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. e du/thir dc ir c uit_2000/245Filed December 7, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-6321

STAR ENTERPRISE; TEXACO INC.,

Petitioners

v.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

Respondent

On Petition for Review of a Final Action by The United States Environmental Protection Agency

Argued July 15, 1999

Before: ROTH and RENDELL, Circuit Judges POLLAK,1 District Judge

(Opinion filed: December 7, 2000)

William H. Lewis, Jr., Esquire Michael W. Steinberg, Esquire (Argued) Morgan, Lewis & Bockius LLP 1800 M Street, N.W. Washington, D.C. 20036-5869

___________________________________________________ ______________ 1. Honorable Louis H. Pollak, United States Distric t Court Judge for the Eastern District of Pennsylvania, sitting by design ation.Jeffrey N. Hurwitz, Esquire

Morgan, Lewis & Bockius LLP

1701 Market Street Philadelphia, PA 19103-2921

Counsel for Petitioners

Lois J. Schiffer Assistant Attorney General

Norman L. Rave, Esquire (Argued) United States Department of Justice

Environmental Defense Section

P.O. Box 23986 Washington, DC 20026-3986

Diane McConkey, Esquire

Office of General Counsel

United States Environmental Protection Agency

Charles McPhedran Senior Assistant Regional Counsel

United States Environmental Protection Agency

Counsel for Respondent

OPINION OF THE COURT

ROTH, Circuit Judge:

The United States Environmental Protection Agency ( EPA)

determined that the "Standards of Per formance for Petroleum Refineries," promulgated under the Clean Air Act and codified at 40 C.F.R. SS 60.100-60.109 (1999) ( Subpart J), applied to two stationary gas turbines located in an electrical power plant complex in Delaware City, De laware. The petitioners challenge this determination. Becau se we conclude that the stationary gas turbines at issue in this case are not "in" a "petroleum r efinery," we hold that these

turbines are not "affected facilities" as defined a t 40 C.F.R. S 60.100(a) and therefore ar e not subject to regul ation

under the "Standards of Perfor mance for Petroleum

2Refineries." For that reason, the EP A erred in det ermining

that these performance standards ar e applicable to the gas

turbines at issue in this case.

I. FACTS

Petitioners, Motiva Enterprises, LLC, and Texaco, I nc., challenge a final agency action, issued on July 21, 1998, by the Environmental Protection Agency.2 This final ac tion, entitled "New Source Performance Standards Subpart J Applicability Determination for the Star Enterprise Petroleum Refinery in Delaware City, Delaware," set forth the EPA's conclusion that two stationary gas turbin es, owned by Motiva and located in an electrical power plant complex adjacent to Motiva's petroleum r efinery in Delaware City, are subject to regulation under the New Source Performance Standards (NSPS) for Petroleum Refineries, codified at 40 C.F.R. SS 60.100-60.109.

Before addressing the merits of the petitioners' ch allenge, we will discuss the relevant regulatory framework. The emission of sulfur dioxide (SO2), which causes acid rain and has serious adverse health effects, particularl y among asthmatics, is regulated by the EPA under the Clean Air Act. See, e.g., American Lung Ass'n v. Environmenta l Protection Agency, 134 F.3d 388, 389-90 (D.C. Cir. 1998). Section 111 of the Clean Air Act, codified at 42 U. S.C. S 7411, authorizes the EPA to pr omulgate performan ce standards for new and modified sources of pollution that the EPA concludes cause or significantly contribute to air pollution. See 42 U.S.C. S 7411(b) (2000). These st andards, the NSPS's, must:

[R]eflect[ ] the degree of emission limitati on achievable through the application of the best system o f emission reduction which (taking into account the cos t of

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2. On October 1, 1998, all assets of Star Enterpris e, including the facilities at issue in this case, were transferred to Motiva. Petitioners

filed a motion on July 15, 1999, to formally substitute M otiva for Star Enterprise in this litigation. The motion was unopp osed and was granted. Thus, Motiva and Texaco became the petitio ners and parties of interest. We refer to both Motiva and Star througho ut this opinion as appropriate.

3achieving such reduction and any nonair qual ity health

and environmental impact and energy r equire ments) the Administrator determines has been adequa tely

demonstrated.

42 U.S.C. S 7411(a)(1) (2000). NSPS's apply only to "affected facilities" that were constructed, modified or reco nstructed after the publication of the applicable proposed re gulation.3 Each NSPS explicitly defines and describes the"affe cted facilities" to which it applies.

The EPA has issued NSPS's for over 70 "sour ce" categories. Most of these NSPS's relate to specific industries such as glass manufacturing, see 40 C.F .R. SS 60.2 90- 60.296 (1999), nitric acid manufacturing, see 40 C .F.R. SS 60.70-60.74 (1999), ferroalloy pr oduction, see 40 C.F.R. SS 60.260-60.266 (1999), copper smelting, see 40 C. F.R. SS 60.160-60.166 (1999), and the NSPS at issue here

, Subpart J, petroleum refining, see 40 C.F.R. SS 60 .100- 60.109 (1999). The EPA has also issued NSPS's for g eneric source categories. These generic source NSPS's appl y to specific types of industrial equipment regar dless of the purpose for which the equipment is used. Examples o f generic source categories include incinerators, see 40 C.F.R. SS 60.50-60.54 (1999), r ecently constructed fossilfuel-fired steam generators, see 40 C.F.R. SS 60.40 -60.46 (1999), and stationary gas turbines, see 40 C.F.R. SS 60.330-60.335 (1999) (Subpart GG).4

NSPS Subpart J, "Standards of Perfor mance for Petroleum Refineries," was designed to r educe SO2 emissions from petroleum refineries. As set forth i n S 60.100, the provisions of Subpart J"are applicabl e to the following affected facilities in petroleum refineri es: fluid catalytic cracking unit catalyst regenerators, fuel gas combustion devices, and all Claus sulfur r ecovery plants

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3. See 40 C.F.R. S 60.1(a) (1999) ("[T]he provision s of this part apply to the owner or operator of any stationary sour ce whi ch contains an affected facility, the construction or modification of which is commenced after the date of publication in this part of any s tandard (or, if earlier, the date of publication of any proposed standar d) applicable to that facility.").

