Clark Waddoups, Esq. (3975) Carolyn

### B. McHugh, 

### Esq. (3733) StevenJ. Christiansen, Esq. (5265) D. Kyle Sampson, Esq. (8112) PARR WADnoups BROWN GEE & LOVELESS, PC 

### i85 South State Street, Suite 1300 SaltLake City, Utah 84111-1536 Telephone: (801) 532-7840 Attorneys for Phillips Petroleum Company
IN THE UNITED STATES DISTRICT COURT DISTRICT OF UT

### AR, NORTHERN DIVISION ) UNITED STATES OF AMERICA, ) 

### PHILLIPS PETROLEUM ) 

### COMPANY'S MOTION FOR Plaintiff, ) 

### PARTIAL SUMMARY JUDGMENT ) vs. ) 

### (Oral Argument Requested) ) PHILLIPS PETROLEUM COMPANY, ) Civil No. 1:97CVOl44S ) Derendant. ) Hon. David Sam )
Pursuant to Rule 56(c) of the 

### Federal Rules ofCivil Procedure, Defendant Phillips Petroleum Company ("Phillips") hereby moves for swnmaryjudgment on Counts I and II ofthe Amended Complaint filed inthis action by the United States ofAmerica ("EPA"). Phillips is entitled to summaryjudgment onCounts I and II on the following grounds:

### 1. Phillips has 

### complied withcontinuous emissions monitoring ("CEM") requirements at itsWoods Cross refinery as a matteroflaw becausethe State of

### Utah determined, to the State's satisfaction, that Phillips' CEM equipmentmalfunctions were unavoidable and therefore excused. 2. 

### Phillips has 

### complied with the daily emissions limit for sulfur dioxide ("SOn 

### at 

### its Woods Cross refInery 

### as amatteroflaw because the hourly S02 

### emissions limit EPA contends applies to Phillips would unconstitutionally discriminate against Phillips and therefore would be unenforceable as a matter oflaw. 3. 

### Phillips has complied with the daily emissions limit for sulfur dioxide ("S02") 

### at its 

### Woods Cross refmery 

### as amatter oflaw because the hourly S02 

### emissions limit EPA concends applies to Phillips would be arbitrary and capricious and therefore unenforceable 

### as amatter of law. This Motion is supported by the Memorandum in Support of Ph.illips Petroleum Company's Motion for Partial Summary Judgment, which is filed concurrently herewith; the Affidavits ofJeffDean, David J. Prey and

### Walter F. Kramer, each ofwhich is filed concurrently herewith; and 

### the record, pleadings, exhibits, depositions, affidavits and otherdocuments on file in 

### this action.

[c:l
...IpIlilJips1,5£>.mot.wpd) 2

### RESPECTFULLY SUBMITTED this 

### 1"'1'day ofAugust, 1998. PARRWADDOUPS BROWN GEE 

### & LOVELESS, PC



### Attorneys for Phillips Petroleum Company

(c:l
...Iphillip.lr56-mol.wpd] 

### 3

### CERTIFICATE OF

### SERVICE I HEREBY CERTIFY thaton

### the**~day** 

### ofAugust, 1998, atrue and correct copy ofthe foregoing PHILLIPS PETROLEUM COMPANY'S MOTION FOR PARTIAL SUMMARY JUDGMENT was mailed, postage pre-paid, to the following:. Eric A. 

### Overby, Esq. U.S. ATTORNEY'S OFFTCE 

### 185 South State Street, Suite 400 Salt Lake City, Utah 84111-1506 William A. Hutchins, Esq. Senior Attorney, Environmental Enforcement Section Environment and 

### Natural Resources Division U.S. DEPARTMENT OFJUSTICE 

### P.O. Box 7611 Ben Franklin Station Washington, D.C. 20044 Kathryn Schmidt, Esq. Environmental Enforcement Section U.S. DEPARTMENT OFJUSTICE 

### 999 18th Street Suite 945, North Tower Denver, Colorado 80202

[e;I
...Iphillipslr56-mol.wpdJ 

### 4Clark Waddoups, Esq. (3975) Carolyn B. McHugh, Esq. (3733) Steven J. Christiansen, Esq. (5265) D. Kyle Sampson, Esq. (8112) PARRWADDOUPS BROWN GEE & loVELESS, PC 185 South State Street, Suite 1300 SaltLake City, Utah 84111-1536 Telephone: (801) 532-7840 Attorneys for Phillips Petroleum Company
IN THE UNITED STATES DISTRICT COURT DISTRICT OFUTAH, NORTHERN DIVISION ) UNITED STATES OF AMERICA, ) MEMORANDUM INSUPPORT ) 

### OFPHll..LIPS PETROLEUM Plaintiff, ) COMPANY'SMOTIONFOR ) PARTIAL SUMMARYnJDGMENT vs. ) ) PHILLIPS PETROLEUM COMPANY, ) Civil No.1:97CV0144S ) Defendant. ) Han. David Sam )
Defendant Phillips Petroleum Company ("Phillips") respectfully submits the following Memorandum in Support ofits Motion for Partial Summary Judgment against PlaintiffUnited States ofAmerica ("EPA").TABLE OF CONTENTS TABLE OF AUTHORITIES iii INTRODUCTION v FACTUAL BACKGROUND vii STATEMENT OF UNDISPUTED FACTS xvii ARGUMENT 1 

### 1. PHIllIPS HAS COMPUEDWITH CEM MONITORINGREQUIREMENTS AS AMATTER OF LAW 1 A. CEM Unavailability Caused by CEM Equipment Malfunction Is Excused Ifthe State Detennines to Its Satisfaction That the Equipment Malfunction Was Unavoidable
. . ; 1 

### B. It Is Undisputed ThatPhillips Demonstrated to the Satisfaction ofthe State That the CEM Unavailability EPA Complains of Was Caused by Unavoidable CEM Equipment Malfunctions
. . 5 C. The State Did Not Abuse The Discretion Granted it in Determining That Phillips' CEM Equipment Malfunctions Were Unavoidable
. . 

### 6 II. PH1U1PS HAS COMPUED WITH S02 EMISSIONS LINllTS AS A MATTER OF LAW 9 A. As Interpreted by EPA, the PM10 SIP and the Approval Orders Would Unconstitutionally Discriminate Against Phillips and Therefore Would Be Unenforceable as a Matter of

### Law
. . 9 

### B. Under EPA's Interpretation, the State's Action in Promulgating the PMIO SIP and Issuing the Approval Orders Would Have Been Arbitrary and Capricious. 18 CONCLUSION 23

Id
...**lphjllip~\r56-mem3.wpdl** 

### ii

### TABLE OF AUTHORITIES**~:** 

### Amax**Magne~ium** 

### Corp. v. Utah State Tax Comm'n, 796 P.2d 1256 (Utah 1990).
. 10, 11, 14 Anderson y. 

### Liberty Lobby,**1llc;.~,** 

### 477 U.S. 242, 106 S. Ct. 2505 (1986) 1 BowmanTransp" Inc. v. Arkansas-Best Freight 

### Sys" Inc., 419 U.S. 281, 95 S. Ct. 438 (1974) 19 Broadbent v, Gibson, 140 P.2d 939 (Utah 1943).
. 10 Caribbean Petroleum Corp. v. EPA, 28 F.3d 232 (lst Cir. 1994) , .. 21 Crowell v. Benson, 285 U.S. 22, 52 S. Ct. 285 (1932).
. 17 Dodge Town. Inc. y.**Rom~,** 

### 480 P.2d 461 (Utah 1971).
. 10 Florida Power &; 

### Light Co. v. Costle. 650 F.2d 579 (5th Cir. 1981)
.. , 2 Greenwood y. 

### City ofNorth Salt Lake, 817 P.2d 816 (Utah 1991) 10 Gronlum1 v. Salt

### Lake City, 194 P.2d464 (Utah 1948). 10, 11 llUnois v. Celotex, 516 F. Supp, 716 (C.D. Ill. 1981) , 11 Malan v. Lewis, 693 P,2d 661 (Utah 1984) 10, 11, 13**~u.nt** 

### Evans Co. y. 

### Madigan, 14 F.3d 1444 (lOth Cir. 1994) , 7 NavlstaLlnt'l Traost'. Corp. v. EPA, 941 F.2d 1339 (6th Cir. 1991)
.. , .. , , . . . . . .. viii Olenhouse v. Commodity Credit Corp., 42 F.3d 1560 (10th Cir. 1994) 18, 20, 21 Rocky MQuntain Helicopters. Inc. v. FAA, 975 F.2d 736 (10th Cir. 1992). . , ,................... 14, 18, 19,20
(c,\
...\phillip'lr56-mcmJ.wpd) 

### iiiSierra Club v, Indiana-Kentucky 

### Eke, CQrp., 716 F.2d 1145 (7th Cir. 1983).
.. I 11
•• I I •••• I ••••••••••••••••••••• State 

### v. 

### Bayer, 97 P. 129 (Utah 1908) 10 State 

### v. Holtgreve, 200 P. 894 (Utah 1921) 10 State v. I.B. & R.E.**Walk~L....1.IJ&...,** 116 P.2d 766 (Utah 1941) 11 I •••••••••• State Tax Comm'n v, Dep't of 

### Finance, 576 P.2d 1297 (Utah 1978) 10 Thomas 

### Brooks Chaltered 

### v. Burnett, 920 F.2d 634 

### (lOth Cir. 1990).
. 7 Train 

### v. Natural Resources Defense Council 

### Inc., 421 U.S. 60, 95 S. Ct. 1470 (1975) 22 I ••••••••••••••••••••••••••••• United States v, Ford Motor Co., 736 F. Supp. 1539 (W.D. Mo. 1990).
. 2 United**Stat~.Lv,** General Motors Corp" 702 F. Supp. 133 

### (N.D. Tex. 1988).
. I ••••••••••••••••••• 2 United States v. Solar Turbines, Inc., 732 F. Supp. 535 (M.D. Pa. 1989) '; 14 Unterrnyer v. State

### Tax. Comm'n, 129 P.2d 881 (Utah 1942) 10 Virginia v. 

### EPA, 108 F.2d 1'397 (D.C. Cir. 1997) 22 Weber

### Basin Home Builders Ass'n v, Roy City, 487 P.2d 866 (Utah 1971) 10 

### Woods**PetrQl~um** Corp. v, Pep't 

### QfIntcriQr, 47 F.3d 1032 

### (lOth 

## Cu. 1995).
. 19 Constitutional PrQvisions: Utah Const., Article I, §24
••••••••••••••••••••••••••• 9, la, 13 I

!e:\,
..IphillipslrS6-mcm3.wpd) lV

### Statutes: Clean Air Act, 42 U.S.C. 

### §§ 7401 

### passim Utah Code Ann. 

### § 19-2-106 (1995) 17 

### Regulations: Utah Admin. 

### R. 307-1-4.7 (1996) xv Utah Admin. 

### R. 307-13 (1996) : 

### 3. 4 

# • 40 C.F.R. Pt. 51, App. P, 

### § 1.0 (1997) 4,5 40 C.F.R. §56.3 (1997) 13 40 C.F.R. §56.4 (1997) " 13 40 C.F.R. 

### § 81.345 (1997). 

### ix 

### INTRODUCTION This case concerns a dispute between the Utah Division of Air Quality ("DAQ" or the "State") and the United States Environmental ProtectionAgency ("EPA") overthe manner 

### in which the State should enforce Utah's State Implementation Planfor PMIO (the "PMIO SIP"). PMIO is particulate matter 10 microns or smaller that is suspended 

### inthe atmosphere and contributes to the air quality condition commonly referred to as smog. EPA contends that Phillips Petroleum Company ("Phillips") has violated the PMlO SIP on numerous occasions. Specifically, EPA contends that Phillips has failed to comply (1) with the PM IO SIP's continuous emissions monitoring ("CEM") requirements and (2) with the PMLQ SIP's sulfur dioxide ("SO/) emissions

v [c:I
...Iphillipslr56-mem3 wpd]

### limits. l 

### AlthoughEPA contends that**the~e** 

### S02 emissions limits are

## lill.Yr1x, the State agrees with Phillips that S02 emissions were to be measured on a basis for compliance purposes. After reviewing all ofthe evidence, the State has determined thatPhillips has complied withthe requirements ofthe PMIO 

### SIP. Indeed, the State has determined (1) 

### that Phillips' failure to operate its CEM within specified calibration parameters during certain periods oftime was excused because such failure was due to unavoidable CEM equipment malfunctions and (2) 

### that 

## • Phillips has complied with the Qaily 

### S02 emissions limits imposed by the PMIQ SIP. In sum, the State has already reviewed the allegations set forth by EPA and has found them to be without merit. Furthermore, EPA's interpretationofthe PMIQ SIPunconstitutionally discriminates against Phillips and is arbitrary and capricious. As aresult, EPA's interpretation is unenforceable. 

