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UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-3364

SOUTHWESTERN PENNSYLVANIA GROWTH ALLIANCE,
Petitioner

v.

CAROL BROWNER, Administrator of the U.S. Environmental Protection Agency, and THE UNITED
STATES ENVIRONMENTAL PROTECTION AGENCY, Respondents

ADVANCED MANUFACTURING NETWORK, Intervenor in support of petitioner

ON PETITION FOR REVIEW OF A FINAL ORDER

OF THE ENVIRONMENTAL PROTECTION AGENCY (Dated May 1, 1996)

Argued: March 11, 1997

Before: BECKER, SCIRICA, and ALITO, Circuit Judges

.

(Opinion Filed: July 28, 1997)

Barry M. Hartman, Esq. (argued) Kenneth S. Komoroski, Esq. John P. Englert, Esq. William J. Labovitz, Esq.

KIRKPATRICK & LOCKHART LLP 1500 Oliver Building Pittsburgh, PA 15222

Attorneys for PetitionerLois J. Schiffer, Esq.

Assistant Attorney General
Environment and Natural
Resources Division

Greer S. Goldman, Esq. (argued) Trial Attorney United States Department of Justice
Environmental Defense Section
P.O. Box 23986 Washington, DC 20026-3986

Attorneys for Respondents

Blair S. McMillin, Esq. Harley N. Trice II, Esq. (argued) Paul S. Kline, Esq.

REED SMITH SHAW & MCCLAY
435 Sixth Avenue Pittsburgh, PA 15219

Attorneys for Intervenor

John R. Serpa, Asst. County
Solicitor 3333 Forbes Avenue, Room 312 Pittsburgh, PA 15213-3120

Kerry A. Fraas, County Solicitor 300 Ft. Pitt Commons Bldg.
445 Ft. Pitt Blvd. Pittsburgh, PA 15219

Attorneys for Amicus Curiae County of Allegheny, Pennsylvania

Nick Francalancia, Esq.
1040 Third Street Beaver, PA 15009

Attorney for Amicus Curiae Beaver County Corporation for Economic Development

2Paul J. Elias

Assistant County Solicitor Westmoreland County 103 Courthouse Square Greensburg, PA 15601

Attorney for Amicus Curiae Westmoreland County, Pennsylvania

Glenn R. Toothmann III, Esq.

TOOTHMAN & TOOTHMAN
61 North Richhill Street Waynesburg, PA 15370

Attorney for Amicus Curiae Greene County, Pennsylvania

Paul S. Kline, Esq.
435 Sixth Avenue Pittsburgh, PA 15219

Attorney for Amici Curiae Armstrong County, Pennsylvania , Lawrence County, Pennsylvania and Butler County, Pennsylvania

McCUNE & VREELAND, Solicitor 119 South College Street Washington, PA 15301

Jill A. Devine
Assistant Solicitor 702 Courthouse Square
100 W. Beau Street Washington, PA 15301

Attorney for Amicus Curiae Washington County, Pennsylvania

3Clifford B. Levine

THORP, REED & ARMSTRONG
One Riverfront Center Pittsburgh, PA 15222

Attorney for Amicus Curiae Port of Pittsburgh Commission

Howard I. Fox Sierra Club Legal Defense Fund 1625 Mass. Ave., N.W., Suite 702 Washington, DC 20036

Joseph Ortis Minott Delaware Valley Citizens'
Council for Clean Air 135 South 19th Street, Suite 300 Philadelphia, PA 19103

Attorney for Amicus Curiae Delaware Valley Citizens' Council for
Clean Air

OPINION OF THE COURT

ALITO, Circuit Judge:

The Southwestern Pennsylvania Growth Alliance ("SWPGA") has petitioned for review of a final rule of the Environmental Protection Agency ("EPA"), 61 Fed. Re g. 19,193 (May 1, 1996). In this rule, the EPA denied the Commonwealth of Pennsylvania's request that the EPA redesignate the Pittsburgh-Beaver Valley nonattainm ent area (the "Area") to attainment status for ozone, p ursuant to the Clean Air Act, 42 U.S.C. §7407(d)(3). An int ervenor, Advanced Manufacturing Network, contends that the E PA's final rule is invalid because the EPA did not compl y with the Regulatory Flexibility Act, 5 U.S.C. §§ 601-12. Although we are sympathetic to the view expressed by many wi thin
the Area that this rule threatens serious economic harm, we recognize that our role as a reviewing court is strictly limited. We conclude that under the applicable lega l

4standards, we are constrained to deny the petition for

review.

I.

A. Congress enacted the Clean Air Act to "protect a nd enhance the quality of the Nation's air resources s o as to promote the public health and welfare and the produ ctive capacity of its population." 42 U.S.C. §7401(b)(1). To achieve this purpose, the Act authorizes the EPA to identify air pollutants that are sufficiently dangerous to w arrant federal regulation. See 42 U.S.C. §7408(a). For each pollutant that the EPA identifies, the Act authoriz es the EPA to promulgate a national ambient air quality st andard (NAAQS), which is the maximum allowable concentrati on of the pollutant in the ambient air. See 42 U.S.C. §7409(a).

One pollutant for which the EPA has promulgated a NAAQS is ozone, whose chemical precursors are emitt ed by industrial and transportation sources. See 40 C.F.R. §50.9(a) (1996). The EPA measures ozone levels at monitoring sites located throughout the country. Wh en a monitoring site measures that a given day's "maximu m hourly average ozone concentration" has exceeded th e NAAQS, an "exceedance" has occurred. See 40 C.F.R. §50, App. H (1996). If a monitoring site registers more than an average of one exceedance per year, over a three-ye ar period, that site is in noncompliance with the NAAQ S. Id

.

The Clean Air Act's 1990 amendments provide that th e EPA designate areas of the country as either "attai nment" areas, "nonattainment" areas, or "unclassifiable" a reas for particular pollutants, depending on whether an area has complied with the NAAQS for that pollutant. See 42 U.S.C. 7407(d). If one monitoring site within an area is i n noncompliance with a NAAQS, then the entire area is designated a nonattainment area for that pollutant. See 40 C.F.R. Pt. 50.9(a); 40 C.F.R. Pt. 50, App. H (1996)

. Nonattainment areas are further classified as "marg inal," "moderate," "serious," "severe," or "extreme" nonat tainment areas, according to the extent to which the area's monitor readings exceed the NAAQS. See 42 U.S.C.§7511a.

5The Clean Air Act assigns to the states the respons ibility

for assuring air quality within each state. See 42 U.S.C. §7407(a). The Act provides that within three years of the EPA's promulgation of a NAAQS for a pollutant, each state must submit to the EPA a state implementation plan ("SIP") specifying measures that will attain, maintain, and enforce the NAAQS. See 42 U.S.C. §7410(a). All SIPs must meet the substantive requirements enumerated at 42 U.S.C. §7410(a)(2). Once the EPA finds that a SIP complies with the Act, the EPA will approve the SIP. See 42 U.S.C. §7410(k). When the EPA has designated an area withi n a state as a nonattainment area for a particular poll utant, that state must modify its SIP to include increasin gly strict pollution controls delineated in the Act, depending on the
area's nonattainment classification. See 42 U.S.C. §7511a.

