Opinion ID: 4020089
Heading Depth: 2
Heading Rank: 3

Heading: the energy-assessment requirement

Text: The Major Boilers Rule and the Area Boilers Rule generally require sources with existing boilers to perform a one-time energy assessment. In the assessment, facilities must “identify energy conservation measures”—such as “process changes or other modifications to the facility”— “that can be implemented to reduce the facility energy demand,” thereby “reduc[ing] fuel use.” 2011 Area Boilers Rule, 76 Fed. Reg. at 15,573; see also 2011 Major Boilers Rule, 76 Fed. Reg. at 15,632. While facilities must conduct the assessment, they need not implement its conclusions. See 2011 Area Boilers Rule, 76 Fed. Reg. at 15,573; 2011 Major Boilers Rule, 76 Fed. Reg. at 15,632. The logic behind the assessment is straightforward. Boilers produce HAP emissions when fuel is combusted. Less combustion means fewer emissions. The EPA primarily justified the assessment as a beyond-the-floor MACT requirement under section 7412(d)(2). See 2011 Area Boilers 46 Rule, 76 Fed. Reg. at 15,573; 2011 Major Boilers Rule, 76 Fed. Reg. at 15,632. With respect to certain biomass and oilfired boilers located at area sources, the assessment was justified as a GACT management practice under section 7412(d)(5). See 2011 Area Boilers Rule, 76 Fed. Reg. at 15,567. Industry Petitioners raise three principal challenges to the energy-assessment requirement, none of which have purchase. The first challenge claims that the energy assessment regulates aspects of facilities that are off limits to the EPA— namely, the energy needs supplied by regulated boilers. Petitioners point to the language of the CAA, which requires the EPA to “list . . . categories and subcategories of major sources and area sources” of enumerated air pollutants. 42 U.S.C. § 7412(c)(1). “For the categories and subcategories the Administrator lists, the Administrator” must set “emissions standards under” section 7412(d). Id. § 7412(c)(2). As relevant here, the EPA defined the source categories to include “industrial boilers and commercial and institutional boilers.” 2011 Area Boilers Rule, 76 Fed. Reg. at 15,557; 2011 Major Boilers Rule, 76 Fed. Reg. at 15,608. To the extent the assessment concerns parts of the facility other than the boiler itself, the Industry Petitioners claim it exceeds the EPA’s authority. The Industry Petitioners misapprehend both the scope of the assessment and the CAA. The assessment requires facilities to evaluate energy systems “located on the site of the affected boiler,” including “[p]rocess heating[,] compressed air systems[,] . . . facility heating, ventilation, and air conditioning systems,” and “[o]ther systems that use steam, hot water, process heat, or electricity, provided by the affected boiler.” 40 C.F.R. § 63.11237; see id. § 63.7575. Based on 47 that evaluation, facilities must compile a “comprehensive report detailing the ways to improve efficiency, the cost of specific improvements, [anticipated] benefits, and the time frame for recouping those investments.” 40 C.F.R. pt. 63, subpt. JJJJJJ tbl.2; id. pt. 63, subpt. DDDDD tbl.3. Contrary to the Industry Petitioners’ argument, the EPA has not “regulate[d] virtually every piece of equipment at all affected facilities.” No. 11-1141 Indus. Pet’rs’ Br. 19. Only “energy use systems” that “us[e] energy clearly produced by affected boilers” must be evaluated; facilities need not review the “total aggregation of all individual energy using segments of a facility.” 2013 Area Boilers Rule, 78 Fed. Reg. at 7,493 (emphasis added); see also 2013 Major Boilers Rule, 78 Fed. Reg. at 7,188. The assessment focuses on “discrete segments of a facility,” such as “production area[s] or building[s]” associated with a particular boiler. 2013 Area Boilers Rule, 78 Fed. Reg. at 7,493; see 2013 Major Boilers Rule, 78 Fed. Reg. at 7,188. Energy requirements satisfied by other sources—not by a HAP-emitting boiler—fall outside of that mandate. See 2011 Area Boilers Rule, 76 Fed. Reg. at 15,573 (limiting the assessment to “specific portions of the source that directly affect emissions from the affected boiler”). And regulated facilities are under no obligation to implement the results they reach. In essence, rather than setting inflexible and generally applicable beyond-the-floor numeric limits, the EPA required facilities to take stock of the actual energy demands placed on their boilers. By reducing energy demands and associated fuel consumption, facilities could reduce HAP emissions. That requirement is more measured than the Industry Petitioners contend. And that measured requirement falls within the EPA’s statutory authority. The CAA authorizes the EPA to regulate 48 “major sources and area sources” of HAPs, and to subdivide those sources into categories and subcategories. 