MACT Follies

Posted on March 20, 2020 by Adam Babich

Data is in from EPA’s “work practice” requirement that petroleum refineries monitor ambient air for benzene concentrations around their fence lines. The regulations set an “action level” of 9 µg/m3 benzene, using benzene as a “surrogate” for fugitive hazardous air pollutants. The purpose? To “protect the health of the populations surrounding the facility, including minority and low-income populations.” EPA set the action level at a concentration that no refinery would exceed as long as its fugitive emissions estimates were “consistent with the level of fugitive emissions actually emitted.” In other words, if operators reported their fugitive emissions accurately, the benzene action level would be entirely theoretical.

Surprise! Benzene concentrations in air around 10 oil refineries blew the limit. The offending refineries include operations by major players such as Chevron, Shell, Marathon, Valero and BPF Energy. Does this tell us something about using unverified industry estimates of emissions as a basis for protecting public health?

In theory, the regulatory structure that governs hazardous air pollutants—such as benzene from oil refineries—is brilliant. It includes elements to appeal to fans of both “technology-based” and “risk-based” regulation. Technology-based standards require that facilities reduce dangerous pollution as much as practical given the state of the art. These standards are relatively straightforward to set and enforce. There is no guarantee, however, that technology-based standards will protect people from all excessive risks. In contrast, risk-based standards are designed to eliminate unacceptable risks, ideally with a margin of safety. Confidence in risk-based regulation, however, requires a leap of faith that risk assessment techniques will generate accurate results. Risk assessments tend to rely on questionable estimates of the amounts of chemical pollutants that people breath, drink, or absorb, and on controversial assumptions about what a safe level of exposure would be. The fact that people are exposed to many chemicals leads to further uncertainty about cumulative and synergistic risks.

Originally, Congress designed the Clean Air Act’s hazardous air pollutant program to use risk-based standards. The Act required EPA to set emission standards that would protect public health with an ample margin of safety. For EPA, this mandate raised the prospect of banning some chemicals completely, at least when “the only level … which would appear to be absolutely protective of health is zero.” The agency essentially froze up. As of 1990, EPA had only promulgated eight hazardous air pollutant standards.

Congress responded in the 1990 Clean Air Act Amendments. At least initially, that law shifted the hazardous-air-pollutant program to rest on technology-based standards. The Act required EPA to determine maximum achievable control technology (MACT) for a list of 191 chemicals. Congress, however, did not stop there. To ensure that a MACT standard is actually protecting the public, the Act mandates an EPA “residual risk” analysis within six years of the promulgation of technology-based limits. This sounds like the best of both the technology-based and risk-based approaches—right?

But look at EPA’s historical approach to residual risk: In Natural Resource Defense Council v. EPA, the D.C. Circuit reviewed EPA’s 2006 analysis of risk from facilities that use or produce synthetic organic chemicals. EPA relied on the results of an American Chemistry Council questionnaire with a 44% response rate. Why? The agency explained, inter alia, that reliance on “industry sources is a well-established practice” and it would have been “very costly and time-consuming” for the agency to require collection and submission of data. EPA’s approach survived the appeal.

With respect to the 2015 petroleum refineries rule: Hats off to EPA for its innovative work-practice/fenceline-monitoring approach. Because the monitoring results illustrate the fallacy of continued reliance on industry estimates of fugitive emissions, the agency should now expand the fenceline-monitoring approach to other sectors.

If It Walks Like a Duck and Talks Like a Duck, It May Still Not Be Sauce for the Gander

Posted on August 23, 2019 by Seth Jaffe

Earlier this week, the D.C. Circuit Court of Appeals held that the “Wehrum Memo,” which reversed EPA’s longstanding policy of “once in, always in” regarding MACT jurisdiction, was not final agency action subject to judicial review.  Like Judge Rogers, I dissent. 

The majority makes much of its effort to clarify this “byzantine” area of the law.  My take is that, to the extent the court has succeeded in that effort, it is only by reducing the law to this simple rule:  If the guidance document appears to impose obligations on the regulated community, then it is a regulation and can be challenged.  If it lessens obligations on the regulated community, then it is guidance and may not be challenged.

This may benefit my clients, but seems an odd view of the law.

The majority and dissent agreed that the Wehrum Memo was the “consummation” of EPA’s decision making process.  The question thus became whether it constituted an agency action “by which rights or obligations have been determined, or from which legal consequences will flow.”  The Court concluded that the Wehrum Memo does not have such an effect, because parties currently subject to MACT can only take advantage of EPA’s new policy by seeking to amend their Title V permit, and states can ignore the Wehrum Memo and permits can, in any case, always be appealed.

However, as Judge Rogers’s dissent noted, the Court pretty much had to ignore the decision Appalachian Power v. EPA, in which the Court stated that “’rights’ may not be created, but ‘obligations’ certain are….  The entire Guidance … reads like a ukase.”

