NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY and Gina McCarthy, Administrator, EPA, Respondents MaxWest Environmental Systems, Inc., et al., Intervenors.
Nos. 11-1131, 11-1167, 11-1185, 12-1236, 12-1237
United States Court of Appeals, District of Columbia Circuit.
Argued May 3, 2013. Decided Aug. 20, 2013.
Rehearing En Banc Denied Oct. 24, 2013.
734 F.3d 1115
James S. Pew argued the cause for petitioner Sierra Club. With him on the briefs was Jonathan A. Wiener.
Lisa Sharp argued the cause for intervenor MaxWest Environmental Systems Inc. With her on the briefs was D. Cameron Prell.
Michele L. Walter and Martha C. Mann, Attorneys, U.S. Department of Justice, argued the causes and filed the brief for respondents.
Jonathan A. Wiener argued the cause for respondent-intervenor Sierra Club. With him on the brief was James S. Pew.
Steven A. Hann, Jeffery A. Knight, and Peter H. Wyckoff were on the brief for respondents-intervenors National Association of Clean Water Agencies, et al.
Before: GARLAND, Chief Judge, BROWN, Circuit Judge, and SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge SENTELLE.
SENTELLE, Senior Circuit Judge:
In March 2011, the Environmental Protection Agency (“EPA“) issued a final rule establishing emission standards for sewage sludge incinerators under
The Clean Air Act cabins EPA‘s discretion in setting MACT standards, requiring EPA to base the standards on the emissions achieved by the best-performing existing incinerators. See
The petitioners challenge several different aspects of the rulemaking. Petitioners National Association of Clean Water Agencies and Hatfield Township Municipal Authority (collectively, “NACWA“) challenge EPA‘s authority to regulate sewage sludge incinerators under
For the reasons stated below, we deny NACWA‘s petition for review as to EPA‘s authority to regulate sewage sludge incinerators under
I. BACKGROUND
A. Statutory Background
The Clean Air Act requires EPA to set emission standards for polluting sources “to protect and enhance the quality of the Nation‘s air resources.”
Under
Congress set parameters governing EPA‘s establishing of the MACT standards, which EPA has implemented through a two-step process. First, EPA sets a baseline level of stringency for emissions controls known as the MACT floor. For new units, the MACT floor is the level of emissions control “that is achieved in practice by the best controlled similar unit,” as determined by EPA.
The Clean Air Act makes promulgating MACT standards under
For sources that are not “major sources“—defined in
B. Regulatory Background
Publicly-owned treatment works, owned by municipalities or regional authorities, are responsible for managing all sewage that enters into the sanitary sewer system. Publicly-owned treatment works first treat the wastewater, creating sewage sludge in the process, then use various methods to dispose of the sewage sludge. Many publicly-owned treatment works use sewage sludge incinerators to dispose of sewage sludge. EPA‘s inventory of sewage sludge incinerators stood at 204 at the time of the rulemaking. 76 Fed.Reg. at 15,387.
EPA proposed emission standards for sewage sludge incinerators in October 2010, asserting its authority under
1. Proposed Rule
On October 14, 2010, EPA issued a proposed rule proposing emission standards for sewage sludge incinerators. See Standards of Performance for New Stationary Sources & Emission Guidelines for Existing Sources: Sewage Sludge Incineration Units, 75 Fed.Reg. 63,260. In the preamble, EPA explained that although it had stated in other rules its intent to regulate sewage sludge incinerators under
In the proposed rule, EPA established two subcategories of sewage sludge incinerators: multiple hearth incinerators and fluidized bed incinerators. 75 Fed.Reg. at 63,268. EPA found that these were the only two types of incinerators used to combust sewage sludge, and determined subcategorization was warranted because thе combustion design for these two types of incinerators varied significantly. Id.
In proposing the MACT standards for the subcategories of incinerators, EPA extensively discussed the methodology it used to derive the MACT floors. See id. at 63,269-75. To select which units to survey for emissions data, EPA identified units equipped with the control technology that it believed would achieve the lowest emissions possible for the
For its dataset, EPA surveyed 9 municipalities, and supplemented the results of that study with data from State environmental agencies’ public databases, yielding emissions information from 5 fluidized bed incinerators and 20 multiple hearth incinerators, although EPA acknowledged that not every test contained information on all nine
EPA addressed this issue by explaining that it could use “statistical techniques to determine the minimum number of observations needed to accurately characterize the distribution of the best performing 12 percent of units in each subcategory.” Id.;
The proposed rule also discussed EPA‘s methods for addressing variability in the emissions data it collected. EPA bases its MACT standards on short-term emissions test data, which are not always “representative of the range of operating conditions that the best-performing facilities face on a day-to-day basis.” Id. at 63,269. Therefore, EPA believed it needed to account for variability in emissions performance. Id. EPA explained that for two or more tests at a single incinerator under what appear to be the same operating conditions, “[v]ariations in emissions may be caused by different settings for emissions testing equipment, different field teams conducting the testing, differences in sample handling or different laboratories analyzing the results.” Id. And emissions may even vary within a single test, as each test comprises at least three separate test runs, and each test run captures only a snapshot of an incinerator‘s performance. Id.
To address this variability, EPA proposed using a statistical tool it terms the “upper prediction limit.” For future observations of emissions from an incinerator, the upper prediction limit “is the upper end of a range of values that will, with a specified degree of confidence, contain the next (or some other pre-specified) randomly selected observation from a population.” Id. Thus, a 99 percent confidence-level upper prediction limit “represents the value which one can expect the mean of future 3-run performance tests from the best-performing 12 percent of sources to fall below, with 99 percent confidence, based upon the results of the independent sample of observations from the same best-performing sources.” Id. at 63,271.
EPA‘s proposed MACT floor methodology also addressed “non-detect data,” which are emission testing data too low for the testing equipment to accurately detect. Id. at 63,272. Rather than estimate that non-detect data was at the “method detection level,” i.e., “the minimum concentration of a pollutant that can be measured with confidence that the level is greater than zero,” EPA Br. at 61 n. 20, EPA used a different test to determine the MACT floor. 75 Fed.Reg. at 63,273. Under the test, EPA multiplied what it termed the “representative method detection level” by three, and compared that value to the MACT floor that EPA calculated using all data, including non-detect data. Id. If three times the representative method detection level was less than the calculated MACT floor, EPA would conclude that the MACT floor calculation adequately addressed measurement variability; if not, EPA would use the three-times value “to ensure that the MACT floor emission limit accounts for measurement variability and imprecision.” Id.
For new source MACT floors, EPA explained that it would base the floors “on the best-performing single source for each regulated pollutant, with an appropriate accounting for emissions variability.” Id. at 63,274. Thus, EPA identified the lowest emitting incinerator with at least three test runs, and applied the 99 percent upper
In discussing whether to set “beyond-the-floor” MACT standards for existing sources, EPA determined that for most of the
EPA also proposed monitoring requirements for all new and existing sewage sludge incinerators. Id. at 63,277-82. In relevant part, EPA proposed initial and annual emissions performance tests for most pollutants, with continuous monitoring as an alternative, and control device parameter monitoring for certain control technologies. Id. at 63,277. EPA specifically required continuous emissions monitoring for carbon monoxide on new sewage sludge incinerators, although continuous emissions monitoring for carbon monoxide remained optional for existing incinerators, and optional for all other pollutants. Id. at 63,278, 63,281.
2. Final Rule
EPA promulgated the final rule setting emission limits for sewage sludge incinerators on March 21, 2011. 76 Fed.Reg. 15,372. The final rule remained substantially similar to the proposed rule, regulating sewage sludge incinerators under
The final rule did contain a few substantive changes. While EPA had proposed setting all new incinerator MACT floors on the best-performing fluidized bed incinerator, in the final rule it decided to set a separate MACT floor for new multiple hearth incinerators. Id. at 15,384. EPA explained that it had been persuaded by comments pointing out that under the proposed regulations, any source that exceeded a threshold in modification costs would be considered a new unit. See
EPA also deviated from the proposed rule by deciding not to set beyond-the-floor standards for any pollutants. Id. at 15,380. In the final rule, EPA explained that the cost of requiring the additional contemplated control technology to reduce mercury was $80,000 to $100,000 per pound removed, and that, based on this cost and other factors, it determined that beyond-the-floor standards were no longer appropriate. Id. at 15,394.
EPA also made minor changes to its MACT floor dataset, such as reducing its inventory of incinerators to 204, and consequently, reducing the numbers of incinerators needed to represent 12 percent to 18 multiple hearth incinerators and 8 fluidized bed incinerators. Id. at 15,387. Although the reduction in inventory decreased the number of incinerators necessary to represent 12 percent, EPA still did not have emissions data from 12 percent of incinerators for certain pollutants. While commenters attempted to supplement that dataset by submitting emissions stack test data that EPA requested in the proposed rule, EPA rejected that data because commenters had not substantiated it with emission test reports. Id.
