UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


LIGNITE ENGY CNCL

v.

EPA


98-1525a

D.C. Cir. 1999


*	*	*


Opinion for the Court filed Per Curiam.


Per Curiam: Petitioners challenge EPA's new source per- formance
standards for nitrogen oxides emissions from utility  and industrial
boilers. We conclude that EPA did not exceed  its discretion under
section 111 of the Clean Air Act in  promulgating these standards, and
therefore deny the peti- tions.


* * * *


Fossil-fuel fired steam generating units ("boilers") emit  nitrogen
oxides (NOx), air pollutants that can cause deleteri- ous health
effects and contribute to the formation of acid rain.  Section 111 of
the Clean Air Act requires EPA to establish  performance standards for
the emission of NOx from newly  constructed boilers; these "new source
performance stan- dards" are to be set at a level that


reflects the degree of emission limitation achievable  through the
application of the best system of emission 


reduction which (taking into account the cost of achieving  such
reduction and any nonair quality health and envi- ronmental impact and
energy requirements) the Admin- istrator determines has been
adequately demonstrated.


42 U.S.C. s 7411(a)(1). In its 1990 Clean Air Act Amend- ments Congress
specifically directed EPA to exercise its  section 111 authority and
establish new NOx standards that  incorporate "improvements in methods
for the reduction of  emissions of oxides of nitrogen." 42 U.S.C. s
7651f(c)(1).


In response to these statutory mandates, EPA promulgated  a rule
lowering its NOx new source performance standards to  .15 lb/MMBtu
(pounds of NOx emitted per million BTU  burned) for utility boilers1
and .20 lb/MMBtu for industrial  boilers. See 63 Fed. Reg. 49,442,
49,443 (1998) (to be codified  at 40 C.F.R. pt. 60). These standards
reflect the level of NOx  emissions achievable by what EPA considers
to be the "best  demonstrated system" of emissions reduction: the use
of  selective catalytic reduction (SCR) in combination with com-
bustion control technologies.2 Petitioners' central claim is  that EPA
selected SCR as the basis for its NOx standards  without properly
balancing the factors that section 111 re- quires it to "take into
account." Because section 111 does not 




__________

n 1 To be precise, the emission standard for utility boilers is an 
output-based standard of 1.6 pounds of NOx emitted per megawatt- hour
of electricity generated. However, as this output-based stan- dard was
intended by EPA to correlate with a .15 lb/MMBtu input- based
standard, we refer to its input-based equivalent for simplici- ty's
sake throughout this opinion. We reject petitioners' argument  that
EPA's decision to shift to an output-based standard for utility 
boilers unfairly "penalizes" the use of low-energy coals, like
lignite;  it would seem just as easy to argue that an input-based
standard  "penalizes" high-energy fuels.


2 SCR is a "flue gas treatment technology"; it reduces NOx  after
combustion by injecting ammonia into the flue gas in the  presence of
a catalyst, breaking down NOx and producing nitrogen  and water. In
setting past standards, EPA had focused solely on  combustion control
technologies, which instead reduce NOx by  suppressing its formation
during the combustion process. See 62  Fed. Reg. 36,948, 36,949-50


set forth the weight that be should assigned to each of these  factors,
we have granted the agency a great degree of discre- tion in balancing
them, see, e.g., New York v. Reilly, 969 F.2d  1147, 1150 (D.C. Cir.
1992); EPA's choice will be sustained  unless the environmental or
economic costs of using the  technology are exorbitant. See National
Asphalt Pavement  Ass'n v. Train, 539 F.2d 775, 786 (D.C. Cir.


Petitioners argue that SCR is not the "best demonstrated  system" under
section 111 because the incremental cost of  reducing NOx emissions is
considerably higher with SCR than  with combustion controls. Recent
improvements in combus- tion controls will enable many boilers to
attain emissions  levels close to EPA's SCR-based standards;
accordingly,  petitioners assert that EPA should have based its
standards  on these less expensive technologies. However, in light of 
EPA's unchallenged findings showing that the new standards  will only
modestly increase the cost of producing electricity in  newly
constructed boilers, see 62 Fed. Reg. 36,948, 36,958  (1997) (proposed
NOx revisions), we do not think that EPA  exceeded its considerable
discretion under section 111.  Moreover, petitioners' argument
stressing the comparable  environmental merits of advanced combustion
controls is to a  certain extent self-defeating, since the new source
perfor- mance standards set by EPA are not technology-forcing, and 
continuing advances in combustion control technologies will  reduce
the amount of NOx reduction that must be captured by  the more


It was also within EPA's discretion to issue uniform stan- dards for
all utility boilers, rather than adhering to its past  practice of
setting a range of standards based on boiler and  fuel type. See,
e.g., 44 Fed. Reg. 33,580 (1979) (establishing  varying NOx emissions
standards for utility boilers). Peti- tioners recognize that EPA is
not required by law to subcate- gorize--section 111 merely states that
"the Administrator  may distinguish among classes, types, and sizes
within cate- gories of new sources," 42 U.S.C. s 7411(b)(2) (emphasis 
added)--but argue that it was arbitrary and capricious for  EPA to
decline to do so. EPA explains that its change to  uniform standards
is justified by SCR's performance charac-


teristics: Unlike the technologies on which past new source 
performance standards were based, flue gas treatment tech- nologies
like SCR limit NOx emissions after combustion, and  the effectiveness
of SCR is thus far less dependent upon  boiler design or fuel type.
Petitioners respond that there are  reasons to expect SCR to perform
less adequately on boilers  burning high-sulfur coals, but EPA
collected continuous emis- sions monitoring data on two high-sulfur
coal-fired utility  boilers that showed that the .15 lb/MMBtu standard
was  achievable, and supplemented this study with similar evidence 
from foreign utility boilers. EPA also considered petitioners' 
concerns about the impact of alkaline metals on the perfor- mance of
the catalyst used in the SCR process, and concluded  that such
"catalyst poisoning" is not a significant problem in  coal-fired
boilers. See 63 Fed. Reg. at 49,445. Mindful of the  high degree of
deference we must show to EPA's scientific  judgment, see, e.g.,
Appalachian Power Co. v. EPA, 135 F.3d  791, 801-02 (D.C. Cir. 1998),
we accept these determinations  and sustain EPA's uniform standard for


