ORAL ARGUMENT NOT YET SCHEDULED IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 11
- 1108 (and consolidated cases)
UNITED STATES SUGAR CORPORATION, et al., Petitioners,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents.

On Petition for Review of Final Action of the United States Environmental Protection Agency

BRIEF FOR RESPONDENT UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

SAM HIRSCH Acting Assistant Attorney General
PERRY M. ROSEN OF COUNSEL: NORMAN L. RAVE, JR. SUSMITA DUBE Y Environmental Defense Section Office of General Counsel Environment and Natural Resources Division United States Environmental United States Department of Justice Protection Agency P.O. Box 7611 1200 Pennsylvania Ave., NW Washington, D.C. 20044 Washington, D.C. 20460 (202) 616
- 7568 November 10, 2014 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 1 of 113ORAL ARGUMENT NOT YET SCHEDULED UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

____________________________________ ) UNITED STATES SUGAR ) CORPORATION, ) ) Petitioner, ) ) v. ) Docket No. 11

- 1108 ) (and consolidated cases) UNITED STATES ENVIRONMENTAL ) PROTECTION AGENCY, et al., ) ) Respondents. )

___________ ________________________ ) RESPONDENTS’ CERTIFICATE OF COUNSEL Pursuant to Circuit Rule 27(a)( 4), counsel for Respondents United States Environmental Protection Agency and Gina McCarthy , Administrator (collectively “EPA”) submit this certificate as to parties, rulings, and related cases. (A) Parties and Amici (i) Parties, Intervenors, and Amici Wh o Appeared in the District Court This case is a petition for review of final agency action, not an appeal from the ruling of a district court. USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 2 of 113(ii) Parties to These Cases All parties, intervenors, and amici appearing in this court are li sted in the Brief for Industry Petitioners. (B) Rulings Under Review The Agency action s under review are “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters,” p ublished at 76 Fed. Reg. 15,608 (March 21, 2011) ; and “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial, and Institutional Boilers and P rocess Heaters,” published at 78 Fed. Reg. 7,138 ( Jan. 31 , 201 3 ) (C) R elated Cases The case on review has not been previously before this Court or any other
Court. Case No. 13

- 1256 was severed from the cases consolidated under No.
11

- 1108 on October 16, 2013. The Court has coordinated this case with Nos.
11

- 1125, 11

- 1141, and 11

- 1189, and ordered that they be heard by the same panel. Dkt. 1461576. Respectfully submitted,
SAM HIRSCH Acting Assistant Attorney General

ii USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 3 of 113/S/ Norman L. Rave, Jr. NORMAN L. RAVE, JR. PERRY M. ROSEN Environmental Defense Section Environment & Natural Resources Division United States Department of Justice P.O. Box 23986 Washington, D.C. 20026

- 3986 (202) 616

- 7568 Counsel for Respondents

November 10, 2014

iii USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 4 of 113TABLE OF CONTENTS

TABLE OF AUTHORITIES

................................ ................................ .................... iv GLOSSARY

................................ ................................ ................................ ............... x JURISDICTION

................................ ................................ ................................ ......... 1 STATEMENT OF ISSUES

................................ ................................ ....................... 1 STATUES AND REGULATIONS

................................ ................................ ........... 3 STATEMENT OF FACTS

................................ ................................ ........................ 4 A. Statutory Background

................................ ................................ ........... 4 B. Regulatory Background

................................ ................................ ......... 8 SUMMARY OF ARGUMENT

................................ ................................ ............... 11 A. Industry Petitioners’ Claims

................................ ................................ 1 1 B. Environmental Petitioners’ Claims

................................ ..................... 1 4 STANDARD OF REVIEW

................................ ................................ ..................... 1 7 ARGUMENT

................................ ................................ ................................ ........... 1 8 I. EPA ACTED RATIONALLY IN SETTING EMISSION STANDARDS ON A POLLUTANT

- BY

- POLLUTANT BASIS FOR NEW HEAVY OIL

- FIRED BOILERS AND EXISTING STOKER COAL FIRED BOILERS

.............. 1 8
II. EPA DID NOT ACT ARBITRARILY IN SETTING NUMERIC CARBON MONOXIDE EMISSION STANDARDS TO CONTROL NON

- DIOXIN ORGANIC HAPS

................................ ................................ 2 7 A. EPA Did Not Act Arbitrarily in Applying a Numeric Emission Standard for Organic HAP Emissions From Coal

- Fired Boilers

........ 2 8 B. EPA D id Not Commit Procedural Error in Addressing the Issue of Organic HAP Emission Standards for Coal

- Fired Boilers

.................. 3 3 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 5 of 113III. EPA’S DETERMINATION THAT SECTION 7412 DOES NOT REQUIRE EMISSION LEVELS DURING MALFUNCTIONS TO BE TAKEN INTO ACCOUNT IN DETERMINING T HE LEVEL ACHIEVED BY THE BEST PERFORMING SOURCES IS REASONABLE AND CONSISTENT WITH THE STATUTE

.................. 3 6 A. EPA’S Historic Practice Regarding Malfunctions

.............................. 3 7 B. There is No Statutory Requirement to Factor Malfunction Emission Levels into MACT Numeric Emission Standards

.............................. 39
C. It Was Not Arbitrary and Capricious for EPA to Decide Not to Create a Work Practice Standard for Malfunction Events

....... 4 8 IV. EPA DID NOT ACT ARBITRARILY IN ESTABLISHING NUMERIC MACT EMISSION STANDARDS FOR HCL

........................ 5 0
V. EPA’S IMPOSITION OF AN ENERGY ASSESSMENT REQUIREMENT AS A BEYOND

- THE

- FLOOR STANDARD WAS WITHIN EPA’S AUTHORITY AND NOT ARIBTRARY OR CAPRICIOUS

..................... 60 A. T he Energy Assessment Fits Squarely Within EPA’s Authority to Establish Beyond

- the

- Floor Standards

................................ ................ 62 B. Emiss ion Standards Apply to the Major Source, Not Merely to the Specific Equipment From Which Hazardous Pollutants are Finally Emitted

................................ ................................ ................................ 6 3 C. The Energy Assessment Complies with All Statutory Requirements

................................ ................................ ...................... 66
VI. EPA REASONABLY USED CARBON MONOXIDE AS A SURROGATE FOR ORGANIC HAPS

................................ .................... 69
VII. T HE SUBCATEGORIES IN THE RULE ARE REASONABLE

................ 76 VIII. EPA REASO NABLY EXCLUDED CERTAIN UNITS CO

- FIRING NATURAL GAS FROM ITS MACT FLOOR ANALYSIS

........................ 79

ii USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 6 of 113IX. EPA’S USE OF THE UPPER PREDICTION LIMIT TO ESTABLISH STANDARDS IS REASONABLE

................................ ............................... 8 1
A. Introduction

................................ ................................ ......................... 8 1 B. Use of the UPL Is Consistent with the Requirements of Section 7412(d)(3)

................................ ................................ ............................ 8 4 1. The UPL Represents the Average Performance of the Top Performing Sources Over Time

................................ ................ 85 2. The UPL Represents What t he Best Performing Sources Achieve Over Time

................................ ................................ ... 88 C. The Standards Are Supported By t he Record

................................ ..... 90 D. EPA Did Not Change Its Rationale f or t he UPL In t he Response t o t he Remand of t he Record

................................ .... 93 CONCLUSION

................................ ................................ ................................ ........ 96

iii USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 7 of 113TABLE OF AUTHORITIES

CASES Alaska Dep't of Envtl. Conservation v. EPA , 540 U.S. 461 (2004)

................................ ................................ .............................. 2 2 Am. Trucking Ass'ns, Inc. v. EPA, 283 F.3d 355 (D.C. Cir. 2002)

................................ ................................ .............. 9 2
* Bluewater Network v. EPA , 370 F. 3d 1 (D.C. Cir. 2004)

................................ ................................ .......... 70, 72 Cement Kiln Recycling Coalition v. EPA ,

255 F.3d 855 (D.C. Cir. 2001)

................................ ............................. 7 , 2 3 , 4 4 , 4 5 Chemical Mfrs. Ass'n v. EPA ,

870 F.2d 177 (5 th Cir. 1989)

................................ ................................ .................. 2 2 Chevron U.S.A. Inc. v. NRDC, Inc. ,

467 U.S. 837 (1984)

................................ ............................... 1 7 , 2 1 , 40, 4 3 , 5 8 , 6 6
EDF v. Duke Energy Corp., 549 U.S. 561 (2007)

................................ ................................ .............................. 2 2 Ethyl Corp. v. EPA , 541 F.2d 1(D.C. Cir. 1976) ( en banc )

................................ ................................ ... 9 2 FCC v. Fox Television Stations, Inc. , 556 U.S. 502 (2009)

................................ ................................ .............................. 5 8 Huls Am. Inc. v. Browner , 83 F.3d 445 (D.C. Cir. 1996)

................................ ................................ ................ 2 2 Jama v. Immigration & Customs Enforcement, 543 U.S. 335 (2005)

................................ ................................ .............................. 5 2

* Authorities chiefly relied upon are marked with an asterisk.

iv USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 8 of 113Kennecott Greens Creek Min. Co. v. Mine Safety and Health Admin. , 476 F.3d 946 (D.C. Cir. 2007)

................................ ................................ ....... 7 0 , 7 2 McCreary v. Offner , 172 F.3d 76 (D.C. Cir. 199 9)

................................ ................................ ................ 5 2 Medical Waste Inst. and Energy Recovery Council v. EPA , 645 F.3d (D.C. Cir. 2011)

................................ ................................ .................... 2 1
* Mossville Envtl. Action Now v. EPA , 370 F .3d 1232 (D.C. Cir. 2004)

................................ ........................... 6 , 7, 83 , 89 Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co

. , 463 U.S. 29 (1983)

................................ ................................ ................................ 1 7
* Nat'l Ass'n of Clean Water Agencies v. EPA , 734 F.3d 1115 (D.C. Cir. 2013)

........................... . 41, 4 5 , 7 6 , 87, 88, 89 , 9 5 Nat'l Cable & telecoms. Ass'n v. Brand X Internet Servs., 545 U.S . 967 (2005)......................................................... ............5 8 National Lime Ass'n v. EPA , 627 F.2d 416 (D.C.Cir. 1980)

................................ ................................ ........ 3 4 , 38 Nat'l Lime Ass'n v. EPA , 233 F.3d 625 (D.C. Cir. 2000)

................................ .................... 6,7 , 2 7 , 41, 7 0 , 7 1 Nat'l Mining Ass'n v. EPA , 59 F.3d 1351 (D.C. Cir. 1995)

................................ ................................ ....... 3 5 , 6 5 Natural Resources Defense Council v. EPA , 822 F.2d 104 (D.C. Cir. 1987)

................................ ................................ .............. 7 2
NRDC v. EPA , 859 F.2d 156 (D.C. Cir. 1988)

................................ ................................ .............. 47 NRDC v. EPA, 194 F.3d 130 (D.C. Cir. 1999)

................................ ................................ .............. 3 2

v USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 9 of 113NRDC v. EPA , 489 F.3d 1250 (D.C. Cir. 2007)

................................ ............................. 5 , 8, 53 , 7 6 NRDC v. EPA , 529 F.3d 1077 (D.C. Cir. 2008)

................................ ................................ .......... 4 , 7
NRDC v. EPA , 5 71 F.3d 1245 (D.C. Cir. 2009)

................................ ................................ ............ 2 1
NRDC v. EPA , 749 F.3d 1055 (D.C. Cir. 2014)

................................ ................................ ..... 39 , 4 0 Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375 (D.C. Cir. 1973)

................................ ................................ .............. 3 5 Reynolds Metals Co. v. EPA , 760 F.2d 549 (4th Cir. 1985)

................................ ................................ ................. 7 2
* Sierra Club v. EPA , 167 F.3d 658 (D.C. Cir. 1999)

................................ .......................... 38, 83, 84, 89

* Sierra Club v. EPA , 353 F.3d 976 (D.C. Cir. 2004)

... ............... ...... ... .... . 4 , 24 , 2 7 , 29 , 7 0 , 7 1 , 7 2 Sierra Club v. EPA ,

479 F.3d 875 (D.C. Cir. 2007)

................................ ..................... 2 3 , 4 5 , 4 7 , 65 , 8 0
* Sierra Club v. EPA , 551 F.3d 1019 (D.C. Cir. 2008)

................................ ............. 9 , 3 6 , 37, 4 0 , 4 4 , 8 1 St. Luke's Hosp. v. Sebelius , 611 F.3d 900 (D.C. Cir. 2010 )

................................ ................................ .............. 2 2 United States v. Mead Corp. ,

533 U.S. 218 (2001)

................................ ................................ .............................. 2 1 Weyerhaeuser Co. v. Costle,

590 F.2d 1011 (D.C. Cir. 1978)

................................ .......................... 45, 46, 47 , 48

vi USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 10 of 113* White Stallion Energy Ctr

. , LLC V. EPA , 748 F.3d 1222 (D.C. Cir. 2014) , p etition for c ert. filed, 83 U.S.L.W. 3089 ( U.S. July 14, 2014) ( No.14

- 46 )

........................ ...... ..... 5 , 25 , 3 2 , 58, 59

STATUTES 42 U.S.C. § 7411

................................ ................................ ................................ ...... 4 3 42 U.S.C. § 7411(a)

................................ ................................ ................................ . 6 5 42 U.S.C. § 7412

.. ................................................ 1, 2, 4 , 8 , 11, 2 0 , 22, 39,

......... ........ ................................ ............... 40, 42, 44, 47, 4 8 , 58 , 6 5 , 8 1 42 U.S.C. § 7412(a)(1)

................................ ................................ ......................... 5, 6 5
42 U.S.C. § 7412(a)(2)...................................................................... 5 42 U.S.C. § 7412(a)(3)...............................................................

. .....6 5 42 U.S.C. § 7412(c)

................................ ................................ ...................... 5 , 63 , 6 4 42 U.S.C. § 7412(d)...

.............................. ... 1, 6, 18, 23, 50, 51, 57, 65, 76 42 U.S.C. § 7412(d)(1)

................................ ................................ ......................... 5 , 7 6 42 U.S.C. § 7412(d)(2)

.............................. 5, 6, 14, 18, 21, 52, 57, 62, 63, 66, 67, 81 42 U.S.C. § 7412(d)(3)

................................ .............. 6, 11, 18, 26, 45, 52, 80, 81, 82 42 U.S.C. § 7412(d)(3)(A)

................................ ................................ ....................... 2 0 42 U.S.C. § 7412(d)(4)....................................

..... ... 51, 52, 5 6 , 57, 58, 59 42 U.S.C. § 7412(f)

................................ ................................ ........................... 2 5 , 5 2 42 U.S.C. § 7412(f)(2)(A)

................................ ................................ ........................ 5 2 42 U.S.C. § 7412(h)

................................ .............................. 7, 12, 13, 33, 44, 48, 50

vii USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 11 of 11342 U.S.C. § 7412(h)(1)

................................ ................................ ...................... 3 0 , 49 42 U.S.C. § 7412(h)(2)

................................ ................................ ............................. 3 0 42 U.S.C. § 7412(h)(2)(A)

................................ ................................ ......................... 8 42 U.S.C. § 7412 (h)(2)(B)....................................

.. ..................... .. ...... 8 42 U.S.C. § 7412(h)(4)

................................ ................................ ............................. 3 0 42 U.S.C. § 7412(n)(1)

................................ ................................ ............................. 59 42 U.S.C. § 7429

................................ ................................ ................................ .... 8, 9 42 U.S.C. § 7602(k).................................

.............................. ... ......8 1 42 U.S.C. § 7607(b)(1)

................................ ................................ ............................... 1 42 U.S.C. § 7607(d)(6)(B)

................................ ................................ ....................... 33 42 U.S.C. § 7607(d)(7)(B)

................................ ................................ ................ 33, 34 42 U.S.C. § 7607(d)(8)

................................ ................................ ............................. 35 42 U.S.C. § 7607(d)(9)

................................ ................................ ............................. 17

P ub. L. No. 91

- 604, §4(a), 84 Stat. 1676 (1970).................................

... ....4 CODE OF FEDERAL REGULATIONS 40 C.F.R. § 63.11237

................................ ................................ ............................... 60
40 C.F.R. § 63.7520(d)

................................ ................................ ............................ 81 40 C.F.R. § 63.7575

................................ ................................ ................................ . 78
40 C.F.R. Part 63, Subpart DDDDD

................................ ................................ .......... 5

vii i USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 12 of 113FEDERAL REGISTER 61 Fed. Reg. 17 ,358 (Apr. 19, 1996)

................................ ................................ ....... 21 69 Fed. Reg. 55 ,218 (Sept. 13, 2004)

................................ ........................... 8, 37, 52 75 Fed. Reg. 32 ,00 6 ( June 4, 2010) 51, 53, 54, 55, 56, 60, 61, 62, 63, 64, 66, 68, 77 75 Fed. Reg. 54 ,970 (Sept. 9, 2010)

................................ ................................ ........ 21 76 Fed . Reg. 15,455 (Mar. 21, 2011)

................................ ................................ ......... 9 76 Fed. Reg. 15 , 554 (Mar. 21, 2011)

................................ ............................ 8 , 61 , 64 76 Fed. Reg. 15,608 (Mar. 21, 2011)...

... ............ ... 10, 20, 24, 26, 32, 34, 37, 38,

................... ...... .....39, 41, 43, 46, 50, 54, 60, 63, 64, 68, 76, 78, 83, 86, 90, 93 76 Fed. Reg. 15,704 (Mar. 21, 2011).......................................

... ............. 9 76 Fed. Reg. 24 ,976 (May 3, 2011)

................................ ................................ .. 3 1 , 3 2
77 Fed. Reg. 9304 (Feb. 16, 2012)....................................

.. ..............2 8 , 3 1 78 Fed. Reg. 7138 (Jan. 31, 2013)......

... . .. . ...... .. 1, 5, 9, 18, 35, 51, 60, 66, 69, 70 ,

............................................. .... ..... ...... . ................. 71 , 75, 76 , 7 8 , 9 1
L EGISLATIVE MATERIALS
H.R. Rep. No. 101

- 490 , at 328 , reprinted in 2 Legislative History of the Clean Air Act Amendments of 1990..........