In the final rule, EPA candidly noted that its MACT floor methodology—including the emissions testing dataset from less than 12 percent of incinerators—was motivated in part by the impending court-ordered deadline to establish emission standards. EPA explained that “given the court-ordered deadline for EPA to issue the final [sewage sludge incinerator] rule, it was not possible to undertake the time-consuming process of sending an [information collection request] to all the affected [sewage sludge incinerators] consistent with the requirements of the [Paperwork Reduction Act].” Id. at 15,386.
EPA also responded to comments criticizing EPA for not using data available to it to set MACT floors, including data about variability in sewage sludge metal concentrations collected from the Clean Water Act regulations. EPA responded that the upper prediction limit and its survey of units from nine different states adequately accounted for variability. Id. at 15,391. EPA further stated that it “did not have sufficient information at proposal to consider if it were appropriate to incorporate variability based on sludge content,” explaining that the data commenters submitted was not adequately supported and therefore insufficient to clarify the effect of sewage sludge variability on emissions. Id.
Sierra Club аnd NACWA filed petitions for reconsideration of EPA‘s final rule. EPA denied both petitions. See 77 Fed.Reg. 25,087 (Apr. 27, 2012). Sierra Club filed a petition for review in this court. NACWA, joined by the Hatfield Township Municipal Authority, also filed a petition for review. We have consolidated all petitions for review.
II. NACWA‘S AND SIERRA CLUB‘S PETITIONS FOR REVIEW
A. EPA‘S AUTHORITY TO REGULATE SEWAGE SLUDGE INCINERATORS
We first address NACWA‘s contention that EPA violated the Clean Air Act by
In contrast to EPA‘s interpretation, NACWA argues that the words “from . . . the general public” “refer only to the proximate source of the solid waste material in question,” covering, for example, trash a municipality collects from a house and transports to a municipal incinerator, but not a waste product that the municipality itself creates. NACWA Br. at 21-22. Because the sewage sludge incinerated by a publicly-owned treatment work is the product of the treatment of domestic sewage, NACWA asserts that sewage sludge comes from the publicly-owned treatment work, and not “from . . . the general public” that produces the domestic sewage. Id. at 19.
Because NACWA asks us to review EPA‘s construction of
At first glance, the definition of solid waste incineration units in
But textual ambiguity is not the end of the matter, as we have held that “a statute may foreclose an agency‘s preferred interpretation despite such textual ambiguities,” an analysis we undertake by “exhaust[ing] the traditional tools of statutory construction to determine whether a congressional act admits of plain meaning.” Catawba County v. EPA, 571 F.3d 20, 35 (D.C. Cir. 2009); Arizona Public Service Co. v. EPA, 211 F.3d 1280, 1287 (D.C. Cir. 2000). Thus, although both NACWA and EPA acknowledge
We begin with NACWA‘s argument that “from . . . the general public” requires a proximate cause interpretation, lest the words “general public” become superfluous. NACWA asserts that because all waste has its origin in the general public at some point, Congress could have simply defined a solid waste incinerator as “a unit . . . which combusts any solid waste material” without having to add “from commercial or industrial establishments or the general public.” See
Although defining a covered incinerator as one that combusts solid waste “from commercial or industrial establishments or the general public” suggests some limitation on the coverage of
NACWA also asserts as factually incorrect EPA‘s statement that “[s]ewage sludge clearly originates from the general public, including residential and commer-
NACWA‘s argument, however, fails to address how EPA‘s original source interpretation of “from“—i.e., that the general public is a “but-for” cause of sewage sludge—renders the treatment facility that creates sewage sludge relevant. For example, one could say “bread comes from fields of wheat,” and be understood, or say “bread comes from the baker,” and also be understood. The fact that several intermediate processes had to occur to produce the bread—transporting wheat from the field, adding different ingredients to produce dough, or heating the dough in an oven—does not negate the validity of a sentence that uses “from” to link the bread to the source of an important ingredient. As we noted above, WEBSTER‘S, supra 17, at 913, at least one dictionary defines “from” as a function word used to indicate, among other meanings, “the place of origin, source or derivation of a material or immaterial thing.” (emphasis added). Thus, the fact that the sewage sludge may not exist in that form until treated at a publicly-owned treatment work does not unambiguously invalidate EPA‘s original source interpretation that sewage sludge is from the general public, even if EPA‘s interpretation is some steps removed. While it is also true that other EPA regulations recognize that sewage sludge is distinct from domestic sewage, these regulations are not dispositive of EPA‘s interpretation of
In addition to its textual arguments, NACWA asserts that EPA‘s interpretation of
We agree with EPA, however, that
In fact, when EPA issued its rule proposing emission standards for publicly-owned treatment works as required by
We therefore conclude that the traditional tools of statutory construction do not demonstrate that
In NRDC, we heard challenges to an EPA rule that defined “commercial or industrial waste” to include solid waste combusted at incinerators that did not provide for energy recovery or operated without energy recovery. Id. at 1258 (citing 70 Fed.Reg. at 55,572). Defining “commercial or industrial waste” in this way effectively created exceptions to the definition of “solid waste incineration unit” beyond those written in the statute. Id. We vacated and remanded EPA‘s rule, rejecting its argument that it was resolving an ambiguity created by Congress‘s failure to define “commercial or industrial waste.” Id. As we explained, Congress‘s use of the word “any” in the definitional phrase “any facility which combusts any solid waste from commercial or industrial establishments” rendered the phrase clear and unambiguous, and EPA had no authority to create exceptions not explicitly listed in the statute through its definition of “commercial or industrial waste.” See id. at 1259-60.
Because the resolution of the present issue depends on the role of the word “from” in this statute, however, our discussion about the broad scope of
Having determined that the phrase “from . . . the general public” is ambiguous under Chevron step one, we now apply Chevron step two to determine whether EPA‘s interpretation “is based on a permissible construction of the statute.” 467 U.S. at 843. If EPA‘s “choice represents a reasonable
NACWA first asserts that EPA‘s interpretation of
Second, NACWA argues EPA‘s construction of
NACWA also contends that one of the congressional objectives of the Clean Water Act is to “maintain[] local flexibility and control over the means for managing sewage sludge,” and that adopting EPA‘s interpretation of
To sum, we conclude that the phrase “from . . . the general public” is ambiguous. Because EPA‘s original source interpretation of that phrase is permissible, we give deference to its interpretation of the definition of “solid waste incineration unit,” and uphold its authority to establish emission standards for sewage sludge incinerators under
B. CHALLENGES TO THE MACT FLOOR METHODOLOGY
Petitioners NACWA and Sierra Club both challenge the adequacy of EPA‘s methodology in determining the MACT floors for existing units. Both challenge EPA‘s decision to set MACT floors on emissions data from less than 12 percent of sewage sludge incinerators, albeit on different legal theories. See NACWA Br. at 32-37 (asserting that EPA‘s failure to base MACT floors on less than 12 percent of incinerators violates
Both petitioners also criticize distinct but related aspects of EPA‘s rulemaking. Sierra Club contends that EPA‘s method of selecting the best performers based on control technology is unlawful and arbitrary, pointing to other factors that may influence emission levels. See Sierra Club Br. at 18-23. NACWA argues that EPA failed to demonstrate that the data it used to set MACT floors represented the performance of the best-performing sewage sludge incinerators, contending that EPA failed to consider variability in sewage sludge contents and its effect on emission levels and that the upper prediction limit does not account for that variability. See NACWA Br. at 38-42. Sierra Club also challenges EPA‘s use of the upper prediction limit, arguing that EPA does not demonstrate that the upper prediction limit represented the “average emissions limitation achieved” and was therefore unlawful and arbitrary. Beyond these related arguments, Sierra Club argues that EPA‘s method for accounting for non-detect data is flawed.
In promulgating the MACT standards for sewage sludge incinerators, EPA took a different approach than it has in other MACT standard regulations that have come before us on petitions for review. First, EPA collected its MACT floor dataset—i.e., the emission levels of “the best performing 12 percent of units” for the existing incinerator MACT floors—by targeting the sewage sludge incinerators it believed to employ the best air pollution control technology for emissions testing. See 75 Fed.Reg. at 63,269-70. Second, after it had collected emissions data for the MACT floor dataset, EPA applied a statistical analysis, which it termed the “upper prediction limit,” to account for variability. See 75 Fed.Reg. at 63,269, 63,271 (explaining that EPA “must exercise its judgment, based on an evaluation of the relevant factors and available data, to determine the level of emissions control that has been achieved by the best performing [sewage sludge incinerators] under variable conditions.“).
