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Case: 19-2562Document: 78Page: 1Date Filed: 08/27/2020PRECEDENTIALSIERRA CLUB,Petitionerv.UNITED STATES ENVIRONMENTAL PROTECTIONAGENCY*PENNSYLVANIA DEPARTMENT OF ENVIRONMENTALPROTECTION,Intervenor Respondent*(Pursuant to the Court Order dated 8/5/19)On Petition for Review of Final Agency Actionof the United States Environmental Protection Agency(EPA-1: EPA-R03-OAR-2017-0290)Argued May 21, 2020Before: McKEE, BIBAS, and NYGAARD, Circuit Judges.(Opinion filed: August 27, 2020)Zachary M. Fabish, Esq.Sierra Club Environmental Law Program50 F Street, N.W.8th FloorWashington, DC 20001Charles McPhedran, Esq. [Argued]Earthjustice1617 John F. Kennedy Boulevard

Case: 19-2562Document: 78Page: 2Date Filed: 08/27/2020Suite 1130Philadelphia, PA 19103Mychal Ozaeta, Esq.Earthjustice707 Wilshire BoulevardSuite 4300Los Angeles, CA 90017Counsel for PetitionerBrandon N. Adkins, Esq. [Argued]United States Department of JusticeEnvironment & Natural Resources DivisionP.O. Box 7611Ben Franklin StationWashington, DC 20044Counsel for RespondentRobert A. Reiley, Esq.Pennsylvania Department of Environmental ProtectionOffice of Chief Counsel9th Floor400 Market StreetRachel Carson State Office BuildingHarrisburg, PA 17101Jesse C. Walker, Esq. [Argued]Office of Attorney General of PennsylvaniaBureau of Regulatory CounselRCSOB 9th FloorP.O. Box 8464Department of Environmental ProtectionHarrisburg, PA 17105Counsel for IntervenorOPINION2

Case: 19-2562Document: 78Page: 3Date Filed: 08/27/2020McKEE, Circuit Judge.The Sierra Club petitions for review of theEnvironmental Protection Agency’s approval of newPennsylvania National Ambient Air Quality Standards(NAAQS). The proposed standards govern pollution output atcoal-burning power plants in the Commonwealth. The SierraClub argues that the standards wrongly claim to reducepollution output at Pennsylvania’s most advanced plants whilesimply rubberstamping an average of current pollution outputas its supposed new gold standard. Further, the Sierra Clubcriticizes the proposal’s minimum temperature threshold—ameasure that allows plants to nearly quintuple their pollutionoutput when operating below 600 degrees Fahrenheit—asunsupported and unsupportable given the technical recordbefore the agency. Finally, the Sierra Club claims that theapproved standards lack enforceable reporting regulations.Because we agree that the regulatory regime which springsforth from these three defining characteristics is neithersupported by adequate facts nor by reasoning found in theadministrative record, we hold that the EPA’s approval wasarbitrary and capricious. We will therefore grant the petitionfor review and remand to the agency with instructions that itdevelop enforceable pollution controls in accordance with itslegal obligations.I.This dispute is governed by the Clean Air Act whichgives Circuit Courts of Appeals original jurisdiction to reviewthe EPA’s approval of a state’s proposed pollution standards.1CAA is a model of cooperative federalism. Indeed, thatphilosophy has been described as the Act’s “core principle.”2Thus, although the EPA is charged with setting the NAAQS,3142 U.S.C. § 7607(b)(1).Miss. Comm’n on Envtl. Quality v. E.P.A., 790 F.3d 138,156 (D.C. Cir. 2015) (quoting E.P.A. v. EME Homer CityGeneration, L.P., 572 U.S. 489, 511 n.14 (2014)).3See 42 U.S.C. § 7408(a) (directing the EPA to list “airpollutants” whose emissions “cause or contribute to airpollution which may reasonably be anticipated to endanger23