............... .... .....................................80 S. Rep. No. 101

- 228 , (1989) , 1990 U.S.C.C.A.N 3385 at * 3552, 3553

........................ ......... ... ..................... ... ...........................2 3 , 25 ELECTRONIC DATABASE http://en.wikipedia.org/wiki/Prediction_interval....................... ..............................85

ix USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 13 of 113GLOSSARY 2011 Rule “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters, Final Rule,” 76 Fed. Reg. 15,608, March 21, 2011 2013 Rule “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters, Final Rule,” 78 Fed. Reg. 7138, January 31, 2013
CAA Clean Air Act, 42 U.S.C. §7401, et seq
. CO Carbon Monoxide
EGU Electric Generating Unit
EPA United States Environmental Protection Agency
HAP H azardous A ir P ollutant HCl Hydrogen Chloride
LEAN Petitioners Louisiana Environmental Action Network, et al.
MACT Maximum Achievable Control Technology Major Boilers Rule 2011 Rule and 2013 Rule collectively
MMBtu Million British thermal units
PM Particulate Matter
RTC Response to Comments tpy tons per year UPL Upper Prediction Limit

x USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 14 of 113J URISDICTION The Court has jurisdiction pursuant to 42 U.S.C. §7607(b)(1). STATEMENT OF ISSUES Petitioners challenge various emission standards established by Respondent Environmental Protection Agency (“EPA”) under section 112 of the Clean Air Act ( “CAA” or “the Act”), 42 U.S.C. §7412 , for hazardous air pollutants (“HAPs”) emitted by industrial, commercial and institutional boilers and process he aters ( collectively “Boilers”) located at “ m ajor” sources . EPA promulgated these regulations through two rulemakings: “ National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters, Final Rule , ” 76 Fed. Reg. 15,608, March 2 1 , 2011 (“2011
R ule ”) ; and EPA’s f inal a ction on r econsideration of the 2011 Rule, 78 Fed. Reg. 7138, January 31, 2013 (“2013 Rule”) (referred to collectively as the “ Major Boilers Rule

. ” )

. The issues raised by Industry Petitioners are: 1. Is EPA’s longstanding pollutant

- by

- pollutant approach to setting emission standards for each hazardous pollutant regulated under 42 U.S.C. § 7412(d) a rational application of that provision , which expressly requires EPA to establish emission standards based on the emission level s actually achieved by the best performing source(s), or is Petitioners’ view that EPA must set emission USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 15 of 113standards based on the emission levels achieved by a single source for all HAPs in aggregate the unambiguous directive of the statute , even where that single source may be the worst performing source for one or more HAPs being regulated ?
2

. Did EPA exceed its authority or act arbitrarily in establishing numeric emission standar ds for non

- dioxin organic HAPs through the use of the surrogate pollutant carbon monoxide ( “ CO ” ), rather than establishing a non

- numeric work practice standard (e.g., equipment tune

- up) to govern emissions of organic HAPs ? 3. Does 42 U.S.C. §7412 unambiguously require EPA to factor emissions that occur during malfunction s , which cannot be predicted as to effect , number, length, nature, severity or cause , into emission standards, and is it arbitrary and capricious for EPA not to have created a work practice standard for malfunction s ?
4. Did EPA exceed its authority or act arbitrar il y in refraining from exercising its discretion to utilize a health threshold in establishing the emission standards for hydrogen chloride (HCl) in the face of a lack of data establishing that such a threshold would be protective of public health ? 5. Did EPA abuse its discretion in establishing a “beyond

- the

- floor” standard requiring m ajor sources to conduct an energy assessment designed to identify methods of reducing fu el usage that would thereby reduc e the levels of
HAPs emitted from the regulated source?

2 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 16 of 113The issues raised by Environmental Petitioners (“LEAN”) are: 6. Did EPA reasonably use CO as a surrogate for non

- dioxin organic HAP emissions where CO is an indicator of efficient combustion, which is the control method for non

- dioxin organic HAPs?
7. Is EPA’s creation of subcategories based on the principal fuel that a unit is designed to combust consistent with the C AA and reasonable , where EPA determined t hat the pri ncipal fuel determines boiler design and affects both emission characteristics and applicable emission control methods?
8. Did EPA reasonabl y determine that certain units co

- combusting natural gas are not “similar” for determining new source em ission standards where that is not typical of units in the subcategory?
9. Did EPA reasonably use the Upper Prediction L imit (“UPL”) methodology to determine the value that the best performing source (s) would achieve 99 percent of the time to account for variability and ensure that the resulting standard could be met by the best performing sources over the full range of foreseeable operating conditions? STATUES AND REGULATIONS Pertinent statutes and regulations appear in Petitioners’ briefs and Addendums thereto.

3 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 17 of 113STATEMENT OF FACTS A. Statutory Background Along with t wo other EPA rules issued on the same day that are also being challenged and have been coordinated with this action ( see p p . 8

- 9 infra ) , the Major Boilers Rule regulates the emissions of hazardous air pollutants , in this case pursuant to CAA § 112, 42 U.S.C. §7412. Section 7412 was enacted by Congress
to regulate the emission of toxic pollutants that are hazardous to public health

. Consequently, w hen first enacted , section 7412 required EPA to identify and regulate HAPs when they were found to “cause, or contribute to, an increase in mortality or an increase in serious irreversible [ ] or incapacitating reversible [ ] illness.” Pub. L. No. 9 1

- 604, §4(a), 84 Stat. 1676, 1685 (1970) , 42 U. S.C. §7412(a)(1) (1970). These health

- based standards , however, proved exceedingly difficult to generate. NRDC v. EPA , 529 F.3d 1077, 1079 (D.C. Cir. 2008). In response, Congress substantially amended section 7412 in 1990 to direct
EPA to regulate HAP emissions utilizing technology

- based standards. Sierra Club
v. EPA , 353 F.3d 976, 979 (D.C. Cir. 2004)

. First, Congress itself identified the pollutants that were deemed to be hazardous, designating 189 HAPs subject to regulati on. Congress then required EPA to establish emission standards for what i t deemed “ m ajor” stationary sources of these hazardous pollutants . Major stationary sources are those that emit more than ten tons per year (“tpy”) of any covered HAP

4 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 18 of 113or more than t wenty

- five tpy of any combination of HAPs. 42 U.S.C. §7412(a)(1). Sources that emit lower levels of HAPs are classified as “ a rea sources.” Id. §7412(a)( 2 )

. To facilitate the regulation of HAP sources , Congress provided for EPA to establish source categories and subcategories . 42 U.S.C. §7412(c). See,
e.g. , 40 C.F.R. Part 63 Subpart DDDDD ( covering Boilers ), 78 Fed. Reg. at 7142 (identifying B oiler subcategories )

. Finally, Congress gave EPA specific direction regard ing how it must promulgate emi ssion standards for m ajor sources. 42 U.S.C. §7412(d)(1); White Stallion E nergy C tr. , LLC v . EPA , 748 F.3d 1222, 1231 (D.C. Cir. 2014) , Petition for Cert. filed, 83 U.S.L.W. 3089 (July 14, 2014) No. 14

- 46

. Se ction 7412 requires EPA to establish national emission standards within designated categories and subcategories for both new and existing m ajor sources of HAPs that “require the maximum degree of reduction in emissions of the hazardous air pollutants subje ct to this section (including a prohibition on such emissions, where achievable) ” that the Administrator determines is achievable based on existing technology, taking cost and other specific factors into consideration. 42 U.S.C. §7412(d)(2). Accordingly, section 7412 emission standards are referred to as “maximum achievable control technology” or “MACT” standards. The establishment of MACT standards is essentially a two

- step process and is different for new sources and existing sources. NRDC v. EPA , 489 F.3d 1250,

5 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 19 of 1131254 (D.C. Cir. 2007)

. Section 7412(d)(3) first specifies the absolute minimum level of emissions reductions covered sources must achieve. For new sources, this MACT standard “ shall not be less stringent than the emission control that is achieved in practice by the best controlled similar source, as determined by the Administrator. ” 42 U.S.C. §7412(d)(3). Emission standards for existing source s in sub categories with 30 or more sources may not be less stringent than “ the average emission limitation achieved by the best performing 12 percent of the existing sources (for which the A dministrator has emission information).” Id. Where there are fewer than 30 sources in a category or subcategory , EPA is to set th e standard based on the best p erforming 5 sources

. Id. Th is minimum level of emission control required for both new and existing sources is called the “MACT floor.” Mossville Envtl. Action Now v. EPA , 370 F.3d 1232, 1235 (D.C. Cir. 2004). Section 7412(d)(2) then directs EPA , in its discretion , to go beyond the minimum stringency requirements of section 7412(d)(3) and set more stringent MACT standards , where such standards are achievable

. These standards can include a broad range of measures that reduce or eliminate emissions of HAPs. In setting these “beyond

- the

- floor” standards , EPA must consider costs and energy and non - air related health and environmental impacts to determine if, and how, beyond

- the

- floor standards are to be established for given source categories. 42
U.S.C. § 7412(d); Nat’l Lime Ass’n v. EPA , 233 F.3d 625 , 629 (D.C. Cir. 2000).

6 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 20 of 113EPA has considerable discretion and latitude in determining how to collect data relevant to establishing the standards and how such data are to be assessed in establishing the standards. NRDC v. EPA , 529 F.3d at 1085

- 86; Cement Kiln Recycling Coalition v. EPA , 255 F.3d 855, 867 (D.C. Cir. 2001). EPA may use estimates of emission levels that have been achieved or are achievable and may
account for variability of a source’s emissions in establishing the emission standards

. Mossville , 370 F.3d at 1 240

- 42. “Floors need not be perfect mirrors of the best

- performers’ emissions...[but instead are to] reflect a reasonable estimate of the emissions ‘ achieved ’ in practice by the best

- performing sources.” Cement Kiln , 255 F.3d at 87 1

- 7 2

. I n regulating HAPs, EPA may use a surrogate (e.g., setting a standard for particulate matter ( “ PM ” ) that will act to control certain hazardous metals), as long as there is a reasonable basis to do so . National Lime , 233 F.3d at 637

- 40. Under 42 U.S.C. §7412 (h), if EPA determines that it is “not feasible ” to prescribe or enforce a numeric MACT standard, it may instead promulgate a design, equipment, work practice or operational standard which, in EPA’s judgment, is consistent with subsections (d) (“ Emission Standards”) or (f) (“Standards to protect health and environment”) of Section 7412. These alternative standards are referred to as “work practice” sta ndards. While the promulgation of a work practice in lieu of a numeric MACT emission standard is

7 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 21 of 113wholly within EPA’s discretion, Congress has cabined this authority by narrowly defining “not feasib le” as limited to situation s where EPA determines that (a) HAPs cannot be emitted through a conveyance to emit or capture such pollutant or when any requirement for us e of such conveyance would be inconsistent with federal, state or local law or (b) when “the application of measurement methodology to a particular class of sources is not practicable due to technological and economic limitations.” 42 U.S.C. §7412 (h)(2) (A), (B).
B. Regulatory Background EPA initially regulated Boilers through a rulemaking promulgated in 2004.
69 Fed. Reg. 55,218 (Sept. 13, 2004) (“2004 Rule”) . Based centrally on a dispute regarding how to define which B oilers would be regulated under section 7412 , which cover s stationary sources generally, vers u s 42 U.S.C. § 7429, which calls for emission standards for stationary sources that combust solid waste, in 200 7 this
C ourt vacated and remanded the emission standards established in the 2004 Rule

. NRDC v. EPA , 489 F.3d at 1374

- 75

. EPA responded to the vacat ur of the 2004 Rule by issuing a series of new rules , all on March 21, 2011: the “2011 Area Rule,” 76 Fed. Reg. 15,554, governing emissions of HAPs from a rea s ource b oilers; the “2011 CISWI Rule,” 76 Fed. Reg. 15,704, governing emissions of nine specific pollutants generated by commercial and industrial solid was te incinerat ion ( “ CISWI ” ) units regulated

8 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 22 of 113under 42 U.S.C. §7429; and the Major Boiler s R ule that is the subject of Petitioners ’ challenge s in this case. EPA also issued a regulation under the
Resourc e Conservation and Recovery Act , defining materials that are solid waste when combusted for the purpose of determining which units are B oilers and which are solid waste incinerators. 76 Fed. Reg. 15 , 455. 1
The Major Boilers Rule establishes MACT floors for 3 2 subcategories of
B oilers fo r five different pollutants : particulate matter (“PM”); hydrogen chloride (“HCl”); mercury (“Hg”); carbon monoxide (“CO”); and dioxin/furan , the first four generally with numeric MACT standards and dioxin/furan with a work practice standard . 78 Fed. Reg. at 7142 (Table 3). 2 Some of these pollutants act as surrogates for regulating different HAPs. For instance, non

- dioxin organic HAPs are controlled through emission standards established for CO. As explained by this C ourt, the emission standards established under section
74 12 must apply during all facets of boiler operation , Sierra Club v. EPA , 551 F.3d 1019, 1026

- 28 (D.C. Cir. 2008) , which include start

- up , shut

- down , and

1 Challenges to EPA’s Rule governing a rea s ources are being addressed in No. 11

- 1141 . Challenges to EPA’s CISWI Rule are being addressed in No. 11

- 1125. Both of these actions, along with No. 11

- 1189, challenging EPA’s definition of solid waste, are coordinated with this case. Dkt. 1461576

.

2 In lieu of a numeric MACT floor, t he M ajor Boiler Rule established a work practice standard for all covered HAPs for four of the thirty

- two subcategories of Boilers. 76 Fed. Reg. at 15,613/1

. 9 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 23 of 113malfunctions. Periods of startup and shutdown are predictable a nd routine aspects of a source’s operations and thus EPA evaluated startup and shutdown conditions in establishing emission standards and creat ed a work practice standard to be applied during these routine operation s . 76 Fed. Reg. at 15,613, 15,618.
M alfunction s, by contrast, are infrequent, unpredictable, and widely varied in scope and impact . Accordingly , EPA does not account for emission levels that
may occur during malfunctions in setting emission standards. I f a source fail s to meet a given emis sion standard due to a malfunction, EPA will determine an appropriate enforcement response on a case - by

- case basis, evaluating , inter alia , whether the malfunction was “ not reasonably preventable” and not “caused in part by poor maintenance or car e less ope ration.” 7 6 Fed. Reg. at 15,613. In addition to the numeric and work practice MACT floor standards established in the Major Boilers Rule , EPA promulgated a beyond

- the

- floor standard for all existing major boilers: a one

- time energy assessment . The assessment is designed to identify practices and procedures that will reduce fuel usage at a source and thereby reduce resultant emissions of hazardous air pollutants. 76 Fed. Reg. at 15,613, 1 5 ,618

.

10 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 24 of 113SUMMARY OF ARGUMENT
EPA ’s arguments on the iss ues presented by Petitioners can be summarized as follows: A. Industry Petitioners’ Claims
1. Petitioners’ assertion that EPA is prohibited from establish ing MACT standards on a pollutant

- by

- pollutant basis is inconsistent with the statute.
42 U.S.C. § 7412(d)(3) requires that MACT standards for each HAP be no less stringent than the level of control achieved by the best

- performing source ( s )

. EPA’s approach implements this mandate by set ting the standards at the lowest
average emissions level actually achieved for each HAP . In contrast, Petitioners’

“ unitary

- source ” approach is based on the l owest common denominator . It would require EPA to establish standards for at least some HAPs that are less stringent than levels actually achieved in practice, which is facially in consistent with a statute intended to require the maximum achievable control technology. Petitioners’ approach would also require EPA to rank pollutants on a risk basis , in order to identify sources that are the ov erall “best” performers for all HAP s . But such a process is inconsistent with Congress’ 1990 wholesale modification of section 74 12 from a program based on subjective determinations of health impacts to one based on the control of HAP emissions actually a chieved by existing

sources.

11 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 25 of 1132. EPA’s decision to establish an emission limit, rather than a work practice standard , to control non

- dioxin organic HAPs from coal

- fired Boiler s is both reasonable and consistent with the statute. The statute authorizes
E PA , in its sole discretion, to establish a work practice standard in lieu of a MACT numeric standard , and then only if specific statutory requirements for infeasibility of a numeric standard are met. 42 U.S.C. §7412(h) (“the Administrator may” establish work practice standards if it is “not feasible in the judgment of the Administrator” to prescribe or enforce a n umeric emission standard). Here, EPA found that the statutory requirements for establishing the lack of feasibility for a numeric MACT standard were not satisfied because, inter alia , CO concentration s in the emissions from m ajor source B oilers can be reliably measured and correlated with non

- dioxin HAP emissions

. Petitioners’ assertion that t his determination is inconsistent with EPA’s use of a work practice in another rulemaking governing electric generating units (“EGUs ” ) is both irrelevant and wrong. This Court has made clear that each section 7412 rulemaking stands on its own record and, w hile the record in the EGU rulemaking established th at CO could not be reliably correlated to emissions of non

- dioxin organic HAP s, the record in this case establishes the opposite to be true

. 3. EPA had no statutory obligation to either take malfunctions into account in setting numeric emission standards or to create a separate work practice

12 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 26 of 113standard for malfunctions

. A ccounting for malfunctions in setting MACT numeric emission standards would be wholly impracticable , given the myriad different types of malfunctions that can occur acros s all sources in a category and given the difficulties associated with predicting or accounting for the frequency, degree and duration of various malfunctions that might occur

. Setting alternative work practice standards for malfunctions under section 741 2(h) presents the same inherent problems as setting numerical emission limits , given the varied nature of malfunctions

. In any event, Petitioners present no evidence that their suggestion to create a generic work practice plan that simply calls for minimi z ing emissions during malfunctions would be consistent with the statutory requirements for establishing a work practice standard , which require such standards

– just like numeric emission standards

– to reflect the performance of the best performing

source s . 4. EPA reasonably determined that it lacked adequate support to promulgate an emission standard that is less stringent than the MACT standard for HCl based on a health

- based risk analysis. Although EPA had promulgated such a standard in the 2004 Rule (which was vacated) , on the basis of its current analysis of the health risks posed by HCl and other acid gases , EPA determined that it would be inappropriate to establish anything other than a MACT standard for HCl.

