Sierra Club v. Envtl. Prot. Agency, 10–1413.

• Decision Date: 22 January 2013
• Docket Number: No. 10–1413.,10–1413.
• Citation: 705 F.3d 458
• Parties: SIERRA CLUB, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY and Lisa Perez Jackson, Administrator, Respondents Utility Air Regulatory Group, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

705 F.3d 458

SIERRA CLUB, Petitioner

v. ENVIRONMENTAL PROTECTION AGENCY and Lisa Perez Jackson, Administrator, RespondentsUtility Air Regulatory Group, Intervenor.

No. 10–1413.

United States Court of Appeals,District of Columbia Circuit.

Argued Sept. 24, 2012.

Decided Jan. 22, 2013.

On Petition for Review of Final Actions of the United States Environmental Protection Agency.

David S. Baron argued the cause for petitioner. With him on the briefs were Seth L. Johnson and Emma C. Cheuse.

Jessica O'Donnell, Attorney, U.S. Department of Justice, argued the cause for respondents. With her on the brief were Brian L. Doster, Assistant General Counsel, U.S. Environmental Protection Agency, and Scott J. Jordan, Attorney.

Andrea Bear Field, Makram B. Jaber, Lucinda Minton Langworthy, and Elizabeth L. Horner were on the brief for intervenor Utility Air Regulatory Group in support of respondent.

Before: SENTELLE, Chief Judge, GRIFFITH, Circuit Judge, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge:

In October 2010, the Environmental Protection Agency (“EPA”) issued a final rule establishing regulations for particulate matter less than 2.5 micrometers (“PM2.5”) under § 166 of the Clean Air Act (“the Act”), 42 U.S.C. § 7476. SeePrevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC), 75 Fed.Reg. 64,864 (Oct. 20, 2010). In this rule, the EPA established Significant Impact Levels (“SILs”) and a Significant Monitoring Concentration (“SMC”) for PM2.5, screening tools the EPA uses to determine whether a new source may be exempted from certain requirements under § 165 of the Act, 42 U.S.C. § 7475. 75 Fed.Reg. at 64,890–91, 64,895. Petitioner Sierra Club seeks review of this regulation.

After the Sierra Club filed its petition, the EPA acknowledged that portions of the rule establishing SILs did not reflect its intent in promulgating the SILs, and now requests that we vacate and remand some (but not all) parts of its PM2.5 SIL regulations. Notwithstanding the EPA's concession, the Sierra Club maintains that the EPA lacks authority to establish SILs and requests that we rule accordingly. The Intervenor, Utility Air Regulatory Group (“UARG”), on the other hand, urges us to uphold the SIL provisions EPA established, or alternatively, to remand the SIL provisions without ordering that they be vacated.

Although the EPA conceded that it needs to revise some of the SIL provisions, it continues to assert that the portions of its rule establishing the SMC were valid. For the reasons stated below, we accept the EPA's concession on the SILs, and vacate and remand some portions of the EPA's rule establishing SILs. We further conclude that the EPA exceeded its authority in establishing the SMC, and grant the Sierra Club's petition as to those portions of the EPA's rule.

I. BACKGROUND

A. The Clean Air Act

The Clean Air Act requires the EPA to set National Ambient Air Quality Standards (“NAAQS”) for various harmful air pollutants at levels necessary to protect the public health and welfare. 42 U.S.C. §§ 7401, 7409. Under the Act, the EPA must designate areas as attainment, nonattainment, or unclassifiable for each NAAQS. Id. § 7407(d)(1)(A). States have primary responsibility for implementing the NAAQS, and must submit a state implementation plan (“SIP”) specifying how the State will achieve and maintain compliance with the NAAQS. Id. § 7407(a).

In 1977, Congress amended the Act to add the Prevention of Significant Deterioration (“PSD”) provisions “to protect the air quality in national parks and similar areas of special scenic or recreational value, and in areas where pollution was within the national ambient standards, while assuring economic growth consistent with such protection.” Environmental Defense Fund v. EPA, 898 F.2d 183, 184 (D.C.Cir.1990) (citing 42 U.S.C. § 7470). When Congress enacted the PSD provisions, it established maximum allowable increases over baseline concentrations—also known as “increments”—for certain pollutants in § 163 of the Act. See 42 U.S.C. § 7473; Environmental Defense Fund, 898 F.2d at 184. For other pollutants, Congress delegated to the EPA the task of promulgating regulations to prevent the significant deterioration of air quality that would result from the emissions of these pollutants. 42 U.S.C. § 7476(a). For pollutants that the EPA began regulating after Congress enacted the PSD provisions, which includes PM2.5, the EPA must promulgate PSD regulations within two years of establishing the NAAQS for that pollutant. Id.

