. Jenson, testifying as a Rule 30(b)(6) witness forPhillips, made it clearthat he understood thatthe SRU was subject to an hourly, not a daily, limit: A. [W]etried to operateunder some kind ofhourly basis
.... We were told, you know, that we needed to stay belowwhat was equivalent to 114 pounds an hour of emissions
.... Q. Who told you that? A. The environmental, [sic] so FrankieWood-Blacktold me that. Id. at 406. Q. Butis it accurate to saythat you were trying to keep the emissions belowthe 114 pound per hourrate all the time? A. Yes. Id. at 408. Q. So in operating it you were notrelying on a 24-hour average, wereyou? A. In operating the unit, no. Id. at 409.

-14­assistthe operatorsto meetthis limit, Phillips installed alarms that would soundwheneverthe Continuous EmissionMonitor (CEM) indicated thatthe unit was exceeding a 114 lb/hr emission rate. 121 Moreover, as part ofher duties, Dr. Wood-Black filed quarterly reports withthe Statethat listed each and every hour in which emissions from the SRUexceeded the hourly limit setforth in thePhillips Approval Orders. Attached to this Motion is a copy ofthe quarterly reportthat Phillips filed for theFourth Quarter of 1994.122 This report makes it clearthat Phillips understood that what it was reporting was whether or notthe SRUwas in compliance with applicable emissions limitations. In certifYing the correctness ofthe information being reported, Phillips acknowledged two critical points: thatthe dataused to show compliance was obtained in accordance with approved methods; and that during the reporting period "compliance withthe standard has notbeen achieved."123 The "standard" in this case is the S02 limitation, which is

121 Mr. Jenson testified: Q. Where is that alarm set now? What level? A. The alarm is set onthe six minute average reading ofS02 in pounds per hour at roughly 114 pounds per hour. Id. at 509-510. 122 Inthe interests ofbrevity, theUnited States is attaching only one ofthe quarterly reports. The attached report is representative, in terms ofthe data reported and format, ofthe other quarterly reports thatthe Companyfiled with the State. 123 Exhibit42 at p.l (following cover letter). There are actually two certifications, one for the Tail Gas Incinerator (atthe SRU) and one forthe AminePlant. The certification for thetail gas incinerator appears at the page denoted as CEM501618. -15­listed on page 3 ofthe report as 95.29 Ibs./hr.124 This is the same figure set forth at Condition 5.E ofthe October 1992 Approval Order. Thebody ofthe report then sets forth tables listing each and every hourfor the calendar quarter. Formost ofthe hours ofthe quarter, Phillips reports no data, indicating thatthe SRUwas operating in compliance with its limits. Scattered throughout the tables, however are entries that set forth numerical limits, all ofwhich are above the 95.29 lbs./hr. limit set forth in the October 1992 Approval Order. 125 Interestingly, there is nothing on theface ofthe reports orthe coverletters actually provided to the State that supports Phillips' assertions thatthe hourly limit in its permit was only for "reporting purposes." Rather, the reports clearly and unequivocally detail "exceedances" of applicable requirements. Thetables on whichPhillips lists its emissions data are titled "Gas ExceedanceEvaluation".126 These tables contain blanks, onefor eachhour ofthe day, that Phillips filled in whenever it exceeded the hourly limit set forth in its Approval Order. 127 Then at
124 Id. at 3. CEM501624. 125 See, e.g., id. at CEM501679-80. 126 Id. at CEM501673. 127 

### IfPhillips really believed that it was only subject to a daily or24-hour averaged emissions limit, then it logically would have filled in the blanks for each and every hour ofthe day, so that an averaged number could be reported. Such entries would have been absolutely essential onthose days when Phillips experienced one ormore exceedances ofthe hourly values in its Approval Order. Absent data entries showing levels belowthe hourly values in the Approval Order, it wouldbemathematically impossible for Phillips to demonstrate compliance with a daily limit for any ofthose days. Two excellent illustrations ofthis point appear onthe entries for October 13 and 14, 1994. On those dates, Phillips experienced a number ofhours in which it exceeded its permit limit of95.29Ibs/hr, in some casesby more than 100%. Id. at CEM501679­ 80. While it would certainly be possible that, averaged over24 hours, the emissions would have beenless than 95.29 poundsper hour, Phillips.provides the state with no data from which to make this calculation. The same wouldbe true for dates on whichPhillips had only a couple of exceedances, such as October4, 1994. Id. at CEM501674-75. Again, however, there is no data -16­the end oftheReport, Phillips tabulates the total number ofhours in the quarter in which exceeded its permitted limits, and percentage oftime ofthose exceedances. Forexample, in the 4th Quarter 1994 Report, Phillips reports that it exceeded the standards during 58 hours of operation, or 1.88% ofthe time in that quarter. 128 Not only did Phillips report each and every hour in which it exceeded its permit limits, but it also specified a "reason code" for each ofthose hourly exceedances, and then explained why it believed a particular reason code applied. It simply makes no sense that Phillips would have taken the time and spent the resources that 

