Opinion ID: 4020089
Heading Depth: 1
Heading Rank: 3

Heading: industry petitioners’ challenges

Text: Industry Petitioners raise two sets of challenges to startup, shutdown, and malfunction periods: (1) a challenge to the EPA’s failure to take malfunctions into account in the Major Boilers and Area Boilers Rules and (2) a challenge to EPA’s failure to take into account periods of startup, shutdown, and malfunction in the CISWI Rule. For the reasons that follow, we reject all of the Industry Petitioners’ claims related to startups, shutdowns, and malfunctions. 1. Periods of Malfunction in the Major Boilers and Area Boilers Rules First, Industry Petitioners challenge the Major Boilers and Area Boilers Rules’ failure to take malfunctions into account in setting MACT floors. See 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613; 2011 Area Boilers Rule, 76 Fed. Reg. at 15,560-61. The EPA defends its refusal to account for malfunctions on the basis of (1) the impracticability of accounting for events that are necessarily unpredictable, and (2) the EPA’s assertion that it will use its prosecutorial discretion to determine on a case-by-case basis whether an exceedance of emission standards is attributable to an excusable malfunction or whether applicable regulatory penalties should be imposed instead. See No. 11-1108 EPA Br. 38; No. 11-1141 EPA Br. 29. 32 Both sides agree that malfunctions are inevitable in the operation of area and major boilers. According to the EPA, “even equipment that is properly designed and maintained can sometimes fail and . . . such failure can sometimes cause an exceedance of the relevant emission standard.” 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613; 2011 Area Boilers Rule, 76 Fed. Reg. at 15,561. Thus, the EPA defined a malfunction as a “sudden, infrequent, and not reasonably preventable failure of air pollution control and monitoring equipment, process equipment or a process to operate in a normal or usual manner.” 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613 (citing 40 C.F.R. § 63.2); 2011 Area Boilers Rule, 76 Fed. Reg. at 15,560 (same). In attempting to write rules to account for emissions, however, the EPA faced an intractable problem: how to account for a malfunction which is, by definition, unpredictable in terms of timing, duration, magnitude, and effect. While the existence of malfunctions is entirely predictable, the nature of those malfunctions is not, and it is the malfunction’s nature that affects emissions and thus is relevant to the application of emission limits. At first glance, the EPA’s chosen approach to malfunctions may seem counterintuitive, as the Agency appears to have several reasonable alternatives: it could exempt periods of malfunction entirely from the application of the emission standards; or it could apply the standards to malfunctions while giving boiler owners the opportunity to defend against a penalty by demonstrating they were not at fault for the malfunction. But the EPA has previously been stymied in its attempts to implement either of these solutions, as this court has concluded neither approach is consistent with the Agency’s enabling statutes. For instance, in Sierra Club III, the EPA attempted to exempt major sources from complying with emission standards during start up, shut 33 down, and malfunction. See 551 F.3d at 1027-28. This court rejected that approach because the Congress “required that there must be continuous section 112-compliant standards” and so the EPA lacked discretion to exempt certain periods from compliance, regardless of their unpredictability. Id. at 1027. In NRDC III, this court considered a challenge to the affirmative defense provision the EPA adopted for persons defending against civil suits under 42 U.S.C. § 7604(a), which allows “any person” to “commence a civil action on his own behalf” against any entity alleged to be in violation of an emission standard or limitation. The affirmative defense provision was meant to shield alleged violators from liability for certain emissions violations caused by “unavoidable” malfunctions; under the provision, therefore, “the district court [could] assess penalties only if violators fail[ed] to meet [their] burden of proving all of the requirements in the affirmative defense.” NRDC III, 749 F.3d at 1062 (internal quotation omitted). The court rejected this provision as an impermissible intrusion on the judiciary’s role. See id. at 1063 (“[U]nder this statute, deciding whether penalties are ‘appropriate’ in a given private civil suit is a job for the courts, not for EPA.”). Faced with an obvious dilemma, the EPA arrived at the approach it defends today. Malfunctions receive no special treatment and the EPA instead exercises “its enforcement discretion to address exceedances of emission limits that may be caused by such uncertain, unpredictable events, on a caseby-case basis.” No. 11-1108 EPA Br. 38; see also No. 111141 EPA Br. 29. The EPA’s current treatment of malfunctions thus differs from its invalid affirmative defense provision because the Agency is exercising its own regulatory enforcement power on an ad hoc basis outside the context of citizen suits. When an exceedance occurs during a 34 malfunction, the EPA determines what enforcement action— if any—it should take by considering “the good faith efforts of the source to minimize emissions during malfunction periods, including preventative and corrective actions, as well as root cause analyses to ascertain and rectify excess emissions.” 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613; see also 2011 Area Boilers Rule, 76 Fed. Reg. at 15,561 (same). The EPA also considers whether the exceedance was in fact “not reasonably preventable” or whether it was “caused in part by poor maintenance or careless operation.” 2011 Major Boilers Rule, 76 Fed. Reg. at 15,613 (citing 40 C.F.R. § 63.2); see also 2011 Area Boilers Rule, 76 Fed. Reg. at 15,561 (same). For our purposes, we need not (indeed, must not) evaluate the policy implications of the EPA’s regulatory choice because our review is confined to determining whether the EPA’s regulation reflects a permissible reading of the applicable statute under Chevron. Here, we conclude that it does. The relevant statute requires only that the EPA set “achievable” standards, 42 U.S.C. § 7412(d)(2), and it defines achievability to be no less “than the emission control that is achieved in practice by the best controlled similar source,” 42 U.S.C. § 7412(d)(3). The “best controlled similar source,” however, is unlikely to be a malfunctioning source, and the EPA is bound to enact a standard in keeping with emission limits achieved by that “best controlled similar source.” If anything, then, the statutory language on its face prevents the EPA from taking into account the effect of potential malfunctions when setting MACT emission standards. At the very least, the language permits the EPA to ignore malfunctions in its standard-setting and account for them instead through its regulatory discretion. Our Sierra Club III decision confirms this. See 551 F.3d at 1027-28. Because the 35 EPA had no option to exclude these unpredictable periods, its approach is reasonable. We therefore reject Industry Petitioners’ argument that the EPA either misinterpreted the CAA or acted arbitrarily and capriciously in failing to account for malfunctions when setting MACT floors in the Major and Area Boilers Rules. Nor do we agree with the Industry Petitioners’ secondary argument that the EPA acted arbitrarily and capriciously by failing to set a work-practice or a GACT managementpractice standard for malfunction periods. First, the statute makes clear that these kinds of standards are to be set at the discretion of the EPA, so it would be difficult to interpret the statute consistently with its text while holding that the text’s permissive language in fact sets out a requirement that the Agency set work-practice or GACT management-practice standards. As to work-practice standards, “[t]he Administrator may, in lieu [of a numeric standard], promulgate a design, equipment, work practice, or operational standard, or combination thereof,” and any such standard set must “in the Administrator’s judgment [be] consistent with the provisions of subsection (d).” 