The Act specifies the procedures through which the EPA may redesignate an area from nonattainment to attai nment. The process begins when the governor of a state sub mits a request for redesignation. See 42 U.S.C. §7407(d)(3)(D). Then, "[w]ithin 18 months of receipt of a complete State redesignation submittal, the [EPA] Administrator sh all approve or deny such redesignation." Id . Under 42 U.S.C. § 7407(d)(3)(E), the EPA Administrator "may not pro mulgate a redesignation of a nonattainment area . . . to at tainment unless" the following five criteria are met:

(i) the Administrator determines that the area has attained the national ambient air quality standard;

(ii) the Administrator has fully approved the appli cable implementation plan for the area under section 7410 (k) of this title;

(iii) the Administrator determines that the improve ment in air quality is due to permanent and enforceable reductions in emissions resulting from implementati on of the applicable implementation plan and applicabl e Federal air pollutant control regulations and other permanent and enforceable reductions;

(iv) the Administrator has fully approved a maintenance plan for the area as meeting the requirements of section 7505a of this title; and

6(v) the State containing such area has met all

requirements applicable to the area under section 7 410 of this title and part D of this subchapter.

Id . Thus, in order for the EPA to redesignate an area from nonattainment to attainment, the EPA must find that all
five of these criteria have been satisfied.

B. In 1990, the EPA classified the Pittsburgh-Beave r Valley Area (the "Area") as a moderate nonattainmen t area
for ozone.1 See 56 Fed. Reg. 56,694, 56,820 (Nov. 6, 1991). The EPA based this designation on ozone exceedances during the three-year period from 1987 to 1989. See id . In November 1993, the Pennsylvania Department of Environmental Resources submitted to the EPA a requ est to redesignate the Area to attainment status for oz one. The redesignation request pointed out that the Area had attained the NAAQS for ozone during the three-year period from 1991-1993, with only two exceedances in 1991, zero exceedances in 1992, and one exceedance in 1993. Se e 61 Fed. Reg. 19,193, 19,195 (May 1, 1996). Pennsylvani a's request acknowledged that its SIP had not yet been fully approved by the EPA, but stated that the state expe cted to receive full EPA approval shortly. The request also included a maintenance plan, under which Pennsylvania demonstrated how it planned to maintain the NAAQS i n the area until the year 2004.2

In July 1995, the EPA published a final notice of
determination that the Area was in attainment of th e

___________________________________________________ ______________

1. The Pittsburgh-Beaver Valley Area comprises Alle gheny County, Armstrong County, Beaver County, Butler County, Fay ette County, Washington County and Westmoreland County.

2. Pennsylvania's Department of Environmental Resou rces subsequently submitted two revisions to this maintenance plan. F irst, in January 1995, the Department submitted a revision acknowled ging that the original submission was incomplete, because it reli ed upon measures that had not been fully adopted. The Department sub mitted the second revision in May 1995. This revision acknowledged th at the original submission had relied upon an automobile inspection and maintenance program that Pennsylvania had suspended, as well as a contingency measure for the use of reformulated gasoline, which Pennsylvania had also suspended.

7NAAQS for ozone. See 60 Fed. Reg. 37,015 (July 19, 1995).

Later in the summer of 1995, however, ozone monitor s in the Area recorded 16 exceedances over a seven-day p eriod.
Two of these monitors recorded more than three exceedances each. After confirming these data, the EPA
revoked its earlier determination that the Area had attained the NAAQS for ozone. See 61 Fed. Reg. 28,061 (June 4, 1996).

The EPA also published a notice of proposed rulemak ing stating its intention to disapprove Pennsylvania's redesignation request and maintenance plan. See 61 Fed. Reg. 4,598 (Feb. 7, 1996). The EPA expressed variou s reasons for proposing disapproval. One of the EPA's
reasons was that the 1995 summer ozone exceedances indicated that the Area had not attained the NAAQS. The
EPA also reasoned that these exceedances indicated that the underlying basis for Pennsylvania's maintenance plan was no longer valid. See id . After public comment, the EPA promulgated a final rule disapproving Pennsylvania' s redesignation request and maintenance plan. See 61 Fed. Reg. 19,193 (May 1, 1996).

C. The petitioner in this case is the Southwestern Pennsylvania Growth Alliance, which is an organizat ion of major manufacturers and local governments in the Pittsburgh-Beaver Valley Area. SWPGA contests the E PA's denial of Pennsylvania's request to redesignate the Area to attainment status. As previously explained, 42 U.S. C. §7407(d)(3)(E) lists five requirements that must be satisfied in order for the EPA to redesignate a nonattainment area to
attainment status. Since the EPA's final rule state d that none of these five criteria had been satisfied, the petitioner, if it is to prevail, must demonstrate that the EPA erred in its determinations as to all five of §7407(d)(3)(E) 's criteria.

The petitioner thus faces an exacting burden. Under the Administrative Procedure Act, 5 U.S.C. §706(2)(A), this court must uphold the EPA's action unless it is "ar bitrary, capricious, an abuse of discretion, or otherwise no t in accordance with law." In applying this standard, ou r "only task is to determine whether [the EPA] considered t he
relevant factors and articulated a rational connect ion
between the facts found and the choice made." Balti more

8Gas & Elec. Co. v. Natural Resources Defense Counci l, Inc. ,

462 U.S. 87, 105 (1983). The EPA's disapproval of Pennsylvania's redesignation request "would be arbi trary and capricious if the agency has relied on factors which Congress has not intended it to consider". Motor Ve hicle

Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co. , 463 U.S. 29, 43 (1983).

II.

SWPGA first argues that the EPA erred when it determined that the Area did not attain the NAAQS f or ozone. In so arguing, SWPGA contends that the EPA h ad no basis for concluding that the first of 42 U.S.C. §7407(d)(3)(E)'s five requirements was not satisfie d. We hold, however, that it was proper for the EPA to de termine that the Area did not attain the NAAQS for ozone.

A. The petitioner contends that the EPA acted contr ary to the language of the Clean Air Act when it took i nto
consideration the ozone exceedances that were recor ded in the summer of 1995. The petitioner points to langua ge in the Act stating that "[w]ithin 18 months of receipt of a complete State redesignation submittal, the Adminis trator
shall approve or deny such redesignation." 42 U.S.C. §7407(d)(3)(D) (emphasis added). The petitioner arg ues that the use of the word "shall" in this provision impos es upon the EPA a mandatory duty to act on a state's redesi gnation request within 18 months of submission. According t o the petitioner, the EPA violated this mandatory duty wh en it
took into consideration the 1995 ozone exceedance d ata, because these data did not exist during the 18-mont h period. The petitioner concludes that without these improperly considered data, there was no valid reas on for the EPA to deny redesignation.