### it didjustifying particular exceedances that, in its view,
were not even violations ofits permit. 129 The State evidently believed thatPhillips was reporting violations ofhourly limits when it reviewed and commented on the reports. MarvMaxell, Manager ofthe Air Standards Branch for
provided from which one can determine whether, on a 24-hourbasis, Phillips was in or out of compliance on that date. This leads inescapably to the conclusion thatPhillips believed that the values being reported wereviolations ofan hourly standard.
128 Id. at CEM501624. Even when Phillips sent these data to EPA, pursuant to a §114 Information request, it said nothing to the effect that compliance should be averaged over a 24­ hour period. See Undisputed FactNo. 14.
129 Another indication that Dr. Wood-Black viewed the QuarterlyReports as constituting evidence ofviolations ofan hourly limit is found in her correspondence ofMarch 30, 1995 to Norm Erickson ofthe State. See, Exhibit 43. In that memorandum, Dr. Wood-Black makes several correctionsto the Quarterly Report for the 4th Quarter of 1994. As a result ofher corrections, Dr. Wood-Black confirms that the number of"exceedances" was reduced from 56 to 37 hours, or 1.876% "exceedances for the quarter." Moreover, Dr. Wood-Black notes that the applicable permit limit will be changing to 114.42Ib/hr. She then notes that "[u]sing the 114.42 lb/hr limit an additional 19 hours are below the this [sic] or 18 hours ofexceedances or0.913% exceedances for the quarter. The import ofthis correspondence is clear. Dr. Wood-Blackis attempting to putthe best possible light on Phillips' quarterly emissions summary. Such efforts would have been completely unnecessary had Phillips actually believed that it was not subject to hourly, but only daily limits. -17­the State'sDivision ofAir Quality, wrotetoPhillips to conunent onthe company's Quarterly Reports. In those letters, and in the attached sununary sheets, Mr. Maxell apparently adopts Phillips' own representations concerning the number ofhours and the percentage oftime that it had exceeded the standards.no Once again, there is nothing onthe face ofthese lettersthat suggests that the state viewed these data as indicative ofanything other than violations ofan hourly pennit limit. Shortly afterreceiving the State'sletters, Dr. Wood-Black began sending e-mails to selectedPhillips employees atthe refinery. Inthose e-mails, Dr. Wood-Black consistently calls attention to the number of"hours ofexceedances" that Phillips had experienced during the reporting period. 

### In virtually every e-mail, Dr. Wood-Black opines onthe number ofexceedances she believes were theresult ofmalfunctions and "which are not counted against us [Phillips]."l3l Nowhere in these e-mails;however, does Dr. Wood-Black make any attempt to compute the

130 See, Exhibit 44 (Letters from MarvMaxell to Phillips dated May 1 and May 12, 1995. TheMay 1letter conunents on Phillips' Report for the 4th Quarter of 1994. The May 12 letter conunents on the Quarterly Report submitted for the 15t Quarter of 1995. In both comment letters, the State adopts Phillips' representations concerning the number ofhours in which it violated its pennit limit and the percentage ofoperatingtime this represented. Bothletters are utterly silent on the issue ofhow many "exceedances" Phillips would have committed had its emissions been averaged over a 24-hour period.