42 U.S.C. § 7412(h)(1). As to GACT management-practice standards, “the Administrator may . . . elect to promulgate” such standards with respect to certain “categories and subcategories of area sources.” Id. § 7412(d)(5). It should go without saying that “may means may.” McCreary v. Offner, 172 F.3d 76, 83 (D.C. Cir. 1999) (internal quotations omitted). Second, the Petitioners have not demonstrated and the EPA does not concede that setting work-practice or GACT management-practice standards would even be feasible for periods of malfunction. As for work-practice standards, the EPA would have to conceive of a standard that could apply 36 equally to the wide range of possible boiler malfunctions, ranging from an explosion to minor mechanical defects. Any possible standard is likely to be hopelessly generic to govern such a wide array of circumstances. Similar problems exist for setting GACT management practices. These management practices would also need to apply to the wide range of possible malfunctions, and the EPA would need to determine that the standard would “reduce emissions of hazardous air pollutants,” an evidence-based standard that is difficult (perhaps impossible) to apply to the unpredictable circumstances of malfunctions. 42 U.S.C. § 7412(d)(5). Thus, we reject the Industry Petitioners’ argument that the EPA was required to set a work-practice or GACT management-practice standard for malfunction periods. In doing so, we are mindful that the EPA is not the only entity able to bring enforcement actions under the CAA, but that private citizens are also empowered to enforce emission standards by filing suit in district court. 42 U.S.C. § 7604(a). Assurances that the EPA will use its prosecutorial discretion to account for malfunctions would mean little if private citizens could seek strict enforcement of those same standards. But as we stated in NRDC III, “the Judiciary, not any executive agency, determines ‘the scope’—including the available remedies—‘of judicial power vested by’ statutes establishing private rights of action.” 749 F.3d at 1063 (quoting City of Arlington v. FCC, 133 S. Ct. 1863, 1871 (2013)). Accordingly, in citizen suits under the CAA, “the courts determine, on a case-by-case basis, whether civil penalties are ‘appropriate.’” Id. Boiler operators can argue that penalties should not be assessed because of an unavoidable malfunction, and they can support that argument with other relevant facts, “such as the defendant’s ‘full 37 compliance history and good faith efforts to comply.’” Id. (quoting 42 U.S.C. § 7413(e)(1)). The EPA can also provide supporting argumentation as intervenor or amicus. Id. Courts should not hesitate to exercise their judicial authority to craft appropriate civil remedies in the case of emissions exceedances caused by unavoidable malfunctions. 2. Periods of Startup, Shutdown, and Malfunction in the CISWI Rule In the CISWI Rule, the EPA made no modification for periods of startup, shutdown, or malfunction. The Industry Petitioners argue that failing to account for these periods violated the EPA’s statutory instruction to set “achievable” standards. Additionally, the Industry Petitioners claim it was arbitrary and capricious for the EPA to set work-practice standards for startup and shutdown periods under the Major Boilers Rule but not under the CISWI Rule. Both arguments are without merit. First, the EPA’s emission standards for small incinerators do take into account periods of shutdown and startup. The EPA based its standards for these machines on “short term stack tests for pollutants,” in which incinerators are monitored during the course of normal operation, which includes daily startup and shutdown periods. See 2011 CISWI Rule, 76 Fed. Reg. at 15,738. Thus, startup and shutdown times are already incorporated into the standards the EPA set, and what is more, nearly all pollutants are present in smaller numbers during startup and shutdown anyway, when incinerators are burning fuels alone rather than fuels and solid waste. See Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (2010 Proposed CISWI Rule), 38 75 Fed. Reg. 31,938, 31,964 (June 4, 2010). Given this reality, the CISWI Rule satisfies the statutory standard of “achievability” and is not arbitrary and capricious. Second, as to periods of malfunctions, the same analysis applies to the CISWI Rule as applies to the Boilers Rules. The EPA adopted a reasonable interpretation of the CAA when it excluded periods of malfunction from its calculations of achievability given that malfunction periods are by their very nature unpredictable in terms of their effect on emissions. The EPA’s decision to account for malfunctions in its discretion is likewise a reasonable interpretation of 42 U.S.C. § 7412(d)(2) and (3). For these reasons, we reject the Industry Petitioners’ challenges to the EPA’s regulatory choices with regard to periods of startup, shutdown, and malfunction.
The EPA must look to the performance of the best major boilers and CISWI incinerators when setting MACT floors for a pollutant. As described above, for new units, the EPA must set floors at the level achieved by the best similar unit in each subcategory. For existing units, the Agency must set floors at the level achieved by the best 12 per cent of similar units in each subcategory. 42 U.S.C. §§ 7412(d)(3)(A), 7429(a)(2). As a result, the EPA had to identify the best performing units in each subcategory when setting the MACT floors for the Major Boilers and CISWI Rules. But the EPA often could not identify a single unit or set of units that controlled all HAPs better than the other units in the subcategory. Instead, the EPA sometimes found that a unit might rank among the best 39 in its subcategory at controlling emissions of one HAP, but among the worst at controlling emissions of a different HAP. To address this problem, the EPA adopted a “pollutantby-pollutant” approach in setting the MACT floors: instead of identifying the unit or units that best controlled all HAPs in the aggregate, the EPA used one unit or set of units to set the MACT floor for, e.g., PM, and used a different unit or set of units to set the MACT floor for, e.g., HCl. See 2011 Major Boilers Rule, 76 Fed. Reg. at 15,621-23; 2011 CISWI Rule, 76 Fed. Reg. at 15,720-21. For at least two subcategories of major boilers—new heavy oil-fired units and existing stoker coal-fired units—the EPA’s pollutant-by-pollutant approach resulted in MACT floors that no unit in the subcategory had achieved in toto. Similarly, for small, remote incinerators (SRIs), the approach resulted in standards for existing units that only two of the 28 SRI units had met in toto, and standards for new units that no existing SRI had met in toto. The Industry Petitioners challenge the EPA’s use of the pollutant-by-pollutant approach. According to the Industry Petitioners, the CAA’s plain language requires the Agency to identify the best overall unit or set of units—not the best unit or set of units for a particular pollutant—in each subcategory when setting MACT floors. They further claim the EPA’s pollutant-by-pollutant approach was unreasonable with regard to SRIs because it resulted in a set of emission standards that no single unit in the subcategory had achieved in practice. We disagree, and conclude that the EPA’s pollutant-bypollutant approach is a reasonable interpretation and application of the statute. For the purposes of this challenge, the MACT floor provisions for major boilers and CISWI units are identical. 40 Under both provisions, the EPA must set emission standards for new units based on “the emissions control that is achieved in practice by the best controlled similar unit, as determined by the Administrator.” 42 U.S.C. § 7429(a)(2) (CISWI); see also id. § 7412(d)(3) (major boilers). For existing units, the MACT floor is based on “the average emissions limitation achieved by the best performing 12 percent of units in the category.” Id. § 7429(a)(2) (CISWI); see also id. § 7412(d)(3)(A) (major boilers). The Industry Petitioners claim this language unambiguously forecloses the EPA’s pollutant-by-pollutant approach. For new units, they assert, the statute requires the EPA to find the single unit that performs best overall and use this unit—and only this unit—to set standards for all regulated pollutants. For example, if Incinerator 3 were deemed the best overall performer in a subcategory, then the EPA would use Incinerator 3’s emissions levels to set standards for PM, CO, and each of the other regulated pollutants. This would be true even if Incinerator 1 in the same subcategory had lower CO emissions and Incinerator 2 had lower PM emissions. The Industry Petitioners also make this argument for existing sources. For these units, under their interpretation, the mandate to identify the “best performing 12 percent of units” required the EPA to use data from the 12 per cent of sources with the lowest overall emissions in the subcategory. In short, the Industry Petitioners argue that the best “unit” referred to by the provision cannot be a “hypothetical composite” of multiple units that result in standards for new units that no actual unit has met in practice with regard to every pollutant, or standards for existing units that 12 per cent of actual units have not met with regard to every pollutant. 