Siaioa Court of
FOB THE DISTRICT OP COLUMBIA CIRCUIT
No. 78-1006
ALABAMA POWER COMPANY, ET AL., PETITIONERS
v.
DOUGLAS M. COSTLE, as Administrator,
ENVIRONMENTAL PROTECTION AGENCY, ET AL.,
RESPONDENTS
SIERRA CLUB, ET AL., INTERVENORS
Petitions for Review of Orders of the
Environmental Protection Agency
Argued April 20,1979
Decided December 14,1979
this date
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Notice: This opinion is subject to formal revision before publication
in the Federal Reporter or U.S.App.D.C. Reports. Users are requested
to notify the Clerk of any formal errors in order that corrections may be
made before the bound volumes go to press.
Stairs (Eourt ut Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 78-1006
ALABAMA POWER COMPANY, ET AL., PETITIONERS *
v.
DOUGLAS M. COSTLE, as Administrator,
ENVIRONMENTAL PROTECTION AGENCY, ET AL.,
. RESPONDENTS *
SIERRA CLUB, ET AL., INTERVENORS *
* Consolidated with the following cases (identified by this
Circuit's case number and petitioner), in all of which the
Environmental Protection Agency is the respondent: No. 78-
1008, American Petroleum Institute, et al.; No. 78-1525, Part
II, Environmental Defense Fund, Inc.; No. 78-1590, Part II,
Hampton Roads Energy Company; No. 79-1591, Alabama
Power Company, et al.; No. 78-1592, Alabama Power Com-
pany, et al.; No. 78-1595, American Petroleum Institute, et
al.; No. 78-1596, American Petroleum Institute, et al.; No.
78-1610, Part II, The Montana Power Company, et al.; No.
78-1752, District of Columbia, a municipal corporation; No.
78-1801, National Coal Association; No. 78-1802, National
Coal Association; No. 78-1805, Mining and Reclamation Coun-
cil of America, Inc.; No. 78-1806, Mining and Reclamation
Council of America, Inc.; No. 78-1807, The Montana Power
Company, Pacific Power and Light Company, Portland Gen-
eral Electric Company, Puget Sound Power and Light Corn-
Bills of costs must be filed within 14 days after entry of judgment. The
court looks with disfavor upon motions to file bills of costs out of time.
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Petitions for Review of Orders of the
Environmental Protection Agency
Argued April 20,1979
Decided December 14,1979
pany, and Washington Water Power Company; No. 78-1810,
Part n, The Pittston Company; No. 78-1811, American Iron
and Steel Institute; No. 78-1815, Part II, American Paper
Institute and the National Forest Products Association; No.
78-1816, Ashland-Warren, Inc.; No. 78-1817, Ashland-Warren,
Inc.; No. 78-1818, Manufacturing Chemists Association,
Chemical Products Corporation, Dow Chemical Company,
FMC Corporation, Monsanto Company, PPG Industries, Inc.,
Rohm and Haas Company, Stauffer Chemical Corporation,
Union Carbide Corporation, and Allied Chemical Corporation;
No. 78-1819, Part II, Manufacturing Chemists Association,
Chemical Products Corporation, Dow Chemical Company,
FMC Corporation, Monsanto Company, PPG Industries, Inc.,
Rohm and Haas Company, Stauffer Chemical Company, Union
Carbide Corporation, and Allied Chemical Corporation; No.
78-1821, Asarco Incorporated; No. 78-1822, American Mining
Congress, United States Steel Corporation, Buttes Resources
Company, Cyrus Mines Corporation, Energy Fuels Corpo-
ration, Freeport Exploration Company, ITT Resources, Inc.,
Johnsmanville Sales Corporation, The Montana Coal Council,
Thermal Energy Inc., and Wyoming Mineral Corporation;
No. 78-1823, Westmoreland Coal Company and Westmoreland
Resources, Inc.; No. 78-1824, Westmoreland Coal Company
and Westmoreland Resources, Inc.; No. 78-1825, State of
Texas; No. 78-1827, Mitchell Energy Co., a corporation; No.
78-1828, Cheyenne Refining Co., a corporation; No. 78-1829,
Gary Western Co.; No. 78-1830, LA Jet, Inc., a corporation;
No. 78-1832, Sierra Club; No. 78-1833, Reynolds Metals Com-
pany, Inc.; No., 78-1834, Colorado Interstate Gas Company,
Tennessee Gas Pipeline Company, a division of Tenneco,
Inc., and Natural Gas Pipeline Company of America; No.
78-1836, GATX Terminals Corporation, General American
Transportation Corporation, and GATX Corporation; No.
78-1837, Occidental Oil Shale, Inc. and Ashland Colorado,
Inc.; No. 78-1838, Part II, Kroppers Company, Inc.; and No.
78-1839), Part II, USM Corporation. '
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Henry V. Nickel with whom George C. Freeman, Jr.,
Michael B. Barr, Andrea S. Bear were on the brief, for
Alabama Power Company, et al., in Nos. 78-1006, .78-
1591, 78-1592, 78-1801, 78-1802 and 78-1832.
Michael K. Glenn for American Paper Institute, et al.,
in Nos. 78-1815 and 78-1832.
James A'. Bieke with whom Francis M. Shea, Richard
T. Conway, William R. Galeota and Joseph C. Zengerle
were on the brief, for Montana Power Company, et al.,
in Nos. 78-1G10, 78-1807 and 78-1832.
Richard G. Wise, Assistant Corporation Counsel, with
whom Louis P. Bobbins, Acting Corporation Counsel,
John C. Salyer, Assistant Corporation Counsel, were on
the brief, for District of Columbia in No. 78-1752.
Jim Mathews, Assistant Attorney General, State of
Texas, with whom John L. Hill *, Attorney General, David
M. Kendall *, First Assistant Attorney General, State of
Texas, were on the brief, for State of Texas in No. 78-
1825.
John J. Adams and David F. Peters were on the brief,
for American Petroleum Institute, et al.,. in Nos. 78-1008,
78-1595, 78-1596, 78-1801 and 78-1832.
J. Michael Hines, John D. Field, III and John R.
Feore, Jr., were on the brief, for Hampton Roads Energy
Company in Nos. 78-1590 and 78-1832.
Alan B. Mollohan and J. Roy Spradley, Jr. were on
the brief, for Mining and Reclamation Council of Amer-
ica, Inc.-in Nos. 78-1805 and 78-1832.
Jonathan B. Hill and Donald W. Marhham were on the
brief, for The Pittston Company in Nos. 78-1810 and 78-
1832.
* At the time the brief was filed.
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Roger M. Golden was on the brief, for American Iron
and Steel Institute in Nos. 78-1811 and 78-1832.
George- J. Miller and William A. White were on the
brief, for Westmoreland Coal Company, et al., in Nos. 78-
1823, 78-1824 and 78-1832.
James L. Lyon-s was on the brief, for Mitchell Energy
Co., et al., in Nos. 78-1827, 78-1828, 78-1829, 78-1830
arid 78-1832.
Carl W. Ulrich, William R. Duff and Henry E. Broivn
were on the brief for Colorado Interstate Gas Company,
et al., in Nos. 78-1832 and 78-1834.
William S. Hemsley, Jr. was on the brief, for GATX
Terminals Corporation, et al, in Nos. 78-1832 and 78-
1836.
Albert J. Beverage, HI and Charles A. Patrizia were
on the brief, for Reynolds Metals Company, Inc. in
No. 78-1833.
Thomas C. Matthews, Jr., Charles C. Abeles and
Donald T. Bucklin were on the brief, for Occidental Oil
Shale, Inc., et al., in Nos. 78-1832 and 78-1837.
Frank H. Morison, Donald Quander and James L.
White were on the brief, for ASARCO Inc. in Nos. 78-
1821 & 78-1832.
Robert C. Rauch, for Environmental Defense 3Tund in
Nos. 78-1006, 78-1008, 78-1525, Part II and 78-1610,
Part II.
Peter J. Herzberg with whom H. Anthony Riickel,
James H. Cohen and Kristine L. Hall were on the brief,
for Sierra Club Legal Defense -Fund, Inc. in No. 78-1006,
78-1008, 78-1591, 78-1592, 78-1595, 78-1596, 78-1752, 78-
1839, Part II, 78-1801, 78-1802, 78-1805, 78-1806, 7S-
1807, 78-1810, Part II, 78-1811, 78-1815, Part II, 78-1816.
78-1817, 78-1818, 78-1819, Part II, 78-1821, 78-1822, 78-
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1823, 78-1824, 78-1825, 78-1827, 78-1828, 78-1829, 78-
1830, 78-1832, 78-1833, 78-1834, 78-1836, 78-1837 and
78-1838, Part II.
Erica L. Dolgin, Angus Macbeth and Elizabeth Stein,
Attorneys, Department of Justice, with whom Sanford
Sagalkin, Acting Assistant Attorney General, was on the
brief, for respondent Douglas M. Costle, et al.
Peter H. Wyckoff, Attorney, Environmental Protection
Agency, a member of the bar of the Supreme Court of
New York pro hac vice by special leave of Court, Jeffrey
C. Smith and Lydia N. Wegman, Attorneys, Environ-
mental Protection Agency, with whom Joan Z. Bernstein,
General Counsel, Environmental Protection Agency, was
on the brief, for respondent Environmental Protection
Agency, et al.
Lawrence V. Robertson, Jr. and John H. Cheatliam,
III were on the brief, for intervenor, Interstate Natural
Gas Association of America in No. 78-1834.
Also James W. Moorman and Earl Salo, Attorneys,
Department of Justice entered appearances for respond-
ent, Douglas M. Costle, et al. in Nos. 78-1006 and 78-
1008.
Also Tom Watson entered an appearance for intervenor
Sierra Pacific Power Company in No. 78-1832.
Also Bruce J. Tends and Philip G. Sunderland entered
appearances for intervenor, Environmental Defense Fund,
et al. in No. 78-1610, Part II.
Before LBVENTHAL,* ROBINSON and WILKEY, Circuit
Judges.
Opinions for 'the Court filed by Circuit Judges LEVEN-
THAL, ROBINSON and WILKEY.
* This opinion was written by Circuit Judge LEVENTHAL
and concurrences were received from the other Judges prior
to his death.
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Per curiam: Because of the great number of complex
issues, the court's opinion appears in three parts, each
written for the court by a member of £he panel. Today's
opinions supersede the per curiam opinion in this case,
issued June 18, 1979. We have entertained narrowly
focused petitions for reconsideration, -all of which are
disposed of by our holdings here.
A table of contents for the three opinions appears at
the start of Judge Leventhal's opinion.
Opinion for the Court by LEVENTHAL, Circuit Judge:
This is one of three opinions issued today considering
challenges to the validity of final regulations1 promul-
gated by the Environmental Protection Agency (EPA)
on June 19, 1978 generally embracing the prevention of
significant deterioration of air quality in the nation's
clean air areas." 2 These "PSD" regulations interpreted
and began the implementation of various provisions of the
Clean Air Act Amendments of 1977.3 Pertinent pro-
visions are gathered in title I, part C of the Clean Air
Act as amended (hereafter sometimes referred to as the
"PSD part" or the "PSD provisions") .
Before us are consolidated petitions for review filed in
this court, as provided by statute, within 60 days of
"
MO C.F.R. §§51.24, 52.21 (1978).
2 "Clean air areas" is the term generally used to refer to
regions designated under sections 107(d) (1) (D) & (E) of
the Clean Air Act as having ambient air quality better than
the applicable national primary or secondary ambient air
quality standard, or for which there is insufficient data to
make a determination of the* air quality. 42 U.S.C. §§ 7407 (d)
(1)(D) & (E) (1978).
3 P.L. 95-95, 91 Stat 685, 42 U.S.C. §§ 7401 et seq. (1978)
(hereafter cited as the "1977 Amendments"). The Clean
Air Act is hereafter cited as "C.A.A." or as the "Act."
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the date of promulgation/ A special procedure was em-
ployed by the Chief Staff Counsel of the Circuit to co-
ordinate the efforts of counsel and facilitate the presenta-
tion of this extraordinarily complex case.5 Significant
preliminary issues raised by these petitions were argued
on., October 10, 1978, and our ruling on those questions
issued March 27, 1979.° The remaining issues raised by
the petitions, involving primarily interpretative questions
of comprehensive importance,7 came to be argued on April
19 and 20,1979.
The judicial review provisions as well as other fea-
tures of the Clean Air Act Amendments set a tone for
expedition of the administrative process that effectuates
the congressional purpose to protect and enhance an in-
valuable national resource, our dean air. Motivated by
such concerns, after careful and complete consideration
of the case, we issued on June 18, 1979, a per curiam
«C.A.A. §307(b)(l), 42 U.S.C. §7607(b)(l) (1978).
B Chief Staff Counsel first separated out the preliminary-
issues for argument and arranged for them to be heard
first in a separate action. Then, he aligned the parties ac-
cording to their interests, divided the issues, and assigned
them for presentation in written and oral argument.
6 Citizens To Save Spencer County v. EPA, U.S.App.
D.C. , F.2d (No. 78-1002, 3/27/79) (uphold-
ing EPA's exercise of legislative rulemaking authority to set
the effective date for the PSD preconstruction review and
permit requirements of the 1977 Amendments as March 1,
1978, subject to minor exceptions).
11n addition to the effect on the interpretation and imple-
mentation of the PSD provisions, several of the questions
decided here are of significance for other comprehensive rule-
makings under the 1977 Amendments, e.g., the regulations for
"nonattainment areas" under part D of the Act, 42 U.S.C.
§§7501-07 (1978).
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8
opinion8 summarizing our rulings on the• questions pre-
sented. The expedited judgment and per curiam opinion
served two additional purposes: (1) it enabled the EPA
to commence rulemaking or other proceedings necessary
to • promulgate those revisions in the PSD regulations
required by our rulings, and to take other prudent action
to effectuate congressional policies;9 and (2) it allowed
the court to entertain, prior to the issuance of this opin-
ion, narrowly focused petitions for reconsideration di-
rected to the panel by the parties.10
The three opinions issued today are in part an in-
corporation, with some enlargement of analysis, of the
rulings in our per curiam opinion of June 18, 1979,
together with modifications that the court has deemed
appropriate in light of the petitions for reconsideration
that have been filed. In view of the large number of
questions raised, the members of the panel divided re-
sponsibility for preparation of discrete parts.
8 Alabama Power Company, et al. v. Costle, et al., U.S.
App.D.0. , F.2d' (No. 78-1006, 6/18/79).
9 EPA has proceeded with expedition to revise the perti-
nent regulation in accordance with the rulings of our per
curiam opinion. Proposed revised regulations have already
been published in the Federal Register for public comment.
40 Fed. Reg. 51924 (Sept. 5, 1979).
10 The court was prompted to adopt this novel procedure
by its appreciation of the complex and subtle nature of the
case. Parties were encouraged to consolidate the presenta-
tion of petitions for reconsideration, a procedure successfully
employed at oral argument
Petitions for reconsideration submitted pursuant to this
procedure were submitted without prejudice to the right of
filing in the ordinary course full petitions for reconsideration
subsequent to the issuance of this detailed opinion.
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TABLE OF CONTENTS
Opinion for the Court by Judge Levenihal Page
I. BACKGROUND OF PSD PROGRAM AND
REGULATIONS UNDER REVIEW 10
II. POTENTIAL TO EMIT 24
III. EXEMPTION OF 50 TPA CONTROLLED
SOURCES 32
IV. PROTECTION OF THE INCREMENTS.... 44
V. APPLICATION OF PSD PERMITS TO
SOURCES IN NONATTA1NMENT
AREAS 49
VI. FUGITIVE DUST SOURCES, RULEMAK-
ING, AND EXEMPTION AUTHORITY.... 59
VII. MONITORING 65
Opinion for the Court by Judge Robinson
I. BASELINE DATE 1
II. BASELINE AND VOLUNTARY FUEL
SWITCHES ..„.; 6
III. MODELING ..._ _ „. 18
IV. STACK HEIGHT ._ „. 33
Opinion for the Court by Judge Wilkey
I. SOURCE DEFINITION 1 2
II. MAJOR MODIFICATION/BUBBLE 12
III. POLLUTANTS SUBJECT TO PSD REGU-
LATION AND THE "MAJOR EMITTING
FACILITY" THRESHOLD 22
IV. DEFINITION OF BACT TO INCLUDE A
VISIBLE EMISSION STANDARD 30
V. "COMMENCED CONSTRUCTION" FOR
PHASED CONSTRUCTION PROJECTS .... 33
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10
I. BACKGROUND OF PSD PROGRAM AND REGULATIONS
UNDER REVIEW u
A. Clean Air Amendments of 1970
Responding to the growing perception of air pollution
as a serious national problem, Congress enacted the Clean
Air Amendments of 1970,12 which restructured the Clean
Air -Act and established a rigorous program for the
regulation of existing and new sources of air pollution.
At the heart of the program were federally promulgated
national ambient air quality standards (NAAQS) and
state-adopted plans to implement those standards.
Section 109 of the Act" directed the Administrator of
EPA to promulgate primary and secondary NAAQS es-
tablishing the maximum permissible concentrations of air
pollutants. Primary standards were defined as those
whose attainment and maintenance were necessary "to
protect the public health," with "an adequate margin of
safety." Secondary standards were to specify the level
of air quality necessary to "protect the public welfare
from any known or anticipated adverse effects" of a
pollutant. Pursuant to this authority, the Administrator
in 1971 promulgated NAAQS for six pollutants, includ-
ing sulfur dioxide and particulate matter, two pollutants
of primary concern to this litigation.1*
The Act contemplated application of the NAAQS to in-
dividual sources of pollution through state enforcement.
Section 10 of the ActIB required each state to hold hear-
11 This description derives in substantial measure from the
able joint statement of the case prepared by industry counsel.
12 Pub. L. No. 91-604, 84 Stat. 1676.
13 Current version at 42 U.S.C. § 7409 (1978).
"40 C.F.R. §50.4-.ll (1978).
1S Current version at 42 U.S.C. § 7410 (1978).
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11
ings on, adopt, and submit to the Administrator a State
Implementation Plan (SIP) for each "air quality control
region" within the state. The SIP was to provide (1)
for the attainment of primary NAAQS "as expeditiously
as practicable but ... in no case later than three years
from the date of approval of the plan," and (.Z> for the
attainment of the secondary standards, ~Tiui< •-.. 'a reason-
able time." Section 110 required that each plan include
"emission limitations, schedules, and timetables with such
linu'tations and such other measures as may be necessary
to insure attainment and maintenance" of the ambient
air quality standards. Once a state plan was submitted,
the Administrator was to approve it if it was consistent
with the statutory requirements. If the plan was inade-
quate, or if no plan was submitted, the Administrator
was required to propose and promulgate a plan for the.
state.
The provisions for the attainment and maintenance
of NAAQS were to operate primarily through controls
on existing sources of pollution. In addition, the Act
contemplated that major new sources of pollution would
be subject to controls more stringent than those needed
to meet primary and secondary NAAQS. Section 111 of
the Act10 required the Administrator to adopt technology-
based new source performance standards (NSPS) limit-
ing the emissions from any new or modified facilities in
certain industrial categories that "contributed signifi-
cantly to air pollution." Section lll(e) made it unlaw-
ful for a new source in such a category to operate in
violation of any applicable NSPS regardless of whether
its emissions caused ambient standards to be exceeded.
Section 110 also provided that state implementation plans
contain a preconstruction review procedure to assure
that major new sources would not interfere with the
attainment and maintenance of ambient standards.
" Id. at § 7411.
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12
B. The PSD Program Prior to tlie 1977 Amendments
1) Genesis of PSD Program. Section 110 of the Act
contained no explicit provision addressing potential de-
terioration of ambient air quality in those areas where
ambient pollutant "levels were lower than those mandated
by primary and secondary NAAQS. EPA did not impose
on the states any requirement to control new sources of
pollution that posed no threat to ambient standards.
In 1972, the Sierra Club brought suit alleging that the
Act required state plans to include measures to prevent
the "significant deterioration" of air quality in those
parts of the country where the ambient standards were
being met. The District Court for the District of Colum-
bia held that the Act's statement of purpose, contained in
section 101 (b) (1), imposed such an obligation.17 On
June 12, 1972, it issued a preliminary injunction direct-
ing the Administrator to disapprove state plans and to
promulgate regulations where the plan failed to take the
measures necessary to prevent such deterioration. This
court affirmed. On June 11, 1973, the Supreme Court
affirmed by an equally divided court. In response to the
injunction, EPA disapproved all state plans in November,
1972, and in 1973, following the Supreme Court's action,
the agency initiated rulemaking to incorporate PSD re-
quirements into each state plan.
2) 197!,. PSD Regulations. In December, 1974, the
Administrator promulgated final regulations amending
each state plan to include a PSD requirement.18 The new
PSD program implemented through preconstruction re-
views of new or modified sources of sulfur dioxide and
" Sierra Club v. Ruckelshaus, 344 F. Supp. 253 (D.D.C.
1972), aff'd per curidm, 4 ERG 1815 (D.C. Cir. 1972),
aff'd by an equally divided court, sub. nom. Fri v. Sierra Club,
412 U.S. 541 (1973).
18
39 Fed. Reg. 42,510 (1974).
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particulate matter.19 "Significant deterioration" was de-
fined in terms of allowable numerical increases in the
concentration of sulfur dioxide and particulate matter in
areas where ambient pollution levels were presumed by
the regulations to be lower than those mandated by
primary and secondary NAAQS.20 These regulated areas
came to be referred to as "clean air areas," although, as
will become clear from our subsequent discussion, the
term encompasses areas that in fact need not possess air
quality better than the applicable NAAQS. These allow-
able increases, or "increments," determined whether air
quality deterioration associated with a new facility was
permissible. Increment consumption, or "use," was calcu-
lated by reference to a "baseline" level of air quality.
Under the 1974 regulations this baseline was defined as
the representative air quality during 1974 plus the pro-
jected emissions from sources that had received permits
to construct before January 1, 1975, but were not in
operation by that date.21
"40 C.F.R. § 52.21 (d) (1) (1977) (superseded). EPA
stated that it could not regulate for PSD the other four
pollutants for which NAAQS had been established because,
among other reasons, existing analytical procedures were not
adequate to determine the impact of individual sources on air
quality concentrations of these pollutants. See 39 Fed. Reg.
42,511 (1974).
26 The regulations applied of their own force to all areas
of the country except as provided by the following provision:
The provisions of this paragraph do not apply in those
counties or other functionally equivalent areas that per-
vasively exceeded any national ambient air quality stand-
ards during 1974 for sulfur dioxide or particulate matter
and then only with respect to such pollutants. States may
notify the Administrator at any time of those areas which
exceeded the national standards during 1974 and there-
fore are exempt from the requirements of this paragraph.
40 C.F.R. § 52.21 (c) (1)' (1977).
2140 C.F.R. § 52.21 (d)(l)(i) (1977) (superseded).
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14
The 1974 regulations established a program under
which the amount of new growth allowed—the siza of
increment—would depend upon the amount of growth
desired for the area. Areas subject to PSD regulations
were divided into three groups. Initially, all such areas
were designated Class II, for which increments were set
permitting moderate growth. Areas could be redesig-
nated Class I, for which much smaller increments ap-
plied, allowing virtually no growth, or Class III, for
which increases in pollution were allowed up to the
national ambient standards. Procedures were established
for reclesignations by the state (or, with respect to areas
within their jurisdiction, by Federal Land Managers and
Indian Governing Bodies) ,22
Small industrial facilities, surface mining, forestry and
similar operations were not subject to PSD review.
Rather, the regulations covered 19 categories of typical
large industrial (or, in .the case of incinerators, munici-
pal) facilities. Each source on the list had significant
process emissions of particulates or sulfur dioxide which,
EPA estimated, accounted for "essentially all of [the
sulfur dioxide and particulate matter] emitted in clean
areas."2S New sources and modifications of existing
sources on the list of 19 were subject to preconstruction
review. The term "modification," which triggered pre-
construction review, was generally defined as a change in
operation or design that increased emissions at a source,
but it was further defined so as to be inapplicable to cer-
tain changes, including the use of a more polluting fuel,
if the source was designed to use the alternate fuel prior
to the December, 1974,*" promulgation of the PSD regu-
lations.24 A PSD permit was required for new or modi-
22 Id. at § 52.21 (c) (superseded).
23 38 Fed. Reff. 18,989 (1973).
2* 40 C.F.E. § 52.01 (d) (1977) (superseded).
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15
fied sources on the list if construction was commenced
after June 1, 1975.
In order to obtain a PSD permit, sources were required
to demonstrate that their emissions would npt violate the
increments in any area encompassed by the regulations.
Under the PSD program, after January 1, 1975, all
emission increases were counted against the increments
unless emitted from a source that had received its permit
but was not in operation by that date.-3 In other words,
emission increases from new small sources, from fuel
switches and from large sources commencing construction
between January 1, 1975, and June 1, 1975, were not
subject to PSD review but could consume the increment.
Therefore, the 1974 PSD regulations "would permit"
unregulated sources of increased emissions "to 'use up'
the entire available deterioration increment, and in some
cases exceed the increment. . . ." -a Since major sources
subject to PSD were required to "consider the impact" of
emission increases from unregulated sources, the PSD
program assured that, if the increments were exceeded,
PSD permitting of major industrial sources would cease
unless the area were "reclassified" to make a larger
increment applicable to it.27
Under the PSD program, determination of a source's
impact on the applicable increments was based upon
"diffusion models"—mathematical techniques for simu-
lating the diffusion into the atmosphere of a new source's
emissions under various meteorological conditions and
operating levels.-3 The purpose of such models is to pre-
25 The definition of "baseline," see 40 C.F.R. § 52.21 (d)
(2) (i) (1977) (superseded), excluded such emissions.
80 39 Fed. Reg. 31,004 (1974).
27 Id. at 31,003.
28 See Technical Support Document—EPA Regulations for
Preventing: the Significant Deterioration of Air Quality 29-
30 (1975); J.A. at 241-42.
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16
diet pollutant concentrations at any point in the neighbor-
hood of the source. While EPA recognized that diffusion
modeling could not be expected to predict, exactly actual
increment consumption, the "normal variability of air
quality data,"29 in EPA's view, made it impractical to
use monitoring data (i.e., actually measured data) to
determine increment consumption. Therefore, • since
models were a more "consistent" method for calculating
consumption, they were "used to keep track of available
(or unused) increments as sources and emission [s] are
increased or decreased."30
"Accounting" by modeling was an on-going process,
and modeling techniques or assumptions might require
adjustments in previous estimates of increment consump-
tion. These changes would affect only future PSD appli-
cants, however. As EPA emphasized in its Background
Document, "significant deterioration is defined in terms
of air quality increments rather than absolute air quality
levels." Therefore, because the PSD program did not
establish "absolute air quality levels" that could not be
exceeded, new sources receiving PSD permits were not
subject to further controls to meet the increment if it
were later discovered that the "EPA or State approved
model was inaccurate." 31
In addition to the increment impact review, sources
under the 1974 PSD program had to apply "best avail-
28 39 Fed. Reg. 31,003 (1974). The concentration of pol-
lutants in the air is not ^constant Variable meterological
conditions (wind direction, wind speed, temperature, humid-
ity, etc,), source location, design and operating modes as well
as other factors, combine to create different pollutant con-
centrations at different times.
30 Technical Support Document, supra note 16, at 29-30,
J.A. at 241-42.
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17
able control technology," defined in terms of emission
limitations on sulfur dioxide and participates. These
BACT limitations were to be established on a case-by-case
basis unless the source was subject to new source per-
formance standards under section 111. The regulations
provided that where an NSPS was applicable, compliance
with the NSPS would constitute compliance with BACT.32
3) Judicial Review of 1974 Regulations. We sustained
the 1974 PSD regulations over challenges by both indus-
try and environmental groups." The Supreme Court
granted industry petitions for certiorari to review our
holding that EPA had authority to adopt PSD require-
ments under section 110 of the Act. On August 27, 1977,
Congress passed the Clean Air Act Amendments of 1977
(1977 Amendments). The Supreme Court consequently
vacated our. decision and remanded for consideration in
light of the 1977 Amendments and of possible mootness.
We, in turn, remanded the case to EPA for consideration
of those issues.
C. Clean Air Act Amendments of 1977
The 1977 Amendments •"" maintain the basic structure of
regulation of stationary sources through state plans, but
made substantial changes in the requirements governing
those plans. The Amendments provide for additional con-
trols on existing sources to ensure protection of the ambi-
ent standards and visibility. Further, they establish strict
requirements for major new sources to be located in areas
where the national standards have not yet been attained
("non-attainment areas").
8240 C.F.R. §52.21(d)(2)(ii) (1977) (superseded).
33 Sierra Club v. EPA, 176 U.S.AppJXC. 335, 540 F.2d
1114 (1976), vacated sub nom. Montana Power Co. v. EPA,
434 U.S. 809 (1977).
M Pub. L. No. 95-95, 91 Stat. 685, 42 U.S.C. § 7401 et seq.
(1978).
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The central focus of this case is Part C of title I
(sections 160-169) added to the Clean Air Act by the
1977 Amendments. Section 161 of the Act35 now pro-
vides an express directive that state plans include meas-
ures to prevent the significant deterioration of air quality
•iTvare --designated by the states under section 107(d)
f.\\'S>^..& (E) of the Act as having ambient air quality
better than the applicable national primary or secondary
ambient air quality standard, or for which there is insuf-
ficient data to make a determination of the air quality.
An area so designated has commonly been referred to in
the legislative history and in the literature that has
developed as a "clean air area," a description often con-
trasted with the term "non-attainment area," which is
defined by section 171(2) of the Act as an area that has
been demonstrated to exceed an NAAQS for a given
pollutant.36 We wish to alert the reader that the phrase
33 42 U.S.C. § 7471 (1978).
38 C.AJV. § 171 (2), 42 U.S.C. § 7501 (2) (1978) provides:
The term 'nonattainment area' means, for any air pol-
lutant an area which is shown by monitoring data or
which is calculated by air quality modeling (or other
methods determined by the Administrator to be reliable)
to exceed any national ambient air quality standard for
such pollutant. Such term includes any area identified
under paragraphs (A) through (C) of section 107(d) (1).
Circumstances will arise where an area that has been desig-
nated under section 107(d)(l)(D) or (E) will be demon-
strated on the basis of-monitoring data required of a permit
applicant under section 165 (e) (2), or on the basis of other
information, to be a nonattainment area for a given pollutant.
Until the designation of that area for such a pollutant is
modified under section 107, the area will be categorized both
under section 107 as a presumed "clean air area" and under
section 171(2) as a "nonattainment area." This anomaly illus-
trates that the second sentence of the definition of nonattain-
ment area is inclusive, but not exhaustive.
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"clean air areas" is a generalization that may bs con-
fusing when employed in technical usages. A so-called
clean air area for a given air pollutant may include an
area that for the same pollutant would be classified as a
non-attainment area if sufficient data existed. Further,
sinc-3 classification of areas is pollutant-specific, the same
area may be a clean air area due to the air quality with
respect to one pollutant, yet be a non-attainment area with
respect to another pollutant. Finally, the areas of the
country subject to regulation under the PSD provisions
of the Act include areas other than those commonly re-
ferred to as clean air areas. With these caveats, which
will b*d explained in greater detail as they become perti-
nent to our discussion, we will continue to use the term
"clean air areas" as a shorthand expression where we do
not feel the context calls for a more technical usage.