131 In an e-mail typical ofall ofthe others that she sent, Dr. Wood-Black states: Forthe quarter through 6/26

- There have been 66 hours ofexceedances ofwhich atLEAST 22 were due to process malfunctions and start ups which are not counted against us....Therefore worst case to date is 44 hours ofexceedances. (i.e. 2.080% exceedances for hours ofoperationthis quarter.) See e-mail of6/27/95 (attached as part ofExhibit 45. A representative selection ofDr. WoodBlack's e-mails, 

### all ofwhich were marked as deposition exhibits to her deposition, are setforth as part ofa composite exhibit.) -18­number ofinstances in which Phillips was in violation ofa daily emissions limit. Once again, this silence is damning to any argument thatPhillips itselfbelieved that it was subject only to a 24­ hour average limitation. It is clear from these contemporaneous messages thatDr. Wood-Black believed thatPhillips was subject to an hourly limitation at its SRU. The wording ofthese messages (with their focus on the number ofhours ofexceedances) also belie Dr. Wood-Black's testimony that she believed that Phillips was only required to report on an hourly basis, ratherthan actually comply. Finally, for purposes offiling Excess Emissions Reports under EPCRA132 Phillips assumed that it was subject to an hourly emissions limit. In an internal memorandum dated December 14, 1995, Dr. Wood-Black set forth the procedures that the refinery operators were to follow when reporting the discharge ofexcess emissions into the atmosphere. Dr. Wood-Black's memorandum states as follows: Until recently, the Woods Cross facility only had a tonperyear limitation on the amount ofS02 that could be released into the atmosphere, thus making [it] virtually impossible to knowifa reportable quantity ofS02 had been released. Now as the permit limits have been tighten[ed] and we have a lb/hour limitation onthe SRU stack
.... 133 Laterin that same document, Dr. Wood-Black states "[o]ur S02permit limit onthe SRU is 114.42 pounds per hour.,,134 Phillips employees evidently followed the guidelines set forth in Dr.

132 EPCRAis theEmergency Planning and Community Right to KnowAct, 42 U.S.C. §§1100l et seq. 133 Exhibit 12 at p. 3. Although Dr. Wood-Black states that, priorto the issuance ofthe July 1995 Approval Order, Phillips had only a tons peryear limitation, this statement is at odds with theway thatPhillips reported its excess emissions to the State. 134 Id. -19­Wood-Black's instructions. Even though written reports were typically sent to the State several days after the initial release ofexcess S02, no attempt to qualify those emissions was ever made. 135 This last point is telling. In her deposition, Dr. Wood-Blacktestified that she understood that Phillips only had a duty to report emissions that exceeded the pennitted levels. 136 EvenwhenPhillips sent summaries ofits ExcessEmissions Reports to EPAin 1996, it made no attempt to qualify any ofthese reports. 137 6. What the StateMayHave "Intended" is Irrelevant to This Phase ofthe Proceedings In an attemptto avoid the clear wording ofthe October 1992 and July 1995 Approval Orders, Phillips and the State now contend that what the State really "intended" to do all along
wasto establish a 24:..hour averaging time for the SRU's emissions. In support ofthis argument,

135 A sampling ofthe ExcessEmissions Reports filed by Phillips is attached as Exhibit 46. TheReport filed onNovember 20, 1995 is illustrative. InthatReport, Dr. Wood Black confirms that Phillips had emitted excess emissions two days earlier

-- onNovember 18. The total excess S02 was 74.03 pounds for the day. Attached to this letter, Dr. Wood-Black attaches a copy of the CEM data for November 18. As reported by the CEM, for the day Phillips' emissions averaged 90.519 pounds perhour

- well underthe permitted limit. YetDr. Wood-Black's letter says nothing to the effect that, in actuality, there had been NO excess emissions that day, because the average emissions werebelowthe permitted level. See also, Report ofNovember 27 (confinning releases onNovember 23). Again, the daily average is less than the permitted level for that day.
136 See, Exhibit 9, Deposition ofDr. Frankie Wood-Black at 611-19.
137 OnFebruary 20, 1996, Dr. Wood-Black also provided EPAwith a summary of Phillips' excess emissions episodes. See, Exhibit 47. Once again, Dr. Wood-Black indicates that the current limit is 114.42 pounds/hr. Id. at CEM306821. Significantly, Dr. Wood-Black again makes no effort to compute the number oftimes that Phillips exceeded its permit assuming 24 hour averaging. Yetthis would havebeen simple to do. For example, on August 3, 1995, Phillips reported two hours in which it exceeded the 114.42 lb/hr limit. Id at CEM306824. The total emissions ofS02 for this date were 1,788.2 pounds, or an average of74.5 lb/hr, employing a 24 houraveragingtime. -20­Phillips (and the State) have argued that, because the Chemical Mass Balance ("CMB") modeling that was done to support the State's attainment demonstration was done on a daily, rather than hourly basis, emissions from sources such as the Phillips SRU should also be regulated on a 24­ hourbasis. Phillips (and the State) also point out that the SIP and the October 1992 Approval Order established daily and annual (and not hourly) limits for the refinery as a whole. Fromthis, Phillips (and the State) seem to conclude that because the State could have established daily limits for the SRU, it necessarily must have intended to do so and, therefore the Approval Orders should be construed in this manner. Itis the position ofthe United States that the testimony and correspondencefrom various State officials adduced by Phillips are nothing more than post hoc rationalizations that are entitled to no deference. Butthe Court need not even reach the issue ofwhether the State really "intended" to impose 24-hour averaging when it submitted its proposed SIP becausethe State's intent is irrelevant to this phase ofthe proceedings. 138 As demonstrated by the testimony ofits
own witnesses, what the State actually submitted to EPAfor approval was a never-to-beexceeded hourly limitation. EPAbased its decision to approve the proposed SIP in reliance on the plain language ofwhat was submitted. Itis simply notEPA's task in reviewing a proposed SIP to divine what the Statewas actually "intending" to do. EPAis entitled to rely on the clear wording ofthe proposed SIP in making its decision whether the plan is approvable ornot. Inthis