42 U.S.C. § 7412(c)(1), (c)(2). To Industry Petitioners, the authority to subdivide sources means the EPA may only regulate the narrowest applicable categorization—in this instance, commercial and industrial boilers. But the statute does not require so rigid a reading. While the EPA is permitted to subdivide sources, each subdivision remains a component of either a major or area “source.” Dividing sources into categories and subcategories does not make them any less of a “source” subject to the EPA’s regulation. For that reason, the EPA explained that the Rules reach, respectively, “[a]ny area source facility using a boiler,” 2011 Area Boilers Rule, 76 Fed. Reg. at 15,555 (emphasis added), and “major source facilities having affected boilers or process heaters,” 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613 (emphasis added). Likewise, the regulations implementing the energy assessment requirement apply to those who “own or operate an existing affected boiler,” not merely to the boiler itself. 40 C.F.R. § 63.11214(c); see id. § 63.7485. Going further, the relevant part of the CFR applies, by its own terms, to the “owner or operator of any stationary source.” Id. § 63.1(b)(1). The Congress’s definition of the terms major and area source supports this reading. At bottom, both terms refer to a “stationary source.” See 42 U.S.C. § 7412(a)(1), (a)(2). Stationary source, in turn, means “any building, structure, facility, or installation which emits or may emit any air pollutant.” Id. § 7411(a)(3). Against that backdrop, the Rules apply to any “building, structure, facility, or installation” that contains a boiler emitting the specified HAPs. The EPA’s 49 regulatory authority reaches the relevant stationary source, of which the boiler is part. That the EPA may regulate stationary sources does not mean it may regulate every nook and cranny of those sources. The CAA directs its authority to the establishment of emission standards; it does not provide some general power to superintend the business processes of plants and manufacturing facilities. In this case, however, we have no occasion to parse the precise parameters of the EPA’s authority to regulate aspects of area sources. It is enough to conclude that the challenged energy assessment—which applies only to systems that “us[e] energy clearly produced by affected boilers”—falls within the EPA’s authority under the CAA. 2013 Area Boilers Rule, 78 Fed. Reg. at 7,493; 2013 Major Boilers Rule, 78 Fed. Reg. at 7,188. In the remaining two challenges, the Industry Petitioners take issue with the EPA’s justification of the energy assessment as a beyond-the-floor MACT standard and a GACT management-practice standard. We reject both challenges. The assessment represents a valid beyond-the-floor MACT standard.13 As discussed, after the Agency sets the MACT floor, it must determine “whether stricter standards are ‘achievable,’” Nat’l Lime Ass’n, 233 F.3d at 629 (quoting 42 U.S.C. § 7412(d)(2)), considering costs, “any non-air 13 In addition to challenging the assessment as a beyond-thefloor measure, the Industry Petitioners claim the assessment represents an invalid work-practice standard. But “[t]he energy assessment is not . . . a work practice standard, and EPA makes no claim that it is.” No. 11-1141 EPA Br. 47 n.9. Therefore, we decline to address that contention. 50 quality health and environmental impacts and energy requirements,” 42 US.C. § 7412(d)(2). These “measures, processes, methods, systems or techniques includ[e], but [are] not limited to, measures which— (A) reduce the volume of, or eliminate emissions of, such pollutants through process changes, substitution of materials or other modifications, . . . (D) are design, equipment, work practice, or operational standards . . . or (E) are a combination of the above. Id. The EPA primarily justified the energy assessment as a beyond-the-floor measure designed to identify “process changes or other modifications to the facility” that would reduce fuel use and thereby reduce hazardous emissions. 