Both steps in this approach involved several different estimations and assumptions. For example, because EPA chose to limit its information collection requests to nine municipalities, it had to estimate which sewage sludge incinerators would have the lowest emissions, which it chose to do
We have accorded Chevron deference to EPA‘s interpretation of
Relying on Sierra Club‘s holding that EPA may estimate “the average emissions limitation achieved by the best performing 12 percent” without violating the Clean Air Act, we have often held EPA‘s attempts to estimate the performance of the top 12 percent units to be lawful in theory. But we have often held that, in practice, EPA could not support the assumptions underlying its estimations with substantial evidence. For example, in Sierra Club, EPA based existing medical waste incinerator MACT floors on emission limits established by state regulations, assuming that “all [medical waste incinerators] are . . . achieving their [regulatory] limits.” Id. at 663 (second alteration in original). Although we held that EPA could, in theory, use regulatory data as a proxy, EPA‘s use of the data in that case to estimate the performance of the top 12 percent was arbitrary and capricious because the state emission limits were substantially higher than emissions from an uncontrolled incinerator, rendering the regulatory data a meaningless proxy for emission levels from medical waste incinerators. See id. at 663-64 (explaining that while the average emission level from uncontrolled incinerators was 2,770 parts per million volume, the average of the state emission limits appeared to be 5,227 parts per million volume); see also Northeast Maryland Waste Disposal Authority, 358 F.3d at 953-54 (rejecting EPA‘s use of state emission levels for the same reason as in Sierra Club).
In later cases, we addressed EPA‘s attempts to expand its MACT approach to develоping existing source MACT floors. See National Lime Ass‘n v. EPA, 233 F.3d 625, 632 (D.C. Cir. 2000); Cement Kiln, 255 F.3d at 859; Sierra Club v. EPA, 479 F.3d 875, 879-880, 882-83 (D.C. Cir. 2007) (“Brick MACT“). For example, in Cement Kiln, EPA identified the best-performing 12 percent of sources by emission levels, identified the control technology used by sources with emission levels equivalent to or lower than the median of that 12 percent, and then set the MACT floor at the worst emission level achieved by any source using that control technology. 255 F.3d at 859. As in Sierra Club, EPA‘s rationale in setting the MACT floors on the worst performer using MACT technology was to account for variability in the emission levels “achieved” by the best-performing 12 percent. See id. at 862, 865-66. While we explained this approach could be lawful in theory if, for example, control technology was completely or significantly determinative of a source‘s emission levels, we nevertheless concluded that EPA had not adequately demonstrated with substantial evidence that its estimation was reasonable. Id. at 863-66. Because factors apart from air pollution control technology could affect emission levels, we concluded that EPA‘s assumption that the worst-performing unit could represent the best-performing units was flawed. Id. at 866; see also Brick MACT, 479 F.3d at 882 (“Given Cement Kiln‘s holding that EPA may not use emission levels of the worst performers without a demonstrated relationship between the two, we conclude that the emission floors . . . violate the [Clean Air Act].“); id. at 883 (“EPA‘s decision to base floors exclusively on technology even though non-technology factors affect emission levels violates the [Clean Air Act].“).
As these cases demonstrate, establishing MACT floors is no simple task. Determining the best performing sources is not even as straightforward as simply collecting emission test data from all incinerators and ranking them, as incinerators that
With this background in mind, we turn to the petitioners’ challenges to the MACT floor methodology EPA used in setting emission standards for sewage sludge incinerators. As we explained, EPA‘s approach to setting MACT floors had essentially two steps: (a) determining the best-performing sewage sludge incinerators and gathering data; and (b) applying the upper prediction limit to the collected dataset to account for variability.
To determine the best-performing incinerators, EPA, mindful of our holding in past MACT floor cases, has devised a different approach than it has in other rulemaking we have reviewed. First, EPA identified the incinerators it believed would have the lowest emissions based on the type of unit and installed air pollution controls. 75 Fed.Reg. at 63,270. EPA then conducted emission tests from these incinerators to develop its MACT floor dataset, which it supplemented with data from state environmental agency public databases. Id. Because some test runs yielded emissions data at a level that EPA‘s testing equipment could not accurately measure, EPA developed a method for incorporating this non-detect data. Id. at 63,273.
This method of using technology to set MACT floors differs from the “MACT approach” discussed in Cement Kiln and Brick MACT. In those cases, EPA had first identified the sources with the lowest emissions, then identified the primary emission control technology used by those sources, and then set the MACT floors based on sources that used that technology. See Cement Kiln, 255 F.3d at 859; Brick MACT, 479 F.3d at 879. In contrast, EPA has, in this rulemaking, selected which sewage sludge incinerators to survey based on their control technology, without first determining their emission levels relative to other sources. See Revised MACT Floor Memo at 6 (“To select the surveyed owners, EPA reviewed the inventory of [sewage sludge incinerators] for the control devices being operated, and identified a subset of units expected to have the lowest emissions based on the type of unit and the installed air pollution controls.” (emphasis added)).
Even after selectively identifying and collecting data from incinerators, EPA did not collect data on every
After it had collected its dataset, EPA applied the upper prediction limit to estimate variability in sewage sludge incinerator emissions, stating its belief that the MACT floors had to be set at such a level that the best-performing incinerators “can expect to meet ‘every day and under all operating conditions.‘” 75 Fed.Reg. at 63,269 (quoting Mossville Environmental Action Now, 370 F.3d at 1241-42). We will address challenges to EPA‘s estimations in the following order: (1) whether EPA may use control technology as a proxy for best-performing incinerators; (2) whether EPA did not adequately account for variability in the characteristics of sewage sludge fed into the sewage sludge incinerators, and whether it may account for variability with the upper prediction limit; (3) whether EPA may apply a statistical equation to determine whether EPA had a sufficient dataset to be representative of the best-performing 12 percent; and (4) whether EPA may incorporate non-detect data by comparing calculated MACT floors to a value that is three times the representative detection level.
1. Identifying the best-performing incinerators based on control technology
We first address Sierra Club‘s challenge to EPA‘s selection of the best-performing units based on the type of unit and installed air pollution control technology. In addressing Sierra Club‘s argument that EPA did not establish that non-technology factors do not affect emissions, we admit some confusion over whether NACWA is also arguing that EPA acted arbitrarily in its selection of best performers by failing to account for variability, or whether its argument is that EPA failed to account for the variability experienced by the best-performing units it selected. See NACWA Br. at 39 (“Commenters argued that EPA‘s targeted selection of nine [publicly-owned treatment works] based solely on type of pollution control makes it impossible for EPA to assume that the data are representative of the best-performing [sewage sludge incinerators] across the entire category.“) (citing NACWA Comments, Joint Appendix 24-25). But see NACWA Br. at 41 (“Because these data show the great variability of these pollutants, commenters urged EPA to determine the emission rates achieved by the best-performing sources under the full range of operating conditions.“). The closeness of these two arguments is hardly surprising given that variability in incinerator operating conditions may make the “best performing 12 percent of units” a moving target, particularly when EPA
uses emission levels as the metric for “best performing.” But while both NACWA‘s and Sierra Club‘s arguments on this point share a similar element—EPA‘s alleged failure to account for sewage sludge variability makes its MACT floor methodology arbitrary and capricious—Sierra Club focuses on EPA‘s assumption about control technology installed on the incinerator, while NACWA focuses on EPA‘s assumptions about the effect of sewage sludge charаcteristics on emission levels. Because these contentions are different in kind, we will address them separately.
We begin with Sierra Club‘s allegation that EPA‘s estimate of the best-performing 12 percent of units is unlawful and arbitrary. In arguing that this estimate is unlawful, Sierra Club relies on Cement Kiln, asserting that EPA‘s estimation technique can be upheld only if air pollution control technologies are “the only factor determining emission levels.” Id. (quoting 255 F.3d at 863). Because EPA conceded that some non-technology factors affected emission levels, even accounting for
Sierra Club reads our holding in Cement Kiln too strictly. Later in our opinion in Cement Kiln we explained that “if [EPA] can demonstrate with substantial evidence—not mere assertions—that MACT technology significantly controls emissions, or that factors other than the control have a negligible effect, the MACT approach could be a reasonable means of satisfying the statute‘s requirements.” 255 F.3d at 866 (emphases added). Unsurprisingly, EPA cited this portion of our opinion when responding to Sierra Club‘s challenge to using control technology as a proxy for the best-performing incinerators. EPA Br. at 55. Sierra Club asserts that EPA cannot justify its approach under this softer standard, arguing that the significant/negligible standard is dicta. See Sierra Club Reply Br. at 3-4.
While Sierra Club may be correct that this statement is dicta, we now elevate it to holding. First, our statement in Cement Kiln that the MACT approach would satisfy the statute “if pollution control technology were the only factor determining emission levels” was a direct quote from our opinion in National Lime, where the statement was itself dicta. 255 F.3d at 863 (quoting National Lime, 233 F.3d at 633); see National Lime, 233 F.3d at 633 (summarizing an argument made by Sierra Club that we could not consider because it was not properly raised). Moreover, in Cement Kiln, we did not rely on the presence of any other factor influencing emission levels to hold that EPA‘s MACT approach failed to satisfy the statutory requirements for setting MACT floors, instead resting our holding on the bases that several non-control factors could influence emission levels, and that EPA‘s difficulty in quantifying these factors was no excuse for failing to demonstrate its estimate was reasonable. Cement Kiln, 255 F.3d at 863-65.