138 The only possible place in which the question ofthe State's intentmight be relevant would be at the penalty phase ofthe proceedings. Werethe Court to conclude that there was general confusion about the standard, and that Phillips in good faith believed thatit was subject to a daily rather than an hourly emissions limit, then the Court could consider this in setting a 

### civil penalty. See, 42 US.c. §7413(e)(penalty assessment criteria). -21­case, what the Stateproposed was an hourly limit, and this is the limit thatEPA approved and is authorized to enforce. 139 7. NoUnfairness to Phillips Results From the Enforcement ofan HourlyLimit Phillips claims that it is "caught in a regulatory crossfire" between the State and EPA concerning the properinterpretation ofthe SIP. Nothing could be farther from the truth. As we have demonstrated above, it was Phillips itselfthat proposed the emissions limits thatEPAis attempting to enforce. Phillips is a sophisticated company, with operations in numerous states and access to qualified legal counsel. 

### It could have proposed 24-hour averaging when it was reviewing drafts ofwhat would become the SIP that was ultimately adopted by Utah and approved by EPA. EPA obviously believed that 24-hour averaging could bejustified in appropriate circumstances, as evidenced by its approval ofthe SIP provisions for Kennecott, Geneva Steel, and other sources. Moreover, the record shows that Phillips proposed at least three different sets ofemissions limitations tothe State for inclusion in Approval Orders. Had Phillips requested 24-hour averaging in either its July 1992 or October 1992 proposals to the State, those limits could have been presented toEPA and, perhaps, adopted as the federal SIP limits. ButPhillips did not make such a proposal. Phillips had a third opportunity to propose 24­ hour averaging in July 1995 when once again it proposed the emissions limits that the State set

139 Perhapsifthe emissions limit for the Phillips SRU were the only one in the entire SIP expressed on an hourly basis, the company's argument might be more plausible. When one examines the SIP document proposed by the State, however, it is apparent that the State chose to regulate the majority ofits stationary sourcesby establishing hourly emissions limitations. See Undisputed FactNo.9. -22­forth in the July 1995 Approval Order. Phillips should be required to live with the limits that it itselfrequested the Stateto impose. 14o

8. Sound Public PolicyRequires that EPABe Able toEnforce the SIP As Written Essentially, Phillips and the State ask that this Court allow the State to amend the SIP through administrative fiat ratherthan the process specified in Section 11

### O(c). As we previously argued in ourResponse to Phillips' Second Motion for Partial Summary Judgment, Section 110(i) ofthe Act prohibits such informal modifications. Aside from the fact that it is inconsistent with the provisions ofthe Act itself, Phillips' suggestion amounts tobad public policy. IfEPA cannot enforce the plain language ofthe SIP that it has approved, then the entire structure ofthe Clean Air Act is undermined. Sources could simply approach State regulators for relieffrom requirements that they considered too onerous. Sympathetic Stateregulators could then simply amend the original SIP requirements under the guise that the original requirement was not what the State actually intended. That States would be encouraged to behave in such a manner is not fanciful. As the Court ofAppeals for the Sixth Circuit stated: As Congress has recognized, ifstate control ofambient air emissions were final, in short order, major shifts ofsmoke stack industries to states with the most lenient pur air standards would inevitably take place. Absent final authority in the United States EPA, the attainment ofgoals ofthe Clean Air Act would prove ephemeral. 141