4. See supra Part IV C for further on Subpart GG.

4except Claus plants of 20 long tons per day (L TD) or less."

40 C.F.R. S 60.100(a) (1999) (emphasis added). Subp art J goes on to define a "petroleum refinery" as "any fa cility engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other pr oducts through distillation of petroleum or through r edistillatio n, cracking or reforming of unfinished petr oleum derivatives." 40 C.F.R. S 60.101(a) (1999). At issue in this case ar e two stationary gas turbines, turbines that the EPA contends are "f uel gas

combustion devices" and thus "affected facilities" (as set forth in S 60.100(a)), subject to regulation under Subpart J.5

The EPA initially proposed the NSPS for petroleum refineries in 1973 and issued the corr esponding fi nal regulation, what is now Subpart J, on Mar ch 8, 197 4. Recognizing that petroleum refineries pr ocess nume rous gases that contain significant amounts of hydr ogen sulfide (H2S) and that the uncontr olled combustion of thes e gases resulted in significant SO2 emissions, the EPA's pr imary goal in promulgating Subpart J was the r eduction o f SO2 emissions from petroleum refineries. Subpart J proh ibits the owner or operator of a "fuel gas combustion dev ice" located in a petroleum refinery fr om combusting an y "fuel gas" that contains H2S in excess of 230 milligrams per dry standard cubic meter. See 40 C.F .R. S 60.104(a)(1)

. Compliance with this standard can be established ei ther by monitoring the amount of H2S in the fuel being burn ed or by monitoring the amount of SO2 emitted from the fu el gas combustion device in question.6

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5. The term "fuel gas combustion device" is defined in Subpart J as "any equipment, such as process heaters, boilers andflar es used to combust fuel gas, except facilities in which gases ar e com busted to produce

sulfur or sulfuric acid." 40 C.F.R. S 60.101(g) (1999). Th e term "fuel gas" is further defined in Subpart J as "any gas which is g enerated at a petroleum refinery and which is combusted." 40 C.F. R. S 60.101(d) (1999). 6. In October 1990, the EPA established an"SO2 equi valence level" to allow regulated entities to monitor the amount of S O2 emitted after combustion in lieu of monitoring the amount of H 2S in the "fuel gas" prior to combustion. See 40 C.F.R.S 60.105(a)(3)(ii ) (1999). Based on the investigation "of typical fuel gas compositions and their combustion products," the EPA determined that the "SO2 equival ence level" set forth in S 60.105(a)(3)(ii) (20 parts per million (ppm), dry basis, zero percent excess air) was equivalent to an H2S level of 230 m illigrams per dry standard cubic meter. 55 Fed. Reg. 40,171, 40,172 ( Oct. 2, 1990).

5Consistent with the goal of reducing SO2 emissions from

petroleum refineries, the definition of "fuel gas" in Subpart J was modified on two separate occasions to exclude gases that do not contain significant amounts of H2S. Ori ginally, in 1974, "fuel gas" was defined as "any gas which i s generated by a petroleum refinery pr ocess unit and which is combusted, including any gaseous mixture of natu ral gas and fuel gas which is combusted." 39 Fed. Reg. 9308 , 9315 (Mar. 8, 1974). In March 1979, the EP A modified th e definition of "fuel gas" to include:

[N]atural gas or any gas generated by a petr oleum refinery process unit which is combusted sep arately or in any combination. Fuel gas does not includ e gases generated by catalytic cracking unit catalys t regenerators and fluid coking unit coke bur ners.

44 Fed. Reg. 13,480, 13,481 (Mar. 12, 1979). The de finition was changed in 1979 to explicitly exclude gases gen erated by "catalytic cracking unit catalyst regenerators a nd fluid coking unit coke burners" because such gases do not contain significant amounts of H2S.

By changing the definition of "fuel gas" in 1979, t he EPA arguably brought within the scope of the regulation natural gas produced off-site and transported to a petroleu m refinery via pipeline. The EPA had not intended to subject such natural gas to regulation under Subpart J beca use natural gas transported to a petroleum r efinery vi a pipeline contains only trace amounts of H2S due to specifica tions established to minimize pipeline corrosion. See 45 Fed. Reg. 13,991, 13,991 (March 3, 1980). The EPA, however, d id intend to regulate natural gas that was both pr odu ced and combusted on-site at a petroleum refinery:

In a few cases, however, a refinery may [its elf] generate natural gas. There may be no legal or techni cal requirement that this gas be desulfurized be fore combustion. If this gas contains appreciable hydrogen sulfide and sulfur constituents, significant emissions of

sulfur dioxide would result when it is bur n ed. The existing standards of performance were inten ded to cover these types of gases.

6Id. The EPA further noted that the"intent of the ex isting

standards of performance for r efinery fuel gas has always been to prevent the emissions of sulfur dioxide res ulting from the burning of gaseous fuels containing hydrog en sulfide." Id. To clarify this distinction (the dist inction between natural gas produced on-site at a petr oleu m refinery and natural gas transported fr om an off-s ite location via pipeline), the EPA proposed revising t he first sentence of the definition of "fuel gas" to read: " `Fuel gas' means natural gas generated at a petroleum r efiner y or any gas generated by a refinery process unit, which is combusted separately or in any combination with any type of natural gas." Id. The EPA ultimately received se veral comments indicating that this proposed language was confusing because gases produced at a r efinery wer e not generally considered "natural gas" even if their ch emical composition was similar to that of natural gas. See 45 Fed. Reg. 79,452, 79,453 (Dec. 1, 1980). In response to these comments, the EPA modified the definition of fuel g as one last time to include "any gas which is generated at a petroleum refinery and which is combusted." Id. The EPA

indicated that this final definition was meant to e ncompass "any gas which has the composition of natural gas." Id.