Case: 19-2562Document: 78Page: 4Date Filed: 08/27/2020the individual states are afforded discretion in the planning andimplementation of plans to achieve the EPA’s goals forreduction in air pollutants.4One such pollutant is ground level ozone, which is nota naturally occurring compound. This ozone is the result of achemical reaction that occurs when power plants and industrialboilers mix nitrogen oxides (NOx) with the organiccompounds they are emitting as air pollution.5 It is similar tothe process that creates most anthropogenic (i.e., humanproduced) ozone, which primarily arises from the “photolysisof nitrogen dioxide by sunlight, occurring in the presence ofhydrocarbons.”6A. Relevant standards and historyThis dispute has its beginnings in the EPA’s 2008revision to its 1997 ozone National Standard. There, the EPAtightened the cap on ozone pollution to an average of 75 partsper-billion over an 8-hour period (the previous standards hadpermitted 80 parts-per-billion7).8 Seventeen counties aroundpublic health or welfare”); 42 U.S.C. § 7409(a)-(b) (for suchlisted air pollutants, EPA must set “ambient air qualitystandards the attainment and maintenance of which . . . arerequisite to protect the public health” with an “adequatemargin of safety”).442 U.S.C. §§ 7410, 7502.5E.P.A., Ground-level Ozone ution/groundlevel-ozone-basics.6Peter J. A. Rombout, et al., Rationale for an Eight-HourOzone Standard, 36 J. OF THE AIR POLLUTION CONTROLASSOC. 913, 913 130.7EPA Proposes New National Ambient Air Quality Standardsfor Ozone, 20 No. 3 AIR POLLUTION CONSULTANT 2.12, 2.13(2010).873 Fed. Reg. 16,436 (Mar. 27, 2008). This 8-hour averagingperiod allows for variation in emissions throughout the day.Since 1997, the EPA has accepted such 8-hour averages forozone emissions, and has judged compliance based on thefourth-highest (i.e., lowest) daily maximum from each 8-hourwindow, averaged over three years. 20 No. 3 AIR POLLUTIONCONSULTANT at 2.13.4

Case: 19-2562Document: 78Page: 5Date Filed: 08/27/2020Philadelphia and Pittsburgh were unable to achieve the new2008 requirements for pollution control.9 Accordingly, theCommonwealth was required to design a state implementationplan (SIP) for its major sources of NOx and volatile organiccompounds.10 Power plants are one of the most significantsources of these pollutants, and were therefore most directlyimpacted by these proposals.Pennsylvania’s proposal had to satisfy ReasonablyAvailable Control Technology (RACT) requirements.11 RACTis a technology-forcing standard designed to induceimprovements and reductions in pollution for existing sources.It is a term of art at the foundation of the EPA’s decisionmaking, but is not defined in the Clean Air Act.12 The EPAitself originally defined this standard in internal guidance asrequiring “the toughest controls considering technological andeconomic feasibility that can be applied to a specific situation. . . [a]nything less than this is by definition less than RACT.”13Because the parties do not dispute this long-standingdefinition, we assume without deciding that the EPA’sdefinition is correct. Therefore, RACT is “the lowest emissionlimitation that a particular source is capable of meeting by theapplication of control technology that is reasonably availableconsidering technological and economic feasibility.”14Pennsylvania DEP, “Attainment Status by px.10See 42 U.S.C. §§ 7511c(a), 7502(c)(1).1142 U.S.C. § 7502(c)(1) (imposing the RACT requirement).1242 U.S.C. § 7502(c)(1). See also Natural Res. Def. Council,Inc. v. E.P.A., 571 F.3d 1245, 1252 (D.C. Cir. 2009) (finding“reasonably available control technology” under the CleanAir Act to be ambiguous).13Memorandum from Roger Strelow, Assistant Admin. forAir and Waste Mgmt., U.S. E.P.A., to Regional Admins.,Regions I - X, at 2-3 (Dec. 9, ection/cp2/19761209 strelow ract.pdf.14E.P.A., State Implementation Plans; Nitrogen OxidesSupplement to the General Preamble for the Implementation95