41 The Industry Petitioners read too much into the statutory language. It is true that the statute requires the EPA to base MACT standards on what is “achieved” by the best “unit” or “12 percent of units.” But, as the EPA argues, the statute says nothing about how the Agency should determine which units are the best. Cf. Sierra Club v. EPA, 167 F.3d 658, 661 (D.C. Cir. 1999) (noting that section 7429(a) “on its own says nothing about how the performance of the best units is to be calculated”). Both the industry-favored method of choosing the best overall unit and the EPA’s method of choosing the best unit as to each particular pollutant facially comport with the statute’s mandate to determine which units are best. Because the statute is ambiguous as to how the EPA should identify those units, we must defer to the Agency’s choice so long as it is reasonable. See Sierra Club I, 353 F.3d at 990. Here, the EPA’s choice is reasonable. The statute provides that emission standards shall reflect “the maximum degree of reduction in emissions of [regulated pollutants] that the Administrator . . . determines is achievable for new or existing units in each category.” 42 U.S.C. § 7429(a)(2); see also id. § 7412(d)(2). It then provides that the “degree of reduction in emissions that is deemed achievable for new units in a category shall not be less stringent than the emissions control that is achieved in practice by the best controlled similar unit, as determined by the Administrator.” Id. § 7429(a)(2); see also id. § 7412(d)(3). Reading these provisions together, they support a pollutant-by-pollutant approach. The “best controlled similar unit” language does not exist in a vacuum; rather, it exists to measure the “degree of reduction in emissions that is deemed achievable.” Id. § 7429(a)(2); see also id. § 7412(d)(3). That “reduction in emissions” is the reduction in emissions of each pollutant listed in sections 7429(a)(4) and 7412(b)(1). The EPA’s 42 approach to setting standards on a pollutant-by-pollutant basis thus comfortably fits within this statutory scheme. Moreover, the Industry Petitioners have not explained how their preferred approach would better comport with the statute. Were the EPA required to determine which units perform best “overall,” we see at least two possibilities for how it could do so: First, the EPA could calculate a unit’s average emissions for each pollutant in consistent units of measurement, add these emissions together, and then choose the unit with the smallest overall sum in each subcategory. But this approach could produce arbitrary results, because the “best performing” overall unit might emit unusually low quantities of some pollutants and unusually high quantities of others. This would mean the emission standards for some pollutants would be lenient while others would be stringent, with no principled reason for the difference. Alternatively, the Agency could identify which source is best overall based on which emits the lowest level of the riskiest pollutants. But this approach would require the Agency to rank pollutants’ relative risks without any congressional guidance on how to do so. This approach would also contravene our previous understanding of the congressional intent behind the MACT floor provisions. As we have explained, the MACT floors “are to be based not on an assessment of the risks posed by [pollutants], but instead on the maximum achievable control technology (MACT) for sources in each category.” Sierra Club I, 353 F.3d at 980. The Industry Petitioners nevertheless argue that the CAA’s legislative history supports their preferred approach. In particular, they point to the floor comments of Senator Durenberger discussing the potential impact on MACT floors of mutually incompatible control technologies. 136 Cong. 43 Rec. S17,238 (daily ed. Oct. 26, 1990) (statement of Senator Durenberger). Mutually incompatible control technologies cannot be used at the same time and therefore present regulators with a dilemma. For example, say Technology 1 and Technology 2 cannot be used together. If Technology 1 is better at reducing PM than Technology 2, and Technology 2 is better at reducing CO than Technology 1, the EPA would have to choose which of the two technologies to factor into emission standards. In such situations, Senator Durenberger anticipated that the “EPA should judge MACT to be the technology which best benefits human health and the environment on the whole.” Id. The Industry Petitioners argue this statement demonstrates that Congress intended the EPA to make an overall determination of which units are the best performing “on the whole.” Senator Durenberger’s statement does not support this broad principle. The statement merely explains that, where two technologies cannot be used together, the EPA should base MACT standards on the technology it considers best overall. Here, the Industry Petitioners do not identify any relevant control technologies that are mutually incompatible. Indeed, the EPA found in the CISWI Rule that “there is no technical reason why [the] air pollution control systems cannot be combined.” 2011 CISWI Rule, 76 Fed. Reg. at 15,721; see also 2011 Major Boilers Rule, 76 Fed. Reg. at 15,623 (“All available data for boilers and process heaters indicate that there is no technical problem achieving the floor levels contained in this final rule for each HAP simultaneously, using the MACT floor technology.”). There is thus no reason to believe that the EPA’s current MACT floor standards cannot be achieved. Instead, the Industry Petitioners merely insist that no units currently meet the EPA’s new unit standards with regard to every regulated 44 pollutant in certain subcategories, and only a few sources meet all of the standards for existing units in the same subcategories. But, if the statute permits the EPA to determine which units are best on a pollutant-by-pollutant basis—and it does—then the EPA’s choice to adopt that approach does not become unlawful merely because few or no units have achieved those standards for all pollutants. Finally, the Industry Petitioners argue that even if the pollutant-by-pollutant approach is reasonable in some circumstances, it is arbitrary and capricious as applied to certain SRIs because it exacerbates certain problems posed by the “batch” nature of SRIs. As explained at infra § III.E, SRIs burn waste in small batches. According to the Petitioners, this means that the SRIs that the EPA identified as best performing were, in reality, burning cleaner waste at the time emissions testing was done; they were not actually better than other units at removing or destroying waste. The pollutant-by-pollutant approach, the Industry Petitioners argue, “simply captures the results from units that happened to be burning wastes with low levels of that particular pollutant during testing,” and this reality makes it harder for SRI units to meet emission standards for all pollutants at the same time. No. 11-1125 Indus. Pet’rs’ Reply Br. 8 (emphasis omitted). This argument fails because the Industry Petitioners have not demonstrated that the Agency considered impermissible factors, failed “to consider important aspect[s] of the problem,” or offered an unreasonable explanation for its decision when setting the MACT floors for SRIs. See State Farm, 463 U.S. at 43. Rather, their argument is a back-door attempt to challenge the Agency’s alleged failure to consider waste inputs, which we reject below at infra § III.E. 45 Petitioners have also not shown that it is infeasible for the SRI units to meet the MACT floor standards or that any individual pollutant standard was not achieved in practice by an existing SRI unit. They merely assert, without evidence, that no existing unit burning high sulfur garbage can match the SO2 performance achieved by the unit the EPA used to set SO2 standards because that latter unit was burning low sulfur waste at the time of the emissions testing. But MACT floors are not unreasonable simply because they are difficult to achieve in practice. As such, we find the EPA’s pollutant-bypollutant approach to be a reasonable interpretation and application of the statute, and deny the Industry Petitioners’ challenge to the EPA’s use of this approach.