The PSD provisions also establish requirements for preconstruction review and permitting of new or modified sources of air pollution. See id. § 7475. Subsection 165(a) of the Act lists the requirements an owner or operator proposing to construct a new source or modify an existing source must meet before starting construction, which include acquiring a PSD permit for the facility. Id. § 7475(a)(1)-(2). Of relevance to this petition, § 165(a)(3) requires that an owner or operator proposing to construct a new major emitting facility or modify an existing facility demonstrate that emissions from construction or operation of the facility will not cause or contribute to any violations of the increment more than once per year, or to any violation of the NAAQS ever. Id. § 7475(a)(3).

Before a review of the § 165(a) requirements may be undertaken, however, either a State or the owner or operator of a facility applying for a PSD permit must conduct an analysis of the ambient air quality at the proposed site and in areas that may be affected by emissions from the facility for the relevant pollutants. Id. § 7475(e)(1). This analysis must include continuous air quality monitoring data gathered to determine whether the facility will exceed either the increments or the NAAQS. Id. § 7475(e)(2). The Act further mandates that this data be collected for a year before the date the applicant applies for a permit unless a State, in accordance with EPA regulations, “determines that a complete and adequate analysis for such purposes may be accomplished in a shorter time period.” Id. The results of the analysis must be made available to the public at the time of the public hearing on the application for a PSD permit. Id.

The Act requires States to address the PSD provisions in their SIPs. Id. § 7410(a)(2). The EPA has promulgated extensive regulations setting forth requirements and guidelines on how SIPs are to implement the PSD provisions. See40 C.F.R. § 51.166. For States without an EPA-approved SIP, the EPA has promulgated separate regulations implementing the PSD provisions. See40 C.F.R. § 52.21.

B. Regulatory Background: Establishing the PM2.5 Increment, SILs, and SMC

In 1997, the EPA revised its NAAQS to include standards for PM2.5, see62 Fed.Reg. 38,652 (July 18, 1997), and in 2006 revised the PM2.5 NAAQS, see71 Fed.Reg. 61,144 (Oct. 17, 2006). In 2007, the EPA proposed a rule establishing increments for PM2.5. See 72 Fed.Reg. 54,112 (Sept. 21, 2007). In this rulemaking, the EPA also proposed two screening tools that would exempt a permit applicant from some of the air quality analysis and monitoring required under the Act and EPA regulations: significant impact levels (“SILs”) and significant monitoring concentration (“SMC”). See id. at 54,138–42.

1. Significant Impact Levels

Under EPA regulations, the owner or operator of a proposed source or modification must undertake a source impact analysis to demonstrate “that allowable emission increases from the proposed source or modification, in conjunction with all other applicable emission increases or reductions (including secondary emissions), would not cause or contribute to” a violation of the increments or the NAAQS. 40 C.F.R. § 51.166(k); id. § 52.21(k). In the proposed rule, the EPA discussed adopting SILs for PM2.5, which the EPA defines as “numeric values derived by EPA that may be used to evaluate the impact a proposed major source or modification may have on the NAAQS or PSD increment.” 72 Fed.Reg. at 54,138. This numerical value, measured in micrograms per meter cubed (µg/m ³), is the level of ambient impact below which the EPA considers a source to have an insignificant effect on ambient air quality. 72 Fed.Reg. at 54,139. According to the EPA's proposed rule, “a source that demonstrates its impact does not exceed a SIL at the relevant location is not required to conduct more extensive air quality analysis or modeling to demonstrate that its emissions, in combination with the emissions of other sources in the vicinity, will not cause or contribute to a violation of the NAAQS at that location,” an analysis the EPA terms the cumulative impact analysis, or the cumulative air quality analysis. 72 Fed.Reg. at 54,139.

As the legal basis for adopting the SILs, the EPA cited Alabama Power Co. v. Costle, 636 F.2d 323 (D.C.Cir.1979). 72 Fed.Reg. at 54,139. In that case we discussed an administrative agency's de minimis authority to establish exemptions from statutory commands, holding that “[c]ategorical exemptions may ... 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.” 636 F.2d at 360. We further stated that “[u]nless Congress has been extraordinarily rigid, there is likely a basis for an implication of de minimis authority to provide exemption when the burdens of regulation yield a gain of trivial or no value.” Id. at 360–61. But that implied authority does not apply to situations “where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs.” Id. at 361. Applying this de minimis authority, the EPA explains...