​Where Do We Go From Here? D.C. Circuit Decision in the Industrial Boiler MACT/Incinerator Rule Challenges Takes Boiler Operators Down an Uncertain Road

On July 29, 2016, the Court of Appeals for the D.C. Circuit issued a decision in United States Sugar Corporation v. EPA, et al that has created substantial uncertainty for owners and operators of industrial, commercial, and institutional boilers and has been viewed as a victory for environmental groups.

The 162-page decision covers three consolidated sets of challenges to different EPA rulemakings concerning hazardous air-pollutant (HAP) emissions: (1) the major source industrial, commercial and institutional boiler NESHAP (IB MACT) rule which generally applies to boilers that have the potential to emit more than 10 tons of a single HAP and 25 tons of a combination of HAPs; (2) the area source IB MACT rule, which generally applies to boilers combusting coal, oil biomass, or other non-waste materials that do not meet the major source IB MACT rule emission thresholds; and (3) a related set of HAP standards applicable to commercial industrial solid waste incinerators (CISWIs).

Of greatest note, the court vacated the currently applicable emission limits in the major source rule for all of the “subcategories” of boilers where the U.S. EPA had excluded units that were co-firing less than 90 percent but more than 10 percent of a certain fuel, like coal or biomass. These units were regulated by the U.S. EPA under the relevant subcategories, but were not considered when setting the applicable emission limitations because the U.S. EPA believed these sources to be dissimilar to boilers that combusted over 90 percent of a particular fuel. In fact, in the November 2011 Revised EPA MACT floor memorandum, U.S. EPA’s consultant, Eastern Research Group, Inc., specifically noted that “not all units are designed to fire or are capable of firing different fuels, and the standards were developed in recognition of this fact.”

The court, however, disagreed. It determined that “this disparate treatment makes a difference; several sources excluded from the MACT-floor determination were among the best performing sources (or, in some cases, the single best performing source) in that fuel based subcategory.”

The scope of this remand and vacatur is not immediately clear based on the decision because the specific subcategories impacted by the ruling were not identified. In fact, a review of the underlying documents in the U.S. EPA’s docket for the rulemaking does not clearly disclose which units the agency excluded from the MACT floor determination because of co-firing fuels. U.S. EPA and other interested parties are in the process of reviewing the rulemaking record to determine which subcategories are included in this remand due to exclusion of “higher performing units.”

The court also remanded to the U.S. EPA certain other provisions of the rules. These included the exclusion of boilers regulated under the area source IB MACT rule with synthetic HAP limits from the Title V program; the requirement to set emission standards under the CISWI rule for cyclonic burn barrels, the exclusion of burn-off ovens, soil treatment units, and space heaters from treatment as CISWI units; and, finally, the selection of generally available controlled technology standards versus MACT standards for non-mercury metals for area source boilers.

Additionally, the court remanded the U.S. EPA’s use of carbon monoxide as a surrogate to achieve reductions in non-dioxin and furan organic HAPs. This requirement was remanded without vacatur due to the court’s belief that the U.S. EPA would be able to successfully complete this task on a remand.

While through this decision, the D.C. Circuit Court is sending the U.S. EPA back to the drawing board once again, the U.S. EPA is not yet required to pick up its pencil. The July 29 decision was stayed by the court until seven days after the disposition of any timely filed rehearing petitions. Reconsideration petitions are due on September 12, 2016.

It remains to be seen whether any of the parties to the challenges will seek reconsideration, but in several instances, including the court’s decision to vacate a yet unknown number of emission limitations, there are good arguments that the court has improperly substituted its judgment for U.S. EPA’s technical expertise.

If you have questions on this proceeding as it develops please contact your Quarles & Brady attorneys Peter Tomasi, 414-277-5677/peter.tomasi@quarles.com, or Cynthia Faur, 312-715-5228/cynthia.faur@quarles.com, or another Quarles & Brady environmental attorney.