Second, if we are to give any substance to EPA‘s ability to estimate the best-performing units based on control technology, we must allow EPA to use air pollution control technology as a proxy for emission levels even if the correlation between control technology and emission levels is imperfect because non-control factors have a negligible effect on emissions. This is so because an estimate, by definition, will not accurately account for every variable that may affect emissions. Webster‘s, supra 17, at 778 (defining “estimate” as meaning “to judge the value, worth, or significance of: esp: to arrive at (a value judgment that is often valid but incomplete, approximate, or tentative)“) (emphasis added).
EPA, however, must still demonstrate that its estimate is reasonable. In justifying its approach of “specifically [seeking] emissions data from those municipalities that have installed and operate more than one of the controls that EPA identified as achieving the most reductions possible for the
It is true that EPA has pointed to some evidence of reduced variability among sewage sludge incinerators, a showing EPA failed to make in other MACT floor cases. See, e.g., Sierra Club, 167 F.3d at 662-64 (concluding that assumption that States would set emission limits at a level near what incinerators achieved in practice to be unsupported and contradicted by the record); Cement Kiln, 255 F.3d at 865 (determining that EPA did not attempt to support its assumption that emission levels were solely dependent on control technologies, instead explaining that for some pollutants, the “factors other than technology that affect emissions . . . are difficult to quantify for the definition of MACT“) (internal quotation marks omitted). Nevertheless, EPA concedes “that there is some variation of
Sierra Club argues that EPA has not made that demonstration, pointing out that EPA‘s assumption does not account for the fact that incinerator emissions are “affected by the fuels they use, the age and design of the individual unit, the specific quality and age of control devices at individual units, the training and skill of the operators, and the care with which they run individual units.” Sierra Club Br. at 18-19 (internal quotation marks omitted). We found this argument persuasive in Cement Kiln, see 255 F.3d at 862-65, and again agree with Sierra Club here. The fact that publicly-owned treatment works are already required to limit pollutant concentrations in sewage sludge before incineration does not establish that other varia
Sierra Club also argues that variations in sewage sludge pollutant content are a factor affecting emission levels apart from the air control technology in use by a sewage sludge incinerator. Responding to EPA‘s arguments that the
Suffice it to say, unless EPA can demonstrate that the relatively reduced variations in sewage sludge characteristics have a negligible effect on emissions, Sierra Club‘s argument that non-technology factors affect emissions seems even more meritorious. See Cement Kiln, 255 F.3d at 864 (citing, in support of its holding, an EPA technical memorandum in which EPA observed that the variability in emissions among sources using MACT technology “indicate[d] that the air pollution control device system type . . . may not be the only important consideration affecting [dioxin/furan] control; other factors such as combustion quality and waste composition . . . may also be of importance.“) (emphasis added) (second alteration in original). As we will discuss in the next section, EPA has alluded to evidence that may demonstrate a low correlation between sewage sludge characteristics and emissions. See Joint Appendix 1095 (Letter Denying NACWA‘s Petition for Reconsideration) (citing data gathered during EPA‘s information collection request that showed that “the contents of . . . pollutants in the sludge itself has little relationship to the emissions of the pollutants, because these pollutants are removed by the control devices.“). But as we will also discuss in the following section, citing this evidence for the first time in denying a petition for reconsideration may be an insufficient basis upon which to defend EPA‘s position that its
To bolster its argument that non-technology factors have a non-negligible effect on emission levels, Sierra Club points out that some incinerators EPA did not survey for data collection reported superior performance to those EPA did survey, undercutting EPA‘s assumption that control technology is the only factor controlling emission levels. For example, Sierra Club cites comments submitted by Palo Alto, which reported that its program of reducing mercury inputs was effective in reducing mercury emissions to a level far below the existing unit MACT floor, and which was not included in the best-performing 12 percent. See Joint Appendix 628-29. Sierra Club also notes that the supplemental data EPA took from state environmental
EPA responds that it did not have to consider the Palo Alto incinerator‘s reported emission level, because Palo Alto failed to comply with EPA‘s instruction in the proposed rule to provide “supporting documentation” when submitting additional emissions stack test data in its comments. See 75 Fed. Reg. at 63,270. Because EPA could not verify the accuracy of Palo Alto‘s asserted emission levels, EPA explains that it was unable to draw any correlation between Palo Alto‘s sewage sludge management practices and a reduction in mercury emissions. In the past, we have upheld EPA‘s rejection of data it determined deficient, explaining that we give substantial deference to an agency‘s expert scientific judgment. Similarly, when EPA requests that commenters substantiate their reported emission test data, and they do not comply, EPA “[is] not obligated under its policy” to compare its collected results with the unsubstantiated data that commenters submit. See Edison Electric Institute v. EPA, 2 F.3d 438, 448 (D.C. Cir. 1993) Id. at 449. Thus, we agree with EPA that it deserves deference for its decision not to draw any correlations between Palo Alto‘s change in management practice and a reduction in mercury emissions based on the data submitted.
EPA, however, does not respond to Sierra Club‘s argument that the fact that randomly selected incinerators from state environmental agency databases had emission levels lower than those from the incinerators EPA chose to survey based on technology demonstrates that EPA‘s use of control technology is unreasonable. Instead, it explains that the supplemental information from state environmental agency databases “included emissions test data from facilities/units that met the same criteria EPA used in issuing information collection requests, i.e., units with more than one of the controls that EPA identified as achieving the most reductions possible for the
Therefore, we agree with Sierra Club that EPA has not demonstrated with substantial evidence that non-control technology factors apart from sewage sludge content, like variations in age, design, or operation of the incinerators themselves,
2. Accounting for variability
We now address NACWA‘s and Sierra Club‘s challenges to EPA‘s method of accounting for variability. In the proposed rule, EPA explained that it was accounting for intraunit variability using a statistical tool it termed the upper prediction limit, and was relying on the
Upper Prediction Limit
In this formula, n represents the number of test runs (i.e., the sample size), m represents the number of test runs in a compliance average, x̄ represents the mean, s represents the standard deviation (i.e., a value representing how much variation exists from the mean within a dataset), and t(0.99, n-1) represents a value called the t-statistic, which is a number based on the number of test runs and EPA‘s desired 99 percent significance.
For existing incinerators, EPA did not apply the upper prediction limit to each 3-run test for each incinerator, but instead applied it to the entire dataset it collected for a pollutant. See
During the comment period Sierra Club, but not NACWA, challenged EPA‘s use of the upper prediction limit. See Joint Appendix 608. Although NACWA did not criticize the upper prediction limit as a method for addressing variability in its comments, it did assert that EPA failed to account for variability in sewage sludge characteristics resulting from regional and seasonal variability. See
In the final rule, EPA defended its use of the upper prediction limit against Sierra Club‘s criticisms. See 76 Fed. Reg. at 15,389. In response to NACWA‘s comments, EPA explained that it collected emissions data from nine different facilities in nine different states, claiming that these facilities were “located in a mix of northern, southern, eastern, and western states,” each with its “own unique sludge characteristics from different residential and commercial populations.”
Both petitioners now challenge EPA‘s use of the upper prediction limit to account for variability among sewage sludge incinerators. Sierra Club contends that the upper prediction limit is unlawful as applied to existing incinerator datasets because it does not represent the “average” emissions limitation achieved by the best-performing 12 percent of incinerators, a fact inconsistent with EPA‘s statements that the upper prediction limit is “based on” an average. Sierra Club asserts that the upper prediction limit is unlawful as applied to new sources as well, stating that “the upper prediction limit is not an estimate of what the best unit actually ‘achieved in practice.‘” Sierra Club Br. at 25.
Sierra Club also argues that EPA‘s use of the upper prediction limit is arbitrary
NACWA does not challenge EPA‘s use of the upper prediction limit as broadly as Sierra Club, explaining that “using the 99 [percent] [upper prediction limit] method to account for variability in emission performance is not prohibited by statute, nor is it unreasonable, provided EPA uses representative data from the congressionally required 12 [percent] of units.” NACWA Intervenor Br. at 7. Instead, NACWA challenges EPA‘s justification that the upper prediction limit adequately accounts for variability in a dataset that itself is not reflective of the variety of conditions in which sewage sludge incinerators operate, asserting that “the [upper prediction limit] cannot account for variability among [sewage sludge incinerators] unless the underlying data are representative of the category as a whole.” In other words, NACWA argues that because EPA failed to take into account regional and seasonal variability in sewage sludge pollutant concentrations and failed to use the
EPA‘s responses to both Sierra Club‘s and NACWA‘s arguments are somewhat conclusory, relying primarily on its explanation in the Revised MACT Floor Memo rather than addressing the petitioners’ legal arguments. Responding to Sierra Club, EPA asserts that it did not “simply ‘pick a number‘” in setting the upper prediction limit, and explains that the reason why some new incinerator MACT floors were higher than existing incinerator MACT floors was because of the smaller datasets with greater variation. EPA Br. at 52. EPA argues that NACWA‘s criticism of the upper prediction limit is “overly simplistic,” explaining that “EPA‘s use of the [upper prediction limit] to account for variability also addressed any emissions variability due to differences in sludge content,” and that if NACWA‘s approach were accepted, “it would account for variability in sludge content on top of the variability in emission levels that are already accounted for through the [upper prediction limit].” EPA Br. at 50-51.