Case: 19-2562Document: 78Page: 6Date Filed: 08/27/2020Pennsylvania calls the SIP’s implementation of that standardthe RACT II Rule, as it is a second generation approach (sinceRACT must be reconsidered at each NAAQS revision).15RACT is not designed to rubber-stamp existing controlmethods. It is a technology-forcing mechanism. Whenoriginally introducing the standard, the EPA noted that “thecontrol agency, using the available guidance, should select thebest available controls, deviating from those controls onlywhere local conditions are such that they cannot be appliedthere and imposing even tougher controls where conditionsallow.”16Thus, in order to satisfy RACT, a proposed SIP mustsatisfy both technological and economic feasibility. The EPAexplains, “[t]he technological feasibility of applying anemission reduction method to a particular source shouldconsider the source’s process and operating procedures, rawmaterials, physical plant layout, and any other environmentalimpacts such as water pollution, waste disposal, and energyof Title I of the Clean Air Act Amendments of 1990, 57 Fed.Reg. 55,620, 55,624/3 (proposed Nov. 25, 1992); NavistarIntern. Transp. Corp. v. E.P.A., 941 F.2d 1339, 1343 (6th Cir.1991) (“Since 1976, the EPA has interpreted reasonablyavailable control technology to be the lowest emissionlimitation that a particular source is capable of meeting by theapplication of control technology that is reasonably availableconsidering technological and economic feasibility.”)(internal quotation marks omitted); Washington Envtl.Council v. Bellon, 732 F.3d 1131, 1137 (9th Cir. 2013)(describing same description of the standard adopted intostate law as part of an EPA-approved SIP).15JA38; see also JA247 (“The evaluation or reevaluation ofwhat constitutes RACT-level control for affected sources is arequirement that must be fulfilled each time the EPApromulgates a new NAAQS . . .”). For clarity, given thepotential for confusion between the general RACT approachand Pennsylvania’s specific implementation here, dubbedRACT II, we refer to the proposed changes as the SIPwhenever possible.16Memorandum from Roger Strelow, supra n.10.6

Case: 19-2562Document: 78Page: 7Date Filed: 08/27/2020requirements.”17 Whereas the economic feasibility “considersthe cost of reducing emissions and the difference in costsbetween the particular source and other similar sources thathave implemented emission reduction.”18 When calculating thecost, the EPA has previously cautioned: “Economic feasibilityrests very little on the ability of a particular source to ‘afford’to reduce emissions to the level of similar sources. Lessefficient sources would be rewarded by having to bear loweremission reduction costs if affordability were given highconsideration. Rather, economic feasibility . . . is largelydetermined by evidence that other sources in a source categoryhave in fact applied the control technology in question.”19A key technological element of this discussion is thedevelopment of selective catalytic reduction (SCR). SCRoriginated in the 1970s and is currently a preferred method forlimiting coal-fired power plant pollution. More than 300 coalpower plants in the U.S. feature the technology.20 SCR can,potentially, remove up to 100% of the ozone pollutionproduced by a plant. However, most systems are only designedfor 90% reduction. By comparison, another potential pollutioncontrol, SNCR, achieves 25-75% reductions.21 The SCRprocess involves injecting a substance such as ammonia or ureaas a catalyst into the post-combustion flue gas. That causes theharmful NOx pollution to break down into its componentnitrogen and water molecules and to be dispersed as vapor.22Plants that are unable to meet specified pollution limitsare allowed to average their emissions with other plants of the17E.P.A., State Implementation Plans; General Preamble forthe Implementation of Title I of the Clean Air ActAmendments of 1990; Supplemental, 57 Fed. Reg. 18,070,18,073 (proposed Apr. 28, 1992) (first introducing RACT as astandard to regulate emissions from existing sources).18Id.19Id.20JA108.21Id.22E.P.A., Air Pollution Control Technology Fact Sheet at 3,

