Opinion ID: 519994
Heading Depth: 3
Heading Rank: 1

Heading: CMA's Challenge to the BPT Subcategorization

Text: 186 CMA challenges the EPA's division of the OCPSF Industry into seven subcategories for the purpose of establishing BPT limitations on the ground that the subcategories are based on SIC-product groupings rather than wastewater characteristics or treatability. CMA argues that the EPA has created an inequity by grouping together plants with substantially different influent concentrations and subjecting them to the same concentration limitations, thereby requiring, in effect, a higher percent removal at plants with higher influent concentrations. 187 In Section 304(b)(1)(B), Congress listed several factors, in addition to cost, that the EPA shall take into account in determining BPT, including the age of equipment, the process employed, engineering aspects of treatment, process changes, and non-water-quality environmental impacts. 133 Based on these factors, the EPA determines whether plants within an industry should be assigned to a subcategory subject to more particularized regulations than the industry as a whole. 188 However, the EPA is required to create a separate subcategory for a group of plants only when they are so fundamentally different from other plants on which the limitations are based that they cannot practicably achieve the effluent limitations achieved by the average of the best plants in the industry. 134 The EPA has considerable discretion in evaluating these factors; it is enough that the EPA considered the relevant factors and reached a rational conclusion about them. 135 The Agency's task is to establish numerical standards limiting effluent pollution, and it should concentrate on grouping plants that could meet the same limitations. 136 If plants can meet the same limitation, they need not be subcategorized simply because they are different. 137 189 The subcategories for the OCPSF industry are defined by generic types of OCPSF production. The EPA maintains that since a plant's chemical processes are closely related to the type of production in which it engages, the subcategorization bears a reasonable relationship to such chemical processes and the wastewater characteristics associated with those processes. 138 190 In making its decision to subcategorize the OCPSF industry for the purpose of its BPT regulations, the EPA analyzed several potential subcategorization factors, such as age of plant, temperature, and SIC-code classification of the plant, just to name a few. CMA disputes whether SIC codes actually have a relationship with BODS effluent concentration. They present a statistical analysis purportedly showing that SIC codes have no significant correlation with BODS effluent. CMA analyzed several categorization schemes, including the one retained by the EPA, and determined the value of R 2 , the coefficient of determination, for each. 139 CMA argues that the categorization scheme which was retained by the EPA has an R 2 of only 0.052, which is not significantly better than other rejected classification schemes. In fact, a random shuffling performed by CMA of BODS data with respect to SIC codes yielded an R 2 of 0.030 in the CMA analysis. This, argues CMA, supports its position that the classification scheme adopted by the EPA is arbitrary and capricious, since it is only slightly better than a random categorization scheme. CMA also criticizes the EPA's addition of allegedly irrelevant dummy variables to the EPA's R 2 analysis of its own model, the alleged effect of which was to artificially inflate the R 2 value. 140 191 We are of the opinion that the R 2 analysis presented by CMA is inconclusive. Though an R 2 analysis can be informative, it cannot of itself conclusively prove or disprove the adequacy of a particular categorization scheme. A good model may nonetheless have a small R 2 value if the spread of data points along the x-axis (horizontal axis) is small. 141 Thus, the fact that the R 2 value attributed to the SIC-code-based classification is relatively small (0.052) is an insufficient basis for us to conclude that the EPA's industrial classification is arbitrary and capricious. Moreover, the coefficient of determination, R 2 , is merely a limited indicator of model adequacy. Ultimately, we believe the EPA's explanation that SIC codes tend to be organized around the products produced by various segments of the industry, and that the type of product in turn influences the wastestream characteristics of those plants, to be a sufficient rationale upon which to uphold the EPA's classification scheme. 142 192 CMA further argues that analysis of its proposed subcategorization scheme based on influent BODS concentrations yields an R 2 of 0.42, which is higher than the R 2 value of the EPA's SIC-code-based plan (although not higher than the EPA analysis when the dummy variables are included). Therefore, argues CMA, the EPA should have subcategorized the OCPSF industry based on influent levels, as opposed to SIC codes. Again, we find this argument to be insufficient for the following reasons. First, it should be remembered that a large R 2 value does not conclusively prove that the variables are causally related. 143 Second, CMA provides a graph of its data points showing influent levels (x-axis) versus effluent levels (y-axis). There are two remote points in x-space on this graph, both with large influent and effluent levels. Data plots with such remote points tend to have much higher R 2 values even though the model is not necessarily superior, since those points exert a greater influence on the slope of the regression line than the points which are clumped together nearer the origin. 144 Moreover, if these points are bad values (due to error), their deletion may reduce the resulting value of R 2 . Although these points may just as well be valid measurements, this determination requires the exercise of discretion on the part of the analyst. It is unclear how CMA exercised its editing discretion in developing the model they presented, and in any event, the limited nature of CMA's regression analysis precludes us from mandating that EPA adopt CMA's model.