Under the provisions of the 1977 Amendments, areas
subject to PSD regulation are divided into three classes; "
increments are set for each class;38 new major fa-
cilities to be located in such areas must meet tech-
nology-based emission limitations reflecting BACT;39
these facilities cannot commence construction if their
emissions would cause or contribute to a violation
of the applicable increments in a Class I, II or ..III area; *°
and demonstrations that new facility emissions would
not violate the applicable increments are to be based on
both monitoring and diffusion modeling.41 The list of
19 major sources which emit, or have the potential to
emit, 100 tons per year or more of any pollutant are
37 C.A.A., § 162, 42 U.S.C. § 7472 (1978).
38 Id. at § 163, 42 U.S.C. § 747,3 (1978).
89 Id. at § 165 (a) (4), 42 U.S.C. § 7475 (a) (4) (1978).
<°7d. at § 169(4), 42 U.S.C. § 7479 (1978).
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subject to PSD review.42 In addition, any other source
having the potential to emit 250 tons per year or more of
any pollutant is also covered. As in the 1974 regulations,
"modifications" of such major sources are also subject to
PSD review.43 Section 165 of the Act44 tightens the re-
quirement that must be included in state plans for the
PSD preconstruction review and permitting of major new
sources to be located in clean air, areas. These stricter
requirements include: (1) case-by-case determination of
BACT rather than automatic application of NSPS; (2)
requirements of air quality impact analyses performed in
accordance with EPA regulations; (3) requirements for
the protection of visibility in Class I areas even though
Class I increments are met; and (4) provisions requiring
public hearings in all cases instead of mere opportunity
for written comment. Other changes in the 1974 regu-
lations effected by the 1977 Amendments include provision
for "variances" from Class I increments if stringent
criteria are satisfied,43 and modification of the definition
of "baseline."40 Congress also structured the program
to minimize disruption, by exempting existing sources
from the permit requirement of section 165 until "modifi-
cations" of those facilities increased emissions,*7 and by
phasing sources under construction into the program.48
In addition, section 166 directs EPA to develop within
two years PSD programs for pollutants other than par-
«Id. at §169(1), 42 U.S.C. §7479(1) (1978).
«/d. at § 169(2), 42 U.S.C. § 7479 (2) (1978).
" Id. at § 165,42 U.S.C. § 7475 (1978).
"C.A.A. at § 165 (d) (2) (D), 42 U.S.C. §7475(d) (2) (D)
(1978).
46 Id. at § 169 (4), 42 U.S.C. § 7479 (4) (1978).
*7 Id. at §169(2) (C), 42 U.S.C. § 7479(2) (C) (1978).
«8 Id. at § 168, 42 U.S.C. § 7478 (1978).
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21
ticulates and sulfur dioxide. EPA is not required to fol-
low the "area classification" approach for these other
pollutants, but implementation through a permit program
is contemplated.
v
D. PSD Regulations Under the 1977 Amendments
Following several notices of proposed rulemaking, com-
ment periods, and public heai'ings, EPA promulgated two
sets of final PSD regulations on June 19, 1978.49 One set
amended 40 C.F.R. Part 51 to provide guidance to the
states on the development of revised state implementation
plans. The other set amended 40 C.F.R. Part 52 to in-
corporate the immediately effective changes required by
the 1977 Amendments.
The regulations require that each major stationary
source and each modification covered by the regulations
undergo a detailed preconstruction review and obtain a
permit prior to the commencement of construction. The
PSD review process contains a number of steps:
1) Control Technology Review. Each new major source
must meet all applicable new source performance stand-
ards promulgated under section 111 of the Act, all emis-
sion standards for hazardous pollutants under section 112
of the Act, and all applicable state implementation plan
requirements.50 In addition, each such source must apply
best available control technology (BACT) for sulfur
dioxide and particulates unless emissions of that pol-
lutant will be less than 50 tons per year, 1,000 pounds
per day and 100 pounds per hour, whichever is most
restrictive.51
«• 43 Fed. Reg. 26,380, 26,388 (1978).
6040 C.F.R. §§ 51.24(j) (1), 52.21 (j) (1) (1978).
« Id. at §§ 51.24(j) (2), 52.21 (j) (2).
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2) Air Quality Review. At the time an application
for a PSD permit is submitted, the owner or operator of
the proposed source must demonstrate that allowable
emissions from the source will not-f-cause or contribute to
a violation of any NAAQS or the applicable increments.3-
Estimates of ambient concentrations that must be pro-
vided in order to determine compliance with these re-
quirements must "be based on the applicable air quality
models, data bases, and other requirements" specified in
EPA's modeling guidelines. The models described in
these guidelines may be modified, or other models substi-
tuted, only after notice and opportunity for comment by
the public, and written approval by the Administrator.33
3) Monitoring Requirements. Two types of monitoring
requirements are imposed on sources submitting PSD ap-
plications after August 7, 1978. An application must in-
clude a full year of continuous monitoring data for any
pollutant emitted by the source for which there is an
ambient standard. This monitoring data, along with the
required modeling results, will form the basis for the
permitting authority's determination of whether the pro-
posed source would cause or contribute to a violation of
a primary or secondary NAAQS. The second requirement
is for post-construction monitoring, to be used as the
state or EPA feels necessary to determine actual impact
of the source on primary or secondary ambient stand-
ards.54
4) Source Information. The PSD permit application
must include, at a minimum, information on the location,
design, and planned "operating schedule of the proposed
facility, a detailed construction schedule, and a descrip-
52 Id. at §§51.24(1), 52.21(1).
**Id. at §§ 51.24 (m) (1), 52.21 (m) (1).
M Id. at §§ 51.24 (n), 52.21 (n).
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>3
tion of the control technology that is proposed as BACT.5B
In addition, the applicant must provide an "analysis of
impairment to visibility, soils, and vegetation" in the
area, and an analysis of the air quality impacts of the
expected growth associated with the proposed source/'0
Meteorological and topographical information on 'the air
quality impacts and nature and extent of any growth
in the locale of the proposed facility since August 7,
1977, must also be provided if requested by EPA or the
state.
5) Processing Applicatiotis. The regulations establish
a complex process for handling the permit application.
Within 30 days of receipt of the application, EPA must
inform the applicant of any additional information re-
quired. EPA or the state must make a final determina-
tion on the application within one year after the applica-
tion is complete. During that time, EPA or the state
must: (a) make a preliminary determination whether
the proposed source will be approved, disapproved, or ap-
proved with conditions; (b) give public notice of the
preliminary determination, provide opportunity for com-
ment and public hearing and the applicant's responses,
and give the applicant and the public notice of the final
determination.57
The regulations also require that, even after the PSD
review process is completed and permit issued, the state
plan must be revised—and individual source emissions re-
duced—if the state or EPA determines that an applicable
increment or maximum permissible concentration is be-
ing violated.58
»Id. at §§ 51.24 (o), 52.21 (o).
«6 Id. at §§ 51.24 (p), 52.21 (p).
67 Id. at §§ 51.24 (r), 52.21 (r).
68 Id. at §51.24 (a) (1)- (3).
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24
II. POTENTIAL TO EMIT
At the heart of the PSD provisions lies a definition
that is jurisdictional in nature. We refer to the section
169(1) definition of "major emitting facility," which
identifies sources of airjpollution that are subject to the
preconstruction review and permit requirements of sec-
tion 165.59 The definition is not pollutant-specific, but
59 Section 169(1), 42 U.S.C. § 7479 (1978) provides in rele-
vant part:
The term "major emitting facilitiy" means any
of the following stationary sources of air pollutants
which emit, or have the potential to emit, one hun-
dred tons per year or more of any air pollutant
from the following types of stationary sources:
fossil-fuel fired steam electric plants of more than
two hundred and fifty million British thermal units
per hour heat input, coal cleaning plants (thermal
dryers), kraft pulp mills, Portland Cement plants,
primary zinc smelters, iron and steel mill plants,
primary aluminum ore reduction plants, primary
copper smelters, municipal incinerators capable of
charging more than two hundred and fifty tons of
refuse per day, hydrofluoric, sulfuric, and nitric acid
plants, petroleum refineries, lime plants, phosphate
rock processing plants, coke oven batteries, sulfur
recovery plants, carbon black plants (furnace
process), primary lead smelters, fuel conversion
plants, sintering plants, secondary metal production
facilities, chemical process plants, fossil-fuel boilers
of more than two hundred and fifty million British
thermal units per hour heat input, petroleum stor-
age and transfer facilities with a capacity exceeding
three hundred thousand barrels, taconite ore process-
ing facilities, glass fiber processing plants, charcoal
production facilities. Such term also includes any
other source with the potential to emit two hundred
and fifty tons per year or more of any air pollutant.
This term shall not include new or modified facilities
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25
rather identifies sources that emit more than a threshold
quantity of any air pollutant.80 Once a source has been
so identified, it may become subject to section 165's sub-
stantial administrative burdens and stringent, technologi-
cal control requirements for each pollutant regulated un-
der the Act, even though the air pollutant, emissions of
which caused the source to be classified as a "major emit-
ting facility," may not be a pollutant for which NAAQS
have been promulgated or even one that is otherwise
regulated under the Act. As will become apparent from
consideration of the ramifications of this definition, Con-
gress's intention was to identify facilities which, due to
their size, are financially able to bear the substantial
regulatory costs imposed by the PSD provisions and
which, as a group, are primarily responsible for emission
of the deleterious pollutants that befoul our nation's air.
Such facilities are defined in section 169(1) as those
stationary sources of air pollutants from among 28 listed
categories which "emit, or have the potential to emit"
100 tons per year or more of any air pollutant plus
any other stationary source with the "potential to emit"
250 tons per year or more of any air pollutant.
EPA has interpreted the phrase "potential to emit" as
referring to the measure of a source's "uncontrolled emis-
sions"—i.e., the projected emissions of a source when
operating at full capacity, with the projection increased
by hypothesizing the absence of air pollution control
which are nonprofit health or education institutions
which have been exempted by the State.
60 Section 165 requires BACT for any pollutant regulated
under the act. It should be noted that the § 169(1) definition
of major emitting facility refers to a broader category of
pollutants than does that of § 165. Section 169 sets as a thres-
hold the emission of "any air pollutant," and § 302 (g) defines
that extremely broadly.
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26
equipment designed into the source.01 Yet, the language
and comprehensive scheme of the statute reveal that an
emitting facility is "major" within the meaning of
section 169(1), only if it either (1) actually emits the
specified annual tonnage of any air pollutant, or (2) has
the potential, when operating at full design capacity, to
emit the statutory amount. The purpose of Congress was
to require preconstruction review and a permit before
major amounts of emissions were released into the air.
When determining a facility's potential to emit air pol-
lutants, EPA must look to the facility's "design capac-
ity"—a concept which not only includes a facility's max-
imum productive capacity (a criterion employed by EPA)
but also takes into account the anticipated functioning of
the air pollution control equipment designed into the
facility.
We are cognizant that in general a court defers to
the interpretation of a new statute by the agency that is
charged with putting it into effect, meshing the wheels,
and that presumably has some awareness of the ap-
proaches of legislators particularly concerned with the
legislation. However, we view our analysis of congres-
sional intent, set forth above, as clearly discernible from
section 169(1). We identify the following as indicators
of legislative intent. Looking at language, we see that the
first sentence provides that a major emitting facility (in
enumerated categories) must "emit, or have the potential
to emit" 100 tons per year of any air pollutant. Plainly,
the pollutants that sources "emit" is a reference to some
measure of actual emissions. However, under EPA's in-
terpretation of "potential to emit," the actual emissions
calculation called for by the verb "emit" would lose all
significance. When potential emissions are calculated, as
EPA provided, by assuming operation at full capacity,
without any reduction to take into account the operation
81 40 C.F.R. §§ 51.24(b) (3), 52.21 (b) (3) (1978).
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27
of the facility's air pollution control equipment, then po-
tential emissions will always and inherently exceed actual
emissions. Under our construction a meaning is given to
the use of "emit" and "or," as applicable in those in-
stances when for any reason, whether or not there is
fault or accident, the "cleansing" equipment- has not been
operated, or has been operated at variance from design.41-
For a wide angle lens on intent, we turn to the fact
that Congress was fully aware that many major new
sources of air pollution were already required by law
to install and operate air pollution control equipment.
The "new source performance standards" of section 111
of the Act, as well as provisions of existing state im-
plementation plans, were the sources of such require-
ments. In this context one would require strong statutory
evidence that Congress intended to approach the measure-
ment of emissions in ignorance and disregard of the oper-
ation of pollution control equipment already required by
law to be dedgned into a facility. All the statutory
evidence points the other way.
The coverage of the 100 ton-per-annum threshold of
the first -sentence of section 169(1) extends to 28 cat-
egories of facilities. A look at these categories, and a
further look at the legislative history ra reveal that Con-
gress was concerned with large industrial enterprises—
62 We are aware that the second sentence of section 169 (1),
which extends coverage of the term "major emitting facility"
to "any other source with the potential to emit" 250 tons per
year of any air pollutant, is not phrased in the disjunctive;
the verb "emit" has not been included. Nevertheless, we are
unpersuaded that Congress intended the disjunctive form
of the first sentence to be mere surplusage. It may be that
the "actual emissions" alternative should be read into the
second sentence on the ground that Congress plainly included
a parallel construction.
63 See notes 70 & 72, infra.
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28
major actual emitters of air pollution. The draftsmen
were of the view that certain small industrial facilities
within these categories might actually and potentially emit
less than the threshold amount. But the submissions of the
parties establish that no operational industrial facility
that could be described as within the listed categories
would have the "potential to emit" less than the threshold
amount if the operation of cleansing control equipment is
totally discounted.
Congress was presumably also aware of the high rate of
effectiveness with which control equipment eliminates
pollutants from unprocessed industrial emissions. For
example, at the time of the enactment of the PSD provi-
sions, technology in operation was capable of eliminating
over 99% of the particulate matter from emissions. Thus,
a source with the potential—according to EPA's "uncon-
trolled emissions" standard—to emit 100 tons per annum
of particulate matter would emit in actuality less than
one ton per year. The record illustrates that the heating
plant operating in a large high school or in a small com-
munity college would become "major" sources under such
a test.04 We have no reason to believe that Congress in-
tended to define such obviously minor sources as "major"
for the purposes of the PSD provision.
EPA recognized that its definition placed an intoler-
able burden on both the agency and minor sources of pol-
lution and sought to cope with it by creating a broad
exemption for smaller sources. As we explain in a sub-
sequent section of this opinion,63 the Act does not give
the agency a free hand authority to grant broad exemp-
tions. Though the costs of compliance with section 165
requirements are substantial, they can reasonably be
borne by facilities that actually emit, or would actually
04 Cong. Rec. 5128*12 (July 19, 1976), LHA at 382.
65 See section III, infra.
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29
emit when operating at full capacity, the large tonnage
thresholds specified in section 169(1). The numbers of
sources that meet these criteria, as we delineate them,
are reasonably in. line with EPA's administrative ca-
pability.
EPA asserts that its view is supported by the'interplay
between the section 169(1) definition of major emitting
facility and a partial exemption from PSD review re-
quirements specified in section 165(b).CG It suffices at
this juncture to refer to a subsequent part of the Court's
opinion,07 and say that EPA's asserted conflict between
sections 165 (b) and 169(1) is premised on an erroneous
interpretation of the application of section 165(b).
We mention the legislative history with some diffidence,
for it is extensive, complex, and conflicting in certain
instances. But our full review of the materials that have
come to our attention reveals that the legislative history
in general supports our interpretation of section 169(1).
The critical phrase "emit or has the potential to emit"
had its origin in the Senate version of the bill that was
to become the 1977 Amendments to the Clean Air Act.08
The House version used.the equivalent phrase: "directly
66 Section 165 (b) creates a partial exemption from certain
PSD review requirements for facilities that have been "modi-
fied" where the increase in particulate and SCX emissions,
due to the modification, is less than 50 tons per year. EPA
asserts that the proper interpretation of section 165 (b) cre-
ates a conflict with the definition of major emitting facility
that is eliminated when the measure of a major emitting fa-
cility is projected emissions in the absence of "cleansing" con-
trol equipment.
07 See section III of Judge Wilkey's opinion in this case.
88 S. Rep. No. 94-717, 94th Cong., 2d Sess. 221 (1976),
LHA at 1691 (1976 version of bill) ; S. Rep. No. 95-127, 95th
Cong., 2d Sess. 219 (1977), LHA at 2643 (1977 version of
bill).
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30
emits, or has the design capacity' to emit." OT The Con-
ference Committee adopted the wording of the Senate bill,
but its Report reflects an understanding of the equiv-
alence of the House and the Senate versions on this point.
We refer to the Report's interpolation of the House lan-
guage into the Conference Committee's paraphrase of the
final provision:
The State plan must require permits for: (a) All
28 categories listed in the Senate bill if the source
has the potential (design capacity) to emit over 100
tons per year; and (b) any other source with the
design capacity to emit more than 250 tons per year
of any air pollutant.70
EPA agrees that the Conference Committee treated the
House and Senate versions as having the same meaning
but argues that EPA's "uncontrolled emissions" construc-
tion was intended. There is some support for EPA's
position in legislative history, particularly on the Senate
side,71 but the overall legislative history does not sup-
69 H. Rep. No. 94-1175, 94th Cong., 2d Sess. 358 (1976),
LHA at 932 (1976 version of bill); H. Rep. No. 95-194, 95th
Cong., 2d Sess. 438 (1977), LHA at 1908 (1977 version of
bill).
70 H. Rep. No. 95-564, 95th Cong., 1st Sess. 152 (1977),
LHA at 3046.
71 EPA makes the point that the term "potential emissions"
had some currency within the agency during the course of the
legislative process and that the term referred to emissions
in the absence of pollution control equipment. EPA also
points to portions of the legislative history where documents
or postulated situations employing the "potential emissions"
usage have been incorporated. At most, there are indications
from these references that there may have been some ambigu-
ity or confusion at times between the term "potential emis-
sions"'and the term "potential to emit." But it is too great a
leap to conclude from these few references that one phrase
("potential emissions") describing a type of emissions, has
the same meaning as "potential to emit," a phrase useci in
the statute to describe a type of polluting source.
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31
port EPA's position. The committee reports and floor
debates evidence the understanding that only major
sources of actual emissions would be covered by the PSD
permit requirements and that some sources within the 28
industrial categories would be too small to satisfy the
threshold tonnage specified in section 169(I).7- These
understandings are inconsistent with EPA's "uncontrolled
emissions" approach.
We remand the regulations premised on EPA's er-
roneous construction of section 169(1) for appropriate
revision by the agency.78
72 E.g., S. Rep. No. 94-717, supra, at 23, 123 Cong-. Rec.
S12809 (July 29, 1976), LHA at 381 (remarks of Sen. Mc-
Clure); S. Rep. No. 95-127, supra, at 96-97, LHA at 2521; 123
Cong. Rec. S9169 (June 8, 1977), LHA at 2667 (remarks of
Sen. Muskie); id. at S9255 (June 9, 1977) (remarks of Sen
Domenici).
78 The design capacity of a facility rarely contemplates un-
interrupted operation 24 hours per day, 365 days per year.
Projected down-time for repair and maintenance or other
factors may reduce the hours of operation that are appropri-
ately considered in the calculation of a facility's "potential
to emit."
The Court's per curiam opinion did not address the issue
of whether such planned down-time must, or may, be in-
cluded in calculating "potential to emit;" and, we do not de-
cide it today. Since the issue was not briefed and argued, we
are not in a position to define for this specific question the
appropriate response by EPA, given our clarification at a
more general level of the meaning of "potential to emit." In-
dustry has petitioned this court to comment on proposed
EPA regulations addressing this point, and has registered
with us objections to them. The appropriate forum for such
discussion is the notice and comment proceeding on those
proposed i-egulations. At a later date, if necessary, recourse
might be had to this Court. For now, we indicate only that
we did not have this issue in mind when we issued the per
curiam opinion, and we do not decide it today.
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32
III. GENERAL EXEMPTION FOR STATIONARY SOURCES
EMITTING LESS THAN 50 TONS PER YEAR
OF ANY AIR POLLUTANT
Having swept in too many facilities, in our view, by
its interpretation of "potential to emit," EPA inserted in
its PSD regulations a partial exemption from the precon-
struction review and permit requirements of section 165
for all major emitting facilities that emit less than spec-
ified amounts,74 50 tons on a yearly basis, of any air
pollutant. ..The pertinent amount is to reflect operation
at maximum capacity and employing the air pollution
controls imposed either by the applicable State Imple-
mentation Plan (SIP) or by an enforceable permit,73
Petitioners Sierra Club and the Environmental Defense
Fund contend that the Act contains no warrant for the
Administratively-created exemption, and that even if
statutorily permissible, the action was arbitrary and
capricious.
EPA does not argue that its 50 ton per year exemption
is consistent with the statutory language of the Clean Air
Act. Rather, EPA concedes 70 that its exemption allowing
sources and modifications under 50 tons per year to forego
BACT and air quality assessment is an "expansion" of
the limited exemption provided in section 165 (b) of the
Act.77 This "expansion" is defended as reflecting EPA's
7* The specified amounts were 50 tons per year, 1,000
pounds per day, or 100 pounds per hour, whichever was most
restrictive. For the purposes of this opinion, we shorthand
these amounts in terms of the annual figure, 50 tons per year.
"40 C.F.R. §§51.240') (2), (k) (1) (ii); 52.210) (2),
(k)(l)(ii) (1973).
79 43 Fed. Reg. 2639.3, Joint Appendix (J.A.) 80.
"Section 165(b), 42 U.S.C. §7475(b) (1978), of the Act
provides:
The demonstration pertaining to maximum allowable
increases required under section (a) (3) [air quality
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3
judgment that application to such sources of the full pre-
construction review and permit process would not be cost-
effective and would strain to the limits the agency's re-
sources. Characterizing its approach as "-[fallowing Con-
gress ['s] lead," EPA concluded that the costs to industry
and permitting authorities entailed in reviewing an es-
timated 2,400 PSD applications for sources emitting less
than 50 tons would far outweigh the benefit of the "rela-
tively insignificant" reduction in emissions that would
result. Consequently, EPA "expanded" the exemption
found in section 165(b) to new as well as existing sources,
and precluded BACT review as well as air quality review.
EPA promised periodic assessments to assure that overall
air quality in any pertinent area did not deteriorate be-
yond the level of any increment.78
EPA's "expansion" of the section 165 (b) exemption
falls well beyond the agency's exemption authority. More-
over, it is premised on a misconstruction of the meaning
and motivation of the section. The court has given close
consideration to this provision and has toiled to give a
reasonable construction to language that is somewhat
awkward and which does not easily disclose the function
intended for it by Congress. We conclude that the ex-
emption is applicable to major emitting facilities in Class
review] shall not apply to maximuin allowable increases
for class II areas in the case of an expansion or modifica-
tion of a major emitting facility which is in existence on
August 7, 1977, whose allowable emissions of air pollut-
ants, after compliance with subsection (a) (4) [BACT],
will be less than fifty tons per year and for which the
owner or operator of such facility demonstrates that
emissions of particulate matter and sulfur oxides will not
cause or contribute to ambient air quality levels in excess
of the national secondary air quality standard for either
of such pollutants.
•8 43 Fed. Reg. 26392-93 (1978).
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34
II areas which existed on August' 7, 1977,70 and which
become subject to the permit requirements of section
165 because of an expansion or modification that, after
application of BACT, results in a net increase of less
than 50 tons a year in the emissions from that facility.
Those expansions or modifications that come within the
exemption of section 165 (b) are permitted to operate
so long as they will not cause' or contribute to ambient
air quality levels in excess of the national secondary am-
bient air quality standard for two pollutants, sulfur
dioxide and particuiate matter. Were this exemption not
in the statute, major emitting facilities, in order to avoid
the permit requirements of section 165, would be en-
couraged to pursue their plans for industrial expansion
by establishing small, independent facilities rather than
by the more efficient expansion or modification of existing
facilities.80
79 In Citizens to Save Spencer County v. EPA, U.S.
App.D.C. , F.2d (No. 78-1002, 3/27/79), we
approved EPA regulations establishing March 19, 1978, as
the effective date of the preconstructiou review and permit
requirements. That date supplanted the effective date speci-
fied in section 165(a), the date of enactment of the Clean Air
Act Amendments of 1977, August 7, 1977. The date specified
in section 165 (b) was obviously intended to mirror that of
section 165(a). In view of this congressional intention, EPA
would have latitude to alter by rule the effective date in sec-
tion 165 (b) to conform with the new effective date of the
PSD provision. Absent such rulemaking, however, this Court
is constrained to apply the literal terms of the statute.
80 In EPA's view, section 165 (b) applies to a major
emitting facility in existence on the date of enactment of the
Clean Air Act Amendments that becomes subject to section
165 duo to an expansion or modification where the allowable
emissions from the entire facility have been reducted, after
BACT, to less than 50 tons per year. EPA has construed the
curious phrase "whose allowable emissions" as referring to
emissions from the major emitting facility. Though this con-
struction may be supported by one reading of the syntax,
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35
We have concluded above that EPA erred in defining
"potential to emit" by discounting the beneficial effects of
air pollution control equipment designed into a facility.
For practical purposes, then, the dispute over-the 50-ton
exemption has become academic. Since "major emitting
facilities" subject to section 165 are only those sources
which after controls emit or have the potential to emit
at least 100 tons annually, sources emitting 50 tons per
year or less would ipso facto be excluded from the PSD
requirements. Nevertheless, standard doctrine teaches us
that our proper course is to remand this matter for fur-
ther consideration by EPA.
In view of the possibility that EPA may refashion,
rather than terminate, its exemption, we guide our re-
mand by identifying the principles pertinent to an agen-
cy's authoi-ity to adopt general exemptions to statutory
requirements. This discussion is appropriate because the
exemption regulations under discussion reflect a misun-
derstanding by EPA of these principles and of regulatory
exemptions based upon assessment of costs and benefits.
These principles may have bearing on EPA's reconsidera-
tion of this exemption on remand and would appear to
have bearing on a number of other EPA actions under
review.
it is so teratogenetic as to force us to reject it as an incorrect
interpretation of the provision. Such a construction would
render section 165 (b) completely non-functional. The section
allows a facility to operate notwithstanding the fact that it
would exceed maximum allowable increases for Class II
areas. But any major emitting facility in existence on the
date of enactment would have a credit within the baseline
concentration of at least 50 tons per annum because on the
baseline date that facility would certainly have been emitting
air pollutants at a rate of 50 tons per annum. If that same
source reduces its emissions to below 50 tons per annum it
is obviously in no danger of exceeding its credit. On such
a reading, therefore, section 165 (b) would be superfluous.
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36
Exemptions Bom of Administrative Necessity. Certain
limited grounds for the creation of exemptions are in-
herent in the administrative process, and their unavail-
ability under a statutory scheme should not be presumed,
save in the face of the most unambiguous demonstration
of congressional intent to foreclose them. But there exists
no general administrative power to create exemptions to
statutory requirements based upon the agency's percep-
tions of costs and benefits.
We noted at the outset that we are not concerned here
with-the "equitable" discretion of agencies to afford case-
by-case treatment—taking into account circumstances
peculiar to individual parties in the application of a
general rule to particular cases, or even in appropriate
cases to grant dispensation from the rule's operation. The
need for such flexibility in appropriate cases is generally
recognized, and enhances the effective operation of the
administrative process,81 though Congress may, of course,
restrain the agency by mandating standards from which
no variance is permitted.82 In this case, however, we are
presented with an attempt by an agency to promulgate a
blanket exemption from statutory requirements. The
EPA's action reflects no choice to exercise administrative
discretion based on circumstances peculiar to the indi-
vidual case.
Categorical exemptions from the clear commands of a
regulatory statute, though sometimes permitted, are not
S1 E.g., Allegheny-Ludlum Steel Corp., 406 U.S. 742, 755
(1972) ; Portland Cement Ass'n v. Ruckelshaus, 158 U.S.
App.D.C. 308, 332, 486 F.2d 375, 399 (1973), cert, denied,
417 U.S. 921 (1974) ("a regulatory system which allows
flexibility and a lessening of firm proscriptions in a proper
case, can lend strength to the system as a whole").
s- E.g., E.I. du Pont de Nemours & Co. v. Train, 430 U.S.
112, 137-39 (1977) ; see Weyerhaeuser Co, v. Costle,
U.S-App.D.C. , , 590 F.2d 1011, 1031-37 (1978).
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37
favored. In FPC o. Texaco Inc., 417 U.S. 380 (1974),
the Supreme Court held that the FPC had no authority
to exempt rates charged by small producers of natural gas
from regulation under the just and reasonable, standard
of the Natural Gas Act. Although it recognized that
persuasive arguments had been made that the assump-
tions underlying natural gas regulations did not obtain
for such producers, and that continued regulation might
even be counterproductive, the Court declared that its
role was not "to overturn congressional assumptions em-
bedded into the framework of regulation established by
the Act." Id. at 400. Similarly, in NRDC v. Costle, 186
U.S.App.D.C. 147, 568 F.2d 1369 (1977), this court
held that the EPA lacked the power to exempt cate-
gories of point sources from the permit requirements
established in section 402 of the Federal Water Pollu-
tion Control Act Amendments of 1972. We emphasized:
"Courts may not manufacture for an agency a revisory
power inconsistent with the clear intent of the relevant
statute." Id. at 155, 568 F.2d at 1377. In American
Iron & Steel Institute v. EPA, 568 F.2d 284 (1977),
the Third Circuit rejected EPA's blanket exemption of
steel plants in the Mahoning Valley from BACT require-
ments. Id. at 306-08. While recognizing that the FWPCA
permitted flexibility to accommodate diverse conditions,
the court held that "an exemption by regulation from
effluent limitations is not a permissible means of accom-
modating diversity." Id. at 307 (footnote omitted; em-
phasis in the original).
This broad principle that frowns upon categorical
administrative exemptions is strict, but is not absolute.
Considerations of administrative necessity may be a
basis for finding implied authority for an administrative
approach not explicitly provided in the statute. The
relevance of such considerations to the regulatory process
has long been recognized. Courts frequently uphold
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38
streamlined agency approaches or procedures where the
conventional course, typically case-by-case determinations,
would, as a practical matter, prevent the agency from
carrying out the mission assigned to .it by Congress. As
the Supreme Court recognized in approving the adopting
by the FPC of area rate regulation as the practical
means of regulating thousands of natural gas producers:
"[C]onsiderations of feasibility and practicality are
certainly germane".to the issues before us. . . . We
cannot, in these circumstances, conclude that Con-
gress has given authority inadequate to achieve with
reasonable effectiveness the purpose for which it has
acted.
Permian Basin Area Kate Cases, 390 U.S. 747, 777
(1968) (quoting Bowles v. Willinyham, 321 U.S. 503,
517 (1944))."
Another application of the underlying principle appears
in Morton v. Ruiz, 415 U.S. 199 (1973). There, the con-
trolling statute provided general assistance benefits un-
der the Snycler Act to Indians living on or near reserva-
tions. When Congress did not provide enough funding
to provide for both classes, the Bureau of Indian Affairs
decided to use the limited funds solely for Indians living
on reservations. The Court held that such a policy,
operating as it did to curtail the statutory rights of
those Indians living near but not on reservations, could
not be implemented unless there was compliance with
the procedural requirements of notice-and-comment rule-
making set forth in the Administrative Procedure Act,
5 U.S.C. § 553. But, the Court acknowledged the sub-
83 Accord, E.I. du Po.»t de Nemours & Co. v. Train, 430
U.S. 112, 132 (1977) ; Weinberger v. Eynson, Westcott &
Dunning-, Ir;c., 4l2,U.S. 603, 021-22 (1973) ; United Stales v.
Storer Broadcnsi.inff Co., 351 U.S. 192, 202-05 (1956) ; En-
vironmental .Defense Fund v. EPA, U.S.App.D.C. ,
, 598 F.2d G2, 84-85 (1973).