### Despite the State's objection, EPA initiated this enforcement action. This action unlawfully infringes upon state prerogatives and unconstitutionally discriminates against Phillips. Importantly, EPA's interpretation ofthe PMIQ SIP would not advance the objectives ofeither the Clean Air Act or the Utah PMlO 

### SIP. Instead, EPA's interpretation ofthe PMIQ SIP and its instigation ofthis action serve only to work a substantial injustice upon Phillips. The material facts bearing upon Phillips' compliance withthe PMlO

### SIP are undisputed. Consequently, Phillips is entitled to the entry ofpartial summaryjudgment in its favor.

I EPA has recently filed an Amended Complaintwhich sets forth three additional claims for relief. The additional claims for reliefpleaded by EPA in the Amended Complaim are not addressed in this Motion for Partial Summary Judgment. {c:\
...\phillips\r56-mem3.wpdl 

### viFACTUALBACKGRQUND Phillips submits the following factual background for the convenience of the Court. Phillips recognizes that some ofthe facts presented 

### in this factual background may be disputed by EPA, but offers this section to assist the Court in understanding the context surrounding the material facts which are not in dispute. Phillips' Statement of Undisputed Facts necessary to sustain summaryjUdgment is set forth immediately following this introductory section. TheRegulatory Context Pursuant to the Clean Air Act Amendments of 1970, Congress required states to attain certain National Ambient Air Quality Standards ("NAAQS"), to be adopted by the United States Environmental Protection Agency ("EPA"). A "NAAQS" is a limit on the amount ofa specified pollutantthat may be present 

### in the atmosphere under the Clean Air Act. AlthoughEPA was to establish the NAAQS for certain criteria pollutants, each state 'was granted the authority to determine how those NAAQSs would be attained. InJuly of 1987, EPA adopted the NAAQS for particulate matter ten microns or smaller (UPMJO"). The NAAQS for PMIO establishes only daily and annual standards. There is no NAAQS which sets an hourly standard orPMJO. Under the Clean Air Act, states are required to determine whether they are in compliance with the daily and annual PM IO NAAQS. Ifthe state, or some region ofthe state, is not in compliance with the NAAQS, then the state must adopt and submit to EPA a State Implementation Plan ("SIP") establishing the manner in which the state will
vii [c:I
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### implement, maintain and enforce the NAAQS. The Development ofUtah's**PM1~** 

### In the late 1980s, the State ofUtah determined that Salt Lake County and Utah County
were not in

### compliance withthe NAAQS for PM10' 

### InSalt Lake County and Utah County, under certain winter inversion conditions, sulfurdioxide ("SOn, along with otherpollutants, is trapped by stagnation near the valley floor and converts, over aperiod ofseveral days, into sulfate - a form ofPMlO• 

### These winter inversionconditions occurprimarily during the months ofDecember, January and February, and, prior to 

### the adoption ofthe PMlO SIP, 

### caused Salt Lake and Utah Counties to exceed the NAAQS up to twenty days per year. The State based 

### its determination that 

### "exceedances,·2 ofthe NAAQS occurred in SaltLake andUtah Counties up to twenty days per year on data collected from air quality monitors located along theWasatchfront. The airqualitymonitors, whichare operated by the State, containfilters which are weighed daily (or less frequently) to 

### determine whether the amount ofPMIO 

### in the air exceeds the PMIO 

### NAAQS. Because the State determined that Salt Lake and Utah Counties

2 An "exceedance" ofthe PM10NAAQS does not necessarily constitute a "violation." [Deposition ofLee Hanley ("Hanley Depo.'') at 230 (cited portions ofthe Hanley Depo. are attached hereto as Exhibit "A''); Affidavit ofDavid J. Prey ("Prey Aff.") 

### 19 (the Prey Aft. is filed concurrently herewith).] The NAAQS provide that a state is in compliance "when the expected number ofdays per calendar year with a 24-hour average concentration above 150 .ug/rn J .•. is equal to or less than one." 40 C.F.R. pI. 50.6(a) (1997). Thus, one exceedance ofthe PM 10 NAAQS per year does not constitute aviolation. 

### U Navistar lot'! TranstJ. CoW, v. EPA, 941 F.2d 1339, 1350 (6th Cir. 1991) (discussing argument that although "there had beenexceedances ofthe ozone [NAAQS] since 1984,
...no viol::tior1s ofthe standard occurred in the period from 1984 to 1987" (emphases added». In this case, EPA has not always properly distinguished between "exceedances" and "violations" ofthe NAAQS. 

### U i!.L. at 1353 n.16 (noling that EPA failed, "at times, to properly distinguish between 'violations' and 'exceedances"').
[c:\
...\phillips\r56-mcmJ.wpdJ 

### viiiexceeded the NAAQ5 for PMIO up to twenty days per year, the State began the process of adopting a SIP (the "PMlO SIP") that would establish a control strategy for PMIO and permit the State to demonstrate compliance with the NAAQS. The State requested that Phillips Petroleum Company ("Phillips") provide an inventory of the S02 emissions from Phillips' Woods Cross petroleum reflnery located in Davis County, Utah. Phillips complied with the State's request and provided emissions inventory data to the State that
was stated in a pounds perday, tons perday and tons peryear format. In addition to acquiring emissions inventory data from Phillips and the other major industrial sources ofS02 emissions, the State performed air quality modeling to serve as the technical foundation ofthe PMlO SIP. All ofthe air quality modeling performed by the State for the SIP was conducted on a daily basis. The State promulgated its PMlO SIP onJune 

### 28,1991, the first such SIP promulgated in the nation. EPA approved the PMIO SIP in 1994. In developing the PMlO SIP, the State focused
on reducing the 502 emissions ofmajorindustrial sources in Salt Lake and Utah Counties because the State believed that regulating major industrial sources would be the most cost-effective way to achieve attainment of the NAAQS. The State also included 

### in the PMlO SIP certain major industrial sources in Davis County because the Slate believed that 502emissions from Davis County were contributing to the amount ofPMIO in the air in Salt Lake County.3 The Geneva

3 Although the StateofUtah also has an S02 SIP, the Woods Cross refinery is not regulated by the SOl SIP and Davis County, where the Woods Cross refinery is located, has been designated as "betterthan national standards" by EPA with respect to 502emissions. 40 C.F.R. § 81.345 (1997). SOl emissions regulated underthe PMIO SIP areregulated solely as a"precursor"ofPM,o (1.&.. asubstance that may conven to PM,o in the atmosphere over time).
(0:\
...**\phillips\rS~mem.J.**wpdl IXSteel mill 

### in Utah County ("Geneva"); the Kennecott Copper smelter ("Kennecott") and the Amoco and Chevron petroleum refmeries in Salt Lake County; and the Crysen. Flying "J" and Phillips petroleum refmeries in Davis County were the major industrial sources ofS02 emissions on which the State primarily focused. The Amoco, Chevron, Crysen. Flying 

### "J" and PhiUips petroleum refineries (the "Five Refineries") are grouped together near the Salt Lake and Davis County border. Phillips is located the furthest north ofthe 'Five Refineries and, as a consequence, is the greatest distance from the point ofnon-compliance with the NAAQS. 

### The Requirements of

### Utah's PM1u.-S.I£ To assist with the attainment ofPM10 standards 

### in Salt Lake and Utah Counties, the PM10 SIP required that the Five Refineries, Kennecott and Geneva install S02 control equipment to reduce the amount ofS02 emitted from their facilities. The PM,o SIP further provided that the specific values of the S02 emissions limits would be established by the State pursuant to its approval order orpermitting process. The State issued approval orders to Phillips in 

### 1992, 1993 and 

### 1995 (the 

### "1992, 1993 and 

### 1995 Approval Orders") which established operating requirements and limitations for the Woods Cross refinery with respect to S02 emissions. The other major industrial sources ofS02 emissions were issued approval orders as well. Under the approval orders, the Five Refmeries. Kennecott and Geneva each were required to reduce S02 emissions by greater than sixty percent. Phillips (and the other major industrial
sources of SO,) spent tens of millions of dollars to design, install and operate S02 control

[c:\,
..\(>hillips\r56-memJ,wpd] 

### xequipment. Indeed, Phillips alone spent in excess of$21.7 million designing and installing its sulfur recovery unit ("SRU"). The PMlQ SIP also required that the Five Refineries, Kennecott and Geneva install continuous emissions monitoring ("CEM") equipment to measure S02 emissions. EPA has recognized that CEMs have an accepted accuracy in the range of ±20percent. Since the installation of S02 control equipment by the Five Refineries, Kennecott and Geneva, the State ofUtah has experienced a significant improvement in airquality. According to air quality monitoring data collected by the State and EPA's own admissions, there have been
no violations ofthe NAAQS for PMIO in the entire State ofUtah for over four years. TheFive Refineries The refining ofcrude oil is a variable process because the level ofS02 emissions may fluctuate depending upon the type ofcrude oil that is being refined. To address this inevitable variability, among other things, the State adopted a separate petroleum refining section in the PMIO SIP which provided thatdaily and annual S02 emissions limits would be established for the class ofsources within the "refinery category," namely, the Five Refineries. At the time the refinery section was initially drafted, neither the State nor the Five Refineries had sufficient technical information to detennine the specific values for the final S02 emissions limits that would be adopted. Nevertheless, the State recognized that the fmallimits must allow for variability in the refining process.

(c:I
...Iphillip$lr56-mem3.wpdj 

### xiDuring this time, several ofthe refineries complained to the State that they were being treated unfairly as compared to the otherrefmeries and requested that the state equitably distribute the regulatory burden occasioned by the adoption ofthe PM IO SIP. The State assured the Five Refineries that itwould impose fair and equal requirements upon each ofthe refineries and would treat the refineries equitably with respect to the PMlO SIP and 

### S02 emissions limits. Like the State, EPA considered the Five Refineries (and Kennecott and Geneva) as a class to be treated fairly vis-a-vis each otherunder the PMlO SIP. The Five Refineries, Kennecott and Geneva, as
a class, were considered to be largely responsible for the industrial 

### S02 emissions affecting the Salt Lake and Utah County air shed. 

### Phillips' Unavoidable 

### CEM Equipment Malfunctions The State has long had an administrative rule relating to continuous emissions monitoring (the "Utah CEM Rule"). The longstanding Utah CEM Rule was incorporated by the State, with EPA's approval, as part ofthe PM10 SIP. Additionally, the 1992 and 1995 Approval Orders issued to Phillips specifically provided that the CEM installed and operated at Phillips' Woods Cross refinery was to comply with the Utah CEM Rule. The Utah CEM Rule incorporates by reference an EPA regulation found at 40 C.F.R. Pt. 51, App. P (1997). This EPA regulation allows the States to exempt sources from CEM monitoring and reporting requirements during periods ofunavoidable CEM malfunction.

Ie:I
...Iphillipslr56-mem3.wpd] xii

# •

The installation ofPhillips' SRU and CEM was completed, and tested for compliance with EPA and State guidelines, in Septemberof 1994. Thereafter, Phillips experienced difficulties with the CEM equipment which resulted, on occasion, in Phillips failing to obtain properly calibrated sample data from the CEM. Pursuant to the PMlO 

### SIP and the Utah CEM Rule, Phillips notified the State each time itexperienced difficulties with the CEM equipment. After investigating these problems, the State detennined, to its satisfaction, that Phillips' CEM equipment malfunctions
were unavoidable and therefore were excused. Since that time, Phillips' CEM has operated properly and has produced valid sample data nearly 100 percent ofthe time. Indeed, the CEM operated properly 100 percent ofthe time during the fourth quarter of 1997. 

### Phillips' SOlEmissions According to the State, the Five Refineries may demonstrate compliance with S02 emissions limits, which are expressed as pounds per hour orppmdv limits inapproval orders, by averaging emissions over a 24-hour period oftime.4 

### The PM10 

### SIP contains headings for S02 emissions limits stated as ulbs/hr, tons/yr and ppmdv,· in addition to general language indicating thatcompliance is to be 

### measured based on daily averaging ofCEM data. The imprecise language

4 During the development ofthe PMIO SIP, EPA

- like the State

- recognized that "(c]ompliance with any standard set for the PM-lO SIP should be detennined ona basis, due to the 24-hour PM-I0 {National Ambient Air Quality] standard." [Memorandum from Mindy Mohr, EPA, to Lee Hanley, EPA (Nov. 3, 1989) (emphasis added) (acopy is attached hereto as Exhibit "B"); Memorandum from Catherine Collins, EPA, to Marius Gedgaudas and Lee Hanley, EPA (Jan. 25, 1991) ("For Phillips, a PM10 emission limit needs to be included." (emphasis added» (acopy is attached hereto as Exhibit "C"); Memorandum from Catherine Collins. EPA, to Marius Gedgaudas and Lee Hanley, EPA (Mar. 18, 1991) (".Q.aily limits must be set for all pollutants (PMI0, SOx, NOx) and all sources." (emphasis added» (a copy is attached hereto as Exhibit "D").]
It:\
...\phillipslr56-mcrrU.wpd] 

### xiii

### ofthe PMlO 

### SIP resulted in some confusion regarding the measuring and reporting ofS02 data to the State. On October 15, 1993, the State sent aletter (the "1993 Approval Order") to the Five Refineries clarifying that under the PMIO 

### SIP and related approval orders, S02 

### emissions were to be averaged on a daily and an annual basis for compliance purposes, even though the emission rates or limits in the 

### PMIO 

### SIP and approval orders were expressed in pounds per hour for 

### CEM and stacktesting purposes. From 1991 until 1996, neither the State nor EPA ever suggested that the major industrial
sources ofS02emissions regulated by the 

### PMIO 

### SIP were notpermitted to demonstrate compliance with "pounds/hour" SRU emissions limits for S02 by averaging those emissions over 24 

### hours. Indeed, the Amoco portion ofthe 

### PMlO 

### SIP, which was modified in 

### 1992, states 

### expressly that the Amoco refInery's compliance withS02 emissions limits is to be measured by a daily average. Similarly, the Approval Order issued to Amoco in 1992 provides daily S02 emissions limits. Chevron's Approval Order also permits daily averaging of Chevron's S02 