13 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 27 of 113This technical, data

- driven determination by the Agency is both eminently rational and entitled to considerable deference.
5

. EPA’s adoption of an energy assessment requirement as a beyond

- the

- floor standard is wholly consistent with the statute, which requires that beyond

- the

- floor standards be implemented when they will result in the maximum degree of reduction in emissions t hat the Administrator determines is achievable , so long as cost and other factors are considered . Because an energy assessment may result in more efficient combustion, and thus lower fuel usage, it would achieve emission reductions beyond those achieved b y post

- combustion control technologies and would, by definition , do so in a cost

- efficient manner, since

sources will only implement energy saving measures that will pay for themselves through lower fuel costs within a reasonable amount of time

. An energy assessment is precisely the type of beyond

- the

- floor standard contemplated by Congress, which directed EPA to implement such standards through all means of “measures, processes, methods, systems, or techniques ” available to reduce the volume of, or elimin ate emissions of HAPs. 42 U.S.C. §7412(d)(2).
B. Environmental Petitioners’ Claims
6. EPA reasonably used carbon monoxide as a surrogate for

non - dioxin organic HAPs. C O is an indicator of efficient combustion, the primary control method for these HAPs, and the record demonstrates a strong correlation

14 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 28 of 113between CO and non

- dioxin organic HAP concentrations. There is no evidence in the record to support Petitioners’ assertion that polycyclic aromatic hydrocarbons are created post

- combustion in B oilers, and the record specifically demonstrates a relationship between CO and polycyclic aromatic hydrocarbon emissions. The lack of a strong relationship between CO and organic HAPs at low concentrations is due to the fact that CO is more difficult to combust tha n organic compounds and thus remains after other compounds have been destroyed.
7. EPA’s creation of subcategories based on combustion system and fuel is consistent with the statute. The fuel to be used in a unit dictates its design and affects its combustion characteristics and emissions. Thus, units designed to burn different fuels constitute different types or classes of sources. While operators have some flexibility to alter the mix of fuels combusted in a particular unit, that flexibility is significantly constr ained by the need for alternate fuels to be compatible with the unit’s fuel handling system and by the fact that the different heat ing value and moisture conten t of different fuels can adversely impact the operational characteristics of the b oiler.
8. Petitioners’ claims that EPA excluded certain units from MACT calculations are not properly before the Court. Furthermore, EPA reasonably determined that units co

- burning natural gas are not a “similar” unit for

15 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 29 of 113determining MACT where not all units in the category are capable of combusting natural gas

. 9. EPA’s use of the Upper Prediction Limit methodology to account for variability in operating conditio ns is consistent with the statute. The Court has repeatedly recognized that EPA may set MACT standards that can be achieved by the best performing source (s) under the full range of foreseeable operating conditions. Because the only emissions data availab le to EPA are “snapshots” obtained during stack tests, EPA must have some methodology to account for anticipated variability in setting the emission standards. The UPL does this by adding to the average emission result for the best performing source (s) a variability factor based on the characteristics of the data set. This is a standard statistical technique and provides a prediction of the emission level that the best performing source , or the average of the best performing sources , achieve s 99 percent o f the time, i.e., over the foreseeable range of operating conditions. Thus,
t he UPL meets the statutory requirement that standards reflect the average performance of the best performing sources because it is a prediction of the average performance of thos e sources over time and represents what the sources actually achieve , based on actual emission tests and the variability of the data set. EPA fully complied with the Court’s remand of the record, and there is no reason for the Court not to consider EPA’s response. EPA requested an

16 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 30 of 113opportunity to explain the methodology it used in this rulemaking, in light of issues raised in a decision of this Court that post

- dated the rule, and that is what the Agency has provided. The UPL methodology described in the r emand response is exactly the same as in the final rule, and the statutory interpretation embedded in the methodology, i.e., that it represents what the average of the best performers currently achieve and will achieve over time, is the same as well. STANDARD OF REVIEW EPA’s action in promulgating the Major Boilers Rule can be overturned only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or in excess of EPA's “ statutory jurisdiction, authority, or li mitations. ” 42 U.S.C. §7607(d)(9). “ The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co

. , 463 U.S. 29, 43 (1983). In interpreting statutory terms, the c ourt applies t h e familiar
two

- step analysis announced in Chevron U.S.A. Inc. v. NRDC, Inc. , 467 U.S. 837 (1984 )

. Under this standard, the court must apply the language of the statute where it reflects “the unambiguously expressed intent of Congress,” but where the statute is "silent or ambiguous with respect to the specific issue," the c ourt must defer to the agency's interpretation so long as it is "based on a permissible construction of the statute." Id. at 842

- 43.

17 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 31 of 113ARGUMENT
I. EPA ACTED R ATIONALLY IN SETTING EMISSION STANDARDS ON A POLLUTANT
- BY
- POLLUTANT BASIS FOR NEW HEAVY OIL
- FIRED BOILERS AND EXISTING STOKER COAL
- FIRED BOILERS___________________________________
I n establishing emission standards for each subclass of B oiler, EPA must require the “ maximum degree of reduction in emissions of the hazardous air pollutants subject to this section , ” which in any case shall “not be less stringent than the emission control that is achieved in practice by the best controlled similar source.” 42 U.S.C. §7412(d)(2),(3) (emphasis added) . Pursuant to this directive, EPA set the numeric MACT floor standards based on emission limitations , after considering variability, actually achieved by the single best performing unit (and best 12 percent of units for existing sources) for each of the covered hazardous air pollutants , i.e., on a “pollutant

- by

- pollutant” basis . Thus, fo r example, EPA set the MACT floor for emissions of PM from new oil units at 0.013 pounds per MMBtu because there is an existing oil unit that has actually achieved that level of emissions of PM

. 7 8 Fed. Reg. at 7142 (chart)

. This approach results in MACT floor standards that reflect the best emissions performance for each regulated pollutant, consistent with the purpose of section 7417(d) to establish stringent technology

- based emission standards for sources of HAPs. 76 Fed . Reg. at 15622. According to Petitioners , however, section 7412(d) mandates that EPA set the emission standards based on the best

- performing single source (or average of

18 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 32 of 113the best performing 12 percent of sources for existing sources) for “all” HAPs regulated, r ather than on the best

- performing source (s) for “each” HAP regulated. Industry Br. 8. To illustrate , based on emission limitations actually achieved by
B oilers in the subcategories of new oil units and existing coal

- fired stoker units after considering variability , the Major Boilers Rule set s the following MACT floors : Pollutant Units Emission Limit New Oil Units Existing Stoker Particulate Matter lbs. per MMBtu 0.013 0.040 Hydrogen Chloride lbs. per MMBtu 4.4 E

- 04 0.022 Mercury lbs. per MMBtu 4.8 E

- 07 5.7E

- 06 Carbon Monoxide parts per million 130 160
7 8 Fed. Reg. at 7142 (chart)

. Under Petitioners ’ “unitary

- source” theory, in setting these emission standards “achieved in practice by the best controlled simila r source ,” EPA is prohibited from actually requiring new heavy

- oil and exi s ting coal

- fired stoker units to meet these enumerated standards which have, in fact, actually been achieved by various existing units. Instead, Petitioners assert that EPA must ide ntify the single unit within the New Oil subcategor y (and 12 percent of units for the Existing Stoker subcategory) that comes closest to the emission limitations being achieved in aggregate for all HAP s , and then reset each of the standards at

19 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 33 of 113the level of emissions of each covered HAP achieved by that single unit (or best performing 12 percent of units for existing sources)

. Industry Br. 29

- 33. Petitioners assert that th is unitary

- source reading of section 7412 is unambiguous

. Industry Br. 30. App lying this unitary

- source theory, Petitioners contend that the standard s for new heavy oil

- fired units are invalid because no single source has concurrently met the emission standard for all four regulated HAPs. Industry Br. 29

- 31. Similarly, Petitioners assert that the emission standard s for exi s ting stoker coal

fired units are invalid because, although two sources meet the standards for all regulated HAPs, there are over 350 sources in the stoker coal

- fired subcategory and thus these two sources do not comprise 12 percent of the total sources in that subcategory. Industry Br. 33. 3
N owhere did Congress direct EPA to establish MACT floors based on Petitioners’ unitary

- source theory. EPA has long recognized that section 7412 is

3 With regard to existing stoker coal

- fired units, Petitioners’ claim is not only legally infirm ( se e discussion, infra ) but also factually incorrect. Section 7412 provides that EPA is to establish the MACT floor for existing sources based on “the average emission limitation achieved by the best performing 12 percent of the existing sources ( for which the Administrator has emissions information )....” 42 U.S.C. §7412(d)(3)(A) (emphasis added). EPA had emissions information for 24 sources within the existing stoker coal

- fired subcategory and the emissions standard established for all four regulated HAPs has been actually achieved by 3 of these sources, i.e., 12.5 percent of the 24 sources for which “the Administrator has emissions information.” EPA

- HQ

- OAR

- 2002

- 0058

- 3836.
20 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 34 of 113ambiguous with regard to how EPA is to establish MACT floors. 76 Fed. Reg. 15,621

- 23. As EPA has explained , given that section 7412(d)(2) mandates the “maximum degree of reduction of the hazardous air pollutants subject to this section” based on levels actually achieved , the promulg ation of emission standards for each of the covered pollutants based on what has actually been achieved by various sources

– rather than on what a single source achieves for all combined regulated pollutants

– is certainly a reasonable interpretation of se ction 7412. Accordingly, EPA has applied a pollutant

- by

- pollutant approach for many years in its various rulemakings establishing MACT standards. See, e.g. , 6 1 Fed. Reg.
1 7 , 386 (April 19, 1996) (lightweight kilns) , 75 Fed. Reg. 54,970, 54,998

- 99 (Sept. 9, 2010) ( P ortland c ement plant s )

. See also , Medical Waste Inst. & Energy Recovery Council v. EPA , 645 F.3d 420, 427 (D.C. Cir. 2011) (“[S] etting floors based on the emissions levels achieved by the best performing units with respect to each individual pollutant” is the Agency’s “long

- standing practice.” )

. I f a statute is “ silent or ambiguous with respect to the specific issue, ” the court must de fer to the A gency's i nterpretation so long as it is “ based on a permissible construction of the statute. ” C hevron , 467 U.S. at 842

- 43. A gencies are entitled to considerable deference when interpreting a statute they administer, particularly one that is complex and within the agency’s area of expertise, United States v. Mead Corp. , 533 U.S. 218, 227

- 31 (2001) , which is the case here. See

21 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 35 of 113NRDC v. EPA , 571 F.3d 1245, 1251 (D.C. Cir. 2009)

. W hen an agency's action involves technical issues or a complex regulatory program , a court applies “an extreme degree of deference.” Huls Am. Inc. v. Browner , 83 F.3d 445, 452 (D.C. Cir. 1996)

. See also , St. Luke's Hosp. v. Sebelius , 611 F.3d 900, 904

- 05 (D.C. Cir.
2010 )

. Finally, courts “accord particular deference to an agency interpretation of

‘ longstanding ’ duration.” Alaska Dep’t of Environ tl Conservation v. EPA , 540 U.S. 461, 487 (2004). See also EDF v. Duke Energy Corp. , 549 U.S. 561, 575 (2007). Given the level of deference accorded to EPA on this issue, it is not surprising that Petitioners conten d that the Court should not reach a Chevron step
two analysis, instead asserting that section 7412 unambiguously mandates the unitary

- source approach. But Petitioners ’ unitary

- source approach is hardly a reasonable one, let alone the unambiguous mandate of the statu t e. First, Petitioners fail to cite a single case even questioning EPA’s pollutant

- by

- pollutant approach. Moreover, courts have recognized that a pollutant

- by

- pollutant approach is a reasonable interpretation of requirements to apply techno log y - centric standards under statutory provisions covering multiple pollutants. See Chemical Mfrs. Ass’n v. EPA , 870 F.2d 177, 239 (5 th Cir. 1989) (concluding that basing Clean Water Act best available technology standards on a

22 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 36 of 113pollutant

- by

- pollutant basis was a rational interpretation of EPA’s obligations under that statute). Petitioners correctly state that MACT floors are to be esta blished based on the emission levels that a given source (or top 12 percent of sources) actually has achieved. Then, by simply clinging steadfastly to their unitary

- source theory, they assert that in enacting the aforementioned MACT floors, EPA has based those standards on hypothetical sources, not an actual source, and on emission levels that are “achievable” rather than what has actually been achieved. Industry Br. 32

- 33. But no amount of semantic gymnastics can change the facts. Each of the emission standards set forth in the table at p. 19 , supra , has actually been achieved by an actual source within the given sub categories; and Industry

- Petitioners nowhere dispute this fact. Quite clearly, a standard is not based on mere achievability if it has act ually been achieved. Petitioners argue that their unitary

- source approach is more in line with Congressional intent. But again they miss the mark. In enacting the 1990 amendments to section 7412(d), Congress stated that “[t]he technology

- based standards promulgated pursuant to this authority shall provide for the maximum degree of reduction in emissions of each of the listed pollutants released by sources in the category.” S. Rep. No

. 101

- 228 at *3553 (emphasis added). As is “appropriate ” for the “ control of extremely harmful air pollutants,” the MACT

23 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 37 of 113standards are intended to be more stringent than almost every other technology

based standard in the CAA. Id. at 3552. See also , Cem ent Kiln, 255 F.3d at 85 7 ( MACT floors are to reflect “the most stringent standards available, even if those levels are not achievable by all sources.” ); Sierra Club v. EPA , 479 F.3d 875, 881 (D.C. Cir. 2007). Petitioners ’ unitary

- source approach subvert s this Congressional intent because it could lead to basing emission standards on sources that are not the best achieving source for any covered HAP and may, indeed, be the worst performing source for at least some of the covered HAPs. For example, the best performing sources for HAP metals might be the worst performing sources for organic HAPs. 76 Fed. Reg. at 15 , 622 (describing example)

. This is not merely fanciful conjecture: it would have been the result if a unitary

- source approach had been adopted in applying MACT to other types of sources. See i d

. at n.3 ( noting that Petitioners challenging the pollutant

- by

- pollutant approach for MACT fl oors for waste incinerators concede d that “the best performers for some pollutants are the worst performers for others.” ). Petitioners assert that EPA could manage th e standard

- setting process by concentrating on the pollutants that are most hazardous t o public health in identifying the single source on which to base all HAP emission standards. But this process would require EPA to prioritize HAPs based on the relative risk to

24 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 38 of 113human health of each pollutant, a criterion that has no place in the establis hment of MACT floors. Sierra Club , 353 F.3d at 979

- 80 (under section 7412(d)(3),

“ emission standards are to be based not on an assessment of the risks posed by HAPs, but instead on the maximum achievable control technology (MACT) for sources in each category” ) ; White Stallion , 748 F.3d at 1245 (“ [ t ] he notion that EPA must ‘pick and choose’ among HAPs in order to regulate only those substances it deems most harmful is at odds with the court’s precedent.”). In the 1990 CAA amendments, Congress abando ned a risk

- based approach
to setting MACT floor s in favor of a technology

- based approach, and reserved considerations of health risk for later phases in the standard

- setting process. See 42 U.S.C. §7412(f) (requiring EPA to evaluate the risk remaining aft er the MACT standard is in effect and determine whether more stringent standards are necessary to protect public health). Petitioners ’ unitary

- source approach would reverse th is
process, requiring EPA to set initial MACT emission standards based on subjective risk

- based value judgments not sanctioned by Congress

. Petitioners attempt to side

- step Congress ’ mandate not to make health

- based value judgments by quoting a single sentence from Senator Durenberger

. Industry
Br. 32. Senator Durenberger’s statement , however, mentions nothing about utilizing the unitary

- source approach

. Senator Durenberger merely noted that in certain limited circumstances

– which are not present in this case

– the technology

25 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 39 of 113necessary to achieve the lowest emissions levels for one HAP might increase emissions for a second HAP. Industry Br. 32. In fact, Congress explicitly considered th is possibility. S. Rep. No. 101

- 228 , 1st Sess. 168. But rather than suggesting that all MACT floors for a source category should be set b ased on one existing source, Congress proposed a different solution: “In cases where control strategies for two or more different pollutants are in actual conflict

. . . maximum protection of human health shall be the objective test.” S. Rep. No. 101

- 228 at (1989) at 3553. See also 76 Fed. Reg. 15 , 622

- 23. T his indicates that Congress expected that MACT floors would be set on a pollutant

- by

- pollutant basis; otherwise there would be no possibility of “conflict” between “control strategies,” because all standards would be derived from technologies already used in conjunction with each other by one existing source. 4 Finally, Petitioners resort to dissecting sentence elements to try and pry from the statute the meaning they desire

. Petitioners point to the phrase “best controlled similar source,” 42 U.S.C. §7412(d)(3), and leap to the assumption that the “similar source” must be the single source that is considered best performing with respect to the entire suite of HAPs. Industry Br. 30. In fact , the phrase “best controlled similar source” can just as easily be read to mean the source with the

4 Petitioners do not claim that there is any such conflict in control technologies in the Major Boilers Rule, nor did they provide any information during the public comment period demonstrating such a conflict. 76 Fed. Reg. at 15623.
26 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 40 of 113best emission control for each HAP . Nothing in section 7412(d)(3) specifies how EPA is to determine the “best controlled similar source ” and it certainly does n ot mandate the unitary

- source approach. To the contrary, the full phrase reads “best controlled similar source, as determined by the Administrator,” indicating that EPA has considerable discretion in determining what is the “best controlled similar

source . ” Petitioners insist that EPA has effectively rewritten the statute by setting the standards based on the “best controlled source for each pollutant .” Industry Br. 30 (italicizing the supposed added language). I f that is true, then Petitioners have done the same, asserting that standards must be based on the “best controlled

source for all pollutants .” This exercise merely demonstrates that the pertinent language is ambiguous. Given the deference accorded EPA based on its long

- term , consistent interpretation of this ambiguous provision of a technical statu t e over which it has expertise, Petitioners ’ challenge to EPA’s establishment of emission standards on a pollutant

- by

- pollutant basis should be rejected

. II. EPA DID NOT ACT ARBITRARILY IN SETTING NUMERIC C A R BON MON O XIDE EMISSION STANDARDS TO CONTROL NON
- DIOXIN ORGANIC HAP S

_____________________________ It is undisputed that EPA may use a surrogate to control the emissions of a particular HAP, so long as it has a reas onable basis for doing so. Nat’l Lime , 233 F.3d at 639; Sierra Club v. EPA , 353 F.3d at 984. In this case, EPA used carbon

27 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 41 of 113monoxide as a surrogate for establishing the emission standards for non

- dioxin organic HAP s because CO is an indicator of good combustion, which is a method for control of organic HAP emissions. See pp. 68

- 69 , infra

. Industry Petitioners do not quarrel with EPA’s use of CO as a surrogate for organic HAPs for most of the subcategories of Boile rs , nor do they challenge the appropriateness of using an indicator of good combustion as an emission standard to control organic HAPs. Instead, Petitioners assert that EPA should have eschewed numeric emission standards for CO solely for the subcategorie s of industrial B oilers that are coal

- fired , and instead should have impose d a work practice standard ( such as requiring a boiler tune

- up) to control o rganic HAP emissions from th is subcategory of B oilers

. This challenge , made on both substantive and procedural grounds , is merit less

. A. EPA Did Not Act Arbitrarily in Applying a Numeric Emission Standard for Organic HAP Emissions From Coal
- F ired Boilers .

