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

Heading: Instant Challenges to UPL

Text: After the EPA issued the Page Memorandum, the Environmental Petitioners renewed their argument that the UPL represents neither (1) the “average” emissions limit of the best performing source or sources in a subcategory, nor (2) the emissions levels “achieved” by the best performing sources in a subcategory. We believe that the EPA has carried its burden of demonstrating that the UPL “reflect[s] a reasonable estimate of the emissions achieved in practice by 93 the best performing sources.” Cement Kiln, 255 F.3d at 87172 (internal quotation marks omitted); see also NACWA, 734 F.3d at 1148 (“[H]aving decided to account for variability, and having decided to estimate that variability, EPA bears the burden of demonstrating with substantial evidence that its estimate is reasonable.”). Our conclusion is driven, in large part, by the deference we owe the EPA when it determines how best to meet the technical challenges in its area of expertise. Indeed, the EPA “typically has wide latitude in determining the extent of datagathering necessary to solve a problem” and, for that reason, we have “accorded Chevron deference to [its] interpretation of [the CAA] as allowing it to estimate MACT floors.” NACWA, 734 F.3d at 1131. Moreover, “the requirement that the existing unit floors not be less stringent than the average emissions limitation achieved by the best performing 12 percent of units does not, on its own, dictate how the performance of the best units is to be calculated,” id. (internal quotation marks omitted)—“[f]loors need not be perfect mirrors of the best-performers’ emissions,” Cement Kiln, 255 F.3d at 871. So long as the EPA “demonstrate[s] with substantial evidence—not mere assertions”—that the UPL “allows a reasonable inference as to the performance of the top 12 percent of units,” NACWA, 734 F.3d at 1131 (quotations omitted) (emphasis added), the EPA has conducted reasoned decision making. The Agency has done so here. The Page Memorandum explains the limitations of stack-test data—i.e., the “snapshots” cannot reflect the best performing source’s or sources’ average emissions levels at all times and under all operating conditions. Page Mem. 6. The Page Memorandum also explains that the Agency chose the UPL as a tool 94 “derived from widely accepted and commonly used statistical principles,” id. at 4, that “reasonably account[s] for variability in the emissions of . . . sources,” id. at 2. Finally, the Page Memorandum plugs the analytical gap we identified in NACWA—it thoroughly explains how and why the UPL accounts for the variance and therefore how and why it reasonably represents the emissions level “achieved by the average source” or sources. Id. at 3-5. In so doing, the EPA has “clarif[ied],” to our satisfaction, “how the upper prediction limit represents the average emissions limitation achieved.” NACWA, 734 F.3d at 1143 (internal quotation marks omitted). The Environmental Petitioners’ arguments to the contrary are unavailing. Their primary objection is that the UPL cannot reasonably estimate the “average” emissions level achieved by the best performing source or sources because the UPL represents “a level [the] EPA expects any future compliance test by any [source] in the top 12 percent to fall below.” No. 11-1108 Envtl. Pet’rs’ Br. 35 (emphases added) (internal quotation marks omitted).28 But the Page Memorandum counters the Environmental Petitioners’ mistaken understanding of what the UPL represents.29 According to the EPA, “the UPL does not represent the worst emissions performance of the best performing units at any 28 See also No. 11-1108 Envtl. Pet’rs’ Reply Br. 15 (“It is, as its name indicates, an upper limit—the emissions limitation that every member of the best-performing 12 percent will fall below . . . .” (emphasis in original) (quotation marks omitted)). 29 The Environmental Petitioners’ argument rests, at least in part, on their contention that we should not consider the Page Memorandum at all. We decline their invitation to ignore the explanation we ordered the EPA to provide. 95 time.” Page Mem. 4 (emphasis in original).30 It is instead “the average level expected to have been achieved over time” by the best performing source or sources. Id. (emphasis in original). “In other words, the 99 percent UPL is the level of emissions that [the EPA is] 99 percent confident is achieved by the average source . . . over a long-term period based on its previous, measured performance history as reflected in short term stack test data.” Id. (emphasis added). Next, the Environmental Petitioners criticize the Page Memorandum’s explanation that the UPL represents the longterm average emissions levels achieved because “the first element of the UPL equation is the average of the short-term emissions test data from the best-performing sources.” Id. In their view, the UPL is no different from “saying that, over time, the average of 1, 2, and 3 = 2 + 500 because the first element in the equation (2) is the average of 1, 2, and 3.” No. 11-1108 Envtl. Pet’rs’ Br. 48. But the UPL does not simply tack an arbitrary increase on top of the stack-test average of the best performing sources. Rather, the UPL “allows [the] EPA to use emissions test data and the data characteristics,” which include “the distribution and sample size, along with the intrinsic variability associated with those data,” to estimate “an emissions limit based on a specified level of confidence such that an average best performing existing 30 See also Page Mem. 5 (It is “generally . . . reasonable to establish a [MACT floor] standard that all the best performing 12 percent of existing sources can meet without any modification because the statute requires the Agency to establish the standard at the average level of performance of the best 12 percent of sources.” (emphasis in original)); id. at 14 (“[T]he MACT floor represents the average emission level achieved by the best performing sources, not the worst emission level achieved by those sources.” (emphases in original)). 