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
Section 7429 regulates combustion units that burn solid waste; units that do not burn solid waste will generally be regulated under section 7412. RCRA defines the term “solid waste” to mean (in part) “discarded material . . . resulting from industrial [or] commercial . . . operations.” 42 U.S.C. § 6903(27); see id. § 7429(g)(6) (directing that “solid waste” carry “the meanings established by the Administrator pursuant to” RCRA). On the same day the EPA issued a rule setting emission standards for CISWI, it issued a separate rule fleshing out the meaning of solid waste in the context of combustion units. See NHSM Rule, 76 Fed. Reg. at 15,456. The NHSM Rule generally provides that “non-hazardous secondary materials that are combusted are solid wastes,”14 subject to several exceptions and exemptions. 40 C.F.R. § 241.3(a). Among the exceptions, non-hazardous secondary materials that meet certain “legitimacy” criteria do not qualify as solid waste. See id. § 241.3(b), (d). Source owners and operators may also seek a finding from the EPA that particular materials do not constitute solid waste when combusted by a third party. Id. § 241.3(c). And the rule exempts altogether a variety of materials from the definition of solid waste, including “traditional fuels.” Id. § 241.2. The NHSM Rule is self-implementing: each source owner or operator must determine whether combusted materials meet the definition of solid waste. See 2011 CISWI Rule, 76 Fed. Reg. at 15,740. To ensure that owners and 14 The NHSM Rule defines non-hazardous secondary material to “mean[] a secondary material that, when discarded, would not be identified as a hazardous waste.” 40 C.F.R. § 241.2. 54 operators “review and apply” the NHSM Rule and its exceptions, the EPA issued strict recordkeeping requirements. Id. Owners and operators who determine the secondary materials they combust are not solid waste must “keep a record” justifying that decision. 40 C.F.R. § 60.2175(v). Failing to file records carries consequences. For units combusting discarded material other than traditional fuels, the failure to “keep and produce records” results in the determination that “the operating unit is a CISWI unit.” Id. §§ 60.2265, 60.2875 (containing an identical provision). Industry Petitioners challenge this last provision of the CISWI Rule.15 They argue that the EPA cannot automatically treat units that fail to keep certain paperwork as CISWI units. Section 7429 permits regulation of “solid waste incineration units”—not units whose owners fail to file paperwork. As a result, the Industry Petitioners ask this court to invalidate the regulatory provision as exceeding the EPA’s statutory authority.16 We decline the invitation. At Chevron’s first step, we find that “Congress did not speak directly, let alone clearly, to 15 In their reply brief, the Industry Petitioners clarify that they do not challenge the EPA’s authority to require sources to keep records. 16 The Industry Petitioners also argue the EPA arbitrarily failed to provide sufficient notice of the recordkeeping presumption. We disagree. The Industry Petitioners had sufficient notice of the CISWI Rule, which was promulgated after notice and comment and “give[s] fair warning of the conduct it prohibits.” Gen. Elec. Co. v. EPA, 53 F.3d 1324, 1328 (D.C. Cir. 1995) (quoting Gates & Fox Co. v. OSHRC, 790 F.2d 154, 156 (D.C. Cir. 1986)). 55 this issue.” Am. Chem. Council v. EPA, 337 F.3d 1060, 1064 (D.C. Cir. 2003). Section 7429 regulates “solid waste incineration units,” a phrase that Congress defined “plainly and broadly to include ‘a distinct operating unit of any facility which combusts any solid waste material from commercial or industrial establishments or the general public.’” NRDC I, 489 F.3d at 1257 (emphasis omitted) (quoting 42 U.S.C. § 7429(g)(1)). In NRDC I, we vacated an earlier iteration of the CISWI Rule that narrowed the scope of that definition beyond what its language would bear. See id. at 1257-58. When the Congress commanded the EPA to regulate units that burn “any” solid waste, the Congress meant what it said. See id. In this case, the EPA included within the revised CISWI Rule a presumption designed to enforce the Congress’s command. Section 7429 nowhere addresses whether the EPA may establish presumptions to ensure its regulations reach all sources burning solid waste. At the same time, the Congress plainly intended the EPA to regulate sources burning “any” solid waste, a goal presumably advanced by the recordkeeping presumption. See id. Against that backdrop, we cannot conclude that the presumption offends the text or purpose of section 7429. Moving to Chevron’s second step, we conclude the recordkeeping presumption is reasonable. In American Chemistry Council, we upheld a regulation issued under RCRA defining hazardous waste to include any mixture or derivative of hazardous substances. See 337 F.3d at 1064-65. “[B]ecause many mixtures of and derivatives from hazardous wastes are themselves hazardous, it [was] reasonable for the EPA to assume that all such mixtures and derivatives are hazardous until shown otherwise.” Id. at 1065. In that 56 context, it made good sense for the EPA to “[p]lac[e] the burden upon the regulated entity” to show that a given substance lacked “hazardous characteristic[s].” Id. Similar reasoning applies here. The EPA crafted the presumption to reach sources likely to be burning solid waste, namely, those burning discarded materials other than traditional fuels. See 42 U.S.C. § 6903(27) (defining “solid waste” to include, among other things, “discarded material”); 40 C.F.R. § 241.2 (exempting traditional fuels, defined as “materials that are produced as fuels . . . that have not been discarded,” from the definition of solid waste). Such sources are subject to strict recordkeeping requirements. See 40 C.F.R. § 60.2175(v). Within those confines, placing the burden on unit operators who have the mandatory obligation and the information to establish their non-regulable status is reasonable. Cf. Am. Chem. Council, 337 F.3d at 1065. There is, however, a difference between the presumption in this case and the one we upheld in American Chemistry Council. The CISWI recordkeeping presumption appears to turn on the failure to file paperwork, rather than the presence of a regulated substance. However broadly the Congress defined “solid waste incineration unit” in section 7429, the Congress did not allow for the regulation of non-waste burning sources—even when those sources fail to file paperwork. Indeed, had the EPA attempted to regulate sources based purely on a failure to file paperwork, we may well have reached a different conclusion. But the CISWI presumption does not stretch so far. As explained, the presumption depends on factors beyond the mere failure to keep records. Sources subject to the presumption burn materials likely to qualify as solid waste, 57 and must satisfy demanding recordkeeping requirements. The EPA acted reasonably when it presumed such sources were burning solid waste. Despite the provision’s narrow reach, the Industry Petitioners fear it will sweep up sources not burning solid waste. To the extent that possibility exists, sources wrongfully regulated as CISWI have multiple forms of recourse. Most obviously, sources can prepare and file the records they were already required to make under 40 C.F.R. § 60.2175(v). They can also avail themselves of procedures designed to identify non-waste materials in 40 C.F.R. § 241.3. The existence of these safety valves calms concerns that the presumption will regulate non-waste burning sources. We therefore reject the Industry Petitioners’ challenges to the recordkeeping presumption.17