2011 Area Boilers Rule, 76 Fed. Reg. at 15,573; 2011 Major Boilers Rule, 76 Fed. Reg. at 15,632. The Industry Petitioners argue that the EPA skipped a step, imposing the energy assessment as a beyond-the-floor measure without first setting a relevant MACT floor. That is incorrect. The EPA first set a numeric MACT emissions limit for the categories and subcategories of sources subject to the energy assessment. See 40 C.F.R. pt. 63, subpt. JJJJJ tbl.1; id. pt. 63, subpt. DDDDD tbl.2. The energy assessment represents a step beyond that—a measure designed to discover energy efficiencies that, once implemented, could decrease emissions below the floor level. Before setting a beyond-the-floor measure, the EPA must consider whether it is “achievable” based on a number of 51 factors, among them cost, “non-air quality health and environmental impacts and energy requirements.” 42 US.C. § 7412(d)(2). The EPA did so here. To begin, the EPA adequately considered costs. In the EPA’s estimation, “[t]he one-time cost of an energy assessment ranges from $2500 to $55,000 depending on the size of the facility.” 2010 Proposed Area Boilers Rule, 75 Fed. Reg. at 31,907; National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters (2010 Proposed Major Boilers Rule), 75 Fed. Reg. 32,006, 32,026 (June 4, 2010). Because saving fuel saves money, common sense suggested that sources would often find the energy assessment “cost-effective” to implement. 2011 Area Boilers Rule, 76 Fed. Reg. at 15,568 (“By definition, any emission reduction [achieved as a result of the energy assessment] would be cost effective or else it would not be implemented.”); see also 2011 Major Boilers Rule, 76 Fed. Reg. at 15,633. In addition to costs, the EPA considered non-air quality health and environmental impacts in general terms, concluding that “improving energy efficiency reduces negative impacts on the environment.” 2010 Proposed Area Boilers Rule, 75 Fed. Reg. at 31,907; 2010 Proposed Major Boilers Rule, 75 Fed. Reg. at 32,026. Given the nature of the assessment, the EPA’s somewhat terse analysis of health and environmental impacts suffices. Performing the assessment involves rudimentary tasks—examining the boiler and associated energy systems and drafting a report—that do not impose meaningful health or environmental impacts. The same holds for the EPA’s consideration of energy use requirements. Facilities would expend very little energy in conducting the one-time assessment, and could conserve 52 energy by implementing the results. The assessment therefore represents a lawful beyond-the-floor measure. We also find that the assessment is a valid GACT management practice. With respect to area sources, the EPA has discretion to require the use of “generally available control technologies or management practices . . . to reduce emissions of hazardous air pollutants.” 42 U.S.C. § 7412(d)(5). The EPA justified the energy assessment as a GACT management practice for oil- and biomass-fired boilers. See 2011 Area Boilers Rule, 76 Fed. Reg. at 15,567. The Industry Petitioners challenge that justification, claiming the energy assessment—which does not require implementation—cannot “reduce emissions of hazardous air pollutants.” 42 U.S.C. § 7412(d)(5). We disagree. The EPA did not need to make implementation mandatory to make the assessment lawful. Under the CAA, the EPA may sometimes act with a soft touch, rather than a firm hand. Here, the EPA selected a soft touch, requiring an assessment but not implementation. It was not unreasonable for the EPA to conclude, “after considering the structure of the requirement, the incentives it presents, and the likely behavior of sources, . . . that sources will find it cost-effective to implement the conservation measures identified in the energy assessment.” 2011 Area Boilers Rule, 76 Fed. Reg. at 15,573. If the results were implemented, HAP emissions would be reduced. For present purposes, that is enough. For those reasons, we reject the Industry Petitioners’ challenges to the energy-assessment requirement. 53