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39
stanlive authority of the Secretary to take appropriate
action to cope with the administrative impossibility of
applying the commands of the substantive statute. Id. at
230-31.'
The same consideration of ad;• h•.•":;;.:.'•:••'/e need to acl-
• ,..,%.
just to available resources woui- apply" where the con-
straint was imposed not by a shortage of funds but, say,
by a shortage of time, or of the technical personnel needed
to administer a program.*4
A corollary principle is observed by the courts when
practical considerations make it impossible for the agency
to carry out its mandate. Thus, in NRDC v. Train, 166
U.S.App.D.C. 312, 510 F.2d 692 (1974), we considered
EPA's failure to meet certain statutory deadlines for the
promulgation of efnuent guidelines under the Federal
Water Pollution Control Act. In ordering that the guide-
lines be issued no later than December 31, 1974, we did
not accept EPA's "apprehension that it [would] not bo
able to publish the great majority of the guidelines" by
the deadline. We nevertheless did recognize the possibil-
ity of a showing by EPA that publication of some of the
guidelines by that date was infeasible. We perceived
two "constraints" on the agency:
First, it is possible that budgetary commitments and
manpower demands required to complete the guide-
lines by December 31 are beyond the agency's ca-
pacity or would unduly jeopardize the implementa-
tion of other essential prc£rams. Second, EPA may
be unable to conduct sufficient evaluation of avail-
able control technology to determine which is the
best practicable or may confront problems in deter-
84 Cf. American Federation of Labor, et al. v. Marshall,
et al., 187 U.S.App.D.C. 121, 123-29, 570 F.2d 1030, 1037-38
(1978) ; NRDC v. Train, 166 U.S.App.D.C. 312, 332, 510
F.2d 092, 712 (1974).
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40
mining the components of particular industrial dis-
charges.
166 U.S.App.D.C. at 332, 510 F.2d at 712. We acknowl-
edge the principle that an agency official required "to do
an impossibility," should be relieved from sanction. Id.
at 333, 510 F.2d at 713. But we emphasized that the
agency bore a heavy burden to demonstrate the existence
of an impossibility:
An equity court can never exclude claims of inability
to render absolute performance, but it must scruti-
nize such claims carefully since officials may seize
on a remedy made available for extreme illness and
promote it into the daily bread of convenience.
Id.
Viewed in its most favorable light, EPA seeks approval
of a prospective exemption of certain categories from a
statutory command based upon the agency's prediction
of the difficulties of undertaking regulation.53 The agen-
cy's burden of justification in such a case is especially
heavy. This is not a circumstance of an agency seeking
relief from a charge which, after a good faith effort, it
has found it cannot perform. It is, rather, an agency
seeking vindication_of an approach contrary to the ex-
plicit statutory design on the basis of its estimate of its
lack of capacity to handle the task delegated to it. Be-
fore a court sanctions such actions, it will carefully study
the governing statute in the manner of Permian Basin,
to ascertain whether the statute authorizes approaches
S5C/. WNCN Listeners Guild v. FCC, "U.S.App.D.C.
, F.2d , Slip Opinion at 19-22 (No. 76-1692,
6/29/79) (en bane) (rejecting FCC claim that implementa-
tion of Circuit's rules on format diversity would result in
an "administrative nightmare"). To the extent the agency
relies, in support of its exemption, on substitution of its
own analysis of policy considerations for those enunciated
by Congress, we must reject its action as trenching on the
congressional function.
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41
that deviate from the legislative mandate in response to
concerns about feasibility. Thus in NRDC v. Costlc,
sivpra, we rejected EPA's arguments that a categorical
exemption of runoff point sources from the National
Pollution Discharge Elimination, System was necessary
because of the infeasibility of developing national effluent
limitations applicable to all runoff point sources and the
impossibility of processing the literally millions of appli-
cations for discharge permits. We found in the statutory
scheme a flexibility encompassing devices such as "gen-
eral" effluent permits (similar to the area rate regulation
employed in Permian Basin), and this flexibility was
sufficient to accomplish the regulatory purpose, thereby
alleviating any need to exempt runoff sources entirely.80
Exemptions for De Minimis Circumstances. Categori-
cal exemptions may also be permissible as an exercise
of agency power, inherent in most statutory schemes, to
overlook circumstances that in context may fairly be
considered de minimis. It is commonplace, of course, that
the law does not concern itself with trifling matters,87
and this principle has often found application in the
administrative context.88 Courts should be reluctant to
86 A similar administrative approach, supported by the
doctrine of necessity, is the deferral of regulation in indi-
vidual instances until the aggregation of these instances sur-
passes a reasonable threshold. The agency's burden of justifi-
cation for such an approach is substantially less than that
required when the agency seeks to exempt rather than defer
regulation.
87 Sec, e.g., Washington v. Washington State Commercial
Passenger Fishing Vessel Ass'n, 99 S. Ct. 3055, 3076 n.29
(1979) (Indian fishing rights); Pennsylvania v. Mimms, 434
U.S. 106, 110 (1977) (search and seizure) ; Ingraham v.
Wright, 430 U.S. 651, 674 (1977) (due process liberty inter-
est) ; Sniadach v. Family Finance Corp., 395 U.S. 337, 342
(1969) (Harlan, J-, concurring).
M See, e.g., FPC v. Texaco, Inc., 417 U.S. 380, 399 (1974) ;
Volkswagenwerk, A.G. v. FMC, 390 U.S. 261, 276-77 (1S68) ;
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42
apply the literal terms of a statute to mandate pointless
expenditures of effort. As we wrote in District of Colum-
bia v. Orleans, 132 U.S.App.D.C. 139, 141, 406 F.2d 957,
959 (1968), "[t]he 'de minimis' doctrine that was devel-
oped to prevent trivial items from draining the time of
the courts has room for sound application to administra-
tion by the Government of its regulatory programs . . ."
The ability, which we describe here, to exempt de minimis
situations from a statutory command is not an ability to
depart from the statute, but rather a tool to be used in
implementing the legislative design.89
Determination of when matters are truly de minimis
naturally will turn on the assessment of particular cir-
cumstances, and the agency will bear the burden of mak-
ing the required showing. But we think most regulatory
statutes, including the Clean Air Act, permit such agency
showings in appropriate cases..
While the difference is one of degree, the difference
of degree is an important one. Unless Congress has been
extraordinarily rigid, there is likely a basis for an impli-
cation of de minimis authority to provide exemption when
the burdens of regulation yield a gain of trivial or no
value. That implied authority is not available for a
situation where the regulatory function does provide
Monsanto Company v. Kennedy, U.S.App.D.C. ,
F.2d , (No. 77-2023, 11/6/79) ; United Glass
& Ceramic Workers, v. Marshall, 189 U.S.App.D.C. 240,
242, 584 F.2d 398, 440 (1978) ; Marine Space Enclosures, Inc.
v. FMC, 137 U.S.App.D.C. 9, 16, 420 F.2d 577, 584 (1969).
&a In this respect, .the principle is a cousin of the doctrine
that, notwithstanding the "plain meaning" of a statute, a
court must look beyond the words to the purpose of the act
where its literal terms lead to "absurd or futile results."
United States v. American Trucking Ass'ns, 310 U.S. 534,
543 (1939); District of Columbia v. Orleans, 132 U.S.App.
D.C. 139, 141, 406 F.2d 957, 959 (1968).
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43
benefits, in the sense of furthering the regulatory objec-
tives, but the agency concludes that the acknowledged
benefits are exceeded by the costs. For such a situation
any implied authority to make cost-benefit decisions must
be based not on a general doctrine but on a fair reading
of the specific statute, its aims and legislative history.
Congress, in section 165 (b), permitted a narrow exemp-
tion—for modifications, and from air quality review
only; this provides no basis for EPA to exercise a "re-
visory power" to exclude new sources as well as modifica-
tions, and to extend the exemption to BACT review in
addition to air quality review.
We do not here extend our analysis of exemption au-
thority for other situations,90 beyond taking note that our
ruling that there is a narrow exemption authority has
not been challenged in any of the petitions for reconsid-
eration, and has been invoked in other contexts by several
90 For example, industry petitioners raise the issue that
mercury is only a "trace" emission from electric generating
plants. See Industry Petitioners' Petition for Rehearing on
the Application of PSD Requirements to Pollutants Other
than Sulfur Dioxide and Particulates at p. 15.
The court does not agree with industry petitioners that
the fact that emission of mercury is not within the group of
sources covered by the national emissions standards for
hazr.rdou? air pollutants (40 C.F.R. § 61.50) means that
mercury is not a pollutant subject to regulation.
It may be that, assuming EPA considei"s it in the public
interest, it would be able to craft a de mini-mis exemption
regulation that v/ould have the result sought by petitioners.
The matter is not now presented to us in a manner per-
mitting authorization declaration.
Apart from its limited de minimis exemption authority,
EPA has flexibility to consider costs and benefits in deciding
what is "best available control terminology" for any situation.
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44
of the parties.01 As to the context of the "50-ton exemp-
tion," if this has practical importance notwithstanding
our "potential to emit" ruling, EPA must take into ac-
count in any action following the remand that this ex-
emption authority is narrow in reach and tightly bounded
by the need to show that the situation is genuinely de
minimis or one of administrative necessity.
IV. PROTECTION OF THE INCREMENTS
The regulations provide that once it is determined that
a state implementation plan "is substantially inadequate
to prevent significant deterioration or that an applicable
increment is being violated," then the SIP must "be re-
vised to correct the inadequacy or the violation." °2 We
rule that EPA has authority under the statute to prevent
or to correct a violation of the increments, but the agency
is without authority to dictate to the States their policy
for management of the consumption of allowable
increments.
The PSD part of the statute, by its title and by its
terms, is designed to pi-event significant deterioration of
air quality in the nation's "clean air areas"—in general,
those areas that have or are presumed to have air quality
91 Respondents' Response to Industry Petitioners' Motion
for Clarification and Petitions for Rehearing and for Recon-
sideration at 20 (August 2, 1979) ; Sierra Club Brief in Re-
sponse to Industrial Petitioners' Motion for Rehearing and
Motion for Clarification and to the Environmental Protection
Agency's Petition for Stay of Issuance of Mandate at 6-7
(August. 2, 1979) ; Response of the District of Columbia to
Industry Petitioners' Petition for Rehearing on the Applica-
tion of'PSD Requirements to Pollutants Other Than Sulfur
Dioxide and Participates at 2 (August 2, 1979).
02 40 C.F.R. § 51.24 (a) (3) (1978).
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45
better than that specified in the applicable primary and
secondary national . ambient air quality standards
(NAAQS).":: The fundamentals of the statutory approach
include differentiation within the clean air areas of Class'
I, II, and III areas,94 and specification for each class
of areas of maximum allowable increases ("increments")
in pollution concentrations for particulate matter and sul-
fur dioxide,'15 with provision for the Administrator to
promulgate allowable increments or similar limitations for
other pollutants governed by NAAQS.90 These provisions
set as the threshold of "significant deterioration" for each
pollutant in each area the lower of the allowable incre-
ment of the applicable NAAQS,"7 and the emphatic goal
of the PSD provisions is tc prevent those thresholds from
being exceeded. It is evident that the principal mech-
anism for monitoring the consumption of allowable incre-
ments and for preventing significant deterioration is the
preconstruction review and permit process required for
new or modified major emitting facilities by the provi-
sions of section 165. However, we cannot agree with in-
dustry's contention that section 165 provides the exclusive
mechanism for protection of the increments. The Admin-
istrator has authority beyond the provisions of section 165
to prevent or to remedy a violation of the thresholds speci-
fied in the Act.
The statutory provisions central to our conclusion are
sections 161 and 163(a). Section 161 provides in perti-
nent part:
93 C.A.A. at § 107(d) (1) (D) & (E) ; 42 U.S.C. § 7407 (d)
(1)(D) & (E) (1978).
w C.A.A. at §§ 162,163; 42 U.S.C. §§ 7472, 7473 (1978).
B0 C.A.A. at § 1C3, 42 U.S.C. § 7473 (1978).
96 C.A.A. at § 166; 42 U.S.C. § 7476 (1978).
"• C.A.A. at § 163 (b) (4) ; 42 U.S.C. §7473(b) (4) (1978).
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46
each applicable implementation plan shall contain
emission limitations and such other measures as
may be necessary, as determined under regulations
promulgated under this part, to prevent significant
deterioration of air quality in each [clean air
area] J*8
Section 163 provides in part:
each applicable implementation plan shall contain
measures assuring that maximum allowable in-
creases over baseline concentrations of, and maxi-
mum allowable concentrations of [sulfur oxides and
particulates] shall not be exceeded."
On their face, these provisions establish the thresholds
as limitations that are not to be exceeded and contem-
plate that state implementation plans shall include such
measures "as may be necessary" to ensure the observance
of this command. The section 165 permit process alone
does not ensure that maximum concentrations or allow-
able increments will not be exceeded. Significant de-
terioration may occur due to increased emissions from un-
regulated minor sources and major emitting facilities
grandfathered out of the permit process, due to the use
of different models to calculate increment consumption,
due to the discovery through monitoring that limitations
inadvertently have been exceeded, due to redesignation of
an area to a more restrictive class, or due to allocation
through administrative error of too many permits. Noth-
ing in the plain language of the statute limits the meas-
ures in the state implementation plan to the preconstruc-
tion permit process. The legislative history reflects an
understanding that other measures might be required—.
and are within the authority conveyed by the Act.
The Conference Report states that the "House provision
requiring that the State Implementation Plan must con-
9842U.S.C. §7471 (1978).
"42 U.S.C. §7473(a) (1978).
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47
tain measures to insure that significant deterioration, as
defined vail be prevented was accepted." 10° The House
Report, in discussing its provision, stated: "This precon-
struction review process should help minimize the need
for enforcement or other actions under the State 'imple-
mentation plan requiring additional postconstruction con-
trol measures on the permitted plants." m And at an-
other point: "States would not be required to apply the
permit process to smaller new sources, although the State
plan would still be required to contain such measures
as are necessary to prevent signficant deterioration." 102
Implicit in each statement is a contemplation that meas-
ures under the Act include more than the pre-construction
process.
Industry representatives do not successfully counter the
force of the statute and the legislative history. They ar-
gue that section 161 refers to incorporation into state
plants of such other measures as may be necessary "as
determined under regulations promulgated under this
part," and they assert that the only regulations mentioned
in the PSD part are those identified as relating to the
preconstruction permitting process. This argument over-
looks the Administrator's general rulemaking authority
under section 301 of the Act to "prescribe such regula-
tions as are necessary to carry out his functions under
this Act," _for a regulation promulgated under this gen-
eral authority to ensure compliance with section 161 is
a regulation promulgated under the PSD part. Industry
petitioners also rely on those sections of the Act that
provide for waiver provisions which, conceivably, could
allow increments to be exceeded. The waiver has vitality
100 H. Rep. No. 95-564, 95th Cong., 1st Sess. 153 (1977),
LHA at 3047.
101 H. Rep. No. 95-294, 95th Cong., 1st Sess. 145 (1977),
LHA at 1615.
»* Id. at 171, LHA at 1641.
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48
and recognition in that facilities granted special consid-
eration under these provisions are, in effect, treated as
facilities operating in compliance with the provisions of
the Act. But the totality of facilities in compliance, as a
group, may be subject to measures necessary to cope with
a condition of pollutants exceeding the PSD maximum.
Finally, industry petitioners argue that the EPA regu-
lations that preceded passage by Congress of the PSD pro-
visions undertook to prevent significant deterioration
through preconstruction review only. And they further
agree, correctly, the legislative history gives no indica-
tion that this fundamental aspect of the prior regulatory
approach was being altered. But this omission and nega-
tive implications do not offset the language of the Act and
the affirmative implications of the House Report that en-
forcement measures were contemplated beyond precon-
struction review. Though the Act is patterned in many
respects on the pre-existing regulatory approach, there
are many differences. Congress did not in each instance
compare the legislation with the reach of the prior regula-
tions, and we cannot view as controlling its failure to do
so in this instance.
The challenged regulation is interpretative in nature.103
It simply states the proposition that SIPs must make
provision to ensure that violations of the increments of
maximum allowable concentrations do not occur, and, if
they have occurred, to ensure that steps will be taken to
correct the violation. EPA has furnished no guidelines
to the states in this regard; there is no requirement that
specified corrective measures be employed. Industry evi-
dences a concern that when EPA does promulgate guide-
103 As an interpretative rule, the challenged regulation was
exempt from the notice and comment requirements of the APA
and of section 307 (d) of the Clean Air Act. 5 U.S.C. § 553
(b) (A) (1976) ; 42 U.S.C. § 7607(d) (1978). Thus there is
no merit to the contention of industry that the regulation was
promulgated without due procedural regularity.
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49
lines or require specific measures, certain operating fa-
cilities will be. unfairly disadvantaged. Obviously, such
considerations are not ripe for review at this time. We
may confirm that EPA has authority to require inclusion
in state plans of provision for the correction of any viola-
tion of allowable increments or maximum allowable con-
*
centrations, and may even require, in appropriate in-
stances, the relatively severe correctives of a rollback
in operations or the application of retrofit air pollution
control technology. At oral argument, EPA assured the
court that any such measures would be employed in a
reasonable fashion on the basis of a rule of general appli-
cability, or by some reasonable attribution of respon-
sibility for the violation. Any regulations promulgated
will be reviewed with such considerations in mind.
The environmental groups have petitioned us to require
EPA to promulgate guidelines detailing the manner in
which States may permit consumption of the available
increments. They also seek to have EPA set aside some
portion of the available increments to ensure that current
development does not inadvertently cause a violation of
the maximum thresholds. EPA has evidenced an inten-
tion to promulgate guidelines to help the states manage
the allocation of available increments. This is an appro-
priate step. But this is not to say that the agency may
prescribe the manner in which states will manage their
allowed internal growth. In the allocation of respon-
sibilities made by Congress, maximum limitations have
been set, These must be observed by the states, but as-
suming such compliance, growth-management decisions
were left by Congress for resolution by the states.
V. SOURCES LOCATED IN NON-ATTAINMENT AREAS
Section 165(a)1
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50
structed in any area to which this part applies," Indus-
try petitioners contend that this language limits the
application of the PSD review requirements to sources
constructed in certain locations, and that those locations
are the statutorily defined "clean air ai'eas." 105 On this
premise, industry petitioners argue that section 135 does
not apply to sources located, in the so-called "non-
attainment" areas.106 EPA, on the other hand, takes the
position that the identification of "clean air" and "non-
attainment" areas in section 107(d)10T of the Act are
only a starting point for the planning process that will
lead to revised state implementation plans, that these
identifications do not shape the "area" to which the PSD
review requirements apply, and that preconstruction re-
view must precede the construction anywhere of a major
emitting facility which will adversely affect the air
quality of an area to which this part applies. EPA's
regulations extend the permit requirements of section 165
to all sources, wherever located, if the emissions from the
source have an impact on any clean air area.108 The
issue, then, is whether a source becomes subject to the
PSD review process because of its location within an area
to which this part applies, or because of its impact upon
the air quality of one.
103 In this context, the term "clean air area" refers to
those air quality control regions in which the ambient air
quality does not exceed the applicable NAAQS, which there
is insufficient data to make such a determination. See C.A.A.
at §§ 161, 163(b), 42 U.S.C. §§7471, 7473 (b) (1978). The
clean air areas are identified pursuant to C.A.A. at §§ 107 (d)
(1)(D), (E),42 U.S.C. §§7407(d)(l)(D), (E) (1978).
ice "Non-attainment" areas are denned in section 171 (2)
as those air quality contr?1 regions designated, under sections
107(d) (1) (A)- (C), <-vs regions that fail to meet the standards
of an applicable NAAQS,
107 42 U.S.C. § 7407(d) (1978).
10340 C.F.R. §§ 51.24(i) (l),52(i) (1) (1978).
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51
EPA discovers in the purposes of the Clean Air Act
and the 1977 Amendments an authority sufficient to
justify its regulation applying section 165 according to
impact. It asserts that such a reading is necessary to
prevent the significant deterioration' of air quality in
fact. Section 160(4) sets forth as a purpose of Part C
(PSD) "to assure that emissions from any source in any
States" (regardless of whether the location of the source
is designated an attainment area) "will not interfere
with" any portion of the PSD plan for any other State.
Clearly, EPA" argues, the concern is with the air quality
in clean air areas, not with the location of the source
affecting that air quality. Finally, the agency contends,
Section 10° 161 incorporates the purpose set out in Sec-
tion 101 (b) (I),110— to protect and enhance the quality
of the nation's air resources—which prompted this Court's
holding in Sierra Club v. Ruckelshaus.111
EPA is correct that portions of the legislative history
indicate that the purposes of the Act would best be served
by an extension of the PSD provisions to any source, the
emissions from which adversely affect the non-degradation
scheme.112 But this alone does not present the situation
we faced in Sierra Club, where Congress had clearly
articulated a purpose but had remained silent as to the
means for effectuating that purpose. Nor do we have
here a case where two provisions of the Act are in irre-
concilable conflict, the situation we faced in Citizens to
10942U.S.C. §7471 (1978).
110 42 U.S.C. §7401(b)(l) (1978).
111 344 F. Supp. 253 (D.D.C. 1972), a-ff'd per curiam, 4
ERC (D.C. Cir. 1972), aff'd by a equally divided court sub
nom. Fri v. Sierra Club, 412 U.S. 541 (1973).
m See, e.g., H. Rep. No. 95-564, 95th Cong., 1st Sess. 151
(1977); H. Rep. No. 95-294, 95th Cong., 1st Sess. 9, 145,
151-52 (1977).
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. 52
Preserve Spencer County v. EPA.u:- Rather, we have here
an instance where the Congress, presumably after due
consideration, has indicated by plain language a prefer-
ence to pursue its stated goals* by what EPA asserts are
less than optimal means. In such a case, neither this
court nor the agency is free to ignore the plain meaning
of the statute and to substitute its policy judgment for
that of Congress.
After careful consideration of the statute and the
legislative history; we must accept the contention of the
industry petitioners that the phrase "constructed in any
area to which this part applies" limits the application of
Section 165 to major emitting facilities to be constructed
in certain locations. But, we reject the proposition that
the only statutory means available to fulfill the purposes
of Part C are the permit provisions of § 165.
The plain meaning of the inclusion in section 165 of
the words "any area to which this part applies" is that
Congress intended location to be the key determinant of
the applicability of the PSD" review requirements. That
this is the correct interpretation is underscored by the
inclusion of the same words in section 165(a) (3) (A),
and by the precise language employed by Congress in
those provisions where its concern was more source
(rather than area) specific.114
The legislative history supports our interpretation.
The language of the pertinent provision, section 165(a),
derives from the original bill reported to the Senate in
1976 by the Public Works Committee. That bill stated in
pertinent part that "[n]o major emitting facility . . .
118 U.S.App.D.C. , F.2d (No. 78-1002,
3/27/79).
114 See, e.g., C.AJL at § 169A(b) (2) (a), 42 U.S.C. § 7479A
(b) (2) (a) (1978) ; C.A.A. at § 165(a) (7), 42 U.S.C. § 7475
(a) (7) (1978); C.A.A. at §165(e)(l), 42 U.S.C. §7475(e)
(1) (1978).
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53
may be consti-ucted in any area designated under this
subsection."115 That plainly means location in a desig-
nated (clear air) area. In 1977, when Senator Muskie
introduced the bill,110'he said, with respect to its PSD
provisions, that it was "in every significant detail identi-
cal to last year's bill." m When the Senate provision
limited the PSD permit process to sources in areas "desig-
nated under this subsection," it was expressly limiting
that process to sources located in the areas subject to
PSD protection. The Conference bill maintained the
principle of the Senate version in that regard, but sub-
stituted for the Senate provisions the House provisions
which designated the areas subject to PSD protection.
Because of this combined approach, the conferees could
not refer to areas "designated under this subsection" (or
even "section") because, unlike the Seriate bill, the PSD
provisions of the Conference bill comprised several sec-
tions (§§ 160-169 of Part C). Accordingly, in order to
make the intended reference, the language was changed
to area "to which this part applies." This change in lan-
guage preserved location as a determinant of the ap-
plicability of section 165. Therefore, we conclude, as
noted above,113 that the phrase "constructed in any area
to which this part applies" limits the application of sec-
tion 165 to major emitting facilities to be constructed in
certain locations.
EPA sought to further extend the reach of the PSD
review provisions. But, to so extend EPA's authority is
to ignore the fact that section 165 (a) defines those major
emitting facilities which become subject to its permit re-
115 Senate Bill, S. 3219, 94th Cong., 2d Sess. (1976).
11'Senate Bill, S. 252, 95th Cong., 1st Sess. (1977).
117 123 Cong. Rec. S9162 (daily ed., June 8, 1977).
118 See also Remarks of Senator Hart, 122 Cong. Rec. S12470
(daily ed., July 26, 197G) ; Remarks of Senator Muskie, 122
Cong. Rec. S13316 (daily ed.f August 4, 1978).
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54
quirements—and does so by virtue of location in a desig-
nated area.
*
EPA argued initially, and in its petition for reconsider-
ation, that limiting the application of the permit require-
ments of section 165 solely to sources within clean air
areas may not provide an adequate solution to a particu-
lar pollution problem associated with those areas—the
problem of interstate pollution. In our per curia/m opin-
ion, we indicated agreement with the position advanced
by EPA, noting that the problem of interstate pollution
was indeed a serious concern not dealt with adequately
by the permit requirement. It was our apprehension that
Congress did not intend such a major pollution problem
to go untreated, and this led us to discover within the
statute a basis for the exercise by EPA of rulemaking
authority to extend the permit requirement of section 165
beyond its literal limitations.
Our review of the petitions for reconsideration sub-
mitted by both the industry petitioners and EPA has
led us to conclude that sections other than section 165
are available to fulfill that congressional objective of need
to cope with the problem of interstate pollution.
Section 110(a) (2) (E) (i) provides a vehicle for im-
plementing the congressional objective of abating sub-
stantial interstate air pollution. That provision requires
that an SIP shall contain "adequate provisions . . . pro-
hibiting any stationary source within the State from
emitting any air pollutant in amounts which will . . .
interfere with measures required to be included in the
applicable implementation plan for any other state under
[the PSD part]." The phrase "measures required to be
included" in an SIP clearly incorporates at least (1) the
absolute emissions limitation for each pollutant for which
increment limitations have been set under section 163 or
166, (2) the monitoring and modeling requirements of
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55
section 165 (e), and (3) "such other measures as may be
necessary, as determined by regulations promulgated un-
der [part C]," as provided in section 161. EPA's au-
thority, under § 110 (a) (2) (E) (i), to^prevent interstate
interference with these measures — to prevent, in other
words, the industry of one state from interfering with
the PSD -program of another — is clear. And, it does not
depend upon the permit process of section 165 for its
effectiveness.
So also, section 126 of the Act is a vehicle for abating
substantial interstate air pollution independent of per-
mitting. That provision allows that, upon petition by a
state or political subdidsion, the EPA may determine
that a source in a neighboring state "emits or would
emit any air pollutant in violation of the prohibition of
section 110(a) (2) (E) (i)." If such a violation is found,
the remedy provided by section 126 (c) — which remedy is
applicable "[notwithstanding any permit which may
have been granted by the State" — is not denial or revoca-
tion of a permit, but a prohibition against construction
or operation for a new source and a prohibition against
continued operation for an existing source, unless EPA
authorizes continued operation for up to three years while
the source is being brought into compliance with § 110
The industry petitioners acknowledged the' obligation
imposed upon them by sections 110 and 126 in their Re-
sponse to EPA's Petition for Rehearing.
Even if § 126 (a) (1) (A) does not mandate SIPs to
require notice i'rom sources in rionattainment areas,
as we believe, that does not relieve such sources
from the requirements of § 110 (A) (2) (E) (i) that
SIPs contain "adequate provisions" preventing any
source from emitting pollutants in amounts which
will interfere with the PSD measures required to be
included in the SIPs of other States. Nor does it
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56
relieve them from the provisions of § 126 (b) for
enforcement of § 110 (a) (2) (E) (i). If notice simi-
lar to that otherwise provided in 5 126 (a) should
be necessary to prevent violation of § 110 (a) (2) (E)
(i) by a source in a nonattainment area which would
adversely affect air quality in a clean-air area of
another State, we do not perceive any reason why
such notice could not ben-equired pursuant to § 110
(a) (2) (E) (i) even though not required by I 126
We hold that both section 110 (a) (2) (E) (i) and sec-
tion 126 (c) give EPA the authority to require that SIP's
contain provisions sufficient to address the problem of
interstate air pollution. We find that section 126 (a)
gives the agency the authority to require that SIP's in-
clude notice provisions designed to trigger the mechanisms
required by section 110 (a) (2) (E) (i) or section 126 (c).
And we find that section 126 (b) is an additional means
to activate those mechanisms by permitting any state or
political subdivision to petition the Administrator for a
finding that "any major source emits or would emit any
air pollutant in violation of the prohibition of section
110 (a) (2) (E)(i)."120
To the extent that there is any gap in those notice
provisions, section 114 is available. It provides that for
the purpose of carrying out the provisions of the Act "the
Administrator may require any person who owns or op-
erates any emission source ... to (A) establish and
maintain such records, (B) make such reports, (C) in-
stall, use, and maintain such monitoring equipment or
methods, (D) sample such emissions . . . , and (E) pro-
vide such other information, as he may reasonably re-
119 Response of Industry Petitioners to Respondents' Peti-
tion for Rehearing at 12 (filed August 2, 1979).
12042 U.S.C. §7426(b) (1978) (emphasis added).
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57
quire . . ." l-1 Thus, section 114 authorizes the Adminis-
trator to require any facility to provide notice of. an
interstate impact on air quality, be it or some other
source the cause of the impact.
Section 161l-- provides still another vehicle for imple-
menting the congressional objective of abating substantial
interstate air pollution. We realize that, at oral argument,
EPA disclaimed invocation of section 161 rulemaking au-
thority to address this problem. However, that disclaimer
came at a time when, in the agency's view, section 165,
by "its own terms, applied PSD review to sources of in-
terstate air pollution impacting on clean air areas. Given
such a view of section 165, the agency's disclaimer of
authority under section 161 was reasonable. We have
now held that section 165 does not, by its own terms,
apply to sources located outside of clean air areas. In
this light, and in view of the legislative desire to prevent
interstate impacts, the authority granted to the EPA by
the plain language of section 161—"each [SIP] shall con-
tain emission limitations and such other measures as may
be necessary, as determined under regulations promul-
gated under this part, to prevent significant deteriora-
tion of air quality [in cleafc air areas]"123—grants to the
Administrator the power to promulgate rules requiring
that SIPs adequately address the problem. We hold that
the Administrator may promulgate rules to require the
inclusion of such provisions in the SIP of the state whose
clean air area is affected, of the state which is the source
of the adverse impact, or of both.
This is not a case where Congress has crafted a
specified set of measures to solve a problem, so that ad-
ditional measures in agency-initiated rules can be deemed
«142 U.S.C. §7414 (1978) (emphasis added).
1=2 42 U.S.C. §7471 (1978).
123 Id. (emphasis added).
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58
not "necessary." On the contrary, this is a, case whsre
the congressional objective to meet the problem of sub-
stantial interstate pollution is clear, and the statutory
measures addressed to it are modest. Accordingly, a de-
termination that supplemental measures are "neces-
sary," '-* for the purpose of tinggering rulemaking au-
thority under section 161, is within the authority granted
by Congress, even though generally the statute relies on
measures specified by Congress rather than a contem-
plation of broad agency rulernaking discretion.