The EPA regulated SRIs as a subcategory in the CISWI Rule. See Memorandum from Eastern Research Group, Inc., to Toni Jones, U.S. Environmental Protection Agency, CISWI Emission Limit Calculations for Existing and New Sources for the Reconsideration Final Rule (Jones Mem.) (Nov. 16, 2012) (No. 11-1125 J.A. 1159, 1162). There are 28 SRI units, 17 The Industry Petitioners also contend that the CISWI Rule functions as a form of injunctive relief in violation of 42 U.S.C. § 7413(a). That is incorrect. The provision is neither styled nor operated as a form of injunctive relief. Cf. 42 U.S.C. § 7413(a) (permitting the Administrator to issue, among other forms of relief, “an administrative penalty order” or “an order requiring [a person in violation of EPA regulations] to comply with such requirement or prohibition”). 58 all of which are located in Alaska, and the EPA had emissions data for nine of them. Id. As explained supra § I.B.3, the EPA used the pollutant-by-pollutant approach to establish MACT emission standards for these units. For new-unit standards, the EPA determined which of the nine units had the lowest emissions for a particular pollutant and set the MACT floor for that pollutant at the level achieved by the identified unit. See 42 U.S.C. § 7429(a)(2) (explaining that MACT floors for new units must be set at “the emissions control that is achieved in practice by the best controlled similar unit”). When setting MACT floors for existing units, the EPA had to calculate the average level of emissions achieved by the best performing 12 per cent of units. See id. It therefore determined which four sources had the lowest emissions for a given pollutant and set the emissions standard for that pollutant at the average level achieved by those four units. The Industry Petitioners argue that the EPA’s approach was unlawful because it failed to account for the unique role that waste inputs play in emissions from SRIs. Unlike larger incinerators, SRIs burn small batches of waste at a time. Some batches include cleaner waste, such as wood and cardboard, while others include waste, such as sewage, that generates large quantities of SO2 and other pollutants. Moreover, existing SRIs cannot use certain “end-of-stack” control technologies like wet scrubbers due to the Alaskan climate. The Industry Petitioners thus contend that emissions from SRIs are more closely tied to waste input than are emissions from other types of incinerators. This difference, they assert, required the EPA to take into account, when determining which SRI units were best performing for MACT floor purposes, the kind of waste an SRI unit was burning at the time of testing. Because the Agency did not do so, the 59 Industry Petitioners contend the MACT standards for SRIs are arbitrary and capricious. We disagree. To support their challenge, the Industry Petitioners advance two arguments, neither of which has merit. Petitioners first point to section 7429(a)(3), which directs the EPA to base emission standards on “methods and technologies for removal or destruction of pollutants before, during, or after combustion.” 42 U.S.C. § 7429(a)(3). According to the Industry Petitioners, this language requires the EPA to identify best performing units for MACT purposes by considering which units are best at removing or destroying pollutants. The Industry Petitioners assert that the Agency did not do this. Instead, they contend, the EPA set standards without regard to whether that unit happened to be burning cleaner waste. And, according to the Industry Petitioners, remote incinerators in Alaska cannot control their waste inputs because the core purpose of SRIs is to burn waste that is impracticably far from municipal landfills. The fact that emissions levels varied dramatically during test runs for the SRI units, they claim, is thus the result of random variance in the type of waste the unit was combusting, rather than any “method” or “technology” aimed at “removing” or “destroying” pollutants. The EPA responds that the approach it adopted for SRIs complies with section 7429(a)(3) because “waste segregation”—that is, diverting dirtier waste to landfills and burning only cleaner waste—is a “method . . . for removal . . . of pollutants before . . . combustion.” See 42 U.S.C. § 7429(a)(3). In fact, during notice and comment, the EPA estimated that many SRIs would choose to comply with the MACT standards by segregating their waste instead of by installing expensive control technologies. See Jones Mem. 60 The Agency also determined that waste segregation was possible for SRIs because their waste often contained materials that could be recycled. Id. Finally, the Agency factored in any additional variance in emissions from these units by calculating the MACT floors according to the UPL formula described at supra §§ I.B.1.a, IV.C. For these reasons, the Agency contends, it did not need to consider further any variation in emissions that might be caused by differences in waste inputs for SRIs. The EPA has the better argument, based on both text and precedent. Textually, waste segregation plainly can be a “method[]” for “removal” of pollutants “before” combustion. See 42 U.S.C. § 7429(a)(3). Accordingly, the EPA, when setting MACT floors, could not have looked solely to technologies used to reduce emissions during combustion. Accord Sierra Club v. EPA (Sierra Club II), 479 F.3d 875, 883 (D.C. Cir. 2007) (per curiam). Instead, the plain language of section 7429(a)(3) requires the Agency to consider whether emission reductions can be achieved by non-combustion-related controls such as using cleaner fuels or waste inputs. Accord id. The statute supports the approach that the Agency took here. Our holding in Sierra Club II confirms that our conclusion is correct. In that case, the EPA had acknowledged that kilns emitted lower levels of pollutants when burning cleaner clay but nevertheless based MACT standards only on the emission reductions achieved by control technology during the combustion process. Id. at 882. The Agency explained that clean clay existed only in certain areas and that transportation of the clay over long distances was impractical. Id. The EPA therefore considered only those emission reductions that were attributable to “deliberate steps 61 kiln operators [took] to reduce emissions rather than to the ‘happenstance’ of being located near cleaner clay.” Id. at 883. But we rejected that approach, finding that “the Clean Air Act requires neither an intentional action nor a deliberate strategy to reduce emissions.” Id. Instead, where “nontechnology factors” affect emission levels, we held the EPA must consider those effects when setting MACT floors. Id. Applying that same reasoning, the EPA acted reasonably when it decided to consider the emissions reduction that could be achieved by waste segregation in SRI units before combustion. This is true even if an element of “happenstance” plays into an SRI unit’s ability to segregate its waste. And, had the EPA instead determined that the best performers were those SRI units that most effectively reduced pollutants only during combustion, as the Industry Petitioners suggest, the resulting MACT standards may have run afoul of our holding in Sierra Club II. We cannot, as a result, find the Agency’s choice to avoid that outcome unreasonable. The Industry Petitioners’ second argument also comes up short. According to Petitioners, the EPA selected the best performers for SRIs merely because those units happened to be burning batches of cleaner waste at the time of the emissions test. They claim this happenstance resulted in test data that did not reasonably estimate the typical performance of the units, and thus misidentified the best performers. See Cement Kiln, 255 F.3d at 862 (finding that although the EPA has authority to estimate which units perform best, its methodology must “provide[] an accurate picture of the relevant sources’ actual performance”). Petitioners further argue that the Agency’s use of the UPL method to account for variability did not fix this problem because the EPA applies that method only after identifying the best performers. 