Before stepping into the morass of arguments on the upper prediction limit, we take a moment to revisit the statutory source of EPA‘s obligation to set MACT floors.
In this case, EPA has explained that its “long-standing interpretation [of
But even with these explicit interpretations of
The phrase could also mean the average of the emission levels that each best-performing unit achieved under the worst foreseeable circumstances. If EPA were to take this interpretation, it would seem sensible to determine the population of the best-performing units based on which units achieve the lowest emission levels under the worst foreseeable conditions, and then average those emission levels.
Based on EPA‘s method of determining MACT floors in this case and its response to Sierra Club‘s comments, however, it seems EPA has adopted yet another interpretation of the phrase “average emissions limitation achieved by the best performing 12 percent of units.” In the final rule, EPA cited Sierra Club‘s comments that
It is not clear to us, however, that the “average emissions limitation achieved by the best performing 12 percent” would refer to the future average of a 3-run test that EPA predicts a source in the best-performing 12 percent will fall below with 99 percent confidence. Instead, the word “average” as referred to in the standard for existing unit MACT floors seems to mean the average emissions limitation that the existing population of the best-performing 12 percent of incinerators has achieved, not the average of a future 3-run test conducted for compliance purposes.
EPA has not interpreted “average emissions limitation achieved” this way, however, and because we “may not supply a reasoned basis for the agency‘s action that the agency itself has not given,” we can only adjudge EPA‘s interpretation based on essentially one sentence from the Federal Register. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285-86 (1974); see 76 Fed. Reg. at 15,389. The need for further explanation is especially acute when EPA‘s approach of using the upper prediction limit and its interpretation of “average emissions limitation achieved” are both departures from the approaches EPA has taken in setting MACT floors in earlier cases. As to the interpretation of “average” specifically, EPA has not previously interpreted the phrase “average emissions limitation achieved” to refer to the average of a future 3-run test, but instead the average emissions levels of the best-performing 12 percent of sources for which EPA had data (or the average of the proxies EPA used to estimate those emission levels). See Sierra Club, 167 F.3d at 661 (“[EPA] selected the 12 percent of the incinerator population subject to the strictest controls and set the floor level for the subcategory by averaging the emissions limitations governing those incinerators.“); National Lime, 233 F.3d at 630 (“To set existing source emission floors, EPA . . . . identified the technology used by the median plant out of the best twelve percent of plants for which it had information and set the existing source emission floor at the emission level of the worst performing plant in its database using that technology.“); Cement Kiln, 255 F.3d at 859 (explaining that for existing sources, EPA identified the best-performing 12 percent of sources, then identified the emission control technology used by sources with emission levels equivalent to or lower than the median of the best-performing 12 percent, and then set the MACT floor at the worst emission level achieved by any source using that technology); Northeast Maryland Waste Disposal Authority, 358 F.3d at 953 (“For each pollutant, EPA calculated the MACT floor by averaging the most stringent 12% of state permit limits in each class.“).
Although EPA may be able to justify its novel interpretation that “average” means the average of a future 3-run compliance test, one sentence in the Federal Register is not enough of a basis to uphold EPA‘s new approach to incorporating variability against аrbitrary and capricious review. Accordingly, on remand, we expect EPA to clarify how the upper prediction limit represents the “average emissions limitation achieved by the best performing 12 percent.” See Sierra Club, 167 F.3d at 664 (remanding EPA‘s MACT floor determina
We now turn to Sierra Club‘s related challenge to the upper prediction limit as arbitrary because “EPA provides no support for the notion that the upper prediction limit for the single best performing unit reflects that unit‘s actual performance, even under the ‘worst reasonably foreseeable’ circumstances.” Sierra Club Br. at 26. While it is true that EPA did not even use the phrase “worse foreseeable circumstances” in its rulemaking, it did explain its belief that it must set MACT floors that the “best performing sources can expect to meet ‘every day and under all operating conditions.‘” 75 Fed. Reg. at 63,269 (quoting Mossville Environmental Action Now, 370 F.3d at 1241-42). Not only are these standards approximately equivalent, EPA is not wedded to our “worse foreseeable circumstances” interpretation of “achieved in practice.” See Sierra Club, 167 F.3d at 665 (explaining that “EPA would be justified in setting the floors at a level that is a reasonable estimate of the performance of the ‘best controlled similar unit’ under the worst reasonably foreseeable circumstances,” adding “we use the subjunctive because it is not clear from the record that the agency was doing this“). More substantively, EPA‘s citation to Mossville Environmental Action Now in the same section as EPA‘s description of the upper prediction limit may be enough to reasonably discern EPA‘s justification for the upper prediction limit, even if EPA has not directly stated how it justifies the upper prediction limit as a method for accounting for variability in light of the
Although it may be sufficiently clear that EPA‘s prediction of the best-performing incinerators’ upper limit represents standards these incinerators can “meet every day and under all operating conditions,” EPA has not clearly explained how the upper prediction limit itself operates to predict this value with sufficient accuracy. In the Brick MACT case, we held that EPA‘s use of the MACT approach violated the
While it is true that we “owe particular deference to EPA when its rulemakings rest upon matters of scientific and statistical judgment within the agency‘s sphere of special competence and statutory jurisdiction,” American Coke & Coal Chemicals Institute v. EPA, 452 F.3d 930, 941 (D.C. Cir. 2006), EPA must still articulate a “rational connection between the facts found and the choice made.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962). Because we are already remanding the upper prediction limit, we encourage EPA to elaborate how the statistical formula it uses can predict the upper limit of incinerator emissions. We are hesitant to rubber-stamp EPA‘s invocation of statistics without some explanation of the underlying principles or reasons why its formulas would produce an accurate result, particularly when the “facts found“—the MACT floor datasets—demonstrate flaws in the formula.
We now turn to NACWA‘s arguments that EPA failed to account for variability in sewage sludge characteristics, beginning with NACWA‘s argument that the upper prediction limit cannot account for this sort of variability. See NACWA Br. at 39; EPA Br. at 51 (“EPA‘s use of the [upper prediction limit] to account for variability also addressed any emissions variability due to differences in sludge content.“). Before discussing NACWA‘s challenges to EPA‘s method of accounting for variability, however, we take a moment to note a distinction NACWA appears to draw in its brief, in which it argues that its analyses on the
First, we agree with NACWA that EPA has not adequately explained how the upper prediction limit can address variability in sewage sludge characteristics, particularly given the context in which it described the upper prediction limit in the proposed rule and the Revised MACT Floor Memo. EPA explained in the proposed rule and in its Revised MACT Floor Mеmo that “[t]he types of variability that EPA attempts to account for include operational distinctions between and within tests at the same unit.” 75 Fed. Reg. at 63,269; Revised MACT Floor Memo at 4-5. As to existing incinerator MACT floors, EPA stated that “[b]y including multiple emissions tests from units with a test average in the top 12 percent, EPA can evaluate intra-unit variability of emissions tests over time, considering variability in control device performance, unit operations, and fuels fired during the test . . . . [T]he [upper prediction limit] was used for the [sewage sludge incinerator] MACT floor variability analysis.” 75 Fed. Reg. at 63,271; Revised MACT Floor Memo at 11-12. These statements appear to contradict EPA‘s implied position in the final rule (and express position on petition for review) that the upper prediction limit can account for more than intra-unit variability. See 76 Fed. Reg. at 15,391 (explaining, in response to NACWA‘s comments that EPA failed to account for variability in sewage sludge characteristics, that in addition to collecting emissions information from facilities in nine different states,
Not only is EPA contradictory on whether the upper prediction limit accounts for more than intra-unit variability, NACWA‘s argument that the underlying dataset must already be representative of variability in sewage sludge characteristics before applying the upper prediction limit is persuasive, at least as applied to variability within a publicly-owned treatment work. Assuming that NACWA‘s summary of monthly average sewage sludge pollutant concentrations in its comments is accurate, short-term emissions testing done in January when the monthly average lead concentration is lowest may not be representative of incinerators’ performance in July, when the monthly average lead concentration is almost double. See Joint Appendix 671 (NACWA Comments). If sewage sludge incinerator emissions increase based on sewage sludge pollutant concentrations, then it would seem to follow that the average emission levels of sewage sludge incinerators in July would be higher than the average in January. Cf. Sierra Club, 167 F.3d at 666 (“The EPA does not deny that the waste stream reductions the Sierra Club calls for would reduce pollution. The less mercury in, the less mercury out, and the less chlorinated plastic in, the less HCl out.“). And assuming that the standard deviation does not change from month-to-month, it would also follow that the upper prediction limit, and thus the MACT floor, would be higher for a dataset based on July emission testing.
As with the other aspects of the upper prediction limit, however, EPA may be able to explain and clarify on remand its position on whether the upper prediction limit can account for variability in sewage sludge content. EPA may also be able to explain why NACWA is incorrect in asserting that EPA needs to base its upper prediction limit on a representative dataset. Alternatively, EPA could adopt an interpretation of “average emissions limitation achieved by the best performing 12 percent of units” thаt does not require EPA to determine what the best-performing units achieve under the worst foreseeable conditions.