Case: 19-2562Document: 78Page: 8Date Filed: 08/27/2020same owner or operator to comply with the limits.23 A plant isalso permitted under section 129.99 of the RACT II Rule torequest an alternative RACT limit that applies only to its ownfacility. These are called “source-specific RACT limits.”24 It isimportant to stress that the overall RACT limit is therefore nota hard cap if certain older plants could not otherwise satisfy therequirements.B. The Pennsylvania proposalPennsylvania’s SIP was submitted in May 2016.25 Itproposed that NOx emission limits for SCR-equipped coalfired power plants operating at 600 degrees or higher berequired to emit less than 0.12 pounds of NOx per millionBritish Thermal Units (MMBtu) (a unit of heat).26 Yet whenSCR-equipped boilers operate below 600 degrees Fahrenheit,a higher limit between 0/16 and 0.4 lb/MMBtu limit would bepermitted.27 Pennsylvania had originally not offered anyreduced limit on SCR-equipped facilities but added theseprovisions (and an accompanying temperature exception,discussed below) in response to critical feedback from theEPA, which suggested a 0.12 lb/MMBtu limit for such plants.28In March 2018, the EPA provisionally approvedPennsylvania’s proposal.29 A number of groups opposed it.They expressed particular concern over the regulations forcoal-fired combustion plants, which generate a largepercentage of Pennsylvania’s emissions.30 Surrounding statesopposed Pennsylvania’s proposal and submitted negativepublic comments during the ensuing comment period.For instance, New York took issue with the EPA’sclaim that the Pennsylvania limits were “comparable to NOx23JA39. The other plants must be subject to the same NOxpresumptive limits and be at the same facility or within thesame nonattainment area. Id.24Id.25JA26.2625 Pa. Code § 129.97(g)(1)(viii).27Id. § 129.97(g)(1)(vi)(C).28JA330.29JA26.30JA47-52.8

Case: 19-2562Document: 78Page: 9Date Filed: 08/27/2020emission limitations in other states.”31 New York compared itsown limits to those proposed by Pennsylvania and argued thatits limits were “more stringent nearly across the board.”32According to New York, Pennsylvania was proposing limitsthat were “comparable to limits that were effective in NewYork from 1995 to 2014.”33New York argued that the EPA’s finding thatPennsylvania’s proposal was comparable to New York andConnecticut ignored the fact that both states are partwaythrough a multi-year emission limit reduction plan. Additionalsubstantial reductions are already completed in Connecticutand expected in New York by 2023.34 Finally, New Yorkcriticized the relatively lenient 30-day averaging of pollutionproposed by Pennsylvania. New York, by contrast, requires a24-hour average, which the state claimed prevents emittersfrom relying on the month-long average to balance out dayswhen they do not use pollution control mechanisms.35Maryland also opposed Pennsylvania’s proposal. Itargued: “all of Pennsylvania’s coal-fired boilers equipped withSCR have demonstrated that they can achieve NOx emissionrates far below 0.12 lb/MMBtu, including hours where theSCR inlet temperature may be lower than 600 F.”36 Marylandnoted that the proposed limits were “on average, nearly 60%higher than what they have achieved in the past.”37 Thesubmission included data showing that all of Pennsylvania’spowerplants were capable of emissions lower than theproposed limit, down to as low as 0.043 lb/MMBtu.38C. Petitioner’s critiquesThe Sierra Club offered even more pointed criticism. Itsubmitted lengthy comments against the proposal. Inparticular, the Sierra Club used data from the EPA’s Id.329