62 If the record supported this argument, it might well be persuasive; in NACWA, we accepted a similar contention that the EPA’s dataset for determining MACT floors must fairly represent a unit’s typical performance. See 734 F.3d at 1146. But the record here does not support the Industry Petitioners’ position. None of the evidence on which Petitioners rely can bear the weight they would have us place on it. First, Petitioners cite evidence indicating that XTO Energy, which operates the incinerator that the EPA deemed the best performer for SO2, was burning low-sulfur “waste wood, cardboard, and oily waste” during the relevant test runs. See ConocoPhillips Co., Comment on EPA’s Proposed National Emission Standards for Hazardous Air Pollutants, EPA-HQ-OAR-2003-0119 (Feb. 12, 2012) (No. 11-1125 J.A. 1036). But the record does not show that the resulting test data were unrepresentative of XTO’s typical performance because the record says nothing about what XTO typically burns. Id. Second, Petitioners note that Drift River, the unit the EPA deemed the worst performer for SO2, had emissions results similar to XTO Energy’s when burning low-sulfur waste, but results over 1,000 times higher when burning highsulfur waste. See id. (No. 11-1125 J.A. 1032-33). But again, the record does not say anything about the type of waste Drift River typically burns or its sulfur content; it merely demonstrates that the unit’s test results varied greatly from one run to the next. See id. Third, Petitioners point to additional test data they provided for the Kuparuk unit, a source that met the EPA’s MACT standards for NOx. See id. (No. 11-1125 J.A. 1017, 1027-28). They claim this data shows that the Kuparuk unit 63 “consistently” emits NOx levels exceeding that standard when burning sewage sludge. Id. This claim is both factually untrue—as the data reveals exceedances on only one day— and says nothing about whether the test data that the EPA used was representative of Kuparuk’s typical performance. Id. Instead, the record supports the EPA’s assertion that it gave Petitioners “multiple opportunities” to present data on the variability of waste streams for SRIs, but Petitioners never provided a reasonable empirical basis upon which the Agency could adjust the MACT standards due to this variability. The Industry Petitioners have thus not met their burden to show that the EPA’s test data was unrepresentative of SRI units’ actual or typical performance. In sum, no record evidence suggests that the current SRI emission standards are not achievable. The Industry Petitioners instead offer only general statements about the “small batch” nature of SRIs and the difficulty of using waste segregation or other controls in remote locations. These factors alone do not call into question the EPA’s assertion that controls such as waste segregation and technology upgrades are a feasible means of achieving compliance with the MACT floors that it established. See 2011 CISWI Rule, 76 Fed. Reg. at 15,730 (explaining that the MACT floors will require SRIs to employ “the best demonstrated technologies that are technologically feasible at these facilities,” such as afterburners and waste segregation, and noting that such controls “are sufficient to meet the MACT floor limits”). As a result, the EPA’s action here was reasonable; the Agency did not need to account further for waste stream variance in setting MACT floor standards for these SRI units. 64
In setting MACT standards for major boilers, the EPA used carbon monoxide (CO) as a surrogate for several of the HAPs that the Agency was required to regulate. A surrogate is another chemical that stands in as a proxy for the regulated HAP when the EPA sets numeric emission standards. The EPA regulates the surrogate in order to regulate the HAP, sometimes because the HAP itself is too difficult to measure. We have previously approved the use of surrogates where the EPA’s choice of a surrogate for the HAP is “reasonable.” See, e.g., Nat’l Lime Ass’n, 233 F.3d at 637. Here, the Industry Petitioners claim the EPA’s use of CO as a surrogate was not reasonable for a particular type of emissions— organic HAP emissions from coal-fired boilers—for two reasons. First, the EPA based the MACT standards on datasets that contained numerous “non-detects” for these organic HAPs. Second, the Agency failed to explain why it used CO as a surrogate for major boilers, but used workpractice standards to regulate similar emissions from other types of boilers in another rule. We find no merit in either argument and, accordingly, deny this challenge. The Industry Petitioners base their first argument on a deficiency in the EPA’s dataset for coal-fired boilers’ emissions—i.e., the dataset contained numerous “non-detects” for organic HAP emissions. A test result is considered a “non-detect” when emissions testing returns a value below that which the test methods are capable of detecting. According to the Industry Petitioners, multiple non-detects in a dataset demonstrate that it is “not feasible” to set a numeric emission standard for the affected HAP. As a result, they argue, the EPA should have set work-practice standards for 65 these HAPs under section 7412(h)(2), which permits the EPA to set such standards when it is “not feasible” to set a numeric emission standard. See 42 U.S.C. § 7412(h)(2). This argument fails because Petitioners have not explained how the non-detects here made setting numeric emissions “not feasible,” as that term is defined in the CAA. The CAA expresses a clear preference for MACT emission standards and limits the EPA’s ability to fashion more flexible work-practice standards. Compare id. § 7412(d)(3) (providing that emission standards “shall not be less stringent” than the MACT floor), with id. § 7412(h)(1) (permitting work-practice standards only if MACT standards are “not feasible”). To set a work-practice standard for these emissions, in fact, the EPA would need to find that it is infeasible to set a numeric standard for a particular HAP. Id. § 7412(h)(1). And, as relevant here, the statute defines setting a numeric standard as “not feasible” where “the application of measurement methodology to a particular class of sources is not practicable due to technological and economic limitations.” Id. § 7412(h)(2)(B). This is a high bar and Petitioners have not demonstrated that the non-detects they have identified meet it. During notice and comment, the Agency reasonably explained that non-detects are present in many of its datasets because they are inherent to the imprecision associated with measuring boiler emissions. See, e.g., 2011 Major Boilers Rule, 76 Fed. Reg. at 15,623. The EPA’s scientific conclusion that its data was nevertheless sufficient to set numeric standards receives an “extreme degree of deference.” Kennecott Greens Creek Mining Co. v. Mine Safety & Health Admin., 476 F.3d 946, 954-55 (D.C. Cir. 2007) (quotations omitted). And the Industry Petitioners never explain here why the particular 66 level of non-detects found in this dataset nevertheless made a numeric standard infeasible. Although the Industry Petitioners point to several comments asserting that no coalfired boiler could meet the current numeric standards in all HAP categories, these general comments say nothing about the relevant question under the statute: whether it was feasible to establish numeric standards for organic HAP emissions in light of the non-detects in the coal-fired boiler datasets. We also reject the Industry Petitioners’ second argument that the EPA needed to explain why it established workpractice standards for other types of boilers in the unrelated “Utility MATS” rule. We take an “every tub on its own bottom” approach to the EPA’s setting of emission standards pursuant to the CAA. Sierra Club I, 353 F.3d at 986. The adequacy of the underlying justification offered by the Agency is what matters in an arbitrary-and-capricious review—not what the Agency did on a different record concerning a different industry. Id. As a result, we cannot find that it was unreasonable for the EPA to use CO as a surrogate in setting numeric standards for coal-fired boilers on this basis. Nor can we find that the EPA was required on reconsideration to explain the discrepancy between its approach to organic HAP emissions in these two rules, as Petitioners assert. See id. at 987 (“EPA could have noted where the bases for its decision in this case differed from those with respect to other decisions in other cases, as was done in the EPA’s brief to this court . . . but such explanations are not required given the different contexts of the various rulemakings.”). 67
