ORAL ARGUMENT SCHEDULED FOR SEPTEMBER 24, 2012

_______________ IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

_______________ No. 10-1413

_______________

SIERRA CLUB,
Petitioner ,

v. UNITED STATES ENVIRONMENTA L PROTECTION AGENCY, and LISA PEREZ JACKSON, ADMINISTRATOR, Respondents.

_______________ ON PETITION FOR REVIEW OF FINAL ACTIONS BY THE UNITED STATES ENVIRONMEN TAL PROTECTION AGENCY

_______________ FINAL BRIEF OF RESPONDENTS

_______________

OF COUNSEL: BRIAN DOSTER SCOTT JORDAN U.S. Environmental Protection Agency Office of General Counsel 1200 Pennsylv ania Avenue, N.W. Washington, D.C. 20460 Dated: June 26, 2012 IGNACIA S. MORENO Assistant Attorney General
JESSICA O’DONNELL U.S. Department of Justice Environment & Natural Resources Division Environmental Defense Section P.O. Box 7611 Washington, D.C. 20044 (202) 305-0851 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 1 of 73i CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES Pursuant to Circuit Rule 28(a)(1), Respondent United States Environmental Protection Agency (“EPA”) states the following: A. Parties, Intervenors, and Amici All parties to this case are listed in petitioner’s brief. B. Rulings Under Review Petitioner seeks review of the Unite d States Environmental Protection Agency’s (“EPA’s”) final rule, “Prevent ion of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micr ometers (PM2.5)---Increments, Significant Impact Levels (SILs), and Significant M onitoring Concentration (SMC),” 75 Fed. Reg. 64,864 (Oct. 20, 2010) (“Rule”) (JA0068-0111). C. Related Cases A petition for review of the Rule by the State of Texas and the Texas Commission on Environmental Quality (co llectively “Texas”), No. 10-1415, filed Dec. 20, 2010, also is pending before th is Court. Texas’s petition is currently stayed pending action by EPA in response to Texas’s administrative petition for reconsideration, which EPA granted to a ddress Texas’s claims that EPA provided inadequate notice and opportunity to comme nt on three discrete aspects of the Rule. The undersigned counsel is not aware of any additional related cases USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 2 of 73ii involving substantially the same parties a nd the same or similar issues pending in this or any other court. Dated: June 26, 2012 Respectfully submitted,
IGNACIA S. MORENO Assistant Attorney General

/s/ Jessica O’Donnell JESSICA O’DONNELL United States Department of Justice Environment & Natural Resources Division Environmental Defense Section P.O. Box 7611 Washington, D.C. 20024 Tel: 202-305-0851 Jessica.O’Donnell@usdoj.gov Of Counsel: BRIAN DOSTER SCOTT JORDAN United States Environmental Protection Agency Office of General Counsel 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460

Counsel for Respondents USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 3 of 73iii TABLE OF CONTENTS
JURISDIC TION ........................................................................................................... 1
STATUTES AND RE GULATIONS ........................................................................... 2
STATEMENT OF ISSUES ......................................................................................... 2
STATEMENT OF THE CA SE AND FACTS ............................................................ 3
I. STAT UTORY BACK GROUND ....................................................................... 3
II. REGULATO RY BACKGR OUND ................................................................... 6
A. PSD Regul ations ..................................................................................... 8
B. EPA’s Longstanding Polic y of Allowing the Use of Screening Tools to Implem ent the PSD Review Process ...................... 11 C. SILs and SMC under the Cha llenged Rule ........................................... 14
1. PM 2.5 Significant Impact Levels ................................................... 14
2. PM 2.5 Significant Monitoring Concentrations .............................. 18
STANDARD OF REVIEW ......................................................................................... 20
SUMMARY OF AR GUMENT ................................................................................... 23
ARGUMENT ............................................................................................................... 26
I. THE CAA AFFORDS EP A DISCRETION TO PROMULGATE SILs AS MEANS TO “DEMONSTRATE” THAT A SOURCE WILL NOT “CAUSE, OR CONTRIBUTE TO” A VIOLATION OF THE NAAQS OR INCREM ENTS. ........................................................................... 26 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 4 of 73iv A. EPA Reasonably Interpre ts CAA Section 165(a)(3) to Allow the Use of SILs to “Demonstrate” that a Source Will Not “Cause, or Contribute to” a Violation of the N AAQS or Increments. ......................................................................... 26 B. EPA Agrees that SILs Shou ld Not Be Used to Exempt a Source Whose Emissions are Shown to Cause a Violation of the NAAQS or Increment. ................................................................ 32
II. EPA’s ADOPTION OF SIL s IS SUPPORTED BY ITS INHE RENT AUTHORITY UNDER ALABAMA POWER TO CREATE DE MINIMIS EXEMPTIONS. .......................................................... 36 A. EPA Reasonably Interprets Section 165(a)(3) to Allow the Use of SILs as De minimis Thresholds. ............................................ 38 B. EPA’s Interpretation of S ection 165(a)(3) to Allow the Use of SILs to Demonstrate Compli ance with NAAQS and Increments Fu rthers the Legisla tive Design. .................................... 42 C. The SILs Identify Levels below which a Source’s Impact is Truly De minimis and thus Requiring a Cumulative Impact Analysis Would Yield Information of Only Triv ial Value. ............................................................................. 43 III. EPA PROPERLY USED ITS DE MINIMIS AUTHORITY TO ADOPT SIGNIFICANT MONITORING CONCENTRATIONS. ................... 44 A. Petitioner’s Challenge to EPA’s Authority to Adopt SMCs is Time-Barred. ............................................................................ 47 B. EPA’s Interpretation of Section 165(e)(2) is a Permissible Construction of th e Statute. ..................................................................... 49 C. The SMC Implements the Legislative Design By Exempting Data that Is Not Accurate Enough to Serve any Useful Purpose. ....................................................................................... 51 D. The SMC Reflects the Level at Which Regulatory Benefits

are Truly De minimis . ............................................................................. 53 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 5 of 73v CONCLUSI ON ............................................................................................................ 56 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 6 of 73vi TABLE OF AUTHORITIES CASES

* Alabama Power v. EPA , 636 F.2d 323 (D.C. Cir. 1980) ......................................... 2, 22, 36, 49, 50, 51, 53
Alaska Dep't of Envtl. Conservation v. EPA , 540 U.S. 461 (2004) ............................................................................................ 22 Am. Electric Power Co. v. Connecticut, 131 S. Ct . 2527 (2011 ) ........................................................................................ 22 Burlington Truck Lines v. United States, 371 U.S. 156 (1 962) ............................................................................................ 20 *Catawba County, N.C. v. EPA , 571 F.3d 20 (D.C. Cir. 2009) ..................................................... 20, 21, 27, 28, 40 Chevron, U.S.A., Inc. v. NRDC , 467 U.S. 837 (1 984) ............................................................................... 21, 22, 27 City of Waukesha v. EPA , 320 F.3d 228 ( D.C. Cir. 2003) ............................................................................ 20 Davis County Solid Wa ste Management v. EPA , 108 F.3d 1454 ( D.C. Cir. 1997) .......................................................................... 35 Envtl. Def. v. Duke Energy Corp. , 549 U.S. 561 (2007) ............................................................................................ 22 *Envtl. Defense Fund ("EDF") v. EPA , 82 F.3d 451 (D.C. Cir. 1996), amended by, 92 F.3d 1209 (D.C. Cir. 1996) ................................................................ 22, 39, 44 Entergy Corp. v. Riverkeeper, Inc. , 556 U.S. 208 (2 009) ......................................................................... 21, 28, 31, 41 *Authorities chiefly relied upon ar e marked with an asterisk. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 7 of 73vii In re N. Mich. Univ. Ripley Heating Plant, PSD Appeal No. 08-02, 2009 WL 443976 (EAB Feb. 18, 2009) ...................... 10 *In re Prarie State Generating Co., 13 E.A.D. 1 (EAB 2006) .............................................................................. 13, 28 Kokechick Fishermen's Ass'n v. Sec'y of Commerce , 839 F.2d 795 ( D.C. Cir. 1988) ............................................................................ 41 *Medical Waste Inst. & Energy Recovery Council , 645 F.3d 420 (D.C . Cir. 2011) ..................................................................... 47, 48 Motor & Equip. Mfrs. Ass'n v. Nichols , 142 F.3d 449 ( D.C.Cir.1998) .............................................................................. 47 New York v. EPA , 443 F.3d 880 (D.C. Cir. 2006) ............................................................... 39, 40, 50
NRDC v. EPA , 571 F.3d 1245 ( D.C. Cir. 2009) .......................................................................... 21 Ober v. Whitman , 243 F.3d 1190 (9 th Cir. 2001) ............................................................................ 22 Ohio v. EPA , 997 F.2d 1520 ( D.C. Cir. 1993) .......................................................................... 22 Public Citizen v. Young , 831 F.2d 1108 (D.C. Cir. 1987) ............................................................. 37, 40, 50
*Sur Contra La Contaminac ion ("SURCCO") v. EPA, 202 F.3d 443 (1st Cir. 2000) ........................................................................ 31, 32 United States v. Mead , 533 U.S. 218 (2001) ............................................................................................ 21 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 8 of 73viii STATUTES
5 U.S.C. § 706( 2)(A) ................................................................................................ 20
21 U.S.C. § 376e(b )(5)(B) ....................................................................................... 40 42 U.S.C. §§ 740 1-7671q .......................................................................................... 3 42 U.S.C. § 7407(a) ................................................................................................... 4 42 U.S.C. § 7407(d)( ii), d(iii) .................................................................................... 5 42 U.S.C. § 7409(b) ................................................................................................... 3 42 U.S.C. § 7410(a)(1)-(2), ( l) ................................................................................... 4 42 U.S.C. § 7410(a)( 2)(C), (D) .................................................................................. 4 42 U.S.C. § 7411(a )(4) ........................................................................................ 5, 39 42 U.S.C. §§ 747 0-7479 ............................................................................................ 5 42 U.S.C. § 7470 ................................................................................................. 4, 41 42 U.S.C. § 7470 (3) ................................................................................................. 41 42 U.S.C. § 7473 ....................................................................................................4 , 5 42 U.S.C. § 7475 ...................................................................................................... 44 42 U.S.C. § 7475(a) ................................................................................................... 5 42 U.S.C. § 7475(a)(3) .............................................. 2, 4, 5, 8, 26, 27, 29, 37, 38, 40 42 U.S.C. § 7475(a )(7) ............................................................................................. 44 42 U.S.C. § 7475 (e)(1) ............................................................................................... 6 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 9 of 73ix 42 U.S.C. § 7475(e)( 2) .................................................................... 1, 6, 9, 25, 44, 51 42 U.S.C. § 7475(e )(3) ............................................................................................. 29 42 U.S.C. § 7475(e)(3 )(D) .............................................................................. 6, 9, 29 42 U.S.C. § 7476 ........................................................................................................ 4 42 U.S.C. § 7479(1) ................................................................................................... 5 42 U.S.C. § 7479 (2)(C) .............................................................................................. 5 42 U.S.C. § 7607(b )(1)........................................................................................ 1, 24 42 U.S.C. § 7607 (b) ................................................................................................. 46 42 U.S.C. § 7607(b)(1 ).................................................................................. 1, 47, 48 42 U.S.C. § 7607(d )(9)(A) ....................................................................................... 20