Having determined that EPA did not make clear whether the upper prediction limit accounts only for intra-unit variability, we now turn to NACWA‘s remaining and related arguments on EPA‘s variability analysis. We start first with NACWA‘s argument that EPA failed to demonstrate that its MACT floor dataset represented the best-performing 12 percent of incinerators because it failed to adequately account for variability in sewage sludge characteristics. NACWA maintains that sewage sludge characteristics can vary not only by geographic region, but also by seasons, differences in wastewater treatment technologies, and the sanitary wastes received from the communities served by publicly-owned treatment works. See Joint Appendix 671 (summarizing month-to-month variability in sewage sludge pollutant concentrations based on Part 503 data);
NACWA argues that this limited testing is problematic, implying that if EPA used a limited dataset that is not representative of the full range of conditions experienced
EPA, in addition to responding that the upper prediction limit accounts for variability, asserts that NACWA “fails to explain how the alleged variations in the metals content in sludge affects the emissions performance of the best performing units.” Instead, EPA contends, “NACWA simply points to data submitted under the [Clean Water Act] Part 503 regulations without demonstrating whether and how the pollutant content of sludge affects emissions.” EPA Br. at 51. EPA further explains that “air pollution control devices generally used by the best performing sewage sludge incinerators result in significant pollutant reductions between the incoming sludge feed and outgoing emissions,” and thus that “any differences in pollutant concentrations in the sludge feed should have minimal impact on emissions beсause the pollutants contained in the sludge feed itself are removed by air pollution control devices.”
EPA did not cite to the record in its brief for these factual assertions. Nor are these assertions in the final rule‘s section responding to NACWA‘s comments on this point, in which EPA responded not that there was a low correlation between emissions and sewage sludge pollutant concentrations, but instead that “[w]e requested additional information in the [notice of proposed rulemaking], but did not receive adequate sampling data from the best-performing sources.” 76 Fed. Reg. at 15,391. Upon review of the record, the only place we could find support for EPA‘s factual assertion was in its letter denying NACWA‘s petition for reconsideration. There, EPA explained that it had collected sludge content data at the same time as the emissions tests, and that because it found a “high reduction in pollutant levels between incoming sludge and emissions due to add-on controls, the variation in the lead content in the sludge . . . did not affect the emissions performance of those sources.” Joint Appendix 1095 (Letter Denying NACWA‘s Petition for Reconsideration).
But even assuming that EPA intended to rely on this assertion in defending its rulemaking on the current petition for review, it is not clear to us that a rationale offered for the first time in a petition for reconsideration is sufficient to be a ground upon which we can judge the propriety of EPA‘s action. We could find no case discussing the propriety of judging an agency‘s action based on a statement made for the first time in a denial of a petition for reconsideration, but it seems to be a weak basis for upholding agency action. This is particularly true when a petitioner has raised an objection during the comment period that gave an agency the opportunity to respond to the objection before the denial of reconsideration. See 76 Fed. Reg. at 15,391 (summarizing several statements from commenters, including that “emissions from [sewage sludge incinerators] are affected not just by control technology but also by other factors including the contents of the sludge that a
Because EPA did not provide evidence during rulemaking that there was a low correlation between sewage sludge pollutants and actual emissions, we address EPA‘s argument that NACWA did not establish a correlation between sewage sludge pollutant contents and emissions. EPA is mistaken in putting the burden of establishing this correlation on NACWA. While EPA could arguably have interpreted
EPA‘s related argument that NACWA “failed to demonstrate why data from more units across more states during different times of the year would have led to a better determination of the best performers, why the representative data that EPA did collect prevented EPA from reasonably determining the best performers, or how consideration of [Clean Water Act] Part 503 data or stack test data would have changed the results” suffers from similar flaws. EPA Br. at 52. Although EPA did not have to consider emissions stack test data that commenters submitted without appropriate documentation, see supra at 1138, we disagree with EPA that NACWA has the burden of showing why more data would better determine best performers. It seems self-evident that more data from a broader span of time would have helped support (or defeat) EPA‘s assumptions about the extent to which sewage sludge variability affects
While we agree with NACWA that EPA may have been unduly dismissive of the fact that there is significant sewage sludge variability within a publicly-owned treatment work, NACWA‘s claim that EPA must account for variability among publicly-owned treatment works raises statutory issues beyond the scope of the issues NACWA raised in its petition for review. Specifically, by asserting that EPA must account for variability among publicly-owned treatment works because the publicly-owned treatment works have limited control over the pollutant concentration in their sewage sludge, NACWA appears to be urging a different interpretation of the “average emissions limitation achieved by the best performing 12 percent of units” than the one EPA has adopted.
In this rulemaking EPA explained that it “is using lowest emissions limitation as the measure of best performance.” 76 Fed. Reg. at 15,389. Thus, by arguing that EPA must account for variability in sewage sludge content over which a publicly-owned treatment work has no control, NACWA is essentially requesting that EPA adopt a different interpretation of the phrase “average emissions limitation achieved by the best performing 12 percent of units.” For example, if an incinerator, through bad luck, receives 100 units of pollutants in its sewage sludge, and manages to emit only 50 units of pollutants, it could be said to be a better performer than an incinerator that receives, through good luck, only 30 units but emits 25 units of pollutants. But under EPA‘s interpretation of “best performing,” the reduction in emissions from uncontrolled conditions to controlled conditions is irrelevant—the best-performing incinerators are those that emit the lowest levels of pollutants, and so the incinerator with an emission level of 25 would be the better performer. Where EPA explains that a best performer is determined by its emission level, apparently in absolute terms, the logical consequence of NACWA‘s argument is that the “best performing” incinerators must be those that are the most effective at removing pollutants from incinerated waste before emitting pollutants from the stack. In fact, NACWA expressly states its desire for a different interpretation in its comments on the proposed rule, explaining that “[w]ithout the use of long-term data to support the level of emission standards, this variability makes numeric technology-based limits impractical and infeasible and should provide EPA strong motivation to look to other regulatory options.” Joint Appendix 671. Relatedly, NACWA‘s comments also urged EPA to apply a “variability factor,” based on the variability in sewage sludge characteristics, to the stack test data.
While it may be true that a publicly-owned treatment work‘s obligation to manage all sewage that enters into the sanitary sewer system distinguishes it from commercial or industrial incinerators that have more control over what waste they combust, this fact does not present a unique scenario in setting MACT floors.
Even if this were true, however, NACWA has not argued that
But while we conclude that NACWA has not argued a legal basis for why EPA should account for variability in sewage sludge characteristics among publicly-owned treatment works, we are somewhat confused by EPA‘s defense of its variability analysis in the final rule, particularly given its statement that it is using the “lowest emissions limitation as the measure of best performance.” 76 Fed. Reg. at 15,389. In the proposed rule, EPA made no mention of deriving a dataset representative of variability among publicly-owned treatment works. See 75 Fed. Reg. at 63,269-72. But in the final rule, EPA re
To sum, while we determine that EPA‘s use of the upper prediction limit may be lawful, we are remanding this portion of its rulemaking for further explanation on the issues of how the upper prediction limit represents the “average emissions limitation achieved,” how the upper prediction limit is a reasonable method of predicting the upper limit of the best-performing incinerators, and how the upper prediction limit accounts for variability in incinerator performance when it is not based on a dataset representative of the best-performing incinerators under the worst-performing conditions. We further conclude that NACWA‘s arguments that EPA must consider variability in sewage sludge characteristics among publicly-owned treatment works are meritless because NACWA has not argued any legal basis invoking either the statutory language or arbitrary-and-capricious review why EPA is compelled to account for that sort of variability. But because EPA‘s discussion of its efforts to create a representative dataset seems in conflict with its assertion that the best-performing incinerators are those with the lowest emission levels, we also remand for EPA to reconcile this point.
3. Adequacy of the MACT floor dataset
We now address Sierra Club‘s and NACWA‘s argument that EPA unlawfully and arbitrarily set certain MACT floors on datasets comprising less than 12 percent of the population of sewage sludge incinerators. In its rulemaking, EPA candidly admitted its data collection efforts yielded a dataset that comprised less than 12 percent of existing incinerators for certain pollutants. See 75 Fed. Reg. at 63,270 (“EPA does not have actual emissions test data for the population of units that represent the best-performing 12 percent. . . .“). EPA nevertheless concluded that the lack of data for at least 12 percent of incinerators did not prevent it from setting MACT floors, as it had “conducted a statistical analysis to verify the minimum number of observations needed to accurately characterize the distribution of the 12 percent of units in each category,” and had determined that the data it used “m[et] or exceed[ed] the number of observations necessary to provide an accurate representation of that data.” 76 Fed. Reg. at 15,387. EPA‘s only explanation for why its use of this technique was appropriate was that “emission data are normally distributed [i.e., on a bell curve], or can be transformed to be normally distributed.” Revised MACT Floor Memo at 8.
