## Facts

- EPA revised Clean Air Act § 111 new source performance standards (NSPS) for nitrogen oxides (NOx) from newly constructed utility and industrial boilers.
- The rule set NOx limits of 0.15 lb/MMBtu for utility boilers and 0.20 lb/MMBtu for industrial boilers.
- EPA selected selective catalytic reduction (SCR), combined with combustion controls, as the “best system of emission reduction” that was “adequately demonstrated,” considering costs, energy requirements, and non-air-quality impacts.
- Industry petitioners sought review in the D.C. Circuit, arguing EPA exceeded statutory authority and acted arbitrarily and capriciously, including in its shift from boiler- and fuel-specific limits to uniform standards.
- Petitioners also contested EPA’s extrapolation of SCR performance data from utility boilers to industrial boilers, application of the industrial standard to combination (multi-fuel) boilers, and EPA’s method for treating cogeneration steam output (a 50% steam credit).

## Issues

1. Whether EPA exceeded its discretion under CAA § 111 by selecting SCR plus combustion controls as the best adequately demonstrated system and by setting NOx NSPS at 0.15 and 0.20 lb/MMBtu.
2. Whether EPA acted arbitrarily and capriciously by inadequately accounting for costs and other § 111 factors when basing the NSPS on SCR rather than combustion controls alone.
3. Whether EPA permissibly adopted uniform utility-boiler standards instead of differentiated boiler- and fuel-specific standards.
4. Whether EPA reasonably extrapolated utility-boiler SCR data to support an SCR-based NSPS for coal-fired industrial boilers and reasonably applied the industrial standard to combination boilers.
5. Whether EPA reasonably assigned a 50% steam-energy credit for cogeneration units in calculating useful energy output for NSPS compliance purposes.

## Decision

- The court denied the petitions for review and left the revised NOx NSPS in place.
- EPA acted within its discretion under CAA § 111 in determining SCR plus combustion controls was adequately demonstrated and supported the challenged NSPS levels.
- EPA reasonably concluded the standards would result in only a modest increase in electricity production costs for new units and adequately considered costs and other statutory factors.
- EPA permissibly adopted uniform utility-boiler standards and sufficiently explained its departure from prior differentiated standards.
- EPA reasonably extrapolated from utility-boiler data to industrial boilers and reasonably applied the industrial standard to combination boilers.
- EPA’s 50% steam credit for cogeneration facilities was upheld as an acceptable administrative approach given measurement and implementation difficulties.

## Legal Principles

- Under CAA § 111, EPA has substantial discretion to determine the “best system of emission reduction” that is “adequately demonstrated,” and courts generally defer to EPA’s technical and predictive judgments when supported by the administrative record.
- EPA must consider costs, energy requirements, and non-air-quality impacts under § 111, but the statute does not require selection of the lowest-cost technology; a reasoned determination that costs are acceptable can satisfy the requirement.
- An agency may change regulatory methodology (including moving from differentiated to uniform standards) if it provides a reasoned explanation grounded in the record and the relevant statutory factors.
- EPA may rely on extrapolation across source categories when it explains why operational conditions and performance evidence support applying data from one category to another.
- EPA may adopt administrable compliance calculations, including standardized credits, when more granular methods are impractical and the chosen approach is reasonable.

## Conclusion

The D.C. Circuit upheld EPA’s revised NOx NSPS for new utility and industrial boilers, concluding that EPA reasonably selected SCR as the adequately demonstrated best system under CAA § 111, permissibly adopted uniform standards, and made nonarbitrary technical and implementation judgments on extrapolation, combination boilers, and cogeneration steam crediting.


Lignite Energy Council v. U.S. Environmental Protection Agency, 198 F.3d 930 (D.C. Cir. 1999)