We agree with the EPA that the petitioner may not r aise this argument on appeal because this argument was n ot raised during the rulemaking process. "Generally, f ederal appellate courts do not consider issues that have n ot been passed on by the agency . . . whose action is being reviewed." New Jersey v. Hufstedler , 724 F.2d 34, 36 n.1 (3d Cir. 1983), rev'd on other grounds , 470 U.S. 632 (1985).

9The petitioner points to the following passage from the record as evidence that Pennsylvania raised this ar gument in its comments to the EPA's proposed rule disappro ving redesignation:

Pennsylvania believes that the Pittsburgh ozone nonattainment area should have been redesignated by
EPA to attainment. The Commonwealth submitted the request in 1993, and EPA had ample opportunity and justification.

For the six year period from 1989 through 1994 the national ambient air quality standard for ozone was achieved. During this time eight ozone monitors operated for the full six years and one additional monitor operated two years at one site and the four subsequent years at a nearby site. Six of these monitors had no exceedances during this period and the remaining monitors stayed under the standard. Thus for the four consecutive three-year periods fr om 1989 through 1994, the Pittsburgh area attained and
maintained the ambient standard.

Comments on Proposed Disapproval of Request to Redesignate Pittsburgh Ozone Nonattainment Area , J.A. at 550. Pennsylvania further commented that "the Pitts burgh area [had not] been redesignated in a timely manner ." Id . at
551.

We hold that these comments are insufficient to pre serve petitioner's intricate statutory interpretation arg ument. These comments admittedly demonstrate that Pennsylvania, during the rulemaking process, broach ed the question whether the EPA had acted in a timely mann er. Yet the comments include neither a reference to a s tatutory provision imposing a specific time limit, nor an ex plicit argument that the existence of such a time limit pr ecluded the EPA from considering the 1995 exceedances. The petitioner thus raises its statutory interpretation argument for the first time on appeal.

We recognize that ("our practice has been to hear i ssues not raised in earlier proceedings when special circumstances warrant an exception to the general r ule.)"
Hufstedler , 724 F.2d at 36 n.1 (considering the retroactivity

10of amendments to a federal education act, even thou gh the

retroactivity argument was not raised in the lower court, because it was "an issue of national importance" th at was "singularly within the competence of appellate cour ts" and "not predicated on complex factual determinations") ; see also Selected Risks Ins. Co. v. Bruno, 718 F.2d 67, 69 (3d Cir. 1983). Although a variety of circumstances hav e prompted appellate courts to apply this exception," [t]he matter of what questions may be taken up and resolv ed for the first time on appeal is one left primarily to t he discretion of the courts of appeals, to be exercise d on the facts of individual cases." Singleton v. Wulff , 428 U.S. 106, 121 (1976). In this case, we find it inappropriate to consider this new issue. Although appellate courts are certa inly capable of addressing questions of statutory interp retation that were not raised during an agency's rulemaking process, it is far more efficient for courts to fac e such questions only after they have been considered by t he agency that Congress has charged with the primary responsibility for enforcing the complex statute in question.

In the instant case, both the EPA and Pennsylvania' s Department of Environmental Resources possess speci al expertise regarding the workings of the Clean Air A ct. Pennsylvania was thus fully capable of explicitly r aising the argument that 142 U.S.C. §7407(d)(3)(D) requires th e EPA to act on a redesignation request within 18 months. Had Pennsylvania made such an explicit argument, the EP A would have then applied its singular expertise on t he Act's mechanics and made a ruling that would inform the deliberations of this court on appeal. If this cour t were to consider the petitioner's argument without the bene fit of the EPA's expert input, we would undermine a fundam ental principle of our system of judicial review of admin istrative
decisions.

The harm that would come to the petitioner as a res ult of this outcome is not so great as to warrant disregar ding

these concerns. See , e.g. , North Alamo Water Supply Corp. v. City of San Juan , 90 F.3d 910, 916 (5th Cir.), cert

. denied , 117 S.Ct. 586 (1996) (an appellate court should invoke its discretion to review a purely legal issu e not raised below when "a miscarriage of justice would r esult

11from [the court's] failure to consider it)." For th ese reasons,

we hold that the petitioner may not raise for the f irst time in this proceeding its argument that 42 U.S.C. §7407(d)(3)(D) required the EPA to act on Pennsylva nia's redesignation request within 18 months.

Moreover, even if we were to reach the merits of th e petitioner's argument, we would hold that 42 U.S.C. §7407(d)(3)(D) did not preclude the EPA from consid ering the summer 1995 exceedance data. The language of th e provision that enumerates the redesignation criteri a tends to support this result. Under 42 U.S.C. §7407(d)(3) (E)(i), the EPA Administrator "may not" promulgate a redesignat ion of a nonattainment area unless, among other things, "t he
Administrator determines that the area has attained the national ambient air quality standard." The use of the term "has attained" instead of "attained" may be interpr eted as suggesting that the attainment must continue until the date of the redesignation.

In any event, even if we assume for present purpose s that the language of 42 U.S.C. §7407(d)(3)(E) is ambiguo us as to whether the EPA may disregard data arising after th e expiration of the 18-month period, we must defer to the EPA's interpretation of this provision under the ru le of Chevron, U.S.A., Inc. v. Natural Resources Defense Council,

Inc. , 467 U.S. 837 (1984). Chevron instructs reviewing courts that if Congress has not "directly spoken to the precise question at issue . . . the question for th e court is whether the agency's answer is based on a permissib le
construction of the statute." Id . at 842-43. The EPA has published numerous legislative rules that have inte rpreted 42 U.S.C. §7407(d)(3)(E) as obliging the EPA to den y a redesignation request if the EPA knows that the are a is not in present attainment of the NAAQS,3 because the EP A's

___________________________________________________ ______________

3. See , e.g. , 61 Fed. Reg. 19,193, 19,197 (1996) (the final rul e denying Pennsylvania's request to redesignate the Area, in which the EPA "note[d] that it has not and may not (in light of section 10 7(d)(1)(A)(i) and 107(d)(3)(E)) approve a redesignation request for a n area that is violating the ozone standard"); 61 Fed. Reg. 4,958, 4,599 (19 96) (the proposed rule denying Pennsylvania's request to redesignate the Area, in which the EPA concluded that "the Pittsburgh area no long er meets

12interpretation is a reasonable construction of the statute.

See Chevron , 467 U.S. at 844 (when Congress has implicitly delegated to an agency the authority to "elucidate a specific provision of the statute by regulation," a reviewin g court "may not substitute its own construction of a statu tory provision for a reasonable interpretation made by t he administrator of an agency").

The petitioners contend that §7407(d)(3)(D) prohibi ts the EPA from considering any data acquired more than 18 months after the submission of Pennsylvania's redesignation request. They assert -- correctly, in our view -- that the use of the word "shall" in §7407(d)(3)( D) imposes upon the EPA a mandatory duty to act on a state's redesignation request within 18 months. The petitio ner's argument fails, however, because §7407(d)(3)(D)'s u se of the word "shall" does not conclusively indicate that Co ngress intended to prohibit the EPA from taking action aft er the expiration of the statutorily specified time period

.

