New Jersey v. Envtl. Prot. Agency

989 F.3d 1038

State of NEW JERSEY, Petitioner

v.ENVIRONMENTAL PROTECTION AGENCY, Respondent

Air Permitting Forum, et al., Intervenors

No. 08-1065

United States Court of Appeals, District of Columbia Circuit.

Argued November 2, 2020

Decided March 5, 2021

Lisa J. Morelli, Deputy Attorney General, Office of the Attorney General for the State of New Jersey, argued the cause for petitioner. With her on the briefs was Gurbir S. Grewal, Attorney General. Jon C. Martin, Deputy Assistant Attorney General, entered an appearance.

Laura J. Brown, Attorney, U.S. Department of Justice, argued the cause for respondent. With her on the brief were Jeffrey Bossert Clark, Assistant Attorney General, Jonathan D. Brightbill, Principal Deputy Assistant Attorney General, and Brian L. Doster, Assistant General Counsel, U.S. Environmental Protection Agency. Eric G. Hostetler and Norman L. Rave Jr., Attorneys, U.S. Department of Justice, and Howard J. Hoffman, Counsel, U.S. Environmental Protection Agency, entered appearances.

Shannon S. Broome, San Francisco, CA, argued the cause for intervenors Air Permitting Forum, et al. in support of respondent. With her on the brief were Laura K. McAfee, Baltimore, MD, Charles H. Knauss, and Alexandra K. Hamilton. David M. Friedland, Stacy R. Linden, Richard S. Moskowitz, Harry M. Ng, and Michele M. Schoeppe, Washington, DC, entered appearances.

Before: Srinivasan, Chief Judge, Rogers and Walker, Circuit Judges.

Dissenting Opinion by Circuit Judge WALKER.

Rogers, Circuit Judge:

This petition for review concerns the rule promulgated by the Environmental Protection Agency ("EPA") upon remand in response to New York v. EPA , 413 F.3d 3 (D.C. Cir. 2005). There, states, environmental organizations, and industrial entities challenged the revision of the Clean Air Act's new source review ("NSR") program for preconstruction permitting of stationary sources of air pollution. This court held that "EPA acted arbitrarily and capriciously in determining that sources making changes need not keep records of their emissions if they see no reasonable possibility that these changes constitute modifications for NSR purposes," id. at 11, and remanded for EPA "either to provide an acceptable explanation for its ‘reasonable possibility’ standard or to devise an appropriately supported alternative," id . at 35–36. The State of New Jersey petitions for review on the grounds that the rule promulgated by EPA on remand adopts an arbitrary percent trigger and inadequately accounts for NSR enforcement. Concluding that challenges to the State's Article III standing lack merit, we deny the petition on the merits because the record confirms that EPA engaged in reasoned decisionmaking.

I.

Under the Clean Air Act ("Act"), "air pollution prevention ... and air pollution control at its source is the primary responsibility of States and local governments." 42 U.S.C. § 7401(a)(3) ; see also id . § 7407(a); Util. Air Regulatory Grp. v. EPA , 573 U.S. 302, 308, 134 S.Ct. 2427, 189 L.Ed.2d 372 (2014). The Act, in fact, establishes "a joint state and federal program for regulating the nation's air quality," Nat'l Ass'n of Clean Air Agencies v. EPA , 489 F.3d 1221, 1224 (D.C. Cir. 2007) (quoting Envtl. Def. v. EPA , 467 F.3d 1329, 1331 (D.C. Cir. 2006) ), directing EPA to formulate national ambient air quality standards ("NAAQS") that specify the maximum permissible concentrations of certain air pollutants, 42 U.S.C. § 7409(b)(1), and requiring states to develop EPA approved plans, known as State Implementation Plans ("SIPs"), describing how they will achieve and maintain the NAAQS, see id. § 7410; Texas v. EPA , 726 F.3d 180, 183 (D.C. Cir. 2013). "States that fail to comply with these requirements are subject to various sanctions and the imposition of a Federal Implementation Plan (‘FIP’)." Appalachian Power Co. v. E.P.A. , 249 F.3d 1032, 1037 (D.C. Cir. 2001) (citing 42 U.S.C. § 7509 ).

The new source review ("NSR") provisions of the Act apply to "major" stationary sources and emitting facilities, such as smelters, power plants, and refineries, that directly emit or have the potential to emit more than one hundred tons per year of any air pollutant. See 42 U.S.C. §§ 7602(j), 7479(1). NSR provisions "require ‘new and modified major stationary sources’ of air pollution to obtain preconstruction permits and to install pollution control technology in order to protect and enhance air quality." New York , 413 F.3d at 21 (citing 42 U.S.C. §§ 7475, 7502, 7503). The "specific pollution control requirements depend[ ] upon the geographic location of the source." New York v. EPA , 443 F.3d 880, 883 (D.C. Cir. 2006). The prevention of significant deterioration ("PSD") provisions apply to sources located in areas that meet the NAAQS, see 42 U.S.C. §§ 7470 – 7479, while more stringent nonattainment NSR ("NNSR") provisions apply to sources in areas that do not meet the NAAQS, see id. §§ 7501–7515; see also New York , 413 F.3d at 13.