On petition for review, NACWA argues that EPA‘s failure to collect sufficient data
NACWA is incorrect that EPA‘s decision to set MACT floors on less than 12 percent of data is per se unlawful. In concluding that the law allows EPA to estimate the “average emissions limitation achieved by the best performing 12 percent of units,” we have not determined any requirement that EPA have at least a representative sample of 12 percent of the population of incinerators. Instead, we have explained that the existing incinerator MACT floor standard “does not by its plain meaning exclude estimation either by sampling or by some other reliable means.” Sierra Club, 167 F.3d at 662 (emphasis added). Thus, the fact that EPA does not possess data directly collected from 12 percent of incinerators does not make its estimate inherently unlawful. Cf. Mossville Environmental Action Now, 370 F.3d at 1241 (allowing EPA to use one data point—EPA‘s preexisting emission standard—to establish an existing source MACT floor, because the preexisting standard was “just barely satisfied by the plant with the lowest overall long term [emission of the pollutant at issue]“).
While NACWA simply asserts EPA cannot lawfully set existing incinerator MACT floors on fewer than 12 percent of incinerators, Sierra Club goes further and argues that EPA acted arbitrarily and capriciously in setting MACT floors representative of the best performing 12 percent on less than 12 percent of data. Sierra Club contends that EPA fails to demonstrate or even claim that “emissions from the units for which it has data are representative of emissions from the ones for which it laсks data,” repeating its argument that incinerators for which EPA lacks data may be achieving lower emission levels than those for which it has data. Sierra Club. Br. at 29. This appears to be the equivalent of arguing that EPA cannot compound its error in estimating the best performing 12 percent by assuming that an imperfect dataset can represent other potentially superior incinerators that should be included in the top 12 percent.
The point that errors in one estimate will be further compounded by another estimate is a fair one. If the MACT technology approach to selecting best performing incinerators was 75 percent accurate, and EPA‘s statistical equation represented a larger sample size with 80 percent accuracy, each estimate, alone, may be sufficiently reasonable. But if EPA combined the two and applied an 80 percent accurate formula to a 75 percent accurate estimate of best performers based on technology, the underlying result may be too imprecise to be considered reasonable. And this does not even account for the fact that EPA‘s MACT floor methodology layers another estimate—the upper prediction limit—to account for variability.
Sierra Club is also correct that EPA has “base[d] estimates of the performance of one group of units on the performance of a different group without demonstrating that this approach yields accurate estimates.” Sierra Club Br. at 29. EPA did so in this case by using a statistical formula for determining the minimum number of observations necessary to adequately characterize the population of the best performing 12 percent of units, which is as follows:
Revised MACT Floor Memo at 8. In this formula, n represents the minimum number of observations required, N represents the population size, Z represents a value associated with a specific confidence level, E represents the level of precision or error tolerance, p represents the degree of variability in observations, and q represents one minus p. We note that none of the variables in this formula are fixed or based on the dataset, aside from N, the population size, leaving EPA to select the value for most variables; in this case, a 90% confidence level, a precision level of 20%, and a degree of variability of 0.5. Revised MACT Floor Memo at 8-9.
The flexibility in defining variables in this formula is of some concern, as the reasonableness of EPA‘s statistical extrapolation depends on variables for which EPA sets values. Our confidence in this statistical methodology is hardly heartened by the fact that the minimum number of observations EPA calculated (11 for fluidized bed incinerators and 14 for multiple hearth incinerators), were both just one shy of the number of observations EPA actually collected for the pollutant with the least amount of test data (12 for fluidized bed incinerators and 15 for multiple hearth incinerators). Revised MACT Floor Memo at 9. To illustrate how much the result can vary, had EPA chosen a precision level of 15% instead of 20%, the minimum number of observations required for fluidized bed incinerators would have increased from 11 to 14. Changing the specific confidence level from 90% to 95%3 increases the minimum number of observations from 11 to 13.4 To EPA‘s credit, it chose a value for variability that would maximize the numbеr of observations required, and explained it chose that value to overestimate the number of minimum observations needed. Revised MACT Floor Memo at 8-9. But for the rest of the variables, EPA selected values which could have been determinative of the validity of its dataset without explaining why it selected those numbers. That EPA could have determined the statutory sufficiency of its dataset by choosing values does not mean that EPA did so, but at a minimum EPA must explain why it chose the values it did. “[A]n agency may not pluck a number out of thin air when it promulgates rules in which percentage terms play a critical role.” WJG Telephone Co. v. FCC, 675 F.2d 386, 388-89 (D.C. Cir. 1982).
In addition to not explaining why it chose the values it did for its statistical equation, EPA has not clarified how this statistical method can allow a limited dataset to approximate a larger portion of the population. In laying out the equation, EPA cited a study titled “Sample Size Requirements for Studying Small Populations in Gerontology Research” from the
As with the upper prediction limit, EPA‘s use of this statistical technique is not unlawful as long as EPA can demonstrate with substantial evidence why it reasonably estimates the performance of incinerators for which it has no data. Because this demonstration requires more detail than EPA gave here, we remand this portion of the rulemaking for further explanation on why EPA can use this formula to estimate gaps in its data and an explanation of why EPA chose thе variables it did.
4. Incorporating non-detect data
Sierra Club challenges EPA‘s method of accounting for certain emissions data that was not quality-assured. When collecting data on certain pollutants from sewage sludge incinerators, EPA encountered “non-detect data“—i.e., emission levels too low to register in an emissions test. See Revised MACT Floor Memo at 14-15. In the rulemaking, EPA explained that it would use a two-part test based on the method detection level, which is the “minimum concentration of a pollutant that can be measured with confidence that the level is greater than zero.” EPA Br. at 61 n. 20; Revised MACT Floor Memo at 14-15.
Because the method detection level varies depending on several factors, EPA first established a value it termed the “representative method detection level,” which it defined as “the highest test-specific method detection level reported in a data set that is also equal to or less than the average emission calculated for the data set.” Revised MACT Floor Memo at 14-15. In other words, if a specific emissions test registered a non-detect at a value higher than the average emission level, EPA excluded it as a candidate for the representative method detection level to “minimiz[e] the effect of a test[] with an inordinately high method detection level.” Id.
The second step in incorporating non-detect data was to multiply the representative method detection level by three and compare it to the calculated floor emission limit for that pollutant. Id. EPA‘s ratio
If the calculated emission limit was greater than the representative method detection level times three, EPA concluded that its calculation adequately addressed measurement variability, and thus would set the calculated emission limit as the MACT floor. Id. If the calculated emission level was less than the representative method detection level, EPA concluded that its calculation did not adequately account for measurement variability, and the representative method detection level would become the MACT floor. Id. EPA used this method to set the four out of the forty MACT floors it established for sewage sludge incinerators. See Revised MACT Floor Memo at 19.
Sierra Club argues that EPA‘s method of incorporating non-detect data is unlawful because it does not reflect what the best performers actually achieve, as required by
We agree with EPA that its method of incorporating non-detect data is reasonable, and not arbitrary or capricious. We do not expect EPA to perform the impossible, see Cement Kiln, 255 F.3d at 871, and that includes recording emission levels that are not accurately detectable with its current emissions testing technology. As EPA explains the issue, emission levels from zero up to some value above the method detection level cannot be stated with accuracy. Because any emission level EPA selects at that point will necessarily be an estimate, EPA adopted a method to account for measurement imprecision that has a rational basis in the correlation between increased emission values and increased testing precision.
Although Sierra Club argued in its comments that EPA should have at the very least assumed that non-detect data was at the detection limit, it did not offer any evidence that EPA was incorrect in explaining why, given the measurement imprecision at the method detection level, a non-detect test run would always yield emissions data below the method detection level. Because we owe significant deference to EPA in areas of its technical expertise, we reject Sierra Club‘s challenge to EPA‘s method of addressing non-detect data.