The stationary gas turbines at issue in this case a r e to be located in an existing electrical power plant compl ex adjacent to the Motiva petroleum refinery in Delawa re City. This power plant complex was originally owned and operated by Delmarva Power & Light Company.7 At the time of its construction in the mid-1950's, Delmarva ent ered into an agreement with Star, Motiva's pr edecessor in in terest, to provide steam and electricity to Star's adjacent pe troleum refinery. Delmarva owned and operated the power pla nt for 35 years. In January 1989, Star exercised its optio n to purchase the power plant from Delmarva, and actual ownership of the power plant was transferred in Jan uary 1992. Following the transfer of ownership, ther e w as no change in the purpose or operation of the power pla nt, and Delmarva has continued to operate the power plant. In connection with its acquisition of the power plant complex,

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7. In 2000, Delmarva changed its name to Conectiv. In this opinion, however, we will continue to refer to the company a s Delmarva.

7Star entered into an agreement with Delmarva to sup ply

electrical power on demand to the Delmarva power gr id from one of the boilers in the power plant.

The stationary gas turbines are part of a lar ger p roject being designed and constructed within the existing power plant complex in Delaware City. This pr oject, know n as the Repowering Project, is designed to replace and/or u pgrade certain existing power plant units at the power pla nt complex. Once operational, the Repowering Pr oject will convert high-sulfur petroleum coke produced at Moti va's adjacent petroleum refinery into synthesis gas, whi ch will then be burned in the stationary gas turbines at is sue to produce steam and electricity. The steam and electr icity will power Motiva's adjacent petroleum refinery; excess electricity will be sold to Delmarva and others on the commercial power grid.

On July 17, 1997, pursuant to 40 C.F.R. S 60.5, Sta r requested a determination of Subpart J nonapplicabi lity from the EPA Region III office. In essence, Star as ked the EPA to issue a ruling stating that Subpart J does n ot apply to the Repowering Project's stationary gas turbines

. Approximately one year later, the EP A responded by issuing

an action entitled "New Source Perfor mance Standar ds Subpart J Applicability Determination for the Star Enterprise Petroleum Refinery in Delawar e City, De laware" in which the EPA concluded that Subpart J applies t o Motiva's Repowering Project, and, more specifically , applies to the two stationary gas turbines that are part of the Repowering Project and will burn synthesis gas to p roduce steam and generate electricity. In reaching its con clusion, the EPA relied primarily on three facts: (1) the po wer plant that houses the Repowering Project is adjacent to M otiva's petroleum refinery, (2) the Repowering Project will provide electricity and steam to the Motiva's adjacent petr oleum refinery, and (3) Motiva owns not only the electric al power plant complex which houses the Repowering Pr oject but also the Repowering Project itself and the adjacent petroleum refinery.8

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8. The EPA also determined that because the aforeme ntioned "synthesis gas," which was to be combusted in the stationary g as turbines at issue

8The EPA's determination was initially communicated not

to Star but to the EPA Region III office. When Star learned of EPA's decision, it sought to withdraw its r eque st for a determination of nonapplicability. However , the St ate of

Delaware asked the EPA for a final determination be cause certain conditions to the issuance of a state const ruction permit were based on EPA's decision that Subpart J was applicable to the two stationary gas turbines.

The EPA finalized its determination on July 21, 199 8, and Star timely filed petitions for review with bot h this Court and the U.S. Court of Appeals for the Distric t of Columbia Circuit. On January 19, 1999, the U.S. Cou rt of Appeals for the District of Columbia Circuit grante d the EPA's motion to dismiss on venue grounds. The petit ion then proceeded before us.

II. JURISDICTION

We have appellate jurisdiction over this petition f or review pursuant to S 307(b)(1) of the Clean Air Act. See 4 2 U.S.C. S 7607(b)(1) (2000). Moreover, we note that despite earlier concerns about the justiciability of the pr esent c ontroversy, we are now persuaded that all the necessary pr ereq uisites to adjudicating this dispute have been met. Indeed, it is undisputed by the parties that the EPA deter minati on at issue is a final agency action, see, e.g., Bennett v. Spear, 520 U.S. 154, 177-78 (1997),9 that the EPA determin ation

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in this case, was generated "at" a petr oleum refin ery, this gas was a

"fuel gas" as defined in Subpart J. See 40 C.F.R. S 60.10 1(d) (1999). The parties to this action argue extensively as to whet her the "synthesis gas" burned in these stationary gas turbines is indeed " fuel gas" and as to whether the stationary gas turbines at issue ar e " fuel gas combustion devices" as these terms are defined in Subpart J. A s discussed infra, we hold today that Subpart J is inapplicable to the st ationary gas turbines

at issue in this case because the turbines ar e not located "in" a "petroleum refinery." We therefore need not reach t he question of whether the "synthesis gas" burned in these station ary gas turbines is a "fuel gas" or whether these turbines ar e "fuel gas combustion devices" as these terms are defined in Subpart J.

9. As the Supreme Court noted in Bennett :

9at issue is ripe for review, see, e.g., Ohio Forest ry Ass'n v.

Sierra Club, 523 U.S. 726, 733 (1998),10 and that a t least one of the petitioners, Motiva, has standing to cha llenge the EPA's determination, see, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).11

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[T]wo conditions must be satisfied for agenc y action to be "final": First, the action must mark the "consummatio n" of the agency's decisionmaking process, Chicago & Souther n Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 113 (1948 )--it must not be of a merely tentative or interlocutory natur e. And second, the action must be one by which "rights or obligations have been determined," or from which "legal consequences will flow, " Port of Boston Marine Terminal Ass'n. v. Rederiaktiebolaget T rans atlantic, 400 U.S. 62,

71 (1970).