140 Moreover, EPA stated clearly in its July 1994 Approval oftheUtah SIP that, were the Stateto revise permit standards that EPA, as a matter offederal law, would enforce the more stringent ofthe two. See, UndisputedFactNo. 11.
141 United States v. FordMotor Co., 814 F.2d 1099, 1102 (6th Cir.), cert. denied, 484 U.S. 822 (1987). Accord, DuquesneLight Co. v. U.S. EPA, 698 F.2d 456,471 (D.C. Cir. 1983). -23­In conclusion, the Stateproposed an hourly emissions limitation, a fact that even the State regulators now acknowledge. EPA approved this hourly limitation as part ofthe SIP, making it a matter offederal law
. EPA must be allowed to enforce the limits that were actually proposed and approved. Forthis reason, theUnited States is entitled to summaryjudgment on the first bifurcated issue. 

### B. Phillips Is Required To Achieve 95% Efficiency AtIts SRU OnA Daily Basis TheUnited States also seeks summaryjudgement that, beginning on July 17, 1995, Phillips had a duty to operate its SRU so that, on a daily basis, the unit removed at least 95% of the sulfur in the gas streams fed to it. The requirement thatPhillips achieve 95% efficiency at the SRUhas been in place sinceEPAapproved the Utah SIP on July 8, 1994. 142 The duty to comply with this 95% requirement on a daily basis was not made explicit until the State issued its Approval Order to Phillips in July 1995. TheUnited States is entitled to summaryjudgment on this issue becausethe 1995 Approval Order is clear on its face that the 95% efficiency requirement is a daily one. Moreover, thetestimony ofthe State's ownwitnesses, including the author ofthe 1995 Approval Order, reveal that it was always their understanding that the duty to comply was a daily one. 1. The July 1995 Approval Orderis Clear on its Face. When interpreting a regulatory provision, the Court should startwith the wording ofthe provision itself Ifthese provisions are unambiguous, thenthe Court should give effect totheir

142 Exhibit 5, at App. A 

### § 2.1.M.A. entitled "PetroleumRefineries" provides that "[a]ll petroleum refineries in or affecting the PMlO nonattainment area shall for the purpose ofthis PMlO, SIP 1) require sulfur units/plants (SRU) that are at least 95% effective in removing sulfur from the streams fed to theunit." -24­ordinary meaning. FDIC v. Canfield, 967 F. 2d 443 (lOth Cir. 1992) (construing statute). The relevant provisions oftheJuly 1995 Approval Oder clearly require thatPhillips meet the 95% efficiency requirement on a daily basis. Condition 5 provides: To comply with the requirements ofthePMlO SIP, Phillips 66 Company in Woods Cross, Utah shall do the following: Require sulfur removal units/plants (SRU) that are at least 95% effective in removing sulfur from the streams fed to the unit
.... 

## c. Indicators 2. Appropriate adjustments to SRU operation parameters shall be made to ensure 95% efficiency on a daily basis
.... 143 While the rest ofCondition 5 specifies how and when the SRU is to betested, and what Phillips must do ifSRU efficiency drops below 95%, there is nothing in the rest ofthis Condition that negates or qualifies the duty oftheCompany to make appropriate adjustments to the SRUto
ensure 95%+ efficiency on a daily basis. Moreover, the concept ofa "dailybasis" is susceptible to only one meaning, namely thatPhillips comply with the efficiency requirement on each and every day that it operatestheunit. Any other interpretation effectively reads out this unambiguous requirement. Anotherindication that the State intended that Phillips achieve 95% every day is found in Condition 5.E, which sets forth the conditions upon which Phillips has the option to increasethe allowable emissions from the "emissions cap" sources ifit can demonstrate that its SRU actually operates at betterthan 95% efficiency. In orderto take advantage ofthis option, Phillips would have to provide at least one year ofdata. For an emissions trade-offrequest to be approved,

143 See, Exhibit 15 (July 1995 Approval Order) at Condition 5 (at pp. 4-5). Emphases in original. -25­"[t]he (SRU) 24 hourminimum operating efficiency shall have been demonstrated to be no less than 95%."144 This provision is also clear. The State is allowing Phillips the option ofincreasing emissions at other points at the refinery provided that it can demonstratethat the SRU's daily (or 24-hour) minimum efficiency is at least 95%. Once again, there is no wayto interpretthis provision as requiring anything other than daily compliance with the standard.
2. The State'sWitnesses and a KeyPhillips Employee Have Testified That 95% EfficiencyMustbeMaintained On a Daily Basis.
In addition to the language ofthe Approval Order itself, three ofthe State's own witnesses, designated pursuanttoFed. R. Civ. P. 30(b)(6), have testified thatthey understood that the July 1995 Approval Order required compliance on a daily basis. Mr. Beheshti, the State PermittingEngineer responsible for the preparation ofthe July 1995 Approval Order, testified as follows: 