Case: 19-2562Document: 78Page: 10Date Filed: 08/27/2020sources to demonstrate that at least some of Pennsylvania’splants have historically been able to emit NOx at 50% of theproposed limit.39 The Sierra Club also argued that otherneighboring states have not received a temperature thresholdfor their plants. It is therefore not at all clear why it isappropriate or reasonable for Pennsylvania to be given one.This is particularly important because the Sierra Club providedevidence regarding at least one Pennsylvania plant showingthat it has operated below the proposed limit (600 degrees) inthe past.40 Lastly, the Sierra Club complained that thePennsylvania proposal failed to require plants to report theirtemperature records. There would be no reliable method formonitoring whether plants were even complying with theseemission limits. Consequently, a plant could explain awayhigher emissions by claiming it was operating below 600degrees at the time, without having to substantiate that claim.The combination of this lack of mandatory reporting and thetemperature waiver created a potent loophole for polluters towalk through.41Despite these concerns, the EPA eventually gave thePennsylvania plan formal approval in 2019.42 Within the 60day statutory window to contest that decision, the Sierra Clubfiled the present petition for review.43II.The EPA had jurisdiction to review and approvePennsylvania’s SIP.44 The SIP is “locally or regionallyapplicable” within the Third Circuit.45 Accordingly, we have39JA336-41.JA341-45 (modeling temperatures and pollution at theCheswick plant). This data suggests that Cheswick would beable to evade the 0.12 lb/MMBtu limit by operating at lowertemperatures, as it has in the past.41JA345-4642JA7.43See 84 Fed. Reg. 20,274 (May 9, 2019) (JA007); 42 U.S.C.§ 7607(b)(1).44JA028; see 42 U.S.C. §§ 7502, 7410(k).4542 U.S.C. § 7607(b)(1).4010

Case: 19-2562Document: 78Page: 11Date Filed: 08/27/2020jurisdiction to review the EPA’s final approval of theCommonwealth’s proposal.A. Standard of ReviewWe accord due deference to a final EPA action, in lightof the agency’s expertise. We will remand only when theagency’s decision “[i]s ‘arbitrary, capricious, an abuse ofdiscretion, or otherwise not in accordance with the law.’”46But to receive such deference, the agency cannot reachwhatever conclusion it likes and then defend it with vagueallusions to its own expertise; instead, the agency must supportits conclusion with demonstrable reasoning based on the factsin the record. When it fails to do so, an agency action isarbitrary and capricious—examples include the agency“entirely fail[ing] to consider an important aspect of theproblem.”47 Or offering only a “conclusory statement” which“failed to articulate a rational basis for its conclusion.”48 Orindeed if “cit[ing] no data whatsoever in support of itsdecision.”49 We have held that “courts are ‘not obliged to standaside and rubber-stamp their affirmance of administrativedecisions that they deem inconsistent with a statutory mandateNat’l Parks Conservation Ass’n v. E.P.A., 803 F.3d 151,158 (3d Cir. 2015) (internal citation omitted). This isillustrated, for example, in Berks County v. E.P.A., anunpublished 2015 decision, where we denied a petition forreview because we found the EPA had considered all the dataand made a reasonable decision. 619 Fed. Appx. 179, 184 (3dCir. 2015).47Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.Co., 463 U.S. 29, 43 (1983); see, e.g., E. Bay SanctuaryCovenant v. Barr, 964 F.3d 832, 857 (9th Cir. 2020)(remanding an agency action because it “entirely failed toconsider an important aspect of the problem”) (citing 463U.S. at 43); Sierra Club, Inc. v. U.S. Forest Serv., 897 F.3d582, 605 (4th Cir. 2018) (same); Genuine Parts Co. v. E.P.A.,890 F.3d 304, 341 (D.C. Cir. 2018) (same).48W.R. Grace & Co. v. E.P.A., 261 F.3d 330, 342 (3d Cir.2001).49Natural Res. Def. Council, Inc. v. E.P.A., 790 F.2d 289,309 (3d Cir. 1986).4611

Case: 19-2562Document: 78Page: 12Date Filed: 08/27/2020or that frustrate the congressional policy underlying astatute.’”50However, we cannot “substitute [our] judgment for thatof the agency.”51 We will therefore defer to the agency’sexpertise if we can discern “a rational connection between thefacts found and the choice made.”52 Even when “[a]n agencyhas engaged in line-drawing determinations” we

PRECEDENTIAL SIERRA CLUB, Petitioner v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY *PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION, Intervenor Respondent *(Pursuant to the Court Order dated 8/5/19) _ On Petition for Review of Final Agency Action of the United States Environmental Protection Agency (EPA-1: EPA-R03-OAR-2017-0290)

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