CODE OF FEDERAL REGULATIONS
40 C.F.R. § 50.13 ....................................................................................................... 3 40 C.F.R. Pt. 51, App. S ........................................................................................... 35 40 C.F.R. Pt. 51, A pp. W .............................................................................. 9, 10, 11 40 C.F.R. § 51.165(b ) ........................................................................... 15, 35, 36, 48 40 C.F.R. § 51.165(b)(2) ................................................................. 12, 16, 28, 29, 36 40 C.F.R. § 51. 165(b)(3) .......................................................................................... 29 40 C.F.R. § 51.166 ..................................................................................................... 6 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 10 of 73x 40 C.F.R. § 51.166(i)(5) .................................................................. 13, 14, 46, 48, 55 40 C.F.R. § 51.166(i)(5 )(i)(c) ........................................................................... 18, 45 40 C.F.R. § 51.166(k) ................................................................................................ 8 40 C.F.R. § 51.166(k)(2) ................................................................. 15, 34, 35, 36, 42 40 C.F.R. § 51.166( l )(1) ............................................................................................. 9 40 C.F.R. § 51.166(m) ............................................................................................... 8 40 C.F.R. § 51. 166(m)(i) ........................................................................................... 9 40 C.F.R. §§ 51.166(m )(1)(iii), (i v) ........................................................................... 9 40 C.F.R. § 52.21 ....................................................................................................... 6 40 C.F.R. § 52.21(i)(5 ) .......................................................................... 13, 14, 46, 48 40 C.F.R. § 52.21(i)(5 )(i)(c) ............................................................................. 18, 45 40 C.F.R. § 52. 21(k) ........................................................................................... 8, 34 40 C.F.R. § 52.21(k)(2 ) ......................................................................... 15, 35, 36, 42 40 C.F.R. § 52.21(m) ................................................................................................. 8 40 C.F.R. § 52.21( m)(1)(i) ......................................................................................... 9 40 C.F.R. § 52.21(m )(1)(iii), (i v) ............................................................................... 9

FEDERAL REGISTERS 44 Fed. Reg. 3274, 3283 (Jan. 16, 1989) ................................................................. 12 45 Fed. Reg. 52,676 (Aug. 7, 1980).............................................................. 1, 13, 45 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 11 of 73xi 45 Fed. Reg. at 52,705 ............................................................................................. 45 45 Fed. Reg. at 52,706 ............................................................................................. 45 45 Fed. Reg. at 52,707 ................................................................................ 16, 17, 45 45 Fed. Reg. at 52, 708 .......................................................................... 16, 17, 45, 48 45 Fed. Reg. at 52,709 ...................................................................................... 45, 48 45 Fed. Reg. at 52,710 .......................................................... 1, 13, 18, 19, 45, 48, 52 45 Fed. Reg. at 52,733-34 ........................................................................................ 47 52 Fed. Reg. 24,672, 24,713 (J uly 1, 1987) ................................................ 12, 15, 28 61 Fed. Reg. 38,250 (J uly 23,1996) ......................................................................... 13 61 Fed. Reg. at 38,291 ............................................................................................. 13 61 Fed. Reg. at 38,292 ............................................................................................. 13 61 Fed. Reg. at 38,293 ............................................................................................. 13 70 Fed. Reg. 68,218, 68,266 (Nov. 9, 2005) ........................................................... 10 72 Fed. Reg. 54,112 (S ept. 21, 2007) ........................................................................ 5 72 Fed. Reg. at 54, 116 ............................................................................................... 5 72 Fed. Reg. at 54, 139 .......................................................................... 14, 15, 28, 30 72 Fed. Reg. at 54, 141 .......................................................................... 10, 18, 45, 54 72 Fed. Reg. at 54,142 ...................................................................................... 18, 54 75 Fed. Reg. 64,864 (O ct. 20, 2010) ......................................................................1, 6 75 Fed. Reg. at 64, 865 ............................................................................................... 7 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 12 of 73xii 75 Fed. Reg. at 64,866 .................................................................... 7, 8, 9, 12, 15, 18 75 Fed. Reg. at 64,867 ........................................................................................ 8, 18 75 Fed. Reg. at 64, 868 ............................................................................................... 5 75 Fed. Reg. at 64,890 ............................................................................................. 13 75 Fed. Reg. at 64,891 ...................................................................................... 11, 14 75 Fed. Reg. at 64,892 ............................................................................................. 33 75 Fed. Reg. at 64,893 ...................................................................................... 16, 43 75 Fed. Reg. at 64,894 ................................................................................ 16, 17, 33 75 Fed. Reg. at 64,895 ............................................................................................. 45 75 Fed. Reg. at 64, 896 .......................................................................... 19, 45, 53, 54 75 Fed. Reg. at 64,897 ................................................................................ 19, 48, 54 75 Fed. Reg. at 64,899 ............................................................................................. 35 75 Fed. Reg. at 64,900 ............................................................................................. 35 75 Fed. Reg. at 64,901 ............................................................................................. 35 75 Fed. Reg. at 64,902 ............................................................................................. 15 75 Fed. Reg. at 64,904 ............................................................................................. 15 75 Fed. Reg. at 64, 906 ............................................................................................ 15 75 Fed. Reg. at 64,993 ............................................................................................. 17 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 13 of 73xiii GLOSSARY
CAA
EDF
EPA
JA NAAQS
NRDC
NSR
PM 2.5

PM 10

RTC
PSD
SILs
SIPs
SMC μg/m 3 Clean Air Act Environmental Defense Fund United States Environmental Protection Agency Joint Appendix National Ambient Air Quality Standards Natural Resources Defense Council New Source Review Fine particulate matter (particul ate matter 2.5 micrometers and smaller in diameter) Coarse particles (particulate ma tter 10 micrometers and smaller in diameter Response to Comment Prevention of Significant Deterioration Significant impact levels State implementation plans Significant monitoring concentration Micrograms per cubic meter USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 14 of 731 JURISDICTION This case involves a cha llenge to the United States Environmental Protection Agency’s (“EPA’s”) final rule, “Prevent ion of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micr ometers (PM2.5)---Increments, Significant Impact Levels (SILs), and Significant M onitoring Concentration (SMC),” 75 Fed. Reg. 64,864 (Oct. 20, 2010) (“Rule”) (JA0068-0111). Petitioner invokes this Court’s jurisdiction under Clean Air Act section 307(b)(1), 42 U.S.C. § 7607(b)(1), which requires that petitions for review of final action of EPA be filed within 60 days of the date of publicati on in the Federal Register. While Petitioner purports to challenge the validity of the above-noted Rule, one of their four claims in fact cha llenges final action take n by EPA long ago. See infra argument III.A. Specifically, Petitioner claims that EPA’s de minimis waiver of preconstruction monitori ng requirements specified in Clean Air Act section 165(e)(2), 42 U.S.C. § 7475(e)(2), is unlaw ful; at base, this claim challenges regulations EPA issued in 1980, 45 Fe d. Reg. 52,676, 52, 710 (Aug. 7, 1980) (JA0003, 0009). Because Petiti oner failed to challenge th ese regulations within 60 days of their issuance, Petitioner’s instan t challenge to these regulations is timebarred under section 307(b)(1), 42 U.S.C . § 7607(b)(1), and this Court lacks jurisdiction to hear it. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 15 of 732 STATUTES AND REGULATIONS The pertinent statutes and regulations are set forth in a separate addendum. STATEMENT OF ISSUES 1. Whether EPA has discretion un der section 165(a)(3) of the CAA, 42 U.S.C. § 7475(a)(3), to develop methods a nd tools that a permit applicant may use to “demonstrate” that it does not “cause or contribute to” violations of the NAAQS and PSD increments. 2. Whether EPA reasonably adopted, under the de minimis authority recognized in Alabama Power Co. v. EPA , 636 F.2d 323, 360-61 (D.C. Cir. 1979), “significant impact levels” as screening t echniques that relieve permit applicants of the need to expend resources on modeling of a proposed project combined with the emissions from other existing sources when the permit applicant shows that the air quality impact of the emissions added by its construction is de minimis and that additional analysis is not needed to make the demonstration required to obtain a permit. 3. Whether the relevant data and analysis in the record support EPA’s finding that the particular significant impact levels promulgated for PM 2.5 represent the level below which the burdens of re quiring a cumulative air quality analysis yield a gain of only trivial value. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 16 of 733 4. Whether the Court can hear Pe titioner’s untimely challenge to EPA’s exercise of its de minimis authority recognized in Alabama Power to establish “significant monitoring concentrations” as a screening tool to exempt proposed sources from pre-constructio n monitoring requirements. 5. If Petitioner’s challenge to EPA’s establishment of significant monitoring concentrations is not time- barred, whether EPA properly invoked its de
minimis authority to establish a significant monitoring concentration for PM 2.5 . 6. Whether the relevant data and analysis in the record support EPA’s finding that the particular significant monitoring concentration promulgated for
PM 2.5 represents the level below which the burdens of regulation yield a gain of only trivial value. STATEMENT OF THE CASE AND FACTS I. STATUTORY BACKGROUND The Clean Air Act (“CAA” or “A ct”), 42 U.S.C. §§ 7401-7671q, requires EPA to set National Ambient Air Quality Standards (“NAAQ S”) at levels requisite to protect public health and welfare. 42 U.S.C. § 7409(b). EPA has established both an annual and a 24-hour PM 2.5 NAAQS. The annual PM 2.5 NAAQS is 15 micrograms per cubic meter (μg/m 3 ) and the 24-hour PM 2.5 NAAQS is 35 μg/m 3

. 40 C.F.R. § 50.13. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 17 of 734 Once EPA establishes a new or re vised NAAQS, States are required to develop and submit for EPA approval stat e implementation plans (“SIPs”) that contain emission limitations and other contro l measures to ensure that the relevant NAAQS is achieved and maintained. 42 U.S.C. §§ 7407(a), 7410(a)(1)-(2), ( l ), 7475(a)(3). The CAA’s Prevention of Significant Deterioration or “PSD” provisions are among those that must be addressed by SIPs. 42 U.S.C. § 7410(a)(2)(C), (D). In brief, the purpose of the PSD program is to protect the public health from adverse effects of air pollution notwithsta nding attainment and maintenance of air quality standards, including ensuring that construction of new or modified sources in attainment areas does not lead to signi ficant deterioration of air quality, while at the same time ensuring that economic gr owth will occur in a manner consistent with the preservation of clean air res ources. 42 U.S.C. § 7470. Thus, the PSD provisions require EPA to establish “incre ments” (discussed below) for the various NAAQS pollutants and ensure that aggr egate permitted pollution increases in attainment areas do not cause significant deterioration in air quality. 42 U.S.C. §§ 7473, 7476. The PSD provisions also set fort h procedures and requirements for preconstruction review and permitting of ne w or modified sources of air pollution that plan to locate in areas that are classified as “att ainment” or “unclassifiable” USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 18 of 735 with respect to a particular NAAQS. See, generally , 42 U.S.C. §§ 7470-7479. 1 The permitting requirements apply to “major emitting facilities,” (hereinafter “facilities”), including new or modified s ources that emit 250 tons per year or 100 tons per year for certain source cat egories of any air pollutants. Id. §§ 7475(a), 7479(1), (2)(C), 7411(a)(4). Under CAA section 165(a)(3), to obt ain a construction permit, a proposed facility subject to PSD review must dem onstrate that emissions from construction or operation of such facility “will not cause , or contribute to, air pollution in excess of any (A) maximum allowable increase or maximum allowable concentration for any pollutant in any area to which this part applies more than one time per year, [or] (B) national ambient air quality standa rd in any air quality control region.” Id. § 7475(a)(3). The “maximum allowable increase” of an air pollutant that may occur above a defined baselin e concentration is known as the PSD “increment.” 75 Fed. Reg. at 64,868 (JA0072); 72 Fe d. Reg. 54,112, 54,116 (Sept. 21, 2007) (JA0023, 0027); see 42 U.S.C. § 7473. For purposes of determining whether emissions from a proposed facility will cause or contribute to an exceedance of either any increment or