### Q: Isit yourunderstanding that Phillips is obligated to meet at least 95-percent efficiency every day? A: That's what the first sentence [referring to Condition 5.C.2] says. Q: Ifyou look atthe whole paragraph, does that change your opinion? A: It doesn't look like it. Q: So you would still say that they are required to meet the efficiency requirement every day? A: Yes. 14S
144 Id. at p. 6 (emphasis added).
14S SeeExhibit 16 (Deposition ofMikeBeheshti) at 29-30. See also, Exhibit 35 (Deposition ofWilliam Reiss) at 16 and 164. -26­Similarly, Mr. Montie Keller, also testifying pursuant to Fed. R. Civ. P. 30(b)(6), recognized that the duty to achieve 95% efficiency was a daily requirement: Q: Is it yourunderstanding that the language her [referring to Condition 5.C. of the 1995 Approval Order] requires that Phillips be in compliance with the 95­ percent efficiency requirement every day? A: I think that was ourintent, yes, that ifit were operating correctly, ifthe SRU were not operating at significantly lowerthan normal capacity, that it oughtto operate
- - that's why we put a plus

- - it ought to operate probably betterthan 95, but a least 95, and that it should do so on a consistentbasis. We didn'tthink it was realistic to have them verify the 95 every hour orevery day, but as an operational kind ofthink I think we expected that ifit was operating properly it would be in the 95 plus range, and we would expect them to operate it so that it would be that way. Not every hour, because we know operational conditions change. But on a 24-hourbasis, ifthey watched it closely enough, they could probably have time with eithertweaking up the SRU oftweaking up the processto keep, you, know generally in that range, so, yeah. 146 Finally, WalterKramer, one ofPhillips' employees (now a former employee) charged with negotiating what became the 1995 Approval Order, stated that was his understanding that the Order required the Companyto achieve 95% efficiency on daily basis: Q: In negotiating this language with the state, wasthere any discussion about whetherPhillips had to meet the 95-percent efficiency requirement on a continuous basis? A: I believe the intent was to meet the 95-percent on a daily basis. The 95-percent efficiency that is. Q: Is that something that you discussed withthe state? A: Yes, sir. Q: And that would have been Bill Reiss and Montie Keller?

146 See Exhibit 36 (Deposition ofMontie Keller) at 344-45. -27­A: Yes, sir. 147 Thus, the personwho negotiated what became the 1995 Approval Order for Phillips, as well as the State employees with whom he negotiated these provisions, had a common understanding that Phillips was to meet the 95% efficiency requirement each and every day. This testimony, coupled with the clear wording ofthe Approval Orderitself, provides ample basis upon which this Court can award the United States summaryjudgment on this issue. 

### C. UTAH'S JUDGMENTS REGARDINGTHEAVOIDABll,lTY OFBREAKDOWNS ARE NOTBINDINGON EPA FORPURPOSES OFFEDERALENFORCEMENT Itis necessaryto address this issue in two parts, first with regard to breakdowns which
cause excess emissions, and second withregard to breakdowns ofthe CEM. This is because the first is the subject ofa SIP provision, while the latteris not. Both aspects will be significant for determining the number ofviolations which Phillips has committed.



### 1. The Utah Excess Emissions Breakdown Rule Does Not Prevent EPA from Exercising IndependentJudgment about Which Breakdowns Are Avoidable UtahRule 4.7 provides that, "emissions resulting from an unavoidable breakdown will not be deemed a violation ofthese regulations
.... Breakdownsthat are caused entirely or in partby poor maintenance, careless operation, or any other preventable upset condition orpreventable equipmentbreakdown shall not be considered unavoidable breakdown [sic]. ,,148 Nothing in Rule 4.7 provides that makingjudgments about the avoidability ofbreakdowns is the sole province of the State.

