DC Circuit Court Vacates and Remands PM2.5 SILs and SMC

In a decision that could have far reaching permitting implications, the United States Court of Appeals for the District of Columbia Circuit (Court) on January 22, 2013 vacated and remanded portions of the U.S. EPA rule establishing significant impact levels (SILs) and vacated the rule establishing the significant monitoring concentration (SMC) for particulate matter less than 2.5 micrometers (PM_2.5).  SILs and SMCs are screening tools that are used by regulatory authorities to determine whether a new source or a major modification to an existing source may be exempted from certain requirements (e.g., source impact analysis and pre-construction pollutant monitoring) under §165 of the Clean Air Act (CAA).

Significant Impact Levels

The petitioner (Sierra Club) argued that the U.S. EPA lacked de-minimis authority to promulgate SILs and that the adoption of the SILs is “contrary to the legislative design of the CAA”.  The petitioner contended that even minor emissions impacts (e.g. below the SIL) that are associated with a proposed new source or modification could cause or contribute to a violation if the source was in an area that was close to violating a national ambient air quality standard (NAAQS) or PSD increment.  Because emissions impacts are below the SIL, the regulatory authority would automatically exempt the source from a NAAQS analysis.  The petitioner also contended that a situation could exist where multiple sources with ambient impacts less that the SIL could cause a cumulative violation of the NAAQS or increment.

The U.S. EPA essentially folded on the SIL issue and admitted that the SIL provisions in the rule were indeed “flawed.”  It was U.S. EPA’s intent to allow permitting authorities the leeway to seek remedial action from the source in circumstances where an impact below a SIL will cause or contribute to an air quality problem.  However, the final regulatory text was structured in such a way that it did not allow regulatory authorities the discretion to require a cumulative impact analysis in such instances. The U.S. EPA ultimately requested that the Court vacate and remand the regulatory text regarding PM_2.5 SILs promulgated in the rule at 40 CFR §§51.166(k)(2) and 52.21(k)(2).

The United Air Regulatory Group (UARG) intervened to argue that a vacatur and remand of the SIL rules was not needed.  UARG argued that:

1. “The premises that an agency’s interpretation of its own regulations is given deference, and that the EPA has interpreted the SIL provisions so that permitting authorities retain discretion in applying the SILs,”
2. “A remand is unnecessary because the EPA requires permitting authorities to address violations by revising their SIPs,” and
3. If the SIL regulations are remanded, they should not be vacated – referring to a previous Court holding in Fertilizer Institution v. EPA where the Court stated that “when equity demands, an unlawfully promulgated regulation can be left in place while the agency provides the proper procedural remedy.”

The Court disagreed with the intervenors positions and vacated and remanded the §§51.166(k)(2) and 52.21(k)(2) SIL PM_2.5  provisions, basing their decision on the U.S. EPA’s lack of authority to exempt sources from the requirements of the CAA. As a consolation prize, the Court ruled that vacatur and remand of the SIL provisions at §51.165(b)(2) was determined to not be necessary because that provision (addressing SILs in nonattainment areas) simply states that a source may be deemed to violate the NAAQS if it exceeds the SILs in certain situations.  

Significant Monitoring Concentrations

Similar to the approach taken with regard to SILs, the Sierra Club argued that the U.S. EPA does not have de minimis authority to promulgate an SMC for PM_2.5 that can be used to exempt a source or modification from the pre-construction air quality monitoring required by §165(e)(2) of the CAA. The U.S. EPA argued that the Sierra Club challenge was “time barred” because U.S. EPA has been using SMCs as a screening tool since 1980 and petitioners seeking review of a U.S. EPA regulation must file petitions sixty (60) days from their publication in the Federal Register.  The Court disagreed with U.S. EPA citing U.S. EPA’s promulgation of new regulation identifying an SMC for PM_2.5, a pollutant that was not regulated in 1980.  U.S. EPA thereby “exposed” the regulation by establishing a new monitoring exemption (SMC) for a new pollutant (PM_2.5).

The Court viewed the preconstruction monitoring requirements of §165(e) of the CAA as “extraordinarily rigid” and cited Congress’s use of the word “shall” in the appropriate sections of §165(e)(2) of the CAA as a “clear legislative mandate” that the preconstruction monitoring requirement applies to prevention of significant deterioration (PSD) permit applicants.  The Court was very definitive in their opinion by inferring Congressional reasoning associated with the statutory language and citing several technical reasons why preconstruction monitoring would be mandated.

The Court granted Sierra Club’s petition regarding the parts of the rule establishing a PM_2.5 SMC, and vacated them, stating that these parts of the rule exceeded the U.S. EPA’s statutory authority. At present, the vacatur is limited to the PM_2.5 SMC because the Court has “not yet decided whether the EPA’s de minimis authority allows it to establish SMCs as a screening tool to determine when to exempt sources from the Act’s preconstruction monitoring requirement.”

What Does It All Mean?

Taking the Court’s decision at face value, a new major source or a major modification at an existing major stationary source involving PM_2.5 would need to collect PM_2.5 preconstruction monitoring data in advance of a PSD permit application and would also need to complete an ambient air quality impacts analysis including a multi-source NAAQS and increment analysis.  The implications to the applicant are significant from both a project timing and cost basis.  The implications are also significant from a regulatory agency perspective as state permitting resources, already understaffed in many jurisdictions, will likely be burdened with significant new oversight and technical review responsibilities.

Because of the definitive nature of the Court’s decision (e.g., establishing SMCs for PM_2.5 exceeded the U.S. EPA’s statutory authority), it seems fair to assume that the remaining SILs and SMCs will be challenged as well.   Overall, the new source review (NSR) process continues to evolve (or devolve depending upon one’s point of view). The NAAQS related changes and interpretations over the past several years are making the permitting of new major sources or major modifications in many locations increasingly onerous from a project timing and cost basis, and even threatening the viability of economically sound projects.  It is evident that strategic air quality planning and innovative air quality permitting approaches that seek to avoid triggering NSR are becoming increasingly important considerations for facilities planning new construction or expansion projects.