### emissions. Furthermore, both Geneva and Kennecottdemonstrate compliance withthe PMIO 

### SIP by averaging 50 2

### emissions on adaily, not an hourly, 

### basis. The S02 

### emitted by the Five Refineries, Geneva and Kennecott

- the class ofindustrial sources ofS02 that bear the bulk ofthe regulatory burden under the 

### PMIO

### SIP

- is trapped and intennixes in the same air shed and only converts to 

### PM IO, 

### ifat all, after several days.

Ie:\
...Iphillip'lr56-mcmJ.wpd] 

### xiv

### Phillips has been and continues to be in compliance with the Qail.x 

### emissions limits contained in the 1992 and 1995 Approval Orders.s Since 1991, the Phillips refinery has emitted less than one-halfof the total amount ofS02 that it is permitted to emit under the PMl() SIP. Although the PMIO 

### SIP allows Phillips to emit 2,016 tons ofS02 peryear, Phillips has emitted only approximately 900 tons ofS02 

### per year since 1991. 

### EPA's Allegations In 1996, EPA informed the State that it was adding Phillips to its "significant violators" list and requested that the State issue aNotice ofViolation C"NOV") to Phillips. EPA's demand

5 Since September of 1994, Phillips SOl emissions, when measured on a daily basis, have exceeded the S02 emissions limitjust thirteen times. These thirteen exceedances occurred on the following dates for the following reasons:
I. 7/15/95 Malfunction ofSRU tail gas analyzer 2. 7/22/95 Malfunction ofSRU tail gas analyzer 3. 12/12/95 Malfunction ofSRU tail gas analyzer 4. 12/16/95 Malfunction ofSRU tail gas analyzer 5. 3/3/96 Malfunction ofair demand analyzeron SRU 6. 3/4/96 Malfunction ofair demand analyzer on SRU 7. 1119/97 Upset in unit upstream from SRU 8. 1/20/97 Upset in unit upstream from SRU 9. 2/13/97 Lost SRU and Amine units due to problem with instrJment air 10. 4/2/97 Major Power Failure II. 7/25/97 Malfunction ofAmine unit resulting in pump failures 12. 8/19197 Sulfur drip lag developed aplug 13. 9/19/97 Major Power Failure Under the Utah Unavoidable Breakdown Rule, which is enforceable as part ofthe PM 10 SIP, the State may grant exemptions from liability forexceedances causedby breakdowns ofcontrol and process equipment. Utah Admin. R. 307-1-4.7 (1997). The State granted such exemptions to Phillips for (he thirteen occasions on which Phillips exceeded (he daily Salemissions limits sel forth in the 1992 and 1995 Approval Orders. 

### xv I \
...\phillips\rS6-mcmJ.wpd]

### that the State issue an NOV was directed to NormErikson ("Erikson"), DAQ's CEM specialist. AtEPA'surging, Eriksondrafted aproposedNOV 

### inJanuary of 

### 1997. The proposed NOV listed each instance during the third quarter of 

### 1996 when the CEM operated by Phillips recorded an "exceedance" ofthe Approval Orderemissions limits for 802' 

### on an basis without allowing for averaging overa24-hourperiod. JeffDean ("Dean"), DAQ's Compliance Manager, reviewed the proposed NOV and instructed Erikson not to issue it. Dean determined that it would be impermissible to issue such an NOV to Phillips, since the State had always intended and had previously issued approval orders to clarify that Phillips was allowed to average S02 

### emissions from its SRU, as measured by its CEM, on a Qgfu. 

### basis for-compliance purposes. Dean also determined that such an NOV would be inconsistent with the original intent ofthe PMlO 

### SIP, 

### would violate the State's ongoing policy oftreating the Five Refineries in anon-discriminatory fashion, and would notbe fair to Phillips. Thereafter, despite the protestations ofthe State and Phillips, EPA issued two NOVs to Phillips. Additionally, notwithstanding efforts by the State and Phillips to convince EPA that its interpretation of the PMIO 

### SIP was erroneous, EPA filed the Complaint in this action on November 

### 18, 1997

- nearly two years after adding Phillips to its significant violators list and
more than three years after Phillips began operating under the PMlO 

### SIP. EPA's Amended Complaint was filed on July 15, 1998.

Id
...\phillips\r56-mcmJ.wpd) 

### xvi

### STATEMENT QFUNDISPUTED FACTS Pursuant to Rule 56-1(b) ofthe 

### Rules ofPracticefor the United StatesDistrict Court for the District ofUtah, Phillips submits the following statement of material facts as to which no genuine issue exists. These material and undisputed facts are sufficient to require the entry of partial summaryjudgment in favor ofPhillips in this action. 

### Utah's 

### pi\t1to.-SIf 1. Utah promulgated the PMlO SIP in 1991. The PMlO SIP established control strategies for the 

### S02 emissions ofcertain stationary sources, including Phillips' Woods Cross petroleum refmery located 

### in Davis County, Utah. [UtahPMlO SIP, §9, App. A, § 2.2.00 (June 28, 1991 version) (cited portions ofthe PMIO SIP are attached hereto as Exhibit "E").] EPA approved the Utah PMIO SIP in 1994. [Amended CompI. 

## 1 12; Plaintiffthe United States of America's Responses to Defendant's FirstRequests for Admission ("EPA's Admissions") No. 20 (a copy ofEPA's Admissions are attached hereto as Exhibit ifF").] 2. ThePMIO SIP required Phillips to install and operate a sulfurrecovery unit ("SRU") at its Woods Cross refinery to reduce Phillips' 

### S02 emissions. [Amended CompI. 

### 123.] The PMlO SIP also required Phillips to install and operate a continuous emissions monitor (lfCEM") on its SRU. [Amended Compi. 

### 125.] 3. The PMIO SIP also required Amoco, Chevron, Crysen, Flying IfJ," Geneva and Kennecott to install and operate 

### S02 control equipment and CEMs. [Utah PM lO SIP, 

### § 9, App.

le:I
...Iphillipslr5&-mem3.wpdJ xviiA (June 28, 1991 version); EPA's Admissions Nos. 2-4.] The S02 emitted by Amoco, Chevron, Crysen, Flying 

### "I," Phillips, Geneva and Kennecott is trapped and intermixes in the same air shed and only converts to PMIO, ifat all, after several days. [Affidavit ofDavid J. Prey ("Prey Aff.") 

## 1 45 (stating that the S02 emissions of the major industrial sources of S02 emissions are indistinguishable 

### inthe atmosphere) (the Prey Aff. is filed concurrently herewith); Hanley Depo. at 548 (conceding that S02 emissions from Geneva and S02 emissions from the Five Refineries react identically in the atmosphere).] 4. The PMIQ SIPprovided that S02 emissions limits for the S02 control equipment installed by Amoco, Chevron, Crysen, Flying "J" and Phillips would be established by the State pursuant to its approval order orpermitting process. [Amended CampI. , 12; UtahPMIO SIP, § 9, App. A, § 2.2.00.5.C (June 28, 1991 version); Hanley Depo. at 634.] In fact, the PMIQ SIP had been intentionally left blank in certain places (e.g., the S02 emission limits for the SRUs at the five refmeries) because ofthe lack ofadequate information at the time the SIP was adopted 

### in 1991. On this latter point, the PMIQ SIP explicitly left it to DAQ to establish these SRU emission limits through issuing Approval Orders to the refineries. [Affidavit ofJeffDean ("Dean Aff.") , 11 (the DeanAff. is filed concurrently herewith).] For example, the language ofthe original SIP sets Amoco's S02 emissions limit as follows: Point Source tQns/vr SulfurPlant Incinerator 

### ????? 250 

### ??? [pM11I SIP, § 9, App. A, §2.2.A.2.D (June 28, 1991 version).] Approval orders issued by the**Ic:\.·.\phillips\r56-~mJ.wpdl** xviiiState are enforceable as part ofthe PM lO SIP. [Amended CompI. , 12; EPA's Admissions No. 13.) 5. The State issued an approval order to Phillips on October 29, 1992 (the "1992 Approval Order"). [Approval Order No. DAQE-690-92 (Oct. 29, 1992) (a copy is attached hereto
as Exhibit "G").) A second approval orderwas issued to Phillips on October 15, 1993 (the "1993 Approval Order"). [Letter from Russell A. Roberts,'Executive Secretary, 

### Utah Air Quality Board, to Max Staples, Phillips Petroleum Company (Oct. 15, 1993) (a copy is attached hereto as Exhibit "H").] A third approval order was issued to Phillips on July 13, 1995 (the "1995 Approval Order"). [Approval Order No. DAQE-623-95 (July 13, 1995) (a copy is attached hereto as Exhibit "I").] 6. The 1992 and 1995 Approval Orders set forth operating requirements and limitations for Phillips' Woods Cross refmery with respect to 

### S02' [Amended CompI. 

## 1 12.] 7. There were no violations ofthe NAAQS for PM10 

### in the State in 1994,1995, 1996 and 1997. [EPA's Admissions Nos. 28-31.] Phillips' CEMEquipmentMalfunctions 

### 8. In 1978, the State adopted an administrative rule relating to continuous emissions monitoring (the "Utah CEM Rule").**~~** Utah Admin. 

### R. 307-13 (1997) (forrnerly Utah Admin. R. 307-1-4.6).

xix [e:l
...Ipl\lllipslrS6-mem3.wp<l]9. Pursuant to the Clean AirAct, 42 U.S.c. §§ 7401**tl..~.** the Utah CEM Rule was submitced to EPA and approved as partofthe PM10 SIP. 40 C.F.R. § 52.2320(c)(6) (1997). 10. The 1992 and 1995 Approval Orders provide that Phillips "shall install, calibrate. maintain and operate a continuous 

### 502 emissions monitoring system on the Sulfur Recovery Unit Incinerator stack." [1992 Approval Order § 15; 1995 Approval Order § 20.] 11. The 1992 and 1995 Approval Orders further provide that the CEM installed and operated by Phillips "shall comply with 

### all applicable sections of [Utah Administrative Rule] 307­ 1-4.6," the Utah regulation governing CEM systems (the "Utah CEM Rule"). 

### lQ... 12. The Utah CEM Rule states: "Minimum performance specifications for all continuous monitoring systems are those contained 

### in40 CFR. Part 60 Appendix Band 40 CFR, Part 51, Appendix P." Utah Admin. R. 307-13-4 (1997). The Utah CEM Rule therefore incorporates 40 C.F.R. Pt. 51, App. P, whichprovides: The State plan 

### [i&.... the SIP] may provide a temporary exemption from the monitoring and reporting requirements of this appendix during any period of monitoring system malfunction, provided that the source owneror operator shows, to the satisfaction of the .State, that the malfunction was unavoidable and is being repaired as expeditiously as practicable. 40 C.F.R. Pt. 51, App. P (1997) (emphasis added). 13. EPA recognizes that the State ofUtahhas anunavoidable breakdown rule for CEM equipment. [Hanley Depo. at 611.]

[c:1
...IphillipslrS6-memJ.wpd] 

### xx14. Phillips experienced difficulties with its CEM equipment. Phillips notified the State and provided informationto the State regarding its CEM equipment malfunctions. 

### & 

### l.n...the. Matter 

## ofPhillips PetroleJilll Company, Utah Air Quality Board Administrative Determination (Apr. 9, 

### 1997) (a copy is attached hereto as Exhibit "J"). Phillips worked with the State to improve its CEM equipment malfunctions. According to Norm Erikson, the State's CEM specialist, Phillips was actively engaged in following procedures to ensure that there was no data loss 

### and the monitors were available to the maximum extent possible, andthat when problems occurred they would upgrade the quality assurance program and implement a quality control program to ensure that those problems would not reoccur, that they would address them in the future and upgrade operational maintenance procedures. [Deposition ofNorman Alfred Erikson ("Erikson Depo.") at 152 (cited portions ofthe Erikson Depo. are attached hereto as Exhibit UK"); 

## see also 

### klat 77 ("I reviewed their data and came away with the conclusion that they had reported everything accurately and represented themselves truthfully.").] 15. The State reviewed the informationprovided by Phillips and conducted independent inspections and investigation ofPhillips' CEM equipment malfunctions. In the Matter of Phillips Petr.Q!s::um Comp<JIn, Utah Air Quality Board Administrative Determination (Apr. 9, 

### 1997). The State's independent inspections and investigation of Phillips' CEM equipment malfunctions were thorough:

Ie:\
...\phillips\r56-mcm3.\lIpd) xxi[W]e start in the office, we go over safety requirements of the facility, and I outline what the purpose ofthe audit's for, and the agency conducting the audit, and that the report will be forwarded to EPA. And then I go in to the - I ask for the data log material, all the emissions data, and see ifthey have records that go back for two years. I pull that information out, and then I will be in on the data log and see if I can find anything that appears to be a violation or monitor unavailability, and also daily calibrations. And ifI see an anomaly, I will see if that had been reported in the quarterly report, and then I will

- if it's in a quarterly report, I'll see what the description was. We'll go into the operation log, control equipment logs, CEM logs, basically the plant records, to find out how it was logged in and see ifthat correlates with the quarterly report. Look for work orders, work orders have order dates and completion dates, and we evaluate the accuracy ofthe quarterly report to see that it's being truthfully reported. After that we go out to the facility that has the monitor and we'll audit the monitor, we will either flow gasses through it, we'll do neutral density filter audits, we'llcheckcurrent lubes, basicallyjustgo over the analyzer to ensure that the signal loop's being generated and an accurate signal is being generated and recorded on the data logger. [Erikson Depo. at 150-51.] EPAdid not conduct any independent inspections orinvestigation of Phillips' CEM equipment malfunctions. [Hanley Depo. at 691,699.] 16. OnApril 9, 1997, the State issued an Administrative Determination which stated: It has been determined by DAQ that Phillips' reported CEM unavailability was the result of unavoidable breakdowns, malfunctions, and equipment checks and adjustments, and that Phillips properly noticed DAQ and has taken prompt action to identify problems and implement corrective actions to prevent future problems, as required by the approval orders and rules. Phillips has kept DAQ informed of the CEM monitoring problems as they have occurred. Primary problems reported included adefective computerchip, corrosion 

### in the probe and pumps, and system pluggage. Also reported were unexpected electrical power surges which caused data collection system shutdown and reset problems on startup. DAQ's review of this matter included review ofthe excess emissions reports and CEM operational records ofPhillips' monitoring program. In the Matter of Phillips Petroleum C..Q.ill.l2ii1lj:, Utah Air Quality Board Administrative
Ie:\
...**\~hillips\15()..m"mJ.** wpd) xxiiDetermination (Apr. 9, 1997); see alsQ EriksQn DepQ. at 158-59 ("1 detennined that they were legitimate breakdQwns
.... 