147 See,**Exhibit~7.(Deposition** ofWalter !<ramer) at 133. See also, id. at 68 and 143.
148 UACR R307-1-4.7 (1992). -28­Because Rule 4.7 is part ofthe SIP, it is federal law as well as State law. Numerous courts have held that deference is due to a federal agency which is interpreting or enforcing federal law. For example, "0nce approved, an SIP becomes part ofthenationwide plan that either EPA or the states can enforce. In ourjudicial review we give great deference to the EPA's interpretation ofthe statutory scheme that Congress entrusted to it to administer. Such deference isjustified because the EPAhas developed special expertise in implementing and enforcing the Act. Thus, we may not substitute our ownjudgmentfor the EPA's, although wewill disapprove EPA decisions that contradictthe Act's plain meaning or intent." 149 Here the clear intent ofthe Act was for EPAto maintain an oversight function, to be sure that public health is protected even ifStates do not take appropriate actions to achieve that goal. Approval ofa SIP is not the end of EPA's oversight. The Act requires EPAto play an active role in monitoring the State's implementation ofthe SIP to ensure that air quality is maintained. For example, Section 110(k)(5) provides that the Administrator must call for a plan revision ifthe existing plan proves to be inadequate. 15o In addition, Section 11O(p) ofthe Act requires Statesto submit reports to

149 American Cyanamid Co. v. US. EPA, 810 F.2d 493, 496 (5th Cir. 1987) (citations omitted). See, also, Argument above at 1-2, Bragdon v. Abbott. et aI., 524 US. 624, 625 (1998) (liThe views ofagencies charged with implementing a statute are entitled to deference."), American Lung Ass'n ofN.J. v. Kean, 670 F. Supp. 1285, 1291 (D.N.J. 1987) ("Although the EPA's interpretation ofNewJersey' SIP does not control my decision, the agency's views are entitled to deference
... I also repeat my earlier observation thatNewJersey, as author ofthe SIP, should not be afforded deference in interpreting the document.").
150 42US.C. §7410(k)(5). "Whenever the Administrator finds that the applicable implementation plan for any area is substantially inadequate to attain or maintain the relevant national ambient air quality standard,
... orto otherwise complywith any requirement ofthis chapter, the Administrator shall require the State to revise the plan as necessary to correct such inadequacies." -29­EPAto allow the Agency to assess the effectiveness ofthe SIP and makejudgments about when action under Section 1l0(k)(5)is necessary.l5l A crucial example ofEPA's continuing oversight is thatEPAis authorized to take a federal enforcement action when a State enforcement action is inadequate. United States v. SCM**~,** 615 F. Supp. 411, 419 (D. Md. 1985) ("In support ofits contention thatthe language of the Clean 

### AirAct precludes the bringing ofthe instant action, defendant leaps from the premise thatthe Act contemplates state enforcement to the conclusion that the state enforcementbars any action by the EPAto enforce federally adopted standards. That conclusion finds no support in logic orthe statute. Congress provided that the EPAmay bring actions in the federal courtsto enforce federally approved SIP's
.... This enforcement scheme, and the significant penalties Congress intended to impose upon air polluters, would be nullified under defendant's view ofthe law.") Section 113(e)(1) ofthe Act/52 which was added in the 1990 amendments, contemplates federal enforcement enforcement ifa State has already received a (presumably insufficient) penalty for the same violation, when it statesthat courts should take into account penalties previously paid, in assessing a penalty in a federal action. See United States v. Vista Paint Corp., 42 ERC 2020, 1996WL 477053, 15 (C.D. Calif. 1996) aff'd 129F.3d 129 (9th Cir. 1997), cert. denied, 119 St. Ct. 53 (1998) (in federal enforcement case for violations ofCalifornia SIP, defendant's payment ofapenalty for same violations to local air pollution agency was merely, a "slightly