Bennett, 520 U.S. 177-78. As the parties concede, a nd as the facts detailed above clearly indicate, the two conditions set forth in Bennett have been met. Thus, the EPA's determination is a f inal agency action and is reviewable by this Court.

10. As the Supreme Court stated in Ohio Forestry:

In deciding whether an agency's decision is, or is not, ripe for judicial review, the Court has examined both the "fitness of the issues for judicial decision" and the "har d ship to the parties of withholding court consideration." Abbott Lab oratories v. Gardner, 387 U.S. 136, 149 (1967). To do so in this c ase, we must consider: (1) whether delayed review would cause har d ship to the plaintiffs, (2) whether judicial intervention would inap pr opriately interfere

with further administrative action, and (3) wheth er the courts would benefit from further factual development of the issues presented.

Ohio Forestry, 523 U.S. at 733. As the parties conc ede, and as the facts detailed above clearly indicate, evaluation of the three factors

delineated in Ohio Forestry clearly demonstrates that the EPA' s determination is ripe for judicial review.

11. As the Supreme Court held in Lujan :

Over the years, our cases have established t hat the irreducible constitutional minimum of standing contains thr ee elements. First, the plaintiff must have suffered an"injury i n fact"--an invasion of a legally protected interest which is (a) co ncrete and particularized and (b) "actual or imminent, not `conjectura l' or `hypothetical.' " Second, there must be a causal connection be tween the injury and10III. STANDARD OF REVIEW

A necessary precursor to determining the appropriat e standard of review in this case is deter mining whe ther the agency action in question is an "interpretive rule" or a "legislative rule." Although petitioners contend th at the EPA's determination is an "interpr etive rule" rath er than a "legislative rule," and thus that the deter minatio n is entitled to little or no judicial deference, we con clude that the EPA's determination is a legislative rule. See, e.g., Wisconsin Elec. Power Co. v. Reilly, 893 F .2d 901, 904-05 (7th Cir. 1990) (en banc); National-Southwire Alumi num Co. v. EPA, 838 F.2d 835, 838, 841-42 (6th Cir. 1988); Potomac Elec. Power Co. v. EPA, 650 F.2d 509, 513 (4th Cir. 1981).

An agency determination is a "rule" under the

Administrative Procedure Act if it is a"statement o f general or particular applicability and future ef fect [and ] designed to implement, interpret, or prescribe law or policy . . . ." Dia Navigation Co. v. Pomeroy, 34 F.3d 1255, 1263 (3d C ir. 1994) (quoting 5 U.S.C. S 551(4)). Such a"rule" may be an "interpretive rule" or a "legislative rule." Id. at 1264. As we

stated in Dia:

If the rule is based on specific statutory p r ovisions, and its validity stands or falls on the correctn ess of the

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the conduct complained of--the injury has to be"fairly . . . trace[able] to the challenged action of the defendant, and not . .

. th[e] result [of] the independent action of some third party not

before the court." Third, it must be "likely," as o pposed to merely "speculative," that the injury will be "r ed ressed by a favorable

decision."

Lujan, 504 U.S. at 560. As the parties concede, and as the facts detailed above clearly indicate, the three requir ements set forth in Lujan have been met with respect to Motiva. Because Motiva has standing to bring suit, we need not reach the question of whether Tex aco has met the necessary constitutional and/or prudential standing requirements. See, e.g., Director, Office of Workers' Compensation Pro grams v. Perini N.

River Assocs., 459 U.S. 297, 303-05 (1983); V illage of A rlington Heights v. Metropolitan Hous. Dev. Corp., 429 U.S. 252, 263-64 & n.9 (1977). See generally Lujan, 504 U.S. at 560 (constitutional st anding); Hazardous Waste Treatment Council v. Thomas, 885 F.2d 918, 92 1-27 (D.C. Cir. 1989) (prudential standing).

11agency's interpretation of those provisions, it is an

interpretive rule. If, however, the rule is based on an agency's power to exercise its judgment as t o how best to implement a general statutory mandate, th e rule is likely a legislative one.

Id. (quoting United Techs. Corp. v. EPA, 821 F.2d 7 14, 719- 20 (D.C. Cir. 1987)).

Courts will reject an agency's interpretive rule if it is contrary to clear congressional intent. See Chevron , U.S.A., Inc. v. Natural Resources Defense Council, Inc., 46 7 U.S. 837, 843 n.9 (1984); American Ambulance Serv. v. Su llivan, 911 F.2d 901, 908 (3d Cir. 1990). If a statute is s ilent or ambiguous with respect to congressional intent, cou rts must defer to an agency's determination if the determination is consistent with a per missible con struction of the statute. See Chevron, 467 U.S. at 843-45; se e Beatty v. Danri Corp., 49 F.3d 993, 997 (3d Cir . 1995). " Varying degrees of deference are accor ded to administrativ e interpretations, based on such factors as the timin g and consistency of the agency's position, and the natur e of its expertise," Batterton v. Francis, 432 U.S. 416, 425 n.9 (1977), and an interpretive rule is not binding on the agency or this Court, see Armstead v. United States Department of Housing and Urban Development, 815 F. 2d 278, 282 (3d Cir. 1987). In contrast, a legislative rule, an agency's interpretation of its own regulation, is " controlling unless `plainly erroneous or inconsistent with the regulation.' " Auer v. Robbins, 519 U.S. 452, 461 ( 1997) (quoting Robertson v. Methow Valley Citizens Counci l, 490 U.S. 332, 359 (1989)); see Beatty, 49 F .3d at 997; Rodriguez v. Reading Hous. Auth., 8 F.3d 961, 965 ( 3d Cir. 1993).