In the Major Boiler Rule, the EPA chose not to exercise its discretion to create more lenient emission standards for hydrogen chloride (HCl) based on health. The Industry Petitioners challenge this decision as arbitrary and capricious because, they claim, the Agency considered impermissible factors in reaching the decision and departed from its previous position without adequate justification. We disagree and hold the EPA reasonably chose not to establish a health-based emissions limitation for HCl. The EPA generally must establish emission standards for all listed pollutants emitted from a source category based on what the best performing similar sources have achieved, i.e., the MACT floor. The Agency, however, may consider adopting alternative health-based emission standards—which are more lenient—for pollutants with an established health threshold. See 42 U.S.C. § 7412(d)(4). The statutory language permitting these alternative standards is discretionary, providing that “[w]ith respect to pollutants for which a health threshold has been established, the Administrator may consider such threshold level, with an ample margin of safety, when establishing emission standards under this subsection.” Id. (emphasis added). But, even if the EPA considers, in its discretion, a health-based emission standard, the statutory text nowhere requires that the EPA adopt a more lenient standard than the MACT floor. This provision thus allows, but does not require, the EPA to adopt a standard more lenient than the MACT floor, subject to two critical restrictions: the Agency must determine (1) that there is an established health threshold, and (2) that the established threshold would provide “an ample margin of safety.” 68 Using this authority, the EPA considered and adopted health-based emission standards for HCl in an earlier rulemaking for major boilers. See 2004 Boilers Rule, 69 Fed. Reg. at 55,240-41. At the time, the Agency based its decision on three key findings: a health threshold was established for HCl, adverse health effects were unlikely at emissions below that level, and low HCl emissions from major source boilers made HCl a “particularly well-suited” candidate for more lenient standards. Id. at 55,241. The EPA also said, however, that it was not embracing a general policy for HCl, but would instead “undertake in each individual rule to determine whether it is appropriate to exercise [the Agency’s] discretion” to adopt such standards. Id. We later vacated that rule without considering the merits of the EPA’s HCl decision. See NRDC I, 489 F.3d 1250. The EPA again chose to consider a health-based standard for HCl in the current rulemaking, but this time declined to set such a standard. 2010 Major Boilers Rule, 75 Fed. Reg. at 32,030. The EPA explained that it continued to interpret its authority under section 7412(d)(4) to require that it find a health threshold exists, with an ample margin of safety, before using its discretion to depart from an established MACT floor. Id. The Agency reasoned further that, even if it made a finding that a health threshold exists, the discretionary nature of the authority allowed it to weigh additional factors when choosing whether to adopt the more lenient health-based standard. Id. Those factors included: the potential for cumulative adverse health effects due to concurrent exposure to other HAPs or emissions from other nearby sources; potential impacts of increased emissions on ecosystems; and reductions in emissions of other pollutants, also known as “co-benefits,” achieved through enforcement of the HCl MACT floor. Id. at 32,030-31. 69 Applying this interpretation, the EPA suggested in its proposed rule that a health-based standard for HCl might not be appropriate because these additional health and environmental considerations cautioned against a more lenient emission standard. Id. at 32,031. The Agency acknowledged, in particular, that its decision in the 2004 rule was based on data that considered only the chronic respiratory effects of HCl exposure. Id. While affirming the validity of those findings, the EPA explained that those chronic impact studies did not consider the additional variables it had now identified, nor did it consider the potential acute or carcinogenic effects that might be caused by HCl exposure. Id. And, because of these potential (though unproven) risks, the Agency resolved that it currently lacked sufficient information to establish an HCl emission standard that would protect health with an ample margin of safety. Id. It thus requested additional data from stakeholders and the regulated community to help address its concerns, including information regarding the potential cumulative effects of HCl emissions from boilers and other nearby sources. Id. After receiving numerous comments on the issue, the EPA declined to set a health-based standard in the final rule for two primary reasons: (1) the comments had not provided sufficient data on potential cumulative health and environmental effects caused by HCl emissions from boilers and other nearby sources; and (2) the comments affirmed the potential co-benefits that limiting HCl emissions might have in lowering emissions of other HAP and non-HAP pollutants. 2011 Major Boilers Rule, 76 Fed. Reg. at 15,643-44. According to the EPA, its consideration of these co-benefits was not a regulation of other pollutants; rather, it was simply choosing not to ignore the purpose of the CAA—to reduce the negative health and environmental effects of HAP 70 emissions—when exercising its discretionary authority under the Act. Id. at 15,644. The Industry Petitioners contend that the EPA’s consideration of the broad potential health and environmental impacts of HCl rendered the Agency’s decision arbitrary and capricious. In particular, they argue that the Agency based its decision on two impermissible factors that were not supported by the record: (1) the potential cumulative effects of emissions from boilers and other nearby sources, and (2) the co-benefits of setting a more stringent MACT floor standard for HCl. We disagree on both counts. The statutory text and purpose of section 7412(d)(4) amply support the Agency’s decision to consider potential cumulative risks associated with emissions from boilers and other nearby sources. Although other CAA provisions require the EPA to set emission standards based on the emissions from a particular source, section 7412(d)(4)’s plain language is not focused on emissions from any particular source. Compare 42 U.S.C. § 7412(d)(3) (instructing the EPA to set emission standards for sources at the level achieved in practice by the best controlled similar source), with id. § 7412(d)(4) (containing no mention of emissions from a particular source). The EPA’s consideration of the cumulative impacts from these emissions is also relevant to the Agency’s statutory mandate to ensure that a health threshold would protect health with an “ample margin of safety.” As such, the Agency had discretion to consider the potential risks associated with the cumulative emissions of boilers and other nearby sources under this provision. The EPA was likewise free to consider potential cobenefits that might be achieved from enforcing the HCl 71 MACT floor. Section 7412(d)(4)’s text does not foreclose the Agency from considering co-benefits and doing so is consistent with the CAA’s purpose—to reduce the health and environmental impacts of hazardous air pollutants. The Agency was under no obligation to ignore the CAA’s purpose in making a final decision on whether to exercise a discretionary authority. The Industry Petitioners attempt to refute this straightforward conclusion by pointing to “restrictions” in another provision, section 7412(d)(2). No. 11-1108 Indus. Pet’rs’ Br. 55-56. This provision requires the EPA to consider costs, non-air quality health and environmental impacts, and energy requirements in setting maximum achievable emission standards. Petitioners contend that these same “restrictions” must be read into section 7412(d)(4). But, even if we assume Petitioners are correct that these factors restrict the Agency’s ability to consider other factors under section 7412(d)(2), that provision furthers the statute’s command to set the strictest possible emission standards above what has already been achieved (i.e., the MACT floors). Section 7412(d)(4), by contrast, is a permissive authority for the EPA to abandon already achieved emission standards. We do not read limits on the EPA’s authority to set more stringent standards into a provision laying out the EPA’s authority to set more lenient standards. If anything, the difference between the provisions cuts the other way. Section 7412(d)(4) does not specify the factors that Petitioners argue for, while section 7412(d)(2) does. This difference shows that Congress knew how to provide such limits where it found them necessary. We thus find no basis to conclude that the EPA could not consider potential cumulative effects or co-benefits in rejecting a more lenient health-based HCl standard. 