The Supreme Court faced a similar question of statu tory interpretation in Brock v. Pierce County , 476 U.S. 253 (1986). At issue in Brock was a provision of the Comprehensive Employment and Training Act ("CETA") stating that the Secretary of Labor "shall" issue a final determination as to the misuse of CETA funds by a g rant recipient within 120 days after receiving a complai nt alleging such misuse. See id . at 254-55. The Department of Labor disallowed almost $500,000 of CETA expenditur es by a county, after an investigation revealed that thos e funds had not been used in accordance with the CETA progr am.

___________________________________________________ ______________

[§7407(d)(3)(E)'s] first criteria for redesignation " in light of the summer 1995 exceedances); 59 Fed. Reg. 37,190, 37,195 (199 4) (a proposed rule redesignating the Detroit-Ann Arbor area to attainm ent status, in which
the EPA warns that if "data shows violations of the ozone NAAQS before the final USEPA action on this redesignation, the U SEPA proposes that it disapprove the redesignation request"); 59 Fed. Reg. 22,757 (1994) (a final rule in which the EPA denied redesignation of the Richmond, Virginia area because that area did "not meet the s tatutory criteria for redesignation to attainment found in section 107(d) (3)(E) of the CAA," even though the area's only ozone exceedance was re gistered after the EPA published a rule proposing approval of the rede signation request).

13 The county argued that the Secretary of Labor could not recover the misused funds because the Secretary did not
issue his final determination of misuse until more than 120 days after the Department received the initial comp laint.

The Supreme Court thus faced the question whether t he use of the word "shall" in the CETA statute prohibi ted the Secretary from recovering misused funds after theexpiration of the 120-day period. A unanimous Court

concluded that "the mere use of the word `shall' " was not enough to demonstrate that Congress intended to pro hibit the Secretary from acting after 120 days. Id . at 262. In so deciding, the Court stated that it "would be most r eluctant to conclude that every failure of an agency to obse rve a procedural requirement voids subsequent agency acti on."
Id . at 260. The Court instead concluded that "the nor mal indicia of congressional intent" should determine w hether an agency may act after the expiration of a statuto ry deadline. See id . at 262 n.9.

Here, the petitioner has not brought to our attenti on anything in the Clean Air Act itself (other than th e use of the word "shall" in 42 U.S.C. §7407(d)(3)(D)), or a nything in the Act's legislative history that shows that Congr ess intended for the EPA to lose its power to consider data brought to its attention after the expiration of th e 18-month deadline. To the contrary, two important aspects of the Clean Air Act strongly suggest that Congress did no t intend for the EPA to lose its power to act after 18 month s. The first is the Act's failure to specify a consequence for noncompliance with the 18-month deadline. As the Supreme Court has observed, "if a statute does not specify a consequence for noncompliance with statutory timi ng provisions, the federal courts will not in the ordi nary course impose their own coercive sanction." United States v. James Daniel Good Real Property , 510 U.S. 43, 63 (1983).

Second, the Clean Air Act affords a less drastic re medy than that urged by the petitioner. In Brock , the Supreme
Court stated that when "there are less drastic reme dies available for failure to meet a statutory deadline, courts should not assume that Congress intended the agency to lose its power to act." Brock , 476 U.S. at 260. The Brock
court's conclusion that there existed a less drasti c remedy

14in that case provides guidance for our present inqu iry.

Noting that "nothing in CETA appears to bar an acti on to enforce the 120-day deadline," the Brock court concluded that anyone within the statute's zone of interests could have brought an action to force the Secretary of La bor to act within the statutory deadline. Id . at 260 n.7. Thus, 120 days after the original complaint, the defendant in Brock could have brought an action to force the Departmen t of Labor to drop its investigation, provided that the defendant could achieve standing by successfully arguing that Congress enacted the 120-day limit in order "to pro tect grant recipients from lengthy delays in audits." Id

.

Similarly, in the present case, either the petition er or the Commonwealth of Pennsylvania could have brought an
action to enforce the 18-month deadline in 42 U.S.C

. §7407(d)(3)(D).4 The petitioner has not called to o ur attention any provision of the Clean Air Act that w ould have precluded such an action. Had the petitioner brough t such an action, the result would have been far less dras tic than that which the petitioner now urges, which is the redesignation of an area that is not in attainment of the
NAAQS.

After oral argument, the parties have called to our
attention certain new facts that must be considered . First,
in 1995 the EPA issued a direct final notice redesi gnating LaFourche Parish, Louisiana, as an attainment area. After the publication of this notice, but prior to its ef fective date, a monitor recorded a violation of the NAAQS for ozo ne in the LaFourche Parish area. Although the EPA was awa re of this exceedance, the EPA did not withdraw the notic e, and the LaFourche Parish area was redesignated as an
attainment area for ozone on the notice's effective date. The petitioner argues that this redesignation demonstra tes that the EPA is not precluded from redesignating an area that

___________________________________________________ ______________

4. Such an enforcement action would have been avail able pursuant to the Administrative Procedure Act, 5 U.S.C. #8E8E # 701-706, which entitles any person "adversely affected or aggrieved by agen cy action" to judicial review, §702, unless the relevant statute precludes judicial review or "agency action is committed to agency discretion by law," §701(a). In such an enforcement action, a court would have auth ority to "compel agency action unlawfully withheld or unreasonably d elayed." §706(1).

15experiences an exceedance while a redesignation req uest is

pending.

The EPA's redesignation of the LaFourche Parish are a in no way undermines the analysis set forth in this op inion. As discussed above, we accept the view that the EPA may not redesignate an area if the EPA knows that the a rea is not meeting the NAAQS. The EPA's redesignation of t he LaFourche Parish redesignation was thus not proper. However, the fact that the EPA apparently acted con trary to law in a prior case did not permit, much less requi re, the EPA to disregard the law in the instant case. See K okechik Fishermen's Assoc. v. Secretary of Commerce, 839 F.2d 795, 802-03 (D.C. Cir. 1988) ("[p]ast administrative pra ctice that is inconsistent with the purpose of an act of Congr ess cannot provide an exception").

The same analysis applies to the second incident th at the parties have brought to our attention. In at least one case, the EPA has excluded exceedance data from its evalu ation of a redesignation request because the data came fr om monitors that were not part of the State or Local A ir Monitoring Stations network ("SLAMS") required by 4 0 C.F.R. §58 (1996). The petitioner contends that suc h incidents undermine the proposition that EPA is req uired to deny a redesignation request when it possesses know ledge that the NAAQS is not being attained. Assuming argu endo
that the EPA's exclusion of non-SLAMS exceedance da ta violates the EPA's duty not to redesignate an area that fails to attain the NAAQS, the EPA's prior disregard of t his duty did not relieve the EPA of its obligation to act co rrectly in

other cases.