Although the Third Circuit has yet to r eview an EP A determination under the Clean Air Act, the Fourth, Sixth, and Seventh Circuit Courts of Appeals have engaged in such review, with all three Circuits concluding tha t Congress, through the Clean Air Act, dir ected the EPA to promulgate New Source Perfor mance Standards. See Wisconsin Elec. Power Co., 893 F.2d at 904-905; Nat ionalSouthwire Aluminum Co., 838 F.2d at 838, 841-42; Po tomac Elec. Power Co., 650 F.2d at 513. The Fourth and Se venth

12Circuit Courts of Appeals have held that EP A

determinations made with respect to New Source Performance Standards are controlling unless plainl y erroneous or inconsistent with the regulation at is sue. See Wisconsin Elec. Power Co., 893 F.2d at 907; Potomac Elec. Power Co., 650 F.2d at 513. The Sixth Cir cuit, in contrast, has held that EPA determinations made with respect to New Source Performance Standar ds are controlling u nless "arbitrary, capricious, an abuse of discr etion, or otherwise

not in accordance with law." National-Southwire Alu minum Co., 838 F.2d at 836.

Section 111 of the Clean Air Act provides:

The Administrator shall . . . publish (and f r om time to time thereafter shall revise) a list of cate gories of stationary sources. He shall include a categ ory of sources in such list if in his judgment it c auses, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or

welfare.

42 U.S.C. S 7411(b)(1)(A) (emphasis added). Section 111 further provides:

Within one year [of making a list accor ding to the above provision], the Administrator shall pu blish proposed regulations, establishing Federal s tandards of performance for new sources within such cate gory. . . . [After opportunity is given for public comme nts and the comments are considered], he shall pr omulga te . . .

such standards with such modifications as he deems appropriate.

42 U.S.C. S 7411(b)(1)(B) (emphasis added).

These provisions clearly indicate that the EP A was directed by Congress to promulgate r egulations nec essary to implement the Clean Air Act. Thus, we conclude t hat EPA determinations interpreting New Source Performa nce Standards, once handed down, constitute "legislativ e rules." Consistent with our reasoning in Dia, as well as wi th Supreme Court jurisprudence and opinions in the Fou rth, Sixth, and Seventh Circuit Courts of Appeals, the E PA determination at issue in this case is a "legislati ve rule,"

13and therefore must be upheld unless plainly erroneo us or

inconsistent with Subpart J. See, e.g., Auer v. Rob bins, 519 U.S. 452, 461 (1997); Beatty, 49 F.3d at 997; Rodri guez, 8

F.3d at 965.

IV. DISCUSSION

A. Subpart J & "Affected Facilities in Petroleum

Refineries"

As detailed above, each New Source Perfor mance Standard promulgated under the Clean Air Act applie s to specific "affected facilities," and each New Source Performance Standard explicitly sets forth and defi nes the "affected facility" or "affected facilities" to whi ch it applies. Consistent with this regulatory framework, Subpart J states in relevant part:

The provisions of this subpart are applicabl e to the following affected facilities in petr oleum refineries: fluid catalytic cracking unit catalyst regenerator s, fuel gas combustion devices, and all Claus sulfur rec overy plants except Claus plants of 20 long tons p er day (LTD) or less. The Claus sulfur recovery pla nt need not be physically located within the boundaries of a petroleum refinery to be an affected facilit y, provided it processes gases produced within a petr oleum refinery.

See 40 C.F.R. S 60.100(a) (1999) (emphasis added).

In determining that the stationary gas turbines loc ated at Motiva's Repowering Project are fuel gas combustion devices subject to regulation under Subpart J, the EPA

concluded that the turbines are "affected facilitie s" as defined by 40 C.F.R. S 60.100(a). However, as 40 C. F.R. S 60.100(a) expressly indicates, Subpart J does not apply to all "fuel gas combustion devices," but rather appli es only to "fuel gas combustion devices" located "in petroleum refineries." Thus, the key question, upon which the outcome of this petition hinges, is: Are the statio nary gas turbines here "in" a "petroleum r efinery?"

Subpart J defines a "petroleum refinery" as "any fa cility engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other pr oducts through

14distillation of petroleum or through r edistillatio n, cracking

or reforming of unfinished petr oleum derivatives." 40 C.F.R. S 60.101(a) (1999). While the EPA r eadily concedes that the Repowering Project and the larger electrical power plant complex, in which the Repowering Project is located , are not a "petroleum refinery,"12 the EPA nonetheless c ontends that the Repowering Project's two stationary gas tu rbines are "in" a "petroleum refinery" and are subject to regulation under Subpart J.

In originally determining that the stationary gas t urbines are subject to regulation under Subpart J, the EPA stated:

Star's [Repowering] Project is located adjac ent to the remainder of the refinery and is under commo n ownership and control; therefore, it is cons idered part of the refinery. Further evidence that the[R epowering] Project is integrated into refinery operatio ns is that the [Repowering] Project will supply most of the refinery's steam and all power requirements, has the ab ility to combust other fuel gas from the refinery, an d . . . will help Star manage its solid waste from the r efinery. Because the [Repowering] Project is part of the refinery, fuel gas combustion devices associated with the [Repowering] Project are "in" a refinery and fuel gas generated at the [Repowering] Project is gen erated at a refinery.

NSPS Subpart J Applicability Determination for the Star Enterprise Petroleum Refinery in Delawar e City, De laware, Memorandum Dated July 21, 1998 (Star Applicability Determination). In short, the EPA concluded and now contends that because Motiva's Repowering Pr oject "is located adjacent to" a "[petroleum] r efinery [that ] is under common ownership and control," it should be"conside red part of the [adjacent] refinery," and thus that the stationary gas turbines at issue in this case, turbines that a r e an integral part of the Repowering Project, ar e "in" a "petroleum refinery."

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12. It is undisputed that Motiva's Repowering Pr oj ect is a cogeneration facility that will gasify petroleum coke and combus t the resulting synthesis gas to generate only electricity and stea m.

