Environmental -- 2016

American Chemistry Council v. EPA   (D.C. Circuit)

Challenging EPA regulation of boilers for area sources (boiler GACT)

The NAM and other industry organizations filed a petition with a federal appeals court to review a final rule on hazardous air pollutants issued by EPA on Feb. 1, 2013, entitled “National Emission Standards for Hazardous Air Pollutants for Area Sources: Industrial, Commercial, and Institutional Boilers.” The rule was written to require "generally available control technologies" (GACT) or management practices to reduce emissions of hazardous air pollutants, taking into consideration the cost of achieving such reductions. Our petition, styled Council of Industrial Boiler Owners v. EPA, was consolidated by the court into the Louisiana Envtl. Action Network case and then into the American Chemistry Council v. EPA case.

Our group also filed a petition with EPA for administrative reconsideration of this regulation, along with two related rules involving air pollutants for major sources (boiler MACT, or maximum achievable control technologies) and commercial and solid waste incineration (CISWI) units.

On 4/17/2014, the NAM and others filed a reply brief in support of our motion that the court vacate all MACT standards that were developed using the Upper Prediction Limit (UPL) methodology in the Area Source Boiler Rules because all such standards were based on nine or fewer data points. The problem with EPA”s approach stems from the statutory requirement that it set emissions limits based on the best performing 12% of combustions units. EPA did not have sufficient data to property calculate an emissions standard based on this 12% requirement. Instead, it used the UPL methodology to estimate the emissions limits based on data gathered from only 9 units rather than a total of at least 26 units that it should have used to satisfy the 12% requirement. By asking for a voluntary remand, EPA is effectively conceding that the methodology used to calculate the UPL standards is flawed. EPA has conceded that its standards based on 9 or fewer data points are indefensible on the current record, and we argued that industry will be harmed if the standards are not vacated. We argued that pending EPA’s reconsideration, the rule should not remain in effect. Otherwise, companies will have to satisfy costly compliance obligations that may become obsolete at the conclusion of EPA’s reconsideration process.

On May 15, 2014, the D.C. Circuit denied our motion for affirmative relief but granted EPA’s motion to remand the emissions standards based on the UPL methodology. According to the remand, EPA had 60 days to provide further explanation of its use of the UPL methodology.

Full briefing in the case began with our main brief filed Aug. 26, 2014. In it, we argued that the EPA's energy assessment requirement is beyond the scope of its authority for several reasons. One is that the requirement reaches far beyond boilers to regulate virtually every piece of equipment at all affected facilities, including "process heating; compressed air systems; machine drive (motors, pumps, fans); process cooling; facility heating, ventilation, and air-conditioning systems; hot water systems; building envelope; and lighting; or other systems that use steam, hot water, process heat, or electricity provided by the affected boiler."

We also argued that EPA unlawfully failed to account for malfunctions when setting the rule's emission standards. The courts have repeatedly required EPA to account for malfunctions when setting technology-based standards, and EPA's standard is not reflective of what is achieved in practice by the best-performing existing sources.

We filed an additional brief 12/23/14 in support of some of EPA's decisions in this rulemaking. The agency appropriately set standards for certain sources, temporary boilers were properly excluded, it properly set generally available rather than maximum-achievable standards, and it reasonably exempted synthetic area sources with controls and federal limits.

On 1/21/15, we filed a brief replying to EPA and environmental group arguments. We reiterated that the energy assessment requirement is unlawful and that EPA has a duty to account for malfunctions when determining what the best performing sources can achieve. Its standards must apply to all phases of operation: startup, normal operations, shutdown, and malfunctions. Leaving malfunctions out of the analysis leads to unreasonably strict standards.

On July 29, 2016, the court rejected all industry arguments, finding that the EPA's approach was reasonable. It agreed with several challenges raised by environmental groups, and ordered EPA to issue a regulation for cyclonic burn barrels and determine whether regulation is required for 4 other categories of incinerators. It also ordered the agency to provide further justification for some of its decisions.

Related Documents:
Reply Brief of Industry Petitioners  (January 21, 2015)
Brief of Industry Intervenor-Respondents  (December 23, 2014)
Opening Brief of Industry Petitioners (incl. NAM)  (August 26, 2014)
NAM Reply Brief in support of motion for affirmative relief  (April 17, 2014)
NAM motion for affirmative relief  (March 13, 2014)
NAM Statement of Issues  (May 1, 2013)
Petition for Review  (April 2, 2013)


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