In sum, though it is clear from the legislative history
that Congress intended to address the problem of inter-
state pollution, we are of the view that the Administrator
has authority to administer section 110 fa) (2.) (E ' (i) and
section 126(b) and (c) in conjunction with section 114
and section 126 (a) so as to require SIPs to address the
problem. We are also of the view that EPA has addi-
tional authority, pursuant to rulemaking authority
granted in section 161, to promulgate regulations requir-
ing that SIPs include measures to abate interstate ad-
verse impacts on clear air areas.
There are provisions in the Act, such as those of sec-
tion 165 (d) (2), which evidence a solicitude for the
maintenance of air quality in federal lands but there are
none which justify the application of the permit require-
ments of section 165 to-sources not located in, but impact-
ing upon, such areas. Section 169A is available to protect
visibility in Class I areas where visibility is an important
characteristic, and the Administrator may choose to in-
voke the rulemaking authority granted to him by section
161 to address this problem. We find no basis for reading
into section 165 an application of the PSD review provi-
124 Even giving that term an expansive reading, see, e.g.,
Niagara Mohawk Power Corporation v. FPC, 126 U.S.App.
D.C. 376, 379 F.2d 1531 (1967).
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59
floi\s to sources in- non-attainment areas that impact upon
the air quality of federal lands and Indian reservations.
In conclusion, based upon our analysis of the Act, we
vacate EPA's regulations extending the permit require-
ments of section I bo to all sources, where ver located, if
the emissions from the source have an impact on any
clean air area.1-5 We do so because they were promul-
gated pursuant to EPA's reading of Section 1G5, a read-
ing which we have rejected.1-"
Based upon this analysis, we are no longer confident
that this statute provides a predicate for the court to put
a "gloss" on section 105 sufficient to support EPA rule-
making authority to apply the permit requirements of
that section to major emitting facilities located in non-
attainment areas in one state that impact adversely upon
clean air arc-as within a neighboring state.
EPA, in a petition for reconsideration, correctly points
out that emissions from facilities located in a non-attain-
ment area within a state which impact adversely on the
air quality of federal lands and Indian reservations raise
similar problems of intcrjurisdictional pollution as are
presented in the context of interstate pollution.
VI. REGULATION OF FUGITIVE EMISSIONS,
INCLUDING FUGITIVE DUST
In the general definitional section of the Act, section
302 (j),1-7 Congress employed the term "fugitive emis-
sions" to refer to one manner of emission of any air
»MO C.F.E. §§ 51.24(1) (1), 52.21(i)(l) (1978).
120 Should the Administrator determine that the provisions
of sections 111), 12!j, and 114 are insufficient to address the
problem of interstate pollution that impacts upon clean air
areas, he may use his rulemaking authority under section 161
to promulgate new regulations. Those regulations will, of
course, be subject to review.
'-742 U.S.C. §7602(j) (1978).
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GO
pollutant. As commonly understood, emissions from i\n
"industrial point source" include emissions emanating
from a stack or from a chimney. By contrast, "fugitive
emissions," are emissions fi«om a facility that escape othur
than from a point source. Principal among the fugitive
emissions is "fugitive dust," a term referring to fugitive
emissions by participate matter.1-8 EPA's regulations en-
compass sources of fugitive emissions (including fugitive
dust) as well as industrial point sources. A subsequent
section of this opinion l-u confirms EPA's authority to reg-
ulate sources of fugitive emissions and discusses the fac-
tors that delimit the agency's discretion to define a
"source" or an ''emitting facility" of fugitive emissions.
EPA's regulation of fugitive emissions has been oi'
special concern to the mining and forestry industries which
contend, without serious opposition, that they are inca-
pable of meeting the strict limitations on the emission
of particulate matter set by the PSD provisions. The
terms of section 165, which detail the preconstruction
review and permit requirements for each new or modified
"major emitting facility" apply with equal force to fugitive
emissions and emissions from industrial point sources.1""
EPA assumed that there is similarly no distinction to be
made between fugitive emissions and emissions from in-
dustrial point sources when determining whether a source
is a major emitting facility within section 169(1) 1S1
and thus subject to section 165. This assumption led the
agency to conclude that sources of fugitive dust satisfying
128 Though we have discerned the general parameters of
these terms, EPA. has latitude to provide reasonable, though
more specific, definitions along similar lines, so long as they
comport with congressional intent.
12M2U.S.C. §7475 (1978).
130 See section III of Judge Wilkey's Part of this opinion.
131 42 U.S.C. 7479(1) (1978).
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61
the annual tonnage threshold specified in section 169(1)
are major emitting facilities. But, solicitude for the
plight of the extractive and silvaculture industries moti-
vated EPA to promulgate a partial exemption for sources
of fugitive dust, an exemption which industry argues is
inadequate and environmental groups contend is beyond,
agency authority.1"1'-'
EPA is correct that a major emitting facility is sub-
ject to the requirements of section 165 for each pollutant
it emits irrespective of the manner in which it is emitted.
However, a source emitting large quantities of fugitive
emissions mr.y remain outside the definition of major
emitting facility and thus may not be subject to. the re-
quirements of section 165.
The origin of this distinction lies in section 302(j) of
the Act, which provides :
Except as otherwise expressly provided, the terms
"major stationary source" and "major emitting fa-
cility" mean any stationary facility or source of air
pollutants which directly emits, or has the potential
to emit, one hundred tons per year or more of any
air pollutant (including any major emitting facility
or source of fugitive emissions of any such pollutant,
as determined by rule by the Administrator).133
EPA construes this provision as a general definition of
"major emitting facility" that is totally supplanted for
the PSD provisions by the definition of major emitting
132 40 C.F.R. §§ 51.34 (k) (5), 52.21 (k) (5) (1978). The reg-
ulation maintains the requirement that such sources apply
best available control technology (BACT) as denned by sec-
tion 162(3), 42 TJ.S.C. §7479(3) (1978), but exempts them
from the otherwise-required showing that particulate emis-
sions from the facility will not exceed either the applicable
national ambient air quality standards (NAAQS) or the al-
lowable increments.
13342U.S.C. §7602(j) (1978).
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62
facility contained in section 169(1); Such is not the case.
Section 302 (j) is a definition of "major emitting facility"
in quantitative terms. That quantitative term is set at
the threshold of 100 tons per year. The calculation oi'
the 100 ton figure includes "fugitive emissions of any
such pollutant, as determined by rule by the Adminis-
trator." Thus, section 302(j) specifically attaches a rule-
making requirement for the inclusion of fugitive emis-
sions in the threshold calculation. The legislative history
of this rulemaking provision is sparse, but it well may de-
fine a legislative response to the policy considerations
presented by the regulation of sources where the pre-
dominant emissions are fugitive in origin, particularly
fugitive dust. Whatever the motivation of the "rule"
provision of 302.(j), its existence is unmistakable. Even
if the origin of this provision is fortuitous, the provision
may be welcomed as serendipitous, for it gives EPA flex-
ibility to provide industry-by-industry consideration and
the appropriate tailoring of coverage.
We must still ask where the special rulemaking provi-
sion of section 302(j) has been supplanted by the defini-
tion, in section 169(1), of "major emitting facility." We
consider section 169(1) to be governed by the rulemaking
requirement of section 302(j). Section- 302(j) is a gen-
eral definitional section defining terms "when used in this
A.ct"—and 302(j) begins: "Except as other expressly
provided."
Section 169(1) does expressly make a substantial modi-
fication in the 302 (j) definition of "major." The 100 ton-
per-armum threshold is expressly retained only for sources
within 28 listed categories. For "any other source," the
threshold is expressly raised to 250 tons per annum.
However, section 169(1) has no "express" provision
modifying section 302(j)'s "rule" requirement as to fugi-
tive emissions. Therefore under section 169(1) controlled
in this respect by section 302(j), the calculation of the
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63
threshold quantity emissions may include fugitive emis-
sions only as determined by rule by the Administrator.
As we have noted, the regulations under review include
a partial exemption from statutory permit requirements
for major emitting facilities of fugitive dust. In light
of nur discussion in section III of this opinion, we h?,ve
reason to doubt whether EPA possesses the statutory
authority to promulgate the exception in this manner,
but we need not resolve the question. The exemption rule
was based on a premise that we have held to be errone-
ous—namely, chat the statute of its own momentum sub-
jects major sources of fugitive emissions to PSD precon-
struction review and permit requirements. In light of our
interpretation of section 302 (j), and in accordance with
our discussion as to the limits of EPA general exemption
authority, we vacate the exemption for sources of fugitive
dust and remand for further consideration.
The statutory scheme provides EPA with a mechanism
for accomplishing its objectives of partially exempting
fugitive dust emitted by major emitting facilities from
the requirements of section 165 by appropriate rulemak-
ing pursuant to section 111.1"
is» EPA has discretion to define the pollutant termed "par-
ticulats matter" to exclude participates of a size or composi-
tion determined not to present substantial public health or
welfare concerns. Such "excluded particulates" would remain
"air pollutants" within the meaning of the Act, section 302
(g), but would be dropped from the list of pollutants com-
piled by the EPA Administrator under section 108 (a) (1)—a
list comprised of air pollutants the "emissions of which, in
his judgment, cause or contribute to air pollution which may
reasonably be anticipated to endanger public health or wel-
fare." Since national ambient air quality standards may exist
only for those pollutants lists under section 108 (a) (1), "ex-
cluded particulates" would not be subject to NAAQS. See
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64
C.A.A. at §§ 108(a) (i), (2), 109, 302 (g), 42 U.S.C. §§ 7403
(1), (2),7409, 7602(2:) (1978).
However, under section lll(b)(l)(A) the Administrator
must compile a list of categories of stationary sources that in
his judgment ''[cause or contribute] significantly to air pol-
lution which may reasonably be anticipated to endanger pub-
lic health or welfare." This list could include sources of "par-
ticulate matter," as newly defined, even though the great
preponderancG of particulates emitted by such sources have
become "excluded particulates." A source may "significant-
ly" contribute to air pollution on account of its emissions of
"particulate matter" even though the quantities of "particu-
late matter" emitted fall well below the tonnage threshold
that would qualify such a source, due to the emissions of that
pollutant, a.s a major emitting facility. Section lll(d) (1)
grants authority to the Administrator to establish standards
of performance for any air pollutant emitted by a source
on the list compiled under section lll(b) (1) (A). See also
C.A.A. at § 111 (a) (1) (C). Thus,, due to the difference in focus
of sections 108 and 111—one on pollutants and the other on
sources—a standard of performance might be developed gov-
erning "excluded particulates" though no NAAQS has been
promulgated. Once a standard of performance has been pro-
mulgated for "excluded particulates," those pollutants be-
come "subject to regulation" within the meaning of section
165 (a) (4), 42 U.S.C. §7475 (a) (4) (1978), the prevision
requiring BACT prior to PSD permit approval.
EPA has authority by rulemaking to incorporate fugitive
emissions, including fugitive dust, in the calculation of ton-
nage thresholds required to qualify a stationary source as a
major emitting facility. See C.A.A. at §302(j), 42 U.S.C.
§ 7602 (j) (1978) ; Section D, supra. After such a rule-making,
a major emitting facility of "excluded particulates'' would be-
come subject to the preconstruction review and permit re-
quirements of section 165. The net result of the administra-
tive action outlined above would be a requirement that such
major emitting facilities apply BACT (section 165(a) (4)),
but no need for showing required by section 165(a) (3) that
emissions of "excluded particulates" would not violate NAAQS
or allowable increments. No NAAQS would exist for "ex-
cluded particulates" and the increments applicable to "par-
ticulate matter" would not apply. See also C.A.A. at § 166, 42
U.S.C. §7470 (197S) (premising development of increments
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65
VII. MONITORING
Environmental petitioners challenge the EPA's monitor-
ing regulations 135 as falling short of the statutory man-
date in several respects. The EPA argues that the Act,
specifically the text of sections 165(a) (2) and (a) (7),136
grants broad discretion to the agency to formulate moni-
toring regulations.
The arguably discretionary language of sections 165
(a) (2) and (a) (7) is in our view restricted by the plain
language of section 165 (e), which provides in part:
The review provided for in subsection (a) shall be
preceded by an analysis in accordance with regula-
tions of the Administrator promulgated under this
subsection. . . .137
Subsection (e) provides unambiguously that certain re-
quirements mvst.be included in the regulations EPA is
directed to issue respecting the analysis. Of course there
are circumstances when statutory language mandatory
in form is held to constitute a mere directory command
to the agency, so that variance triggers no judiciaFsanc-
tion. In this case, however, the nature of the statutory
command and its background in the legislative history138
supports our determination that the specification of re-
quirements in section 165 (e) must control agency action
in this respect.
for "other pollutants" on the existence of NAAQS for such
pollutants).
135 40 C.F.R. §§ 51.24 (n), 52.21 (n) (1978).
1S842U.S.C. §7475 (a) (2) and (a) (7) (1978).
"* 42 U.S.C- § 7475 (e) (1978) (emphasis added).
188 See H. Rep. No. 95-5G4, 95th Cong., 1st Scss. 151-53
(1977) ; H. Rep. No. 95-294, 95th Cong., 1st Sess. 8-9, 171
(1977).
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66
A. Elements Required by Section 165 (e) (1)
On its face, section 165 (e) (1) requires that precon-
struction "review . . . shall be preceded by an analysis
. . . for each pollutant subject to regulation under this
Act which will be emitted" from the facility.139 The man-
datory nature of these provisions—subject only to the
•authority of the agency to exempt de minimis situa-
tions 14°—is clear. There must be an analysis; it must be
for each pollutant regulated under the Act.
The regulations under review required monitoring only
for those pollutants for which a NAAQS exists. The
Sierra Club and the Environmental Defense Fund argue
that § 165 (e) (1) mandates monitoring for all pollutants
under the Act. In the per curiam opinion issued earlier
in this case, we expressed the view that § 165 did in fact
i*equire preconstruction monitoring for each pollutant
subject to regulation under the Act.1*1 Further reflection,
prompted in part by a petition for rehearing filed by
industry petitioners,1*2 has caused us to reconsider our
rulings. We now affirm that § 165 (e) (1) requires that
an analysis be conducted, and that it be conducted foi*
each pollutant regulated under the Act. But, we also find
that §165(e)(l), standing alone, does not require
monitoring as the method of analysis to be employed in
fulfillment of its requirements. This conclusion is dic-
tated by the absence of any reference to monitoring in
§ 165 (e) (1)—in contrast to its explicit inclusion in § 165
139 42 U.S.C. §7475(e) (1) (1978).
140 See section IIIB of this opinion.
141 Alabama Power Company, et al. v. Costle, U.S.
App.D.C. , , F.2d , , Slip Opinion at
33-34 (No. 78-10006, 6/18/79);
142 Industry Petitioners' Petition for Rehearing on the
Application of PSD Requirements to Pollutants Other Than
Sulfur Dioxide and Participates .it 7-10 (Filed, July 19,1979).
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6?
(o)(2), which requires preconstruction monitoring- to
determine whether emissions will exceed maximum allow-
able increases or concentrations where such limits have
been promulgated. Furthermore, § lG5(e) (3) (D), which
provides that EPA regulations shall specify any models
to be used, opens the possibility that EPA might, in
varying circumstances or for various pollutants, choose
either monitoring or modeling as the method of analysis
for §165(e)(l).
EPA may use its discretion in the choice of methodol-
ogy—either monitoring or modeling—to be employed in
fulfilling the requirements of § 165 (e) (1). That discre-
tion is subject, however, to the provisions of I 165 (e) (2)
which sets forth requirements as to monitoring.
B. Elements Required by Section-165 (e) (2)
EPA's regulations have required monitoring only to
determine whether an applicable NAAQS will be ex-
ceeded. The Agency argues in justification for its re-
strictions on the use of monitoring that monitoring for
actual air quality concentrations is technologically infeasi-
ble for all but a small number of pollutants and that
current monitoring techniques are at best of questionable
accuracy even for the relatively straightforward measure-
ment of whether an applicable NAAQS has been ex-
ceeded. The environmental petitioners argue that the
regulation .falls short of the statutory command, that
monitoring must be required to determine as well whether
the applicant will cause or contribute to violations of
allowable increments.
The language of subsection 165 (e) (2) is dispositive.
It provides in part:
Effective one year after date of enactment of this
part, the analysis required by this subsection shall
include continuous air quality monitoring data gath-
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ercd for purposes of determining whether emissions
from such facility will exceed the maximum alLov:-
able increases or the maximum' allowable concentra-
tion permitted under this part.143
This is a plain requirement for inclusion of monitoring
data, for purposes of the determination whether emis-
sions will exceed allowable increments.
We discern from the statute a technology-forcing ob-
jective. Congress intended that monitoring would im-
pose a certain discipline on the use of modeling tech-
niques, which would be the principal device relied upon
for the projection of the impact on air quality of emis-
sions from .a regulated source. This projects that the
employment of modeling techniques be held to earth by
a continual process of confirmation and reassessment, a
process that enhances confidence in modeling, as a means
for realistic projection of air quality. This objective is
furthered by the development of sophisticated monitoring
techniques, and the collection of the data base that would
result from monitoring's widespread use. Of course even
a congressional mandate, such as a technology-forcing re-
qxiirement based on a congressional projection of emer-
gence of technology for the future, is subject to a justi-
fied excuse from compliance where good-faith effort to
comply has not been fruitful of results. That is far
different from the exemption created by EPA on the basis
of current technological infeasibility. Though EPA has
authority to require methods other than monitoring in
its effort to ensure that allowable increments and NAAQS
are not violated, and though it may choose to invoke
that authority because of its perception that monitoring
alone is inadequate to the task, it does not have authority
to dispense with monitoring—as at least one element of
the overall enforcement effort—where Congress has man-
dated the use of that technique.
»342 U.S.C. §7475(e)(2) (1978) (emphasis added).
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69
C. Guide-lines for Siate Exemption Authority Under
Section l()5(e)'(2)
The monitoring requirement of subsection lG5(e)(2)
includes an instruction that:
^
Such data shall be gathered over a period of one
calendar year preceding the date of application for
a permit under this part unless the State, in accord-
ance ioiih- regulations promulgated by the Adminis-
trator, determines that a complete and adequate
analysis for such purposes may be accomplished in
a shorter period.
(Emphasis added.) The pertinent regulations have failed
to provide concrete guidance to the cognizant State au-
thorities for the exercise of the partial exemption author-
ity granted by the provision. Instead, they have left such
determinations to the States on a completely open-ended
basis. We discern a congressional intention that EPA
furnish meaningful guidance to the States as to the cir-
cumstances appropriate for exemption. We remand for
further consideration.
D. Requirement for Post-Construction Monitoring
EPA has imposed no requirement for post-construction
monitoring. The Sierra Club and the Environmental De-
fense Fund argue that this omission is invalid. In sup-
port of their contention, they point (1) to what they
perceive to be the "prospective" monitoring requirement
of section 16o(a) (7);1U and (2) to a congressional
intent, ostensibly apparent from the inclusion of the
modeling provisions of section 165(e) (3) (D) "•"' in sec-
tion 165, to ensure that monitoring and modeling aug-
ment one another in an ongoing manner.
This contention of environmental petitioners runs
against the explicit language. Section 165(a) (7)140 does
»« 42 U.S.C. § 7475 (a) (7) (1978).
»«'42 U.S.C. § 7475 (e) (3) (D) (1978).
"•42 U.S.C. § 7475 (a) (7) (1978).
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70 ;
make reference to a requirement of post-construction
monitoring, but grants discretion to the agency in this
regard—a discretion that has not been provided with re-
spect to the pre-applicatlon monitoring requirements spec-
ified in subsection 165 (e). Section 165 (a) (7) provides as
a condition of permit approval that the applicant:
agrees to conduct such monitoring as may be neces-
sary to determine the effect which emissions from
any such facility may have, or is having, on air
quality in any area which may be affected by emis-
sions from such source.147
The determination of the post-construction monitoring
that "may be necessary" is not dictated by' any ]/revision
in subsection 165(e), which pertains to pre-app!ication
monitoring requirements. EPA has latitude to make a
determination under subsection 165(a) (7) in light of
the facts and circumstances of each case. There is also
latitude to respond to suggestions that guidelines be
formulated outlining the pircumstances that require post-
construction monitoring and the nature of the monitoring
requirement
Section 11414S grants the Administrator broad au-
thority to require monitoring by any source that in his
judgment is necessary to carry out his responsibilities
under the Act. This includes an authority to require post-
construction monitoring, but does not compel such a re-
quirement. Section 319 14
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ROBINSON, Circuit Judge: This opinion addresses four
issues: first, whether EPA's action in specifying a uni-
form date on which baseline concentrations in attainment
areas are to be ascertained comports with statutory
requirements; second, whether increased emissions con-
sequent upon voluntary changcovers from cleaner to
dirtier fuels are to be included in the baseline; third,
whether EPA provided reasoned responses to the modeling
regulations that it proposed and ultimately adopted; and
fourth, the legal propriety of EPA's regulations govern-
ing the role of stack height in determining the air pollu-
tion control requirements applicable to an emitting
source.
I. BASELINE DATE
A central feature of the statutory program for the
prevention of significant deterioration of air quality in
attainment areas, with respect to sulfur dioxide and
particulate matter at least,1 is the establishment of maxi-
mum allowable increases, known, as increments, in con-
centrations of pollutants.2 The increment concept incor-
porates the idea of a baseline from which deterioration
is calculated, by models or monitors, to determine whether
it is permissible. Congress has defined with specificity
the time and manner in which the baseline for an attain-
ment area is to be determined. The first sentence of Sec-
tion 169 (4), the part now relevant, provides:
The term 'baseline concentration' means, with respect
to a pollutant, the ambient concentration levels
1 Section 163 fixes the increments for these two pollutants.
91 Stat. 732, 42 U.S.C. §7473 (Supp. I 1977). Section 166
contemplates that EPA will study the four so-called "auto-
motive" pollutants for which national ambient air quality
standards have been set with a view to determining whether
increments for these pollutants should be established. 91 Stat.
739, 42 U.S.C. §7476 (Supp. I 1977). See generally Part
III(B) supra of Judge Wilkey's opinion.
2 See § 163, 91 Stat. 732, 42 U.S.C. § 7473 (Supp. I 1977).
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2
which exist at the time of the first application for
a permit in an area subject to [Part C], based on
air quality data available in the Environmental Pro-
tection Agency or a State air pollution control agency
and on such monitoring data as the permit applicant
is required to submit.3
EPA has acknowledged that- the literal purport of the
statutory definition is that the starting point* for de-
termining the baseline in a particular clean air region
is the existing ambient pollution level in that area at the
time of the first application for a permit by a major
emitting facility.5 Yet, in a remarkable assertion of
administrative power to revise what Congress has
wrought, EPA's final regulations define baseline con-
centration in terms of actual air quality as of August
7, 1977.6 The Administrator explained this decision as
follows:
[T]he regulations promulgated today recognize the
severe technical and administrative problems with
implementing a definition of baseline concentration
that relates to the date of first permit application
in an area. The administrator believes that a strict
3 91 Stat. 741, 42 U.S.C. § 7479 (4) (Supp. I 1977).
* The remainder of § 169 (4) deals with attribution of
emissions of non-operating major emitting facilities on which
construction was commenced prior to January 6, 1975, and of
major emitting facilities, whether operating or not, on which
construction "was commenced after January 6, 1975. These
provisions will be instrumental in our resolution of the "fuel
switches" issue. See Part II infra,.
5 "Section 169(4) of the Act generally defines baseline in
terms of the ambient concentration existing at the time of the
first application for a permit in an area." 43 Fed. Reg. 26400
(June 19, 1978) (explanation of final regulations).
8 40 C.F.R. § 51.24(b) (11) (1978); 40 C.F.R. § 52.21 (b)
(11) (1978).
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3
interpretation of the Act's language would create
thousands of different areas each with different base-
line starting points. Moreover, these areas would
eventually overlap as more and more sources applied
,»for PSD permits. The final regulations . . . resolve
those problems by establishing a uniform starting
date for determining the baseline concentration in
all areas.7
Without disavowing that rationale, EPA's counsel has
offered, as a second justification for the selection of a
single date for calculation of the baseline, the following
"anomaly":
There is no apparent reason why in one clean air
area five 'minor' sources constructed at the same
time as five 'minor' sources in another clean air
area should be counted against the increment simply
because the first application by a major facility for
a PSD permit came at an earlier date in the first
area than in the second.8
Industry petitioners, the State of Texas and the Dis-
trict of Columbia* urge that EPA's uniform baseline
date be set aside and the statutory baseline date rein-
stated. We agree. EPA has no authority to overrule a
clear, consistent congressional directive:10 "the sound
7 43 Fed. Reg. 26400 (June 19, 1978).
8 Brief for Respondents at 161. In rejecting this position
on the merits, see notes 12-17 infra, and accompanying text,
we do not mean to imply that appellate counsel's carpentry
can repair a deficient agency rationale.' See, e.g., Citizens to
Preserve Overton Park V. Volpe, 401 U.S. 402, 419, 91 S.Ct.
814, 825, 28 L.Ed.2d 136, 155 (1971).
8 It may be some time before a major emitting facility
seeks to operate in the District of Columbia.
10 Espinoza V. Farah Mfg. Co., 414 U.S. 86, 94-95, 94 S.Ct.
334, 339, 38 L.Ed.2d 287, 295 (1973), quoting Red Lion Broad-
casting Co. V. FCC, 395 U.S. 3G7, 381, 89 S.Ct. 17S4, 1802, 23
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principle of according deference to administrative prac-
tice normally applies only where- the relevant statutory
language is unclear or susceptible of differing inter-
pretations." "
The statutory definition of baseline concentration was
in no sense a product of legislative inadvertence.1- Con-
gress focused on how to define the baseline and fully
understood the consequences of its chosen resolution. The
Conference Committee explicitly acknowledged its adop-
tion of the Senate definition of baseline,13 and the Senate
report had explicitly rejected EPA's uniform date ap-
proach.1* Indeed, it purposely embraced the situation
L.Ed.2d 371, 384 (1969) ("[c]ourts need not defer to an ad-
ministrative construction of a statute where there are 'com-
pelling indications that it is wrong1") ; Volkswagenwert
Aktiengcsellschaft V. FMC, 390 U.S. 261, 273, 88 S.Ct. 929,
936, 19 L.Ed.2d 1090, 1098 (1968), quoting NLRB v. Bmcn,
380 U.S. 278, 291, 85 S.Ct. 980, 988, 13 L.Ed.2d 839, 849
(1965) ("the courts are the final authorities on issues of
statutory construction [citations omitted], and 'are not
obliged to stand aside and rubber-stamp their affirmance of
administrative decisions that they deem inconsistent with a
statutory mandate or that frustrates the congressional policy
underlying a statute' ").
11 Shea v. Vialpando, 416 U.S. 251, 262 n.ll, 94 S.Ct. 1746,
1754 n.11, 40 L.Ed.2d 120, 130 n.ll (1974); see Townsend v.
Swank, 404 U.S. 282, 286, 92 S.Ct. 502, 505, 30 L.Ed.2d 448,
453 (1971).
12 Compare Citizens to Save Spencer County v. EPA, No.
78-1002 (B.C. Cir. Mar. 27, 1979).
13H.R. Rep. No. 564, 95th Cong. 1st Sess. 153 (1977)
(conference report).
14 See S. Rep. No. 127, 95th Cong., 1st Sess. 98 (1977)
("[u]nder the reported bill [unlike EPA's regulations], the
time at which the baseline is established for different areas
will depend upon the timing of the first application of a
major emitting facility"). Congress also rejected the House
definition of baseline, which embraced a fixed-date approach.
See H.R. 6161, 95th Cong., 1st Sess., §108 (1977) (adding
§ 160(c) (2) (E) to the Clean Air Act).
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EPA's counsel considers anomalous: "Under this defini-
tion [of baseline] it is possible for nonmajor emitting
sources to be constructed in the area after the date of
enactment without having their emissions affect the ability
of major emitters to use the increment available." 15 ,
This -differential treatment of clean air areas, keyed
to when the first major emitting facility applies for a
permit, is based on a sound, practical consideration. As
the Senate explained,
[t]he purpose is to use actual air quality data to
establish the baseline. Where sufficient actual data
are not available, the State may require the appli-
cant to perform whatever monitoring the State be-
lieves is necessary to provide that information. This
may involve monitoring for 12 months or more to
establish an annual average.16
In other words, the task of monitoring existing ambient
pollution levels in attainment areas is assigned to the
first permit applicant, who will provide the information
essential to calculation of the baseline.17
lfiS. Rep. No. 127, 95th Cong,, 1st Sess. 98 (1977). EPA.
suggests that the Conference Committee's rejection of the
Senate proposal that only emissions from major new sources
should be considered in assessing consumption of the incre-
ment, see S. 252, 95th Cong., 1st Sess. § 7 (1977) (adding
§ 110(g) (B) (2) to the Clean Air Act), vitiated the purpose
of calculating the baseline as of the date of the first permit
application. Brief for Respondents at 157-161. This misap-
prehends the rationale of the Senate's baseline definition. See
notes 16-18 infra, and accompanying text. It is true, however,
that the statement quoted in text possessed, prior to the
above-mentioned conference decision, a broader meaning.
16 S. Rep. No. 127, 95th Cong., 1st Sess. 98 (1977).
"See § 165(e) (l)-(2), 91 Stat. 738, 42 U.S.C. §7475(e)
(l)-(2) (Supp. I 1977). EPA asserts that its uniform date
is supported by § 107 (d) of the Act, 91 Stat 687, 42 U.S.C.
[Footnote continued on page 6]
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The Administrator's recitation of the administrative
and technical burdens obviated by a uniform date for the
setting of the baseline simply blinks reality.18 A uniform
date for calculating the baseline does not result in es-
tablishment of a uniform baseline. Ambient concentra-
tion levels of regulated pollutants varied considerably in
different clean air areas on August 7, 1977, or any date
for that matter, and thus baselines inevitably must
differ. EPA's regulations requiring baseline concentra-
tion to be figured as of August 7, 1977, must be set aside
in favor of the statutory directive to ascertain the base-
line in each region as of the date of the first permit
application^
II. BASELINE AND VOLUNTARY FUEL SWITCHES
The first sentence of Section 169 (4),™ as we have just
explained, specifies that the baseline concentration means
17 [Continued]
§7404(d) (Supp. I 1977). Brief for Respondents at 162.
Section 107(d)(l) requires each state to submit to EPA,
within 120 days of enactment of the 1977 amendments, a list
of those portions of the state which, on August 7, 1977, do not
meet a national ambient air quality standard, and a list of both
those which meet all such standards and those which, for lack
of sufficient information, cannot be classified and therefore are
deemed clean air areas. See Citizens to Save Spencer County
v. EPA, supra, note 12, at 12-13 (dissenting opinion). But
the § 107 lists submitted so far indicate that a great many
states do not have acceptable air quality data showing pollu-
tion levels as of August 7, 1977. See, e.g., 43 Fed. Reg. 89G7,
8970, 8978, 8980, 8983, 8985, 8992, 8999, 9001, 9002, 9005,
9012, 9017, 9019, 9025, 9027, 9029, 9035, 9037, 9041, 9044,
9046 (Mar. 3, 1978). Thus, Congress' concern over the ade-
quacy of existing information concerning ambient air quality
has been borne out by experience.
18 See note 7 sif.pra and accompanying text.
10 42 U.S.C. §7479(4) (Supp. I 1977), quoted in relevant
part in text supra at note 3.