B. The petitioner further attacks the EPA's conclus ion that the Area did not attain the NAAQS by arguing t hat the EPA failed to take into account data demonstrating that much of the offending ozone originated outside the Area. The petitioner contends that ozone readings from bo rder
monitors demonstrate that much of the ozone contrib uting to the exceedances during the summer of 1995 origin ated in neighboring states and was transported into the Area by wind. In its final rule denying redesignation, the EPA included the following analysis of the interstate o zone transport question:

16Pennsylvania has made no demonstration that the

ozone problem in the Pittsburgh area is caused by transport from upwind sources. An adequate technica l demonstration, including emissions data and a modeling analysis, must be provided to support any claim of transport-dominated nonattainment.

Although ozone levels recorded at monitors near th e West Virginia/Ohio/Pennsylvania border seem to
correlate with the levels recorded further east in the nonattainment area, this data is not sufficient to demonstrate that the Pittsburgh area's ozone proble m is due to transport. During the summer of 1995, on the days when monitors in the Pittsburgh area ("downwind" monitors in Allegheny and Westmoreland Counties) recorded exceedances of the ozone standar d,
ozone levels at the monitors on the western border of the Pittsburgh area (the "upwind" monitors in Beave r and Washington Counties, Pennsylvania) recorded increased levels of ozone. However, these "upwind" monitors did not record any exceedances of the ozon e standard. In other words, "downwind" monitors in th e Pittsburgh area always recorded higher ozone levels
than the monitors at the western border. This demonstrates the Pittsburgh area is causing its own exceedances by generating ozone in the area. . . .

. . . [E]ven if the violations in Pittsburgh could be attributed to transport, EPA would not have the authority to redesignate Pittsburgh to attainment.[ 42 U.S.C. §7407(d)(1)(A)(ii)] defines an attainment ar ea as an area "that meets" the national ambient air quali ty standard and [§7407(d)(3)(E)] prohibits EPA from redesignating an area to attainment unless EPA determines that the area is attaining the standard. As an area that is experiencing violations of the ozon e standard is not attaining the standard, EPA is not authorized by the Clean Air Act to redesignate such an area to attainment.

61 Fed. Reg. 19,193, 19,194 (May 1, 1996).

The petitioner contends that the EPA "failed to adequately analyze and consider the role transporte d ozone

17and ozone precursors played in the Area's 1995

exceedances." Pet'r. Br. at 28. Although the petiti oner does not seem to argue that these exceedances were cause d solely by transported ozone, the petitioner maintai ns that such ozone plainly contributed to the 1995 exceedan ces. See id . The petitioner states that "[t]here is nothing in the record upon which the EPA bases its assumption that exceedances are attributable solely to sources with in the border when high ozone levels are being transported into

the Area." Id . at 29.

In response, the EPA argues that the Clean Air Act and its implementing regulations "require that EPA dete rmine whether or not an area has met the NAAQS and satisf ied the first criterion for redesignation without regar d to why the NAAQS and the criterion many not have been met. " Resp't. Br. at 30. In essence, then, the EPA mainta ins that the origin of the ozone that caused the 1995 exceed ances was legally irrelevant. See 61 Fed. Reg. at 19,193 19,194 (the EPA's final rule denying Pennsylvania's reques t to redesignate the Area). The EPA goes on, however, to defend its scientific analysis of the role of transported ozone in the

Area.

In evaluating the EPA's interpretation of the Clean Air Act, we must apply the familiar Chevron analysis to which we previously referred. Under this analysis, if "Co ngress has directly spoken to the precise question at issu e. . . the court . . . must give effect to the unambiguously e xpressed intent of Congress." Chevron , 467 U.S. at 842-43. If, however, the "precise question at issue" is one abo ut which Congress has been either "silent or ambiguous," the n a reviewing court must defer to the agency's statutor y interpretation if it is "based on a permissible con struction

of the statute" Id . at 843.

Here, the EPA contends that the Clean Air Act itsel f prohibited allowances for ozone transported from ou tside the Area. The EPA relies in part on 42 U.S.C. §7407(d)(1)(A)(ii), which provides that an attainme nt area is one that "meets" the NAAQS, and 42 U.S.C. §7407(d)(3)(E)(i), which prohibits the EPA from redesignating an area to attainment unless the EPA determines that the area "has attained" the NAAQS. These

18provisions are certainly consistent with and lend s ome

support to the EPA's interpretation.

Somewhat stronger support for the EPA's argument is furnished by other provisions of the Act. The first of these is 42 U.S.C. §7511a(h), which establishes "rural tr ansport areas." These are areas that do not attain the NAAQ S for ozone, despite not producing any significant amount of ozone themselves. Congress addressed the problem th at ozone transport causes rural transport areas by exe mpting such areas from certain pollution control requireme nts, provided that the areas make certain submissions to the EPA. Although such areas can enjoy relaxed control requirements, they must remain in nonattainment sta tus, because they have not attained the NAAQS for ozone.

Congress also addressed the problem of ozone transp ort in 42 U.S.C. §7511(a)(4), which describes certain circumstances under which the EPA may adjust a nonattainment area's classification (e.g ., from "severe" to "serious"). Under this provision, if a nonattainmen t area meets criteria making it eligible for adjustment of its classification, there are several factors that the EPA may consider when making the adjustment. One of these f actors is "the level of pollution transport between the ar ea and other affected areas, including both intrastate and interstate transport." Id . Thus, under this provision, the EPA may consider pollutant transport when adjusting a nonattainment area's classification, but pollution transport does not affect the area's designation as a nonatta inment

area.

Although these provisions provide significant suppo rt for the EPA's interpretation, we need not, and do not, go so far
as to hold that the Clean Air Act dictates that interpretation. For present purposes, it is enough to hold that even if the Act would permit a different inter pretation, the EPA's interpretation is plainly a reasonable on e to which, under Chevron , we must defer. Accordingly, we accept the EPA's position that the origin of the oz one that caused the exceedances at issue is legally irreleva nt.

After oral argument, the EPA brought to our attenti on certain administrative actions that must be address ed in

19connection with this analysis. First, the EPA point ed out

that it has issued a "Guideline on the Identificati on and Use of Air Quality Data Affected by Exceptional Eve nts."

See Letter from Lois J. Schiffer, Assistant Attorney G eneral, Environment and Natural Resources Division, to the Court at 3 (May 8, 1997), referring to U.S. Environmental Protection Agency, Office of Air and Radiation, Off ice of Air Quality Planning and Standards, Monitoring and Data Analysis Division, Guideline on the Identification and Use of Air Quality Data Affected by Exceptional Events , EPA450/4-86-007 (July 1986). This Guideline permits th e exclusion from consideration, for various regulator y purposes, of data affected by certain exceptional e vents. The only exceptional event that applies to ozone da ta is a "stratospheric ozone intrusion." This is a phenomen on that occurs when a parcel of air from the stratosphere s uddenly falls to ground level, as occasionally happens duri ng severe thunderstorms. See id ., referring to the Guideline at 4.1.2. Second, the EPA has noted that in considering certa in other redesignation requests, it has excluded ozone data as having been influenced by forest fires. See id

.