1 An “attainment” area is one where the air quality meets the NAAQS for a pollutant; an “unclassifiable” area is one that cannot be classified as meeting or not meeting the NAAQS for a pollutant. 42 U.S.C. § 7407(d)(ii), (d)(iii). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 19 of 736 NAAQS, section 165(e) requires the pe rmitting authority or the proposed facility to conduct an ambient air quality analysis including: continuous air quality monitoring da ta . . . gathered over a period of one calendar year preceding the date of the application for a permit . . . unless the State, in accordance w ith regulations promulgated by the [EPA] Administrator, determines that a complete and adequate analysis for such purposes may be acc omplished in a shorter period. 42 U.S.C. § 7475(e)(1), (2). Section 165(e)(3) further authorizes EPA to promulgate regulations regarding the ambient air quality analysis required for PSD review, including rules that “specify with reasonable particularity each air quality model or models to be used under specified sets of conditio ns for purposes of this part.” Id. § 7475(e)(3)(D). II. REGULATORY BACKGROUND Over time, EPA has promulgated co mprehensive regulations and guidance setting forth detailed require ments for States to implement the PSD program. See 40 C.F.R. § 51.166. EPA also has esta blished corresponding regulations for federal implementation of the PSD provisions in States that lack an EPA-approved PSD program in their SIP. 40 C.F.R. § 52.21. The final rule at issue here, “Prevention of Significant Deterioration (PSD) for Par ticulate Matter Less Than 2.5 Micrometers (PM2.5)---Increments, Significant Impact Levels (SILs), and Significant Monitoring Concentration (S MC),” 75 Fed. Reg. 64,864 (Oct. 20, USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 20 of 737 2010) (“Rule”), supplements these regulations to implement the PSD provisions as applied to fine particle pollution—also known as “PM 2.5 .” 2 Specifically, the Rule does three things: First, it establishes “increments” for
PM 2.5 , which serve to limit aggregate pollu tion increases in attainment and unclassifiable areas to prevent significant de terioration of air quality in areas that are meeting the NAAQS. See 75 Fed. Reg. at 64,865 (JA0069). Second, it establishes “significant impact levels” (“SILs”) for PM 2.5 that may be used in various ways in evaluating the impact th at a proposed new source or modification may have on the PM 2.5 NAAQS and increments. Id . at 64,865-66 (JA0069-0070). Generally speaking, the SILs EPA adopted in this Rule are screening tools that may be used to identify de minimis circumstances where it may be unnecessary for a PSD permit applicant to c onduct a more in-depth cumula tive impact analysis of a proposed source’s impact. Third, the Ru le establishes a “significant monitoring concentration” (“SMC”) for PM 2.5 . Id . at 64,866 (JA0070). The SMC is a screening tool to identify de minimis circumstances wher e either a proposed source’s impact or the existin g ambient concentration of PM 2.5 is de minimis and thus the collection of preconstruction moni toring data would not yield meaningful

2 The “ 2.5 ” in this acronym refers to the size of fine particulate matter, i.e., 2.5 microns or less. Other EPA regulations implement the PSD provisions as applied to relatively more coarse partic ulate matter up to 10 microns (“PM 10 ”). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 21 of 738 information for the analysis. See id. at 64,866-67 (JA0070-0071). Sierra Club challenges only those provisions of the Rule relating to the PM 2.5 significant impact levels and significant monitoring concentration. A. PSD Regulations As noted above, section 165(a)(3), 42 U.S.C. § 7475(a)(3), requires that a new source or modification proposing to lo cate in an attainment or unclassifiable area demonstrate that its emissions will not cause or contribute to any violation of the applicable increment or the NAAQS. For this demonstration, EPA’s preexisting PSD regulations generally requi re sources to submit for review and approval a source impact analysis and an air quality analysis, which consist of an analysis of existing air quality that woul d be affected by the proposed source and a showing that the proposed source’s allo wable emissions would not cause or contribute to a violation of any NAAQS or increment. 75 Fed. Reg. at 64,866 (JA0070); 40 C.F.R. § 51. 166(k), (m); 40 C.F.R. § 52.21(k), (m). The source impact analysis is prim arily a modeling analysis designed to show that the allowable emissions increase from the proposed source, in conjunction with other emissions increases from existing sources, will not result in a violation of either the NAAQS or th e increments. 75 Fed. Reg. at 64,866 (JA0070). EPA has published guidelines fo r conducting this modeling analysis in a document called the Guideline on Air Quality Models (the “Guideline’), which is USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 22 of 739 incorporated in the Code of Federal Regulations. 40 C.F.R. Pt. 51, App. W. EPA’s PSD regulations require modeling to be based on the Guideline. 40 C.F.R. §§ 51.166( l )(1), 52.21( l )(1). The Guideline im plements CAA section 165(e)(3)(D), 42 U.S.C. § 7475(e)(3)(D), 3 by identifying air quality models and modeling techniques that should be app lied in the review of PSD permit applications. 40 C.F.R. Pt. 51, App. W, § 1.0.a. The air quality analysis must assess the ambient air quality in the area that the proposed project would affect. 75 Fe d. Reg. at 64,866 (JA0070); 40 C.F.R. §§ 52.21(m)(1)(i), 51.166(m)(1)(i). Consis tent with section 165(e)(2), 42 U.S.C. § 7475(e)(2), this analysis must contai n air quality monitoring data that is representative of the air quality in the area affected by the proposed source for the one-year period preceding receipt of the PSD permit application. 75 Fed. Reg. at 64,866 (JA0070); 40 C.F.R. §§ 51.166(m)(1 )(iii), (iv), 52.21(m)(1)(iii), (iv). Where data representative of air quality in the area already exists, the applicant may submit that available data; otherwis e, the source owner or operator must install and operate monitors to collect th e necessary data. 75 Fed. Reg. at 64,866 (JA0070); New Source Review Workshop Manual, Prevention of Significant

3 40 C.F.R. Pt. 51, App. W, Prefa ce (explaining how the Guideline was published to satisfy requirements of the 1977 amendments with respect to consistency in the application of air quality models). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 23 of 7310 Deterioration and Nonattainment Area Perm itting, at C.18-C.19 (Draft Oct. 1990) (hereinafter “NSR Work shop Manual”) (JA0245-0246); 4 In re N. Mich. Univ. Ripley Heating Plant , PSD Appeal No. 08-02, 20 09 WL 443976 (EAB Feb. 18, 2009). EPA’s Guideline recommends using m onitored data to determine one component of the background concentrat ion used in an air quality modeling exercise. 40 C.F.R. Pt. 51, App. W, Table 8-2 n.9 (“Generally, the ambient impacts from non-nearby (background) sour ces can be represented by air quality data unless adequate data do not exist.”); id . § 8.2.3.f. (refe rencing § 8.2.2 5 of the Guidelines which describes air quality data from monitors); 72 Fed. Reg. at 54,141 (JA0052) (discussing this topic but referenc ing § 9.2 prior to a revision that moved this content to § 8.2). 6 Another component of the background concentration is established by explicitly modeling the imp act of “nearby sources.” 40 C.F.R. Pt.

4 This document is referenced in th e Guideline on Air Quality Models. 40 C.F.R. Pt. 51, App. W, Preface n.2. EPA devel oped the NSR Workshop Manual for use in conjunction with New Sour ce Review workshops and training, as guidance for permitting authorities to be used in implementing the PSD requirements of the New Source Review Program. See id. (Preface).

5 Section 8.2.3.f. of the Guidelines actu ally references § 89.2. 2. This appears to be a scrivener’s error, as the Guid eline does not have a § 89 or a § 9.2.2.
6 EPA renumbered the sections of Appendix W in 2005, and moved the content of § 9 to § 8. 70 Fed. Reg. 68,218, 68,266 (Nov. 9, 2005). The proposed rule to establish SILs and SMCs appears to reference the older § 9.2 and § 9.2.3.f, which are presently located at § 8.2 and § 8.2.3.f. respectively. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 24 of 7311 51, App. W, §§ 8.2, 8.2.3.b; 72 Fed. Reg. at 54,141 (JA0052); see also 40 C.F.R. Pt. 51, App. W, Table 8-2 (describing thr ee types of source emissions data that are needed to complete a cumu lative impacts analysis on a PSD permit application). B. EPA’s Longstanding Policy of Allowing the Use of Screening Tools to Implement the PSD Review Process A fundamental principle of the air quality modeling discipline is that a modeling analysis should begin with relati vely simple estimating techniques that provide conservative estimates of air quality impact and then progress toward more refined and precise techniques as needed. 40 C.F.R. Pt. 51, App. W, §§ 2.2, 4.2.1, 4.2.2. The Guideline observes that “use of screening techniques followed, as appropriate, by a more refined analysis is always de sirable.” 40 C.F.R. Pt. 51, App. W, § 2.2.c. With respect to PSD permit review specifically, the Guideline

states: The purpose of [screening] techniques is to eliminate the need of more detailed modeling for those sources that clearly will not cause or contribute to ambient concentrations in excess of either the National Ambient Air Quality Standards ( NAAQS) or the allowable prevention of significant deterioration (PSD ) concentration increments. If a screening technique indicates that the concentration contributed by the source exceeds the PSD increment or the increment remaining to just meet the NAAQS, then the second leve l of more sophisticated models should be applied.
Id. § 2.2.a. The use of screening approaches is partly based on the recognition that more complex air qua lity modeling analysis requires more USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 25 of 7312 resources. Id . § 2.1.d.; 75 Fed. Reg. at 64,891 (JA0095) (“a screening tool greatly improves PSD program implem entation by streamlining the permit process and reducing the labor hours necessary to submit and review a complete permit application”). Consistent with the Guideline, EPA has historically allowed the use of several types of screening tools to fac ilitate implementation of the preconstruction review process to reduce the permit applicant’s burden and streamline the permitting process for de minimis circumstances. 75 Fed. Reg. at 64,866 (JA0070). These tools include the SILs and SMCs, described generally below. Significant Impact Levels . The SIL, expressed as an ambient pollutant concentration ( μ g/m 3 ), has multiple uses. EPA in itially promulgated SILs in 1979 as the “significance levels” under whic h a source may be exempt from the preconstruction review requirements in Appe ndix S of Part 51. 44 Fed. Reg. 3274, 3283 (Jan. 16, 1979). In 1987, EPA promulgated these SILs as a tool for showing that a predicted ambient impact resulting from the emissions increase at a proposed major new stationary source or modificati on would not cause or contribute to a violation of the NAAQS in an area that was not meeting the NAAQS. 52 Fed. Reg. 24,672, 24,713 (July 1, 1987) (promulg ating 40 C.F.R. § 51.165(b)(2)). EPA also has interpreted this regulation to support using a SIL to show that an individual proposed source’s impact is de minimis and thus the source is not USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 26 of 7313 “culpable” for a violation of the NAAQS or increment that might be predicted in an attainment area as a result of cumula tive source impact analysis reflecting the impacts of other sources in the area. 75 Fed. Reg. at 64,890 (JA0094); 61 Fed. Reg. 38,250, 38,293 (July 23, 1996); In re Prairie State Generating Co. , 13 E.A.D. 1, 103-09 (EAB 2006). Additionally, EPA guidance has provided for the use of the same SIL values to determine: (1 ) when a proposed source’s ambient impacts warrant a comprehensive cumulative source impact analysis that incorporates information on the air quality impact of the emissions of other sources besides the source seeking the permit; and (2) the size of the impact area w ithin which the air quality analysis is completed. 75 Fed. Reg. at 64,890 (JA0094); 61 Fed. Reg. at 38,293; In re Prairie State Generating Co. , 13 E.A.D. 1, 103-09 (EAB 2006); see also NSR Workshop Manual at C.24-C.31 (JA0251-0258). EPA proposed to codify some of these uses of SILs into the PSD regulations in 1996, 61 Fed. Reg. at 38,291-93, but took no final action on that proposed rule. Significant Monitoring Concentrations . EPA initially promulgated Significant Monitoring Concentrations in 1980. 45 Fed. Reg. 52,676, 52,710 (Aug. 7, 1980) (JA0003, 0009). Using the SMC as a screening tool, sources may be able to demonstrate that it is unnece ssary to gather preconstruction monitoring data for a particular pollutant at the discretion of the permitting authority. See 40 C.F.R. §§ 51.166(i)(5) and 52.21(i)(5); see NSR Workshop Manual C.16-C.18 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 27 of 7314 (JA0243-0245). Such a showing can be made by demonstrating that the modeled air quality impact of emissions from the ne w source or modification or the existing air quality level in the area where the source would construct is less than a de
minimis level, expressed as an ambi ent pollutant concentration ( μ g/m 3 ). 40 C.F.R. §§ 51.166(i)(5), 52.21(i)(5); NSR Manua l C.16-C.18 (JA0243-0245). C. SILs and SMC under the Challenged Rule 1. PM 2.5 Significant Impact Levels In the Rule, EPA for the first time a dopted express language in regulations intended to authorize the longstanding practic e of using “significant impact levels” as a screening tool for evaluating wh ether a comprehensive cumulative source impact analysis is necessary to dem onstrate that a source will not cause or contribute to a violation of the NAAQS or increments. 75 Fed. Reg. at 64,891 (JA0095); 72 Feg. Reg. at 54,139 (JA0050 ) (“If based on a preliminary impact analysis, a source can show that its em issions alone will not increase ambient concentrations by more than the SILs, EPA considers this to be a sufficient demonstration that a source will not cause or contribute to a violation of the NAAQS or increment.”); Response to Comment (“RTC”), EPA-HQ-OAR-2006- 0605-0059, at 67 (JA0199) (“The SIL is us ed largely as a screening tool to determine the level of air quality analysis that a proposed source or modification must undertake to satisfy the requirements for an air quality impact analysis.”). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 28 of 7315 Specifically, under the provisions promulgate d in this Rule, if the proposed source shows through modeling that its projected emissions alone have an impact below the SIL, the source is deemed not to cause or contribute to any violation of the NAAQS or increments and is thereby exempt from doing a cumulative source impact analysis. 75 Fed. Reg. at 64,904, 64,906 (JA0108, 0110); 40 C.F.R. §§ 51.166(k)(2), 52.21(k)(2). EPA also incorporated the PM 2.5 SIL values into its preexisting regulation authorizing the use of SILs to determine whether a new or modified source causes or contributes to a NAAQS violation in a nonattainment area, 40 C.F.R. § 51.165(b). 7 75 Fed. Reg. at 64, 866, 64,902 (JA0070, 0106). EPA established the SILs for PM 2.5 utilizing methods that would identify levels representing de minimis or insignificant impact on ambient air quality. 72 Fed. Reg. at 54,139 (JA0050). The fina l SILs adopted by EPA were calculated by multiplying the PM 10 SILs proposed in 1996 by the ratio of the PM 2.5 NAAQS to the PM 10 NAAQS, resulting in the following PM 2.5 SILs: Averaging Period SILs (μg/m 3 ) Class I Areas Class II Areas Class III Areas Annual .06 0.3 0.3 24 hour .07 1.2 1.2

