On March 4, 2013, the Environmental Protection Agency (EPA) issued a Question and Answer (QA) document addressing how the agency intends to deal with the　January 22, 2013 decision of the United States Court of Appeals for the District of Columbia Circuit which vacated portions of the PM2.5 implementation rule concerning the use of significant impact levels (SIL) and significant monitoring concentrations (SMC). See Sierra Club v.EPA, No. 10-1413 (D.C. Cir. 1/22/13). EPA also stated its intent to issue guidance on how to conduct air quality analyses to support Prevention of Significant Deterioration (PSD) permits and initiate a proposed rulemaking action to address the vacatur.

The January 22, 2013 vacatur created significant uncertainty in the regulated community, and the QA document represents EPA’s first published guidance document on the topic addressed to permitting authorities. As the QA document notes, the vacatur does not become effective until seven days after the last day for filing a request for rehearing (approximately March 15, 2013) and although the QA document states the federal government has not yet decided whether to seek a rehearing, EPA urges permitting authorities to immediately comply with the court’s decision.

The QA document provides answers to some very important questions, however it still leaves much uncertainty, especially for those permit applications currently pending review.

Background

Pursuant to its authority under the Clean Air Act (CAA), EPA has set National Ambient Air Quality Standards (NAAQS) to protect public health and welfare. 42 U.S.C. § 7409(b). A source subject to the PSD permitting program must demonstrate that emissions from its construction or operation "will not cause, or contribute to" air pollution in excess of any established NAAQS or any promulgated maximum allowable increase in ambient pollutant concentrations above an existing baseline concentration – this is called an "increment." An increment is determined based on geography. Sources in areas designated as Class I, Class II and Class II areas will be subject to different increments. Pursuant to CAA §165 (42 U.S.C. § 7475), a proposed source must make this demonstration by collecting pre-construction ambient air monitoring data.

By the 2010 rule, EPA amended PM_2.5 requirements under the PSD program to include a PM2.5 increment and two screening tools – the SIL and SMC – to help determine if a facility’s construction or operation will exceed the PM_2.5 NAAQS or increment. The SIL was promulgated to determine if emissions from a modification would bede minimis, such that a full facility impact analysis would not be required. The SMC was similarly promulgated to determine if a source’s impact or the existing PM_2.5 ambient concentrations are de minimis, such that pre-construction monitoring would not be required.

Although the 2010 rule promulgated these screening tools specifically for PM_2.5, EPA has used these tools since 1980 to limit the number of sources required to conduct in-depth analyses and pre-construction monitoring for other pollutants. Regardless of EPA’s long history utilizing these tools, the Court found the relevant statutory language was clear and that EPA exceeded its authority when it created these tools in the context of the 2010 PM_2.5 rule.

The Court’s Decision

As noted above, the Court vacated and remanded the portions of the PM_2.5 rule which permit SILs and SMCs to determine if a source’s emissions are de minimis and require no further investigation or analysis. The effect of a vacatur is that the vacated portions of the rule effectively disappear, as if they were never promulgated. However, and most importantly, the Court’s decision was limited to the use of the PM_2.5 SILs and SMCs that were created in the 2010 rule. The Court specifically declined to address Sierra Club’s question of whether EPA generally has authority to promulgate SILs because,

"[t]o do so would require that we answer a question not prudentially ripe for determination. On remand, the EPA may promulgate regulations that do not include SILs or that do include SILs that do not allow the construction or modification of a source to evade the requirements of the [CAA] as do the SILs in the current rule. In such an event, we would not need to address the universal allowance of all de minimis authority."

Sierra Club v. EPA, at 11.

The QA Document

EPA’s March 4, 2013 QA document appears to pick up on the Court’s holding and provides states with interim directives for implementing the PM_2.5 PSD program. In brief summary, the QA document clarifies that states have the ability to continue using PM_2.5 SILs in PSD permitting, but must do so with caution and a full explanation of the justifications for doing so. On this point, the most critical portions of the QA document provide as follows:

May the PM_2.5 SILs be used to complete the required PM_2.5 air quality analysis in light of the court’s decision?

• The EPA does not interpret the Court’s decision to preclude the use of SILs for PM_2.5 entirely but additional care should be taken by permitting authorities in how they apply those SILs so that the permitting record supports a conclusion that the source will not cause or contribute to a violation of the PM_2.5 NAAQS .
• PSD permitting authorities have the discretion to select PM_2.5 SIL values if the permitting record provides sufficient justification for the SIL values that are used and the manner in which they are used to support a permitting decision.
• The PM_2.5 SIL values in the EPA’s regulations may continue to be used in some circumstances if permitting authorities take care to consider background concentrations prior to using these SIL values in particular ways.
• As part of a cumulative analysis, the applicant may continue to show that the proposed source does not contribute to an existing violation of the PM_2.5 NAAQS by demonstrating that the proposed source’s PM_2.5 impact does not significantly contribute to an existing violation of the PM_2.5 NAAQS. However, permitting authorities should consult with the EPA before using any of the SIL values in the EPA’s regulations for this purpose (including the PM_2.5 SIL value in section 51.165(b)(2), which was not vacated by the Court).

How does the Court’s decision on PM_2.5 SILs and SMC affect permits already issued?

• The EPA believes that sources with final PSD permits are not likely to be affected by the Court’s decision, since they were issued in accordance with the rules in effect at that time.

Impact on Wisconsin

It is currently unclear what impact this decision will have on sources in Wisconsin, especially those sources that are midway through a PSD permitting process and have relied on SILs for PM_2.5.

There are a number of factors that will go into the Wisconsin-specific implementation of the Sierra Club v. EPA decision. For example, there may be a legal argument that the Sierra Club v. EPA decision cannot be applied to Wisconsin’s air program because of our state-specific regulatory language. Moreover, recall that WDNR issued a detailed guidance document in April 2011 which outlines when a source must conduct detailed modeling and when such modeling is not required. Based on this WDNR guidance (before this decision was issued), a Wisconsin source would be required to model only a proposed new piece of equipment and, if it’s emissions modeled below the SIL, no additional modeling would be required; however now, there may be questions raised as to whether the WDNR’s guidance is still applicable.

Sources who are considering submitting an air permit application or who are midway through the permitting process should carefully consider the optional paths for moving forward to ensure that new investment dollars are not sacrificed because of this regulatory development.