### I dQn't see how they eQuId have aVQided any QfthQse."). 17. The Administrative Detennination further stated that "no Notice ofViolatiQn was warranted fQr reported excess emissions ofsulfur oxides and CEM unavailability." 

### In the Matter ofPhillips Petroleum Compan)!, Utah Air Quality Board Administrative Detennination (Apr. 9, 1997). 18: The State of Utah and Phillips held meetings during the fall of 1996 wherein breakdowns atPhillips' Woods Cross refinery were discussed. EPA representatives were invited butdeclined to attend such meetings. [EPA's Admissions No. 54; Hanley Depo. at 612.] EPA contends that the State did not evaluate Phillips' CEM equipment breakdQwns "adequately," but has statedthat its contentionin this regard is "strictly speculation." [Hanley Depo. at 702; 

### s'e.e...allQ ill..,. at 

### 720 ("[SJpeculating

- totally speculating, 

### I don't believe the State did the evaluation adequately Qn the breakdowns.").] 

### fhillips' S02Emissions 19. The majorityofS02 emissions from industrial sources 

### in Utah, SaltLake and Davis Counties CQmes from seven sources: Geneva, Kennecott, Amoco, Chevron, Crysen, Flying 

### "1" andPhillips. [Utah PMIO SIP, 

### §9, Table 9.A.13 at 4-5 (June 28, 1991 version); Dean Aff. 16.J The Amoco, Chevron, Crysen, Flying "J" and Phillipspetroleum refmeries (the "Five Refineries"), are grouped together near the Salt Lake and Davis County border.

I c:\
...\rhlllip,\rS6-memJ.wpdl xxiii20. Indeveloping the PMIO SIP, the Stare requested that Phillips provide an inventory of the 

### S02 emissions from its Woods Cross refinery. [Affidavit ofWalter F. Kramer ("Kramer Aff.") 1118,25 (the Kramer Aff. is filed concurrently herewith).] 21. The emissions inventory data Phillips provided to the State "in support 

### ofthe SIP process was in a pounds/day, tons/day or tons/year format. Moreover, all ofthe modeling
... [the State] performed ofthe petroleum refineries to serve as the technical basis for the PMIO SIP
was performed strictly on a daily basis." [Kramer Aff. 125; see also Hanley Depo. at 640-41 (stating that the State only conducted 

### CMB and micro-inventory modeling and that both types of modeling do not reflect hourly measurements, but only 24-hourmeasurements).] 22. Indeveloping the PMIO SIP, the State also performed airquality modeling. [Prey Aff. 112; Hanley Depo. at 640.] During the development ofthe PMIO SIP, David Prey was the only airquality modeler working for the State. [prey 

### Aff. 

### 17;Hanley Depo. at 242.] According to Prey, modeling serves as the technical foundation for the entire SIP. Inbrief, modeling identifies the responsible sources (or parties), modeling quantifies the extent of their contribution to the air quality violations, and modelingjustifies the emission reductions (Le. emissions limitations) imposed on the responsible parties. Without valid modeling, or modeling techniques, the SIP emission limitations cannot be justified or supported. [Prey Aff. 

## 1 12.) 23. Air quality modelers "for state agencies must use only EPA approved models for SIPdevelopment purposes. [Prey 

### Aff. 

## 1 13.] The State relied on "receptormodeling," also called
[c:\
...\phillips\r56-memJ.wpd) xxivChemical Mass Balance ("CMB") modeling, after EPA rejected the use of "dispersion modeling." [Prey Aff. 117 ('rEPA disapproved the use ofdispersion models, and receptor models were used
as the primary modeling tool for the PMIO SIPs in both Salt Lake (including Davis) and Utah Counties."); Kramer Aff. " 21-25; Hanley Depo. at 640, 643-44, 647-48 (agreeing that dispersion modeling could not in any way predict the impact of

### S02 in terms ofcontributing to PMIQ).] Indeed, the State and EPA Region

# vrn officials came to the same conclusionon the PMIO SIPmodeling question

- dispersion models were not to be used as the technical basisfor the Salt Lake County PMIO SIP because they were not reliable and not applicable to the stagnant air conditions associated with PM,o problems in Salt Lake County. [Kramer Aff. 123.] 24. Receptor, or CMB, modeling is simply a "technique which looks at the PMIO collected on the filters ofPM 10 air quality monitors on a daily bfcis and attributes responsibility for that PMIO to various sources in the area surrounding that monitor. Thus, CMB looks only at 

## d..a.ili: emissions and PMIO responsibility." [Kramer Aff. 124 (emphases added); see alsQ Prey Aff. " 22, 33-37 ("[U]nlike dispersion models, receptor models are capable ofmodeling only one day at a time. In the case ofPMIO, the filters are collected over a 24-hourperiod, and
are therefore, not available on an hourly basis."); Hanley Depo. at 641 ("My understanding from the various modelers is that [CMB modeling] collect[s] a composite over 24 hours./I).] 25. All ofthe modeling for the PMlO SIP was conducted on a daily basis: "[T]he only modeling conducted of the Phillips Woods Cross Refinery for PMlQ SIP purposes was CMB

'c:\
...\phillips\r:56-memJ.wpd] xxvmodeling performed on a daily basis. No one (i.e. Phillips, DAQ or EPA) performed any modeling ofthe Phillips refinery onanhourly basis for PMIO or S02
.... " [Kramer Aff. , 24;
see also Hanley Depo. at 649-50 (agreeing that no modeling was perfonned on an hourly basis); Prey Aff. " 45-46 ("In the case ofthe PM10 SIP, all ofthe modeling was performed on a daily basis (i.e. CMB)
.... I am not aware ofany modeling, as approved for SIP purposes, that was performed by anyone ofthe refineries on any basis other than daily orannual.").] 

### 26. Thetechnical support documents upon which the PMIO 

### SIP is based consist ofdaily emissions inventory data and daily receptor or CMB modeling data. [Prey Aff. " 38, 46, 50; Kramer Aff. " 18-25.] 27. A primary objective of the State "in adopting and enforcing the PMIO SIP has always been to protect the environment, in a maMer which would notbeunfair, discriminatory
or anti-competitive as far as the regulated community and individual companies are concerned." [Dean Aff. , 10.] 28. During the time the PMIO SIP

### was developed, EPA considered the Five Refineries, Kennecott and Geneva to constitute a class ofmajor industrial sources ofS02 emissions. [Hanley Depo. at 186; Memorandum from Mindy Mohr, EPA, to Lee Hanley, EPA (Nov. 3. 1989); Memorandum from Catherine Collins, EPA, to Lee Hanley, EPA (Aug. 14, 1990) (a copy is artachedhereto as Exhibit "L"); Memorandum from Catherine Collins, EPA, to Marius Gedgaudas andLee Hanley, EPA (Oct. 30, 1990) (a copy is attached hereto as Exhibit "M").]

[c:\
...Iphillip,\rS6-mc:m3.wpdl xxvi29. EPA's position, like the State's, was to treat the Five Refineries, Kennecott and Geneva in a fair and non-discriminatory manner under the PMIO SIP. [Memorandum from Catherine Collins, EPA, to Marius Gedgaudas, EPA (Sep. 10, 1990) (discussing "how to equitably distribute the emission reductions required for the 

### Utah PM10 SIP to the Five Refineries in the Salt Lake/Davis County area" and "the fairest way to equitably handle the refineries") (a copy is attached hereto as Exhibit "N"); Memorandum from Catherine Collins, EPA, to Marius Gedgaudas and Lee Hanley, EPA (Jan. 25, 1991) (listing inconsistencies in not-yet-promulgated PMIO SIP that "exist betweenvarious refineries"); Memorandum from Catherine Collins, EPA, to Marius Gedgaudas and Lee Hanley, EPA (Mar. 18, 1991) (noting that SIP provisions need "to be consistent among the refineries" and that "[t]he refineries should be treated eqUitably"); Memorandum from Catherine Collins, EPA, to Marius Gedgaudas and Lee Hanley, EPA (May 31, 1991) (stating that stack testing methods for refineries in PMIO SIP "must be consistent with the methods used for Geneva") (a copy is attached hereto as Exhibit "0").] 30. On October 15, 1993, the State sent aletter to the Five Refmeries. Inrelevant part, the letter states:**w~** feel that there may be some confusion with the method ofdetennining these 12-monthlimits [on S02 emissions set forth 

### in the PMlO SIP and approval orders] because the EPA reference methods for testing use mass and gravimetric rates, suchas IJ.g/m3, ppm, orpounds/hour. 

### By necessity, testing is only conducted for short periods of time
.. A test of one day or one year would be difficult or impossible. Therefore, the following language 

### will be included 

### in all future AOs [i&,., approval orders] specifying annual emission limits in tons/year, to avoid any misunderstanding in the future:
[e:\
. Iphillips\r56-memJ
......pd] xxviiCompliance with emission limitations shall be verified by EPA reference test methods, continuous emission monitors, or alternative test methods approved by the Executive Secretary. The duration ofthe compliance tests for time and/or volume collected shall conform to EPA reference test method requirements. The following shall be used for the purpose ofdemonstrating compliance with emission limits which are based on averaging periods of longer duration than those specified in the reference test methods: The emission rate calculated as the average of the number of reference tests conducted shall be assumed valid for the duration of the averaging period associated with the particular emission limit, Le., daily, monthly, quarterly, and annually. This procedure assumes the process is constant, which it is not, but will be acceptable for compliance purposes. The actual 12-month limit shall be determined by summing the daily emissions determined by CEMS, mass balances, orotheralternative methods approvedby the Executive Secretary. Please attach a copy ofthis letter to your appropriate AOs. [Letter from Russell A. Roberts, Executive Secretary, Utah Air Quality Board, to Max Staples, Phillips Petroleum Company (Oct. 15, 1993) (the "1993 Approval Order").] 31. According to JeffDean, the State's Compliance Manager, the letter was issued by DAQ as an Approval Order (i.e., "1993 Approval Order") and as a clarification of the PMIO SIP and Approval Orders for the petroleum refmeries on the issue ofdemonstrating compliance with S02 emission limits at the refinery SRUs. The purpose ofthe language has always beento allow refineries to average their S02emissions from theirSRUs, as measured by CEMs, ona daily and annual basis for all compliance demonstration purposes. Under this language the refineries may show compliance with emission limitations expressed as pounds/hour orppmdv (Le. parts per million) by averaging over a 24-hour period oftime. My understanding and intent was that this 1993 Approval Order would apply to both existing and future refinery Approval Orders.
[c:I
..IphIII ipslr56-memJ.wpdI xxviii[Dean Aff. 

### 120.] 32. The Amoco portionofthe PMlO SIP, which was modified in November of 1992, expressly establishes a daily 

### S02 emissions limit for Amoco's SRU. [EPA's Admissions No. 18; Dean Aff. 

## 1 13 ("[T]he AMOCO PMlO SIP revisions included language which clarified specifically that S02 emissions from their Sulfur Removal Unit ("SRU") would be totaled or averaged on a daily basis, not an hourly basis, for all compliance purposes.").] In addition, Amoco was issued an approval order by the State which establishes a _ 

### S02 emissions limit for Amoco's SRU. [Approval Order No. DAQE-llOl-92, , 9.B.2 (Nov. 20, 1992) (a copy is attached hereto as Exhibit "P").] 33. OnNovember4, 1992, the UtahAir Quality Board discussed modifying the Amoco SRU S02 emissions limit in the PMIO SIP from pounds per hour to tons per day. [EPA's Admissions No. 10.] Lee Hanley ofEPAwas in attendance at the meeting and did not object to such a modification. [EPA's Response to Request for Admission Nos. 11-12.] According to Jeff Dean ofthe State, [a]fter receiving public comments on the proposed AMOCO revisions, including written comments from EPA Region VIII which registered no objection to setting adaily S021imitfor the emissions from the 

### tail gas incinerator at AMOCO's SRU. the UAQB [i.&.., the State] approved the revisions during its regularly scheduled meeting onNovember4, 1992. Representatives ofthe refineries, Utah Petroleum Association and EPA were in attendance at both the August and November 1992 UAQB meetings. [Dean Aff. , 12.]