When one reads Appalachian Power together with Sackett v. EPA, one conclusion becomes clear – courts are not going to allow agencies to promulgate guidance that allows them to exercise coercion against regulated entities who face significant costs and risks if they ignore the enforcement implications of agency “guidance.”

On the other hand, the courts seem to have concluded, if the guidance benefits the regulated community, then there is no harm to making those who want to challenge the guidance wait until some formal appellate opportunity becomes ripe at some point in the future.  However, as Judge Rogers pointed out, “legal consequences flow” from the Wehrum Memo as soon as major sources take enforceable limits to get below MACT thresholds.

I’m very skeptical that the decision contributes towards “clarifying this somewhat gnarled field of jurisprudence,” unless the Court really does intend the law to be that regulated entities can challenge guidance, but others cannot.

Chevron Deference Lives! EPA’s Boiler Rule (Mostly) Survives Review

Posted on August 2, 2016 by Seth Jaffe

On Friday, the D.C. Circuit largely upheld EPA’s Boiler MACT rule. boiler-mactThe industry challenges were a complete washout.  The environmental petitioners won one significant victory and a number of smaller ones.

The environmental petitioners’ one significant victory is important.  EPA included within relevant subcategories any source that burns a fuel containing at least 10% of the “subcategory-defining fuel.”  However, for defining MACT, EPA included only those sources that burn fuel containing at 90% of the subcategory-defining fuel for existing sources, and 100% for new sources.  The Court rejected this approach.

"The CAA, however, demands that source subcategories take the bitter with the sweet. Section 7412 mandates, without ambiguity, that the EPA set the MACT floor at the level achieved by the best performing source, or the average of the best performing sources, in a subcategory. It thus follows that if the EPA includes a source in a subcategory, it must take into account that source’s emissions levels in setting the MACT floor."

Which brings me to my big take-away from this decision.  Chevron lives.  By my count, The Court cited Chevron 30 times.  Chevron pervades the decision.  Even in the one big issue that EPA lost, the Court’s decision was based not on a rejection of EPA’s interpretation of an ambiguous provision under step 2 of Chevron, but on a plain meaning interpretation of § 112.  EPA defined what a source is, but it then refused to calculate MACT based upon the performance of all of the sources in a given subcategory.  The statute simply did not allow EPA that leeway.

Other than EPA’s attempt to avoid taking “the bitter with the sweet”, however, the Court’s deference – by three Republican appointees – to EPA’s technical decisions was notable.  Not every case is the Clean Power Plan.  Where EPA is not really pushing the boundaries, I don’t see the Supreme Court weakening Chevron any time soon.

Where You Stand Depends on Where You Sit: Utility MACT Edition

Posted on August 30, 2011 by Seth Jaffe

As the deadline passed last week for submitting comments on EPA's Utility MACT rule, it's worth taking a big picture look at how the commenters line up. Big utility groups, such as the Edison Electric Institute and the American Public Power Association are looking for EPA to delay the rules. The basic argument is that it is going to take a long time to comply. EEI states that so many facilities will require extensions that the number of requests will create a backlog that will itself essentially create compliance problems.

However, it is not just environmental and public health groups that filed comments in support of the MACT rule. Exelon, which has a large nuclear fleet, submitted comments in support of the rule. In fact, Exelon referred to the "overblown critique" of the Utility MACT proposal, stating that the "lack of a national standard for toxic emissions continues to be a barrier to investment in new, cleaner generation capacity." Industry supporters are not limited to Exelon. The Clean Energy Group, which includes PG&E, Calpine, and other generators with large gas fleets, also focused on the "business certainty the electric sector needs to move forward with capital investment decisions."

In looking at these comments, it is worth keeping in mind that the Utility MACT rule is only one of nine rules under development by EPA that would impose costs on coal-fired power plants. This confluence of rules has been referred to as the "train wreck" for coal-fired power plants. While the Utility MACT rule may impose the greatest costs - and achieve the greatest benefits, according to EPA - many are concerned about the cumulative impact on coal-fired capacity. Earlier this week, the Congressional Research Service attempted to debunk the train wreck perspective:

The primary impacts of many of the rules will largely be on coal-fired plants more than 40 years old that have not, until now, installed state-of-the-art pollution controls. Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel - natural gas - continues to be low, almost regardless of EPA rules.

In any case, what's the argument against promulgation of these rules on the same time frame? Isn't that a good thing? There may be coal-fired plants which could sustain the capital investment required to comply with Utility MACT, but not the added cost of cooling water intake improvements to comply with new Clean Water Act requirements or the added cost of new disposal requirements if coal ash is regulated as a hazardous waste. Isn't it better to know about all of these rules up front, so that facilities can plan for the total cost of all the rules? Wouldn't a facility have legitimate cause to complain if the rules were instead issued seriatim, so that the facilities did not know about the full range of regulatory compliance costs when they make the decision whether to invest to comply with the first rule or instead to shut down?