_________________________________ Petitioners ’ argument is based on the Mercury and Air Toxics Rule, 77 Fed. Reg. 9304 (Feb. 16, 2012) (“Utility Rule ”) , governing electric utility steam generating units , where EPA adopted a work practice standard ra ther than a numeric CO limit for o rganic HAP s . Petitioners assert that EPA acted arbitrari ly by not following the identical practice here. Industry Br. 11

- 12, 46

- 48.

28 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 42 of 113First, the fact that EPA adopted different standards for the same pollutant s (organic HAPs) emitted by different industries is irrelevant. EPA may reasonabl y choose different regulatory approaches for different industries, as appropriate. Petitioners in Sierra Club v. EPA asserted that it was unreasonable for EPA to utilize P M as a surrogate for HAP metals for copper smelters when it was not used in the rulema king for hazardous waste combustors and where a different surrogate, lead, was used for metals in the lead smelter rulemaking. 353 F.3d at 986. As the
C ourt explained, [t]his court has adopted an “every tub on its own bottom” approach to EPA’s setting o f standards pursuant to the CAA, under which the adequacy of the underlying justification offered by the agency is the pertinent factor

– not what the agency did on a different record concerning a different industry. [ Citation omitted]. Id. (explaining that the question of whether EPA acted arbitrarily is to be “decided on the basis of information concerning that industry alone.”). As explained below, the rationale for promulgating a work practice in the Utility Rule does not apply for coal

- fired B oiler s. There are t hree characteristics associated with applying work practice standards in lieu of numeric emission standards : (a) they are to be used only when “it is not feasible in the judgment of the Administrator to prescribe or enforce [ a numeric] emission standard for control of a hazardous air pollutant;” (b) the use of a work practice standard is wholly within the discretion of EPA ( “ [ T ] he

29 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 43 of 113Administrator may , in lieu [ of a numeric standard], promulgate a design, equipment, work practice o r operational standard, or combination thereof ”) ; and (c) in choosing to implement a work practice standard, that standard must “ in the Administrator’s judgment [be] consistent with the provisions of subsection (d) or (f),” which are the provisions requiring EPA to implement the most stringent emission standards possible. 42 U.S.C. §7412(h)(1) (emphasis added). In order to determine that a numeric emission standard is not feasible, the Administrator must determine that: (a) the HAP cannot be emit ted through a conveyance designed and constructed to emit or capture that hazardous pollutant or it would violate local, state or federal law to do so ; or (b) “the application of
measurement methodology to a particular class of sources is not practicable d ue to technological and economic limitations.” Id. §7412(h)(2). T h e Administrator’s judgment on this issue must be made against the backdrop that n umeric emission standards must be established whenever it is feasible to do so. Id . §7412(h)(4).
As EPA ex plained in the Utility Rule, it established a work practice for emissions of organic HAP s from coal

- fired EGUs because the significant majority of data for measured organic HAP emissions from EGUs are below the detection levels of the EPA test methods, even when long duration (around 8 hour) test [ s ] . . . are considered. As such, we consider it impracticable to measure emissions from these units . As discussed at proposal, we believe the inaccuracy of a majority of measurements , coupled with the extended sampling times used, allow a work practice standard under CAA section 112(h) to apply to these HAP

. . . . We believe that the work

30 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 44 of 113practice st andard will result in actions being taken that will reduce emissions of these HAP. 77 Fed. Reg. at 9369/2. Petitioners assert that the same circumstances are present in this case. Industry Br. 45

- 48. In a word, the same circumstance s are not present h ere. In the Utility R ule, “the majority of measurements are so low, doubt is cast on the true levels of emissions that were measured during the test s .” 76 Fed. Reg. 24,976 , 25,040 (May 3, 2011). More specifically, for non

- dioxin/furan organic HAP s , “bet ween 57 and 89 percent of the run data were comprised o f values below the detection level. ” Id. In contrast, for coal

- fired B oilers , EPA had reliable data for about two

- thirds of the tested units. EPA

- HQ

- OAR

- 2002

- 0058

- 3830 (emissions database) (JAXXXXX)

. Thus, while in the Utility R ule “the majority of emissions of these pollutants are below the detection levels of EPA test methods and, therefore, are impractica l to measure,” 7 7 Fed. Reg. at 9380/2 , the opposite was true with regard to B oilers. Petiti oners refer to the average and maximum concentrations of formaldehyde in the two emission datasets for the proposition that “there is no meaningful distinction between the datasets” in the Utility Rule and the Major Boiler R ule . Industry Br. 47

- 48. Howev er, EPA is utilizing CO, not formaldehyde, as a surrogate for organic HAPs, and therefore the issue i n whether EPA may utilize a work practice in lieu of a numeric standard is whether CO can be effectively measured. Additionally, EPA’s analysis, as explained above, was

31 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 45 of 113based on the number of non

- detect samples, not the average or maximum concentrations.
As EPA explained , “non

- detect values are present in many of the datasets from best performing units , ” 76 Fed. Reg . at 15,623/2 , and EPA must make judgments as to when those non - detect levels rise high enough that it merits the Administrator making a determination, consistent with the requirements of section 7412( h ) and the strong presumption for establishing numeric standards, that a work practice standard is warranted

. T here have been other instances where EPA found significant non

- detect levels of HAPs, including organic HAPs, and nevertheless determined that it could generate reliable numeric standards and that a work practice standard was not warranted. See, e.g. , 76 Fed. Reg. at 25,040/2 ( describing standards set for P ortland c ement sources ) . It is certainly reasonable for EPA to judge that , while 57 to 89 percent non - detect levels for all organic
HAP s identified in the Utility Rule made the use of numeric emission standards infeasible in that case, that is not the case when th e non - detect level is around 33 percent , which is the case with coal

- fired Boilers. EPA

- HQ

- OAR

- 2002

- 0058

- 3830 (JAXXXX). “The ‘arbitrary and capricious ’ standard deems the agency action presumptively valid provided the action meets a minimum rationality standard .” White Stallion, 748 F.3d at 1233, quoting NRDC v. EPA, 194 F.3d 130, 136 (D.C.

32 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 46 of 113Cir. 1999)

. Given the discretion afforded to the Administrator under section 7412(h) to decide whether to establish work practice standards , and the great deference to be accorded to the Administrator’s decision on this highly technical issue , EPA’s conclusion that a work practice standard was not warranted because it had reliable test data from the majori ty of tested sources was reasonable

. B. EPA Did Not Commit Procedural Error in Addressing the Issue of Organic HAP Emission Standards for Coal
- Fired Boilers .

___ Petitioners raise a procedural issue, asserting that in responding to the comments of CIBO and MidAmerican Energy Co. raising the issue of a work practice standard, EPA did not provide a “direct” response to those entities and instead referred them to EPA’s response to another commenter and otherwise did not “enunciate a reason why it did not adopt a §112(h) work practice standard in place of a numeric CO limit.” Industry Br. 48

- 49. However, t he two comments do nothing more than mention in an off

- hand manner that a work practice standard could be used, the first in a single sentence and the second in a single paragraph. EPA

- HQ

- OAR

- 2002

- 0058

- 2702 (p.5) and

- 2786 (p

. 25). Neither makes the argument Petitioners now raise; that non

detection levels render use of a numeric emissions limit infeasib le and therefore warrant a work practice standard. EPA’s obligation is to provide a response, in whatever form, to “each of the significant comments, criticisms, and new data submitted.” 42 U

. S

. C

.
33 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 47 of 113§ 7607(d)(6)(B) (emphasis added)

. The fact that Petitio ners now choose to raise this issue to the level that it is included in their brief , does not make the single sentence and paragraph submitted by the two commenters significant at the time EPA was preparing responses to comments . In any event, EPA explain ed in detail how it was dealing with non

- detection levels over several pages in the preamble to the 2011 Rule. See Section V

. A

. 3, 76 Fed. Reg. at 15,623

- 65 ( entitled “Treatment of Detection Levels”). Petitioners further complain that in denying subsequ ent administrative petitions for reconsideration filed in conjunction with the 2013 Rule , EPA explained that petitioners had a mple opportunity to comment on the work practice issue in their original comments (which, as Petitioners note, CIBO and MidAmercian did )

. Petitioners assert that they were entitled to reconsideration under 42 U.S.C. §7607(d)(7)(B) because the Utility R ule, wh ich established a work practice standard for organic HAPs for a different industry, provides information that they “could not have reasonably anticipated” when commenting on the 2011 Rule. Industry Br. 49. EPA had no obligation to address this issue in response to a Petition for Reconsideration , or otherwise. EPA’s only obligation is to provide a rational basis for establishing the standard it chose and it need not explain why it did not adopt the same type of standard it adopted for a different industr y. National Lime , 627

34 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 48 of 113F.2d at 447, n.108 (“That different industries may be subject to different standards and the Administrator need not bear the burden of explaining those differences is clear.”); Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 375 , 389 (D.C. Cir. 1973) (“ [ T ] he Administrator is not required to present affirmative justifications for different standards in different industries.”). Moreover, as EPA pointed out in its 2013 Rule, Petitioners had ample opportunity to raise this issue in their comments on the 2011 Rule. 78 Fed. Reg. at 7149

- 50. Petitioners could have made the identical arguments in those comments that they make now after issuance of the Utility Rule , asserting that the number of

non - detect tests rendered establishment of a num eric emission standard infeasible. Indeed, i n the 2011 Rule EPA promulgated a number of work practice standards for various hazardous pollutants for certain subcategories of B oilers. See n.2,
supra . In the end, both of Petitioners’ claims regarding EPA’s purported lack of an adequate response to comments raise alleged procedural rulemaking defects. “In reviewing alleged procedural errors, the court may invalidate the rule only if the errors were so serious and related to matters of such central rele vance to the rule that there is a substantial likelihood that the rule would have been significantly changed if such errors had not been made. ” 42 U.S.C. §7607(d)(8). See also , Nat’l Mining Ass’n v . EPA, 59 F.3d 1351, 135 8 (D.C. Cir. 1995) . As outlined

35 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 49 of 113above, there is no l ikelihood that the Major Boilers Rule would have been significantly changed if EPA had provided a more robust response to the two comments cited on the 2011 Rule or if it performed a reanalysis upon reconsideration after the Utility R ule was issued

. I II . EPA’S DETERMINATION THAT SECTION 74 12 DOES NOT REQUIRE EMISSION LEVELS DURING MALFUNCTION S TO BE TAKEN INTO ACCOUNT IN DETERMINING THE LEVEL ACHIEVED BY THE BEST PERFORMING SOURCES IS REASONABLE AND CONSISTENT WITH THE STATUTE

_ ___ Industry Petitioners assert that EPA must account for malfunctions when determining the emissions level achieved by the best performing sources. But this view is neither reasonable nor supported by the text of the CAA. Section 7412(d)(3) requires EPA to set standards that are no less stringent than the emission control achieved in practice by the best performing source ( s ) . It also requires those standards to apply on a continuous basis, which this Court has interpreted to include periods of start

- up, shut

- do wn, and malfunction. See Sierra Club v. EPA , 551 F.3d at 1027

- 28 (striking down a general provision that exempted start

- up, shut

- down, and malfunction periods). EPA’s approach both accounts for variability associated with a reasonably foreseeable range o f operating conditions (as explained in section IX , infra ) and recognizes that enforcement mechanisms can address emission exceedances due to unpreventable equipment or process failures. While Petitioners seek greater accommodation for malfunctions,

36 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 50 of 113such accommodation is not compelled by the statutory text and EPA’s approach is reasonable. A. EPA’S Historic Practice Regarding Malfunctions
EPA has acknowledged that start

- up and shut

- down operations as well as malfunctions of a source’s process and pollution control equipment , can sometimes result in varying HAP emissions . In fact, EPA had exempted Boilers from having to comply with HAP emission standards during start

- up, shut

- down or malfunctions

. 69 Fed. Reg. 55,218 (Sept. 13, 2004). In 2008, ho wever, t his Court struck down an exemption for malfunctions in a different section 7412 regulation , finding that it violated the statutory requirement under section 7412 to establish emission limitations on a “continuous basis

. ” Sierra Club v. EPA , 551 F. 3d at 1027

- 28

. In response to Sierra Club , in the 2011 Major Boilers Rule EPA eliminated exemptions for start

- up, shut

- down, and malfunction s and developed standards that apply at all times

. Because start

- up and shut

- down periods are predictable and routine aspects of a source’s operations, EPA evaluated start

- up and shut

- down conditions in establishing emission standards and determined that work practice standards , which must reflect the emissions achieved by the best performing

sources, were appropr iate for these specific operational periods. 76 Fed. Reg. at 15,613. EPA did not take this same approach for malfunctions.

37 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 51 of 113Unlike start

- up and shut

- down , which are foreseeable operations , no one can predict the nature, scope, severity, timing, length , number or likely recurrences of malfunctions a source may

– or may not

– experience

. Although EPA bases emission standards on different manners of operations and circumstances, EPA only takes into account conditions that are “ foreseeable ” and “which can

r easonably be expected to recur.” Sierra Club , 167 F.3d at 665. See also Nat.
Lime , 627 F

. 2d. at 431, n

. 46. Virtually no malfunction is foreseeable in terms of its nature, timing or effect on emission levels and no operator knows when or if a

m alfunction could recur . Moreover, it is difficult to apply the concept of a best performing source to sources that are malfunctioning, since the best performing sources are likely to operate in a manner that avoids malfunctions. 76 Fed. Reg. at 15,613/2.
EPA ca n use its enforcement discretion to address exceedances of emission limits that may be caused by such uncertain, unpredictable events , on a

case - by

- case basis. 76 Fed. Reg. at 15,613, 15,642

. If a source is unable to comply with emission standards during a malfunction, EPA will consider what actions, if any, to take with regard to such exceedance. Id. In making that determination, EPA will consider factors such as the source’s efforts to minimize

38 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 52 of 113emissions during the malfunction, preventive actions take n, corrective actions taken, and root cause analyses. Id. 5 According to Petitioners , the case

- by

- case treatment of malfunction events will not suffice. Petitioners assert that EPA is required under 42 U.S.C. §7412 to factor into its MACT standards the emission levels of HAPs that occur during malfunctions. Industry Br. 34

- 42. Petitioners alternatively assert that EPA acted arbitrarily in refraining from exercising i t s wholly discretionary option to create a work practice standard applicable to all malfunction events. Industry Br. 42

- 44. Petitioners’ arguments find no support under either 42 U.S.C. § 7412 or the decisions of this Court.
B . There is No Statutory Requirement to Factor Malfunction Emission Levels into MACT Numeric Emission Standards . Petitioners identify no language in the statute that even implies that EPA
must factor into MACT emission standards the emission levels that occur during malfunctions. Yet, they assert that 42 U.S.C. §7412 m andate s that EPA account for malfunctions in establishing every single MACT floor standard or set a

5 EPA also created an affirmative defense in the Major Boilers Rule with regard to impos ition of civil penalties for an exceedance during malfunctions. 76 Fed. Reg. at 15,613/3

. That affirmative defense was recently struck down in another case

. NRDC v. EPA , 749 F.3d at 1063. In light of this development, t he use of an affirmative defense for malfunction events for Boilers is the subject of a pending petition for reconsideration and is not presently before the Court. See Dkt. 1511358, severing this issue

. 39 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 53 of 113separate MACT floor standard for malfunctions, so that they reflect higher emission levels that might occur during undefined , unidentified malfunction
events

. Petitioners a ppear to rely on the silence of section 7412, which does not speak directly to how malfunctions are to be treated to support their view, filling the void with their own judgments of how EPA must address such uncertain and undefined events

. Of course , whe re a statute is ambiguous or leaves a gap as to its application, the C ourt must defer to the agency's i nterpretation so long as it is “ based on a permissible construction of the statute ,” Chevron , 467 U.S. at 842

- 43 , and in making this determination under the regulatory HAPs program administered by EPA, the Agency is accorded substantial deference. See pp. 21

- 22 , supra . Although EPA may have authority to address malfunctions through different mechanisms

– albeit lim ited by the Court in Sierra Club v. EPA (striking down exemptions for malfunctions) and NRDC v. EPA (striking down an affirmative defense for malfunctions)

– EPA’s interpretation that it is not required by section 7412 to address malfunction emissions by r esetting MACT numeric standards is certainly a rational application of section 7412. First, Petitioners never explain how setting MACT floors based on emission levels that occur during various malfunctions might be implemented. As Petitioners readily admit, in establishing MACT floors , section 7412 “requires

40 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 54 of 113EPA to ground its decisions on data reflecting performance.” Industry Br. 36, citing Nat’l Ass’n of Clean Water Agencies v. EPA , 734 F.3d 1115, 1158 (D.C. Cir. 2013) (“ NACWA ”). Yet, Petitioners p oint to no data in the record that could arguably form a basis for MACT emission standards that take malfunctions into
account

. This, in fact, would be quite a feat since Petitioners characterize malfunctions as any period “when systems are not technologi cally stable,” an extremely broad characterization that could encompass a vast range of circumstances. Industry Br. 34. As this C ourt has said a number of times, EPA may establish emission standards based on information other than actual emissions but on ly when it results in a reasonable estimate of the levels of emissions that will be emitted by the best performing source. See National Lime , 233 F.3d at 632 ( “EPA’s method of setting emission floors must reasonably estimate the performance of the relevant best performing plants

. ” ). EPA has accounted for variability among the best performing sources’ emissions over the entire range of foreseeable operating conditions, as explained in Part IX , infra . But, as EPA determined, it would be wholly impra cticable for EPA to factor unforeseeable, random malfunction incidents into emission standards , 76 Fed. Reg. at 1 5,613/2 , and Petitioners offer

no road map for doing so. To the contrary, Petitioners agree that the process they seek is impracticable for num eric standards . Industry Br. 43 (“Commenters

41 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 55 of 113asserted, and EPA agreed, that it would be impracticable for EPA to set numeric emission standards for malfunctions. [Citation omitted]. This is true for many reasons, particularly because malfunctions are inf requent and unpredictable.”). In any event , even if incorporating emission levels that occur during uncertain, hypothetical, unmeasured malfunction events were theoretically possible, there is no statutory basis for requiring EPA to take such action. Petitioners assert that 42 U.S.C. §7412 mandates that EPA establish MACT floor standard s so that they reflect higher emission levels that might occur during unidentified, unmeasured malfunction events. Industry Br. 29

- 37. To su pport their argument, Petitioners assert that a source that experiences a malfunction will not be able to achieve the MACT standards established by EPA because they do not reflect emission levels that occur during that unknown malfunction. Industry Br.
34

. But a source that suffers worker malfeasance or experiences a hurricane or a terrorist event , may also exceed emission standards at certain times. These events , like malfunction s , do not magically transform standards based on emission levels that actua lly have been achieved into un achievable standards. Indeed, under Petitioner’s reasoning, every MACT floor is forever invalid because it does not reflect emission levels that will occur during the next malfunction, act of God, strike, malfeasance or other unpredictable event.