15This reasoning alone cannot, however, pr ovide the basis

for concluding that the Repowering Project's statio nary gas turbines are subject to regulation under Subpart J. Indeed, were the EPA's reasoning sufficient to establish th at the Repowering Project is part of Motiva's adjacent pet roleum refinery, it would also be sufficient to establish that any independent, free-standing facility owned by Motiva and built on land adjacent to Motiva's petroleum r efin ery is part of Motiva's petroleum refinery. For example, EPA's reasoning would also be sufficient to establish tha t a McDonald's restaurant, owned by Motiva and built on land adjacent to Motiva's petroleum refinery for the con venience of refinery workers, is part of Motiva's adjacent p etroleum refinery. Under this interpretation, the EPA would be able to regulate, under Subpart J, fuel gas combustion d evices inside the McDonald's. Even though these fuel gas combustion devices would not be located "in" a"petr oleum refinery," such devices would be subject to regulat ion under Subpart J under the EPA's interpretation because th ey would be treated as "affected facilities in [a] pet roleum refinery[ ]."

Were we to accept the EPA's r easoning (assuming "common ownership and control"), any fuel gas combu stion device located in a facility adjacent to Motiva's p etroleum refinery would be subject to regulation under Subpa rt J because such devices would be treated, inappr opria tely, as "affected facilities in [a] petr oleum refinery[ ]. " This

conclusion is untenable.

As detailed above, it is undisputed that Motiva's Repowering Project is a cogeneration facility that will gasify petroleum coke and combust the resulting synthesis gas to generate electricity and steam. Moreover , even tho ugh Motiva's Repowering Project is adjacent to a petrol eum refinery that Motiva owns, the Repowering Pr oject is located in a free-standing building, an electric power plan t complex that is physically separate and distinct from Motiv a's petroleum refinery. Neither the Repowering Project nor the electric power plant complex in which the Repowerin g Project is to be constructed and operated is a"petr oleum refinery." We therefor e fail to understand how the EPA concluded and now contends that the Repowering Pr o ject's

16stationery gas turbines are themselves "in" a "petr oleum

refinery." Furthermore, if these turbines are not " in" a "petroleum refinery," they ar e not "affected facil ities" and thus are not subject to regulation under Subpart J.

The EPA also argues that the Repowering Project wil l be an integral part of the refinery's operations and f or that reason the stationary gas turbines at issue ar e "i n" a "petroleum refinery." The EP A asserts that:

[The Repowering Project] will take low value material from the refinery, i.e., petr oleum coke, co nvert it into a different low value material, i.e. , a combu stible gas, burn the gas in a combustion turbine, and us e the steam and electricity produced by the turbin e to provide energy for other refinery processes. The [Repowering] Project is thus a integral part of the refinery's operations both because it is par t of the refinery's process of manufacturing usable p roducts from crude oil and because it uses refinery products to provide a valuable input, i.e. ener gy [in t he form of electricity and steam] to the refinery's ope ration.

Star Applicability Determination. While much of the above is accurate, the Repowering Project is neither part of the adjacent petroleum refinery nor necessary to the re finery's operations. Indeed, as the EPA concedes, Motiva cou ld as easily have chosen to power its refinery by purchas ing electricity from the local electric company's comme rcial grid.13

If we were to follow the EPA's reasoning that the Repowering Project is part of Motiva's adjacent pet roleum refinery, we would also be requir ed to conclude th at any building that is located on land adjacent to Motiva 's petroleum refinery and has a mutually beneficial relationship with the petroleum refinery -- be it t o provide food to the workers or energy to the machinery-- is part of the petroleum refinery. Following this r easoning, the EPA would be able to regulate facilities within any suc h building as if they were located "in" the petr oleum refiner y.

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13. As we have already noted, Motiva's Repowering P roject produces more than enough electricity to power the adjacent petroleum refinery and that surplus electricity will be sold to Delmar va and/or other customers on the commercial power grid.

17The EPA acknowledges that the term "petroleum refin ery"

is clearly defined in Subpart J as "any facility en gaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other products thr ough d istillation of petroleum or through redistillation, cracking or reforming of unfinished petroleum derivatives." 40 C.F.R. S 6 0.101(a). Moreover, the EPA concedes that Motiva's Repowering Project is a cogeneration facility that generates o nly electricity and steam and that the Repowering Pr oj ect resides in a separate, free-standing electric power plant complex. The EPA also concedes that none of the pro cesses described in the definition of "petroleum refinery" set forth in S 60.101(a) takes place as a part of the Repower ing Project or even within the building in which the Re powering Project resides. Nonetheless, the EP A contends tha t a "broad definition" of "petroleum refinery" to inclu de operations essential to its purpose is consistent w ith the language of Subpart J. Using this broad definition, the EPA

concluded:

The Star [petroleum] refinery is engaged in the processes described in the NSPS Subpart J de finition of "petroleum refinery." The [Repowering] Pr oject is an integral part of the refinery. It gasifies c oke generated by refinery process units, producing synthes is gas, combusts the synthesis gas and is also capab le of combusting other types of refinery fuel gas. The sulfur compounds (mainly H2S) stripped during the gasification process will be sent to the mod ified Claus sulfur recovery plant. The steam and most of the electricity produced by the project will be routed back to other refinery process units.

Star Applicability Determination. The EPA's reasoni ng is flawed because the Repowering Project is not essent ial to the operation of Motiva's petroleum refinery. Were the Repowering Project essential to the operation of th e refinery, the EPA might be able to convince us that the Repowering Project was part of Motiva's petr oleum refinery and that the stationary gas turbines located in the Repowering Project are "in" a "petroleum refinery." However, as mentioned above, Motiva does not need electricit y from the Repowering Project to power its refinery. Motiv a could

18just as easily purchase electricity from the local power

company. Nor is the Repowering Project necessary fo r coke disposal. Rather than using the petroleum coke, pro duced in its refinery, to power the turbines at issue her e, Motiva could ship the coke off-site for use at other indus trial facilities or for disposal. Indeed, because Motiva' s petroleum refinery operated for many years prior to the conception of the Repowering Project, it is har d t o understand how the EPA concludes that the Repowerin g Project is essential to the operation of the adjace nt petroleum refinery.14Moreover, the EPA's claim that "[i]f the current power plant did not exist, Star would not b e able to operate the refinery at its current capacity" is al so inaccurate for the reasons articulated above. Presu mably, the only limitations on refinery capacity would be limitations on available power and available raw ma terials. The Repowering Project in no way affects the availa bility of raw materials, and although the Repowering Pr oject would supply power to Motiva's petroleum refinery, Motiva could just easily purchase that power (and any additional power needed) from a commercial supplier .