7 Petitioner does not and indeed cannot challenge EPA’s use of its de minimis authority as reflected in 40 C.F.R. § 51.165(b) ( see Pet. Br. 20 n.8 & 32 n.12), as EPA adopted this regulation in 1987 (52 Fed. Reg. 24,672, 24 ,713 (July 1, 1987)) and thus the time to challenge it under 42 U.S.C. § 7607(b)(1) has long since passed. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 29 of 7316 75 Fed. Reg. at 64,866 (JA0070). EPA relied on past actions setting threshold de minimis values to conclude that the SIL values set here would also be de minimis . First, EPA calculated each
PM 2.5 SIL value such that the ratio of the PM 2.5 SIL to the PM 2.5 NAAQS was the same as the ratio of the previously established PM 10 SIL to the PM 10 NAAQS for each applicable averaging period. 75 Fed. Reg. at 64,893 (JA0097); see also 40 C.F.R. § 51.165(b)(2). Using these ratios, the PM 2.5 SILs are 2% of the NAAQS for the annual figures (annual PM 2.5 SIL (Class II and III) of 0.3 μ g/m 3 divided by annual PM 2.5 NAAQS of 15 μ g/m 3 ) and 3.4% of the 24-hour NAAQS for the 24- hour figures (24-hour PM 2.5 SIL (Class II and III ) of 1.3 μ g/m 3 divided by 24-hour
PM 2.5 NAAQS of 35 μ g/m 3 ). EPA next compared the PM 2.5 SILs to the PM 2.5 increments consistent with the applicable averaging period. This comparison showed that the annual SIL was 7.5% of the annual increment and th e 24-hour SIL was 13% of the 24-hour increment. EPA then comp ared these percentages to the corresponding figures for the PM 10 SILs, which are 5% for the annual and 17% for the 24-hour, and concluded they were comparable. 75 Fed. Reg. at 64,893 (JA0097). Additionally, EPA looked back at the modeling and analysis done in 1980 to establish those earlier de minimis thresholds. This analysis and modeling (which is described in more detail at 75 Fed. Reg. at 64,893-94 (JA 0097-0098) and 45 Fed. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 30 of 7317 Reg. at 52,707-08 (JA0006-0007 )) concluded that source impacts representing less than 5% of the NAAQS and less than 35 % of the increments were reasonably considered de minimis . 75 Fed. Reg. at 64,893 (J A0097); 45 Fed. Reg. at 52,707 (JA0006). The PM 2.5 SILs established in this Rule compare favorably to that standard. The PM 2.5 SILs at 2.0% (annual) and 3.4% (24-hour) of the NAAQS are both less than 5%. Similarly, the PM 2.5 SILs at 7.5% (annua l) and 13% (24-hour) of the Class II and Class III increments are both less than 35%. Further, even in an area where multiple sources with de minimis impacts will be located, it cannot be assumed that th e individual impacts of each source are additive. For example, four sources e ach consuming 12% of the increment would not necessarily consume 48% of the increm ent collectively. 75 Fed. Reg. at 64,894 (JA0098). A given source’s greatest impact will be limited to the area nearest to it and during the specific times when the em issions are actually occurring, and the location and timing of a source’s impact w ill be different for different sources. Id .;

see 45 Fed. Reg. at 52,708 (JA0007) (‘“[T]he source specific concentration [of the pollutant] occurs in only a limited area (often one point) and the temporal and spatial conditions which lead to maximu m consumption [of the increment] by one source are seldom the same for other sources that may be making similar de
minimis changes.”). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 31 of 7318 Nevertheless, EPA expects permitting ag encies to be cautious about using SILs where a number of de minimis impacts could collectively create air quality problems. See RTC at 62 (JA00194) (“In short, it is not our intent that the SILs be used as a means of allowing known adverse ai r quality situations to be ignored just because they are small.”). If, for exampl e, the cumulative effect of a number of de
minimis impacts in an area can be shown to cause air quality problems that are not being addressed simply because no source’ s impact is “significant” then the permitting authority must address the air quality problems, either by using lower de
minimis levels, or by temporarily ceasing to use the de minimis concept altogether where it is known to allow th e adverse conditions to wors en without remedy, or by taking some other step to address the problems. Id. 2. PM 2.5 Significant Monitoring Concentrations The Rule also added a significant monitoring concentration (“SMC”) for
PM 2.5 to the long-standing monitoring exem ption provision (promulgated in the 1980 PSD regulations at 45 Fed. Reg. at 52,710 (JA0009)). See 75 Fed. Reg. at 64,866-67 (JA0070-0071) (40 C.F.R. § 51.166(i)(5)(i)(c); § 52.21(i)(5)(i)(c)). EPA proposed and evaluated three options for determining an appropriate SMC that would identify the degree of ambient impact on PM 2.5 concentration that is truly de minimis . 72 Fed. Reg. at 54,141-42 (J A0052-0053). Ultimately, EPA selected the option that is based on the lowe st detectable concentration, adjusted by USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 32 of 7319 a multiplication factor to account for erro rs that may arise from various activities associated with air quality monitoring, su ch as sample collection, analytical measurement, calibration, and interferences. See 75 Fed. Reg. at 64,896 (JA0100). EPA followed the same practice it established in 1980, when it first promulgated the SMC provision. At that time, EPA determin ed the SMCs based on the then-current capability of obtaini ng a meaningful measure of ambient pollutant concentrations. Id. EPA promulgated values that represented five times the lowest detectable concentration in am bient air that could be measured by the instruments available. Id. (citing 45 Fed. Reg. at 52,710). This factor of five took into account the measurement errors associ ated with the monitoring of these low pollutant levels or small incremen tal changes in concentration. Id. In this Rule, EPA took another look at the minimum detection limit of 2 μg/m 3 used in 1980, and reaffirmed this value based on recent data. 75 Fed. Reg. at 64,896-97 (JA0100-0101). The minimum detection limit was “reaffirmed by 9 years of field blank data collected by EPA through the PM 2.5 Performance Evaluation Program.” Id. Then, based on information collected during this rulemaking, EPA used its assessment of the uncertainties introduced to the measurement of PM 2.5 due to such factors as mechan ical or operational variations in the sampling devices, and the possibilit y of human error associated with the performance of sampling device calibration and sample analysis. Id. at 64,896 USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 33 of 7320 (JA0100). As a result of this new inform ation, EPA reduced th e uncertainty factor from 5 to 2, which reduced the SMC value from 10 μg/m 3 (that is, 5 times the detection limit of 2 μg/m 3 ) to the value established in this rule, 4 μg/m 3

. Id. 8 EPA concluded that “there is little to be gained from preconstruction monitoring of
PM 2.5 concentrations that cannot be accurately measured.” Id

. STANDARD OF REVIEW The CAA sets forth the appropriate sta ndard of review, which is the same as the standard set forth in the Admini strative Procedure Act (APA), 5 U.S.C. § 706(2)(A). Catawba County, N.C. v. EPA , 571 F.3d 20, 41 (D.C. Cir. 2009) (citations omitted). The Court consider s whether EPA’s action was “arbitrary, capricious, an abuse of discretion, or ot herwise not in accord ance with law.” 42 U.S.C. § 7607(d)(9)(A). The Court “must affirm the Rule if the record shows EPA considered all relevant factors and artic ulated a ‘rational connection between the facts found and the choice made.”’ Catawba , 571 F.3d at 41 (citing Burlington Truck Lines v. United States , 371 U.S. 156, 168 (1962)). Of particular note here, EPA is entitled to an “extreme degree of deference [] when it is evaluating scientific data within its technical expertise.” City of Waukesha v. EPA , 320 F.3d

8 As part of the grant of the State of Texas’s reconsideration petition, EPA has granted reconsideration of the SMC valu e to address Texas’s claim that the reduction of the uncertainty value from 5 to 2 was done without adequate notice and opportunity to comment. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 34 of 7321 228, 247 (D.C. Cir. 2003) (int ernal quotation marks omitted) . “Such deference is especially appropriate in [the court’s] review of EPA’s administration of the complicated provisions of the Clean Air Act.” Catawba , 571 F.3d at 41 (citation omitted). When reviewing EPA’s statutory inte rpretation, the Court first inquires whether Congress “has directly spoken to the precise question at issue,” in which case the Court “must give effect to the unambiguously expressed intent of Congress.” Chevron, U.S.A., Inc. v. NRDC , 467 U.S. 837, 842-43 (1984). If the statute is “silent or ambiguous with respect to the specific issue,” the Court moves

to Chevron's second step and must defer to the ag ency's interpretation so long as it is "based on a permissible construction of the statute." Id