72 Finally, the Industry Petitioners claim that the EPA’s decision was arbitrary because the Agency failed to support its reversal from the 2004 rule, in which it set health-based emission standards for HCl. Because the EPA changed its position, the Petitioners contend that the Agency had to present factual support for its decision to disregard the facts and circumstances that underlay its prior adoption of a healthbased HCl standard. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 516 (2009). The Agency failed to do this, Petitioners say, because it relied on a data gap regarding the potential cumulative effects of HCl exposure. But this argument fares no better than Petitioners’ first. At the outset, Petitioners misstate the EPA’s burden to justify its change in policy. Although an agency does not generally need to provide a more substantial explanation or reason for a policy change than for any other action, it must do so where “its new policy rests upon factual findings that contradict those which underlay its prior policy.” Id. at 515. In that circumstance, “it is not that further justification is demanded by the mere fact of policy change; but that a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy.” Id. at 515-16. The EPA, therefore, was not required to refute the factual underpinnings of its prior policy with new factual data. The Agency only needed to provide a reasoned explanation for discounting the importance of the facts that it had previously relied upon. Id. The EPA did so here by explaining that its prior decision focused too narrowly on the chronic respiratory effects of HCl emissions without considering the broader implications of such emissions on health and environmental conditions. See 2010 Proposed Major Boilers Rule, 75 Fed. Reg. at 32,03073 31. In so doing, the EPA neither contradicted nor abandoned the factual findings it made in its earlier rulemaking. It instead acknowledged that those findings were more limited than what it now considered necessary to justify the exercise of its discretion to set a health-based standard. Id. For example, the Agency noted that: (1) little research had been done on HCl’s carcinogenicity or on the toxicity of mixtures of HCl and other respiratory irritants emitted from boilers; and (2) the Agency had no data about peak short-term emissions of HCl from major boilers that might create risks of acute exposure. Id. These enumerated concerns were sufficient to support the Agency’s decision not to adopt a health-based standard. Section 7412(d)(4) does not require that the EPA present affirmative factual data to reject a health-based standard. The provision requires just the opposite: in order to impose a health-based standard, the Agency must find that a health threshold can be set that provides an ample margin of safety. The EPA here determined that it could not do so, in part because it lacked relevant data like that discussed above. 2011 Major Boilers Rule, 76 Fed. Reg. at 15,643-44. In other words, the EPA could not determine that any health threshold would provide an ample margin of safety to protect health. Without such a finding, the EPA could not invoke its discretionary authority under the statute. Id. There was thus nothing impermissible in the EPA’s reliance on a lack of data in rejecting a more lenient health-based standard. The EPA’s decision not to adopt health-based emission standards for HCl was not arbitrary and capricious. 74
IN ONE FACILITY Certain industry entities urged the EPA to allow facilities with more than one CISWI unit to demonstrate MACT compliance by showing that the average HAP emissions across all units at that location fell under the relevant cap. They pointed to the EPA’s allowance of emissions averaging in the Major Boilers Rule but the Agency defended its disparate treatment because, in its view, “[t]he applicability of CISWI is such that each unit is an affected facility.” See 2011 Proposed CISWI Rule on Reconsideration, 76 Fed. Reg. at 80,463. It subsequently elaborated that it did “not believe [it has] the legal authority to allow emissions averaging in CISWI or under section [7429] generally because each individual unit is an affected facility.” CISWI Rule— Responses to Comments, at 195-96. The Industry Petitioners challenge the disallowance of facility-wide averaging for CISWIs, arguing that “unit” cannot mean “facility” because section 7429(g)(1) defines “solid waste incineration unit” as “a distinct operating unit of any facility” and therefore the EPA’s rule fails Chevron step 1. They also argue the EPA’s conflation of “unit” and “facility” is unreasonable, and thus violates Chevron step 2, because the EPA has allowed emissions averaging in a different section 7429 rule and in a number of section 7412 rules. Although the Industry Petitioners’ point is well taken— the plain terms of the CAA foreclose the EPA’s conflation of a CISWI “unit” and “affected facility,” see 42 U.S.C. § 7429(g)(1) (“facility” is comprised of “units”)—we agree that the EPA has no statutory authority to allow emissions 75 averaging under section 7429.18 Section 7429 requires the EPA to regulate emissions from all “solid waste incineration units,” 42 U.S.C. § 7429(a)(2); see also id. § 7429(a)(4), and the CAA defines a “solid waste incinerator unit” as “a distinct operating unit” of a “facility,” id. § 7429(g)(1) (emphasis added). In other words, because the CAA mandates that the EPA regulate each “distinct” CISWI unit in a “facility,” the EPA cannot allow emissions averaging of all CISWI units in a facility. See id. For this reason, the Industry Petitioners’ Chevron challenge fails, notwithstanding the EPA’s minimal explanation set forth in its proposed CISWI Rule. It is axiomatic that an agency must “articulate[] an adequate explanation for its action,” Int’l Fabricare Inst. v. EPA, 972 F.2d 384, 389 (D.C. Cir. 1992) (emphasis added); see also State Farm, 463 U.S. at 48, but the EPA’s failure to do so here cannot create statutory authority that does not exist. And because the EPA has no authority under section 7429 to allow emissions averaging of multiple CISWI units in one facility, the Petitioners’ Chevron argument does not carry the day.19 18 The EPA does have statutory authority under section 7412 to allow facility-wide emissions averaging in the Major Boilers Rule. See 42 U.S.C. § 7412(a)(1) (“major source[s]” defined as “any stationary source or group of stationary sources located within a contiguous area and under common control” (emphasis added)); see also id. § 7411(a)(3) (“stationary source” defined as “any building, structure, facility, or installation which emits or may emit any air pollutant”). 19 The EPA concedes that it once allowed, in a different rule, emissions averaging for units subject to section 7429 but has since concluded that it does not have the statutory authority to do so. Although the Industry Petitioners argue that the Agency arbitrarily 76