The petitioner contends that it is inconsistent for the EPA to exclude ozone data that is influenced by stratos pheric ozone intrusions or forest fires, but not to exclud e ozone data that is influenced by interstate ozone transpo rt. This inconsistency, the petitioner contends, undermines the argument that the Clean Air Act prohibits the EPA f rom redesignating an area that is not in attainment, ev en in
cases when the nonattainment is attributable to ozo ne that has been transported from outside the area.

The petitioner's argument, however, does not distur b our conclusion that the EPA's interpretation of the Act as precluding allowances for transported ozone, even i f not statutorily compelled, is nevertheless reasonable. The EPA's view that allowances are permissible in cases of stratospheric ozone intrusions and forest fires is not at issue here, and does not prove that the EPA's posit ion concerning transported ozone is unreasonable.

C. In light of our deference to the EPA's interpret ation of the Act as precluding allowances for transported oz one, the petitioner's attack on the EPA's scientific evaluat ion of the

20role of transported ozone is beside the point. Yet even if it

were not, we would see no ground for disturbing tha t analysis. A reviewing court "must generally be at i ts most deferential" when reviewing factual determinations within an agency's area of special expertise. New York v. E.P.A. , 852 F.2d 574, 580 (D.C. Cir. 1988), cert . denied , 489 U.S. 1065 (1989). It is not the role of a reviewing cour t to "second-guess the scientific judgments of the EPA." American Mining Congress v. E.P.A. , 907 F.2d 1179, 1187 (D.C. Cir. 1990). Rather, we must "review the recor d to ascertain that the agency has made a reasoned decis ion based on reasonable extrapolations from some reliab le evidence, to ensure that the agency has examined th e relevant data and articulated a satisfactory explan ation for its action including a rational connection between the facts
found and the choice made." Id . (internal quotations and citations omitted).

If we were to review the EPA's final rule under thi s standard, we would conclude that the EPA considered the relevant data and articulated a satisfactory explan ation for its findings. In its response to comments concernin g the interstate transport of ozone, the EPA considered t he correlation between border ozone readings and the o zone levels in the Area, but concluded that the data fro m the
border was insufficient to demonstrate that ozone t ransport
"caused" the exceedances in the Area. See 61 Fed. Reg. at 19,194. The EPA supported its conclusion by noting that the ozone levels were higher within the Area (where the exceedances were registered) than at the border (wh ere no exceedances were detected), demonstrating that the Area was "causing its own exceedances by generating ozon e in the [A]rea." Id . Contrary to the petitioner's suggestion, we do not interpret the EPA's explanation to mean that it found that transported ozone did not contribute to the 1995 exceedances. Rather, the EPA found only that the exceedances were not "caused by" or "due to" transp orted ozone. 61 Fed. Reg. at 19,194. Since the EPA consid ered
the relevant data and articulated a rational connec tion between these data and its conclusion, we cannot di sturb
the EPA's factual determinations.

D. We thus conclude that the EPA did not act arbitr arily

21or capriciously, did not abuse its discretion, and did not act

contrary to law when it determined that the Pittsbu rghBeaver Valley area was not attaining the national a mbient air quality standard for ozone. Since 42 U.S.C. §7407(d)(E)(i) prohibits the EPA from redesignating an area that is not in attainment of the NAAQS, the EPA cor rectly denied Pennsylvania's request for redesignation. We thus do not need to consider the petitioner's arguments that the EPA erred in determining that §7407(d)(E)'s four ot her criteria were also not met, since §7407(d)(E) provi des that nonfulfillment of any one of its five criteria will prohibit the EPA from redesignating a nonattainment area to atta inment

status.5

III.

We next consider the contention of the intervenor, Advanced Manufacturing Network ("AMN"), that the EP A's final rule denying Pennsylvania's redesignation req uest was invalid because the EPA did not comply with the Reg ulatory Flexibility Act, 5 U.S.C. §§ 601-12. We conclude th at the intervenor may not raise its RFA argument in this proceeding because this argument was not adequately presented to the EPA during the rulemaking process. In the alternative, we hold that the intervenor's RFA argu ment lacks merit, because the EPA's final rule is suffic ient to satisfy the requirements of the RFA.

A. The Regulatory Flexibility Act requires administ rative agencies to give public consideration to the impact that a proposed regulation will have on small entities, in cluding small businesses, small not-for-profit enterprises, and small local governments. See 5 U.S.C. §601(3)-(6). Under

___________________________________________________ ______________

5. We find no merit to the petitioner's contention that it was inconsistent
for the EPA to create de minimis exceptions to §7407(d)(E)'s criteria in
some other cases but not in the instant case. An ar ea's failure to attain a NAAQS is the most fundamental criterion in its de signation as a nonattainment area. This is demonstrated by §7407(d )(1)(A)(i), which defines a "nonattainment" area as "any area that do es not meet [the NAAQS] for the pollutant". The Area's failure to me et the NAAQS for ozone is thus a far cry from the types of trivialit ies that warrant the
creation of a de minimis exception.

22the RFA, at two points during the rulemaking proces s, an

agency must prepare a regulatory flexibility analys is, which is an assessment of the proposed rule's effects on small entities. First, whenever an agency is required by law to publish a proposed rule, the agency must prepare an initial regulatory flexibility analysis. See 5 U.S.C. 603(a). Second, whenever an agency promulgates a final rule after h aving been required to publish a proposed rule, the agenc y must prepare a final regulatory flexibility analysis. Se e 5 U.S.C. 604(a). The RFA exempts an agency from the requirem ent to publish the two regulatory flexibility analyses if the agency "certifies that the rule will not, if promul gated, have a significant economic impact on a substantial numb er of small entities." 5 U.S.C. 605(b).

In its final rule disapproving Pennsylvania's reque st for redesignation, the EPA made the following certifica tion statement, which summarized a similar statement in the proposed rule:

As described in the [notice of proposed rulemaking] , EPA has determined that the disapproval of the redesignation request will not affect a substantial
number of small entities. EPA's denial of the Commonwealth's redesignation request under [42 U.S.C. §7407(d)(3)(E)] does not affect any existing requirements applicable to small entities nor does it impose new requirements. The area retains its curre nt designation status and will continue to be subject to the same statutory requirements. To the extent that the area must adopt regulations, based on its nonattainment status, EPA will review the effect of
those actions on small entities at the time the Commonwealth submits those regulations.

61 Fed. Reg. 19,193, 19,197.

The intervenor argues that this statement is not su fficient to satisfy the requirements of the RFA. Specificall y, the
intervenor contends that this statement is concluso ry because it mentions neither the number of small ent ities that the EPA believes the rule will affect, nor the number of
small entities that the EPA believes to be "substan tial." The intervenor argues that the EPA erred in concluding that the

23rule would not affect a substantial number of small entities.

In the intervenor's view, the rule will affect smal l entities
because the retention of the Area's nonattainment s tatus will soon require the EPA to reclassify the Area fr om moderate nonattainment status to serious nonattainm ent status, thereby subjecting small entities within th e Area to heightened pollution control requirements.