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primarily the actual ambient pollution levels existing at
the time of the first permit application by a major emit-
ting facility.20 This baseline is, however, subject to an
adjustment specified in the remainder of Section 169(4):
Such ambient concentration levels shall take into
account all projected emissions in, or which • may
affect, such area from any major emitting facility
on which construction commenced prior to January
6, 1975, but which has not begun operation by the
date of the baseline air quality concentration deter-
mination. Emissions of sulfur oxides and particu-
late matter from any major emitting facility on
which construction commenced after January 6, 1975,
shall not be included in the baseline and shall be
counted against the maximum allowable increases
in pollutant concentrations established under [Part
C].21
The significance of January 6, 1975, is that it was the
effective date of EPA's earlier PSD regulations.22
Indisputably, then, the baseline is to include all emis-
sions actually being made by major facilities on which
construction was under way before January 6, 1975*,
and which are in operation when the baseline determina-
tion is made. Nor is there any quarrel over the scope or
import of the last sentence of Section 1G9 (4) : emissions
of sulfur dioxide and particulate matter23 from major
20 See notes 10-18 supra and accompanying text.
2142 U.S.C. § 7479 (4) (Supp. 11977).
22 See S. Rep. No. 127, 95th Cong., 1st Sess. 98 (1977).
23 This case does not require us to explore the implications,
if any, to be drawn from the fact that the last sentence of
§169(4), 42 U.S.C. §7479(4) (Supp. I 1977), is limited to
sulfur dioxide and particulate matter while the remainder of
the statutory definition of "baseline concentration" spenks
more broadly of pollutants. The other regulated pollutants
have not yet been subjected to the baseline-increment method
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8
facilities on which construction began after January 6,
1975, are not grandfathered into the baseline but rather
count against the increments, even if such facilities are
operating on the date of the first permit application/-4
On the other hand, controversy rages over the meaning
of the middle sentence of Section 169(4). EPA has per-
sisted, over firm objection,23 in reading that directive
according to its literal terms.28 In EPA's view, the sen-
tence evinces a congressional design to grandfather pro-
jected emissions only of sources not in operation when
the baseline is established, and then only if construction
began prior to January 6, 1975.27 The State of Texas
of regulation. Section 166 contemplates that the four pollu-
tants other than sulfur dioxide and particulate matter for
which national ambient standards have been set will be regu-
lated to prevent significant deterioration. 42 U.S.C. § 7476
(Supp. I 1977). The methods for preventing significant de-
terioration by those pollutants, however, "need not require
the establishment of maximum allowable increases." 42 U.S.C.
§7476(e) (Supp. 11977),
24 43 Fed. Reg. 26383 (June 19, 1978) (to be codified in
40 C.F.R. § 51.24 (b) (11)); 43 Fed. Reg. 26404 (June 19,
1978) (to be codified in 40 C.F.R. § 52.21 (b) (11)).
23 Several of these complaints, submitted to EPA in affidavit
form and appended to petitioners' brief, maintain that EPA's
position penalizes companies that have in the past voluntarily
burned cleaner-than-allowable fuel. The answer is that base-
line and increments are set for regions, rather than individual
facilities.
28 See generally 40 C.F.R. § 51.24 (b) (11) (1978); 40 C.F.Pv.
§ 52.21(b) (11) (1978).
27 "The baseline concentration shall include contributions
from — [t]he allowable emissions of major stationary sources
and major modifications which commenced construction be-
fore January 6, 1975, but were not in operation by August 7,
1977." 40 C.F.R. §51.24(b) (11) (ii) (1978); 40 C.F.R.
§ 52.21 (b) (11) (ii) (19,78). August 7,1977, it will be recalled,
was EPA's uniform baseline date, which we have held to be
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and members of the chemical manufacturing and utility
industries have petitioned for review on this point, argu-
ing that the provision in question reflects an intention to
exempt projected emissions of any source onVhich con-
struction commenced before January 6, 1975, even if
operating at the time of establishment of the baseline.28
Issue has been joined on whether increased emissions
resulting from a major facility's voluntary switch from
a relatively clean but scarce fuel to a more abundant
but dirtier fuel are to consume the increments or rather
are to be included within the baseline when the facility
was capable of utilizing the alternate, more plentiful
fuel prior to January 6,1975.M
EPA has held, first, that voluntary fuel switches by
emissions sources which were designed to accommodate
, the alternate fuel prior to January 6, 1975, do not con-
stitute modifications within the meaning of Section 111
(a) (4),3l) and accordingly that such changeovers are not
subject to the review and permitting strictures imposed
by Section 165.S1 EPA's ruling on this point has not been
in contravention of the statute. See Part I supra. The refer-
ence to August 7, 1977, is thus simply to the time of baseline
determination.
28 Brief for Industry Petitioners on Fuel Switches at 17-22.
29 EPA's position is "that [voluntary fuel] switches . . .
will consume increment." 43 Fed. Reg. 26397 (June 19, 1978)
(explanation of final regulations).
80 42 U.S.C. § 7411 (a) (4) (Supp. 11977).
81 42 U.S.C. §7475 (Supp. I 1977). In enacting the 1977
amendments, Congress neglected to subject modifications of
major emitting facilities to the permit and best available con-
trol technology requirements. A so-called "technical" amend-
ment to § 169 (2) of the Act added a new subparagraph C,
which provided that "[t]he term 'construction' when used in
connection with any source or facility, includes the modifica-
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10
challenged. EPA has further resolved, as we have stated,
that the additional emissions resulting from such fuel
switches do, under the Act, consume the increments.32
Texas and the industry petitioners complaining inti-
mate that EPA's position on voluntary fuel switches is
internally inconsistent.3* This argument conflates the
tion (as defined in section 111 (a)) of any source or facility."
Act of Nov. 16, 1977, Pub. L. No. 95-190, 91 Stat. 1402, 42
U.S.C. §7479 (2) (C) (Supp. I 1977). By this amendment
modifications of major facilities must meet the demands of
§ 165, and "modification" is defined to mean "any physical
change in, or change in the method of operation of, a sta-
tionary source which increases the amount of any air pollutant
emitted by such source or which results in the emission of any
air pollutant not previously emitted." 42 U.S.C. § 7411 (a) (4)
(Supp. 11977).
EPA's decision to omit voluntary fuel switches from PSD
scrutiny is based upon a belief that Congress did not intend
that they be considered changes in the "method of operation."
The Administrator explained :
In adding Section 169(2) (C) to the Act, Congress indi-
cated that it intended to conform the meaning of 'modifi-
cation* to 'usage in other parts of the Act.' 123 Cong. Rec.
H11955, 11957 (November 1, 1977). At the time, regula-
tions promulgated under Section 111 had defined 'modifi-
cations' to exclude voluntary fuel switches when the
source, 'prior to the date any standard under this part
becomes applicable to that source type ...[,] was de-
signed to accommodate that alternative use.' 40 C.F.R.
60.14(e) (4) (1977). Apparently, Congress intended vol-
untary fuel switches to be treated similarly for PSD
purposes.
43 Fed. Reg. 26396 (June 19, 1978).
32 See note 29 supra.
33 E.g., Brief for Industry Petitioners on Fuel Switches 37-
42. These petitioners also urge that EPA's fuel-switches posi-
tion is at odds with its avowed intent to deviate from a base-
line calculated on the basis of actual emissions in those regions
where a SIP relaxation was submitted to EPA and was still
pending on August 7, 1977. 43 Fed. Reg. 26400 (June 19,
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11
different yet complementary functions of Section 1G5 re-
view and calculation of increment consumption. The
theory of the statutory PSD program is that concentra-
tion on preconstruction review of major emitting fa-
cilities "' in clean air areas will preserve air quality in
those areas with a minimum of. economic hardship.31"' At
the same time, the success of the program depends heavily
upon realistic assessments of pollution levels. As Senator
Gary Hart put it, "[sjulfur dioxide is sulfur dioxide—
and it doesn't matter whether it comes from 1 large
major source or from 1,000 small nonmajor sources. The
effects are still the same." so Moreover, the severe techni-
cal problems involved in assessing the origin of existing
pollution are sidestepped somewhat by this approach.37
1978). The validity of this approach itself is not questioned
here, and we intimate no view either on its appropriateness
or on petitioners' argument of inconsistency. Restraint is
especially warranted because EPA could reconsider this issue
in light of our decision overturning its uniform, August 7,
1977, date for determining the baseline. See Part I supra.
Industry also points to EPA's announcement that it will use
reasonable assumptions in ascertaining ambient concentration
as of the baseline date. 43 Fed. Reg. 26400 (June 19, 1978).
This policy likewise is unchallenged, and may be revised, so
we decline to rule on it. See generally notes 4-3-44 infra and
accompanying text.
34 "This key term [major emitting facility] assures that
industrial plants of significant impact are fully covered, yet
also assures that smaller activities are not subject to over-
zealous regulation." 122 Cong. Rec. S12809 (daily ed. July
29, 197G) (remarks of Senator McClure). See also 123 Cong.
Rec. S13710-13711 (daily ed. Aug. 4, 1977) (remarks of Sena-
tor McClure).
35 122 Cong. Rec. S12470 (daily ed. July 26, 1976) (remarks
of Senator Hart).
"Id. See also 122 Cong. Rec. S13325-13326 (daily ed. Aug.
4, 1976) (remarks of Senator Hart). The Hart amendment
was defeated. See note 46 infra and accompanying text.
™ Id.
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12
The central submission of the protesting- petitioners is
that EPA's decision not to grandfather emissions from
fuel switches by facilities capable of so changing prior
to January 6, 1975, contravenes congressional intent as
revealed in the second sentence of Section 169(4) and
throughout the history of the 1977 Amendments. Ap-
proaching the issue with the considerable degree of defer-
ence due an agency's interpretation of the statute it is
charged with administering,"8 we sustain the administra-
tive construction.
Every issue of statutory interpretation should com-
mence with a close textual examination.311 The second
sentence of Section 169(4) is in express terms limited
to facilities on which construction was commenced prior
to January 6, 1975, but which are not in operation when
the first permit application triggers calculation of the
baseline. Petitioners, however, would modify this pro-
vision to make it referable to any major facility on which
construction started before that date, "even if" the fa-
cility has not begun operation at the time of the base-
38 United States V. Sheffield Bd. of Comm'rs, 435 U.S. 110,
131, 98 S.Ct. 965, 979, 55 L.Ed.2d 148, 166 (1978) ; United
States v. Consumer Life Ins. Co., 430 U.S. 725, 751-752, 97
S.Ct. 1440, 1454, 52 L.Ed.2d 4, 24 (1977) ; Train v. Natural
Resources Defense Council, 421 U.S. 60, 87, 95 S.Ct. 1470,
1485, 43 L.Ed.2d 731, 750 (1975) ; Udall V. Tall-man, 380
U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616, 625 (1965).
39 Ernst & Ernst V. Hochfelder, 425 U.S. 185, 197, 96 S.Ct.
1375, 1383, 47 L.Ed.2d 668, 679 (1976), quoting Blue Chip
Stamps V. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct.
1917, 1935, 44 L.Ed.2d 536, 561 (1975) (concurring opinion)
("[tjhe starting point in every case involving construction
of a statute is the language itself") ; FTC v. Bunte Bros.,
312 U.S. 349, 350, 61 S.Ct. 580, 581, 85 L.Ed. 881, 883 (1941)
("[w]hile one may not end with the words of a disputed
statute, one certainly begins there"); Citizens to Save Spencer
County v. EPA, supra note 12, at 3-4 & nn.12-14 (dissenting
opinion).
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line determination.40 To justify this surgeiy, they assert
that "[cjlearly it would be anomalous to assume that
Congress intended to grandfather only those projected
emissions from sources that commenced construction prior
to January 6, 1975, but which were not in. operation [by
the date the baseline is figured], and exclude sources
which were built and operating beforehand." 41
In our opinion, Section 169(4) as enacted draws a
sensible distinction. There are two types of emitting
sources begun prior to the existence of any PSD program.
If the source has no actual emissions because it has yet
to commence operating, its hypothetical, projected emis-
sions are included in the baseline. If, however, the source
is an established operation, a more realistic assessment
of its impact on ambient air quality levels is possible, and
thus is directed.42
*° Brief for Industry Petitioners on Fuel Switches 18 (em-
phasis in original).
41 Id. at 20 n.l.
"Brief for Respondents at 173. EPA also relies on
§163(c), 91 Stat. 733, 42 U.S.C. §7473(c) (Supp. I 1977),
to support its policy of counting emissions from voluntary
fuel changes against the increment. Brief for Respondents at
166-174. This subsection provides in relevant part:
(1) In the case of any State which has a plan approved
by the Administrator for purposes of carrying out [Part
C], the Governor of such State may, after notice and op-
portunity for public hearing, issue orders or promulgate
rules providing that for purposes of determining compli-
ance with the maximum allowable increases in ambient
concentrations of an air pollutant, the following concen-
trations of such pollutant shall not be taken into account:
(A) concentrations of such pollutant attributable to
the increase in emissions from stationary sources which
have converted from the use of petroleum products, or
natural gas, or both, by reason of an order which is in
effect under the provisions of sections 2(a) and (b)
of the Energy Supply and Environmental Coordination
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14
Petitioners rail against this qualified "snapshot" ap-
proach to determination of the baseline concentration.
They argue that if the snapshot is .taken on a day on
which industrial activity is rather dormant—say, Sunday
Act of 1974 (or any subsequent legislation which super-
sedes such provisions) over the emissions from such
sources before the effective date of such order.
(B) the concentrations of such pollutant attributable
to the increase in emissions from stationary sources which
have converted from using natural gas by reason of a
natural gas curtailment pursuant to a natural gas curtail-
ment plan in effect pursuant to the Federal Power Act
over the emissions from such sources before the effective
date of such plan, . . .
(3) No action under this subsection shall take effect
unless the Governor submits th« order or rule providing'
for such exclusion to the Administrator and the Adminis-
trator determines that such order or rule is in compliance
with the provisions of this subsection.
Since Congress focused on the question of increment con-
sumption caused by fuel conversions and declined to fashion
an exemption for voluntary switches, so the argument goes,
EPA could not expand the statutorily-authorized exemptions.
While this thesis has some appeal, industry petitioners aptly
respond that § 163 (c) deals with fuel conversions regardless
of whether the plant was capable of utilizing the alternate
fuel prior to January 6, 1975. Thus that subsection addresses
a somev/hat different concern and application of the maxim
expressio unius est cxclusio alterhts did not compel SPA's de-
cision to count emissions from post-January 6, 1975, voluntary
switches not involving any design changes. Reply Brief for
Industry Petitioners on Fuel Switches at 3-6.
Texas, in a separate brief, insists that EPA's final regula-
tions arbitrarily treat state-ordered fuel-conversion orders
differently from federally-mandated fuel switches since only
emissions from the latter are exempted from increment
consumption. Brief for Petitioner State of Texas at 6-15.
This contention is firmly rebutted by §163(c). Texas main-
tains that state- and federally-ordered conversions are in-
distinguishable—both are directed for sound energy conser-
vation reasons. If, however, Texas has a justified grievance,
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15
or a holiday, or when wind conditions are peculiarly
favorable—then the baseline concentration will be set
so low that full operation of existing facilities on an
average clay will lead to increment exceedauces."13 We
think this fear is-groundless. Congress expected EPA
to use "administrative good sense" in establishing the
baseline and calculating exeeedances/4 "Were measure-
ments on an atypical day the sole method of determining
actual ambient air quality as of the approximate time
of the first permit application, affected industries would
then have cause for complaint and potential ground for
relief.
Petitioners understandably seek support for their
projected-emissions approach in the Act's legislative his-
tory, for both the Senate and House bills, in different
ways, would have excluded projected emissions from old
sources in calculating expenditure of the increments.
Both the 1976 and 1S77 Senate bills defined the incre-
ments in terms of maximum allowable increases in sulfur
dioxide and participate matter "resulting from the con-
struction and operation of any new major emitting fa-
resoiution of it is committee! to Congress. Congress may have
been concerned that some state agencies might not consider
all of the environmental consequences of a conversion order,
as federal energy authorities are required to do. In any event,
in light of §163(c), EPA's failure to exclude increased
emissions resulting from a state-ordered fuel switch is not
judicially condemnable.
43 Reply Brief for Industry Petitioners on Fuel Switches
at 9.
•*•* The Senate Report, after explaining that actual air
quality data are to be utilized to establish the baseline, stated:
In calculating the baseline air quality concentration,
one caveat is in order. This concerns background par-
ticulates levels in rural, arid and semiarid Slates. Because
of the imprecision inherent in the total suspended par-
ticulate standards, background dust in such States can
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1G
cility";" thus only emissions from new major sources
would count against the increments. In 1976, the Senate
soundly defeated an amendment providing that emissions
from all sources would be counted in determining- incre-
ment consumption.40 Both the 1978 and 1977 House bills
included within the baseline "tha level of concentration
determined for each period of exposure on the basis of
plant capacity in existence on ... January 1, 1975." 'S7
As the 1976 House report stated, "the bill's definition of
baseline level authorizes the 'granclfathering* of ... all
existing industrial capacity.. . ."4S
cause levels in excess of the particulates standards. For-
tunately, the logical dilemma posed by the shortcomings
of the present participate standards can be overcome by
administrative good sense until such time as modification
of the standards are adopted.
S. Rep. No. 127, S5th Con?., 1st Sess. 98 (1977). Though
directed at a specific problem, we believe that this illustration
indicates that Congress did not intend a simple measurement
of air quality on a day with atypical conditions to control
calculation of the baseline. Reasonable efforts to ascertain
the actual—but usual—concentration levels, as of the date
of the first application for a permit, are required. See also
note 33 supra.
45 S. 252, 95th Cong., 1st Sess. §7 (1977), (adding § ll
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Had either the House definition of baseline concentra-
tion or the.Senate approach to increment consumption
been enacted, petitioners would be on firm ground in
urging that emissions resulting from fuel switches in
plants with the capacity to use the dirtier fuel prior to
January 6, 1975, do not consume the increments. The
Conference Committee withdrew these crucial supports,
however. The Senate definition of the baseline became
Section 169(4).4tt As ex:--;^ v.^^V^sr^sion of the
appropriate date for dei>; ;>.:".;.; ^y^/i^:!^30 the Sen-
ate chose "to use actual i.'-/."^i^ly-:Uiita to establish the
baseline," gathered if necessary through monitoring by
the first permit applicant." Petitioners attempt to dis-
tinguish the injunction to use "actual data" from the
use of "actual emissions,"s- but this strikes us as con-
trary to common sense and, more significantly, to the
clear directive of the first sentence of Section 1G9(4),
which defines the baseline in terms of existing ambient
concentration levels.53
The Conference Committee also rejected the Senate
philosophy that only emissions from new major facilities
should expend the increments. As the Committee observed,
"[iIncrements setting forth the maximum allowable in-
"H.R. Rep. No. 564, 95th Cong., 1st Sess. 153 (1977)
(conference report).
80 See notes 16-17 supra and accompanying text.
61 S. Rep. No. 127, 95th Cong., 1st Sess. 98 (1977). See also
122 Cong. liec. S13177 (daily ed. Aug. 3, 1976) (remarks
of Senator Brooke) ("the House bill, unlike the Senate bill,
defines the 'baseline'—to which new pollution increases may
be added—on the basis of total 'design capacity' of existing
sources, not actual emissions").
52 Reply Brief for Industry Petitioners on Fuel Switches at
10.
53 42 U.S.C. § 7479(4), quoted in pertinent part in text ac-
companying note 3 supra.
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18
crease in pollutants are stated in the statute for par-
ticulates and sulfur dioxide," 54 and those increments are
not source-specific; all emissions are considered in de-
termining whether the statute's aim of preventing signifi-
cant deterioration of the air quality in attainment areas
is being secured.55
In sum, EPA's refusal to grandfather emissions result-
ing from a voluntary fuel switch is a well-supported in-
terpretation of congressional intent.36 We accordingly
must uphold SPA's regulations on this score.
III. MODELING
In its initial, reluctant effort to establish a program
for the prevention of significant clean-air deterioration,
EPA in 1973 proposed four alternative sets of regula-
tions.57 Though differing in many important respects,
54 H.R.Rep. No. 564, 95th Cong., 1st Sess. 151 (1977) (con-
ference report).
»§163(b), 91 Stat. 732, 42 U.S.C. §7473(b) (Supp. I
1977) ; see also notes 33-35 supra and accompanying text.
58 Petitioners also assert that EPA's position on voluntary
fuel switches is procedurally infirm. They suggest that EPA
failed to explain the basis for its action and neglected to re-
spond to significant comments. Brief for Industry Petitioners
on Fuel Switches at 30-37. These contentions are without mer-
it. EPA carefully detailed the rationale of its fuel-sv/itches
policy; its view of congressional intent simply differed, and
justifiably so, from those of petitioners. Moreover, since
EPA's fuel switches regulations are interpretative, they are
exempt from the requirements of § 4 of the Administrative
Procedure Act. 5 U.S.C. §553 (1976). See Citizens to Save
Spencer County v. EPA, supra note 12, at 64-69. See also
§307(d), 91 Stat. 772, 42 U.S.C. §7607(d) (Supp. I 1977)
(procedural requirements applicable to rules proposed more
than 90 days after enactment of the 1977 amendments; in-
terpretative rules arc .exempted).
57 38 Fed. Reg. 18986 (July 16, 1973).
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19
each set.embraced increment-consumption measurements
as the primary means for determining whether to grant
a permit to a proposed new major emitting facility.58
Each facility would be required to monitor its impact on
air quality unless the state wherein it was located were to
determine that an adequate monitoring network already
existed.50
By 1974, EPA had abandoned this program, mainly for
two reasons: the absence of existing air quality data in
attainment areas, and the inability of existing monitoring
technology to "reliably distinguish between readings ap-
proaching the small increments." 60 Instead, EPA decided
to rely principally on techniques of diffusion modeling—
mathematical techniques for estimating the effects of
emissions from multiple sources on air quality in the
surrounding area.01 Where feasible, the accuracy of the
models was to be tested by measurements of actual air
quality.62
In fashioning the Clean Air Act Amendments of 1977,
Congress basically shared EPA's mind-set concerning
models. Although Congress considered models less than
completely trustworthy,63 it believed them to be essential
88 Id. at 18989-18990.
69 Id. at 18990.
80 39 Fed. Reg. 31000, 31003 (Aug. 27, 1974).
81 Id.
02 " [C] urrent instrumentation would be adequate to cali-
brate and improve current diffusion modeling techniques ... ."
Id.
MSee, e.g., 122 Cong. Rec. H9564 (daily ed. Sept. 8, 1976)
(remarks of Representative Milford) ("[a] wide variety of
diffusion modeling methodology is available, each with its sup-
porters and its detractors ...[;] [i] n other words, the non-
deterioration proposal rests fundamentally on mathematical
procedures that require data and scientific knowledge which
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20
to implementation of a PSD program.04 Consequently, it
directed EPA to develop regulations "specify[ing] with
reasonable particularity each air quality model or models
to be used under specified sets of conditions . . . ."65 To
insure that EPA-sanctioned models would not lag behind
the state of the art, Congress instructed the agency to
hold conferences on modeling techniques, and permit
specialists and interested persons to participate and sub-
we do not have"); 122 Cong. Rec. S13175 (daily ed. Aug. 3,
1976) (remarks of Senator Doraenici) ("[a] major premise
in the study rationale [of a proposed amendment] is that the
current state of the art of air quality diffusion modeling makes
the studies the committee has relied on unreliable[;] . . . even
if one grants this contention . . . [a] 11 the . . . amendment
offers us is another study employing the same flawed model-
ing techniques").
64 123 Cong. Rec, S9269 (daily ed. June 9, 1977) (remarks
of Senator McClure) ("[wje are making the best judgment
we can, without knowing what those models are going to show,
without knowing what the science of modeling will do, with-
out knowing what effects it may have on specific questions") ;
122 Cong. Rec. S13175 (daily ed. Aug. 3, 1976) (remarks of
Senator Domenici) (the bill, with its reliance on modeling,
is "the first step in gathering knowledge on how our environ-
mental values can be protected"; "real world feedback can . ..
serve as the basis for making future modifications in the
law").
«§165(e)(3)(D), 91 Stat. 739, 42 U.S.C. §7475(e)(3)
(D) (Supp. I 1977). This provision goes on to say that
[a]ny model or models designated under such regulations
may be adjusted upon a determination, after notice and
opportunity for public hearing, by the Administrator that
such adjustment is necessary to take into account unique
terrain or a meteorological characteristic of an area po-
tentially affected by emissions from a source applying for
a permit required under this part.
Id.
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21
mit comments.66 The first such conference was held on
December 14-15, 1977, in Washington, D.C., and subse-
quent modeling conferences must be held at least trien-
nially.07
Many industry petitioners participated in the 1877
conference and utilized the subsequent comment period.
EPA, however, adhered essentially to its proposal to adopt
the variety of models detailed in its "Interim Guideline
on Air Quality Models," which had been released in
October, 1Q77.GS The final regulations on modeling in-
08 (a) Not later than six months after the date of the
enactment of the Clean Air Act Amendments of 1877,
and at least every three years thereafter, the Administra-
tor shall conduct a conference on air quality modeling.
In conducting such conference, special attention shall be
given to appropriate modeling necessary for carrying out
Part C of title I (relating to prevention of significant
deterioration of air quality).
(b) The conference conducted under this section shall
provide for participation by the National Academy of
Sciences, representatives of State and local air pollution
control agencies, and appropriate Federal agencies, in-
cluding the National Science Foundation; the National
Oceanic and Atmospheric Administration, and the Na-
tional Bureau of Standards.
(c) Interested persons shall be permitted to submit
written comments and a verbatim transcript of the con-
ference proceedings shall be maintained.
(d) The comments submitted and the transcript main-
tained pursuant to subsection (c) shall be included in the
docket required to be established for purposes of promul-
gating or revising any regulation relating to air quality
modeling under Part C of title I.
§ 320, 91 Stat. 782, 42 U.S.C. § 7620 (Supp. 11977).
67 Id.
68 42 Fed. Reg. 57472-57473 (Nov. 3, 1977) (explaining
proposal to employ requii-ements specified in EPA's Interim
Guideline on Air Quality Models (Oct. 1977)).
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22
corporate essentially the revised version of this document,
released in April, 1978.';u On this review, industry peti-
tioners urge that EPA's modeling- regulations be set
aside on the ground that the agency failed to respond
meaningfully to significant criticism of the Interim
Guideline, in contravention of Section 4 of -the Adminis-
trative Procedure Act.70 They contend that their com-
ments raised three crucial policy issues which EPA
neglected to address.71
Petitioners' first policy complaint goes not to the sub-
stance, but to an assumed exclusivity, of the models
described in the guideline. The regulations require esti-
mates of ambient concentrations to normally be based on
the models specified in the 1978 guideline.72 If, however,
69 43 Fed. Reg. 26398-26399 (June 19, 1978) (explaining
regulations that incorporate by reference EPA's Guideline on
Air Quality Models (Apr. 1978) [hereafter cited as "Guide-
line"]) ; 40 C.F.R. § 51.24 (m) (1978); 40 C.F.R. § 52.21(m)
(1978).
™5U.S.C. §553 (1976).
71 Brief for Industry Petitioners on Modeling at 13-27.
~- Air quality models. (I) The plan shall provide for pro-
cedures which specify that—
(i) All estimates of ambient concentrations required
under paragraph (1) shall be based on the applicable air
quality models, data bases, and other requirements speci-
fied in the Guideline on Air Quality Models . . .
(ii) Where an air quality impact model specified in the
Guideline on Air Quality Models is inappropriate, the
model may be modified or another model substituted.
(iii) A substitution or modification of a model shall be
subject to public comment procedures developed in ac-
cordance with paragraph (r) of this section.
,(iv) Written approval of the Administrator must be
obtained for any modification or substitution.
(v). Methods like those outlined in the Workbook for
the Comparison of Air Quality Models . . . should be
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23
a model designated by the guideline is inappropriate, it
may be modified or another model substituted,7'" but such
changes are subject to public notice and comment pro-
cedures.71 Moreover, methods prescribed in, an EPA-
pvcpared workbook ™ are to be used to determine whether
substituted models are comparable to those laid out in the
guideline.7" Petitioners read the regulations to require a
demonstration that an industry-proposed model shares the
individual technical aspects of one of the models approved
in the guideline.77 They suggest that even if a proposed
model possesses greater predictive accuracy in particular
circumstances than the reference model, it may not be
employed unless it reproduces the technical shortcomings
in the design of the standard model. According to peti-
tioners, comments criticizing this emphasis on strict com-
parability, to the detriment of precision in estimating
pollution concentrations, went unanswered.78
used to determine the comparability of air quality models.
(2) The Guideline on Air Quality Mod-els is incorporated
by reference. ...
40 C.F.R. § 51.24 (m) (1978); see 40 C.F.R. § 52.21 (m)
(1978) (spme standards with respect to models used by source
owners or operators to demonstrate compliance with the incre-
ments).
73 See note 72 supra.
74 See note 72 supra.
75 Environmental Protection Agency, Workbook for the
Comparison of Air Quality Models (May, 1978).
70 40 C.F.R. § 51.24 (m)(l)(v) (1978); 40 C.F.R. §52.21
(m)(2) (1978).
77 Brief for Industry Petitioners on Modeling at 14-15, 23
(quoting a comment submitted by the American Petroleum In-
stitute).
78 Id. at 14-15, 23, 26.
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24
EPA asserts, and we agree,, that petitioners misread
the regulations and the accompanying guideline.70 "[N]oc
intended to be a compendium of modeling techniques," s°
the guideline explicitly states its role:
[t]his guide makes specific recommendations con-
cerning (1) air quality models, (2) data bases and
(3) general requirements for concentration esti-
mates. . . . However, it may be found that (1) the
recommended air quality model is not appropriate
for a particular application, (2) the required data
base is unavailable, or (3) a better model or analy-
tical procedure is available and applicable. In such
cases, alternatives indicated in this guide or c:her
data, models and techniques deemed appropriate by
the Regional Administrator may be used. Thv oven
though specific recommendations are mac hey
should not be considered rigid requiremeiv Yhe
preferred model is that-which best simulates ,..rt-os-
phenc transport and dispersion in the area of in-
terest.81
In sum, industry's criticism proceeded from a faulty
premise and was firmly rebutted by the guideline, which
was incorporated in the final regulations.
Since the models prescribed in the guideline are pre-
sumptively, not conclusively, appropriate, and EPA
welcomes use of more accurate models, it could be argued
that the modeling regulations are "general statements of
policy" exempt under Section 4 from notice and comment
procedures,8'- whence comes the duty to respond to sig-
79 Brief for Respondents at 214.
so Guideline, supra note 69, at 1.
81 Guideline, supra note 69, at 1-2.
82 5 XJ.S.C. § 553Xb) (3) (A) (1976) provides that "[e]xcept
when notice or hearing is required by statute," the notice and
comment requirement is inapplicable to ''interpretative rules,
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25
r.ificarit comments." We have heretofore noted that
[tjhe critical distinction between the substantive
rule and a ercmeral statement of policy is the different
practical eli'ect that these two types of pronounce-
ments have in subsequent administrative proceed-
ings. . . . When tlie agency applies the policy in a
particular situation, it must be prepared to support
the polioy ;just as if the policy statement had never
been issued."
A.s the modeling regulations illustrate, the line between
binding, substantive rules 9ml merely informational an-
nouncements on how the p.ger.ey plans to exercise a
discretionary power is not ahvays bright. But the guide-
line requires that "deviations [from the specified models]
be fully supported and documented," ss and in our view
the models designated in the guideline are thus granted
sufficient weight in subsequent proceedings to remove the
regulations from the ambit of policy statements and the
exemption therefor. In any event, it bears repeating that
the duty to respond to significant comments finds a
statutory basis in inquired notice and comment pro-
cedures, for "the opportunity to comment is meaningless
unless the agency responds to significant points raised
general statements of policy, or rules of agency organization,
procedure or practice. . . ."