42 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 56 of 113Petitioners seem to contend that malfunctions are somehow different from these other unpredictable events by asserting that “EPA expressly acknowledged that even the best performers will inevitably experience malfunctions resulting in increased emissions.” Industry Br. 37. But EPA did not make this statement , and Petitioners cite to no place in the record where it did. Instead, as Petitioners explain, EPA stated that even well

- maintained equipment “can sometimes fail and such fail ures can sometimes cause an exceedance of the relevant emissions standard.” Industry Br. 35, quoting 76 Fed. Reg. at 15,613 (emphasis added).
H urricanes, strikes, and malfeasance can also occur at well

- maintained and well

managed sources, but this does n ot warrant factoring such un predictable events into emission standards. And again, even if malfunctions were inevitable for all

sources , including the best

- performing sources, that does not make it possible to take them into account when establishing MACT emission standards , because they are still unknown in frequency, length, magnitude and, most importantly, effect on emission levels

. In support of their argument , Petitioners cite three cases applying provisions of the CAA’s N ew Source Performance Standards , a separate CAA program under 42 U.S.C. §7411. Industry Br. 38

- 40

. These cases are not relevant on numerous grounds. First, they were all decided decades before the HAP program in its present form was even enacted and before Chevron , which requires particular

43 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 57 of 113deference to EPA’s interpretation of ambiguous provisions of the CAA. Second, these cases did not direct EPA to incorporate emission levels that might occur during malfunctions into the applicable standards nor explain how such a task could conceivably be accomplished. Third , these cases did not direct EPA to implement a work practice standard or consider whether the specific statutor y requirements for implementing a work practice standard established under section 7412(h) were satisfied. F ourth , at best, these cases simply suggest ed that in certain limited circumstances EPA could provide an exemption for source s that may not be able to reach promulgated emission standards that have been established under normal operating conditions. This suggestion , however, has effectively been rejected by this Court in Sierra Club , at least with regard to the section 7412 HAPs program that is at is sue in this case. 551 F.3d at 1027

- 28. Petitioners also point to a case decided under section 7412 where the C ourt stated that “industry petitioners may be correct that EPA should have exempted HWCs f r om regulatory limits during periods of startup, shutd own and malfunction.” Industry Br. 39 , quoting Cement Kiln , 255 F.3d at 872. First, this

was dicta in a 2001 case (the C ourt was discussing issues it did not reach)

. Second, as noted, this Court found exemptions to be invalid in Sierra Club . Mo st importantly, nothing in Cement Kiln even implies that EPA has a duty to reflect

44 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 58 of 113emission levels that might occur during unpredictable malfunction events in its numeric or work practice emission standards. To the contrary, Cement Kiln cuts to the heart of Petitioners’ argument. The fundamental principle of Petitioners’ argument is that due to malfunctions, the
MACT emission standards, which undeniably have been achieved by B oilers, may be “un achievable ” if specific sources experience a malfunction. See, e.g. , Industry Br. 34 (citing Nat’l Lime Kiln and Essex Chem Corp., two New Source Performance Standard cases, concluding that “the record does not support the ‘achievability’ of the promulgated standards for the industry as a whole”). The
C ourt in C ement Kiln , however, rejected the notion that because a MACT standard may not be achievable by some sources, it is invalid. Cement Kiln , 255 F.3d at 861 (“EPA may not deviate from section 7412(d)(3)’s requirement that floors reflect what the best performe rs actually achieve by claiming that floors must be achievable by all sources using MACT technology.”). See also Sierra Club v.
EPA , 479 F.3d at 878 ; NACWA, 734 F.3d at 1150 ( explaining that the argument that a MACT standard is invalid because it is not a chievable by all sources at all times has been “roundly rejected” by the Court)

. I n determining that it is appropriate to handle exceedances of emission standards caused by malfunctions through case

- by

- case exercise of enforcement discretion, EPA relied in part on the reasoning of this C ourt in Weyerhaeuser Co.

45 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 59 of 113v. Costle , 590 F.2d 1011, 1058 (D.C. Cir. 1978)

. 76 Fed. Reg. at 15,613. As the
C ourt there concluded, “[a] line must be drawn as to what is treated in the general rule [setting emission s tandards] and what is handled case

- by

- case, and we believe it appropriate to defer when EPA, in the interest of preserving an enforcement system based on straightforward numbers” draws that line. 590 F.2d at 1058. Petitioners do their best to distinguis h Weyerhaeuser , but to no avail. Petitioners first assert that Weyerhaeuser should be ignored because it was a Clean Water Act case. Industry Br. 32. But, as Petitioners themselves point out, this Court has “applied the same approach to technology

- based standards under the Clean Water Act as it has applied to the CAA

. ” Industry Br. 38. Petitioners next assert that Weyerhaeuser only addressed emissions affected by “uncontrollable acts of third parties.” Industry Br. 32. In fact, the C ourt in Weyerhaeus er was addressing “unusual events such as plant start

- up and shut

- down, equipment failures , human mistakes , and natural disasters .” 590 F.2d at 1056 (emphasis added). Petitioners next assert that the Weyerhaeuser court based its holding on the fact that the standards at issue there were technology

- forcing. Industry Br. 32. While the C ourt did address this point, it went on to uphold EPA’s case

- by

- case approach because interjecting factors dependent on “murky determinations concerning the sequence of eve nts in the plant, whether those events would have been avoidable” and similar factors, is inconsistent with the intent of Congress to

46 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 60 of 113require numeric emission standards that are measurable and easily enforceable. 590 F.2d at 1057

- 58. Finally, Petitione rs imply that Weyerhaeuser was overruled by another Clean Water Act case, NRDC v. EPA , 859 F.2d 156 (D.C. Cir. 1988) , citing it for the proposition that a technology

- based standard must accommodate defects in technology. Industry Br. 38. Th at case was decided in 1988, decades before this Court found that accommodations promulgated by E PA (an exemption and an affirmative defense for malfunctions ) were inconsistent with the requirements of the HAPs program under section 7412. Moreover, the disc ussion of technology

- based standards was dicta because the issue before the C ourt was whether water quality

- based standards must account for malfunctions. In fact, the holding in NRDC , that water quality based standards do not need to account for malfunct ions despite sources’ use of technology for compliance, supports EPA’s position in this case. Id. at 2 07

- 10

. In the present case, although Congress revised the HAPs program in 1990 to have technology serve as the core for establishing emission standards, those standards are also not strictly control technology

- based but rather are based on the emission levels actually achieved in practice, which this Court has explained goes beyond what can be achieved solely through available control technolog y. See Sierra Club v. EPA , 479 F.3d 875, 882

- 83 (D.C. Cir. 2007).

47 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 61 of 113Notwithstanding EPA’s reliance on Weyerhaeuser , the establishment of emission standards based on foreseeable operations of the best controlled sources , and the fundamental impracticality of assessing the effects of unknown, unpredictable malfunctions , Petitioners insist that EPA is relying solely on the Sierra Club decision that struck down the exemption for malfunctions , which they
assert does not require EPA to ignore malfunctions in establishing numeric emission standards. Industry Br. 40

- 41. But Sierra Club is not the basis for EPA’s treatment of malfunctions , as detailed above

. Furthermore , t his allegation misses the point. The issu e is not whether EPA may deal with malfunctions in one form or another in establishing MACT standards, it is whether EPA is required under 42 U.S.C. §7412 to factor emissions occurring during malfunctions into its emission standards, be they numerical stan dards or alternative work practices. EPA’s view that n othing in the statu t e contains such a requirement is a permissible reading of the statu t e and, under Chevron , should therefore be upheld

. C . It W as Not Arbitrary and Capricious for EPA to Decide Not to Create a Work Practice Standard for Malfunction Events . Petitioners alternatively assert that EPA’s failure to create a work practice standard for malfunctions is arbitrary and capricious. Pet. Br. 42

- 44. A s outlined
supra , the use of a work practice standard is wholly within the discretion of EPA. 42 U.S.C. §7412(h) (“ [ T ] he Administrator may , in lieu [ of a numeric standard], promulgate a design, equipment, work practice , or operational standard, or

48 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 62 of 113combination thereof

. ”). I n exercising the option to establish a work practice standard, that standard must “ in the Administrator’s judgment [be] consistent with the provisions of subsection (d) or (f).” 42 U.S.C. §7412(h)(1) (emphasis added). As outlined above, these subsections make clear that E PA is to base emission standards on the emission levels already achieved by the best performing sources and to ensure that public health is protected. This means that work practice standards, although written in non

- numeric form, must still approximate th e top performing source or top 12 percent of sources. See, e.g. , Reconsideration Response to Comments (“ RTC ”) at 59 2 (JAXXXX) (“When establishing work practice standards, EPA must ensure that the standard represents the maximum achievable control technology.”).
I t is just as difficult to establish a work practice standard for malfunctions that can approximate th e level of emission reduction achieved by the best performing sources during malfunctions as it would be to factor emission levels that occur during malfunctions into the numeric standards, as discussed supra . EPA would have to design a single work practic e standard that applies equally to a
B oiler explosion as it does to a pilot light being extinguished for an hour or innumerable types of operator error , computer glitches or a myriad of other unknown events , or alternatively create innumerable work practic e standards

.

49 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 63 of 113Petitioners’ generic suggestion to create a work practice standard that merely directs sources to have plans to minimize emissions during malfunctions and return to system stability as soon as possible, Industry Br. 44, does not present a v iable solution. Absent any evidence that a mere requirement to have such a plan is consistent with EPA’s obligation under section 74 12(h) to only establish a work practice standard if, in the Administrator’s judgment, it can be done consistent with section 74 12( d ), EPA’s decision not to adopt this suggestion cannot be deemed to be arbitrary. In sum , j ust as it is not arbitrary and cap ricious for EPA to refrain from promulgating a work practice for hurricanes or worker error , it is not arbitrary to refrain from creating a work practice for malfunctions. Finally, Petitioners appear to assert that EPA did not provide an adequate expla nation why it did not exercise the work practice option. Industry Br. 44. But EPA considered comments calling for such an option and fully explained why it did not take malfunctions into account in setting standards and that it would treat violations cau sed by malfunctions on a case - by

- case basis through the exercise of enforcement discretion. See, e.g. , 76 Fed Reg. at 15,613

- 14, 15,641; Reconsideration RTC at 1062

- 63 (JA XXXX

- XX )

. I V. EPA DID NOT ACT ARBITRARILY IN ESTABLISHING NUMERIC MACT EMISSION STANDARDS FOR HC L In the Major Boilers Rule , EPA established numeric MACT emission standards for hydrogen chloride , which also serves as a surrogate for certain other

50 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 64 of 113acid gas HAPs, including chlorine, hydrogen fluoride , and hydrogen cyanide. 75 Fed. Reg. 32,030/1. As with most of the other emission standards established in the Major Boilers Rule , and as required under 42 U.S.C. §7412(d), the emission standards for HCl are numeric, technology

- based standards generated from the emission levels of HCl actually achieved by the best performing single source and best 12 percent of sources. 78 Fed. Reg. at 7193

- 7198 (tables 1 and 2)

. Section 7412(d)(4) does permit EPA , under certain circumstances, to take a different approach with regard to pollutants for which a health threshold has been established. Section 7412(d)(4) states in full: “With respect to pollutants for which a health threshold has been established, the Administrator may consider such threshold level, with an ample margin of sa fety , when establishing emission standards under this subsection.” As EPA explained: “ This provision is intended to allow EPA to establish emission standards other than conventional MACT standards, in cases where a less stringent emission standard will st ill ensure that the health threshold will not be exceeded, with an ample margin of safety. ” 75 Fed. Reg. 32,030/2. Contrary to Petitioners’ assertion, EPA is not obligated to jettison a technology

- based MACT standard in favor of a health

- based standar d for a ny hazardous air pollutant that has an established health threshold. T he determination of whether to consider health thresholds in establishing an emission standard is , as

51 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 65 of 113expressly stated in the statute, wholly within EPA’s discretion (“the Administrator
may consider such threshold level.”)

. 42 U.S.C. § 7412(d)(4 ) ( emphasis added)
A s a matter of statutory interpretation with regard to an agency’s responsibilities, except where contrary intent is expressed elsewhere, “may means may.” McCreary v. Offner , 172 F.3d 76, 83 (D.C. Cir. 199 9). This “connotation is particularly apt

. . . when ‘may’ is used in contraposition to the word ‘shall

. ’” Jama v. Immigration & Customs Enforcement, 543 U.S. 335, 347 (2005). Here, sections 7412(d)(2) and (3) recite that EPA “shall” establish MACT technology

based standards and, where certain requirements are met, beyond

- the

- floor standards for every HAP. The next subsection, section 7412(d)(4), then states that the Administrator “may” consider a health threshold when establishing emission standards. Indeed, there are oth er subsections of section 7412 that require EPA’s review and imposition of standards as they relate to health effects. See, e.g. , section 7412(f) , which provides that EPA “shall” promulgate “residual risk” standards if it determines that they are required in order to provide an ample margin of safety to protect public health . 42 U.S.C. §7412(f)(2)(A) . But section 7412(d)(4), the provision upon which Petitioners rely, contains no such mandatory language , nor does it establish any st andards or criteria upon which EPA is to

52 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 66 of 113exercise its option to implement a health

- based standard once a threshold has been established

. Petitioners assert that EPA is required to generate emission standards for HCl based on health thresholds because it has done so in the past. A decade ago in the 2004 Rule, the then

- Administrator determined that a health

- based emission standard could be used for HCl emitted from solid fuel Boilers. 69 Fed. Reg. at 55,227. That Rule, however, was vacated by this Court and thus does not bind the Agency. NRDC v. EPA , 489 F.3d at 1261. Vacated or not, the position EPA took in 2004 does not constrict its discretion , based on the present state of scientific knowledge and technical data , to make a new determination in a new rulemaking as to whether the Agency should choose to base HCl emission standards on health

based thresholds. In the Major Boilers Rule EPA described in detail its reasoning for not exercising its option in 2011 to establish a health

- based emission stand ard for HCl.
See 75 Fed. Reg. at 32,030

- 033. Because HCl is an acid gas that is associated with chronic respiratory toxicity , a risk threshold was established for this pollutant through the establishment of a chronic reference concentration. Id. at 32,031/1. I n examining whether to establish a health

- based emission standard based on this threshold, EPA determined that th is value tells only a partial story.