B. We must consider whether we have jurisdiction to hear the intervenor's RFA argument. The intervenor asserts that we have jurisdiction over the RFA claim pursua nt to the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), which amended the RFA to provide, inter
alia , for judicial review of agency action under the RF A. See Pub. L. No. 104-121, §242, 110 Stat. 857, 865-66 (1 996) (codified as amended at 5 U.S.C. §611) ("For any ru le subject to this chapter, a small entity that is adv ersely affected or aggrieved by final agency action is ent itled to judicial review of agency compliance with the requi rements of [the RFA]"). The EPA retorts that the SBREFA amendments do not provide jurisdiction over the intervenor's RFA claim, because the EPA published i ts final

rule before the effective date of the SBREFA amendments. Thus, in order to determine whether we have jurisdi ction over the intervenor's RFA claim, we must determine whether the SBREFA amendment allowing judicial revi ew of RFA claims applies to legislative rules that were promulgated before the effective date of the SBREFA

amendments.

The Supreme Court analyzed the question of the temporal reach of new statutes in Landgraf v. USI F ilm

Prods. , 511 U.S. 244 (1994), and Lindh v. Murphy , No. 96- 6298, 1997 WL 338568 (U.S. June 23, 1997). In Landg raf , the Court provided the following guidance to lower courts considering the temporal reach of new federal statu tes:

When a case implicates a federal statute enacted af ter the events in suit, the court's first task is to de termine whether Congress has expressly prescribed the statute's proper reach. If Congress has done so, of course, there is no need to resort to judicial defa ult rules. When, however, the statute contains no such express command, the court must determine whether

24the new statute would have retroactive effect, i.e. ,

whether it would impair rights a party possessed wh en he acted, increase a party's liability for past con duct, or impose new duties with respect to transactions already completed. If the statute would operate retroactively, our traditional presumption [against retroactive applicability] teaches that it does not govern absent clear congressional intent favoring such a

result.

Landgraf , 511 U.S. at 280.

In Lindh , the Supreme Court explained that this language from Landgraf does not mean that there exist only two possible means of determining questions of temporal reach, namely, an "express command" or the Landgraf default
rule. See Lindh at *3-4. Instead, this language reaffirms the traditional rule that courts will not apply statute s having retroactive effect unless Congress expressly indica ted that it intended for such application. This clear statement rule has no bearing on other inquiries related to questions of temporal reach, including "determining whether a st atute's terms would produce a retroactive effect" and "dete rmining a statute's temporal reach generally." Id . To such inquiries "our normal rules of construction apply." Id

.

Following Landgraf and Lindh , we consider whether the SBREFA amendments indicate the temporal reach of th e amendment concerning judicial review. The only port ion of the SBREFA amendments that mentions applicability t o past EPA action is the following:

This subtitle shall become effective on the expirat ion of 90 days after the date of enactment of this subtitl e, except that such amendments shall not apply to interpretative rules for which a notice of proposed rulemaking was published prior to the date of

enactment.

Pub. L. No. 104-121, §245, 110 Stat. 857, 868 (1996 ).

The intervenor argues that since this provision exp ressly provides that the amendments do not apply to interp retive rules that were promulgated before the effective da te, the amendments must apply to legislative rules that wer e

25promulgated before the effective date, such as the

legislative rule denying redesignation of the Area. This negative inference, drawn from application of the s tatutory interpretation canon expressio unis est exclusio al terius , is very convincing. See Lindh , 1997 WL 338568 at *4-*5.

This conclusion is bolstered by the fact that the S BREFA amendment concerning judicial review does not retroactively alter substantive rights, duties or l iabilities. In its discussion of retroactive applicability, Landgr af distinguishes between two categories of intervening statutes. The first category consists of statutes t hat "attach[ ] new legal consequences to events complet ed before [the statutes'] enactment." Landgraf , 511 U.S. 269- 70. Such statutes "would impair rights a party poss essed when he acted, increase a party's liability for pas t conduct, or impose new duties with respect to transactions a lways completed." Id . at 280. To such statutes, the courts apply a "deeply rooted" "presumption against statutory retroactivity," because "considerations of fairness dictate that individuals should have an opportunity to know what the law is and conform their conduct accordingly." Id . at 265, 273, 265.

The second category of intervening statutes consist s of statutes that "authorize[ ] or affect[ ] the propri ety of prospective relief." Id . at 273. Application of such a statute to events that took place before the statute's enac tment "is unquestionably proper" because no substantive right s are retroactively affected. Id . Courts have thus "regularly applied intervening statutes conferring or ousting jurisdiction, whether or not jurisdiction lay when the underlying conduct occurred." Id . at 274.

We hold that the amendment entitling small entities to judicial review of agency compliance with the RFA f alls within Landgraf 's second category. This is because the amendment does not retroactively alter any substant ive rights or duties, since the SBREFA amendment allowi ng judicial review did not change the substantive RFA requirements that applied to the EPA's promulgation of the final rule denying redesignation. SBREFA's judicial review amendment instead prospectively changed the jurisdi ction of the federal courts to allow judicial review of a n agency's

26compliance with the RFA. We must apply such a statu te to

a rule promulgated before the statute's enactment. As indicated above, we hold that the text of the SBREF A amendments support this conclusion.

We note that the United States District Court for t he District of Maine reached the opposite conclusion i n Associated Fisheries v. Daley , 954 F.Supp. 383 (D. Maine 1997). The court in that case held that the SBREFA amendment concerning judicial review did not apply to a rule promulgated before the SBREFA amendments. In s o ruling, the Associated Fisheries court observed that, in addition to the provision concerning judicial revie w, the SBREFA amendments also contained provisions imposin g new substantive requirements upon an agency that undertakes a regulatory flexibility analysis under the RFA. Since such substantive requirements cannot be appli ed to rules promulgated before the amendments, the court concluded that it "would be anomalous to apply the judicial review portion of the [SBREFA] amendments to past a gency actions but at the same time not apply the substanc e of those amendments, unless Congress expressly stated that
was its intent." Id . at 387.

We disagree with the Associated Fisheries court's conclusion that the SBREFA's judicial review provis ion and substantive provisions must be treated uniformly fo r purposes of applicability to past agency actions. T he Supreme Court in Landgraf addressed this precise question when it held that §102 of the Civil Rights Act of 1 991 should govern cases arising before its enactment, e ven though other provisions of that Act imposed new substantive requirements. The Landgraf Court reasoned as
follows:

[T]here is no special reason to think that all the diverse provisions of the Act must be treated uniformly for [purposes of applicability to past conduct]. To the contrary, we understand [the statute's] instruction that the provisions are to "take effect upon enactment" to mean that courts should evaluate each provision of the Act in light of ordinary judicial principles concer ning the application of new rules to pending cases and p reenactment conduct.

27Landgraf , 511 U.S. at 280.