83 Home Box Office, Inc. v. FCC, 185 U.S.App.D.C. 142, 168,
567 F.2d 9, 35 (1977) ; Automotive Parts £ Acc?-«sorics Afts'n
V. Boyd, 132 U.S.App.D.C. 200, 203, 407 F.2d 330, 338 (1968).
81 Pacific Gas & FAec. Co. v. FPC, 164 U.S.App.D.C. 371,
376, 506 F.2d 33, 38 (1974); sec Texaco, Inc. v. FPC, 412
F.2d 740, 744 (3d Cir. 1969) ; Air Port Conim'n V. CAB, 300
F.2d 185, 1S8 (4th Cir. 19G2) ; Pacific Lighiirui Serv. Co. v.
FPC, 518 F.2d 718, 7.19 (9,th Cir.), cert, denied, 423 U.S. 1000,
96 S.Ct. 432, 46 L.Ed.2d 376 (1975).
85 Guideline, supra note 69, at 2.
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26
by the public." 80 And, for the case at bar, Section 320
of the Clean Air Act Amendments of 1977 explicitly
affords interested persons that opportunity with respect
to the proceedings of the special modeling conference,87
and submitted comments must be included in the docket
established for promulgation and review of regulations
pertaining to air quality modeling.83 Comments standing
unacklressed thus may well leave a reviewing court un-
able to say that the agency 'has considered all relevant
factors.30
The second group of allegedly unrebutted but significant
comments submitted by industry spokesmen charges un-
due conservatism in assumptions adopted in the guideline.
Industry states that the guideline assumes "maximum
loading, worst case meteorology, ground reflection, no
travel time considerations and minimum plume rise,"'-0
88 Home Box Office, Inc. v. FCC, supra note 80, 185 U.S.
App.D.C. at 168-169, 567 F.2d at 33-36; see Portland Cement
Ass'n v. Ruckelsliaus, 158 U.S.App.D.C. 308, 326-327, 486
F.2d 375, 393-394 (1973), cert, denied, 417 U.S. 921, 94 S.Ct.
2628, 41 L.Ed.2d 226 (1974).
8742 U.S.C. §7620(c) (Supp. I 1977), quoted'in note 66
supra.
88 42 U.S.C. §7620(d) (Supp. I 1977), quoted in note 66
supra,.
89 See Citizens to Preserve Overton Park v. Volpe, siipra
note 8, 401 U.S. at 420, 91 S.Ct. at 823-824, 28 L.Ed.2d at 150;
Home Box Office, Inc. v. FCC, supra- note 83, 185 U.S.App.
D.C. at 169, 567 F.2d at 36; Natural Resources Defense Coun-
cil V. United States Nuclear Regulatory Cowm'n, 17S U.S.
App.D.C. 336, 346, 547 F.2d 633, 646 (1976), rcv'd on other
grounds sub nom. Vermont Yankee Nuclear Pawe.r Cory. v.
NRDC, 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978);
Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C.
383, 393, 444 F.2d 841, 851 (1970), cert, denied, 403 U.S. 923,
91 S.Ct. 2233, 29 L.Ed.2d 701 (1971).
90 Brief for Industry Petitioners on Modeling at 22 (citing
comments submitted on behalf of Arizona Public Service Com-
pany and American Peti-oleum Institute).
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27
and that together they result in drastic overprediction of
pollution concentrations. These comments were critical of
the assumptions underlying the proposed models, not the
techniques they incorporate. No objection has been raised
against EPA's view that the models proposed,, though
flawed, reflect faithfully the present technological state
of the art.91
Industry's position, we think, is overdrawn. The guide-
line first recommends use of a preliminary screening-
technique to single out, with minimum effort, those emis-
sion sources that clearly will not consume the i-emaining
increment."- Only if the source might threaten an incre-
ment cxceedance is more sophisticated and expensive
modeling required. The diffusion models specified are
designed to make an accurate translation from source
emissions to ambient air concentration levels at carefully
selected places, called receptor sites, away from the
01 Guideline, supra note 69, at 18 ("[t]he models recom-
mended in this guideline are simply those which are (1) rep-
resentative of the str.to-of-the-art for atmospheric simulation
models and (2) most readily, available to air pollution control
agencies"). Industry petitioners do point out that some com-
mentators have expressed serious reservations about one of
the models. Brief for Industry Petitioners on Modeling at 25.
These may prove to be persuasive to EPA, however, as all the
Guideline says about this model is that it may be "applicable to
some complex terrain situations . . . ." Guideline, supra- note
69, at 19. Congress recognized the technical difficulties in
modeling emissions across complex terrain and expected EPA
to develop and use the most appropriate models for such sit-
uations. See 123 Cong. Rec. S13708 (daily ed. Aug. 4, 1977)
(colloquy between Senator Muskie and Senator Garn).
02 Guideline, supra note 69, at 2, 19-20. Recommended are
the screening techniques summarized in EPA's Guidelines for
Air Quality Maintenance Planning and Analysis, Vol. 10: Pro-
cedures for Evaluating Air Quality Impact of New Stationary
Sources (Oct., 1977).
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28
sources.93 These models depend upon procui-ement and
analysis of data concerning background pollution, load-
emission conditions at the sources, and topographical
and meteorological conditions in the area.0'* The guide-
line does not, contrary to petitioners' intimation, require
use of the highest of all estimated concentrations at any
site. Rather, the "highest of second-highest concentra-
tions for a field of receptors" ,is generally employed to
predict increment consumption."3 This concentration is
obtained by (a) estimating ths short-term concentration
at each receptor site in the field, (b) discarding the
highest estimated concentration at each site, and (c)
identifying the highest of the remaining concentration
estimates from the field—the result referred to as the
"highest, second-highest" concentration.90 Where moni-
tored air-quality data indicate impacts greater than
predicted by models using highest, second-highest esti-
mated concentrations, the measured concentration levels
are utilized.BT And if the regional administrator deter-
mines that there is a lack of confidence in the highest,
second-highest concentration standard because of data or
model inadequacies, he may require use of the highest
93 See, e.g., Sierra, Club v. EPA, 176 U.S.App.D.C. 335, 357,
540 F.2d 1114, 1136 (1976), remanded sub nom. Montana
Power Co. V. EPA, 434 U.S. 809, 9S S.Ct. 42, 54 L.Ed.2d 66
(1977) ; Mision Indus., Inc. v. EPA, 547 F.2d 123, 123-129
(1st Cir. 1976) ; Cincinnati Gas <£ Elcc. Co. V. EPA, 573 F.2d
660, 661 (6th Cir. 197S), cert, denied, U.S. , 99 S.Ct.
1017, 59 L.Ed.2d 72 (1279); W. Rodgers, Environmental Law
237 (1977).
94 Guideline, supranote 69, at 27-37.
•» Id. at 8.
98 Id. '
9T Id. at 9.
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29
estimated concentrations until the necessary data are
acquired or analytical techniques are improved.08
EPA's resort to the highest, second-highest concentra-
tion level is not inexplicable. Models are designed to aid
EPA in its tr.sk of protecting the statutorily-prescribed
increments and, as the guideline states, "[tjhese maxi-
mum allowable increases in pollutant concentrations may
be exceeded only once per year, except for the annual
increment." °" Thus the guideline points out why the
models embrace rather conservative assumptions not
likely to hold true on many days: protection of the
increments, the statute says, is a well-nigh continuous
responsibility, not a casual goal to be assured only on
typical days.
Industry petitioners' remaining set of complaints does
recognise the need to fit the models into the statutory
scheme. They submitted comments averring that Con-
gress intended to ratify the modeling analysis employed
in a 1975 report by EPA and the Federal Energy Ad-
ministration ll)0 assessing the impact of the PSD program
on the electric utility industry.101 They point out ways
in which .the models selected in the guideline are more
conservative than that employed in the 1975 EPA-FEA
study.102
98 Id. at 9-10.
•>ald. at 11. See §163(a), (b), 91 Stat. 732, 42 U.S.C.
§7473(a), (b) (Supp. I 1977).
100 Environmental Protection Agency & Federal Energy Ad-
ministration, An Analysis of the Impact on the Electric Util-
ity Industry of Alternative Approaches to Significant Deterio-
ration (Oct., 1975).
101 Brief for Industry Petitioners on Modeling: at 16-21 (dis-
cussing: comments submitted on behalf of Utility Air Regula-
tory Group and other industry interests).
102 They suggest that the EPA-FEA report, unlike the guide-
line, relied heavily on a limited mixing model for Class I
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30
This argument is belied by the facts. Congress itself
changed some of the assumptions on which the EPA-FEA
report was based. To take an obvisus example. Congress
made the increments used in both the House bill and the
study more stringent.10-" Congress also specified the con-
ference and comment procedures in order to prod EPA
into revising its models to reflect growing scientific
sophistication.1"4 Moreover, industry's interpretation of
the legislative history is itself one-sided. It is true that
Congressman Broyhill indicated that the House receded
from insistence upon the provisions of an amendment,
which would have authorized temporary increment ex-
ceedances in Class II areas, upon assurances that the
EPA-FEA study demonstrated that "powerplants up to
6,000 megawatts could be built" under the bill.1""' But
this proves nothing, for even according to petitioners'
impact analysis, and that the guideline adopts conservative
assumptions while the earlier report was based "on the use of
average (typical) conditions." Brief for Industry Petitioners
on Modeling at 16. The limited mixing model has been re-
tained as a screening model. See Guidelines for Air Quality
Maintenance Planning and Analysis, supra, note 92, at 4-12,
4-38 to 4-40. And the more conservative assumptions were
warranted by the new statutory framework. See notes 90-99
mvpra and accompanying test.
103 Petitioners' representative at the December, 1977, model-
ing conference acknowledged this crucial change. Transcript
of Modeling Conference at 81 (Dec. 15, 1977) (remarks of Dr.
Mahoney), quoted infra note 106.
1
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31
representative, such a plant can be built under the EPA
regulations.1"" Moreover, Senator McGlure, an influential
supporter of the Act, did remark that the bill would
"make it impossible to build a 3,000-megowatt plant in
southern Utah," 107 yet the Senator recognized that the
Act was not drafted in terms of either allowing or pro-
hibiting sources of specified sizes, and. that the Act's
actual impact on particular sources could not be predicted:
"[s]o we are taking something on faith. We are making
the best judgment we can, without knowing what those
models are going to show, without knowing what the
science of modeling will do, without knowing what effects
it may have on specific questions." los Senator Muskie
agreed that "the best we can do is to try to define the
broad parameters" 109 of what the Act will do.
We conclude that Congress did not direct the use of
any particular diffusion models; rather, it expected EPA
to develop and utilize the most accurate and feasible
modeling techniques available. It also set largely in-
flexible increments for sulfur dioxide and particulates,
ice [Y7]e fin(j that this is entirely consistent with the new
guidelines and that when the earlier results are scaled to
the increment level limit finally adopted by Congress,
plants up to 6,000 megowatt capacity could be built, if
they adopt what we would call best available control
technology, having very limited degradation, that is use
of low sulfur Western coal with a scrubber .... We do
find that the statement of the Congressional debate, that
a 6,000 megowatt plant could be built is appropriate for
that case.
Transcript of Modeling Conference at 81-82 (Dec. 15, 1977)
(remarks of Dr. Mahoney).
107123 Cong. Rec. S92C9 (daily ed. June 9, 1977) (remarks
of Senator McClure). This example concerned a Class I area.
108Id. (remarks of Senator McClure).
109Id. (remarks of Senator Muskie).
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32
thus commanding the use of conservative assumptions on
weather and other data input. In short, EPA's medals
do not contravene any discernible congressional directive.
Comments of industrial spokesmen to the contrary thus
raised relatively insubstantial questions of law, and con-
sequently did not necessitate an agency reply.110
But though we today sustain EPA's modeling regu-
lations, a final observation is in order. Of great im-
portance is a reasoned agency response to substantial
questions of fact, policy or science raised in comments on
recommended models or in proposals to employ new tech-
niques. In passing Part C of the Clean Air Act,111 Con-
gress evinced its determination to preserve the clean air
regions of the Nation. Congress did not, however, ignore
other vital economic and energy considerations.112 More-
over, successful implementation of the balance struck by
Congress will in large part depend on EPA's good sense
in establishing and applying modeling guidelines. Model-
ing, the agency tells us, is on "the frontiers of scientific
knowledge," 113 but the lack of scientific certitude about
modeling techniques increases rather than reduces the
need for the agency to critically examine all substantial
questions of fact and science emerging from the com-
menting process. EPA's guideline warns that all pro-
110 See Home Box Office, Inc. V. FCC, supra, note 83, 185
U.S.App.D.C. at 168-169 & n.5'8, 567 F.2d at 35-36 & n.58;
Portland Cement Ass'n v. Ruckelshatis, supra note 86, 153
U.S-App.D.C. at 326-327, 486 F.2d at 393-394.
111 42 U.S.C. §§ 7470-7491 (Supp. 11977).
"-See, e.g., §160(3), 91 Stat. 731, 42 U.S.C. §7470(3)
(Supp. I 1977); § 163 (c), 91 Stat. 733, 42 U.S.C. §7473(c)
(Supp. I 1977).
113 Brief for Respondents at 206, citing Hercules, Inc. v.
EPA, No. 77-1248 (D.C. Cir. Nov. 3, 1978), slip op. at 41;
Industrial. Union Dep't V. Hodgson, 102 U.S.App.D.C. 331,
338, 499 F.2d 467, 474 (1974).
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33
posed deviations from the endorsed model must be fully
supported,114 but this language should not be overempha-
sized, for the models present!}' specified in the guideline
are concededly flawed.113 Should scientific advances or
better information permit a'more accurate assessment of
air quality, EPA should move to adopt the more accurate
procedure, although it too may not be entirely free from
fault.118
IV. STACK HEIGHT
Both ambient air quality standards and PSD incre-
ments are expressed in terms of permissible concentra-
tions of pollutants at ground level.117 The effect of a
source's emissions on air quality in its vicinity, as gauged
by these* fundamental criteria, will be influenced by the
altitude at which pollutants are released. A good many
industrial facilities subject to the Clean Air Amendments
114 Guideline, supra note 69, at 2.
m In many cases, solutions to the issues raised must rely
on further scientific developments. Some inherently must
rely on case-by-case technical judgments by qualified
scientists. EPA is actively working in the areas of model
validation and improvement, turbulence characterization
and the use of representative meteorological data and
will provide additional guidance on these areas as it
becomes available.
43 Fed. Reg. 26399 (June 19, 1978).. (explanation of final
regulations). See also Guidelines, supra, note 69, at 4-6.
118 We would associate ourselves with the observation that
"[d]ecisions which are not arbitrary and capricious in the
light of existing knowledge may become so by the dint of
scientific advances. By its use of estimations and sparse
data, the EPA creates a continuing responsibility to develop,
review and apply updated and more sophisticated informa-
tion." Texas v. EPA, 499 F.2d 289, 301 n.16 (5th Cir. 1974).
11T Industry Petitioners' Joint Statement of the Case at 3-1,
14-15.
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34
of 1970 "" tried to take advantage 'of this phenomenon by
building taller-than-necessary stacks in order to achieve
greater dispersion of their emissions and thus comply
with national ambient standards. This strategy was also
in vogue among sources required to comply with EPA's
1974 PSD program.110
The Congress that enacted the Clean Air Act Amend-
ments of 1977 J-° was deeply concerned about the conse-
quences to health and welfare of the use of tall stacks
and other dispersion techniques.121 It addressed the prob-
lem forcefully, not by prohibiting tall stacks, but by
removing all existing regulatory incentives for cons true-
ing them.1- Section 123(a) of the Act provides in
relevant part that
11S Clean Air Amendments of 1970, Pub.L. No. 91-604, 84
Stat. 1676.
119 Promulgated pursuant to Sierra Club v. Ruckelshaus,
344 F.Supp. 253 (D.D.C. 1972>, aff'd, 4 ERG 1815 (D.C. Cir.
1972), aff'd by an eqiially divided Court sub. nom. Fri v.
Sierra Club, 412 U.S. 541, 93 S.Ct. 2770, 37 L.Ed.2d 140
(1973).
120 Clean Air Amendments of 1977, Pub.1,. No. 95-95, 91
Stat. 635.
121 See, e.g., H.R. Rep. No. 564, 95th Cong., 1st Sess. 143-
144 (1977) (conference report) ; H.R. Rep. No. 294, 95th
Cong., 1st Sess. 81-94 (1977) ; 123 Cong-. Rec. S9174-9175
(daily ed. June 8, 1977) (remarks of Senator Muskie). Re-
lated to the tall stacks problem, and addressed in similar
fashion by virtue of §§ 123(a) (2) and 123(b). 91 Stat. 721,
42 U.S.C. §§7423(2) (2), (b) (Supp. I 1977), is the problem
of intermittent controls, which involve extensive operation
when meteorological conditions will best disperse the emis-
sions and curtailed operations at other times. See W. Rodgrers,
Environmental Law 259 (1977) ("[t]he rhythm method, to
be sure, is better than'-nothing but it is born of desperation
and succeeds by chance").
122 See notes 150-15G infra and accompanying text.
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35
[t]he degree of emission limitation required fov con-
trol of any air pollutant under an applicable imple-
mentation plan under [Title I] shall not be affected
in any manner by—
(1) so much of the stack height of any source as
exceeds good engineering practice (as determined
under regulations promulgated by the Administra-
tor) 1M
Industry petitioners read Section 123 as a ban only
on administrative consideration of stacks taller than
warranted by good engineering practice (GEP) as an
alternative to emission limitations.1-4 So, industry con-
cedes, when a facility with a tall stack—a term that
really covers a too-tall stack—seeks a permit and it must
be determined whether that facility's emissions will
threaten a violation of a national ambient standard or an
increment exceedar.ce, the calculation must be predicated
on the false assumption that the stack has only GEP
height.1-5 EPA interpret:: the mandate of Section 123
more broadly, declaring that it further requires emissions
from all pree.vsting sources with tall stacks that were built
after the effective date of the 1970 Act, and hence were
not grandfathered, to be modeled as though the emissions
proceeded from GEP-height stacks when ascertaining the
emission limitations to be imposed—on new facilities.128
123 §123(a), 91 Stat. 721, 42 U.S.C. §7423(a) (Supp. I
1977).
121 Brief for Industry Petitioners on Stack Height at 11-12.
125 Id.
12042 Fed. Re.?. 57460 (Nov. 3, 1977) ("[a]ny subsequent
PSD reviews will have to be based on a GEP stack height
for the applicant as well as for any sources which have re-
ceived PSD approval"); see 40 C.F.R. § 52.21 (h) (1978);
40 C.F.R. § 51.24 (h) (1978) (provision appears to have been
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36
Asked to resolve this dispute-, "our task is. to interpret
the v/ords of [Section 123] in light of the purposes Con-
gress sought to serve." l-7 Granting EPA's view a proper
measure of deference,1-8 we sustain its construction.
A. The 1970 Act and Tall Stacks
Under the Clean Air Act of 1970,129 EPA was required,
by Section HOl'a) (2) (B), to approve a state imple-
mentation plan if it determined that the plan vras
"adopted after reasonable notice and hearing," 13° and if"
"it include [d] emission limitations, schedules, and time-
tables for compliance with such limitations, and such
other measures as may be necessary to insure attainment
and maintenance of [the applicable] primary or secon-
dary standard, including, but not limited to, land-use and
written so as to erroneously reach only grand fathered tall
stacks).
127 Chapman V. Houston Welfare Rights Organization,
U.S. , , 99 S.Ct. 1905, 1911, 60 L.Ed.2d 508, 516
(1979).
128 We have noted that "[t]his deference is heightened
when, as here, the interpretation is of a new statute by its
implementing agency." Ethyl Corp. v. EPA, 176 U.S.App.D.C.
373, 403 n.64, 541 F.2d 1, 31 n.64 (en bane), cert, denied,
426 U.S. 941, 96 S.Ct. 2662, 49 L.Ed.2d 394 (1976), citing
Power Reactor Devel. Co. v. International Union of Elec.,
Radio and Mach. Workers, 367 U.S. 396, 408, 81 S.Ct. 1529,
1535, 6 L.Ed.2d 924, 932 (1961) ; Unitsd States V. Zncca, 351
U.S. 91, 96, 76 S.Ct. 671, 674, 100 L.Ed. 964, 970 (1956) ;
United States v. American Trucking Ass'n, 310 U.S. 534, 549,
60 S.Ct. 1059, 1067, 84 L.Ed. 1345, 1354 (1940) : Norwegian
Nitrogen Prods. Co. V. United States, 288 U.S. 294. 315, 53
S.Ct. 350, 358, 77 L.Ed. 796, 807 (1933) ; Natural Resources
Defense Council v. Train, 166 U.S.App.D.C. 312, 326, 510 F.2d
692,708 (1975).
IM Pub.L. No. 91-604, 84 Stat. 1676.
130 42 U.S.C. §1857c-5(a)(2) (1976).
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37
ransportation controls . . . ." m EPA initially permitted
tate plar.s to authorize tall stacks and other dispersion
echniqucs1:'- in lieu of emission limitations. The Fifth
Circuit, however, ordered EPA to disapprove state plans
endorsing this pz*actice as inconsistent with Section
.10(a) (2) (B)'s requirement of emission limitations
:onstant in their operation,13" and the Sixth 5i'4 and Ninth
Circuits1:!S followed the Fifth Circuit's construction of
he 1970 Act.
3. EPA's 1976 Tall-Stack Guidelines
Informed as well as chastened by these judicial de-
risions, EPA in early 1976 promulgated a guideline on
•he role of tall stacks.180 The agency declared that "it is
13142 U.S.C. §1857c-5(a)(2)(B) (1976). Section 108(a)
r;2) of the 1977 Amendments, 91 Stat. 693, revised this sub-
jection by substituting "transportation controls, air quality
maintenance plans and preconstruction review of direct
sources of air pollution os provided in subparagraph (D)"
."or "land use and transportation controls." See 42 U.S.C.
;7410(a)(2)(B) (Supp. I 1977).
132 See 37 Fed. Reg. 10.859 (May 31, 1972), rev'd in relevant
mrt, Natural Resources Defense Council v. EPA, 489 F.2d
J90 (5th Cir. 1974), rev'd on other issues sub nom. Train v.
Natural Resources Defense Council, 421 U.S. 60, 95 S.Ct.
1470, 43 L.Ed.2d 731 (1975).
133 Natural Resources Defense Council v. EPA, supra note
132, 489 F.2d at 406-411.
134 Big Rivers Elec. Corp. v. EPA, 523 F.2d 16, 20-22 (6th
Sir. 1975), cert, denied, 425 U.S. 934, 96 S.Ct. 1663, 48 L.Ed.
Ed 175 (1976).
lss Kennecott Copper Corp. v. Train, 526 F.2d 1149, 1151-
1160 (9th Cir. 1975), cert, denied, 425 U.S. 935, 96 S.Ct.
1665, 48 L.Ed.2d 176 (1976).
1S* Environmental Protection Agency, Legal Interpretation
and Guideline Concerning Stack Height Increases as a Means
of Meeting Federal Ambient Air Quality Standards (Jan. 6,
1976).
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38
clear that Congress did not intend increased stack height
and supplementary control systems to be used as a means
of attaining national ambient air quality standards where
constant emission reduction controls were available." in?
On the other hand, EPA ruled, dispersion techniques were
within the congressional intendment "when constant con-
trols are not available." 12S
The guideline divided emission sources into three cate-
gories and imposed different .technological requirements
on each group: (1) sources in existence prior to the
latest date by which state plans were to be submitted to
EPA under the 1970 Act; (2) sources receiving permits
after the Fifth Circuit decision but before issuance of the
guideline; (3) sources receiving permits after release of
the EPA notice.139 The guideline was clear, however, that
if any source applied the best available control technology
it would be credited for the full dispersive effect of its
tall stack.110 Indeed, said EPA, "[s]o long as stack height
is not used in lieii of emission reduction, the Agency
encourages tall stacks as the means of further minimizing
the effects of emissions on ground level concentrations." iu
C. The 1977 Amendments
Industry petitioners suggest, though somewhat half-
heartedly, that the Ninety-fifth Congress "ratified the
general thrust" of the_EPA guideline when it enacted
Section 123.142 They concede, however, that unlike the
137 Id. at 1.
138 Id.
1:19 Id. at 2-4.
"° Id.
141 Id. &t, 4 (emphasis in original).
142 Brief for Industry Petitioners on Stack Height at 10. It
would be fair to say that Congress generally approved of the
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39
guideline, Section 123 requires that GEP stack height be
assumed in calculating emission limitations for an in-
dividual source even though it applies the best available
control technology.11" But. they argue, once the emission
limitation for a source is properly set, Congress intended
that the pollutants from that source be modeled as th6ugh
emitted from the existing tall stack in' order to reflect
its actual impact on air quality. As r.l: .'v';* .-_t:*,-*-,:3-:"*
EPA, in its November 3, 1977, final''-*>:;.>.;* V-y.''- .V. *i*-rhe
contrary reading of the statute.14*
The language of Section 123(a), though not necesarily
reflective of a conscious resolution of the point in dispute,
is certainly more amenable to EPA's construction.14"
The section specifies that the degree of emission limitation
required, for control of any air pollutant "shall not be
affected in any manner by ... so much of the stack height
of any source as exceeds good engineering prac-
tice . . . ." 147 The term "emission limitation" includes
emission standards, such as increments and national am-
bient air quality standards."". The interpretation urged
court decisions. See H.R. Rep. No. 294, 95th Cong., 1st Sess.
91 (1977). It would not be accurate to say that Congress
simply codified the holdings and dicta of those decisions in
§ 123.
143 Brief for Industry Petitioners on Stack Height at 11.
144 See note 126 supra and accompanying text.
"5 See note 126 sivpra.
14U See cases cited supra note 39.
147 42 U.S.C. §7423 (a) (1) (Supp. I 1977) (emphasis sup-
plied).
148 § 302 (k), 91 Stat. 770, 42 U.S.C. §7602(k) (Supp. I
1977). The House report, H.R. Rep. No. 294, 95th Cong., 1st
Sess. 92 (1977), states that "[b]y defining the terms 'emission
limitation/ 'emission standard,' and 'standard of perform-
ance,' the committee has made clear that constant or con-
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40
by industry petitioners contravenes the natural import
of these words, as it would have- the degree of emission
limitation required for a source reduced by the fact that
neighboring, preexisting sources with tall stacks disperse
their emissions over a broader region, thus resulting in
lower concentrations in the immediate vicinity.
The policy of Section 123, as gleaned from examination
of its genesis and progress in Congress, is also supportive
of EPA's interpretation. This provision originated in the
House,140 and the 1977 House Report dealt extensively
with the problem of dispersion techniques.150 In addition
to disapproving tall stacks arid other dispersion-dependent
techniques in lieu of constant controls,131 the House Report
detailed some independently deleterious effects of tall
stacks. Among other things, the report noted that tall
stacks, by increasing the transportation of pollutants,
may lead to production of derivative pollutants, such as
suspended sulfates and nitrates, which pose a greater
health hazard than the parent compounds.132 Tall stacks
also transport pollution problems to distant areas and
states "where it is too late to control the pollution." )5S
In the uppar chamber, Senator Muskie spoke at length
on the tall stacks problem.134 Contrary to petitioners'
tinuous means of reducing emissions must be used to meet
these requirements."
uo See H.R. Rep. No. 564, 95th Cong., 1st Sess. 143-144
(1977) (conference report).
150 H.R. Rep. No. 294, 95th Cong., 1st Sess. 81-94 (1977).
151 Id.
1!i2/d. at 33-84. The report also suggested that harmful
acid rain appears to be associated with tall stocks. Id. at
85-86.
153 Id, at 84-85. .
134123 Cong. Rec. S9174-9175 (daily ed. June 8, 1977)
(remarks of Senator Muskie).
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. 41
suggestion, ir'r' EPA's 1976 guideline was not beyond con-
gressional dissatisfaction. Senator Muskie expressed this
sentiment:
Far from prohibiting the construction of tall stacks
or the use of intermittent controls, the guidelines
provide that once minimal emission control require-
. r-^r-^r, are met. polluters are encouraged to substi-
• -A: -'.•", >xv-::limited stack height for --.ny further control
As the courts have held, the act prescribes how air
quality standards must be aiet — neither EPA nor the
States may permit a proposed plan to meet the re-
quirements by using tall stacks or other dispersion
devices or techniques.
A policy of encouraging 'tall stacks' will increase
the burden of pollution. Long-range transport of
pollutants will be exacerbated. There is no support
in the Clean Air Act for such a policy. Certainly
ruch a policy would be wholly inconsistent with the
policy to prevent significant deterioration."8
Th-2 firm congressional resolve to remove all regulatory
incentives for the construction of tall stacks bolsters
EPA's reading of Section 123, for the position urged by
industry petitioners would encourage, though to a lesser
degree than the 1976 guideline, the use of such stacks
15S See note 142 supra and accompanying text.
1SC 123 Cong. Rec. S9175 (daily ed. June 8, 1977) (remarks
of Senator Muskie). The Senator also noted that a report
by "the National Academies of Science of Engineering found
that dispersion measures may exacerbate the formation in
the atmosphere of acid sulfates and nitrates from the sulfur
and nitrogen oxides emitted from fuel-burning sources. These
derivative pollutants are thought to be more toxic forms
than the oxides of sulfur and nitrogen that are actually
emitted at the smokestack and are measured in the vicinity
of the source." Id. at S9174.
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42
and other dispersion methods. A company may well wish
to expand by building a new facility close to an existing
one, and if the older facility had a tali stack and if
petitioners' interpretation of Section 123 were to prevail,
the new facility would find it easi'er to comply with ncn-
deterioration and national ambient standards. Addition-.
ally, operating permits are not irrevocable, and by use
of a tall stack a facility would lessen pollution concen-
trations in its own air quality region and render it less
likely that violations of national standards or increment
exceedances—which would necessitate further controls or
possibly partial or complete shutdown of the facility 15T—
will occur.
Industry petitioners make three points which, they sub-
mit, reveal the absurdity 1!i3 of EPA's interpretation of
Section 123. First, they bitterly complain of artificial
assumptions which in their view unnecessarily complicate
administration of the federal pollution regulatory sys-
tem.isu One might concur in petitioners' assessment, but
a sufficient answer is that Congress introduced a number
of such elements into the system. For example, the base-
line is not only a snapshot of pollution on the date of the
first permit application, but it must be reduced to exclude
emissions from major operating facilities on which con-
struction commenced after January 6, 1975, and in-
creased to include the projected emissions of sources not
157 See Part IV of Judge Leventhal'a Opinion.
158 Of course, an absurd construction is to be avoided if at
all possible. E.g., United States v. Mcnasche, 348 U.S. 528,
538-539, 75 S.Ct. 513, 520, 99 L.Ed. 615, 624 (1955) ; Metong
v. Micronesfan Claims Comm'n, 18G U.S.App.D.C. 391, 395,
569 F.2d 630, 634 (1977) ; Quinn v. Blitz, 166 U.S.App.D.C.
363, 373, 510 F.2d 743, 753 (1975).
130 E.g., Brief for Industry Petitioners on Stack Height
at 14-16; Transcript of Oral Argument 128-129 (Apr. 20,
1979).
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43
yet in operation as of the date of the first permit appli-
cation but on which construction began prior to January
6, 1975.1CO There is, indeed, a degree of artificiality in
the modeling of tall-stack emissions as though they came
from a GEP stack, but indisputably that is what Con-
gress envisioned.