53 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 67 of 113As EPA explained, there are a number of health factors that were not addressed in establishing a health threshold for HCl nor was there adequate data in the record relating to these factors

. Id. at 32,031. For instance, while the health threshold for HCl is based on studies of its chronic effects on respiratory systems,

“ [ t ] here is a significant body of scientific literature addressing the health effects of

acute exposure to HCl [but EPA] currently lacks information regarding peak short

term emissions of HC l from boilers.” Id. ( e mphasis added). EPA further noted that there were significant data gaps with regard to the variation of acid gas emissions from various subcategories of emitting units. 76 Fed. Reg. at 15,643/3. Variation of emissions was important to assessing the peak, short

- term effects of HCl exposure. E PA also lack ed information “addressing the toxicity of mixtures of HCl with other re s piratory irritants

. ” Id. EPA also was concerned that while the health threshold focuses on respiratory ailments, there is little research regarding the carcinogenic effec ts of HCl. Id. This lack of relevant information regarding the types and degree of health impacts associated with HCl emissions was of particular concern given that any emission standard based on a health threshold must, under the express wording of

se ction 7412(d) (4) , include an ample margin of safety , 75 Fed. Reg. at 32,031/1, and that HCl is the predominant HAP, comprising 6 9 percent of the hazardous pollutants emitted from B oilers. 76 Fed. Reg. at 15,611/1 . Accordingly, b ased on

54 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 68 of 113th e lack of data on these various health issues , EPA concluded that it did not have sufficient information to establish a health

- based emission standard for HCl. 75 Fed. Reg. at 32,031/3. In addition to the direct health questions discussed above , EPA also examined less direct but equally significant health issues. EPA recognized the

co - benefits of regulating HCl, as it would significantly reduce emissions of the other acid gas HAPs listed above. Id. As EPA explained, while this co

- benefit is present when the tec hnology

- based MACT standard is util ized, it disappears if a health

- based standard is used: HCl can serve as a surrogate for the other acid gases in a technology

- based MACT standard , because the control technology that would be used to control HCl would als o reduce the other acid gases. By contrast, HCl would not be an appropriate surrogate for a health

- based emission standard that is protective against the potential adverse health effects from the other acid gases, because these gases (e.g., [hydrogen cyan ide ) can act on biological organism s in a different manner than HCl, and each of the acid gases affects human health with a different dose

- response relationship. 75 Fed. Reg. at 32,030, n.16. Therefore, even if EPA had concluded that it was appropriate to establish a health based standard for HCl, numeric standards would still be needed for the other acid gases, which are currently regulated through the HCl standard. EPA also explained that establishing the HCl standard based on the health threshold ig nores the cumulative adverse health effects due to concurrent exposure

55 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 69 of 113to other HAPs with similar biological endpoints. Id. at 32,030/3. Furthermore, u se of the MACT standards for HCl , rather than health

- based standards, result s in significant reductions of non

- HAP pollutants, including sulfur dioxide and hydrogen bromide. Id. at 32,032/2

- 3

. Petitioners assert that it was arbitrary and capricious for EPA to consider some of the factors it did, specifically the co

- benefits or cumulative impacts associated with setting numeric emission standards for HCl. Industry Br. 53

- 56

. Petitioners , however, never even address EPA’s stated concern about the direct health effects of HCl emissions, such as acute (as oppos ed to chronic) respiratory effects and potential carcinogenic effects. These are real, potential direct effects of the emissions of HCl , and Petitioners failed to provide any basis to alleviate EPA’s concerns about these effects . On this basis alone, EPA’s decision not to implement a health

- based emission standard for HCl cannot be considered to be arbitrary and capricious. Separately, section 7412(d)(4) mentions nothing about the factors EPA must consider in assessing whether to exercise the option of creating a health

- based standard in lieu of a numeric MACT technology

- based standard or, more importantly, that EPA is restricted in what factors it may consider. Instead, Petitioners assert that restrictions on the factors EPA m ay consider in deciding whether to apply a health

- based emission standard under section 7412(d)(4)

56 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 70 of 113emanate from section 7412(d)(2). Industry Br. 55

- 56

. However , section 7412(d)(2) sets forth the parameters for establishing a beyond

- the

- floor standard, wh ich is more stringent than the numerical MACT floor standard. In assessing whether to utilize a health

- based emission standard, EPA consider s whether to alter its MACT floor standard, which would create a standard that is less stringent than the MACT floo r (because EPA has determined that the MACT floor standard is not required to protect public health for a threshold pollutant , with a margin of safety ). The factors to consider in creating a beyond

- the

- floor standard simply have no bearing o n creating a h ealth

- based MACT standard

. In the end, Petitioners merely harken back to statements made by EPA in conjunction with the promulgation of the 2004 Rule as “evidence” that EPA took the view that cumulative impacts or co

- benefits were not to be considered. Industry Br. 53

- 56

. For instance, Petitioners quote an EPA statement that it d id not interpret section 7412(d)(4) to require it to consider emissions from other sources
i n establishing health

- based standards under this provision. Industry Br. 54. At the same time, there is nothing in this provision that precludes EPA from considering emissions from other sources, or emissions of other pollutants affected by the HAP emiss ion standards used, or the effect on reduction of non

- HAP poll utants from application of MACT

- based standards, or the general environmental effects, or other factors. In any event , when the very general

57 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 71 of 113language of section 7412(d)(4) is read in the contex t of the entire section, which evidences clear intent to reduce emissions of pollutants to the maximum extent possible to protect public health, EPA’s consideration of these factors is clearly consistent with the statute and certainly a rational interpreta tion of section 7412(d)(4) , which does not in any way limit the factors EPA may consider

. Furthermore, the position EPA took in 2004 w ith regard to which factors it sh ould consider is not germane . As this Court recently explained in another challenge t o emission standards under section 7412 where EPA reversed its earlier view: To the extent p etitioners’ challenge concerns EPA’s change in interpretation from that in 2005, our approach is the same [as a basic Chevron analysis] because “[a]gency inconsistency is not a basis for declining to analyze the agency’s interpretation under the Chevron framework.” Nat’l Cable & T elecoms. Ass’n v. Brand X Internet Servs. , 545 U.S. 967, 981 (2005) [] . That is, “if the agency adequ ately explains the reasons for a reversal in policy, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute to the implementing agency.” Id. ( Internal quotation marks omitted). White Stallion , 748 F.3d at 1235

. See also , FCC v. Fox Television Stations, Inc. , 556 U.S. 502, 513

- 14 ( 2009); Nat’l Cable , 545 U.S. at 981

- 82 (“ An initial agency interpretation is not instantly carved in stone. O n the contrary, the agency

. . . must consider varying interpretations and the wisdom of its policy on a continuing basis,” Chevron , supra at 863

- 864 [], for example, in response to change d factual circumstances, or a change in administrations. ”).

58 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 72 of 113Indeed, the C ourt in White Stallion reje cted the same type of argument Petitioners make here. Under section 7412(n)(1), EPA is directed to study public health hazards reasonably anticipated to occur “as a result of emissions by electric utility steam generating units.” 42 U.S.C. §7412(n)(1). Petitioners there asserted that EPA could not consider cumulative impacts of HAP emissions because they were not the direct “ result of emissions” from these units. Noting that EPA had supported Petitioners’ view in an earlier regulation, this Court found EPA’s present view, which considered the cumulative impacts of the HAP emissions, to be well within EPA’s discretion. The Court recited EPA’s reasoning for taking a more holistic approach, including the fact that “[a]n individual that suffers adverse heal th effects as the result of the combined HAP emissions from EGUs and other sources is harmed, irrespective of whether HAP emissions alone would cause the harm.” White Stallion , 748 F.3d at 12 42

- 43. EPA has taken the same approach here i n assessing whether to exercise its option under 7412(d)(4). The purpose of section 7412(d)(4) is to provide the Administrator with the discretion to implement health

- based emission standards in situations where the Administrator can be reasonably assure d that the technology

- based MACT standards clearly are not necessary to protect public health. This highly technical, scientific determination is a decision for EPA, to which this Court grants a high degree of deference. Industry

- Petitioners have present ed no evidentiary basis to

59 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 73 of 113conclude that EPA acted irrationally in refraining from creating a health

- based emission standard and instead, as it is otherwise directed to do by statute, bas e the emission standard for HCl on the emission levels actually achie ved by existing

sources for this predominant hazardous air pollutant.
V . EPA’S IMPOSITION OF AN ENERGY ASSESSMENT REQUIREMENT AS A BEYOND
- THE
- FLOOR STANDARD WAS WITHIN EPA’S AUTHORITY AND NOT ARIBTRARY OR CAPRICIOUS

__________ __________________________ __ In addition to the MACT floor standards promulgated in the Major Boilers Rule , EPA generated a beyond

- the

- floor requirement for existing B oilers. These sources must conduct a one

- time energy assessment which includes, inter alia , a review of fuel usage and energy management practices and conservation measures.
7 8 Fed. Reg. 7198

- 99, Table 3. T he purpose of the energy assessment is to identify processes and practices that will reduce or conserve energy consumption because “[i]mprovement in energy efficiency results in decreased fuel use which results in a corresponding decrease in emissions (bot h HAP and non

- HAP) from the [ boiler ]

. ” 75 Fed. Reg. at 3 2,026/ 2

. In response to comments about the contemplated breadth of the assessment , EPA took special care to limit t he energy assessment to the “specific portions of the source that directly affec t emissions from the affected [ boiler ] .” 76 Fed. Reg. at 15,556/1 , 15,632

. See also , 40 C.F.R. §63.11237 (definitions of “energy assessment” and “energy use system”). Thus, EPA is not mandating a general

60 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 74 of 113facility

- wide energy assessment but rather direct ing it only to those components that directly affect the amount of HAPs emitted from the boilers within the subject subcategories. Id. See also , 76 Fed. Reg. at 15,573/2 (Area Rule) (“It is not EPA’s intent to require an energy assessment for the entire facility * * * [A]n energy assessment is only required for those portions of the facility using the energy generated from the affected boiler system .” ). This beyond

- the

- floor requirement is limited to an assessment; nothing requires a m ajor source to imp lement pollutant

- reducing practices identified in the assessment. Instead, because the assessment is designed to identify practices that will reduce fuel costs along with emissions of hazardous pollutants, o wners and operators are expected to voluntarily use the results of the assessment to increase the energy

- efficiency and cost

- efficiency of their boiler system. RTC Vol. 1 at 1444, 1595 (JAXXXX). The cost of the assessment is minimal (between $2,500 and $55,000 depending on the size of the source) and that cost would be recaptured through implementation of fuel

- savings actions. 75 Fed. Reg. at 32,026. Industry Petitioners ’ varied attempts to challenge this beyond

- the

- floor requirement as beyond EPA’s authority are without basis

.

61 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 75 of 113A. The Energy Assessment Fits Squarely Within EPA’s Authority to Establish Beyond
- the
- Floor Standards .______________________ As Petitioners recognize, the energy assessment requirement is a beyond

- the

- floor standard established under section 7412(d)(2). 6 In enacting section 7412(d)(2), Congress made it abundantly clear that EPA was to take actions that “shall require the maximum degree of reduction in emissions of hazardous air pollutants subject to this section (including a prohibition on such emission s, where achievable).” While emissions are generally measured at the boiler or other combustion equipment from which hazardous pollutants emanate, Congress did not limit EPA ’s regulatory authority to that specific combustion equipment. To the contrary, s ection 7412(d)(2) declares that in imposing standards designed to achieve the maximum degree of reduction of emissions, EPA shall do so through the “application of measures, processes, methods, systems or techniques, including, but not limited to, measures which

– (A) reduce the volume of, or eliminate emissions of, such pollutants through process changes, substitution

6 Petitioners alternatively argue that the energy assessment is not a proper work practice standard. Industry Br. 28

- 29. The energy assessment is not, however, a work practice standard, and EPA makes no claim that it is. See, e.g. , 75 Fed. Reg. at 32,030/ 1 (“An energy assessment is a beyond

- the

- floor standard being proposed for existing facilities.”). Because EPA does not assert that the energy assessment is a work practice standard, the Court need not address whether the requirements for establishing suc h a standard have been satisfied.
62 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 76 of 113of materials or other modifications.” Id. Thus, Congress authorized EPA to address upstream causes of HAP emissions in promulgating emissi on standards. As EPA explained, because implementation of measures or process changes identified in the energy assessment will inevitably lead to reduction in emissions of hazardous pollutants, “an energy assessment, in combination with the MACT emission limits will result in the maximum degree of reduction in emissions required by CAA section 74 12(d)(2).” 75 Fed. Reg. at 32,026/3. EPA is carrying out this stat ut or y mandate through the precise mechanisms outlined by Congress: “measures, processes, methods, systems or techniques [that will] reduce the volume of, or eliminate emissions of, such pollutants, through process changes, substitution of materials or other modifications.” And in this case, the energy assessment is expressly limited to the sp ecific portions of the facility that directly affect emissions from the affected source. 76 Fed. Reg. at 15,632. Accordingly, the promulgation of the energy assessment for Boilers cannot be considered to be beyond EPA’s authority.
B . Emission Standards Apply to the Major Source, Not Merely to the Specific Equipment From Which Hazardous Pollutants are Finally Emitted .

________________________________________ Petitioners assert that EPA is confined to regulate only the operations o r the specific equipment at a facility which fall under the category of sources created under 42 U.S.C. §7412(c) , which they interpret as only the boiler or process heater

63 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 77 of 113and no other equipment that affects emissions from the boiler

. Industry Br. 20

- 23. However, Petit ioners both overstate the scope of the energy assessment requirement and apply an ultra

- constrictive view of EPA’s authority to require
HAP emission reductions from major source s that is not supported by the statute

. EPA directed the energy assessment to a specific portion of the facility: all “specific portions of the source that directly affect emissions from the affected boiler.” 76 Fed. Reg. at 15,556/1 , 15,632 (emphasis added). Therefore, the assessment is an exercise of EPA’s authority under sectio n 7412 “over HAPs emitted from the boiler and process heater source category.” Cf. Industry Br. at 23. Congress instructed EPA that it could create “categories and subcategories of major sources and area sources

. . . of the [hazardous] air pollutants li sted.” 42 U.S.C. §7412(c)

. As EPA explained, it does so when different types of units have different emission characteristics which may affect the feasibility and effectiveness of emission control. 75 Fed. Reg. at 32,017/1

. There is nothing about the statutory language of section 7412(c) that limits EPA’s regulatory authority to specific components of a source; it merely states that EPA shall establish emission standards that are specific to each category or subcategory of source. T he fact that Congress granted EPA authority to create categories of sources to facilitate their regulation does not alter the fact that the entity that is subject to potential emission standards, whether MACT floors, beyond

- the

- floor standard s, or

64 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 78 of 113work practices, is “ any major source. ” 42 U.S.C. § 7 412(d). A “major source” is defined as “any stationary source or group of stationary sources located within a conti g uous area and under common control that emits or has the potential to emit ” speci fied quantities of any HAP

. 42 U.S.C. §7412(a)(1). Section 7412(a)(3) refers to 42 U.S.C. §7411(a) for the definition of a “stationary source,” which defines that term as “any building, structure, facility, or installation which emits or may emit any air pollutant.” C.f. , Nat’l Mining Ass’n , 59 F.3d at 1355 (finding that “all portions of a major source are subject to MACT [emission standards] regardless of the number of source categories into which the facility is divided.”)

. Accordingly, the regulated entity under section 7412 that is generally subject to MACT regulations is the entire facility or installation, not a specific piece of operating equipment like a B oiler. And, as noted, in this regulation EPA has carefully limit ed the energy assessment to only those portions of the facility that directly affect emissions from the boiler.
T he only case authority cited by Petitioners is a partial quote from Senior Judge Williams in his concurrence in Sierra Club v. EPA , 479 F .3d at 885

. Judge Williams explained that the language requiring EPA to establish standards for sources in each category is designed to ensure that sources in one category, whose technological capabilities may differ from those in another category or who may be combusting a different type of fuel, are not held to the standards of other categories

65 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 79 of 113of source s . Nothing in Judge Williams’ concurr ence even intimates that the creation of a category of a m ajor source thereby defines the equipment and
processes a t an individual source that may be subject to regulation. As outlined above, EPA’s interpretation of its statutory requirements is to be upheld so long as it represents a rational application of the statu t e. Chevron , 467
U.S. 837 (which itself afforded deference to EPA’s defining the contours of a “source” under the CAA). EPA’s interpretation of its mandate as not limit ed to the boiler is clearly a rational interpretation of the directive given by Congress in section 7412(d)(2) , and is not constricted by the creation of categories of sources under section 7412(c). C . The Energy Assessment Complies with All Statutory Requirements .

_________________________________ Petitioners raise a series of arguments asserting that EPA failed to comply with statutory requirements , but those requirements either do not exist, are inapplicable to an energy assessment, or have been complied with. Petitioners first
assert that designation of an energy assessment as a beyond

- the

- floor standard is illegal because “ there is no underlying MACT floor determination.” Industry Br. 24 (Subheading 1). But this is plainly wrong. EPA has established a MACT floor or similar standard for every subcategory of existing B oilers. See 78 Fed. Reg. 7195

- 7198 (Table 2), setting o ut the numeric MACT floor standards for each subcategory of B oilers. See also 75 Fed. Reg. at 32,026/1 (explaining that i t was

66 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 80 of 113only after “the MACT floor determinations were done for each subcategory” that EPA consid ered beyond

- the

- floor standards ). Petitioners next assert that EPA may not call for an energy assessment as a beyond

- the

- floor standard because EPA did not establish energy assessment s as the floor. Industry Br. 24. There simply is no authority for the proposition that the MACT floor and the beyond

- the

- floor standard must be of the same type or character , and Petitioners cite to no such authority. To the contrary, while MACT floors are generally implemented through numeric emission standards, beyond

- - he

- floor standards are to consider me asures, processes, systems, techniques and methods to further reduce HAP emissions , and the energy assessment is clearly such a measure

. 42 U.S.C. §7412(d)(2). Next, Petitioners assert that “EPA did not adequately consider the costs of the theoretical beyond

- the

- floor emissions reductions.” Industry Br. 25 (Subheading 2). EPA did not impose any “theoretical beyond

- the

- floor emissions reductions” of HAPs through its energy assessment requirement . To the contrary, EPA required an analysis of fuel use systems and methodologies that could potentially reduce HAP emissions along with analyses of the costs of such systems and methodologies. As EPA explained, the ener gy assessment does n o t obligate operators to implement or modify equipment based on the assessment

67 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 81 of 113recommendations , although sources are expected to do so in order to achieve the cost savings the measures will provide

. RTC Vol. 1 at 1444, 1595 (JAXXXX)

. Petitioners pivot, arguing that the energy assessment itself will cost from $ 2,500 to $55,000 per facility , and because EPA cannot determine if fuel management processes should be implemented until the studies show that they are useful and effective in f urther reducing HAPs, EPA has failed to adequately assess the costs of its required energy assessment. Industry Br. 25

- 26. A s EPA explained, however, lower fuel costs achieved through energy conservation improvement s that are expected to be implemented will offset the costs of such improvements, and along with it the $2,500 to $55,000 cost to analyze how best to achieve those fuel reductions. 75 Fed. Reg. at 32,026. Indeed, the energy assessment is designed specifically to identify only “cost

- effectiv e energy conservation measure s, ” that will provide payback of the investment in a short amount of time, otherwise the source will not implement such measures. Id

. Finally, Petitioners assert that “EPA failed to consider non

- air quality and environmenta l impacts of the energy assessment” and “failed to consider the energy requirements of the energy assessment.” Industry Br. 26

- 27 (Subheading s 3 and 4 ). As outlined above, however, EPA did consider these factors, explaining how they would lead to reduced energy requirements and reduced environmental impacts. 76 Fed. Reg. at 15,632

- 33; Cost Memo, Sec. 5 (JAXXXX). EPA is not

68 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 82 of 113required to delineate more specific source