[c:\
...\philtips\rS6-mem3.wpdl xxix34. InNovember of 1992, the State informed Chevron that the mass and concentration based limits for S02 set forth in the PMIO SIP were daily and annual limits because the focus of the 

### PMIO SIP is attainment ofthe 24-hour PMIO NAAQS: [T]he Approval Order does not explicitly state the time period over which the [SRU] S02 limits apply. A conversation with Dutch Nellenstein ofyour staffon November 

### 9, 1992 indicated that the mass and concentration based limits (as measured by a Continuous Emission Monitqr) were daily limits because the focus ofthe PMIO SIP is the 24-hour standard. Thus, the mass limit 

### in [the Chevron] Approval Order
... should be changed to 2.135 tons/day
.... Chevron also requests that the Approval Order explicitly state that the ppmdv limit is a daily limit. [Letter from T. Panchyshyn, Chevron, to Burnell Cordner, Director, Division ofAir Quality (Dec. 11, 1992) (emphasis added) (a copy is attached hereto as Exhibit "Q").] 35. In 1996, Chevron was issued an approval order by the State which establishes a daily 

### S02 emissions limit for Chevron's SRU. [Approval Order No. DAQE-330-96, , 7.D (Mar. 21, 1996) (a copy is attached hereto as Exhibit "R").] 36. The

### PMIO SIP establishes a**S~** emissions limit for Kennecott's smelter main stack. [UtahPMIQ SIP, §9, App. A, §2.2.V.B.1.B. (June 28, 1991 version); EPA's Admissions No.5; Hanley Depo. at 537.] 37. The PM lO SIP establishes a 

### Q.aili: S02 emissions limit for Geneva's SRU. [Utah PM IO SIP, §9, App. A, § 1.2.F.2.K.1 (June 28, 1991 version); EPA's Admissions No.6; Hanley Depo. at 547, 549.]

[c:\
...\phillipslr56-mem3.wpd] 

### xxx38. The 1995 Approval Order issued to Phillips requires that Phillips perform a mass balance ofthe acid gas streams passing through the SRU to determine the SRU's efficiency "[i]f
a daily (24-hQur) SRU Incinerator S02 emissions limit, as specified 

### in this AQ and measured by
a Continuous Emission Monitoring 

### (CEM), is exceeded (either 

### Ih/da! or ppmdv)." [1995 Approval Order § 5.C.2 (emphases added).} 39. The ·capped" emissions of S02 at Phillips' Woods Cross refinery from point
sources other than the SRU are to be averaged on a 24-hour basis. [Hanley Depo. at 410-11.] These "capped" emissions constitute approximately 75 percent ofPhillips' total S02 emissions. 40. On May 

### 6, 1997, the State responded to Phillips' inquiry regarding the proper method for determining compliance with S02 emissions limits: The DAQ has reviewed Phillips understanding ofthe AO 

### [i..Jt., approval order] limits and agrees withPhillips conclusion oncalculating compliance with their AO and SIP daily emission limits.

. . . [T]he AO and relevantportions onthe SIP establish a daily limit to protect the National Ambient Air Quality Standards. Forhistoric and practical reasons, the Phillips' daily limitfor the tail gas incinerator ofthe Sulfur Recovery Unit (SRU) is expressed interms ofpounds perhour. 

### Itis however a daily limit calculated by averaging the emissions ofthe day by the nwnber ofhours ofoperation in the day. Phillips exceeds its 114.42 lb/hr limit when the daily total emissions divided by the number ofhours ofoperationofthe SRU tail gas incinerator in the day exceeds the average hourly rate. Condition

### 6 ofthe [1995 Approval Order] provides that compliance is determined ona daily and annual basis. The hourly emissions specified in Condition 

### 6 must be met when averaged for the day. Furthermore, Section IX, Part H.2, Subsection C (Compliance Demonstration) of the SIP provides the methodology for determining compliance with 

### S02 limits imposed on refinery 

### SRUs. Consistent 

### r c:\
...lphillips\r56-memJ.wpd] xxxiwith the AO, the SIP provides that compliance is detennined on a daily basis. [Letter from Ursula 

### K. Trueman, Director, Utah Division ofAir Quality, to Richard J. Walsh, Phillips Petroleum Company (May 6, 1997) (a copy is attached hereto as Exhibit "S").] 41. On November20, 1997, the State again stated, in a letter to Phillips, that the 

### S02 emissions limits in the 1992 and 1995 Approval Orders were daily limits: "[T]he correct method of calculating compliance for the Sulfur Reduction Unit
... (is] to take the daily emissions divided by the number ofhours ofoperation and compare that to the emission limit." [Letter from Ursula 

### K. Trueman, Executive Secretary, Utah Air Quality Board, to Anthony 

### W. Benedict, Phillips Petroleum Company (November 20, 1997) (a copy is attached hereto as Exhibit "T").] 42. The letter from the State to Phillips ofNovember 20, 1997, also states: At the time the 

### SIP was written, itwas determined that

### daily 

### emission limits would be established. This was absolutely the clearintent ofthe staffwho wrote the SIP. the basis of our negotiations with all ofthe industrial sources in developing the SIP, and the intent ofthe Utah

### AirQuality Board who approved the SIP. This was based on the following: 1. The National Ambient

### Air Quality Standard (NAAQS) for PMIO which the State violated and for which the SIP was written is 

### a24-hour standard. 2. The EPA reference method monitorused to establish compliance with the NAAQS for 

### PMlO is incapable ofanalyzing data representing anything less than a 24-hour period. 3. The modeling tools used to establish the impact various sources had on the monitor were based on annual or seasonal emissions and operational data adjusted to represent average winter weekday emissions. There was no actual data for the specific days when the NAAQS was violated.

[0:\
...**\~hillips\r56-mc:m3.**wpdl xxxii4. The Technical Support Document for the SIP contains an infernal EPA memorandum dated November 5, 1989, from Mindy Mohr to Lee Hanley ofEPA Region VITI. Item No.2 on page 2 ofthis memo states that "Compliance with any standard set for the PM-10 SIP should be determined on a daily basis, due to the 24-hour PM-I0 standard." Not only is there plain language in SectionIX.A (PMI0) demonstrating that the attainment demonstration is based on24-houremission limits, but one cannot read Section IX.H.2.a.M (petroleum Refineries) and find any mention of an hourly emission limit. However, 24-hour and**annu~l** emission limits are repeatedly cited. 

### M... (emphasis in original). 43. TheState, "throughcompliance inspections and reports, 

### has consistently interpreted the refinery S02 emission limits for SRUs as allowing for daily and annual averaging." [Dean Aff. 21.] Indeed, from 1991 to 1996, no one at DAQ or EPA Region VIII ever suggested that the refineries, including Phillips, could not demonstrate compliance with**"pounds/hour~** SRU emission limitations for S02 by averaging on a daily and annual basis. Daily and annual averaging always has been the accepted understanding and interpretation ofthe PMIO SIP since it was promulgated by the State ofUtah in 1991. [Dean Aff. , 22.] 44. According to EPA, there is no difference between anhourly S02 emissions limit and a daily S02 emissions limit when it comes to achieving attainment ofthe PM10 NAAQS. [Hanley Depo. at 588.] David Prey, the State's air quality modeler during the development of the PM10 SIP, agrees: Technically speaking, it would make no sense to regulate, or average, S02 emissions from some refineries for SIPpurposes onan hourly basis and others on
(e;I
...Iphillipslr56-memJ.wpdl xxxiii

### adaily basis. Such a distinction (hourly v. daily) as between refineries could not have been demonstrated to show any beneficial environmental purpose consistent with the modeling. [Prey Aff. 45; see aJjQ id. at 50 (liMy own technical conclusion is that an hourly averaging time for refinery S02 emissionlimits in the PM10 

### SIP is inconsistent with the modeling andhistory of the SIP. In addition, even ifan hourly interpretation were appropriate, it would serve no beneficial environmental purpose.").] EPA's Allegations 45. On March 6, 1997, EPA issued to Phillips a Notice ofViolation ("NOV") for alleged violations ofCEM monitoring requirements and S02 emissions limits contained in the PM IO 

### SIP and the 1992 and 1995 Approval Orders. 

## & In the Matter ofPhillips 66 Company. Woods 

### Cross Utah, Docket No. CAA(113) VIII-96-13 (Mar. 6, 1997). EPA issued a second NOV to Phillips on August 13, 1997. The second NOV again alleged that Phillips violated CEM monitoring requirements and S02 emissions limits.**s..~** 

### In the Matter ofPhillips 66 Company. WOOds Cross, Utah, 

### Docket No. CAA(1l3) VIlI-97-09 (Aug. 13, 

### 1997). 

### 46. On November 18, 1997, EPAfiled the Complaint in this 

### action. On July 15. 1998, EPA filed the Amended Complaint in this action. EPA alleges that Phillips violated the CEM monitoring requirements and an 

### hm!rlJ!. S02 emissions limit contained in the PMIQ SIP and the 1992 and 1995 Approval Orders. [Amended Compl. "25-41.] EPA seeks civil penalties against Phillips ofup to $27,500 per day. [Amended CompI., Prayer for Relief 

## 3.J

[c:\
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### xxxiv

### ARGUMENT Phillips 

### is entitled to summary

### judgmenton Counts I and II "ifthe pleadings, depositions,
answers to interrogatories, and admissions on fIle, together with the affidavits, ifany, show that there is 

### no genuine issue as to any material fact, and the moving party is entitled tojudgment as
a matter of law." Fed. R. Civ. P. 56(c). Whether a fact is "material" is determined by the substantive law defining the claims. AndersQn v. Liberty 

### LQbby. Inc., 477 U.S. 242, 106 

### S. Ct. 2505, 2510 (1986). 

### Summaryjudgmentmustbe granted ifno reasonable trier offact could find for the non-moving party. 

### id.. The facts material to Phillips' compliance with the SIP and related approval orders are undisputed. Thus, Phillips is entitled to summaryjudgment. I. 

### fl{ILLIPS HAS COMrLIED

## WITHCEM MONITORING 

## REQUIREMENTS AS AMATIER OFLAW. In Count I ofthe Amended Complaint, EPA alleges that Phillips failed on numerous occasions to operate within specified calibrationparameters the CEM located on the stack ofthe SRU incinerator at Phillips' Woods Cross refinery. [Amended CompI. " 28, 36.] As demonstratedbelow, applicationofthe law to the facts material to Phillips' compliance with CEM monitoring requirements warrants the entry ofsummaryjudgment in favor ofPhillips. 

### A. CEM Unavailability Caused by CEM Equipment Malfunction 

### Is. Excused 

### IftheStateDetennines

### toIts Satisfaction Thatthe

### Equipment MalfunctionWas Unavoidable. As 

### amatteroflaw, under the PMlO 

### SIP and the 1992 and 1995 Approval Orders, Phillips is exemptfrom CEM monitoring requirements during periods ofCEM malfunction, provided that
(c:I
...lphillipslr5l>-mem3.wpd] 

### 1

### Phillips shows, "to the satisfaction ofthe State," that the malfunctions were unavoidable and were repaired as expeditiously as practicable. Where EPA has delegated discretion to the state to detennine whether a source is complying with the SIP, EPA's recourse - ifit believes the SIP
as enforced by the state does not reduce pollution as much as is necessary to achieve compliance with the NAAQS

- is to pursue revision of the SIP through administrative procedures. United States v. Ford Motor Co., 736 F. Supp. 1539, 1548-49 

### (W.n. Mo. 1990) ("[B]ecause EPA delegated authority to Missouri to approve [alternate compliance plans ("ACPs")],
. . . EPA's only recourse ifit believes the ACP is substantially inadequate to attain NAAQS is to pursue revision ofthe ACP through administrative procedures."); United States v. General Motors 

### .QmL, 702 F. Supp. 133, 137 (N.D. Tex. 1988) ("If 

### the EPA believes that the discretionary authority vested inthe [state]
... is undennining national ambient air standards, then it may seek
a revision ofthe SIPunder42 U.S.C. §

### 7410(a)(2)(H)."); Ifthe SIPprovision granting discretion to the state is ambiguous, then the state's interpretation ofthe SIP provision must controL General Motors, 702 F. Supp. at 138; see also Florida Power &**Li~ht** 

### Co, v. CQstle. 650 F,2d 579,588 (5th Cir. 1981) (holding that "EPA is to be accorded no discretion in interpreting state law" and that "the United States should defer to the state's interpretation ofthe terms ofits air pollutioncontrol plan when said interpretationis consistent with the CleanAir Act"), Here, there
canbe 

### no argumentthat adaily S02 emissions limit is inconsistent with the Clean Air Act because EPAadmits the State has beenconsistently in attainment ofthe PMIQ NAAQS since 1994, despite

(c:I
...Iphillip,1r56-mcm3.wpd] 

### 2the allowance of24-hour averaging. Moreover, the federal PMlO NAAQS, adopted pursuant to the Clean Air Act, is a 24-hour standard. The PMIO SIP required Phillips (1) to install and operate an SRU to reduce S02 emissions and (2) to install and operate a CEM on the SRU incinerator stack to monitor S02 emissions. ent ofUndisputed Facts ("Undisputed Facts") 12.] The PM10 SIP further provided that
:ing requirements and limits for the Phillips 

### refmery with respect to S02 would be established by the State through the issuance of approval orders. [Undisputed Facts 

## 16.] Accordingly, pursuantto the PMIO SIP, the State issued approval orders onOctober 29, 1992, October 15, 1993 and July 13, 1995 (the "1992, 1993 and 1995 Approval Orders"), which set forth the CEM requirements and S02 emissions limits applicable to Phillips. [Undisputed Facts 

## l'5-6.] The 1992 and 1995 Approval Orders, in confonnance with the PMIO SIP, provide that Phillips "shall install, calibrate, maintain and operate a continuous S02 emissions monitoring system onthe SulfurRecovery Unit Incinerator stack." [Undisputed Facts' 10.] The Approval Orders further provide that the CEM installed and operated by Phillips "shall comply with all applicable sections of [Utah Administrative Rule] 307-1-4.6," the Utahregulation governing CEM systems (the "Utah CEM Rule"). [Undisputed Facts 

## 1 11.] The 1992 and 1995 Approval Orders
are enforceable as part ofthe PMIO SIP. [Undisputed Facts 

## 14.] The Utah CEM Rule, which has been renumbered to Utah Admin. R. 307-13 (1996), applies to sources required to install continuous emission monitoring system equipment and report to the executive secretary any emissions or operating
(c:I
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### parameters as required by the following documents: (1) Federal, New Source Perfonnance Standards (NSPS); (2) State Implementation Plan; (3) Approval Orders; (4) Consent Decrees; or (5) Administrative Orders and Agreement. Utah Admin. R. 307-13-5.A (1996). Imporrantly, the Utah CEM Rule provides that "[m]inimum perfonnance specifications for all continuous monitoring systems are those contained in
...40 CFR, Part 51, Appendix P." Utah Admin. R. 307-13-4 (1996). The EPA regulation cited in the Utah CEM Rule and incorporated by reference into the 1992 and 1995 Approval Orders, 40 C.F.R. Pt. 51, App. P ("Appendix P"), is entitled "Minimum EmissionMonitoring Requirements." "This appendix P sets forth the minimum requirements for continuous emission monitoring and recording that each State ImplementationPlanmust include in order to be approved
...." 40 C.F.R. Pt. 