Second, petitioners point out that under Section 123 (c)
a stack height in excess of two and one-half times the
height of the emission source may be considered a GEP
160 See notes 21-43 supra and accompanying text. Of course,
as EPA has recognized, 43 Fed. Reg. 26400 (June 19, 1978) ;
42 Fed. Reg. 57460 (Nov. 3, 1977) ; Brief for EPA at 186-187,
emissions from tall-stack sources that have been included in
the definition of baseline under § 169(4) do not consume the
available increment; their actual emissions as of the time
of the first permit application are grandfathcred. See Parts
I, II supra. This consequence of the baseline definition does
not conflict with § 123(a), for these grandfathered emissions
do not affect the "degree of emission limitation required" for
applicants for PSD permits. Nor does it render the Decem-
ber 31, 1970, cutoff in § 123 nugatory, for § 123 is not in
Part C (PSD), and the statutory tall-stacks policy is not con-
fined to the nondeterioration program but rather is applicable
to the entire range of programs developed pursuant to the
Clean Air Act. This point was not made clear in our per
curiam opinion, Alabama Power Co. v. Costle, No. 78-1006
(D.C. Cir. June 18, 1979), at 40-43, as industry petitioners
have pointed out in a petition for reconsideration. On the
other hand, as we have explained in our discussion of the fuel-
switches issue, see notes 19-56 supra and accompanying text,
only the actual emissions of a major source operating on the
date of the baseline determination and on which construction
commenced prior to January 6,1975, arc grandfathered; addi-
tional emissions from such a source consume the increment.
Thus, if non-baseline emissions from such a source proceed
from a taller-than-GEP stack not in existence before De^
cember 31, 1970, they consume the increment as though they
were emitted from a GEP stack. In short, § 123's tall-stacks
policy, for purposes of the nondeterioration program, applies
to non-baseline emissions of nongi'andfathered stacks.
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44
stack only if the "owner or operator" demonstrates that
such height is "necesary to insure that emissions from
the stack do not result in excessive concentrations of any
air pollutants in the immediate vicinity of the source as
a result of atmospheric downwash, eddies and wakes
which may be created by the source itself, nearby struc-
tures or nearby terrain obstacles . . . ." l
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45
that since the 1970 Act "prohibited tall stacks as a final
compliance method, . . . sources which raised their stacks
or constructed tall stacks after the date of enactment
should [not] be eligible for any credit." lli4 It will, how-
ever, be in the interest of all post-1970 facilities with tall
stacks to demonstrate, if possible, that their excess height
.,.-,-; j.•••stifled by do\vn\v?•••••.;••>:., •;.
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46
violated.100 This residual authority ensures that the tall-
stacks policy need not hamper attainment and mainte-
nance of federally-prescribed pollution standards every-
where.
In summary, EPA's reading of Section 123(a) is pre-
ferable as a matter of simple English to petitioners', is
soundly supported by the legislative history, and is not
belied fay other provisions or policies of the Clean Air
Act. Granting EPA's interpretation due deference,170 it
must be sustained.171
169 Id.
170 See cases cited supra, notes 38, 128.
171 Petitioners have urged us to defer our ruling on EPA's
interpretation of § 123 (a) until completion of a pending ruie-
making proceeding designed to implement § 123, and which
will define, among other things, GEP height. 44 Fed. Reg.
2608 (Jan. 12, 1979) (proposed rules). That proceeding does
not involve the question we decide today—the propriety of
modeling emissions from tall stacks at GEP height when calcu-
lating emission limitations for later sources. EPA's final posi-
tion on the" question under review here was announced in
November, 1977, 42 Fed. Reg. 58460 (Nov. 3, 1977). We per-
ceive no merit in petitioners' deferral request.
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WILKEY, Circuit Jvdae: . This part of our opinion re-
views several interrelated regulatory provisions l promul-
gated by the Environmental Protection Agency under the
Clean Air Act, as amended in 1977.- These provisions
fali within five topical categories: I. EPA's definition
of pollution-emitting "sources" subject to rules governing
the Prevention of Significant Deterioration (PSD)3 of air
quality (."source definition" issue) ; II. EPA's definition
of the term "nodincation" of stationary sources for the
purposes of PSD, and the right of industries to offset
pollution-increasing changes against pollution-decreasing
changes in a single source without PSD reviev,7 ("major
modification" and "bubble" issues) : III. the applicability
of PSD to pollutants other than sulfur dioxide and par-
ticulate matter, and EPA's 100 and 250-ton per year
emission threshold for each pollutant (pollutants subject
to PSD and EPA's '''major emitting facility" threshold) ;
IV. EPA's inclusion of visible emission standards among
emission limitations subject to best available control tech-
nology:4 and V. administrative conditions imposed by
EPA on each stage of a multi-phase construction project
for which EPA issues a comprehensive-construction per-
mit (the definition of "commence construction" for
phased projects).
1 40 C.F.R. §§ 51.24, 52.21 (1078).
2 Pub. L. No. 88-206, 77 Stat. 392 (1963), as amended by
Clean Air Act Amendments of 1977, Pub. L. No. 95-S5, 91
Stat. 685 (1977) (codified at 42 U.S.C. §§7401-7642 (Supp.
I 1977)). EPA's general rulemaking authority under the Act
is provided in § 301, 42 U.S.C. § 7601 (Supp. I 1977).
3 The Act's PSD provisions are set forth in Clean Air Act
Title I, Part C, §§ 160-169A, 42 U.S.C. §§ 7470-7491 (Supp.
I 1977). These are the principal provisions at issue in this
case.
4 See Clean Air Act § 169(3), 42 U.S.C. §7479(3) (Supp.
I 1977) (definition of "best available control technology").
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I. SOURCE DEFINITION
Pollution control measures enacted under the Clean Air
Act's PSD program apply to major pollution-emitting
facilities,5 which are defined as certain types of "sta-
tionary sources" that emit or could emit 100 tons of
pollut...v••;.'•-. per year, or "any other source" that could
•?.-.-•;':•:•:.-"' tons:0 The terms "stationary source" and "any
other source," however, are not specifically defined in the
PSD provisions of the Act. To fill this statutory defini-
tional breach,. EPA as part of comprehensive Clean Air
Act regulations promulgated for the purposes of PSD
the following definition:
"Source" means any structure, building, facility
equipment, installation or operation (or combination
thereof) which is located on one or more contiguous
or adjacent properties and which is owned or oper-
ated by the same person (or by persons under con-
mon control).7
EPA also provided by regulation that:
Notwithstanding the source sizes specified in [the
first, sentence of Clean Air Act § 169(1), 42 U.S.C.
§ 7479(1) (Supp. I 1977), "major stationary source"
means] any source which emits, or has the potential
to emit, 250 tons per year or more of any air pollu-
tant regulated under the Act.s
In this section of our opinion we consider three separate
issues pertaining to the above regulatory definitions.
0 Clean Air Act §165(a), 42 U.S.C. §7475(a) (Supp. I
1977).
«Clean Air Act § 169(1), 42 U.S.C. § 7479 (Supp. I 1977).
MO C.F.R. §§ 51.24 (b) (4), 52.21 (b) (4) (1978).
*Id. § 51.24(b) (1) (ii). See id. § 52.21 (b) (1) (ii)..
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A. Inclusion of "Equipment," "Operation," and "Com-
bination Thereof within EPA's Definition of
"Source"
We consider first whether EPA erred in defining
"source" to include "any structure, building, facility,
equipment, installation or operation (or combination
thereof) "9
Petitioning Industry Groups 10 argue that by introduc-
ing the above italicized language into the regulatory defi-
nition of "source," EPA has subjected a wider range of
pollution-emitting activities to the Act's PSD require-
ments than Congress intended. Industry groups fear that
EPA will capitalize on its expansive definition of
"source" by subjecting to PSD review every type of pro-
ductive enterprise ranging from mining and forestry to
commercial trains and ships.11 There is a risk of an un-
limited scope of PSD regulation which could follow from
literal application of PSD to any "equipment" or "opera-
tion," and to any "combination" of, for example, equip-
ment and operations, that meets minimum emission
standards.
EPA, however, argues that Congress did not intend to
confine PSD to a class of pollution-emitting entities so
narrow as the four nonitalicized terms above. EPA con-
siders it prudent to "err on the side of inclusiveness," in
order to extend PSD to the range of activities it claims
9Id. §§ 51.24(b) (4), 52.21 (b) (4) (emphasis added).
10 We use the term "Industry Groups" throughout this
opinion to refer generally to the numerous industry petition-
ers and intervenors. Likewise we use the term "Environ-
mental Groups" to refer to the several environmental
petitioners and intervenors.
11 Industry Petitioners' Brief on Source Definition Issue
at 10 [hereinafter cited as Industry Brief on Source Defi-
nition] .
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Congress intended, and in order to give notice to those
who must apply for PSD permits.1-'
We find this definitional issue to be governed by the
definition of "source" provided in Clean Air Act section
111 (a) (3),13 pertaining to the Act's new source perform-
ance, standards (NSPS). Section 111 (a) (3) provides
that for the purposes of NSPS "[t]he term 'stationary
source' means any building, stwcture, facility, or instal-
lation which emits or may emit any air pollutant." 14 In
addition, section 111 (a) (2) provides that for NSPS
"[t]he term 'new source' means any stationary source,
the construction or modification of which is commenced
after [a specified time],"15 thus incorporating into the
term "source" the components of the term "stationary
source." For NSPS the two terms become essentially in-
terchangeable.
We find no support in the statute for the notion that
Congress intended its definition of the term "source" as
used in the PSD provision of the Act to differ from that
provided for NSPS in section 111 (a) (3). Though "sta-
tionary source" is not defined expressiy for PSD in the
Act, it had at the time of the 1977 Amendments a well-
established meaning, which included the four terms
"structure," "building," "facility," and "installation," but
not "equipment," "operation," or "combination thereof." ia
12 See Brief for EPA at 55-56. See also 42 U.S.C. § 7411
(a)(3) (Supp. I 1977).
13 42 U.S.C. §7411(b)-(j) (Supp. I 1977).
14 Id. § 7411 (a) (3) (Supp. I 1977) (emphasis added).
"Id. §7411 (a) (2).
16 EPA's NSPS regulations in effect at the time of the en-
actment of the Clean Air Act Amendments of 1977, 40 C.F.R.
§60 (1977), define the term "stationary source" as "any
building, structure, facility or installation which- emits or
may emit any air pollutant and which contain any one or
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Given no expression of any contrary intent in the Act
or in the legislative history regarding these definitions,
we must assume that the meaning of a particular term is
to be consistent throughout the Act. This is especially true
under present circumstances, where the subject term
prior to enactment of the controversial language had as-
sumed a particular definition under closely related statu-
tory provisions.
In support of this conclusion we note that Clean Air
Act section 169, which defines certain terms expressly for
PSD, states in subsection (2) (C) that "[t]he term 'con-
struction' when used in connection with any source or
facility, includes the modification (as defined in section
111 (a)) of any source or facility." 17 Section 111 (a) (4),
in turn, provides that the term "modification" means
"any physical change in, or change in the method of op-
eration of, a stationary source . . ." as that term is de-
fined in section 111 (a) (3).1S Since several key sections
of the Act apply PSD to the construction of new facili-
ties,19 those sections thereby incorporate the definition of
"stationary source" used in section 111, at least with re-
gard to source "modification." The PSD provisions thus
indirectly incorporated the section 111 definition of
"source" concerning modifications; we find it implausible
to assume that the same definition of source does not
combination of [a variety of specified types of facilities].
Id. §60.2(d). Similarly, EPA's definition of "stationary
source" in its regulations for approval and promulgation of
implementation plans, 40 C.F.Pv. §52.01 (a) (1977), refers
to "any building, structure, facility, or installation which
emits or may emit an air pollutant for which a national
standard is in effect."
"Clean Air Act §169(2)(C), 42 U.S.C. §7479(2) (C)
(Supp. 11977) (emphasis added).
"Clean Air Act §lll(a)(4), 42 U.S.C. §7411(a)(4)
(Supp. I 1977).
"See, e.g., Clean Air Act §§ 165, 167, 42 U.S.C. §§7475,
'7477 (Sapp. 1.1977).
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apply to construction as well. Therefore, we hold that
the term "source" retains a consistent meaning in all
PSD provisions of the Act and that the applicable defini-
tion is provided in section 111.
EPA contends that the words "equipment," "opera-
tion," and "combination thereof" must be included in the
•'-^definition of "source" for PSD, because the full range of
•'•'"''industrial entities specifically made subject to PSD in
section 169(1) cannot be comprehended within the defini-
tion of "source" provided in section 111 (a) (3).-° We do
not agree. The four terms encompass all of the types of
entities specified in the first sentence of section 169(1),
. as well as all entities and activities included on a longer
list compiled by EPA from which the statutory list was
. drawn. Thus, for example, the components of the term
"source" provided in section -111 (a) (3) need not be in-
terpreted so narrowly as to comprehend only those
sources that emit pollutants through industrial "point"
sources (such as smokestacks and chimneys). EPA has
discretion to define the terms reasonably to carry out the
intent of the Act, but not to go clear beyond the scope of
the Act, as it has done here. Section 169(1) clearly does
mean that a plant is to be viewed as a source; the section
lists many types of plants as stationary sources. But EPA
has discretion to define statutory terms reasonably so as
to carry out the expressed purposes of the Act. We view
it as reasonable, for instance, to define "facility" and
"installation" broadly enough to encompass an entire
plant.
In ASARCO Inc. v. Environmental Protection Agency,
this court struck down the agency's defining source for
NSPS as, inter alia, a combination of facilities. But that
case allpwed EPA broad discretion to define the statutory
terms for "source," so long as guided by a reasonable
application of the statute.-1 The agency has the same
reasonable discretion here to refashion its regulations.
20 See Brief for EPA at 57.
-1 078 F.2d 319, 324 & n.17 (D.C. Cir. 1973).
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B. Extension of EPA's Definition of "Source" to In-
clude Industrial Units Joined by Contiguity and
Common Oicnership
EPA regulations provide that the term "source" shall
mean any industrial unit "which is located on one or
more contiguous or adjacent properties and which is
owned or operated by the same person (or by persons
under common control)." 22
Industry Groups contend that Congress intended PSD
review to apply only to "major industrial process facili-
ties at specific, plant sites" without grouping of such
process facilities according to proximity or ownership,
and that EPA's contiguity and common ownership lan-
guage has expanded unlawfully the potential scope of
PSD.23 In ASARCO, this court held that EPA had no
authority to attach a similar provision to the definition
of "source" for the NSPS program, as defined in section
111 of the Act. That definition, however, \vas not ex-
panded by any other part of the NSPS provisions or their
legislative history. For this reason, the court in ASARCO
concluded that the definition of "stationary source" in
section 111 (a) (3) as "any building, structure, facility or
installation which emits or may emit any air pollutant"
could not be administratively expanded to include an en-
tire plant.2*
With regard to PSD, however, Congress clearly envi-
sioned that entire plants could be considered to be single
"sources." Clean Air Act section 169(1) expressly pro-
vides that for the purposes of PSD the term "major emit-
ting facility" means "any of the following stationary
sources of air pollutants . . . : fossil-fuel fired steam
electric plants . . . , Portland Cement plants, . . . iron
22 40 C.F.R. §§ 51.24 (b) (4), 52.21 (b) (4) (1978).
23 See Industry Brief on Source Definition, s-upra note 11,
at 23.
» 578 F.2d at 326-27.
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8
and steel mill plants." -3 In fact, fourteen different
types of industrial "plants" are specifically cited in section
169(1) as types of "stationary sources" to which PSD
is to apply.-0 By the terms of the PSD provisions, then,
the ASARCO holding does not prevent aggregation of in-
dividual units of a plant int'o a single source.
Because of the limited scope afforded the term "source"
in section 111 (a) (3), however, EPA cannot treat con-
tiguous and commonly owned units as a single source un-
less they fit within the four permissible statutory terms.
To allow an entire plant or other appropriate group-
ing of industrial activity to be subject as a single unit
to PSD, as Congress clearly intended, EPA should devise
regulatory definitions of the terms "structure," "build-
ing," "facility," and "installation" to provide for the ag-
gregation, where appropriate, of industrial activities ac-
cording to considerations such as proximity and owner-
ship. We have no doubt that the term installation, for
instance, is susceptible in its common usage to a reason-
able interpretation that includes all the types of sources
specified in the first sentence of section 1G9(1), as well
a,s those intended by Congress to be reached in the second
sentence of section 169 (1).
23 Clean Air Act §169(1), 42 U.S.C. §7479(1) (Supp.
I 1977) (emphasis added).
28 Id. A similar list of such industrial "plants" and "mills"
was considered by Congress in drawing up NSPS require-
ments in § 111, and was considered as a part of the legislative
history of § 111 by the court in ASARCO. See ASARCO hie.
v. EPA, 578 F.2d at 326 n.24. This list, however, was not
incorporated into § 111 as it was in § 169(1). Consequently,
the court in ASARCO found the legislative history on the
question of whether an entire plant could be considered a
single source for NSPS "a much less reliable guide than the
words of the statute itself," and concluded from the statute
that the types of industrial units used to define "source"
in § 111 could not be aggregated for the purposes of NSPS.
ASARCO Inc. v. SPA, 578 F.2d at 326 n.24.
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EPA's new definitions should also provide explicit
notice as to whether (and on what statutory authority)
EPA construes the term source, as divided into its sev-
eral constituent units, to include the unloading of vessels
at marine terminals and "long-line" operations such as
pipelines, railroads, and transmission lines. We agree
with Industry Groups that EPA has not yet given ade-
quate notice as to whether it considers those industrial
activities to be subject to PSD.
EPA has latitude to adopt definitions of the component
terms of "source" that are different in scope from those
that may be employed for NSPS and other clean air pro-
grams, due to differences in the purpose and structure
of the two programs. The reasonableness of EPA's con-
tiguity and common ownership criteria, in light of the
new source definitions required, must await review until
their application in specific circumstances.27
C. EPA's Extension of PSD to All Sources with Po-
tential Emissions of 250 Tons or More Per Year
Petitioners object to EPA's definition of "major sta-
tionary source" to include any "source" with actual or
potential emissions of 250 tons per year, regardless of
physical size or production capacity of the source.28 The
statute leaves some ambiguity on this issue. Under sec-
27 There is no danger that the limited opportunity for
parties to petition for review under the Act will be forfeited
by our decision not to resolve these issues here, since EPA's
regulations as revised in light of this opinion will constitute
new "final action" and trigger once again the review pro-
cedures of Clean Air Act §307(b), 42 U.S.C. §7607 (Supp.
11977).
28 Industry Groups also object to EPA's use of the term
"major stationary source" in place of the statutory term
"major emitting: facility." This objection is without merit
so long as the regulatory term is defined in a manner con-
sistent with statutory requirements.
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10
tion 169(1), the term ''major emitting facility includes
twenty-eight specific types of industrial entities which
can emit 100 tons per year or more of any air pollutant.-"-*
Four of thess types of entities, however, are subject to
PSD only if they meet additional operating capacity, or
size, qualifications.30 The second sentence of section
JLG9C1) then states that major emitting facilities include
"any other source with the potential to emit two hundred
and fifty tons per year or more of any air pollutant." ai
EPA interprets the two sentences to mean that the four
special entities are not exempo from PSD if they exceed
the 250-ton threshold, even if they remain below the size
qualifications.32 To justify this interpretation, EPA em-
phasizes the mandate of the second sentence that PSD
shall apply to "any" other source with the requisite po-
tential to emit.23 Industry Groups, on the other hand,
stress that PSD shall apply only to any "other" source
with the requisite potential to emit.34 Industry Groups
assume, in essence, that each generic type of industrial
entity specified in the first sentence, regardless of size,
was considered exclusively by Congress in the first sen-
tence and cannot be included by EPA within the second.
Reasonable semantic arguments can be made on either
side of this issue, and the EPA's interpretation is not un-
reasonable. While it may be uneconomical and impractical
to apply PSD to small sources that emit a low level of
pollutants, such as those sources, withdrawn from PSD
*• Clean Air Act §169(1), 42 U.S.C. §7479(1) (Supp. I
1977).
30 Id.
31 Id. (emphasis added).
**See 40 C.F.R. §§ 51.24 (b) (1) (ii), 52.21 (b) (1) (ii)
(1978).
33 See Brief for EPA at 74.
34 See, e.g., Industry Brief on Source Definition, supra note
11, at 36-37.
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11
by the first sentence of section 109(1); it is less im-
practical to ?.ppiy PSD to small sources that emit rela-
tively higher levels of pollutants, such as those sources
reached by the second sentence. The critical factor in
pollution control is not the industrial output of"a particu-
lar source, but its poUu-tior,, output. As ^m pirated by
offshore oil rpills, a great pollr'.ior.)•><*:•.,:..;•.: -f^oe caused
by a relatively small source.
Finally, and most conclusively, legislative history shows
that Congress intendod the contested sources to be subject
to PSD. The two sentence definition of "major emitting
facility" in section 169(1) resulted from the adoption of
both a one sentence definition originating in the Senate
and a one sentence definition originating in the House.
The first sentence of section 169(1), which designated
the twenty-eight types of entities to which PSD would
apply, originated almost verbatim in Senate bills passed
in 1976 and 1977.:!5 The second sentence of section
169 (1), which applies PSD to all other sources with po-
tential to emit 250 tons per year of more of any pollutant,
originated in House bills passed in 1976 and 1977 but
with the pollution-emission minimum raised from 100 to
250 tons per year.36 As noted in the applicable Confer-
ence Committee Report,37 the House concurred in the adop-
tion of the Senate provision contained in the eventual
first sentence of section 169(1) "with a- requirement
that ... a major emitting facility will also include fa-
35 Sec S. REP. No. 717, 94th Cong., 2d Sess. 221 (1976);
S. REP. No. 127, 95th Cong., 1st Sess. 219 (1977).
*See H.R. RE?. No. 1175, 94th Cong., 2d Sess. 358 (1976) ;
H.R. REP. No. 294, 95th Cong., 1st Sess. 439 (1977).
37 This is the Conference Committee Report of 1976, which
explained language later adopted into the Clean Air Act
Amendments of 1977. See H.R. REP. No. 1742, 94th Cong.,
2d Sess. (1976).
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12
cilities which have the capacity to emit 250 tens per year
or more [of any air pollutant]""8—the language sub-
sequently adopted in the second sentence. The Report
does not suggest that those entities subject to size limita-
tions in the definitional sentence borrowed i'rom the Sen-
ate bill were to be excluded from the term "facilities," as
defined by the sentence i'rom the House.
We conclude that the definition from the House bill
adopted by the Conference. Committee as the second sen-
tence of section 169(1) retains its universal character,
thus comprehending all sources that meet the sole qualifi-
cation specified in that sentence: that they have the "po-
tential to emit two hundred and fifty tons per year or
more of any air pollutant." 38 We therefore uphold EPA's
extension of PSD to all sources with potential emission!;
of 2-50 tons or more per year.
II. "MAJOR MODIFICATION" AND "BUBBLE"
We consider in this part of the opinion two questions
relating to the applicability of the Clean Air Act's PSD
provisions to the "modification" (as opposed to the initial
construction) of "major emitting facilities."
A. EPA's Regulatory Definition of "Modification"
Standards for PSD review of construction of facilities
apply also to the "modification" of any source or facility;10
as defined by section 111 (a) (4). That section of the
Act defines "modification" as "any physical change in, or
38 Id. at 46.
so Clean Air Act §169(1), 42 U.S.C. §7479(1) (Supp. I
1977).
40 See Clean Air Act § 169(2) (C), 42 U.S.C. § 7479(2) (C)
(Supp. I 1977).
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13
change in the method of operation of, a stationary source
which increases the amount of any air pollutant emitted
by such source or which results in the emission of any
air pollutant not previously emitted." *l-
By. regulation EPA has limited PSD review to only
those modifications deemed "major" within the following
definition :
"Major moclificr.tion" means any physical change
in, change in the method of operation of, or addi-
tion to a stationary source winch increases the po-
tential emission rate of any air pollutant regulated
under the act . . . by either 100 tons per year or
more for any source category identified in [the first
sentence of Clean Air Act § 169(1)]', or by 250 tons
per year or more for any stationary source.*2
This definition incorporates the same 100 or 250-ton per
year threshold that Congress established for the term
"major emitting facility." 13 The regulation differs from
the statute by exempting from PSD review any modifica-
tion that does not exceed this threshold.
For this departure in regulation language, no reason-
able basis can be found in the statute. The Act requires
PSD review for any construction of a major emitting
facility;" the same PSD review requirement applies
for any modification of a major emitting facility;45 and
the term "modification" is nowhere limited to physical
41 Clean Air Act §111 (a) (4), 42 U.S.C. §7411 (a) (4)
(Supp. I 1977).
42 40 C.F.R. §§51.24(b)(2), 52.21 (b) (2) (1378) (empha-
sis added).
"Clean Air Act §169(1), 42 U.S.C. §7479(1) (Supp. I
1977).
"See Clean Air Act § 165(a), 42 U.S.C. § 7475(a) (Supp.
I 1977).
43 See Clean Air Act § 169(2) (C), 42 U.S.C. § 7479(2) (C)
(Supp. I 1977).
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14
changes exceeding a certain magnitude.40 There is some
indication in the legislative history to suggest'that at
least one Senator intended some such limit'17 But the
language of the statute clearly did not enact such limit
*" To exemp£ modest inci-eases in pollution emissions, how-
ever, Congress did pi-ovide in § 165 (b) of the Act for a 50-
ton per year minimum for certain substantive elements of
PSD review of "modification of a ma.i'or emitting facility" in
class II clean air areas. Clean Air Act S 165(b), 42 U.S.C.
§7475(b) (Siipp. I 1077). As noted in the Senate report:
Section JLlO(g) (4) (C) exempts smaller, well-controlled
sources which are expansions of existing facilities from
having to demonstrate compliance with class II incre-
ments. Many such sources which are small and relatively
insignificant with respect to air quality would otherwise
ba brought under the requirements of section 110 (g) by
the "naojor emitting facility" definition of 100 tons per
year potential emissions of any pollutant.
S. REP. No. 127, 95th Cong., 1st Sess. 33 (1977). We find
nothing to indicate that a substantial additional exemption,
applicable for all clean air areas, was implicit in the statute's
definition of "modification" itself.
47 Describing the scope of the Senate bill, Senator Buckley
stated, " 'No significant deterioration' is a policy that has no
effect on existing sources, unless a source undertakes a major
expansion program. It requires the States to study the im-
pact on air quality resulting from the siting of new ma.ior
sources of pollution . . . ." 122 CONG. RffC. 23,833 (1976).
Senator Buckley was ranking minority member of the Sub-
committee on Environmental Pollution at the time the bill was
drafted, and took a leading role in its drafting and in ex-
plaining it or. the floor of the Senate. When this deb.Vce took
place, the statutory language did not apply PSD preconstruc-
tion review to source "modification." In November li)77, the
Senate and House passed technical amendments, one of which
had the effect of defining "construction" to include "modifica-
tions." It tyas this new language that had the effect of
overriding Senator Buckley's interpretation of the meaning
of "no significant deterioration."
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•'; w • '
into law. We are constrained here to follow the clear
language.
EPA does have discretion, in administering the stat-
ute's "modification" provision, to exempt from PSD re-
view some emission increases on grounds of de minimis
or administrative necessity. The exemption in question,
however, has not been PO v.rst*.."•>•..-.?, and thus cannot stand.
We discuss EPA's disc/^tiOu s.o define de minimis in Part
III below.
Implementation of the statute's definition of "modifica-
tion" will undoubtedly prove inconvenient and costly to
affected industries; but the clear language of the statute
unavoidably imposes these costs except for de minimis
increases. The statutory scheme intends to "grandfather"
existing industries; but the provisions concerning modifi-
cations indicate that this is not to constitute a perpetual
immunity from all standards under the PSD program.
If these plants increase pollution, they will generally need
a permit. Exceptions to this rule will occur when the
increases are de minimis, and when the increases are
offset by contemporaneous decreases of pollutants, as we
discuss below. These two exceptions, we believe, will
allow for improvement of plants, technological changes,
and replacement of depreciated capital stock, without im-
posing a completely disabling administrative and regula-
tory burden.
B. EPA's Qualified Application of the "Bubble" Con-
cept of PSD
An important issue under the Act arises from the
problem of detei-mining what types of industrial changes
will be construed as "modifications" subject to PSD re-
view requirements. Under the Act, the PSD permit and
review process applies to construction and modification of
major emitting facilities. As discussed in the previous
section, the Act defines "modification" as any physical
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16
or operational change in a stationary source which "in-
creases the amount of any air pollutant emitted by such
source."" There are two possible ways to construe
the term "increases." First, one can look at any change
proposed for a plant, and decide whether the net
effect of all the steps involved in that change is to in-
crease the emission of any air pollutant—this is commonly
termed the "bubble" concept. Second, one can inspect the
individual units of a plant, which are affected by an
operational change, and determine whether any of the
units will consequently emit more of a pollutant. In its
regulations, EPA has adopted a qualified form of the
"bubble" concept for defining modifications subject to
PSD review.
Congress did not, in any pertinent part of legislative
history, specify which of these two constructions was to
be controlling;49 but an analysis of the implications of
the two possible interpretations shows the second to be
unreasonable and contrary to the expressed purposes of
the PSD provisions of the Act. It is important first to
recognize that alterations of almost any plant occur con-
tinuously; whether to replace depreciated capital goods,
to keep pace with technological advances, or to respond
to changing consumer demands. This dynamic aspect of
American industry was not disputed by the parties. To
apply the second instruction of "increases," however,
would require PSD review for many such routine altera-
tions of a plant; a new unit would contribute additional
pollutants, these increases could not be set off against the
«Clean Air Act §111 (a) (4), 42 U.S.C. §7411 (a) (4)
(Supp. I 1977).
49 The definition of "modification" was incorporated into
the PSD provisions by technical amendment, Pub. L. No. 95-
190, §14(a) (54), 91 Stat. 1393, 1402 (1977), which was
not intended to resolve any substantive issues. See 123 CONG.
REG. H11.957 (daily ed. 1 Nov. 1977). .
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«i
decrease resulting from abandonment of the old unit, and
thus the change would become a "modification" subject
to PSD review. Not only would this result be extremely
burdensome, it was never intended by Congress in en-
acting the Clean Air Act Amendments.
The intent of the relevant portion, Part C, of the Clean
Air Act as amended in 1977, is succinctly stated by the
title of that part: "Prevention of Significant Deteriora-
tion of Air Quality"—in areas that currently attain air
quality standards.60 According to their stated purposes,
the PSD provisions seek "to assure that any decision to
permit increased air pollution in any area to which this
section applies is made only after careful evaluation of
all the consequences of such a decision and after adequate
procedural opportunities for informed public participa-
tion in the decisionmaking process." 51
Congress wished to apply the permit process, then, only
where industrial changes might increase pollution in an
area, not where an existing plant changed its operations
in ways that produced no pollution increase. It is true
that Congress intended to generate technological improve-
ment in pollution control, but this approach focused upon
"rapid adoption of improvements in technology as new
sources are built,"52 not as old ones were changed with-
out pollution increase. The interpretation of "modifica-
tion" as requiring a net increase is thus consistent with
the purpose of the Act; while the other interpretation is
not. The EPA has properly exempted from best available
control technology (BACT) and ambient air quality
review those "modifications" of a source that do not
50 See Clean Air Act § 160, 42 U.S.C. § 7470 (Supp. I 1977),
."Clean Air Act §160(5), 42 U.S.C. §7470(5) (Supp. I
1977) (emphasis added).
82 S. REP. No. 127, 95th Cong., 1st Sess. 18 (1977).
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18
produce a net increase in any pollutant.*' Within the
terminology of ths Act, of course, industrial changes
meeting this standard are not "modifications" at all.