- by

- source energy and environmental impacts, since that is the very purpose of the assessm ent ordered.
VI . EPA REASONABLY USED CARBON MONOXIDE AS A SURROGATE FOR ORGANIC HAPS

______ In the Major Boilers Rule, EPA established emission standards for carbon monoxide as a surrogate for emissions of non

- dioxin organic hazardous air pollutants. 78 Fed. Reg. at 7144

- 45. This approach is based on the demonstrated relationship between the combustion process and these pollutants. C ombustion, such as occurs in the units subject to the Major Boilers Rule, is the process of breaking apart the organic (i.e., carbon

- containing) molecules in the fuel and converting them to carbon dioxide. RTC Vol. 2 at 16

- 17 (JAXXXX

- XX). Perfectly complete combustion would convert all of the carbon in the fuel to carbon dioxide. C ompleteness of the combustion process is dependent on several variables, including temperature, amount of oxygen, and mixing of the fuel and oxygen. Incomplete combustion results in production of partly broken down and partially oxidized organic compou nds, including CO . Because the conversion of
CO to carbon dioxide is a difficult step, and the last one in the destruction of hydrocarbons, including organic HAPs, it is a good indicator of the completeness of combustion. 78 Fed. Reg. at 7145/2. Thus, d ecreasing levels of CO are correlated with increasing destruction of organic compounds until a threshold is reached where, because combustion of CO is the last step in combustion, the

69 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 83 of 113combustion of organic materials is essentially complete. 78 Fed. Reg. a t 7144

- 45. CO concentration is thus an indicator of the level of destruction of organic compounds, and accordingly can be used as a surrogate to control the emissions of organic HAPs. In the Major Boilers Rule, EPA determined that at CO concentrations below 130 parts per million (“ppm”) , there is no more reduction or destruction of organic HAPs associated with further reductions of CO concentrations. Id. EPA based this conclusion on an analy sis of data in the record from emissions tests where both CO and formaldehyde (a representative organic HAP) had been measured. Id. EPA then reviewed the emissions of the best performing sources in each subcategory. Where the CO emissions of the best performi ng source (s) , as calculated using the
U pper P rediction L imit methodology, are above the threshold, the emission standard was set at the calculated value. Where the calculated value was below the threshold, the emission standard was set at the threshold. Id. at 7145. 7 This Court has repeatedly held that EPA can utilize surrogates in regulating pollutants, if the use of the surrogate is reasonable. Sierra Club v. EPA , 353 F.3d
at 984; Bluewater Network v. EPA , 370 F.3d 1, 18 (D.C. Cir. 2004); National
Lim e , 233 F.3d at 637

. S ee also Kennecott Greens Creek Min. Co. v. Mine Safety

7 Environmental

- Petitioners’ challenge to EPA’s use of the 130 ppm threshold as the minimum standard for CO has been severed and held in abeyance. Dkt. 1461576.
70 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 84 of 113and Health Admin. , 476 F.3d 946, 954

- 55 (D.C. Cir. 2007) (“there is nothing inherently problematic with an agency regulating one substance as a surrogate for another substance.”) Petitioners ’ attempt to apply to this case the standards articulated by the Court in National Lime and Sierra Club for determining whether the use of particulate matter as a surrogate for hazardous metals is reasonable, LEAN Br.
22

- 23 , should be rejected because t hose cases are inapposite

. T hat test is not a general one for determining whether the use of a surrogate is reasonable. Rather, as stated in Sierra Club , it is specific to determining “whether the use of PM as a surrogate for HAPs is reasonable.” 353 F.3d at 984 (emphasis added). That analysis is specific to both EPA’s rationale for the use of particulate matter in that circumstance (i.e., that the HAP metals are in the form of particulate matter) and to
t he particular challenges made to those standards (i.e., that measures other than particulate control were used by the best performing sources to control HAP metals). Neither of those circumstances appl ies here. Rather, as described above, CO is a surro gate for organic HAPs because it is a conservative indicator of the effectiveness of the combustion process in destroying organic HAPs. 78 Fed. Reg. at 7144

- 45; s ee EPA

- HQ

- OAR

- 2002

- 0058

- 2960.1 at C

- 1 to C

- 2 (JAXXXX

- XX) (comments of American Petroleum Inst itute et al.). This Court has previously upheld the use of

71 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 85 of 113surrogates as reasonable without applying the three

- part test of Sierra Club

. See Bluewater Network , 370 F.3d at 18 (upholding use of hydrocarbons as a surrogate for particulate matter because hy drocarbons contribute to particulate matter pollution and control of hydrocarbon emissions serves to control particulate matter); Kennecott Greens Creek , 476 F.3d at 954

- 55 (upholding Mine Safety and Health Administration rule using total elemental carbon as surrogates for diesel particulate matter). See also Reynolds Metals Co. v. EPA , 760 F.2d 549 (4th Cir. 1985) (in Clean Water Act context

. upholding use of oil and grease as a surrogate for control of total toxic organics), cited with approval in Natura l Resources Defense Council , 822 F.2d at 125. Petitioners raise two objections to the use of CO as a surrogate for organic HAPs. They argue, first, that certain compounds, including polynuclear aromatic hydrocarbons, are created downstream of the combust ion chamber, and therefore are not adequately controlled by maximizing destruction of organics through combustion. LEAN Br. 23

- 24. Second, Petitioners argue that there is not an adequate relationship between CO concentration and organic HAP destruction. Id. at 25

- 26. With regard to the first contention, Petitioners identify no evidence in the record show ing that polynuclear aromatic hydrocarbons, or any compounds other than dioxins and furans, are produced post

- combustion in the types of boilers

72 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 86 of 113subject to the Major Boilers Rule. Rather, Petitioners rely solely on their own comments, id . at 23

- 24, which in turn rely on general citations to reference works on combustion (without identifying specific pages). Clean Air Task Force Comments, EPA

- HQ

- O AR

- 2002

- 0058

- 3187.2, at 18 , n.11 (JAXXXX). 8 These generalized assertions are not sufficient to overcome the considerable deference the Court owes to the Agency’s technical expertise. Moreover, contrary to Petitioners’ assertions, the record does contai n evidence demonstrating a relation between CO and polynuclear aromatic hydrocarbons. For example, a study specifically performed to examine that relationship found that CO emission levels are a conservative predictor of polynuclear aromatic hydrocarbon e missions. EPA

- HQ

- OAR

- 2002

- 0058

- 3856 at 3777

- 78 (JAXXXX

- XX). The study authors simultaneously measured emissions of CO and polynuclear aromatic hydrocarbons, and found a strong correlation. While the relative amount of CO increased at higher boiler tempe ratures, that only makes the use of CO as a surrogate for combustion of hazardous organics more

8 Moreover, the references cited in the comments do not sup port Environmental Petitioners’ assertion. Warnatz, et al., at 261, state that polycyclic aromatic hydrocarbons “ are usually formed under fuel

- rich conditions (present in rich premixed and always in nonpremixed flames) ,” which is not a condition found pos t

- combustion. In addition, Bartok, et al., at 694, state that f or cyclic hydrocarbons, the “ rate

- controlling, step in the high

- temperature combustion of hydrocarbons is the oxidation of CO ,” which is exactly EPA’s rationale for the use of CO as a surrogat e.
73 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 87 of 113conservative. Id. Another technical paper in the record examine d the combustion of wood in boilers, and found that in boilers operating in good combustion

con ditions, lower emissions of CO were correlated with lower emissions of hazardous organics, including polynuclear aromatic hydrocarbons.
EPA

- HQ

- OAR

- 2002

- 0058

- 0006 at 8

- 36 to 8

- 40 (JAXXXX

- XX). That EPA set a separate standard for dioxins and furans is not inconsistent because EPA has specific data demonstrating that those compounds are formed in the air pollution control equipment after the combustion chamber. RTC Vol. 2 at
16 (JAXXXX). EPA has no such data for other compounds, however, and believes that they are adequately controlled by optimizing combustion conditions, which is monitored by the CO emissions. See Reconsideration RTC at 336

- 38 (JAXXXX

- XX). Petitioners’ argument concerning the “break down” of the relationship between CO and hazardous organics at low CO concentrations is based on a fundamental misunderstanding of the data in the record. For example, Petitioners rely on comments submitted by Southern Company. LEAN Br. 24. However, the entire point of those comments is t hat CO is an overly conservative surrogate because elevated CO levels can persist when all the organic compounds have been destroyed. EPA

- HQ

- OAR

- 2002

- 0058

- 2741 at 10

- 12 (JA XXXX

- XX). Thus, they

74 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 88 of 113do not support Petitioners’ claim that the regulation does n ot adequately regulate hazardous organics. The alleged “break down” of the relationship is, rather, a reflection of the fact that the conversion of CO to carbon dioxide is the last step in the combustion process and a particularly difficult one, which mea ns that there is a threshold point where essentially all of the organic compounds have been combusted but some CO remains. RTC Vol. 2 at 34

- 35 (JAXXXX

- XX). This is demonstrated by the graphs comparing the concentration of organic compounds versus the

con centration of CO , which cross the line of zero organics at a point where there is still a concentration of CO

. Id. In the final rule, EPA took this threshold phenomenon into account by setting the CO standard at the higher of the actual CO concentration achieved by the best

- performing sources in a subcategory or 130 ppm, which EPA determined to be the threshold below which no further combustion of organic compounds occurs. 78 Fed. Reg. at 7144

- 45. Finally, the fact that there are various ways to reduce the emissions of hazardous organics, LEAN Br. 24, does not make the use of CO as a surrogate unreasonable. Regardless of the control measure, the boiler’s fuel will be combusted, and thorough combustion will be needed to minimize the emissions of hazardou s organics. CO is an indicator of the completeness of combustion, and thus is an appropriate surrogate.

75 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 89 of 113VII . THE SUBCATEGORIES IN THE RULE ARE REASONABLE S ection 7412(d) provides that in establishing standards for HAPs , EPA may distinguish among classes, types and sizes of sources. 42 U.S.C. §7412(d)(1). This Court has recognized that EPA’s exercise of this authority involves an expert determination, “placing a heavy burden on a challenger to overcome deference to
EPA ’s ‘articulated rational connection between the facts found and the choice made.’” NACWA , 734 F.3d at 1159, quoting NRDC v. EPA , 489 F.3d at 1375. Petitioners have not met that burden. In the Major Boilers Rule, EPA created subcategories based on the fu el the boiler is designed to combust and, for some fuel types, the mechanism used for feeding the fuel into the boiler. 78 Fed. Reg. at 7144; 76 Fed. Reg. at 15,617

- 18, 15,633

- 37. As EPA explained, the different boiler designs and combustion systems affe ct the emission of pollutants, such as hazardous organics, that are associated with combustion conditions and the types of pollution control equipment that can be used. 76 Fed. Reg. at 15,617/3; Reconsideration RTC at
558

- 64 (JAXXXX

- XX). In order to esta blish a standard based on what the best performing units achieve, the units considered must be sufficiently similar to each other that the comparison is meaningful. Because the type of fuel a unit is designed to burn is a significant factor in determining the level of emission control

76 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 90 of 113the unit can achieve, EPA reasonably determined the best

- performing sources for each type of fuel and combustion system separately. Petitioners argue that because the subcategories in the rule are defined in terms of the fue l that a boiler is combusting, the subcategories do not reflect different “classes, types, or sizes.” LEAN Br. 27

- 29. However, as EPA explained, the design, and thus the physical structure of a boiler, is determined by the type of fuel it burns. 75 Fed. Reg. at 32,016

- 17; Reconsideration RTC at 559(JAXXXX). The mechanism s for delivering and combusting solid fuels, for example, are different from those for gaseous and liquid fuels. Even within these broad categories, different types of fuel require diff erent designs. For example, although they are both solids, biomass and coal require different combustor designs because coal has a higher energy density than biomass. Reconsideration RTC at 559

- 61 (JAXXXX

- XX). Thus, a larger amount of biomass must be co mbusted to produce the same amount of energy, and the combustion system must be designed to accommodate that fact. Furthermore, the system must be designed to address the higher moisture content of biomass. Id. at 560 (JAXXXX). Thus, although the subcat egories are defined in terms of the fuel being burned, each subcategory is characterized by differences in design and manufacture that are necessitated by the type of fuel being burned. Furthermore, EPA has determined that these differences in design resu lt in differences in

77 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 91 of 113emissions. 76 Fed. Reg. at 15,617

- 18; 78 Fed. Reg. at 7144; Reconsideration RTC at 560 (JAXXXX). Thus, in determining the best performing sources, it is necessary to look at sources that are comparable in design, which in turn is det ermined by the fuel the unit is designed for. Furthermore, while the definitions of “unit designed to burn biomass” and “unit designed to burn coal” require that the unit derive more than 10 percent of its input from biomass or coal, 40 C.F.R. §63.7575, a s EPA explained, the differences in design between the types of units means that it is generally impracticable for units to switch between categories or even to burn such a high percentage of the alternative fuel. Reconsideration RTC at 559

- 63 (JAXXXX

- XX) . Coal

- burning units are not designed to handle either the physical form of biomass or its high moisture content, which can damage the boiler, and will not be able to operate at their designed heat input because of the lower energy density of biomass. Id

. at 560

- 61 (JAXXXX

- XX). Similarly, biomass units may be damaged by the higher temperatures resulting from burning coal. Thus, while biomass units may burn some coal because of fluctuations in supply of biomass, they are not likely to switch to burning h igh volumes of coal. Id. The subcategories represent units that differ structurally and operationally in ways that affect the emissions from the units, and thus constitute different classes or types.

78 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 92 of 113VIII . EPA REASONABLY EXCLUDED CERTAIN UNITS CO
- FIRING NATURAL GAS FROM ITS MACT FLOOR ANALYSIS

________ In calculating the MACT floor for the particulate matter standard for new and existing biomass solid suspension burners, the total suspended material standard for new wet biomass stoker/sloped grat e/other units, and the CO standard for new heavy liquid units, EPA did not consider unit s with the lowest emission test value because those units were co

- firing natural gas with biomass or heavy liquid fuel when the performance test was done. Revised MACT Floor Analysis (August 2012), EPA

- HQ

- OAR

- 2002

- 0058

- 3836, at 4, 8, App. E

- 9 (JAXXXX, XXXX, XXXX). 9 EPA excluded these units because not all units in the subcategory are capable of co

- firing natural gas as an auxiliary fuel, and therefore these units are n ot “similar” sources for the purpose of establishing the MACT standard

. Id. at 8 (JAXXXX). 10

9 Although Petitioners express the issue more broadly, these four standards are the only ones for which EPA excluded the top

- performing units from a MACT floor analysis because the unit was not burning 100 percent of the subcategory

- defining fuel. Id.

10 While EPA could have gone on creating subcategories ad infinitum to address every possible combination of fuels that boilers are capable of combusting, the Agency determined it was more appropriate to create subcategories based on the primary fuel the boiler is designed to combust and, where necessary, exclude anomalous units from the MACT floor calculation.

79 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 93 of 113This issue is not properly before the Court, regardless of whether Petitioners raised the issue in comments. 11 The challenged standards for the two biomass categ ories were remanded to EPA by the Court’s Order of May 15, 2014 ( Dkt. 1493171) , and are thus no longer before the Court

. See EPA’s Motion for Remand ( Dkt. 1482091) at 10

- 12. Petitioners’ challenge to the heavy liquid standard is also moot because EPA set the CO standard at the 130 ppm threshold level ( see p. 70 , supra ), and would have set the same standard if it had used the sources with lower emission valu es. 12 Moreover, EPA’s action s w ere reasonable. MACT standards for new sources must be no less stringent than “the best controlled similar source, as determined by the Administrator

. ” 42 U.S.C. §7412(d)( 3 ) (emphasis added)

. EPA reasonably determined th at a unit with an operational feature that is not found in all units in the category, i.e., the ability to co

- combust natural gas, is not a “similar”

source. See H.R. R e p . No. 101

- 490 at 328 (EPA must consider physical characteristics and type of operation of a source to determine if it is “similar”).

11 Accordingly, Petitioners’ conditional challenge to EPA’s denial of reconsideration, LEAN Br. 31

- 32, is moot.

12 As noted above, Environmental Petitioners’ challenge to EPA’s use of the 130 ppm threshold as the minimum standard for carbon monoxide has been severed and held in abeyance.
80 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 94 of 113Petitioners’ reliance on Sierra Club v. EPA , 479 F.3d 875 , is inapposite. In Sierra Club , the issue was whether EPA could exclude all units using the
most

- effective emission control technique becaus e it might not be applicable to all existing units. Here , EPA is excluding a test result that is unrepresentative of typical operations of units in the subcategory, and thus is inappropriate to use in establishing the MACT floor.
IX. EPA’S USE OF THE UPP ER PREDICTION LIMIT TO ESTABLISH STANDARDS IS REASONABLE

_ A. Introduction Emission standards promulgated pursuant to section 7412 must simultaneously meet a number of requirements. They must be achievable, 42 U.S.C. §7412(d)(2) ; they must ensure continuous regulation of the covered source, id. §7602(k) ; and they must be no less stringent than the level of emission control achieved by the best controlled source or sources, id. §7412(d)(3). Sierra Club v.
EPA , 551 F.3d at 1027 (“t here must be continuous section 112

- compliant standards”). In many cases, including this one, EPA must establish those standards on the basis of limited data, generally in the form of “stack tests.” 13 Because stack

13 A stack test typically consists of three separate sampling periods of several hours each conducted over one or more days. The concentration of the pollutants of interest is determined for each sampling event and the result of the test is the average of the three values for each pollutant. 40 C.F.R. §63.7520(d).
81 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 95 of 113tests are time

- consuming and expensive , the available data for a source category will generally be limited to stack tests that facilities have been required to perform, which, in many cases , will be no more than one test per facility. Each stack test is a “snapshot” of the facility’s emissio ns at a particular point in time. Because EPA lacks data showing the full emissions performance of the best performing unit or units over time , EPA reasonably uses an established statistical methodology in order to determine such performance. When establ ishing a MACT emission standard, EPA ranks the facilities for which it has valid emissions data from the lowest average tested emission level of each pollutant to the highest. The Agency then determines the best

- performing similar sources in accordance wi th section 7412(d)(3) , i.e., the best

- performing source for establishing standards for new sources and the average of the best

- performing sources for existing sources

. Because MACT standards must be complied with at all times under all operating conditi ons, and stack tests only measure emissions at one time and under one set of conditions, in establishing MACT standards EPA uses statistical techniques to account for the range of variability to be expected in operating conditions and measurement accuracy and to set a standard that is achievable for the best

- performing source or the average of the best

- performing sources at all times and under the foreseeable range of operating conditions. “EPA’s Response

82 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 96 of 113to Remand of the Record for Major Source Boilers,” Dkt. 1502494 (“UPL Remand Response” ) at 5 (JAXXXX). See also 76 Fed. Reg. at 15,630/1

- 2. This Court has repeatedly held that it is appropriate for EPA to take such variability into account. Mossville , 370 F.3d at 1242; Sierra Club v. EPA , 167 F.3d 658, 665 (D.C. Cir. 1999). In this case, EPA used a statistical technique known as the Upper Prediction Limit. As EPA stated in the preamble to the March 2011 final rule, “The UPL calculation is a statistical formula designed to estimate a MACT floor level th at is equivalent to the average of the best performing sources.” 76 Fed. Reg. at 15,630. See also UPL Remand Response at 5 (JAXXXX) (“the UPL predicts the level of emissions that the sources upon which the floor is based are expected to meet over time, considering both the average emission level achieved as well as emission variability and the uncertainty that exists in the determination of emission variability given the available, short

- term data.”) The UPL is a statistical technique that, given the r esults of a particular measurement on a small sample, predicts the range in which all such measurement s will fall with a specified level of certainty , based on prediction of measurements at times other than when data is collected . In this case, it predict s the range in which the average emissions of the best

- performing sources would fall with 99 percent certainty on an ongoing basis . It is analogous to the statistical analysis that a

83 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 97 of 113manufacturer would perform to determine the range of a particular measur ement if all units in a large production run were tested based on the results of testing a small sample of the production run. For this rule, the existing source UPL was calculated by taking the average emissions of the top

- performing sources and adding t o it a variability factor that is calculated based on the characteristics of the data set and the desired level of confidence (in this case 99 percent). UPL Remand Response at 10

- 15 (JAXXXX

- XX).
B. Use of the UPL I s Consistent with the Requirements of Section 7412(d)(3) .