151 42 U.S.C. §7410(p). "Any State shall submit, according to such schedule as the Administratormay prescribe, such reports as the Administrator may require relating to emission reductions, vehicle miles traveled, congestion levels, and any otherinformation the Administrator may deem necessary to assess the development effectiveness, need for revision, orimplementation ofany plan revision required under this chapter."
152 42 U.S.C. §7413(e)(I). -30­mitigating factor" considered by federal court in assessing a penalty.)153 Thus, it would be inimical to the scheme ofthe Act for EPAto give up its right to determine whatbehaviorby a polluter constitutes a violation. Phillips maintains that a State's finding ofcompliance binds EPA. This would mean that EPA somehowwaived its statutory right to enforce based on factualjudgmentby State. What Phillips is essentially arguing is that silence constitutes an agreement to bebound. As the SCM and VistaPaint cases, supra, show, however, State and local enforcement actions cannot preclude federal enforcement. Howabsurd, then, that lack ofenforcementby a State could have that effect. For all the reasons above, this Court should grant summaryjudgment to theUnited States
on the point thattheUtah excess emissions breakdowns are avoidable. 2. NothingPrevents EPA from Exercising IndependentJudgment about Which CEM Breakdowns AreAvoidable The SIP and the Approval Orders require thatPhillips "install, calibrate, maintain and operate a continuous S02 emissions monitoring system on the SulfurRecovery Unit Incinerator stack.,,154 That monitoring system is the sole means for measuring Phillips' SRU S02 emissions, and thus it is critical to determining whetherPhillips violates its SRU emission limitations and its efficiency requirements. TheUnited States is not aware ofany provision in the SIP or any Approval Order which exempts unavoidable breakdowns ofthe CEMfrom being violations ofthe requirement to operatethe monitoring system.

153 Exhibit 48, the district court opinion, is supplied, pursuant to DUCiv. R. 7-2. 154 See Exhibit 8 [10/92 Approval Order] at §16 and Exhibit 15 [95 Approval Order] at §20. -31­In its correspondence withEPAregarding this issue, Phillips relies heavily on the CEM malfunction provision ofthe federal regulations regarding SIPs. Paragraph 1.4 of40 C.F.R. Part 51, Appendix P, states: "The State plan may provide a temporary exemption
... during any period ofmonitoring system malfunction, provided that,the source owner oroperator shows, to the satisfaction ofthe State, that the malfunction was unavoidable and is being repaired as expeditiously as practicable." [Emphasis added.] However there is no evidence to suggest that Utah actually adopted this language into its SIP. The closest Utah came was in UACR 307-1­ 4.6.3, which states thatthe "Minimumperformance specifications for all continuous monitoring systems are those contained in
... 40 C.F.R., Part 51, Appendix P." That Appendix sets forth the minimum requirements for CEMs that each SIP must include. Clearly Utah did adopt the "minimum performance Specifications" portion ofAppendix P, which is in Sections 3.0 through 3,9, ButParagraph 1.4 is not contained in that section ofAppendix P and is optional, based on the "may provide" phrasing. Thus, the United States concludes that the language ofParagraph 1.4 does not apply to this cause ofaction. Even ifUtah were implementing an exemption along the lines ofthat allowed by Paragraph 1.4, EPAwould certainly have the authority to exercise independentjudgment regarding the avoidability ofCEM malfunctions, As with many other provisions ofthe Clean Air Act and its implementing regulations, the regulatory scheme is that States have the primary role in taking certain actions. The EPArole is to review that action by the State and to step in when necessary toprotect public health orthe integrity ofthe program. In this case, EPAbelieves that Utah's acceptance ofPhillips' assertions ofunavoidability is incorrect and must be addressed. (See



### -32­argument in Section III.C.1, above, for additional discussion ofwhy Utah'sjudgments about avoidability should not bind EPAeven ifa SIP malfunction provision is found to be applicable.) "When a [SIP] is approved by the EPA, its requirements become federal law and are fully enforceable in federal court. ,,155 Here, as noted, the requirement is operate a CEM at the SRU is part ofthe SIP. Thus the federal government is entitled to decide what breakdowns ofthe CEM should be excused as unavoidable, ifany. VI. CONCLUSION Forthe foregoing reasons the United States is entitled to summaryjudgment on each of the three bifurcated issues.

155UnitekEnvironmental Services, Inc. and Unitek Solvent Services, Inc. v. Hawaiian Cement, 27 ELR20483 (D. Haw. 1997). -33­DATED: December

__, 1999 Respectfully submitted, LOIS J. SCHIFFER Assistant Attorney General Environment andNatural Resources Division U.S. Department ofJustice

# By:'Rd~**~01lh«1** ROBERT R. HOWAK Trial Attorney DAVID ROCHLIN Special DOJ Attorney Environmental Enforcement Section Environment and Natural Resources Division U.S. Department ofJustice 999 18th Street, Suite 900-N Denver, Colorado 80202 (303) 312-7353 PAULM. WARNER United States Attorney District ofUtah ERIC OVERBY Assistant United StatesAttorney District ofUtah 185 South State Street Suite 440 Salt Lake City, Utah 84111 (801) 325-3233

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