. Under Chevron step two, considerable defere nce must be accorded to the interpretation of the agency assigned to admi nister that statute. In applying that deference, the agency’s interpretation must be upheld “if it is a reasonable interpretation of the statute – not necessar ily the only possible interpretation, nor even the interpretation deemed most reasonable by the courts.” Entergy Corp. v. Riverkeeper, Inc ., 556 U.S. 208, 218 (2009) (emphasis in original). Moreover, heightened deference is to be given to an agency’s interpretation of a statute that is complex and within the agency’s expertise. United States v. Mead , 533 U.S. 218, 227-31 (2001). The CAA is precisely this type of statute. NRDC v. EPA , 571 F.3d USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 35 of 7322 1245, 1251 (D.C. Cir. 2009). See also Am. Electric Power Co. v. Connecticut , 131S. Ct. 2527, 2533 n.2 (2011) (describing the “complicated issues related to carbondioxide emissions and climate change”). Finally, to the extent that EPA’s longs tanding interpretation reflected in its PSD regulations authorizing the use of de minimis screening levels does not foreclose Petitioners’ arguments under 42 U.S.C. § 7607(b), see infra argument III.A, EPA’s interpretation must at the very least be accorded substantial deference. Envtl. Def. v. Duke Energy Corp., 549 U.S. 561, 575 (2007); Alaska Dep’t of Envtl. Conservation v. EPA , 540 U.S. 461, 487 (2004) (“We ‘normally accord particular deference to an agency interpretation of long standing’ duration.”) (citations omitted). In reviewing EPA’s use of its de minimis authority recognized in Alabama
Power Co. v. EPA , 636 F.2d 323, 360-61 (D.C. Cir. 1979), the Court should apply the same deference that is accorded the agency’s “reasonable interpretation of an ambiguous statute.” Envtl. Def. Fund, In c. (“EDF”) v. EPA , 82 F.3d 451, 467 (D.C. Cir. 1996), amended by, 92 F.3d 1209 (D.C. Cir. 1996) (citing Chevron, 467 U.S. at 843; Ohio v. EPA , 997 F.2d 1520, 1535 (D.C. Cir. 1993)); see also Ober v. Whitman , 243 F.3d 1190, 1195 (9th Cir. 2001) (“EPA, in discharging its duty to enforce the Act, is permitted under Chevron to exempt de minimis sources of PM10 from pollution controls.”). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 36 of 7323 SUMMARY OF ARGUMENT Petitioner Sierra Club attacks only those portions of the Rule promulgating the PM2.5 significant impact levels and significant monitoring concentration, challenging both EPA’s legal authority an d its record-basis for adopting these provisions of the Rule. But, EPA’s use of SILs and SMC is consistent with EPA’s legal authority under the CAA, furthers th e purposes of the statute, and is amply supported by the record. With regard to the significant imp act levels, EPA reasonably interprets section 165(a)(3) of the CAA, 42 U.S.C . § 7475(a)(3), to allow the use of significance levels as a means to demons trate that a source will not cause or contribute to any violation of the NAAQ S or increment. The terms “cause, or contribute to” and “demonstrate” are am biguous, and EPA reasonably interprets the statute to allow sources that do not contribute significantly to ambient air concentrations of PM 2.5 to demonstrate complianc e through modeling of the source’s impact measured against the SILs. However, EPA agrees with Petitione r that the statute should not be interpreted to allow the use of SIL s to make the required compliance demonstration under section 165(a)(3) in ci rcumstances where it can be shown that the source causes a NAAQS or increments violation that would not exist but for the emissions from that source. In the co urse of this litigation, EPA has come to USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 37 of 7324 recognize that the regulatory text it a dopted in 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2) does not accurately reflect EPA’s intent, be cause it does not afford permitting authorities sufficient discretion to deny sources use of the SILs where their use would lead to a new violation of the NAAQS or increm ent. Accordingly, EPA asks that the Court v acate and remand these provisi ons to EPA, so that EPA may initiate a rulemaking to revise them to reflect EPA’s intent. Notwithstanding this error in the regulatory text, EPA submits that SILs generally are a valid exercise of EPA’s de minimis authority, and that the use of SILs generally should be upheld. Se ction 165(a)(3) requires sources to demonstrate they will not cause or c ontribute to any NAAQS or increments violation. EPA’s use of SILs as a me ans to demonstrate compliance with the NAAQS or increments thus implements the legislative design. Moreover, EPA rationally concluded that th e SILs reflect the level at which a source’s impact is truly de minimis and thus requiring the source to perform a comprehensive cumulative impact analysis would yield only trivial gain. Additionally, Petitioner fails to show that EPA’s adoption of a significant monitoring concentration for PM 2.5 is inconsistent with the statute or EPA’s de
minimis authority. First, Petitioner’s claim that EPA lacks the statutory authority to use a SMC to exempt a source from su bmitting a year’s worth of monitoring data is time-barred under s ection 307(b)(1) of the CAA, 42 U.S.C. § 7607(b)(1). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 38 of 7325 EPA promulgated the SMC provisions cha llenged here in 1980. EPA’s statutory interpretation to permit de minimis exemptions of the air quality monitoring requirement has not changed since EPA fi rst adopted SMCs for several pollutants in its 1980 PSD regulations. Accordingly, any challenges to that interpretation should have been raised long ago. Be cause EPA’s interpretation of its legal authority to adopt SMCs has not change d since 1980, Petitioner cannot challenge it

now. In any event, EPA’s use of SMCs is fi rmly grounded in its inherent authority to adopt de minimis exemptions. EPA’s interpreta tion of CAA section 165(e)(2), 42 U.S.C. § 7475(e)(2), to permit de minimis exemptions of the requirement for a year’s worth of preconstruction monitoring data when the source’s impact or the ambient air concentrations are below leve ls at which such concentrations can accurately be measured is reasonable. Further, EPA ra tionally concluded that the
de minimis levels it selected as the SMC for PM 2.5 reflect the levels below which concentrations cannot accurately be measur ed and thus the requirement to collect monitoring data would yield information of no more than trivial value. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 39 of 7326 ARGUMENT
I. THE CAA AFFORDS EPA DISCRETI ON TO PROMULGATE SILs AS MEANS TO “DEMONSTRATE” THAT A SOURCE WILL NOT “CAUSE, OR CONTRIBUTE TO” A VIOLATION OF THE NAAQS OR INCREMENTS. A. EPA Reasonably Interprets C AA Section 165(a)(3) to Allow the Use of SILs to “Demonstrate” that a Source Will Not “Cause, or Contribute to” a Violation of the NAAQS or Increments. EPA reasonably interprets CAA sec tion 165(a)(3), 42 U.S.C. § 7475(a)(3), to give it the discretion to adopt SILs for the purpose of demonstrating that a proposed new source or modification will have de minimis impacts on air quality and therefore will not cause or contribute to a violation of any NAAQS or increment. Petitioner’s primary argument to the contrary is that SILs are unlawful because they waive complia nce with the NAAQS and in crements. This argument misunderstands the purposes of the SILs a nd relies on an overly restrictive reading of the statute. The SILs are not intende d to waive section 165(a)(3)’s requirement that a source demonstrate co mpliance with the NAAQS or increment. Rather, the purpose of SILs is to provide a me ans by which a source may make this demonstration. EPA’s interpretation of section 165(a)(3) to allow the use of SILs to make the required showing is a reasona ble interpretation of a statute that is ambiguous as to this issue. Nothing in the CAA precludes EPA’s use of SILs in this manner. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 40 of 7327 Section 165(a)(3) provides that “[n] o major emitting facility . . . may be constructed in any area to which [the PSD program] applies unless” . . . the facility

“ demonstrates ” that its emissions “will not cause, or contribute to , air pollution in excess of any (A) [increment ] for any pollutant . . . [o r] (B) national ambient air quality standard for any po llutant.” 42 U.S.C. § 7475( a)(3) (emphasis added). While it is clear that such a demonstrati on must be made to obtain a PSD permit, the statute does not define the phrase “cau se, or contribute to,” or specify how a facility is to “demonstrate” that it does not cause or contribute to a violation of the NAAQS or increments. Therefore, the st atute is ambiguous with respect to the precise questions at issue here, and EPA’s permissible interpretation of these terms must be upheld. Chevron, 467 U.S. at 843. As this Court recently observed, dicti onary definitions of “contribute” vary as to whether the word im plicitly includes a level of significance or is defined without reference to any thre shold level of significance. Catawba , 571 F.3d at 38- 39 (discussing meaning of “contribute” in 42 U.S.C. § 7407(d), and concluding that the provision “is ambiguous as to how EPA should measure contribution and what degree of contribution is sufficient”). In that case, petitioners had argued that
EPA was required to interpret the word “contribute” in section 107(d) of the CAA to incorporate a signi ficance threshold. Id. The Catawba court concluded that the fact that the term “contribute” may or may not connote a significance threshold USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 41 of 7328 “alone suggests an ambiguity th at fatally undermines petitioners’ Chevron step one argument” regarding the meaning of “con tribute” in section 107(d). 571 F.3d at 39. So it is here. Because Congress did not further de fine or quantify “contribute” in section 165(a)(3), it is “eminently reasonable to conclude that [Congress’s silence] is meant to convey nothing more than a refusal to tie the agency’s hands” as to the level of contribution necessary under section 165(a)(3). Entergy , 556
U.S. at 222. EPA has long interpreted the phrase “cause, or contribute” to refer to significant or non- de minimis emission contributions. 72 Fed. Reg. at 54,139 (JA0050); In re Prairie State Generating Co. , 13 E.A.D. at 105-08; see, e.g., NSR Workshop Manual at C.52 (J A0279) (“The source will not be considered to cause or contribute to the violation if its own impact is not significant at any violating receptor at the time of each predicte d violation.”). EPA’s New Source Review regulations, at 40 C.F.R. § 51.165(b)(2), promulgated in 1987, 52 Fed. Reg. at 24,713, provide that a new source or m odification proposing to locate in an attainment area will be considered to “ cause or contribute to” a violation of the NAAQS in a nonattainment area if its emissions would exceed specific “significance levels” identified in the re gulations. If the emissions from the proposed source or modification would have an ambient impact in a nonattainment area that exceeds the SILs, i.e., a signifi cant impact, the source is considered to USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 42 of 7329 “cause, or contribute to” the NAAQS vi olation and may not receive a PSD permit unless it obtains emissions reductions to compensate for its impact. 40 C.F.R. § 51.165(b)(2)-(3). Additionally, section 165(a)(3) does not specify the method a source must use to “demonstrate” that it will not “cause, or contribute to” a NAAQS or increment violation. See 42 U.S.C. § 7475(a)(3). By its silence, Congress left it to EPA to determine how best to implement Congress’s intent that new or modified sources “demonstrate” compliance with the increment and NAAQS before obtaining a PSD permit. Nothing in the statute precludes EPA from using a modeling analysis that relies on signifi cance levels as a m eans to demonstrate whether a source will “cause, or contribu te” to a violation of the NAAQS or increments. In fact, Congress expressed in explic it terms its intent that EPA determine precisely how section 165(a)(3 )’s core requirements shoul d be implemented. CAA section 165(e)(3), 42 U.S.C . § 7475(e)(3), expressly di rects EPA to promulgate regulations regarding the a ppropriate ambient air quality analyses to be performed in implementing section 165. Additi onally, section 165(e)(3)(D), 42 U.S.C. § 7475(e)(3)(D), directs EPA to specify eac h model to be used under specified sets of conditions. Thus, while the statute cl early gives EPA the discretion to require a cumulative impact analysis, it does not preclude EPA generally from promulgating USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 43 of 7330 regulations that allow a source to “dem onstrate” that its emissions alone are de
minimis and therefore do not “cause or c ontribute to” a NAAQS or increment violation. Because the SILs are a reasonable method for demonstrating compliance with the NAAQS and increments, Petitioner’s argument that EPA’s use of SILs waives section 165(a)(3)’s core requirement is unavailing. Although EPA has not previously incorporated every application of the SILs into the PSD regulations at issue he re, 40 C.F.R. §§ 51.166 and 52.21, EPA historically has supported using SILs to determine whether a new or modified source wishing to locate in an attainment area must conduct a more extensive cumulative impact analysis to demonstrate that it will not “cause, or contribute to” a violation of the NAAQS or PSD increment. See 72 Fed. Reg. at 54,139 (JA0050). Thus, EPA stated in its NSR Workshop Manual, drafted in 1990, that “EPA does not require a full impact anal ysis for a particular pollutant when emissions of that pollutant from a proposed source or modification would not increase ambient concentrations by more than prescribed significant ambient impact levels.” NSR Worksh op Manual at C.24 (JA0251). Numerous other guidance documents al so recognize the us e of SILs as an appropriate screening tool to determin e whether a proposed source’s ambient impact is significant “so as to warrant a comprehensive, cumulative air quality analysis to demonstrate co mpliance with the NAAQS.” E.g. , Memorandum, from USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 44 of 7331 Stephen D. Page, Director, Office of Ai r Quality Planning and Standards, to Regional Air Division Directors, “Guidan ce Concerning the Implementation of the 1-hour SO2 NAAQS for the Prevention of Significant Deterioration Program at 4, Aug. 23, 2010. 9 EPA’s longstanding policy and practice of interpreting the “cause, or contribute” demonstration in section 165(a)(3) to include a significance inquiry “tends to show that the EPA’s current practice is a reasonable and hence legitimate exercise of its discretion.” Entergy Corp. , 556 U.S. at 224. Indeed, in Sur Contra La Contaminacion (“SURCCO”) v. EPA , 202 F.3d 443, 448 (1st Cir. 2000), the First Circuit upheld EPA’s use of SILs to grant a PSD permit. In that case, SURCCO had argued that it was improper for EPA to issue