C. SETTING CERTAIN NEW MULTIPLE HEARTH INCINERATOR MACT FLOORS AT EXISTING MULTIPLE HEARTH INCINERATOR MACT FLOOR EMISSION LEVELS
Although EPA had explained in its proposed rule that it was proposing new incinerator MACT floors for all sewage sludge incinerators based only on fluidized bed incinerator emission data, in the final rule it set separate new incinerator MACT floors for both subcategories in response to industry commenters. See 76 Fed. Reg. at 15,384. When EPA applied the upper prediction limit to the best performing multiple hearth incinerator for each pollutant, however, it yielded new multiple hearth incinerator MACT floors for hydrogen chloride and sulfur dioxide that were higher than the existing multiple
Sierra Club challenges this decision, arguing, among other things, that this decision does not at all attempt to satisfy
D. BEYOND-THE-FLOOR STANDARDS
In the final rule, EPA explained that it chose not to adopt beyond-the-floor standards for existing incinerators, primarily based on its determination that additional control technologies would not be cost-effective, and mentioned nothing about setting beyond-the-floor standards for new incinerators. 76 Fed. Reg. at 15,394. Sierra Club challenges EPA‘s determination not to set beyond-the-floor standards for existing units based on cost-effectiveness considerations. Sierra Club also challenges EPA‘s decision not to set beyond-the-floor standards for new multiple hearth incinerators even though it provided no comment on this issue, explaining that because EPA did not adopt new multiple hearth incinerators MACT floors until the final rule it was impracticable to do so. See 75 Fed. Reg. at 63,272 (deciding to set all new sewage sludge incinerator MACT floors at the level of the best-performing fluidized bed incinerators);
1. Deciding not to set beyond-the-floor standards for existing units
In challenging EPA‘s decision not to set beyond-the-floor standards for existing units, Sierra Club argues that
EPA argues that
Sierra Club also asserts that EPA‘s cost-effectiveness analysis is arbitrary and capricious because EPA only considered the cost of proposed beyond-the-floor technology options in reductions of mercury, without also considering the benefit that these proposed technology options would have in reducing other pollutants. But in the proposed rule, EPA estimated the emission reductions to both dioxins and mercury from different control technology options, attributing the cost solely to mercury because “99.9 percent of the emissions reduction [from applying beyond-the-floor technologies] is associated with [mercury].” 75 Fed. Reg. at 63,277. In the final rule, EPA evaluated adding a fabric filter in combination with the beyond-the-floor technologies it discussed in its proposed rule, and again attributed reductions solely to mercury. 76 Fed. Reg. at 15,393-94. Although EPA did not explain in the final rule why it did not consider the cost in terms of pounds removed of other pollutants, its failure to do so was not arbitrary and capricious, particularly given that Congress gave EPA broad discretion in considering whether to go beyond-the-floor. See
Finally, Sierra Club argues that EPA violated
EPA responds that
2. Deciding not to set beyond-the-floor standards for new multiple hearth incinerators
EPA asserts that Sierra Club has waived the issue of beyond-the-floor standards for new multiple hearth incinerators by failing to comment on this issue. We agree. The
In promulgating the sewage sludge incinerator rule, EPA explained in the proposed rulemaking that while it was proposing that all new incinerator MACT floors be based оn data from the best-performing fluidized bed incinerator, it was “aware that owners and operators with modified [multiple hearth] units may have concerns regarding meeting the new source limits.” 75 Fed. Reg. at 63,272. In light of that, EPA “request[ed] comment on th[e] proposed approach,” even providing a proposal of potential MACT floor emission limits “[t]o assist commenters with their evaluation of the proposal.”
EPA‘s request for comment and proposed new multiple hearth incinerator MACT floors put Sierra Club on notice that EPA was seriously considering deviating from its proposed new incinerator MACT floors for new multiple hearth incinerators. Although the potential MACT standards for new multiple hearth incinerators were more stringent than the MACT standards EPA ultimately adopted, Sierra Club had EPA‘S MACT floor dataset, which included raw data from emissions test and a list of the control devices used by the units EPA considered the best performing. Compare 75 Fed. Reg. at 63,272 (tabulating proposed new multiple hearth incinerator MACT standards), with 76 Fed. Reg. at 15,388-89 (tabulating final new multiple hearth incinerator MACT standards); see Joint Appendix 607 (Sierra Club comments citing EPA‘s MACT floor analysis and commenting on EPA‘s dataset).
While it is true that “we do not require telepathy,” and are reluctant to require advocates for affected groups to anticipate every contingency lest we encourage strategic vagueness by agencies, we nevertheless “require some degree of foresight on the part of commenters.” Portland Cement Ass‘n, 665 F.3d at 186. Because Sierra Club was on notice that EPA was considering setting new multiple hearth incinerator MACT floors and because it had access to the dataset EPA would use in setting new multiple hearth incinerator floors, we conclude that it was practicable for Sierra Club to comment on beyond-the-floor standards for new multiple hearth incinerator MACT floors. Accordingly, we will not consider Sierra Club‘s argument regarding new multiple hearth incinerator beyond-the-floor standards. See
E. SUBCATEGORIZING SEWAGE SLUDGE INCINERATORS
NACWA challenges EPA‘s decision to create only two subcategories for sewage sludge incinerators. In its rulemaking, EPA proposed subcategorizing sewage sludge incinerators into multiple hearth and fluidized bed incinerators, and proposed no other categories or subdivisions. See 75 Fed. Reg. at 63,268. EPA invited comment on whether other combustor designs were used at sewage sludge incinerators, requesting emissions information from stack tests conducted on those designs.
Commenters responded and requested that EPA further subcategorize “based on size of the [sewage sludge incinerator],
NACWA challenges EPA‘s decision not to subcategorize further, asserting that it had identified “back-up and emergency” sewage sludge incinerators, and other unique categories, that would have a difficult time meeting the sewage sludge incinerator rule‘s testing obligations. As its legal basis, NACWA asserts that EPA failed to respond adequately to its substantive comment, as required under
We agree with EPA that its decision to create subcategories only for multiple hearth and fluidized bed incinerators was not arbitrary or capricious. We have held that EPA has authority to subcategorize within Congressionally mandated categories under
EPA‘s decision here appears well within its expert determination. Perhaps recognizing the deference we owe EPA in its decision to subcategorize, NACWA does not challenge EPA‘s authority to do so, but instead asserts procedural challenges. We do not find these challenges meritorious. EPA rationally stated its policy to require emission information from stack tests on the combustion designs that commenters wanted EPA to accommodate into a separate subcategory. Although NACWA identified different classes of incinerators and discussed differences in sewage sludge variability that it felt justified further subcategorization, it does not cite any emissions information from stack tests it submitted for the special-circumstance sewage sludge incinerators for which it desired subcategorization. EPA “was not obligated under its policy” to create new subcategories or to offer a further response on NACWA‘s request for further subcategorization, and we will uphold its decision not to create additional subcategories beyond the multiple hearth and fluidized bed incinerators. See Edison Electric Institute, 2 F.3d at 449.
F. MONITORING
Sierra Club argues that EPA violates the statute by only requiring parameter monitoring and not mandating continuous emissions monitoring for all pollutants on all incinerators. EPA responds that Congress gave it the discretion to require parameter monitoring as appropriate, and that its combination of initial and annual emissions testing combined with parameter monitoring serves to meet
Under
III. MAXWEST‘S INTERVENTION
MaxWest Environmental Systems, the developer of a “proprietary biosolids management process that converts biosolids into syngas,” used in units MaxWest terms as “gasifiers,” challenges EPA‘s treatment (or lack thereof) of gasifiers in the final rule. See Intervenor MaxWest Br. at 1-2, 9-21. EPA asserts several grounds why we need not reach MaxWest‘s arguments, including that MaxWest lacks standing and that the issues it raises are outside the scope of those raised by the petitioners.
“[B]ecause Article III standing is a prerequisite to a federal court‘s exercise of jurisdiction,” we “cannot proceed at all in any cause” unless we first determine that a party seeking to be heard has satisfied the three-part test of Lujan. Sinochem International Co. v. Malaysia International Shipping Corp., 549 U.S. 422, 430 (2007); New England Power Generators Ass‘n v. FERC, 707 F.3d 364, 368 (D.C. Cir. 2013). But while we cannot assume hypothetical jurisdiction to decide the merits of a case, we have leeway “to choose among threshold grounds for denying audience to a case on the merits” because “jurisdiction is vital only if the court proposes to issue a judgment on the merits.” Sinochem, 549 U.S. at 431 (internal alteration omitted) (quoting Intec USA, LLC v. Engle, 467 F.3d 1038, 1041 (7th Cir. 2006)). Thus, we need not resolve MaxWest‘s standing to intervene if we can dispose of its intervention on another threshold ground that does not require us to reach the merits of MaxWest‘s arguments. See id. (explaining that a federal court need not determine whether it has jurisdiction
The alternative threshold ground for rejecting MaxWest‘s intervention is that MaxWest‘s issues аre outside the scope of those raised by NACWA. None of the six petitioners’ briefs filed in this case mention MaxWest‘s gasification process. When we allowed MaxWest to intervene out of time, we warned it that “an intervening party may join issue only on a matter that has been brought before the court by another party.” NACWA v. EPA, No. 11-1131, Doc. 1344244 at 2 (D.C. Cir. filed Nov. 28, 2011) (citing Beethoven.com LLC v. Librarian of Congress, 394 F.3d 939, 946 (D.C. Cir. 2005)). MaxWest has not heeded our warning. Its bare assertion that it modeled its statement of issues after NACWA‘s does not change the fact that its substantive arguments are unrelated to the issues raised by NACWA and Sierra Club. See MaxWest Reply Br. at 8-10. Therefore, we will not consider MaxWest‘s arguments.
IV. CONCLUSION
For the foregoing reasons, we remand to EPA portions of its rule for further explanation without vacating the current MACT standards. Specifically, we direct EPA to clarify why its
In all other respects, we uphold EPA‘s rule against the petitioners’ challenges. Because the issues MaxWest raised in its intervenor brief are outside the scope raised by the petitioners, we do not consider its arguments.
So ordered.