Petitioners offer a broader challenge to EPA's .20 lb/ MMBtu standard
for industrial boilers, claiming that SCR is  not "adequately
demonstrated" for any coal-fired industrial  boilers. EPA was unable
to collect emissions data for the  application of SCR to these
boilers, but this absence of data is  not surprising for a new
technology like SCR, nor does it in  and of itself defeat EPA's
standard. Because it applies only  to new sources, we have recognized
that section 111 "looks  toward what may fairly be projected for the
regulated future,  rather than the state of the art at present."
Portland  Cement Ass'n v. Ruckelshaus, 486 F.2d 375, 391 (D.C. Cir. 
1973). Of course, where data are unavailable, EPA may not  base its
determination that a technology is adequately demon- strated or that a
standard is achievable on mere speculation  or conjecture, see, e.g.,
National Asphalt Pavement Ass'n,  539 F.2d at 787, but EPA may
compensate for a shortage of  data through the use of other
qualitative methods, including  the reasonable extrapolation of a
technology's performance in  other industries. See, e.g., Weyerhaeuser
Co. v. Costle, 590  F.2d 1011, 1054 n.70 (D.C. Cir. 1978).


EPA has done precisely that here, concluding from its  study of utility
boilers that SCR is "adequately demonstrat- ed" and the .20 lb/MMBtu
standard is "achievable" for coal- fired industrial boilers as well.
Utility and industrial boilers  are similar in design and both
categories of boilers can attain  similar levels of NOx emissions
reduction through combustion  controls, which means that SCR will be
required to capture  comparable quantities of NOx for both boiler
types. While  petitioners argue that SCR is less likely to be
effective on  industrial boilers because they have widely fluctuating
load  cycles, EPA has shown that SCR can be successfully applied  to
coal-fired utility boilers under a "wide range of operating 
conditions" including those analogous to the load cycles of 
industrial boilers. 63 Fed. Reg. at 49,444. We think that it  was
reasonable for EPA to extrapolate from its studies of  utility boilers
in setting an SCR-based new source perfor- mance standard for


We also sustain EPA's application of the .20 lb/MMBtu  standard to
combination boilers, which simultaneously com- bust a mixture of
fuels. The preexisting NOx emissions  standards established a range of
values for combustion boil- ers that varied by fuel type: while
combination boilers burn- ing natural gas with non-coal solid fuels
(e.g., wood) were  subject to a .30 lb/MMBtu standard, the performance
stan- dards for combination boilers combusting coal with oil or 
natural gas were determined based upon the proportion of  the boiler's
total heat input provided by each fuel. See 51  Fed. Reg. 42,768,
42,790 (1986). It is difficult to understand  petitioners' objection
to the application of the industrial boiler  standard to boilers
burning natural gas and wood. A reduc- tion of that standard from .30
to .20 lb/MMBtu is perfectly 




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n 3 For similar reasons, we do not think that EPA's lack of data  on
domestic SCR applications to boilers burning lignite renders its 
standards unlawful. In assessing a new technology like SCR, EPA  is
not required to provide evidence of its application to boilers 
burning every type of coal from every geographical location. It is 
acceptable for EPA to extrapolate from the successful applications  of
SCR to domestic high-sulfur coal-fired boilers and to foreign  boilers
burning lignite.


reasonable in light of the significant advances in NOx emis- sions
technology since 1986; indeed, EPA studies show that  wood-fired
boilers can reach emissions levels far lower than  .20 lb/MMBtu
through the application of flue gas treatment  technologies. And our
conclusion that the .20 lb/MMBtu  standard is achievable for boilers
burning only coal necessari- ly defeats petitioners' objection that
the industrial boiler  standard is unreasonable as applied to
combination boilers  burning coal simultaneously with other fuels with
lower NOx  emissions characteristics.


Petitioners' final objection is to EPA's valuation of steam  energy
produced by "cogeneration facilities." EPA's adop- tion of an
output-based standard for utility boilers raised the  question of how
to calculate the energy produced by these  units, which generate
thermal steam energy in addition to  electrical energy. Steam energy
produced by cogeneration  facilities is exported for several different
industrial uses;  however, because of inefficiencies in transporting
and con- verting steam, only a fraction of steam energy produced by 
cogeneration facilities is actually used in the industrial pro- cess.
EPA resolved this problem by assigning a 50% credit  for steam energy
when determining a cogeneration unit's  output. See 63 Fed. Reg. at
49,447. Petitioners describe this  credit as an arbitrary and
capricious "discounting" of steam  energy's value, but it just as
easily could be called a subsidy:  The maximum efficiency for the
conversion of steam to elec- trical energy is only 38%, and EPA's
final rule justifies the  50% credit on the ground that it will
encourage cogeneration.  Id. In light of the difficulties that would
attend calculating  the useful energy of steam heat produced by
cogeneration  facilities on a unit-by-unit basis, we conclude that


The petitions for review are denied.


So ordered.