Finally, in support of its initial determination, t he EPA

contends that:

The coke gasification project is not a stand -alone facility. . . . In Star's case, the refinery in its current form could not operate without the curr ent "power plant" or without the planned Project, and i t is not likely that the current "power plant" or pla nned Project would exist (they certainly would not exist in their current or planned form) without the r emain der of the refinery.

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14. Were we to accept the EPA's logic, if Motiva pu rchased electricity from the local electric company, generated by a gen erator located in a free-standing building on land adjacent to its petr oleum refinery, and then, at a later date, Motiva purchased outright th e entire local electric company, any stationary gas turbines that wer e a p art of the aforementioned generator facility would (quite sudd enly) become subject to regulation under Subpart J, since these turbines would be literally transformed into "affected facilitiesin [a] petrole um refinery[ ]." This

sort of reasoning, and the outcome dictated by it, are u ntenable.

19Star Applicability Determination. For the same reas ons

detailed above, this argument is unpersuasive. Put simply, the Repowering Project is a stand-alone facility an d could operate absent the existence of Motiva's petr oleum refinery by obtaining petroleum coke from another commercial supplier (rather than Motiva's adjacent petr oleum refinery) and selling all of the steam and electricity pr odu ced by the Repowering Project to commercial customers such as

Delmarva.

While it is undisputed that a mutually beneficial relationship exists between Motiva's Repowering Pro ject and Motiva's petroleum refinery, the EP A's determinati on that the stationary gas turbines at Motiva's Repowering Project are subject to regulation under Subpart J is not on ly plainly erroneous but also inconsistent with the la nguage of Subpart J itself. In short, the EPA's deter minatio n that the stationary gas turbines at Motiva's Repowering Pr o ject are "affected facilities" subject to r egulation under Subpart J ignores the requirement that r egulated turbines be located "in" a "petroleum refinery."

B. Physical Location as the Touchstone of S 60.100( a)

Despite the EPA's arguments to the contrary, in determining what facilities are "af fected faciliti es" that can be regulated under Subpart J, and, specifically, in determining what facilities are "in petroleum refin eries," the touchstone of such a determination is the physical location of the facilities in question. As noted above, 40 C .F.R. S 60.100(a) states:

The provisions of this subpart are applicabl e to the following affected facilities in petroleum r efineries: fluid catalytic cracking unit catalyst regenerator s, fuel gas combustion devices, and all Claus sulfur rec overy plants except Claus plants of 20 long tons p er day (LTD) or less. The Claus sulfur recovery pla nt need not be physically located within the boundaries of a petroleum refinery to be an af fected facili ty, provided it processes gases produced within a petr oleum refinery.

40 C.F.R. S 60.100(a) (1999) (emphasis added). For the last sentence of S 60.100(a) to make any sense, the ulti mate question to be answered when determining whether ce rtain

20facilities are "in petroleum refineries" must be: W here are

the facilities physically located?

Although the EPA argues strenuously that the term "petroleum refinery" must be interpreted broadly to include not only Motiva's petroleum refinery but also an ad jacent, free-standing, independent electric power plant com plex that produces steam and electricity for use by the refinery (as well as other commercial customers including th e local power company), the stationary gas turbines in this freestanding, independent facility are simply not"in" a "petroleum refinery" because neither the Repowering Project nor the electric power plant complex in which the Repowering Project is located engages in the pr odu ction of "gasoline, kerosene, distillate fuel oils, r esidua l fuel oils, lubricants, or other products through distillation of petroleum or through redistillation, cracking or re forming of unfinished petroleum derivatives." 40 C.F .R. S 60. 101(a) (1999). Moreover, the explicit inclusion in S 60.10 0(a) of Claus recovery plants "not . . . physically located within the boundaries of a petroleum refinery," and the corres ponding absence of a similar inclusion with respect to"fuel gas combustion devices" "not . . . physically located w ithin the boundaries of a petroleum refinery," further underm ines

the EPA's determination.

C. Chemical Composition of Synthesis Gas Bur ned in the Stationary Gas Turbines

Although our determination that Subpart J does not apply here frees us from having to determine whethe r the synthesis gas to be burned by the stationary gas tu rbines is a "fuel gas" regulated under Subpart J, we do no te that the chemical composition of the synthesis gas is ma rkedly different from the chemical composition of other fu el gases, the burning of which is subject to regulation under Subpart J. As the petitioners highlight in their brief, and as the regulatory history of Subpart J suggests, the exclu sive focus and purpose of Subpart J is the reduction of sulfur emissions (specifically sulfur dioxide (SO2) emissi ons) by limiting the amount of hydrogen sulfide (H 2S) in combustible fuel gases combusted in petroleum r efi neries. According to Motiva, a not insignificant amount of the sulfur/SO2, emitted when the synthesis gas at issue is

21combusted in these turbines, comes not from H 2S in the

synthesis gas but from COS in the synthesis gas.