96 source would not be expected to exceed the limit a specified number of times.” Page Mem. 6 (emphases added). In other words, the UPL does not simply add an arbitrarily chosen value but instead turns entirely on the features inherent in the stack-test data and how those features reflect the natural variance in emissions experienced by the best performing sources over time. See id. at 4 (“[T]he MACT floor calculation takes into account the inherent variability in emissions performance to more accurately reflect the range of the best performing sources’ emissions over time.” (emphasis added)).31 Thus, as the Page Memorandum amply demonstrates, see id., the EPA’s use of the UPL is not arbitrary. The Environmental Petitioners also attack the results produced by the UPL. They provide a series of charts that, in their view, demonstrate that the UPL sets MACT floors far too high to comport with the CAA’s mandate that floors represent “the maximum degree of reduction in emissions.” See 42 U.S.C. § 7412(d)(2). True, some of the charts show that the EPA has set a MACT floor above the highest emissions level recorded by the best performing sources’ stack testing. See No. 11-1108 Envtl. Pet’rs’ Br. 14-15; No. 11-1108 Envtl. Pet’rs’ Reply Br. 23. But this does not mean that the UPL is an arbitrary “average” proxy—for at least two reasons. 31 See also Page Mem. 6-7 (“[T]he UPL equation that is used to account for variability and [to] calculate the MACT floor standard depends on the distribution of the data.”); id. at 11 (“The UPL . . . is directly related to the confidence level and to the variance, meaning that as either of these values go up or down, so does the UPL value.”). 97 First, the charts selectively included are generated from data sets with considerable variance between the highest recorded stack test and the lowest. Unsurprisingly, if a handful of “snapshots” in a data set demonstrate that emissions levels experience high spikes and low plummets at discrete times, it is more likely that the average emissions level achieved by the best performing sources at all times might be high. This is because a data set with high variability will produce a higher UPL than a data set with low variability, even if the two sets share the same average. In other words, the UPL takes large variance into account and therefore naturally goes higher to arrive at the 99 per cent certainty the EPA thinks is appropriate.32 Second, where the UPL suggested a MACT floor higher than the results of the stack tests, it often did so by insubstantial amounts. Indeed, for at least one chart, “the limit is a mere 4 millionths of a pound per million Btu above the emissions test results of best performers, an unalarming amount given that the methodology is supposed to account for variable results.” No. 11-1108 Indus. Intervenors’ Br. 10 (emphases in original). For these reasons, the Environmental Petitioners have not convinced us that the EPA failed to satisfy the 32 The EPA “selected the 99 percent level in order to provide reasonable assurance that the limit can be met at all times by a source with emissions at the average level achieved by the best performing source or sources.” Page Mem. 10. The Environmental Petitioners have not challenged the EPA’s choice of a 99 per cent confidence level, as opposed to a lower level of certainty, and we express no opinion on that choice. And we reiterate that the more specific concerns we had with the UPL when we decided NACWA—in particular, the UPL’s accuracy “given a small dataset”—are not before us. 734 F.3d at 1144-45. 98 “minimal standard[] of rationality” that we require. Ethyl Corp. v. EPA, 541 F.2d 1, 36 (D.C. Cir. 1976) (en banc). Finally, the Environmental Petitioners insist that “[t]he UPL predicts a level that hypothetical future tests will fall below, rather than estimating what boilers actually achieved,” in contravention of the requirement that MACT floors “reflect what the best-performing sources achieved.” No. 11-1108 Envtl. Pet’rs’ Reply Br. 24 (internal quotation marks omitted). But the Environmental Petitioners ignore the Page Memorandum’s explanation that, because the UPL is not time-dependent, it “not only is a prediction of the emissions performance of those sources in tests conducted in the future, but is also an indication of the range of current average emissions performance of those units.” Page Mem. 3;33 see also No. 11-1108 Indus. Intervenors’ Br. 9 (“Because this statistical method is not time-dependent, it is equally valid for predicting past performance (i.e., the range of emissions levels expected to have been experienced in the past by the best performers during periods when actual emissions testing was not underway) and future performance.”). We believe that the UPL “reflect[s] a reasonable estimate of the emissions achieved in practice by the best-performing sources,” Cement Kiln, 255 F.3d at 871-72 (internal quotation marks omitted), and, accordingly, we reject the Environmental Petitioners’ challenge to it. 33 See also Page Mem. 4 (“[T]he 99 percent UPL is the emissions level that the source would be predicted to be below 99 out of 100 performance tests, including emissions tests conducted in the past, present, and future.”); id. at 10 (“The confidence level, in this case 99 percent, is the percentage of measurements (past, present, and future) that are predicted to fall at or below the UPL value.”). 99