9 Available at http://www.epa.gov/nsr/guida nce.html (last visited June 22, 2012). See also Memorandum from Stephen D. Page, Director , Office of Air Quality Planning and Standards, to Regional Air Division Director s, “Guidance Concerning the Implementation of the 1-hour NO2 NAAQS for the Prevention of Sign ificant Deterioration Program at 11, June 29, 2010, available at http://www.epa.gov/nsr/gui dance.html (last visited June 22, 2012); Memorandum from Gerald A. Emison, Direct or, EPA Office of Air Quality Planning and Standards, to Thomas J. Ma slany, Director, Air Manageme nt Division, “Air Quality Analysis for Prevention of Significant Deteriora tion (PSD)” at 1 (July 5, 1988), available at http://www.epa.gov/region07/air/ns r/nsrindex.htm (last visited June 22, 2012) (“Historically, the [EPA’s] position has been that a PSD source will not be consid ered to cause or contribute to a predicted NAAQS or increment violation if the source’s estimated air quality impact is insignificant (i.e., at or below defined de minimis levels.”); Memorandum from Richard G. Rhodes, Director, Control Programs Develo pment Division, EPA, to Alexandra Smith, Director, Air and Hazardous Materials Divi sion, EPA Region 10, “Interpretation of ‘Significant Contribution,’” (Dec. 16, 1980), available at http://www.epa.gov/ttn/nsr/psd2/p12_12.html (last visited June 22, 2012) (a source will not be viewed as causing or contributing to a viola tion if the source’s impact is lower than the SILs at the time and location of the violation). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 45 of 7332 the permit without requiring a full impact an alysis of the proposed source’s sulfur dioxide emissions. Id . The Court held that “[i]t was rational for the Agency to prefer its own model, to reject SURC CO’s proposed altern ative modeling that allegedly showed sulfur dioxide emissi ons above the threshold levels, and to accept, instead, [the a pplicant’s] modeling.” Id. The Court thus found that EPA was “within its discretion, under the regula tions, to exempt [the applicant] from conducting a full impact analysis.” Id. The First Circuit’ s acceptance of EPA’s reliance on a SIL in the context of a sp ecific permit challenge as a sufficient demonstration of compliance with the N AAQS and increments further shows the reasonableness of EPA’s interpretation of the statute. B. EPA Agrees that SILs Should No t Be Used to Exempt a Source Whose Emissions are Shown to Cause a Violation of the NAAQS or Increment. EPA does not dispute Petitioner’s contention that section 165(a)(3) unambiguously requires all permit applicants to demonstrate that proposed construction will not cause or contribute to a violation of air quality standards. Likewise, EPA agrees that SILs should not be used to justify issuing permits to sources whose emissions will in fact cause violations of the NAAQS. Thus, EPA acknowledged in the preamble to the Rule that there may be circumstances in which an impact from an individual s ource could cause a NAAQS or increment violation even if the impact falls below the app licable SILs. For example, EPA USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 46 of 7333 specifically cautioned against the use of SILs in circumstances where the ambient air quality in an area is cl ose to the NAAQS or close to consuming the increment.
See 75 Fed. Reg. at 64,894 (JA 0098) (“[W]e have historically cautioned states that the use of a SIL may not be appropriate when a substantial portion of any NAAQS or increment is known to be consumed.” ). Similarly, EPA stated that SILs should

not be used where a number of de minimis impacts could collectively cause a violation. See RTC at 62 (JA00194) (“If, for exam ple, the cumulative effect of a number of de minimis impacts in an area can be shown to cause air quality problems that are not being addressed simply because no source’s impact is “significant” then the permitting authorit y must address the air quality problems, whether by using lower de minimis levels or temporarily cease using the de
minimis concept altogether where it is known to allow the adverse conditions to worsen without remedy, or taking some other step to address the problems.”). In short, EPA did not and does not in tend for SILs “to be used as a means for allowing known adverse air quality situati ons to be ignored just because they are small.” RTC at 62 (JA00194). Thus, in the preamble to the final Rule, EPA stated: “[N]otwithstanding the existe nce of a SIL, permitting authorities should determine when it may be appropria te to conclude that even a de minimis impact will ‘cause or contribute’ to an air qua lity problem and to seek remedial action from the proposed new source or modificati on.” 75 Fed. Reg. at 64,892 (JA0096). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 47 of 7334 In the course of this litigation, howe ver, EPA has come to the conclusion that the regulatory text it promulga ted in 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2) does not correctly implement EPA’s intent in this regard. In particular, where information exists demonstrating that a proposed source’s impact would cause a NAAQS or increments violati on, which violation would not exist but for the source’s impact at any particul ar location, then EPA agrees it would not be appropriate to use the SILs. EPA believes that the re gulatory text it adopted does not allow permitting authorities the discretion to require a cumulative impact analysis, notwithstanding that the source’s impact is below the SIL, where there is information that shows the proposed sour ce would lead to a violation of the NAAQS or increments. This was not EPA’s intent in promulgating this Rule. Therefore, EPA seeks vacatur and remand of the regulatory text promulgated in this Rule at 40 C.F.R. § 51.166(k)(2) a nd 52.21(k)(2) so that the Agency may consider how to revise those provisions to ensure that SILs are not used in circumstances where a source’s impact may lead to a NAAQS or increment violation. 10

10 EPA plans to issue guidance in the n ear future on how the PM2.5 SIL values that remain in 40 C.F.R. § 51.165(b) ma y be properly applied as part of a demonstration to show that a source’s im pact will not cause or contribute to a violation of the NAAQS or increments. This guidance would apply until revised regulations can be finalized. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 48 of 7335 Vacating and remanding these di screte provisions (40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2 )) does not require that the Court vacate the entire Rule. The test for assessing whether portions of a challenged regulation are severable is to determine whether or not the agency would have adopted the severed portion on its own. See Davis County Solid Waste Mgmt. v. EPA , 108 F.3d 1454, 1458-59 (D.C. Cir. 1997). The record here demonstrates that EPA intended the other portions of the Rule to operate with or without the SIL provisions that EPA now concedes are improperly written. As EPA explained in the final Rule preamble, SILs are not mandatory or requir ed elements of an approvable PSD state implementation plan, even though they are c onsidered to be useful components for implementing the PSD program. 75 Fed. Reg. at 64,899-901 (JA0103-0105). In other words, the absence of the SILs in the regulation would not have any meaningful effect on the implementati on of the PSD increments and SMC for
PM 2.5 that EPA adopted in this Rule. Thus , even though EPA is conceding that the Court should invalidate the SIL provisi ons of the Rule, the Court need not invalidate the portions of the Rule establishing PM 2.5 increments or SMC. Additionally, we note that the regulatory text in 40 C.F.R. § 51.165(b) (which established SILs as a tool for show ing that a source will cause or contribute to a NAAQS violation) and 40 C.F.R. Pt. 51, App. S (which uses SILs as a threshold for the applicability of certain Appendix S requirements) do not contain USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 49 of 7336 the same language as EPA promulgated in this Rule in 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2) that leads EPA to seek th e remand of those provisions. We also note that Petitioner does not in this pe tition challenge the SIL s contained in 40 C.F.R. § 51.165(b) on the grounds that they are outside of EPA’s statutory authority under the CAA ( see Pet. Br. 20 n.8 and 32 n.12). Although Petitioner does challenge the reasonableness of the PM 2.5 SIL values incorporated into EPA’s existing regulation at 40 C.F.R. § 51.165(b)(2) (Pet. Br. 37 n.17), for the reasons discussed below, EPA submits that thes e values are fully supported by the administrative record and therefore should be upheld.

II. EPA’s ADOPTION OF SILs IS SUPPORTED BY ITS INHERENT AUTHORITY UNDER ALABAMA POWER TO CREATE DE MINIMIS EXEMPTIONS. In Alabama Power , the D.C. Circuit recognized that EPA has the inherent authority under the CAA to exempt emi ssions increases from new or modified sources from some or all of the PSD re quirements where such emissions would be
de minimis and thus their regulation would yield only trivial or no value. Ala.
Power Co. , 636 F.2d at 360-61. The authority to exempt de minimis activity from regulation where such regulatio n would result in trivial or no benefit is part of an agency’s usual responsibility to carry out a statutory scheme, like the CAA. In USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 50 of 7337 fact, there is “vir tually a presumption in its favor.” Public Citizen v. Young , 831 F.2d 1108, 1113 (D.C. Cir. 1987). As applied here, EPA is using SILs to identify a level of impact on ambient air quality that EPA regards as truly de minimis , in that requiring more detailed air quality analysis would have virtually no be nefit. A source that demonstrates its impact does not exc eed a SIL is not required to c onduct more extensive air quality analysis or modeling to demonstrate th at those emissions “will not cause, or contribute to” a violation of the NAAQS or increment. 42 U.S.C. § 7475(a)(3). Because in such circumstances the source’s impacts alone are de miminis , i.e., insignificant, a cumulativ e impact analysis and modeling by that source would yield information of trivial value. It thus makes little economic or environmental sense to require that work to be done. As discussed more fully below, EPA’s interpretation of section 165(a)(3) to allow sources with de minimis impacts to demonstrate compliance with NAAQs and increments without a comprehensive cumulative impact analysis is firmly grounded in EPA’s de minimis authority under Alabama Power and reflects a permissible construction of the statute under Chevron . Petitioner’s arguments against EPA’s use of its de minimis authority should be reje cted. The statute is not so rigid as to foreclose EPA’s use of SIL s as a means for making the demonstration required by section 165(a)(3) of complia nce with the NAAQS and increments. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 51 of 7338 Contrary to Petitioner’s argument, SILs are not intended to waive the central requirements of section 165(a)(3) but, rath er, are a tool to implement Congress’s intent. Moreover, the SILs in the Rule are based on EPA’s reasonable assessment of the level at which a source’s impact is truly de minimis

. A. EPA Reasonably Interprets Sect ion 165(a)(3) to Allow the Use of SILs as De Minimis Thresholds. As discussed above, section 165(a)(3 ), 42 U.S.C. § 7475 (a)(3), does not specify how the required demonstrati on of whether a sour ce will “cause, or contribute to” a NAAQS or increment violation is to be made, and EPA’s interpretation of that provision to allow the use of SILs as a means to demonstrate compliance is reasonable. Petitioner’s argume nt that the statute is extraordinarily rigid, foreclosing the use of SILs, is based on its misunderstanding of how SILs operate. The use of SILs does not waive the mandatory requirement in section 165(a)(3) that a source “demonstrate” that it “will not cause, or contribute to,” a violation of the NAAQS or increments. Rather, SILs are a mean s of demonstrating through modeling that the source’s impact will be sufficiently low relative to the NAAQS or increments that such impact will not cause or contribute to a NAAQS or increments violation. Petitioner’s contention that Congress’s use of the terms “no” and “any” in section 165(a)(3) reflects the sort of rigid language that forecloses EPA’s de USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 52 of 7339 minimis authority (Pet. Br. 21) ignores that this Court has approved de minimis exemptions from similarly broa d and sweeping language. In EDF v. EPA , 82 F.3d at 465, for instance, the Court considered EPA’s use of its de minimis authority in the context of section 176(c) of the CAA, which provides that “ [n]o department, agency, or instrumentality of the Fe deral Government shall . . . support in any way