### 51, App. P, § 

### 1.0 (1997). Appendix Pprovides that SIPs may provide a temporary exemption from the monitoring and reporting requirements ofthis 

### appendix during any period ofmonitoring system malfunction, provided thatthe source owner or operator shows, to 

### the satisfaction ofthe State, that the malfunction was unavoidable and is being repaired as expeditiously as practicable. 40 C.F.R. 

### Pc. 51, App. P, § 

### 1.4 (1997) (emphasis added). In summary, the 1992 and 1995 Approval Orders, which are enforceable as part ofthe PMIO 

### SIP, incorporate by reference the Utah CEM Rule, Utah Admin. R. 

### 307-13 (1996) (fonnerly Utah Admin. 

### R. 307-1-4.6), which, in tum, incorporates by reference Appendix P, 40
le:\..•lnhillipslr56-memJ.wpcl] 

### 4C.F.R. Pt. 51, App. P (1997). Appendix P gives the State the discretion to exempt sources from CEM monitoring requirements during periods ofunavoidable CEM malfunction. Accordingly. under the PMIO SIP (and provisions incorporated therein), Phillips is exempt from CEM monitoring requirements during periods ofCEM equipment malfunction, provided that Phillips shows, to the satisfaction ofthe State, that the malfunction was unavoidable. 

### B. It Is 

### Undisputed ThatPhillips Demonstrated tothe Satisfaction ofthe StateThattheCEMUnavailability EPA Complains ofWas Caused by Unavoidable CEMEquipmentMalfunctions. EPA does not dispute that the State has determined, to the State's satisfaction, that unavoidable CEM equipment or calibration malfunctions caused Phillips' CEM to generate improperly calibrated and invalid data ona nwnber ofoccasions. Phillips experienced mechanical and calibration difficulties with its CEM equipment, rendering that equipment inoperable during portions ofcertain quarters. [Undisputed Facts 

## 1 14.] Phillips notified the State ofthe CEM malfunctions, which were caused by a variety ofproblems, including a defective computer chip, corrosion in the probe and pumps, plugging ofthe system, several unexpected electrical power surges and lack ofcalibrationgas, and worked with the State to improve the operation ofits CEM. [Undisputed Facts 

## 1 16.] Indeed, according to the State's CEM specialist, Norm Erikson, "Phillips was actively engaged in following procedures to ensure that there was no data loss and the monitors were available to the maximum extent possible." [Undisputed Facts' 14.]

Ic:I
...Iphillips\r:i6-mem3.wpd] 5

### The Scate reviewed the informationprovided by Phillips regarding the CEM equipment malfunctions and conducted independent investigations ofthe periods ofCEM unavailability and inspections of the CEM equipment. [Undisputed Facts' 15.] The State's investigation of Phillips' CEM equipment malfunctions was extremely chorough. [Undisputed Facts 

## 115.] 

### In contrast, EPA conducted no on-site investigacions or inspeccions and refused to attend meetings held by the State and Phillips wherein Phillips' breakdowns were discussed. [Undisputed Facts " 15, 18.] On April 9, 1997, 

### the State issued an Administrative Determination which stated: Ithas beendetermined by DAQ thatreported CEM unavailability was the result of unavoidable breakdowns, malfunccions, and equipment checks and adjustments, and that Phillips properly noticed DAQ and bas taken prompt action to identify problems and implement corrective actions to prevent future problems, as required by the approval orders and rules. [Undisputed Facts 

## 1 16.] The 

### State further 

### determined that uno notice ofviolation was warranted for reported excess emissions ofsulfuroxides and

### CBvI**una~ai1ability.** 

### [Undisputed Facts 117.] Jt 

### Thus, it is undisputed thaC Phillips has shown, to the satisfaction ofthe State, that the CEM unavailability EPA complains ofwas the result ofunavoidable CEM equipment malfunctions. 

### C. The State Did 

### Not AQYSf 

### The 

### Discretion Granted it 

### in Determining That Phillips· CEM

### Equipment Malfunctjons

### Were Unavoidable. 

### The State did not abuse irs discretion when itdetermined that Phillips' CEM unavailability
was causedby equipment malfunctions that were unavoidable. To show that it did not abuse its discretion, all the State mustdo "is demonstrate itconsidered relevant factors and alternatives after
a full ventilation of the issues, and that the choice it made was reasonable based on those
(c:\
...\phillips\r56-mcmJ.wpd) 

### 6

### considerations." Thomas Brooks Chartered v, Burnett, 920 F.2d 634,643 (lOth Cir. 1990). An 

### agency has abused its discretion when it "entirely failed to consider an 

### important aspect ofthe problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that itcould not be ascribed to adifference inview or the product of agency expertise." 

### Mount Evans CO. v, Madigan, 14 F.3d 1444, 1455 (10th Cir. 1994). Here, the Scate's detennination that the CEM equipment malfunctions experienced by PhiHips were unavoidable was not an abuse ofdiscretion. The State reviewed the information provided by Phillips regarding the CEM equipment malfunctions and conducted independent investigations of the periods of CEM unavailability and thorough inspections of the CEM equipment. [Undisputed Facts "15-16.J 

### The State did not base its administrative determination
onflawed data, nordid it fail to explain the bases for its decision. g:"

### Mount Evans, 14 F.3d at 1455-56 (rejecting assertions that 

### agency decision was based on flawed data and that agency failed to explain adequately the reason for its decision). Furthermore, pursuant to the State's instructions, Phillips took prompt action to identify problems with the CEM and was "active engaged" in

### implementing corrective action to 

### preventfuture problems. [Undisputed Facts " 14­ 16.] EPA contends that the State did not evaluate Phillips' CEM equipment breakdowns "adequately I II 

### butfrankly admits that its contention is "strictly speculation." [Undisputed Facts 

## 1 18 ("[S]peculating

- totally speculating, I don'tbelieve the State did the evaluation adequately on the breakdowns.").]

(e,I".Iphilhpslr56-memJ,Wpd] 

### 7Permitting EPA to pursue the alleged "monitoring violations" against Phillips, which simply acted in accordance with the State's directives, would result in substantial injustice to Phillips. Moreover, permitting EPA to press these alleged monitoring violations would unnecessarily consume valuablejudicial resources. EPA contends that "[e]ach day that Phillips failed or fails to comply with the requirements ofthe SIP by not having**th~** monitor operating properly constitutes a separate violation ofthat SIP." [Amended Compl. 

## 137.] The State has already reviewed the numerous alleged monitoring violations and determined that the breakdowns EPA complains ofwere unavoidable and therefore are excused. EPA, however, contends that all of the State's work should be ignored and that this Court should review again. one-by-one, the
numerous breakdowns and then supplant the State's technical expertise by fact-finding and entry of ajudgment. Phillips contends only that the State's determination excusing the breakdowns should be upheld. As a matter oflaw, under the PMIO SIP and the 1992 and 1995 Approval Orders, Phillips is exempt from CEM monitoring requirements during periods ofCEM malfunction 

### ifthe State is satisfied that the equipment malfunctions were unavoidable and that Phillips repaired the equipment as expeditiously as practicable. It is undisputed that Phillips has met these requirements to the satisfactionofthe State. [Undisputed Facts

# n 16-17.] Accordingly, Phillips is entitled to summaryjudgment in its favor on Count I ofEPA's Amended Complaint.

[c:\
...\phillips\r56-memJ,wpdI 

### 8

### II. fHILLIPS HAS COMPLIED WITH S02 EMISSIONS LIMITS AS A MATTER OFLAW. 

### In Count II ofthe Amended Complaint, EPA alleges that Phillips violated the PMtu 

### SIP and the 1992 and 1995 Approval Orders "by emitting more than the amounts ofsulfur dioxide permitted" onover 1,000 occasions. [Amended CompI. 

### 140.] The Complaint further alleges that (e]ach instance 

### inwhich Phillips failed to comply with the requirements ofthe SIP by emitting excess amounts ofsulfur dioxide constitutes a separate violation ofthat SIP
... [and] is subject to 

### a'penalty ofup to $25,000 for each violation prior to January 30, 1997, and apenalty ofup to $27,500 for each violation after that date. [Amended CompI. 

### 141.] Application ofthe law to 

### the facts material to 

### Phillips' compliance with S01 

### emissions limits warrants the entry ofsummaryjudgment for Phillips. A. 

### As Interpreted by 

### EPA, the

### PM1n-SlP and the Approval 

### Orders Would UnconstitutionallyDiscriminate Against Phillips and ThereforeWould Be Unenforceable 

### as a MatterofLaw. 

### Under EPA's interpretation ofthe PMlO 

### SIP and the 1992 and 1995 Approval Orders, Phillips is subject to an S02 emissions limit. 6 

### [Amended CompI. 

## 127 (alleging that "Phillips exceeded the

## b.om:lx limit established in

### the SIP and Approval Orders for sulfurdioxide emissions" (emphasis added».] Article I, §

### 24 ofthe Utah Constitutionprovides that U[a]ll laws

6 In conU'3St, both the State and Phillips interpret the PM,O SIP and the Approval Orders to impose alimit stated in pounds perhourthat is determined by taking only aQaili: average ofSalemissions from the SRU. Furthermore, the PM 10SIPunquestionably establishes that compliance demonstrations for SOl emissions are to be conducted on a daily basis. This issue

- whether the PM,O SIP and the Approval Orders should be interpreted so as to impose daily or hourly Sal emissions limits

- is hotly disputed and is not ripe for disposition at the summaryjudgment stage. Phillips in no way concedes that it is subject to an hourly SOlemissions limit, but contends that even assuming the PMIO SIP and the Approval Orders can be construed to impose an hourly S01 emissions limit, such an hourly limit would be unconstitutional and, as aresult, is unenforceable.
[c:\
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### ofageneral nature shall have unifonn operation. ,,7 

### This constitutional provision requires (1) 

### "that
a law mustapply equally to all persons within a class" and (2) "that statutory classifications must have areasonable tendency to further the objectives ofthe statute." 

