Lignite Energy Council v. United States Environmental Protection Agency

Fossil-fuel-fired, steam-generating units (boilers) emit hazardous air pollutants, nitrogen oxides (NOx). NOx can cause harmful health and environmental effects, so Congress regulated NOx emissions in the Clean Air Act (CAA). Section 111 of the CAA required the Environmental Protection Agency (EPA) (defendant) to establish new-source performance standards (NSPS) for NOx emissions. Section 111 required that NSPS be set at a level that reflects the degree of emission limitation achievable using the best system of emission reduction, which is determined to be adequately demonstrated considering costs and energy requirements. In 1990, the EPA amended the CAA to direct the EPA to establish new NOx NSPS that incorporate improvements in methods for the reduction of NOx emissions. In response, the EPA promulgated a rule lowering its NOx NSPS to .15 pounds per million BTU burned (lb/MMBtu) for utility boilers and 0.20 lb/MMBtu for industrial boilers. This rule reflected the standard of the level achievable using new selective catalytic reduction (SCR) technology in combination with traditional combustion control technology. The EPA determined that SCR is adequately demonstrated based on a qualitative study performed on boilers. The EPA considered this to be the best-demonstrated system of emissions reduction and that it only modestly increased energy production costs for newly constructed boilers. Lignite Energy Council (Lignite) (plaintiff) claimed that the EPA improperly selected SCR as the basis for its NOx NSPS without properly balancing the cost factors required by § 111. Lignite claimed the cost of reducing NOx emissions using SCR with combustion controls was substantially greater than through the use of combustion controls alone and that improvements in combustion controls enabled many boilers to attain standards close to the SCR-based NSPS. Lignite also claimed that the EPA acted arbitrarily and capriciously by failing to adequately demonstrate SCR.