. . . any activity which does not conform to an implementation plan.” 42 U.S.C. § 7506(c) (emphasis added). The Court in EDF concluded this language was not so rigid as to foreclose de minimis exceptions, notwithstanding the words “no” and “any.” EDF , 82 F.3d at 466. The language in se ction 165(a)(3) is no more rigid than the language in section 176(c). If the Court found the language of the conformity provision in EDF to admit of de minimis exceptions, so too should this Court conclude that section 165(a)(3) authorizes EPA to use SILs as de minimis thresholds for demonstrating that a source does not cause or contribute to NAAQS or increments violations. This Court’s decision in New York v. EPA , 443 F.3d 880, 888 (D.C. Cir. 2006), also is instructive. In that cas e, the Court vacated an EPA rule that interpreted “any physical change” in the definition of “modification” in 42 U.S.C. § 7411(a)(4) to exempt physical changes that do not exceed 20% of the replacement value and do not change the source’s basic design parameters. The Court reasoned that the plain language of the statute said “any” and there is “no USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 53 of 7340 reason why ‘any’ should not mean ‘any.’” Id. However, the court in that case discussed the de minimis principle as a separate question, noting that the Alabama
Power court acknowledged that EPA could apply the de minimis principle in applying the statutory definition of “modification.” Id. at 888. The one de minimis case Petitioners cite, Public Citizen v. Young , 831 F.2d at 1111-13, involves statutory language th at does not parallel the usage of the terms “no” or “any” in section 165(a)(3). Compare 21 U.S.C. § 376e(b)(5)(B) (“a color additive . . . shall be deemed unsafe . . . if . . . [it] is found . . . to induce cancer” in man or animal), with 42 U.S.C. § 7475(a)(3) (“no major emitting facility . . . may be constructed in any area to which [the PSD program] applies unless,”
inter alia , the facility “demonstrates . . . that [its] emissions . . . will not cause, or contribute to” any violation of the NAAQS or increment). Accordingly, Public Citizen does not support Petitioner’s reading of the statute as “extraordinarily rigid.” Petitioner’s argument that the absence of the word “significant” from section 165(a)(3) forecloses EPA from applying a de minimis exemption also is unavailing. As discussed above, the term “contribute to” may or may not connote a significance threshold and therefore is ambiguous. See Catawba , 571 F.3d at 39. Thus, nothing in the statute precludes EPA from interpreting the phrase to mean a contribution that is significant. Indeed, “ it is eminently reasonable to conclude that USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 54 of 7341 [Congress’s silence] is mean t to convey nothing more than a refusal to tie the agency’s hands” as to the level of cont ribution necessary under section 165(a)(3). Entergy , 556 U.S. at 222. EPA’s interpretati on of “contribute” in section 165(a)(3) to mean “significantly contribute” furthers the legislative intent that EPA ensure that economic growth occur consistent w ith preserving air quality, as provided in 42 U.S.C. § 7470(3). Finally, that section 165 provides several express waivers from the requirement in section 165(a )(3) does not show that C ongress intended to foreclose EPA’s use of its de minimis authority in this Rule. See Pet. Br. at 21-22. EPA is not waiving the requirement in section 165(a)(3); EPA is establishing de minimis levels that allow a source to demonstrate through modeling that its impact will not cause or contribute to a NAAQS or incremen ts violation. In any event, Petitioner’s reliance on Kokechick Fishermen’s Ass’ n v. Sec’y of Commerce , 839 F.2d 795, 801-02 (D.C. Cir. 1988), is misplaced, as that case is clearly distinguishable. In that case, the court’s analysis of the rele vant statute turned on its conclusion that the text does not allow balancing of ma rine mammal protection against fishing interests. Id. at 801-02. In contrast, in CAA section 160, 42 U.S.C. § 7470, Congress has identified vari ous purposes of the PSD program, seemingly at some tension with one another, incl uding encouraging economic growth and preventing significant deterioration of air quality, a nd it has required EPA to balance these USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 55 of 7342 competing interests. EPA’s use of SILs as a means of demonstrating compliance with NAAQS and increments is one r easonable approach to balancing these competing purposes of the statute. B. EPA’s Interpretation of Section 165(a)(3) to Allow the Use of SILs to Demonstrate Compliance with NAAQS and Increments Furthers the Legislative Design. Because SILs are a means of dem onstrating compliance with the NAAQS and increments, they also implement the legislative design. Petitioner’s argument that SILs thwart the legislative design is based on their assumption that SILs waive the requirement in section 165(a)(3) that pe rmit applicants “demonstrate” that they will not “cause, or contribute to” a viola tion of the NAAQS and or the increments. Pet. Br. 29. As discussed in argument I.B., supra , EPA agrees with Petitioner that SILs should not be used to justify permitting a source without a cumulative analysis in circumstances where there is in formation to suggest that use of the SIL in this manner would lead to a violati on of the NAAQS or in crement. Because EPA recognizes that the regulatory language it adopted in 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2) does not provide pe rmitting authorities discretion not to apply SILs for the particular purpose covered by these provisions, EPA agrees that §§ 51.166(k)(2) and 52.21(k) (2) should be vacated and remanded. With appropriate safeguard s addressing circumstances when SILs should not be used, however, SILs remain a reasonable mechanism to meet section 165(a)(3)’s USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 56 of 7343 requirements that sources demonstr ate compliance with the NAAQS and increments. C. The SILs Identify Levels below which a Source’s Impact is Truly De minimis , and thus Requiring a Cumulative Impact Analysis Would Yield Information of Only Trivial Value. EPA has provided a reasoned explanation that shows air quality impacts below the SILs are truly de minimis . Petitioner’s arguments do not so much challenge the particular values EPA determined are appropriate de minimis levels as they rehash their arguments, addressed above, that the use of SILs is foreclosed by the statute and thus that EPA could identify no appropriate de minimis level. The most direct attack Petitioner makes on the numeric values of the SILs is to argue that EPA did not provide any evidence to support the SILs it set. See Pet. Br. 38-39. Contrary to Petitioner’s assertio ns, the rationale for the SILs adopted is fully explained and supported by evidence in the record. EPA calculated the SILs by mu ltiplying the ratio of the PM 2.5 NAAQS to the
PM 10 NAAQS by the existing PM 10 SILs, which are set forth in 40 C.F.R. 51.165(b)(2). 75 Fed. Reg. at 64,893 (JA0097). To de termine that these levels reflect truly de minimis impacts, EPA analyzed them in comparison to the impact EPA deems insignificant for purposes of determining whether a source is a major emitting facility. Id. EPA determined that the am bient impact resulting from the application of the SIL is comparable to the range of ambient concentrations USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 57 of 7344 deemed de minimis under EPA’s 1980 regulations establishing significance rates for purposes of the majo r source determination. Id. ; see supra Background, section II.C.1. (comparing these SILs as a percentage of the PM 2.5 NAAQs and increments to the significance levels for PM 10 ). EPA reasonably relie d on significance levels established in analogous contexts as a basi s for its determinati on that the SILs here reflect the levels below which any furthe r regulation would yield, at most, only trivial benefits. See EDF , 82 F.3d at 467 (upholding EPA’s finding of de minimis impacts based on previously adopted de minimis levels); Ober , 243 F.3d at 1196 (same).

III. EPA PROPERLY USED ITS DE MINIMIS AUTHORITY TO ADOPT SIGNIFICANT MONITORING CONCENTRATIONS. As part of the required PSD review of new or modified sources of air pollution, CAA section 165, 42 U.S .C. § 7475, and EPA’s implementing regulations require a source to coll ect preconstruction monitoring data. Specifically, section 165(a)(7), 42 U.S.C. § 7475(a)(7), requires “such monitoring as may be necessary to determine the e ffect which emissions from any [covered] facility may have, or is having, on air qua lity in any areas which may be affected by emissions from such source.” Add itionally, section 165(e)(2), 42 U.S.C. § 7475(e)(2), calls for collecting one year ’s worth of preconstruction monitoring USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 58 of 7345 data, unless the permitting authority determin es a complete and adequate analysis may be accomplished in a shorter period. Under EPA’s longstanding interpretation of the Act, as reflected in regulations first adopted in 1980, EPA may use its de minimis authority to exempt sources from providing such monitoring da ta if the source can demonstrate that either its ambient impact or the ambient c oncentration with regard to a pollutant is less than a value known as the significant monitoring concentration, or SMC. See 72 Fed. Reg. at 54,141 (JA0052); 45 Fed. Reg. 52,676, 52,707 (JA0003, 0006); 40 C.F.R. §§ 51.166(m), 52.21(m). EPA first adopted this interpretation in its 1980 PSD implementation regulations, 45 Fed. Reg. at 52, 705-710 (JA0004-0009), when it promulgated a number of SMCs to be used as screening tools for sources to use to determine whether they s hould conduct site-specific preconstruction monitoring. In the present Rule, EPA amended its PSD implementing regulations by adopting an SMC for PM 2.5 . 75 Fed. Reg. at 64, 895 (JA0099) (40 C.F.R. §§ 51.166(i)(5)(i)(c), 52.21(i )(5)(i)(c)). As it did in the 1980 Rule, EPA based the SMC on its de minimis authority recognized in Alabama Power . 75 Fed. Reg. at 64,895-96 (JA0099-0100). Like the ot her pollutants for which EPA has promulgated SMCs, EPA concluded that th ere is little to be gained from requiring USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 59 of 7346 the collection of preconstruction monitoring data for PM 2.5 concentrations that are at levels so low that they ca nnot be accurately measured. Id. Petitioner’s arguments against the SMC must be rejected. As an initial matter, this Court does not have jurisd iction to consider Petitioner’s claim that EPA lacks the authority to implement SM Cs. EPA adopted the provisions of the PSD regulations at issue here, 40 C.F.R. §§ 51.166(i)(5) and 52. 21(i)(5), in 1980. At that time, EPA set forth its interpre tation of the CAA to allow the use of de
minimis thresholds for determining whether a source must collect a year’s worth of monitoring data. If Petitioner wished to challenge that interpretation, it was required to do so within 60 days of publi cation of the regulation in the Federal Register. Section 307(b), 42 U.S.C. § 7607(b), precludes Petitioner from raising the issue now. To the extent the Court reaches Pe titioner’s argument that the statute does not authorize SMCs, Petitioner fa ils to show that the statute is so rigid as to rebut the “virtual presumption” of inhe rent agency authority to create de minimis exemptions from regulatory burdens that will have little or no benefit. Second, Petitioner misconstrues the basis for the ex emption to be that all monitoring is “pointless.” Pet. Br. 43. To the c ontrary, EPA reasonably determined that monitoring that would not provide accurate data would not serve the purposes of the Act. Third, Petitioner’s argument that the SMC is arbitrary ignores EPA’s USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 60 of 7347 explanation in the record, which shows th at the SMC reflects a narrowly tailored exemption applicable only where the value of the monitoring data is likely to be trivial. A. Petitioner’s Challenge to EP A’s Authority to Adopt SMCs is Time-Barred. CAA section 307(b)(1), 42 U.S.C. § 7607( b)(1), directs that any petition for review must be filed within sixty days from the date that notice of the challenged action appears in the Federal Register. The filing period in the Clean Air Act “is jurisdictional in nature.” Motor & Equip. Mfrs. Ass’n v. Nichols , 142 F.3d 449, 460 (D.C. Cir. 1998) (citation and internal quotation marks omitted). Thus, if the petitioner has failed to comply with it, th e Court is “powerless to address their claim.” Medical Waste Inst. & Energy Recovery Council v. EPA , 645 F.3d 420, 427 (D.C. Cir. 2011). Here, Pet itioner failed to comply w ith this requirement with regard to its claim that EPA l acks the authority to adopt SMCs. As noted, EPA first promulgated SMCs in its 1980 regulations implementing the PSD provisions of th e CAA. 45 Fed. Reg. at 52,733-34 (JA0010-0011). At that time, EPA asserted its interpretation of section 165(e)(2) of the CAA to permit a permitting authority to exempt a source from submitting a year’s worth of preconstruction monitoring data if the source could show either that the source’s proposed impact or th e ambient air quality concentrations were USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 61 of 7348 below de minimis levels promulgated as “signifi cant monitoring concentrations.” 45 Fed. Reg. at 52,708-710 (JA0007-0009). EPA relied on the same interpretation of the Act in promulgating the PM 2.5 SMC here. Indeed, EPA did not substantively modify the regulatory text Petitioner cha llenges, except to add a new SMC for
PM 2.5 . 11 Pursuant to section 307(b)(1), cha llenges to EPA’s interpretation of the CAA as reflected in the SMC were required to have been raised within 60 days of when the regulation was first published in the Federal Register. 42 U.S.C. § 7607(b)(1). As the Court recently held in the context of another CAA regulation: “The sixty-day window provided by statute has long since closed, and [the Court] may not reopen it and entertain a belated challenge to the EPA’s [SMC] approach
now.” Medical Waste Inst. , 645 F.3d at 427. This is true even though Petitioner lodged objections to EPA’s SMC approach during the rulemaking. See id. Petitioner’s objection to EPA’s authorit y to adopt SMCs is time-barred. 12

11 In this Rule, EPA made minor tec hnical corrections to the language in 40 C.F.R. §§ 51.166(i)(5) and 52. 21(i)(5) to address an err oneous cross-reference to a subparagraph (i)(8), whic h EPA inadvertently faile d to change when the paragraphs were renumbered in an ear lier rulemaking. 75 Fed. Reg. at 64,897 (JA0101).