### QreernvQQd v. City 

### ofNorth SaltLake, 817 P.2d 816,821 (Utah 1991).8 Alaw is unconstirutionally discriminatory ifitdoes not "apply equally to all persons within
aclass." Malan v, 

### Lewis, 693 P,2d 661,671-71 (Utah 1984). Accordingly, "persons similarly situated should be treated similarly." 

### M.. at 669. Article I, §

### 24 ofthe Utah Constitution intends simply that the effect ofgeneral laws shall be the same upon all persons who stand in 

### the same relation to the law. It has been repeatedly held that a law is general which applies to all ofa class

- the classification being aproper one ­ and that the requirement ofuniformity is satisfied ifit applies to all ofthe class alike. Untermyer v. State Tax 

### Comm:n, 129 P.2d 881, 886 (Utah 1942) (quotation omitted). A law unconstitutionally classifies ifthere is "no basis for the differentiation" ofpersons and the differentiation does notbear "a reasonable relation to the purposes to be accomplished by

7 Article I, §24 ofthe Utah Constitution "acts as Utah's equal protection clause."Amax**rvla~nesium** Corp. v. UtahStateTa.t; Comm'n, 796 P.2d 1256, 1261 n.23 (Utah 1990) (citing cases), but provides greater protection than the Equal Protection Clause ofthe United States Constitution, illGreenwood v. City ofNQrth Salt Lake, 817 P.2d 816,821 (Utah 1991).
8The Utah Supreme Courthas not hesitated to strike down laws that violate Article I, § 24. See**c.~** .**~,** 796 P.2d at 1261 (tax statute); Malan v. Lewjs. 693 P.2d 661,675 (Utah 1984) (automobile guest statute); Srilte Tax Comm'n II. D(lV'( offinance, 576 P.2d 1297, 1298 (Utah 1978) (tax statute); Weber Basin HQme Builders Ass'n II, Roy City, 487 P.2d 866, 869 (Utah 1971) (city ordinance increasing building permit fee); Dodge Town, Inc. v,**~,** 480 P.2d461. 462 (Utah 1971) (Sunday closing Ijlw); Gronlund II. Salt Lake Citv. 194 P.2d 464, 468 (Utah 1948) (same); BrQadbent v, Gibson, 140 P.2d 939, 946 (Utah 1943) (same); Slate v. HQltgreve, 200 P, 894, 896 (Utah 1921) (Trading Stamp Act); Slate v, Bayer. 97 p, 129. 132 (Utah 1908) (statute prohibiting "hawking or peddling" without a license).
[e:I
...lphillipslr56-mcmJ.wpdl 10the act" State v, 1,'6, 

### & R.E, Walker. Inc., 116 P.2d 766, 769 (Utah 1941). Furthermore, a law may not create classes of persons and then apply "differently to each classification without a reasonably related legitimate governmentpurpose." Amax Magnesium Corp v. Utah State Tax Comm'n, 796 P.2d 1256, 1261 (Utah 1990). "The objects and purposes ofa law present the touchstone for determining proper and improperclassifications." Gronlund v. Salt Lake City, 194 P.2d 464, 466 (Utah 1948); see also 

### Malsn, 693 P.2d at 670 ("Whether a statute meets equal protection standards depends in the first instance upon the objectives ofthe statute and whether the classifications established provide a reasonable basis for promoting those objectives."). A SIPprovision that is found to be invalidunder state law is unenforceable, notwithstanding the fact that EPA has approved the provision. Sierra Club v, Indiana-Kentucky EleQ. 

### CQm,., 716 F.2d 1145, 1151-52 (7th Cir. 1983); Illinois v, Celotex, 516 F. Supp. 716, 718 

## (c.n. Ill. 1981). Otherwise, "the Clean

### Air Act would 

### be construed to reach the inconsistent result that
an implementationplan, the product ofajointfederal and state effortunder the same Act, would be enforCeable inthe courts ofone level ofgovernment but not the other. n Sierra Club, 716 F.2d at 1151; see alsQ CelQtex, 516 F. Supp. at 718 ("It would be an anomaly, ifnot a denial of
. . . due process rights, to allow
... full enforcementofthose invalid regulations."). Inthis case, it is undisputed that the FiveRefineries, Kennecott and Geneva constitute the class ofmajor industrial sources of

### S02 emissions regulated by the PM10 SIP. [Undisputed Facts " 19, 27-29.] 

### Inaddition, it is undisputed that both the State and EPA intended to treat this class

(c:\
...Irhi1Jips\rS6.mcmJ.wpd] 

### 11

### equitablyunderthe PM10

### SIP and related approval orders. [Undisputed Facts 1127-29.] Indeed,
a primary objective ofthe State "in 

### adopting and enforcing the PM10 

### SIP has always been to protect the environment, in 

### a manner which would not be 

### unfair, discriminatory or anticompetitive as far as 

### the regulated corrununity and individual companies are concerned." [Undisputed Facts 

## 127.] To that end, the State imposed.dillly S02 emissions limits on all the members ofthe class. [Undisputed Facts 1130-37.] However, under EPA's interpretation ofthe PMlO 

### SIP and the 1992 and 1995 Approval Orders, parties similarly situated would not be treated similarly. For example, it is undisputed thatAmoco, Chevron, Kennecott and Geneva

- parties within the class ofsources regulated by the PMlO 

### SIP that emit S02 into the Salt Lake County air shed9

- 

### are permitted to average S02 emissions on a daily basis. [Undisputed Facts" 32-37] In November of 1992, the Amoco portion ofthe PMIO 

### SIP was revised, withoutobjection'from EPA, to clarify expressly that S02 emissions from the 

### Amoco SRU were to be

### totaled oraveraged on a basis for all compliance purposes. [Undisputed Facts 1132-33.] Amoco was also issued an Approval Order by the State in 1992 whichestablished daily S02 

### emissions limits. [Undisputed Facts 

## f 32.] In December of 1992, the State informed Chevronthat the mass and concentrationbased limits for S02 

### set forth in the PMlO 

### SIP were

## illill:ilimits because the focus ofthe PM,o 

### SIP is attairunent ofthe 24-hour

9The 502emitted by the Five Refineries, Geneva and Kennecott is trapped and intennixes in the same air shed and only converts to PMIO• ifat all, after several days. [UndisputedFacts 

### 1 3.1 Thus, the hourly 502emissions limits EPA contends for are irrelevant to the protection ofthe environment.
[c:I
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### 12

### PMIO 

### NAAQS. [Undisputed Facts 134.1 Indeed, the NAAQS for PMIO 

### establishes only daily and annual limits; EPA has never promulgated a NAAQS for PMIO 

### for a time period shorter than twenty-four hours. In 1996, Chevron's Approval Order was clarified to permit !la.i.ly 

### averaging ofChevron's S02 emissions. [Undisputed Facts 

## 1 35.] 

### And, it is undisputed that both Kennecott and Geneva demonstrate compliance with the PM10 

### SIP by averaging 502emissions on a lliilly 

### basis. [Undisputed Facts

# f' 36-37.] EPA admits that the**~capped"** 

### emissions of502at Phillips' Woods Cross refinery from point sources other than the SRU are to be 

### averaged on a 24-hour basis. These**~capped"** 

### emissions constitute approximately 75 percent ofthe 502that enters the air shedfrom Phillips. [Undisputed Facts' 39.} Finally, Phillips' own 1995 Approval Order refers to "a QIDly 

### (24-hour) SRU Incinerator S02 emissions limit." [Undisputed Facts , 38 (emphases added).] Nevertheless, EPA contends in this lawsuit that Phillips is subject to 

### an S02 emissions limit. [Amended Compi. 127.] EPA's contention plainly violates Article I, § 

### 24 of the Utah Constitution. 10 

### ·When persons are similarly situated, it is unconstitutional to single out one person or group ofpersons from among a larger class on the basis of a tenuous justification that has little or no merit." 

### M.lla.n, 693 P.2d at 671. 

### EPA has put forth nojustification, let alone a meritorious one, for

10 In addition, treating similarly situated parties differently may very well violate EPA's own regulations. Fair and uniformimplemenlation and enforcement ofthe OeanAir Act and state implementation plans is plainly mandated by EPA regulations. 40 C.F.R. § 56.3 (1997) (stating EPA's policy to "[a]ssure fair and uniform application
.

. . ofthe criteria, procedures, and policies employed in implementing and enforcing the act"); 40 C.F.R. § 56.4 (1997) (outlining "mechanisms to assure that the rule or regulation is implemented and enforced fairly and uniformly''). !c:I
...Iphillipslr56-mcm3.wpd] 

### 13singling out Phillips. II Indeed, EPA's singling out ofPhillips in its ongoing battle with the State
over the manner in which the State should enforce the PMIO SIP (and how the PMIO SIP should be interpreted) is simply not fair to Phillips. 

### CL United States v, Solar Turbines. 

### Inc;" 732 F. Supp. 535, 539 (M.D. Pa. 1989) ("EPA cannot as a matter oflaw pursue enforcement action against an owner/operator who has committed no violation that can be attributed to it other than to act in accordance with a pennit it received from an authorized pennit-issuing authority, but which pennitEPA beJieves the issuing authority improperly granted."). Furthermore, ifthe PMIO SIP and the 1992 and 1995 Approval Orders impose an hourly S02 emissions limit on Phillips, but only daily emissions limits are imposed oneven one ofthe other sources of S02, then the PMIO SIP has created two classes and arbitrarily discriminated against one class for no apparentreason. Such "disparity does not pass ... constitutional muster." 

### A.InM, 796 P.2d at 1261. Indeed, there is no reasonable basis for classifying Phillips differently than the other refineries, Kennecott or Geneva. 

## U kL. Furthennore, there is no reasonable relationship between such classification and the purpose ofeither the PMIO SIPor the Clean Air Act, which is to enforce the federally adopted NAAQS for PMIO• 

# cr. id... at 1261-62. This is

II In addition to being unconstirutional, applying the PM10 SIP and the Approval Orders in the manner EPA contends for would also be arbitrary and capricious. An agency's inconsistent treatment ofsimilarly situated panies that is unexplained in the administrative record constitutes arbitrary and capricious action, Rocky MQuntain**HeljCQDter~.** Inc, v, fAA, 975 F.2d 736,737-38 (10th Cir. 1992). In this case, the administrative record fails to explain why, as EPA contends,

### J:!.mlrlx 501emissions limits should be imposed on Phillips while emissions limits are imposed on similarly siruatedparties, namely theotherrefineries, Kennecott and Geneva. 

### U Section II.B., infra (discussing why an hourly Salemissions limit would be arbitrary and capricious). le:\,
..\phillips\r56-mem3.wpd) 

### 14particularly true in light of EPA's admission that there have been no violations of the PMlO NAAQS in the State since 1994. [Undisputed Facts 

### 17.] Inrecognitionofthe fact that the Five Refineries, Kennecott and Genevamust be treated fairly underthe PMIO SIP and approval orders, EPA bas recently taken the position, for purposes of this litigation, that 

### IIIofthe refineries are subject to an S02 emissions limit. Indeed, EPAtook this litigationposition fur the first time in the deposition ofLeonila Hanley, taken less than two weeks ago. [Hanley Depo. at 586 ("[A]B ofthe refineries are to have pounds per hour for the SRU."); 

### kL at 595 ("[T]he Utah SIP specifies a pounds perhour for all the refmeries for the 

### tail gas incinerator.").] EPA'smost recent litigationposition is without merit for two reasons. First, EPAconcedes that Kennecott and Geneva

- two members ofthe class ofmajor industrial
sources of S02 emissions regulated by the PMlO SIP

- are subject to daily, not hourly, S02 emissions limits. [Undisputed Facts 

### "36-37] Given this concession, EPAlikely will argue that Kennecott and Geneva (which produce copper and steel) are not in the same class as the Five Refmeries (whichproduce petroleum). Such an argument should be rejected. It is undisputed (1) thatthe Five Refmeries, Kennecott and Geneva are responsible for the majority ofS02 emissions from industrial sources along the Wasatch Front [Undisputed Facts' 19]; (2) that the S02 emitted by the Five Refmeries, Kennecott and Geneva is trapped and intermixes in the same air shed and only converts to PM\o, ifat all, after several days [Undisputed Facts 

## 1 3]; and (3) that the Five Refineries, Kennecott and Geneva were required by the PM IO SIP to bear the bulk of the

[e:\
...\ph<llips\rS6-mem3.wpd] 15

### regulatory burden and install expensive S02 control equipment [Undisputed Facts 

### 13]. Thus, it is clearthat Kennecott and Geneva, which are subjectto S02 emissions limits, are within the
same class of sources regulated by the PMIO 

### SIP as are the Five Refineries, which EPA now contends are subject to b.Q.w:l.x 

### S02 emissions limits. Second, even ifthe class is narrowed to include only the Five Refineries (which compete in the same petroleum refining market and are grouped along the Salt Lake and Davis County border), EPA cannotplausibly argue thatAmoco is subject to 

### an hourly 502emissions limit. The PM,o SIPprovides that 502emissions limits for the SRUs installed by the Five Refineries would be established by the State pursuant to its approval orderprocess. [Undisputed Facts'4.] On November20, 

### 1992, the State issued to 

### Amoco an approval order (the"Amoco Approval Orden whichestablished a

### Qailx S02emissions limitfor Amoco's SRU. [Undisputed Facts' 32.] 

### EPA officials attended the State meeting in which the Amoco Approval Order (and its daily 502 emissions limits) were approved and did not objectto the Approval Order's issuance. [Undisputed Facts at "32-33.] 

### Thus, in Novem'ber of 1992, 

### EPA received notice that Amoco was subject to a S02 emissions limit. Now, nearly six years later, EPA contends

- without any factual basis

- that Amoco is subject to an 

### bm!!:.ti. 502emissions limit. [Hanley Depo. at 729 

### ("[T]he SIP specified
... that apounds-per-hour value would be specified for Amoco.").r2 Because

12 Indeed, the PM 10

### srp intentionally left blank tbe SOl emissions limit for the Amoco SRU. [Undisputed Facts

, 4.J Thus, Amoco is subject either to the daily S02 emissions limit established by the approval order issued in Novemberof 1992 orto no limitwhatsoever. The actu31language ofthe original PM,O SIP relied upon by EPA sets Amoco's S01 emissions limit from its SRU as follows: [c;I
...Iphillipslr56-mem3.wpd) 

### 16Amoco is subject to a daily S02 emissions limit, and because Amoco and Phillips are members ofthe same class, imposing anhourly S02 emissions limit onPhillips would be unconstitutional. This Court should reject EPA's interpretation ofthe PMLO SIP and the 1992 and 1995 Approval Orders imposing an hourly S02 emissions limit on Phillips. A law should not be construed 

### in a manner which leads to unconstitutional results. Crowell v. Benson, 285 U.S. 22, 52 S. Ct. 285, 296 (1932) ("[I]fa serious doubt ofconstitutionality is raised,
... this Court will first ascertain whether a construction ofthe statute is fairly possible by which the question maybe avoided."). Under EPA's interpretation, the PMIQ SIP and the 1992 and 1995 Approval Orders would be unconstitutional.13 Accordingly, Phillips is entitled to summaryjUdgment on PQint Source Sulfur Plant Incinerator ????? 250 ??? [Undisputed Facts'4.} 13 In addition, underEPA's interpretation, the PM IO SIP and the 1992 and 1995 Approval Orders would be void pursuant to state law. The Utah Code provides: (l) Except as provided in Subsection (2), no rule which the [Utah Air Quality Board] makes for the purpose ofadministering aprogramunder the federal Clean Air Act may be more stringent that the corresponding federal regulations which address the same circumstances
.... (2) The board may make rules more stringent than corresponding federal regulations
..