The "bubble" regulation for ,PSD must be compared
with an earlier EPA regulation, which applied the bubble
concept to the new source performance standards of
the Act,54 and which w?.s sti*uck down by this court in
ASARCO Inc. v. Environmental Protection Agency™
That, regulation stated that a modification of a source for
NSPS purposes "shall not be deemed to occur if an exist-
ing facility undergoes a physical or operational change
where . . . the total emission rate of any pollutant has
not increased from all facilities within the stationary
source . . .'."
The ASARCQ case struck down that regulation because
it expanded the definition of "source," within which
offsets were allowed, to include combinations of facilities,
contrary to the statutory definition of "source." 3T Here
we start with the same premise as ASARCO, that the
Agency may not define "source" to include a combination
of facilities.^ Several factors prevent us, however, from
drawing the same conclusion. First is a difference be-
tween the two regulations. The present EPA regulation
allows offsets within a "source"; it does not, in light of
our decision in this case, allow offsets within any "com-
bination of facilities." Thus it does not suffer from the
53 See 40 C.F.R. §§ 51.24, 52.21 (1973).
54 See id. §§60.2(h), G0.14 (1976). The Act's new source
performance standards are set forth in Clean Air Act § 111,
42 U.S.C. §7411 (Supp. I 1977).
85 578 F.2d 319 (D.C. Cir. 1973).
5940C.F.R. §60.14(d) (1976).
87 See ASARCO Inc. v. EPA, 578 F.2d at 329.
53 See Part I supra.
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.19
defect on which the ASARCO decision turned. Second,
ASARCO did not rule out the interpretation of "increases"
in pollution as net increases. The case stated that a
bubble concept would be contrary to the intent of the
NSPS provisions, but such is clearly not the case with
regard to the PSD provisions. Third, the PSD provisions
express a purpose of ensuring that economic growth oc-
curs in a mariner consistent with preservation of clean
air.58 The bubble concept is precisely suited to preserve
air quality within a framework that allows cost-efficient,
flexible planning for industrial expansion and improve-
ment. Finally, it is relevant that EPA had its NSPS
bubble concept in effect at the time Congress enacted the
1977 Clean Air Act Amendments. Though we ai*e reluc-
tant to assume that Congress expressly endorsed the spe-
cific bubble regulation, the Conference Committee ap-
proved the congressional policy as enacted at that time
in existing EPA regulations.00 ASARCO, in short, dealt
with a significantly different regulation and statutory
purpose. Its holding is therefore not inconsistent with
our decision today, upholding the bubble concept for the
PSD regulations.
The Agency retains substantial discretion in applying
the bubble concept. First, any offset changes claimed by
industry must be substantially contemporaneous. The
agency has discretion, within reason, to define which
changes are substantially contemporaneous. Second, the
offsetting changes must be within the same source, as
defined by EPA. In light of the statutory intent to treat
modification the same as construction,01 EPA's defini-
tion of "statutory source" for the PSD provisions will
«942 U.S.C. §7470(3) (Supp. I 1977).
00 See 123 CONG. REG. H8G65 (daily ed. 4 Aug. 1977).
81 See Clean Air Act § 169(2) (C), 42 U.S.C. § 7479(2) (C)
(Supp. I 1977).
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govern both the definition of "modification" and the cover-
age of section 169 (1).
The Agency's regulations, however, impose on the u*e
of the bubble concept an additional limitation, which is
challenged in this case. The * regulations define "major
modification" by means of accumulated increases in po-
tential emissions after 7 August 1977, with no offset
allowed for contemporaneous emission decreases.62 The
effect of this definition is to subject major changes to
PSD review, even when they are offset by contemporane-
ous reductions. The only effect of the EPA's bubble con-
cept then is to exempt the facility from cei'tain substan-
tive review standards when there are such offsetting
changes, leaving the facility subject to all procedural
PSD requirements.03 The most important procedural re-
quirement is that a permit be issued, under section 165
of the Act, before consti-uction begins. Under the Act,
however, PSD procedural requirements, just like substan-
tive ones, apply only to construction and modification of
sources. We must therefore resolve the question whether
EPA has authority to impose procedural requirements
where there is no net increase of any pollutant from con-
temporaneous changes.
The Agency concedes that a literal reading of the Act
would allow exemption from all PSD review requirements
for offsetting changes. But it argues that a total ex-
emption from section 165 requirements would contravene
the basic purpose of the 1977 Amendments. We disagree.
There is no basis in the Act for establishing two dif-
ferent definitions of "modification," one that looks only
«*See 40 C.F.R. §§ 51.24 (b) (2), 52.21 (b) (2) (1978).
03 Since we have rejected the limitation of modifications to
only "major" ones, this provision, when revised in accordance
with our opinion, would bring many more offsetting changes
within the PSD procedural review requirements.
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21
at net increases for substantive requirements, and a
second that looks at all increases, without allowing off-
sets, for procedural requirements. If a particular set of
industrial alterations is not a "modification" within the
terms of the Act, then it is subject to neither procedural
nor substantive PSD requirements.
The Act gives the EPA Administrator authority "to
prescribe such regulations as are necessary to carry out
his functions" under the Act.u< The Agency argues that
the permit process is necessary to ensure that it receives
information about industrial plans, so that it can decide
whether proposed emission increases are in fact offset.
But the PSD provisions set several thresholds, below
which Agency review authority does not extend. The
100 and 250-ton per year limit for "major emitting fa-
cilities" is one such threshold. The logic of the Agency's
argument would justify permit requirements for any in-
dustrial action that falls below any of the thresholds.
Rather than allow such an extension of Agency review
authority, Congress has set clear limits outside which
PSD review does not apply. If industries falsely claim
to be below the thresholds for PSD applicability, there
exist means to uncover and penalize such abuses. An
extension of PSD permit requh'ements beyond the word-
ing of the Act is therefore neither necessary nor ap-
propriate to carry out EPA's functions under the Act.
Such extension would seriously delay and impede indus-
trial changes that Congress did not intend to regulate.
Where there is no net increase from contemporaneous
changes within a source, we hold that PSD review,
whether procedural or substantive, cannot apply.
"Clean Air Act §301(a)(l), 42 U.S.C. §7601(a)(l)
(Supp. I 1977). •
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III. POLLUTANTS SUBJECT TO PSD REGULATION AND THE
"MAJOR EMITTING FACILITY" THRESHOLD
Several sections of the Clean Air Act apply PSD re-
view and best available control technology to emissions
by major emitting facilities of each pollutant subject
to regulation under the Clean Air Act. In this part
we review two regulations of EPA that define which
pollutants are subject to PSD and BACT review. One
regulation exempts from PSD and BACT each pollutant
not emitted in sufficient amounts to qualify a source as
a major emitting facility. The other applies PSD and
BACT immediately to each type of pollutant regulated
for any purpose under any provision of the Act, not
limited to sulfur dioxide and particulars. We reverse
EPA on the first regulation and affirm on the second.
A. Statutory and Regulatory Background
Section 165 of the Act provides in pertinent part:
(a) No major emitting facility on which con-
struction is commenced after [7 August 1977] may
be constructed . . . unless—
• • • •
(3) the owner or operator of such facility
demonstrates that emissions from construc-
tion or operation of such facility will not cause,
or contribute to, air pollution in excess of any
(A) maximum allowable increase or maximum
allowable concentration for any pollutant in any
area to w'hich [PSD] applies more than one time
per year, ... or (C) any other applicable emis-
sion standard or sta.ndard of performance -under
.this Act;
(4) the proposed facility is .subject to the
best available control technology for each pol-
lutant subject to regulation under this Act
emitted from, or which results 'from, such
facility .....
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(e) (1) The review provided for in subsection (a)
shall be preceded by an analysis ... of the ambient
air quality at the proposed site . . . for each pollut-
ant subject to regulation under this Act which will
be emitted from such facility.
• • t •
(3) The Administrator shall . . . promulgate
regulations . . . which . . .—
(B) shall require an analysis of the ambient
air quality, climate and meteorology,- terrain,
soils and vegetation, and visibility at the site
of the proposed major emitting facility . . .
for each pollutant regulated under this Act
which will be emitted .from . . . such facil-
itv °3
Ivj . • • •
Also section 169(3), for the purposes of PSD, defines
BACT as "an emission limitation based on the maximum
degree of reduction of each pollutant subject to regula-
tion under this Act emitted from or which results from
any major emitting facility." 6C
The italized language in the above sections would not
seem readily susceptible to misinterpretation. In each
instance, any source that qualifies with regard to any
applicable pollutant as a "major emitting facility" under
the statute's definition of such a source,67 is subject to
"any . . . applicable emission standard" or "standard of
performance" under the Act, and to pollution controls
for "any pollutant in any [geographic] area" subject
to PSD and for "each pollutant subject to regula-
tion" under the Act. The only administrative task ap-
parently reserved to the Agency in executing these pro-
85 Clean Air Act § 165, 42 U.S.C. § 7475 (Supp. I 1977)
(emphasis added).
00 Clean Air Act §109(3), 42 U.S.C. §7479(3) (Supp. I
1977) (emphasis added).
« See Clean Air Act § 169(1), 42 U.S.C. § 7479(1) (Supp.
I 1977).
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24
visions is to identify those emission standards, standards
of performance, and pollutants subject to regulation un-
der the Act which are thereby comprehended by the
statute. The language of the Act does not limit the ap-
plicability of PSD only to one or several of the pollutants
regulated under the Act, establish any special time-
table for the regulation of particular pollutants, or set
high thresholds for potential emissions of each pollutant
yj!u-£before a major emitting facility becomes subject to PSD
'•''' ' for that pollutant.
The first regulation states that PSD requirements, in-
cluding BACT, "shall apply to a proposed source or modi-
fication only with respect to those pollutants for which
the proposed construction would be a major stationary
source or major modification." 68 This provision exempts
from PSD all pollutants not emitted in quantities of at
least 100 tons per year by a major emitting facility of one
of the twenty-eight types specified in the first sentence of
section 169(1), and 250 tons per year by all other
sources.6" The Agency thus adopted a BACT "de mini-
mis" criterion to coincide with the 100 and 250-ton emis-
sion thresholds for major emitting facilities. It did this
on grounds that the "BACT de minimis level should be
made consistent" with the overall PSD emission thres-
hold.70
The petition of the District of Columbia challenges this
regulation. We find the regulation to be contrary to clear
statutory language. Section 165 states that no major
emitting facility may be constructed unless it is subject
to BACT "for each pollutant subject to regulation under
this Act emitted from . . . such facility."71 The statute,
8840 C.F.R. §51.24(1) (1) (1978). See id. § 52.21(i) (1).
68 Clean Air Act §169(1), 42 U.S.C. §7479(1) (Supp. I
1977).
70 43 Fed. Reg. 26,380, 26,381-82 (1978).
71 Clean Air Act §165(a)(4), 42 U.S.C. §7475 (a) (4)
(Supp. I 1977).
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25
then, does not exempt pollutants emitted at quantities of
less than 100 tons per year by the twenty-eight types of
sources specified in the first sentence of section 169(1),
or less than 250 tons per year by any other source. There
is no statutory basis for applying the 100 and. 250-ton
thresholds directly to the BACT requirement for all pol-
lutants from a major emitting facility. This' clear error
of statutory interpretation by EPA is analogous to its
exemption for non-major modifications. We strike down
both for similar reasons.
We understand that the application of BACT require-
ments to the emission of all pollutants from a new fa-
cility, no matter how miniscule some may be, could im-
pose severe administrative burdens on EPA, as well as
severe economic burdens on the construction of new fa-
cilities. But the proper way to resolve this difficulty is
to define a de minimis standard rationally designed to
alleviate severe administrative burdens, not to extend
the statutory 100 or 250-ton threshold to a context where
Congress clearly did not apply it. Just as for the ap-
plicability of PSD to modifications, the de minimis ex-
emption must be designed with the specific administrative
burdens and specific regulatory context in mind. This
the Agency has failed to do. We do not hold that 100
tons per year necessarily exceeds a permissible de minimis
level; only that the Agency must follow a rational ap-
proach to determine what level of emission is a de
minimis amount.
A rational approach would consider the "administrative
burden with respect to each statutory context: what
level of emission is de minimis for modification, what
level de minimis for application of BACT. Concerning
the application of BACT, a rational approach would
consider whether the cf-e minimis threshold should vary
depending on the specific pollutant and the danger posed
by increases in its emission. The Agency should look at
the degree of administrative burden posed by enforce-
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28 .
ment at various de tninim-ifi threshold levels. It is rele-
vant that our decision requires the Agency, in its evalua-
tion of emissions of facilities, to take into account the
facility's air pollution controls. It may also be relevant,
though it is certainly not controlling, that Congress made
a judgment in the Act that new facilities emitting less
than ICO or 250 tons per year are not sizeable enough to
warrant PSD review.
B. Types of Pollutants to be Regulated Under PSD
Industry Groups argue that the Act's provisions which
apply PSD to each pollutant subject to regulation under
this Act, require that controls be imposed immediately
for only two types of pollutants: sulfur dioxide and
particulates. The argument is made that PSD pre-
consta'uction review under section 165 is qualified by
section 166, which requires EPA to conduct a study and
to promulgate regulations to prevent the significant de-
terioration of air quality resulting from emissions of
"hydrocarbons, carbon monoxide, photochemical oxidants,
and nitrogen oxides" (the "automotive pollutants".), as
well as "pollutants for which national ambient, air quality
standards are promulgated."72 Although there is no
statutory language which so pi-oxides, Industry Groups
contend that the effective date of the PSD permit and
review framework in section 165 must be delayed in the
case of each pollutant until studies and regulations re-
quired in section 166 have been set forth. Only sulfur
dioxide and particulates are said to be exempt from this
requirement, since these pollutants alone were covered
by EPA's pre-1977 PSD regulations:73 thus the requisite
studies have already been, conducted and the applicable
"Clean Air Act §166(a), 42 U.S.C. §7476(a) (Supp. I
1977).
73 The first set of proposed PSD regulations was published
in 1974, see 39 Fed. Re;r. 42,510, 42.514 (1074). and later
codified in 40 C.F.H. §§ 52.01 (d) (5), 52.21 (1977).
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27
standards set,7'1 and any PSD review not premised on the
studies and- standards required by section 166 thus must
bs arbitrary and invalid, industry Groups also argue
th&t an undue burden will be imposed en affected fa-
cilities by the Agency's immediate application of section
16-5 to all pollutants subject to regulation under the Act.
In line with their reading or the- statute and in order to
lessen the regulatory bimlen, Industry Groups argue that
PSD regulation of the four "automotive pollutants"
should be delayed for at least three years artS seven
months following the enactment of the 1977 Amendments,
and other pollutants even longer.75
These arguments, however, are contradicted by the
plain language of section 165. Section 165, in a litany of
repetition, provides without qualification that each of
its major substantive provisions shall be effective after
7 August 1977 with regard to each pollutant subject to
regulation under the Act, or with regard to any "applic-
able emission standard or standard of performance under"
the Act.78 . As if to make the point even more clear, the
definition of BACT itself in section 168 applies to each
74 Industry Groups also point out that § 163 (a) of the Act
expressly requires that state plans contain measures assuring1
that maximum allowable increases over baseline concentra-
tions not be exceeded "in the case of sulfur oxide and particu-
late matter," and that § 163 (b) establishes specific sulfur
dioxide and particulate increments for class I, II, and III
areas to be implemented in state plans. Clean Air Act
§163(a)-(b), 42 U.S.C. §7473(a)-(b) (Supp. I 1977). No
mention is made in these sections of other pollutants to be
reached by PSD.
75 See Brief for Industry Petitioners on Regulation of Pol-
lutants Other Than Sulfur Dioxide and Participates at 14
[hereinafter cited as Industry Brief on Other Pollutants].
78See Clean Air Act § 165(a) (3)-(4), (e) (1), 42 U.S.C.
§7475 (a) (3)-(4), (e) (1) (Supp. I 1977).
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such pollutant." The statutory language leaves no room
for limiting the phrase "each pollutant subject to regula-
tion" to sulfur dioxide and particulatcs.
We find no implied or apparent conflict bot\veen sec-
tions 165 and 16C; nor, as Industry Groups contend,
must the requirements of section 165 be "subsumed"
within those of section 166.73 As vre noted in our earlier
per curiam opinion, section 16(3 has a different focus
from section 165: "the development of maximum allow-
able increments or equivalent limitations for those pollu-
tants (other than sulfur dioxide and particulate matter.'
for vrhich NAAQSs [national ambient air quality stand-
ards] have been or will be established."T0 Though Con-
gress could have decided to delay the applicability of
PSD for such pollutants until all studies and regu-
lations required by section 166 have been completed.
Congress apparently chose not to do so, and it em-
phasized its decision on that point in at least five
statutory provisions.00 What legislative history there
is on this point supports that view.51 Therefore we
"Clean Air Act §169(3), 42 U.S.C. §7479(3) (Supp. I
1977).
78 See Industry Brief on Other Pollutants, supra- note 75,
at 19.
79 See Alabama Power Co. V. EPA, No. 78-1006, slip op. at
29 (D.C. Cir. 18 June 1979) (per curiam). __.
80 See notes 76-77 supra.
81 Though the legislative history is net entirely unambigu-
ous, we ,'ote, for example, that the Kouse specifically rejected
an amendment offered to restrict PSD coverage to sulfur
oxides and particulatss. Sec 122 CONG. REC. 29,568-69 (1975).
In the Senate, the clearest statement of intention in late 1977
may have been made by Senator Muskic, the principal Senate
sponsor of the 1977 Clean Air. Act Amendments:
The committee did not extend the use of nondegrnda-
tion increments to pollutants other than sulfur oxides
or particulates. The lack of adequate information on
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29
uphold this Agency regulation.--
l:he implications of covering- other criteria pollutants pre-
cluded sucii a requirement. The committee did, however,
r.';7/T
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IV. DEFINITION OF BACT TO INCLUDE A VISIBLE EMIS-
SION STANDARD
One of the principal substantive prerequisites to ob-
taining a. PSD permit for construction of a major emit-
ting facility in clean air areas under the Act is utiliza-
tion by that facility of the "best available control tech-
nology" for each pollutant subject to regulation under
the Act to be emitted from that facility,83 In this
part of the opinion we consider whether EPA had auth-
ority to include a visible emission standard among
other emission limitations to be considered by the PSD
permitting authority in applying BACT. For reasons
stated herein, we conclude that EPA had such authority.
Clean Air Act section 169(31 defines BACT as:
an emis&uiti limitation based on the maximum de-
gree of reduction of each pollutant subject to regu-
lation under this Act emitted from . . . any major
emitting facility, which the permitting authority . . .
determines is achievable . . . through application of
production processes and available methods, systems
and techniques . . . ,M
Section 302 (k) of the Act, in turn, defines "emission
limitation" (and also "emission standard*') as:
unambiguous language of the statute) apparently has adopted
a different position.
We also are not convinced by petitioners' procedural objec-
tions. See Industry Brief on Other Pollutants, supra note 75,
at 23-30. In light of the unambiguous legislative command at
issue, we believe that the Administrator adequately explained
the basis for his action and responded to significant comments
raised durinir the rulernaking proceedings. See- 43 Fed. Res:.
26,330, 2G,397 (1978).
53 See Clean Air Act § lC5(a) (4), 42 U.S.C. § 7475 (a) (4)
(Supp. 1 1977).
w Clean'Air Act §169(3), 42 U.S.C. §7479(3) (Supp. I
1977) (emphasis added).
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a i-oquivenvoiit established by the State or the
[EPA] Administrator v.'hich limits the quantity,
rail:], or concentration of emissions of air pollutants
on a continuous basis, hiclut;.:.•£>; any requirement
relating to the operation or rni;iatena?ice of a source
to assure continuous emission reduction.-"
In its final regulations. EPA defined PACT essentially as
in section 169(3) of the statute, except for the paren-
thetical inclusion that BACT means ';an emission limita-
tion (including a -visible emission standard)." s'; The
central question for review is thus whether a "visiblo
emission standard" may be considered an "omission limi-
tation" or "emission standard" within the meaning of
section SOS (k) and in the context of BACT.
A petitioning- Industry Group S7 contends that EPA's
parenthetical inclusion of a "visible emission standard"
as a type of emission limitation expands the scope of
BACT beyond that intended by Congress. The Group
argues that Congress provided explicitly and exclusively
for visibility protection of certain clean air areas in sec-
tion 169ACS of the Act, and that therefore such visibility
standards cannot be incorporated into other PSD pro-
visions. These contentions are without merit.
Under the language of the statute, a visible emission
standard to be incorporated into BACT must constitute
a "requirement . . . which limits the quantity, rate, or
concentration" of pollutant emissions.58 An emission
»Ck£a Air Act §802(k), 42 U.S.C. §7G02(k) (Supp. I
1977) (emphasis added).
'•" 40 C.F.R. §§5l.24(b) (10), £2.21(b) (10) (1978) (em-
phasis added).
87 This Group is the American Iron and Steel Institute.
85 Clean Air Act § 169A, 42 U.S.C. §7491 (Supp. I 1977).
89 Clean Air Act §S02(k), 42 U.S.C. §7602(k) (Supp. I
1977) (emphasis added).
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standard pertaining to air opacity, is one such means of
measuring and limiting emissions; such a standard sets
limits on the emission of pollutants according to their
density in ways that are apparent to the human eye and
that therefore afreet, for example, human vision. EPA's
regulation on the point thus does no more than amplify
one ordinary and reasonable meaning of the statutory
term "emission standard"; even without the parentheti-
cal amplification, we believe "that PSD permitting au-
thorities could fairly have construed the term "emission
standard" to comprehend a "visible emission standard."
Opacity "standards are not novel; they are used, for
example, by a number of states in their attempts to
control air pollution.9" Opacity standards have been up-
held previously by this court under closely analogous
circumstances involving the Clean Air Act's NSPS pro-
gram.5'1 Congress also has expressed concern for opacity
values in measuring air pollution under the Clean Air
Act, and specifically under PSD. As noted by Senator
Muskie, chief Senate sponsor of the Clean Air Act Amend-
ments of 1977, with regard to the need for nondegrada-
tion provisions to protect against harmful environmental
effects not anticipated by the Clean Air Act's secondary
standards:
[I]f the [Act's] secondary standards were the
only restraint on new sources in clean air re-
gions, visibility which is now -100 miles or more in
some areas could deteriorate to 12 miles. If humid-
ity is high, visibility would be reduced even further.
While visibility may not be important in dirty air
'MScs, e.g., CAL. HEALTH AND SAFETY CODK § 41701 (West);
COLO. REV. STAT. § 25-7-1-C, and Regulation No. 1A promul-
gated thereunder; ARIZ. REV. STAT. §36-779, ami Regulation
R 9-3-301 promulgated thereunder.
91 Portland Cement Ass'n v. Train, 513 F.2d 506 (B.C. Cir.
1975), cert, denied, 423 U.S. 1025 (1976).
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areas, it has high public value in many clean air
regions . . . .u-
Finaliy, we note that EPA'r, inclusion of visible emis-
sion standards (among others) to be used to determine
compliiuice with BACT sets no single standard that all
PSD permittees must meet. Instead, the regulations con-
tsmpl.rce only the factoring of. an opacity standard into
other BACT considerations such as "energy, environ-
mental, and economic impacts and other costs" to be ap-
plied on a "case-by-ease basis" to emitting facilities."3
As such the regulation is far from oppressive or unduly
expansive; it merely defines with some specificity an area
in which the permitting authority, which in most cases
win be a state, may exercise reasonable discretion.
V. '-'COLLMENCED CONSTRUCTION" FOP, P EASED CON-
STRUCTION PROJECTS
Section 1G5 of the Clean Air Act states that no major
emitting facility, on which construction is commenced
after 7 August 1977, may be constructed in any clean
air area unless -PSD permitting requirements are met.
For an industrial project that is to be constructed in
stages, as over a period of years, the meaning of the
phrase "construction is commenced" may determine
whether and to what extent PSD preconstruction review
applies. EPA has developed the practice of issuing a
single, comprehensive PSD permit for an entire project
with special conditions pertaining to each phase of
construction.
82128 CONG. REC. S2170 (daily ed. 8 June 1977) (emph.isis
;id
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In this part, we review regulations of EPA that con-
dition the granting of a comprehensive PSD permit for
a phased construction project on: (1) independent BACT
review of each phase of the project, (2) actual com-
mencement of construction of each phase within eigh-
teen months of the target elate specified in the original
application, v,?ich a variance procedure available only lor
the commencement date of the first phase of the project,
and (3) avoidance of any interruption in the course of
construction of any particular phase for longer than
eighteen months. EPA's regulations also suggest, vary
specifically, that power company multi-boiler construction
projects will not be eligible under any circumstances lor
a comprehensive, multi-phase PSD permit. EPA's regu-
lations allow a comprehensive permit for construction
projects that are to be completed in phases, thus avoiding
a separate permit proceeding for each phase.
The important statutory section for our evaluation of
these regulations is Clean Air Act section 169(2) (A),
which provides:
The term 'commenced' as applied to construction
of a major emitting facility means that the owner
or operator has obtained all necessary preconstruc-
tion approvals or permits required by . . . air quality
laws or regulations and either has (i) begun ... a
continuous program of physical on-site construction
of the facility or (ii) entered into binding agree-
ments or contractual obligations, which cannot be
canceled or modified without substantial loss to the
owner or operator, to undertake a program of con-
struction of the facility to be completed within a
reasonable time.9'4
This section provides little guidance concerning the
meaning of commencing construction, in the case of a
multi-phase construction project, for which on-site con-
M Clean Air Act §169(2) (A), 42 U.S.C. §7479(2) (A)
(Supp. 1 1977).
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structioii may have begun, and contractual obligations
may hnve -bean assumed, for only one of several phases
of the entire project. SPA has sought to provide guid-
ance on this issue in its PSD regulations. The pertinent
regulation reads:
Approval to eonsl.vuct I.a nv-vjor emitting facility]
shdi bscorne invalid if construction is not com-
menced within IS months after receipt of such ap-
proval if construction is discontinued for a period
of IS months or more, or if construction is not
completed within a reasonable, time. The Adminis-
trator may extend the 18-month period upon a satis-
factory showing that an extension is justified. This
provision dues not applii to the time period between
coii^irnction of ti;-c approved phases of a phased
co luir nation project; cadi pitase •must commence
construction within IS months of the projected and
approved cornmencc-ment date.1*
The preamble to the final regulations adds the signifi-
cant, qualification that a comprehensive PSD permit for
multi-phase construction projects will be issued only
where the phases are '''mutually dependent." ee
As an exception, EPA regulations cite a power com-
pany's '''three-boiler project" as an instance in which a
second construction phase would be subject to renewed
PSD review if construction on that phase were not com-
« 40 C.F.ft. § 52.21 (s) (2) (1978) (emphasis added).
86 43 Fed, Reg. 26,388, 26,396 (1978). The preamble states:
In general, ii' the phases of the major facilities in-
volved ;;re mutually dependent and one of the major
facilities has, by un applicable grandfather date, com-
menced construction, then all other dependent facilities-
specifically approved for construction at the same time
v/ill also hold such status. Conversely, each independent
facility must individually commence construction by the
. prescribed grandfather clate(s).
Id. (footnote omitted).
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menced within eighteen months of issuance of the origi-
nal permit, even if "there may be a phased construction
process at the sfune general site" of all three boilers/"7
Similarly, a footnote to this preamble appears to single
out power company boilers for special treatment:
The dependence of facilities within n source will
be determined on an individual basis. Two or more
facilities will generally be considered dependent ii:
the construction of one would necessitate the con-
struction of the other facility (ies) at the same site
in order to complete a given project or provide a
given type (not level of) service. A kraft pulp mill
is an example of a source with dependent facilities,
whereas a three-boiler power plant is a typical exam-
ple of a source with major independent facilities.**
Petitioning utility companies object to their apparent
exclusion from EPA's special provision for rnulti-phaso
permitting and charge that such exclusion is arbitrary.
These petitioners also object to EPA's refusal to con-
sider granting specific exemptions from the eighteen-
month commencement deadline for construction of all but
the first phase oJ: a multi-phase project. With regard to
EPA's rules for phased construction aside from these two
points, however, petitioners concede that in general EPA
has taken a rational approach.03
We find EPA's regulations on these matters to be
within the Agency's statutory authority. The conditions
imposed by EPA on the granting of a multi-phase con-
struction permit are- reasonable. Finally, the ineligi-
bility of utility company multi-boiler projects for multi-
" Id.
98Id. n.6 (emphasis added).
90 See Reply Brief of Alabama Power Company, .et a!, en
Stack Height and Commenced Construction at 9.
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phase PSD permits is. consistent v/ith the reasoning be-
hind the multi-phase PSD program and has not, on this
record, been shown to be arbitrary or capricious.
As described in Part I, the Agency has considerable
discretion to define the terras "source" and "major emit-
ting facility." Within the limits of the statutory lan-
guage, EPA couid define each phase of a multi-phase
construction project as a separate source—so long as each
phase couid reasonably be termed a structure, building,
facility, or installation—or it could define the entire
project as a single source, so long as it was reasonably
one facility, or installation, etc. Ii' a particular phase
is deemed a separate source, then EPA has statutory
authority to require for it a. separate permit. But. EPA
also has statutory authority to issue a singI-3 permit
covering all phr.ses of the project. If the Agency deems
the project to ne a single source, then a single permit
would of course be appropriate; if it considers each phase
to constitute a separate source, it may still issue a single
permit covering all phases, so long as the pemiit pre-
requisites are satisfied as to each phase.
We find that the Agency reasonably exercised its "dis-
cretion by providing for a comprehensive PSD permit
for any project on a common site the phases of which
are mutually dependent. This is a wise measure to re-
duce regulatory burdens and facilitate construction. It
is valid whether or not the whole project can be deemed
a single "source" in light of Part I of this opinion.
The limitations on the use of the comprehensive permit
are also valid. To require mutual dependence is a rea-
sonable threshold standard. While it might be economi-
cally preferable to issue a comprehensive permit when-
ever economies of scale are achievable through a com-
prehensive project, the Act leaves EPA discretion to
issue separate permits for phases that can be deemed
separate sources; and the Agency's action here does not
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rjO
amount to an abuse of that discretion. The time limits
for commencement of construction l°° are reasonable, in
order to prevent construction projects from reserving, for
too long in the future, a disproportionate share of avail-
able pollution increments. The same rationale amply
supports the restriction on gaps in construction progress
exceeding eighteen months, and the refusal to grant
variances except for the commencement date of the first
phase. There is no need for EPA to re-propose these
rules, as they represent reasonable revisions of the origi-
nally proposed rules in light of comments received.101
Finally, utility companies object specifically to the
statement, in the preamble to the^-e regulations, that a
three-boiler pov/er plant is a typical example of a, source
vrith major independent facilities.102 Whare multi-boiler
plants can utilize shared water, cooling, and other fa-
cilities, the.re is certainly an economy of scale, and EPA's
regulation will reduce the certainty of industry that
future boiler construction will pass PSD review. But
EPA balanced this interest against the danger that com-
prehensive permits for multiple boiler' units would pre-
empt available pollution increment into the future. There
is support in the legislative history for giving this ad-
verse treatment to construction of multiple boiler units;
the Senate Committee Report stated that most contracts
for construction of multiple utility boiler units do not
maet the statutory standard for •'commenced construc-
tion." 10:1 Therefore EPA's treatment of utility boilers
is not an abuse of discretion.
100 See 43 Fed. Reg. 26,358, 26,398 (1978).
101 See International Harvester Co. v. Rucfcelshaus. 478 F.2d
615, 632 & n.5i (D.C. Cir. 1973).
102 See 43 Fed. Reg. 26,388, 26,396 n.6 (1978).
loaS. REP. No. 127, 95th Cong., 1st Sess. S3 (1977).
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