All newly constructed major stationary sources must comply with NSR requirements. For existing sources, these requirements apply only to "major" modifications that will result in (1) a "significant emissions increase" and (2) a "significant net emissions increase" of one or more regulated pollutants. See, e.g. , 40 C.F.R. § 52.21(a)(2)(iv). A "significant emissions increase" is defined by numeric significance levels for each regulated pollutant. See, e.g. , id. § 52.21(b)(40). NSR requirements do not apply to routine maintenance, repair, and replacement. See, e.g. , id. § 52.21(b)(2)(iii)(a). States are additionally required to administer programs to regulate "the modification and construction of any stationary source ... as necessary to assure that national air quality standards are achieved." 42 U.S.C. § 7410(a)(2)(C). Modifications not subject to PSD or NNSR requirements may nonetheless be subject to these "minor NSR" requirements.

In 2002, EPA revised the methodology to be used by sources to determine whether a modification is "major" and therefore subject to NSR requirements. See Prevention of Significant Deterioration and Nonattainment New Source Review, 67 Fed. Reg. 80,186 (Dec. 31, 2002) (codified at 40 C.F.R. §§ 51, 52) ("2002 Rule"). Two aspects of the 2002 Rule are relevant to the instant petition. First, the 2002 Rule adopted the "actual-to-projected-actual" methodology, so a "significant emissions increase" is projected to occur if the difference between the source's baseline actual emissions and its projected actual emissions equals or exceeds the significance level for that pollutant. See, e.g. , 40 C.F.R. § 52.21(a)(2)(iv)(c). To calculate projected actual emissions, a source "[s]hall consider all relevant information, including but not limited to, historical operational data, the company's own representations, the company's expected business activity and the company's highest projections of business activity, the company's filings with the State or Federal regulatory authorities, and compliance plans under the approved State Implementation Plan." See, e.g. , id. § 52.21(b)(41)(ii)(a). This calculation "[s]hall include fugitive emissions to the extent quantifiable, and emissions associated with startups, shutdowns, and malfunctions." See, e.g. , id. § 52.21(b)(41)(ii)(b). It "[s]hall exclude ... any increased utilization due to product demand growth." See, e.g. , id. § 52.21(b)(41)(ii)(c). Second, the 2002 Rule mandated compliance with its recordkeeping and reporting requirements if a source determined that (1) a modification did not trigger NSR, and (2) there was still a "reasonable possibility" that the modification would result in a "significant emissions increase." See, e.g. , id . § 52.21(r)(6). The 2002 Rule did not define the term "reasonable possibility."

The court upheld the 2002 Rule's "actual-to-projected-actual" methodology while holding that its "reasonable possibility" standard was arbitrary and capricious. New York , 413 F.3d at 10–11, 33–36. The 2002 Rule "allow[ed] sources that take advantage of the ‘reasonable possibility’ standard to avoid recordkeeping altogether" without providing any explanation as to how EPA could prove NSR transgressions if sources deciding no reasonable possibility of a significant emissions increase exists kept no data. Id . at 35. EPA also failed to explain how, absent such data, reporting requirements of the Act's Title V program and minor NSR programs provided enforcement authorities with the relevant information. Id . The court observed that the "intricacies of the actual-to-projected-actual methodology will aggravate the enforcement difficulties stemming from the absence of data." Id.

In response to the court's remand, EPA issued a notice of proposed rulemaking and sought comments on two options for defining "reasonable possibility," including its preferred option of using 50 percent of the applicable significance level for a regulated pollutant as the trigger for NSR recordkeeping and reporting requirements. See Prevention of Significant Deterioration and Nonattainment New Source Review: Reasonable Possibility in Recordkeeping, 72 Fed. Reg. 10,445, 10,449 (proposed Mar. 8, 2007). Thereafter, upon considering comments, EPA promulgated the final rule. See Prevention of Significant Deterioration and Nonattainment New Source Review: Reasonable Possibility in Recordkeeping, 72 Fed. Reg. 72,607 (Dec. 21, 2007) (codified at 40 C.F.R. §§ 51.165, 51.166, 52.21 ) ("Rule"). The Rule provides that:

"(vi) A ‘reasonable possibility’ under paragraph (a)(6) of this section occurs when the owner or operator calculates the project to result in either:

(A) A projected actual emissions increase of at least 50 percent of the amount that is a ‘significant emissions increase,’ as defined under paragraph (a)(1)(xxvii) of this section (without reference to the amount that is a significant net emissions increase), for the regulated NSR pollutant; or

(B) A projected actual emissions increase

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