Regardless of the exact source of the sulfur/SO2 emissions, it appears from the recor d that at leas t some of the sulfur/SO2 emitted when the synthesis gas at is sue is combusted comes not from H2S in the gas but rather from COS in the gas. As mentioned above, compliance with Subpart J can be established either by measuring an d monitoring the H2S level in the fuel gas prior to c ombustion or by measuring and monitoring the SO2 level in th e emissions after combustion. See supra, note 4. If s ubject to regulation under Subpart J, Motiva is without a leg ally acceptable method for measuring the combined concentration of COS and H2S in the pre-combustion synthesis burned at the Repowering Project. Therefo re, Motiva will be forced either to monitor and r educe the emission of SO2, or to monitor and control the leve l of H2S in the pre-combustion synthesis gas being combusted at the Repowering Project (rather than the level of H2 S and COS in the pre-combustion synthesis gas), even thou gh by itself, the level of H2S in the synthesis gas being combusted is an arguably poor and clearly inferior measure of Motiva's compliance with Subpart J. As the EPA points out, t he unique chemical composition of the synthesis gas, i n and of itself, does not and would not exempt the stationar y gas turbines at issue here from regulation under Subpar t J. This composition may suggest, however, that another regulation, for example, Subpart GG,15 regulating s tationary gas turbines, rather than Subpart J, may be the

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15. 40 C.F.R. S 60.330, entitled"Applicability and Designation of Affected Facility," is the first section of Title 40, Subpar t GG, and states in relevant part:

(a) The provisions of this subpart ar e appl icable to the following affected facilities: All stationary gas turb ines with a heat input at peak load equal to or greater than 10.7 g igajoules per hour, based on the lower heating value of the fuel fir ed.

(b) Any facility under paragraph (a) of this section which commences construction, modification, or r e construction after October 3, 1977, is subject to the requir em ents of this part

. . . .

40 C.F.R. S 60.330 (1999). It is undisputed by the parties that Subpart GG applies to the stationary gas turbines at issue in this case. The parties dispute only the applicability of Subpart J , which imposes much more stringent requirements than does Subpart GG on emissions from these stationary gas turbines.22appropriate regulation under which to r egulate emi ssions

from these gas turbines. The discontinuity between the chemical composition of synthesis gas to be combust ed at the Repowering Project and the chemical composition of other fuel gases, the combustion of which is subjec t to regulation under Subpart J, also suggests that the EPA's determination is "inconsistent with the r egulation " at issue

and should be set aside.16

D. EPA's Prior Determination Under Subpart OOO

In arguing that its determination in this case is n either plainly erroneous nor inconsistent with Subpart J, the EPA relies in part on what it characterizes as a prior, analogous determination under Subpart OOO--Standar ds of Performance for Nonmetallic Mineral Pr ocessing Pla nts.17 The EPA's reliance on this determination is misplac ed for

two reasons.

First, while the factual background of the EP A's e arlier determination under Subpart OOO is not entir ely cl ear (the record is incomplete), it is clear that the facts o f this earlier determination are distinguishable, in at least one key respect, from the facts in this case. Unlike the st ationary gas turbines at issue here, the Cement T reated Bas e plants located at nonmetallic mineral processing plants we re portable. This fact alone distinguishes the EP A's prior determination under Subpart OOO because, as discuss ed above, physical location is the touchstone for dete r mining

which facilities are "affected facilities" as the t erm is defined in Subpart J. Because the Cement Treated Base plant s at issue in this prior determination were portable, ha d the EPA concluded that these Cement Tr eated Base plant s were subject to regulation under Subpart OOO based on th eir physical location, the regulatory framework establi shed by

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16. We further note that Motiva's inability to moni tor and control the level of H2S and COS (prior to combustion) in the g as being combusted at the Repowering Project would take on heightened significance if it could be shown that monitoring the post-combustion SO2 emissions was more costly than monitoring the pre-combustion leve l of H2S in the synthesis gas at issue.

17. See Standards of Perfor mance for Nonmetallic M ineral Processing Plants, 40 C.F.R. SS 60.670-60.676 (1999).

23Subpart OOO could have been easily circumvented sim ply

by moving the Cement Treated Base plants. Phrased differently, when portable facilities ar e at issue , physical location cannot possibly be the touchstone for dete r mining if, and/or when, regulation is appropriate. This ob vious consequence of portability is, of course, irr eleva nt in the present case because the gas turbines her e are sta tionary.

Second, and more importantly, even assuming, arguen do, that the facts surrounding the prior deter mination under Subpart OOO and the present determination under Subpart J are sufficiently analogous, this in no wa y implies that the EPA's prior determination under Subpart OO O was either correct or consistent with Subpart OOO. Neit her this Court nor any other court of which we are awar e ha s addressed the propriety and/or legality of this pri or determination upon which the EPA r elies in part. A s such, even assuming that the facts surrounding this prior determination under Subpart OOO and the pr esent determination under Subpart J are sufficiently anal ogous, we can only conclude from this that the EP A has ad dressed the issues consistently, not correctly.18

V. CONCLUSION

It well-established, as a general proposition, that the EPA's interpretation of its own r egulations is ent itled to "great deference." As the Supr eme Court stated in Udall v.

Tallman:

When faced with a problem of statutory const ruction, this Court shows great deference to the inte rpretation given the statute by the officers or agency char ged with its administration. . . . [Moreover, w]hen t he construction of an administrative regulation rather

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18. The parties argue extensively as to whether sub jecting the stationary gas turbines at issue in this case to regulation un der Subpart J would "yield . . . any environmental benefits." As discus sed supra, we hold today that Subpart J is inapplicable to these stati onary gas turbines because the turbines are not located "in" a "petrol eum refinery." We therefore need not reach the question of whether su bjecting the turbines at issue in this case to regulation under Subpart J would "yield . . . any

environmental benefits."

24than a statute is in issue, deference is eve n more

clearly in order.

Udall v. Tallman, 380 U.S. 1, 16 (1965). Such defer ence, however, is not without limitations. The EP A deter mination at issue in this case seemingly ignores the r equir ement, set forth at 40 C.F.R. S 60.100(a) (1999), that "affect ed facilities" regulated under Subpart J be located "i n [a] petroleum refinery." In light of this, we conclude that the EPA's determination is both "plainly erroneous," an d inconsistent with Subpart J. We will ther efore gra nt Motiva's petition for review and vacate the EP A's

Determination.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

25