__________ ________ EPA uses the UPL to establish emission standards that reflect what the average of the top

- performing sources achieve over the entire range of operating conditions likely to be encountered . The standards are thus consistent with the statutory requirements that they be achievable under the foreseeable range of operating conditions

. Environmental Petitioners nonetheless assert that EPA’s use of the UPL is inconsistent with the Clean Air Act ’s requirements, claiming that the resulting standards do not reflect the average of the top

- performing sources and do not reflect the level of emission control achieved by those sources. T hese claims lack merit.

84 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 98 of 1131. The UPL Represents the Average Perfor mance of the Top
- Performing Sources Over Time .

______________ That the emission standards calculated using the UPL reflect the average emission control achieved by the top

- performing sources is inherent in the formula used to calculate the UPL and was stated by EPA both in the rulemaking and in its response to the Co urt’s remand of the record. The formula for calculating the UPL determines the value that the average of the best

- performing sources will fall within 99 percent of the time. The process for calculating the UPL begins with calculating the average of the e mission levels of the best

- performing sources. See UPL Remand Response at 10 (JAXXXX). (The symbol “ xx ̅ ” stands for the average of the measured values.) A term is then added to that value , which , using standard statistical techniques, predicts how much t he average value is likely to vary over a range of conditions. Id. at 10

- 11 (JAXXXX). For a general description of the use and calculation of prediction intervals see http://en.wikipedia.or g/wiki/Prediction_interval (“a prediction interval is an estimate of an interval in which future observations will fall, with a certain probability, given what has already been observed”). In both the preamble to the final rule and the response to the rem and of the record, EPA has clearly stated that the purpose of the UPL is to represent the expected range of the average emission reductions achieved by the best

- performing sources. Thus, in the preamble to the March 2011 final rule EPA stated, “The UPL

85 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 99 of 113ca lculation is a statistical formula designed to estimate a MACT floor level that is equivalent to the average of the best performing sources.” 76 Fed. Reg. at 15,630 (emphasis added). Similarly, in its response to the remand of the record EPA stated:
EPA interprets the average to mean the average emissions over time, based on both the calculated average of all emissions test data from the best performing source or sources and the available information regarding the variability of emissions. The UPL, which EPA uses to account for variability among the best performing sources, reflects an upper limit for the emissions of those sources at times other than when the emissions test occurred. This not only is a prediction of the emissions performance of those so urces in tests conducted in the future, but is also an indication of the range of current average emissions performance of those sources. UPL Remand Response at 3 (JAXXXX). Petitioners do not address the way in which the UPL is calculated except to make a specious comparison between that calculation and the addition of a string of numbers. LEAN Br. 48. As discussed above, the UPL calculation applies a standard statistical technique to determine the range of variability in the average emissions of the be st

- performing sources that can be expected over time. The calculation begins with calculating the average emissions and adds to it a factor based on measures of the variability of the data set, such as the size of the data set and the range of values. Th us, the UPL, by its nature calculates the expected values of the average emissions.

86 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 100 of 113Petitioners’ further claim that the remaining terms are unrelated to the
average, LEAN Br. 48

- 49, is equally spurious and demonstrate s a fundamental misunderstanding of statistical analysis. Those terms are used to calculate the expected variability, represent standard statistical methods, and are determined by the nature of the data set. Because the other terms relate to the nature a nd amount of the data, the fact that they are not dependent on the average value does not change the fact that what the UPL calculates is the expected value of the average emission level. Furthermore, the fact that a smaller data set increases uncertainty , and may, as in the example from Sierra Club’s comments cited in NACWA , result in a higher value for the UPL, is a basic fact of statistical analysis. If a manufacturer tests 10 units out of a run of a million, the extent to which the sample represents t he range of values found in the entire run is much more uncertain than if the manufacturer tested 1000 units. To account for that uncertainty, the prediction limit calculated from the 10 tests (which predicts the range of values found in the entire run to a specified level of certainty) would likely be higher than
i f 1000 units were tested . The same is true of emission limits. The smaller the number of samples, the greater the uncertainty that those samples represent the full range of values, which might result in a higher UPL. T he calculated value , however, still represent s a reasonable estimate of the expected values of the

87 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 101 of 113average level of control achieved by the best

- performing sources based on the available data

. 2. The UPL Represents What t he Bes t - Performing Sources Achieve Over Time .

________________________________ Petitioners’ claim that the emission values calculated by the UPL do not represent the level of emission control “achieved” by the best performing sources,
LEAB Br. 36

- 38, is eq ually without merit. Petitioners admit that EPA can consider variability in establishing MACT standards. Id. at 38. As explained above, that is the purpose of the UPL

– it starts with the average level and then takes variability into account to satisfy the statutory requirement that the standards be achievable on a continuous basis during varying operating conditions. Petitioners do not address that purpose or the way the UPL is calculated to address variability

. Instead, Petitioners rely solely on a quote taken out of context from EPA’s Response to Comments Document. Id. at 37. The comment to which the quoted response was made requested that EPA calculate MACT standards by calculating a UPL for each individu al source, ranking the sources on the basis of the site

- specific UPL and then basing the standard on a UPL analysis of that set of numbers

. RTC Vol. 1 at 769 (JAXXXX). In explaining why it did not adopt that approach, EPA explained that the purpose of th e UPL in this rulemaking was not to analyze the performance of individual sources, but rather is “a prediction value for

88 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 102 of 113the average of test runs from a new observation from the same population.” Id. ( Emphasis added). There is nothing inconsistent betwe en that statement and the fact that the purpose of the UPL is to predict emissions of the best performing sources over time. Although Petitioners admit that EPA may consider variability in establishing MACT standards, and thus is not required to simply im pose the mathematical average of the top test results, they do not explain how EPA might do that other than by using a statistical technique such as the UPL that predicts the range of future performance (which is what the standard governs) based on the

var iability of the test results. Furthermore, this Court has long recognized that the Clean Air Act does not specify how EPA is to determine what the best performing units are achieving, and that EPA has considerable discretion in doing so as long as its methodology is reasonable. NACWA , 734 F.3d at 1141

- 42; Mossville

. 370 F.3d at 1241; Sierra Club v. EPA , 167 F.3d at 661

- 63. T h is Court has held that: EPA would be justified in setting the floors at a level that is a reasonable estimate of the performance of the “best controlled similar unit” under the worst reasonably foreseeable circumstances. . . . It is reasonable to suppose that if an emissions standard is as stringent as “the emissions control that is achieved in practice” by a particular unit, then that particular unit will not vio late the standard. This only results if “achieved in practice” is interpreted to mean “achieved under the worst foreseeable circumstances.” Id. at 665.

89 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 103 of 113That is exactly EPA’s rationale for using the UPL. As the Agency has explained: It is reasonable t o interpret the statutory requirement that the MACT floor level reflect the “emission control that is achieved in practice” by the best controlled similar source and “average emission limitation achieved by” the best performing 12 percent of sources as a l evel [or] the average level the best performers are meeting on a consistent basis over time, not just at the single point in time during which emissions test data were collected. If EPA were to simply take the average of the stack test data from the best performing source or sources, the MACT floor would not represent the levels of emissions achieved in practice over time because the MACT floors would not reflect variations in material inputs (e.g., fuels), control device performance, operating unit perfor mance (e.g., changes in combustion conditions that impact emissions), and other factors that affect unit performance over time. This is demonstrated by the fact that even single three run tests, which are performed over a short period of time, typically s how different emission levels during each individual test run. UPL Remand Response at 5 (JAXXXX). See also , 76 Fed. Reg. at 15,630/1

- 2. Since the UPL is designed to set the standard at the level that the average of the best controlled unit s achieve under the worst reasonably foreseeable circumstances during operating conditions, it is consistent with both the Clean Air Act and this Court’s precedents. C. The Standards Are Supported By t he Record . EPA’s use of the UPL to set emission standa rds is supported by the record, which demonstrates that emissions from the units covered by the Major Boilers Rule are subject to considerable variability that is not due to factors such as differences in control measures or operator diligence

. This is de monstrated by

90 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 104 of 113observed variability in emissions from single boiler s , including variability among the three sampling events that constitute a single performance test. Petitioners rely in part on two graphs included in their brief. LEAN Br.
14

- 15. The Co urt should disregard the first graph (on page 14) because it does not use the correct emission limit. The filterable particulate matter limit for existing wet biomass units is 0.037 lb /MMBtu, 78 Fed. Reg. at 7196, not 0.32 as shown on the graph, an error of almost ten

- fold. 14 If the proper standard w ere shown on the graph, it would fall in the bottommost row, and would be exceeded by several of the test runs. While the second graph uses the correct emission limit, the mere fact that the limit exceeds the test results from the best performing sources (in this case, by approximately 4 millionths of a pound per million Btu), does not render the methodology arbitrary and capricious. As shown on the graph, the test results show substantial variability, under t he controlled conditions of a stack test, and it is not unreasonable that the average emissions from these units under the worst reasonably foreseeable operating conditions could exceed those levels. Petitioners also rely on several comments to support th eir claim that variability in test results is not due to statistical variation. LEAN Br. 39

- 40. None of those comments, however, present s any actual data to demonstrate that the

14 P etitioners appear to have used the MACT floor fo r dry biomass units, Nov.2011 Floor MACT Memo at 8 (JAXXXX), which is based on a different data set.
91 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 105 of 113variability in the test results from design or operational differences betwe en boilers, but simply speculate that it may be so. See JAXXXX, XXXX,
XXXX

- XX. Thus, they provide no factual support for Petitioners’ claims. In contrast, the record does demonstrate variability in test results at the same unit, even within the same 3

- run test. As this Court has often recognized, it owes considerable deferen ce to EPA in the Agency’s exercise of its technical expertise. Ethyl Corp. v. EPA , 541 F.2d 1, 36 (D.C. Cir. 1976) ( en banc ) (“[The court] must look at the [agency’s] decision not as the chemist, biologist or statistician that [it is] qualified neither by training nor experience to be, but as a reviewing court exercising our narrowly defined duty of holding agencies to certain minimal standards of rationality.”); Am. Trucking Ass’ns, Inc. v. EPA , 283 F.3d 355, 374 (D.C. Cir. 2002) . Analyzing the variabili ty in emission test results among units in a source category and determining the appropriate statistical methodology for establishing standards under the worst reasonably foreseeable conditions fall squarely within EPA’s technical expertise. The record su pports EPA’s determination that the variability in test results can be appropriately addressed through statistical methods and the Agency applied a well

- established statistical technique to the data in the record. The Court should accordingly defer to EPA ’s exercise of its technical expertise.

92 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 106 of 113D. EPA Did Not Change Its Rationale f or t he UPL In t he Response t o t he Remand o f t he Record .

____ There is no merit to Petitioners ’ claim that EPA’s response to the Court’s remand of the record presented a different rationale for EPA’s use of UPL than that presented in the original rulemaking. LEAN Br. 41

- 43. 15 To the contrary, while the remand response explains EPA’s use of the UPL in more detail, the rationale is exactly the same, i.e., EPA uses the UPL to establish emission standards at the level that the average of the best controlled unit is achiev ing under the full range of foreseeable operating circumstances. In the March 2011 final rule preamble EPA stated, “The UPL calculation is a statistical formula designed to estimate a MACT floor level that is equivalent to the average of the best performing sources based on future compliance tests.” 76 Fed. Reg. at 15,630. This is no different than what the Agency said in its response to the remand of the record: “EPA interprets the average to mean the average emissions over time, based on both the calculated average of all emission test data from the best performing source or sources and the available information regarding the variability of emissions. The UPL, which EPA uses to account for variability among the best performing sources, reflects an

15 There is also no basis to Petitioners’ claim that EPA introduced new data contrary to representations in the remand motion. While EPA did use a data set from the sewage sludge rulemaking to illustrate how the UPL works, that data is not presented as substantive support for the Major Boilers Rule.
93 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 107 of 113upper limit for the emissions of those sources at times other than when the emissions t est occurred.” UPL Remand Response at 5 (JAXXXX). The purpose of the UPL is to determine what the average of the best performing sources achieve s in the whole range of operating circumstances. It applies to the future because that is when the emission standard is effective, i.e., sources covered by the Major Boilers Rule must demonstrate compliance with the rule by means of emission tests that will occur in the future , but it also represents what the average of the best performing sources are currently achieving over time

. Moreover, the method for calculating the UPL is exactly the same in the
R ule and in the response to the remand. What the UPL represents is inherent in the methodology used to calculate it. As described above, in calculating the UPL , EPA determines the best performing sources, calculates the average emission level of those sources, then calculates a variability factor based on the characteristics of the data set and adds it to the average emission value. Thus, the UPL calculates the variability of the average of the best

- performing sources. Regardless of the language used to describe it, EPA’s interpretation of how the UPL is consistent with the statutory requirement to base MACT standards on the average of the best

performing source s is built into the methodology. The methodology provides that the UPL

- based standards reflect the average emission reductions achieved by the best

- performing sources.

94 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 108 of 113Petitioners’ claim that EPA represented to the Court that it would provide an explanat ion of how the average value of a three

- run compliance test reflects the average of the best

- performing sources, LEAN Br. 41, is specious. 16 That has never been EPA’s view. In the motion for remand of the record, EPA requested the remand “ in order to prov ide further explanation of the analysis of variability used in setting the numeric standards .” Dkt . 1482091 at 1. That is exactly what EPA did. The response to the remand of the record provides a more detailed explanation of the analysis that EPA perfor med. Petitioners’ assertion that EPA should instead have made up a rationale for a position that the Agency does not hold and has never held is absurd. First, the motion sought remand of the record in this case to explain use of the UPL in the rule und er review in this case , and that is exactly what EPA did. Second, the Court
in NACWA did not order EPA to provide an explanation of “how the average value of a three

- run compliance test reflects the average of the best

- performing sources , ” but rather orde red EPA “ to clarify issues related to its upper prediction limit and variability analysis. ” NACWA , 734 F.3d at 1161. Again, that is exactly what EPA did. Finally, even if the NACWA Court erroneously believed that EPA was

16 As noted above, the standard protocol for a stack test requires three separate sampling periods with emissio n levels calculated for each period. Compliance is determined by the average of the levels measured in each period. The average of the three periods constitutes a single compliance test.
95 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 109 of 113equating the average of a three

- run compliance test with the average of the best performing sources, the Court would surely have expected EPA on remand to explain what it actually did, rather than to make up an explanation for a position it has never taken. Finally, the Court has already rejected Petitioners’ claim that the remand of the record required notice and comment when it granted EPA’s motion over that objection by the Petitioners. That holding is therefore the law of the case and cannot be revisited here. Petitioners’ ar guments concerning the validity of EPA’s use of the UPL, LEAN Br. 43

- 51, are addressed above. CONCLUSION The petitions for review should be denied. Respectfully submitted,
SAM HIRSCH Acting Assistant Attorney General November 10, 2014 /S / Perry M. Rosen PERRY M. ROSEN NORMAN L. RAVE, JR. Environmental Defense Section Environment & Natural Resources Division United States Department of Justice P.O. Box 7611 Washington, D.C. 20044 (202) 616

- 7568 Counsel for Respondent

96 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 110 of 113Of Counsel:
SUSMITA DUBEY Office of General Counsel U. S. Environmental Protection Agency 1200 Pennsylvania Ave., NW Washington, DC 20460

97 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 111 of 113CERTIFICATE OF COMPLIANCE WITH WORD LIMITATION Pursuant to Federal Rule of Appellate Procedure 32(a)(7)(C), I hereby certify that the foregoing Brief of Respondent EPA contains 22,31 4 words as counted by the Microsoft Office Word 20 13 word processing system, and thus complies with the applicable word limitation. /S/ Norman L. Rave, Jr. Norman L. Rave, Jr.

98 USCA Case #11-1108 Document #1521657 Filed: 11/10/2014 Page 112 of 113CERTIFICATE OF SERVICE I hereby certify that on November 10, 2014, the foregoing Brief of Respondent was served electronically through the Court’s CM/ECF system on all registered co unsel. /S/ Norman L. Rave, Jr. Norman L. Rave, Jr.

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