. . only ifit makes awritten finding afterpublic comment and hearing and based on evidence in the record, that corresponding federal regUlations are not adequate to protect public health and the environment ofthe state. Those findings shall be accompanied by an opinion referring to and evaluating the public health and environmental infonnation and studies contained in the record which fonn the basis for the board's conclusion. Utah Code Ann. § 19·2-106 (1995). Here, the PM 10 SIP and the 1992 and 1995 Approval Orders promulgated by the State, as interpreted by EPA (with their 

### hmI.rlY Sal emissions limits), would be more stringent than the corresponding federal NAAQS for PM 10 (with its

### s1ail:l. standard). Moreover, the State has made no "written finding le:\
...Iphillip!\rS6-mcm3.wpdl 17 cCount II ofthe Amended Complaint. 

### B. 

### Under EPA's 

### Interpretation. the 

### State's 

### As.:tiQn 

### in Promulgating the 

### llilO 

### SIP and 

### Issuing Approval Orders 

### \Vould Have 

### llfen Arbitrary and Capricious. The hourly limit on 

### S02 emissions that EPA contends applies to Phillips (and that EPA recently contends applies to the other refineries), in addition to being unconstitutional, would be arbitrary and capricious because the technical analysis forming the basis for the PM10 SIP and the 1992 and 1995 Approval Orders consists exclusively of

### daily emissions inventories and daily air quality modeling. Indeed, the administrative record is utterly devoid ofevidence supporting an 

### hm!J:.IY limit on

### S02 emissions. A state's action 

### inpromulgating a SIP is arbitrary and capricious if the state "has failed to provide a reasoned explanation for its action, or if limitations in the administrative record make it impossible to conclude the action was the product of reasoned decisionmaking." Q15:nhQuse v, 

### COmmodity Credit 

### Corp., 42 F.3d 1560, 1575 (10th Cir. 1994) (emphasis added). In addition to requiring a reasoned basis for agency action, the "arbitrary or capricious" standard requires anagency's aceion to be supported by the facts in the record. iQ.,.; see also Bocky MQuntain Helicopters. Inc, v, FAA, 975 F.2d 736, 737 (lOth Cir. 1992) ("[A]gency action is arbitrary and capricious ifthe agency fails to demonstrate in the reCQrd that it has examined the relevant data and articulated a satisfactory explanation for its action."

afterpubliccomment and hearing andbased onevidence in the record" that the federal PMIO NAAQS "are not adequate to protectpublic health and the environment ofthe state." Utah Code Ann. § 19-2-106(2). Thus, as interpreted by EPA, thePM,o SIP and the Approval Orders would violate not only the Utah Constitution, but also the Utah Code.
le:l
...lphillipslr56-mcmJ wpdJ 

### 18(emphasis added)). Furthermore, a state agency's action in promulgating a SIP would be "arbitrary and capricious ifthereis no rational connection between the facts found and the choice made./I Woods Petroleum 

### Corp. v. Dep't 

### of Interior, 47 F.3d 1032, 1037 (10th Cir. 1995) (quotation omitted). Accordingly, 

### a state agency's conclusions that do not follow from the premises the agency relied upon are arbitrary. InRocky Mountain, 975 

### F.2d at 736, the plaintiffchallenged as arbitrary and capricious
a determination by the Federal AviationAdministration ("FAA/I) that the removal and replacement ofoxygencylinders used 

### in medical oxygen systems installed on aircraft could only be performed by certified mechanics.**s.e~** 

### kL. at 736-37. After noting that the administrative record revealed thatthe FAA'sorderapplied to "attached" oxygen systems but not to "portablen oxygen systems, which the FAAconceded "may beexchanged by the pilot or any other properly trained person, n the Court stated that "[t]he record contains no satisfactory explanation for the discrepancy in treatment ofportable and attached systems. n 

### ld.... at 737. The Court further stated that the record contained an FAA study "which determined that the exchange ofoxygen cylinders was a simple procedure for whichRocky Mountainpersonnel otherthan certified mechanics had beenproperly trained," that the study itselffound Rocky Mountain'sposition "to be 'reasonable,'" and that "[t]he FAA offered no evidence refuting the study's conclusions./I 

### ld... Based on this review ofthe administrative record, the Courtconcluded that the record contains no adequate explanation for requiring that a mechanic, ratherthan any other adequately trained Rocky Mountain employee,exchange the
(d
...\phillip!\rS6-mcmJ.wpdj 19

### oxygencylinders. Without further explanation from the FAA, we cannotuphold the agency's decision. We therefore hold that theFAAhas acted arbitrarily andcapriciously in this instance. Consequently, we must set aside the FAA's action
.... 

### IQ... at 

### 738. 

### In this case, as in Rock'" Mountain, the administrative record is devoid of evidence supporting the agency's determination. Nothing.in the administrative record supports EPA's contentionthat the PMlO 

### SIPrequires hourly, as opposed to daily, S02 

### emissions limits on Phillips andthe otherrefIneries. In

### addition, nothing in 

### the administrative record supports treating Phillips differently than Kennecott and Geneva

- the othermajorindustrial sources ofS02 

### emissions. 

### CL Olenhouse, 42 F.3d at 1576 (holding that district court, when reviewing agency action, "must examine the administrative record and
... find and identify facts that support the agency's action"). To the contrary, evidence in

### the administrative record establishes that the PM10 

### SIP and the 1992 and 1995 Approval Orders impose daily and annual S02

### emissions limits on all ofthe major industrial sources ofS02 

### emissions, including Phillips. 14

14 EPA admits that there is no difference between an hourly SO, emissions limit and adaily SO, emissions limit when it comes to achieving attainment ofthe PM\o NAAQS. [Undisputed Facts 144.J David Prey, the State's air quality modeler during the development ofthe PM 10 SIP, agrees: Technically speaking, it would make no sense to regulate, or average, SO, emissions from some refineries for SIP purposes on an hourly basis and others on a daily basis. Such a distinction (hourly v. daily) as between refineries could not have been demonstrated to show any beneficial environmental purpose consistent with the modeling. {Undisputed Facts 

### 1 44.]
le:\
...**\philIips\rS~~m3.**wp<ll 

### 20

### During the development of the PMIO 

### SIP, the State requested that Phillips provide an inventory ofits S02 emissions. [Undisputed Facts' 20.] 

### All ofthe emissions inventory data Phillips provided to the State, uponwhichthe PMIO

### SIP was based, was in apounds per day, tons perday ortons peryear format. None ofthe emissions data was provided by Phillips in a pounds per h.Qyr

### format. [Undisputed Facts 

### "21,25-26.] In addition. none ofthe air quality modeling performed by the State for the PMIO 

### SIP was conducted on an hourly basis. [Undisputed Facts

, 25.] 

### At EPA's instruction, the State relied exclusively onreceptor modeling, which, by its very nature, can only model Qafu: 

### emissions. [Undisputed Facts 

# n 23-25.] 

### Thus, the technical foundation of the PMlO 

### SIP

- everything in the administrative record

- supports 

### da.ilx S02 emissions limits and 

### nothing supports hQ.w:ly 

### S02 emissions limits. [Undisputed Facts "25-26.] 

### Because the State relied exclusively on emissions inventories and air quality modeling, the State was without the authority to impose 

### 1:lm.!r1Y S02 emissions limits when it promulgated the PMIO 

### SIP and issued to Phillips the 1992 and 1995 Approval Orders. Indeed, such an imposition would constitute arbitrary and capricious agency action. 

### CL. Qlenhouse, 42 F.3d at 1581 (holding that agency action was arbitrary because it was "not supported by substantial evidence in the record"). In sum, the State was without the authority, and did not intend. to impose an hourly SQ2emissions limit on Phillips based on the administrative record. EPA's assertions to the contrary are arbitrary and simply make no sense. 

### U Caribbean Petroleum Corp.

n 

## uPA. 28 

### F.3d 232,235 

### (1st Cir. 1994) (agency action is arbitrary ifit "makes no sense ).

le:\
...\phillips\r56-mcmJ.wpdl 

### 21Independent ofthe state ofthe administrative record, EPA itselfis without the authority to insist on hourly 

### S02 emissions limits. The Supreme Court has made clear that so long as compliance with the relevant SIP is resulting in attairunent ofthe NAAQS, the State has absolute discretion to determine the means by which the NAAQS will be met. 

### I(ain v. Natural Resources Defense Council.**I.nc~,** 421 U.S. 60, 95 S. Ct. 1470, 1481-82 (1975). There have been
no violations ofthe NAAQS forPMIO 

### in the entire State ofUtah for over fOUf years. (Undisputed Facts 

## 1 7.] As the

### I.rnin coun stated: [EPA] is plainly charged by the (Clean Air] Act with the responsibility for setting the (NAAQS]. Just as plainly, however, it is relegated by the Act to a secondary role in the process of determining and enforcing the specific, source-by-source emission limitations which are necessary ifthe national standards it has set are to 

### be met. . . . The

### Act giyes the 

### A£ency no authority to questjon the wisdom ofa State's choices ofemission limitations ifthey are part ofa plan which satisfies the standards of 

### § 1l0(a)(2)
.... Thus. so long as the ultimate choice ofemission limitations is in compliance with the [NAAQSJ, the State is at 

### liberty to 

### adopt whatever mix ofemission limitatjons it deems best suited to its particular situation. 95 S. Ct. at 1481-82 (emphases added); see also Virginia v. EPA, 108 F.2d 1397,1410 (D.C. Cir. 1997) (reaffinning 

### Irain and stating that the Clean Air Act "does not enable EPA to force particular control measures on the state"). Thus, two independent and sufficient reasons exist for granting sununaryjUdgment for Phillips on the alleged emissions violations. First, under EPA's interpretation, the PMlO SIP and the Approval Orders wouldunconstitutiQnally discriminate against Phillips. Second, under EPA's interpretation. the State's action inpromulgating the PMlO SIP and in issuing the Approval Orders

[c:\
...\phillips\rSf>.mem3.wpd] 

### 22would have been arbitrary and capricious. For either of these reasons, Phillips is entitled to summaryjUdgment in its favor on Count II ofEPA's Amended Complaint. 

### CONCLUSION Consistent with federal regulations. EPA agreed that a source could be exempted from operation ofCEM equipmentif

### itproved, "to the satisfaction ofthe State," that an exemption was warranted. The State has investigated the CEM equipment malfunctions reported by Phillips and concluded that no violation of CEM requirements bas occurred. 

### IfEPA is unhappy with the authority it has delegated to the State, its remedy is to change the CEM breakdown rule after propernotice and corrrrnent. Instead, EPA 

### is attempting inthis litigation to engage in rulemaking by enforcement. BecausePhillips bas ·satisfied" the State that its CEM equipment malfunctions
were unavoidable, EPA's claims for penalties relating to CEMunavailability should bedenied. Likewise, neither EPA nor the State was free to adopt a PM IO SIP that treated businesses within a class differently. Despite EPA's belated attempts to distance itself from the Amoco Approval Order, approved with EPA's knowledge 

### in 1992, Amoco, Geneva and Kennecott are permitted to average 

### S02 on a basis. As a result, the PMIO SIP and the approval orders issued to Phillips, as interpretedby EPA (to impose an hourly S02 emissions limit), would violate Article I, 

### §24 ofthe Utah Constitution. Therefore, to be enforceable at all, the PMIO SIP and the Approval Orders must allow for daily averaging ofS02 emissions by Phillips.

(c;\
...Iphil!ipslr56-mem3 INpdl 23Furthermore. imposing upon Phillips (and the other refineries) a never to be exceeded pounds perhour limit atthe SRU would be arbitrary and capricious. Despite the fact that the Five Refineries have been operating under daily S02 emissions limits the State enforces, there have been no violations ofthe PMlO NAAQS since 1994. The modeling to support the S02 controls used in the PMIO SIP to demonstrate attainment ofthe PM,O NAAQS.was conducted on a daily basis. Sulfurdioxide does not convert into PMlO within

### hillm, in converts to PMIO• ifat all within**several~.** And. EPA admits that much ofthe same chemical compound, S02, emitted into the SaltLake and Utah County air shed is only regulated on a daily basis. Because it would make no
sense to impose hourly S02 emissions limits upon Phillips. EPA's position is arbitrary and capricious. Forthe foregoing reasons. Phillips respectfully requests that the Court enter summary judgment on Counts I and II 

### infavor ofPhillips and againstEPA. DATED this \,\1\- day ofAugust, 1998. PARR WADDOUPS BROWN GEE& LOVELESS. PC 

### By:**--'7'---t-f--'~--+**

Attorneys forPhillips Petroleum Company

[C:\
...Iphillips\rS6-memJ.wpd] 

### 24