The Environmental Protection Agency issued a 2022 rule establishing Maximum Achievable Control Technology standards for industrial boilers. This rule was a response to a previous court decision, U.S. Sugar Corp. II, which had remanded 34 specific emission standards back to the EPA for correction due to calculation errors. In the 2022 rule, the EPA classified boilers built after June 4, 2010, as new sources, even though the specific revised standards for these boilers were not proposed until August 24, 2020. Industry groups, led by U.S. Sugar Corporation, argued this classification was unlawful because it subjected boilers built years ago to the stricter standards reserved for new construction. Conversely, environmental groups challenged the EPA's decision to use a 2013 dataset for its calculations rather than newer data collected after 2013, arguing the exclusion of recent data made the standards less protective than the law requires.
The Court addressed two distinct issues. First, regarding the definition of a new source, the Court applied de novo review under Loper Bright, rejecting the EPA's interpretation. The Clean Air Act defines a new source as one where construction commences after the Administrator first proposes regulations establishing an emission standard applicable to that source. The Court reasoned that the phrase an emission standard refers to each sequential standard proposed, not the original proposal for the entire category. This reading harmonizes the statute with its compliance deadlines, which require new sources to comply immediately while giving existing sources a grace period. Treating decade-old boilers as new sources would render the statutory grace period nonsensical and short-circuit the Act's iterative review process. Therefore, the Court held that the proper date to determine if a boiler is new is the date the specific revised standards were first proposed in 2020, not the 2010 cutoff used by the EPA. Second, regarding the data selection, the Court found the EPA's decision to rely on the 2013 dataset was neither unlawful nor arbitrary. The Court noted that the prior remand was limited to correcting specific errors, not initiating a new rulemaking. Using the original dataset ensured consistency across all standards and allowed the EPA to comply with the court's instruction to act promptly. The Court rejected the argument that the statute requires the use of all available data, noting that such an interpretation would create an endless loop of recalculation and hamper the agency's ability to function.
The 2022 rule is set aside to the extent it classifies boilers constructed before August 24, 2020, as new sources. These boilers will now be treated as existing sources, subjecting them to less stringent emission standards and allowing them time to retrofit rather than requiring immediate compliance with the strictest standards. The EPA must revise the rule to reflect this corrected classification. The decision leaves the EPA's data selection methodology intact, confirming that agencies may rely on historical datasets to ensure consistency and efficiency when acting on a limited remand.
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