12 Notably, Petitioner recognizes that they cannot challenge here EPA’s authority to adopt the SILs at 40 C.F.R. § 51.165(b) ( compare Pet. Br. 20 n.8 and 32 n.12, with Pet. Br. 37 n.17), which were firs t promulgated in 1987. Petitioner USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 62 of 7349 B. EPA’s Interpretation of Section 165(e)(2) is a Permissible Construction of the Statute. To the extent the Court reaches Petitione r’s statutory challenge to the SMC, EPA reasonably interprets the statut e to allow an exemption from the preconstruction monitoring requirement based on de minimis levels reflecting current capabilities to accurately measure ambient air concentrations. The purpose of the statute’s monitoring requirement is to provide data for purposes of performing an air quality analysis. It is reasonable for EPA to conclude that the statute permits an exemption for collection of data that is not useful to carrying out the purposes of the statute. Petitioner’s argument that CAA section 165(e)(2) forecloses any de minimis exemptions because it sets forth a plain re quirement for monitori ng data (Pet. Br. at 41(citing Alabama Power )), proves too much. By defin ition, an agency’s authority to adopt de minimis exemptions as recognized in Alabama Power is inherent—that is, not express in the statute. 636 F.2d at 360 (“Courts should be reluctant to apply the literal terms of a statute to mandate poi ntless expenditures of effort.”). Thus, while it is true that the court in Alabama Power , 636 F.2d at 372, interpreted section 165(e)(2) as a “plain requirement” for monitoring data that could not be

fails to explain, however, why the same do es not hold true fo r Petitioner’s belated attempt to challenge EPA’s longstandi ng regulations adopting SMC. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 63 of 7350 categorically waived on the ground of t echnological infeasibility, that does not mean EPA is foreclos ed from exercising its de minimis authority to craft a more narrowly tailored exemption, as it did here. Further, this Court has recognized that an agency’s inherent authority to adopt de minimis exemptions is “virtually a presumption.” Public Citizen , 831 F.2d at 1113. To argue, as Petitioner does, that the statute sets forth a plain requirement is not sufficient to rebut that presumption. Petitioner must show that the statute is “ex traordinarily rigid” before an agency will be precluded from adopting a de minimis exemption. Alabama Power , 636 F.2d at 360-61. Moreover, Petitioner cannot buttress its interpretation of the statute as “extraordinarily rigid” by arguing that Congress’s inclusion of an express exemption in section 165(e)(2), forecloses EPA from adopting de minimis exemptions. Alabama Power recognizes an agen cy’s inherent authority to adopt exemptions for de minimis exemptions that are not otherwise explicitly authorized by the statute. Whether a statute may be read to implicitly authorize non- de
minimis exceptions in the face of exemptions expressly authorized by Congress is a separate question. See, e.g., New York , 443 F.3d at 887-88 (distinguishing the issue in that case, i.e., wh ether the agency may create implicit exemptions in the face of explicit exemptions, from an agency’s inherent Alabama Power authority

to create de minimis exemptions). Thus, the principle of statutory construction USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 64 of 7351 Petitioner relies upon is inapposite in the c ontext of an agency’s implied authority

to create de minimis exemptions. To the extent the exemption in sec tion 165(e)(2) is relevant at all, the language of the exemption supports EPA’s interpretation of the statute. Section 165(e)(2) authorizes EPA to establish re gulations allowing a permitting authority to require less than one year’s data if “a complete and adequate analysis for such purposes may be accomplished in a s horter period.” 42 U.S.C. § 7475(e)(2) (emphasis added). This language further demonstrates that the purpose of the preconstruction monitoring requirement is to provide data that is sufficient to conduct a “complete and adequate analysis.” If the monito ring data is inaccurate or could lead to uncertainty, then re quiring its collection does not serve the purposes of the statute. EPA’s decision to create a de minimis exemption based on the levels below which ambient pollutant concentrations can accurately be measured furthers Congress’s intent and th erefore is an appropriate exercise of
EPA’s de minimis authority. C. The SMC Implements the Legisl ative Design By Exempting Data that Is Not Accurate Enough to Serve any Useful Purpose. The purpose of de minimis exemptions is to inject a limited degree of flexibility into the statute, where an othe rwise rigid application would thwart the legislative purposes. See Alabama Power , 636 F.2d at 360. The SMC for a USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 65 of 7352 pollutant reflects levels belo w which concentrations of th at pollutant in ambient air cannot accurately be measured. There is no purpose in requiring collection of data that cannot be relied upon in an analysis of ambient air quality under the statute. EPA’s decision to create a de minimis exemption based on the levels below which pollutant concentrations can accurately be measured furthers C ongress’s intent and therefore is an appropriate exercise of EPA’s de minimis authority. Petitioner’s assertion that the SMC th warts the legislative purposes (because it allows NAAQS violations) ignores that EPA has long stated that permitting authorities should not apply the exemptio n in circumstances where an area’s ambient concentration is close to the NAAQS or the consumption of the increment. 45 Fed. Reg. at 52,710 (JA0009) (SMCs “should not be used when (1) there is an apparent threat to an applicable PSD increment or NAAQS based on modeling alone or (2) when there is a question of adverse impact on a Class I area.”). Moreover, Petitioner fails to explain how th e collection of possibly inaccurate data or uncertain data would enable permitti ng authorities to determine whether a proposed new source will violate the NA AQS or increments . In fact, EPA concluded the opposite. EPA found that preconstruction monitoring of ambient concentrations that are below the SMC “could not be used for any quantitative purposes because [the resu lts] would not provide the desired confidence of accuracy and precision.” RTC at 92 (JA0206 ). EPA reasonably concluded that, in USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 66 of 7353 these circumstances, “the time and expense of a year of preconstruction monitoring data would be wasted.” Id. EPA’s use of its de minimis authority to avoid such “pointless expenditures of effort” furthe rs the legislative design and should be upheld. Alabama Power , 636 F.2d at 360. D. The SMC Reflects the Level at Which Regulatory Benefits are Truly De minimis . Petitioner’s argument that EPA cannot s how monitoring benefits are trivial (Pet. Br. 47-54) misunderstands or mischa racterizes the purpose and scope of the SMC exemption and ignores the analysis in the record supporting the values EPA selected as the SMC for PM 2.5 . As already discussed, th e purpose of the exemption is to exempt permit applicants from havi ng to collect monitoring data when the source’s impact or the ambient concentra tions are below the level at which the concentrations may accurately be measured . EPA does not deem all monitoring to be trivial, as Petitioner suggests. Pet. Br . 47. Rather, EPA believes there is little value to requiring additional monitoring data to be co llected when the source’s impact or the ambient concentrations in th e area are below the levels at which the concentrations can accurate ly be measured. 75 Fed. Reg. at 64,896 (JA0100). As noted above, representative data may already be available. Thus, the exemption is narrowly targeted to exempt only thos e instances where the collection of monitoring data is not likely to be useful in any ambient air quality analysis. Id. USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 67 of 7354 See RTC at 91-92 (JA0205-0206). As such, it is an appropriate de minimis exemption under Alabama Power . 636 F.2d at 361 (valid de minimis exemption is one that is “narrow in reach and tightly bounded by the need to show that the situation is genuinely de minimis ”). Further, EPA fully explained its choi ce of the SMC value in the record. EPA proposed and evaluated three options for determining an appropriate SMC that would identify the degree of ambient impact on PM 2.5 concentration that is truly de minimis . 72 Fed. Reg. at 54,141-42 (JA 0052-0053). EPA selected the option that is based on the lowest detect able concentration—or minimum detection limit—adjusted by a multiplication factor to account for errors that may arise in monitoring from various sources, such as sample collection, analytical measurement, calibration, and interferences. See 75 Fed. Reg. at 64,896 (JA0100). EPA’s reasoning reflects a rational connec tion between the SMC values selected and EPA’s goal of exempting monitoring that would be of little value. Accordingly, EPA’s judgment is entitled to deference. Moreover, EPA in this rulemaking took another look at the detection limit originally used in 1980, and reaffirmed this value based on re cent data. 75 Fed. Reg. at 64,896-97 (JA0100-0101) (minimum detection limit was “reaffirmed by 9 years of field blank data collected by EPA through the PM 2.5 Performance Evaluation Program.”) Then, based on information collected during this USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 68 of 7355 rulemaking, EPA used its assessment of the uncertainties introduced to the measurement of PM 2.5 due to mechanical or operatio nal variations of the sampling devices, and human error associated w ith the performance of sampling device calibration and sample analyses. Id. As a result of this new information, EPA reduced the uncertainty factor from 5 to 2, which reduced the SMC value from 10 μg/m 3 (that is, 5 times the detection limit of 2 μg/m 3 ) to the value established in this rule, 4 μg/m 3

. Id. EPA’s thorough examination of these technical issues further supports the reasonableness of its decision. However, that EPA gave permitting au thorities the discretion to consider whether monitoring might provide more th an trivial benefits, notwithstanding the SMC, shows that EPA properl y limited the exemption to those situations that are truly de minimis

. 13 Thus, contrary to Petitioner’s argument, EPA’s limitation of the use of the SMC supports rather than undermines its use of its de minimis authority. Finally, EPA considered and rejected Petitioner’s argument that there is no rational relationship betw een basing the SMC on monitoring accuracy and

13 In contrast to the language in §§ 51.166(k)(2) and 52.21(k)(2) that EPA concedes is erroneous, the language in §§ 51.166(i)(5) and 52.21(i)(5) of EPA’s regulations leaves more room fo r permitting authority discretion. See e.g. , 40 C.F.R. § 51.166(i)(5) (“may exempt ... from the requirements of paragraph (m) of this section, with respect to monitoring”). USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 69 of 7356 applying it based on a measurement of a source’s predicted increase in emissions based on modeling. In that argument, Petitioner does not dispute that the predicted impact of a source might be below levels that could be accurately measured, but argued that there was still value to precons truction monitoring. Pet. Br. 51. As EPA explained in response to comment s, “any difference in the ambient concentration due to such a source [with impacts below the SMC] would be too small to be measured accurately, so any attempt to quantify the impact of a source based on preconstruction and post-construction monitori ng in the area would be inconclusive.” RTC at 92 (JA0206). Si milarly, EPA concluded that a source trying to measure ambien t concentrations below the SMC “would be trying to measure concentrations that are in the range where uncertainties exist, and the results of the monitoring could not be us ed for any quantitative purposes.” RTC at 92 (JA0206). In such circumstances, ther e would be no benefit to be gained from the time and expense of collecti ng a year’s worth of data and a de minimis exception is appropriate. Id. CONCLUSION For all of the foregoing reasons, the Court should uphold EPA’s use of its de
minimis authority to promulgate SILs and SM C in general, but vacate and remand to EPA those portions of the SIL regulati ons codified at 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2), so that EPA may revise the text to properly reflect EPA’s intent USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 70 of 7357 that the SILs not be used in circumstan ces where their use may lead to a new violation of the NAAQS or increments. Further, the Court should find that Petitioner’s challenge to EPA’s authority to adopt the SMC is time-barred and dismiss that portion of their challenge for lack of jurisdiction. The Court should otherwise deny the remainder of the issues raised by the petition.

Dated: June 26, 2012 Respectfully submitted,
IGNACIA S. MORENO Assistant Attorney General

/s/ Jessica O’Donnell JESSICA O’DONNELL United States Department of Justice Environment & Natural Resources Division Environmental Defense Section P.O. Box 7611 Washington, D.C. 20024 Tel: 202-305-0851 Jessica.O’Donnell@usdoj.gov Of Counsel: BRIAN DOSTER SCOTT JORDAN United States Environmental Protection Agency Office of General Counsel 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460

Counsel for Respondents USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 71 of 7358 CERTIFICATE OF SERVICE I hereby certify that a copy of the fo regoing Final Brief for Respondent was served, this 26th day of June, 2012, on all registered counsel, through the Court’s CM/ECF system.

/s/ Jessica O’Donnell Jessica O’Donnell United States Department of Justice Environment & Natural Resources Div. Counsel for Respondent EPA USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 72 of 7359 CERTIFICATE OF COMPLIANCE WITH WORD LIMITATION Pursuant to Federal Rule of A ppellate Procedure 32(a)(7)(C), I hereby certify that the foregoing proof Brief of Respondent EPA contains 12,638 words as counted by the Microsoft Office Word 2007 word processing system, and thus complies with the appli cable word limitation.

/s/ Jessica O’Donnell Jessica O’Donnell United States Department of Justice Environment & Natural Resources Div. Counsel for Respondent EPA USCA Case #10-1413 Document #1380762 Filed: 06/26/2012 Page 73 of 73