We conclude that it is proper to apply the SBREFA's judicial review amendment to past agency action, ev en assuming that it would be inappropriate to apply th e SBREFA's substantive amendments to past agency acti on. For these reasons, we conclude that we have jurisdi ction over the intervenor's RFA claim, pursuant to the SB REFA's judicial review amendment.

C. EPA contends that the intervenor may not raise i ts RFA argument because the petitioner, SWPGA, did not raise this argument in its own brief. It is a general rul e that an intervenor may argue only the issues raised by the principal parties and may not enlarge those issues. See Vinson v. Washington Gas Light Co ., 321 U.S. 489, 498 (1944); Synovus Fin. Corp. v. Board of Governors , 952 F.2d 426, 433 (D.C. Cir. 1991). The intervenor contends that the petitioner sufficiently raised the RFA issue in its brief through the following incorporation by reference:

Petitioner incorporates by reference the statement of issues raised by Intervenor with regard to whether EPA erred in certifying under the Regulatory Flexibilit y Act that its disapproval of the Commonwealth of Pennsylvania's request for redesignation would have no effect on small entities.

Petitioner's Br. at 2 n.3.

The EPA argues that such an incorporation by refere nce is insufficient to satisfy the rule that a principa l party must
raise an issue in its brief before an intervenor ma y argue it. In support of this argument, the EPA points to Time Warner

v. FCC , 56 F.3d 151, 202 (D.C. Cir. 1995), cert . denied , 116 S.Ct. 911 (1996). The court in Time Warner was presented
with an intervenor's claim that certain FCC orders did not comply with the RFA and the Small Business Act ("SB A"). The only mention of the RFA and SBA arguments in th e brief of the Time Warner petitioners was "a short twosentence footnote." Id . This footnote "neither explain[ed] nor develop[ed] the statutory challenges, noting only t hat the intervenors' brief [would] discuss this issue." Id . (internal quotation omitted). The Time Warner court concluded that such a "terse reference in a complex regulatory cas e is

28insufficient to raise an issue unrelated to petitio ners' other

challenges and not discussed elsewhere in their bri efs or even mentioned in their petition for review." Id

.

We agree with the EPA that under Time Warner intervenor AMN could not raise its RFA argument bec ause petitioner SWPGA's incorporation by reference did n ot sufficiently broach the issue. However, we decline to follow
Time Warner on this point. In its analysis of this issue, the
Time Warner court relied on Carducci v. Regan , 714 F.2d 171, 177 (D.C. Cir. 1983) (Scalia, J.), and Railway Labor
Executives' Ass'n v. United States R.R. Retirement Board , 749 F.2d 856, 859 (D.C. Cir. 1984). See id . We believe that
the Time Warner court misapplied these precedents when it concluded that an intervenor may not raise an argum ent that a principal party mentions only in an incorpor ation by

reference.

The court in Carducci reviewed a federal employee's claims that he was unlawfully reassigned to a posit ion of lower rank. In his complaint, the disgruntled emplo yee asserted, inter alia , that his employing agency violated his Fifth Amendment right to due process when it reassi gned him. The district court's opinion, which dismissed the employee's complaint, did not discuss his due proce ss claim. In his appellate brief, the employee express ed his due process argument only through a single assertio n that an official who reviewed the reassignment "rel[ied] on information not contained in the grievance file or record when he issued his final decision on the grievance. "
Carducci , 714 F.2d at 176.

On appeal, the District of Columbia Circuit did not address the employee's due process claims because t he employee had "made no attempt to address the issue. " Id

. at 177. The court stated that it would not resolve the complex legal issues that the employee's claim pres ented "on the basis of briefing and argument by counsel w hich literally consisted of no more than the assertion o f violation of due process rights, with no discussion of case l aw supporting that proposition or of the statutory tex t and legislative history relevant" to the legal question s involved.

Id . The court so ruled because consideration of compl icated legal questions without proper briefing by the part ies would

29ultimately deprive the courts of the assistance of counsel

that our adversarial system assumes. Id

.

We endorse the Carducci court's conclusion that appellate courts generally should not address legal issues that the parties have not developed through proper briefing. However, the situation in Carducci differs dramatically from
that in both Time Warner and the instant case, in which a party has adopted by reference an argument that is thoroughly developed in an intervenor's brief. As t henJudge Scalia explained in the Court of Appeals' dec ision in
Carducci , deciding legal issues without proper briefing can result in bad decisions. No similar danger is prese nted, however, when a petitioner incorporates by referenc e an argument that is fully developed in an intervenor's brief. We thus disagree with Time Warner on this point, and we hold that when a principal party adopts by reference an argument that an intervenor fully briefs, the inter venor may argue the question just as if the principal party h ad fully
briefed the issue itself.

We find further support for our conclusion in the f act that this practice does not differ substantively fr om the practice of an appellant's (or appellee's) adopting by reference part of the brief of a coappellant (or co appellee), which is expressly permitted under Fed. R. App. P. 28(i). Applying this analysis to the instant case, we conc lude that intervenor AMN is not precluded from raising its RF A argument by the fact that petitioner SWPGA adopted the intervenor's RFA argument by reference, rather than fully developing the argument in its own brief.

D. Although we have jurisdiction over the interveno r's RFA claim, and although the parties have properly b riefed the question, we hold that the intervenor may not r aise this issue in this proceeding because it was never prese nted to the EPA during the rulemaking process. "Generally, federal appellate courts do not consider issues that have n ot been passed on by the agency . . . whose action is being
reviewed." Hufstedler , 724 F.2d at 36 n.1.

The intervenor has not identified any section of th e record in which the EPA was presented with an argum ent that mentions the applicability of the RFA to the E PA's

30rulemaking. The only section of the record that the

intervenor has identified as relevant to its RFA ar gument is
a discussion of the circumstances that will result in a "bump up" of an area's nonattainment classification . See Intervenor's Reply Br. at 8, citing J.A. at 298. Th e intervenor argues that this discussion is relevant to its argument that retention of the Area's nonattainment status will affect small entities by subjecting them to en hanced pollution control requirements when the EPA subsequ ently "bumps up" the Area's nonattainment classification. This argument is flawed, however, because the section of the record to which the intervenor points discusses the nonattainment classification of the Reading area, n ot the Pittsburgh-Beaver Valley area. See id . Since the intervenor has brought to our attention no other portion of th e record relevant to its RFA argument, we conclude that the intervenor may not raise this argument before this Court because this argument was never presented to the EP A during the rulemaking process.

E. We hold in the alternative that the EPA's certif ication statement satisfies the requirements of the RFA. Th e EPA's statement complies fully with 5 U.S.C. §605(b), whi ch sets out certain circumstances under which the requireme nt of a regulatory flexibility analysis does not apply. U nder §605(b), an agency may avoid preparing a regulatory flexibility analysis if the agency publishes in the Federal Register a certification that "the rule will not, i f promulgated, have a significant economic impact on a substantial number of small entities." 5 U.S.C. §60 5(b). Along with this certification, the agency must also publish a "statement providing the factual basis for such
certification." Id . The intervenor contends that the EPA violated this provision because the EPA's statement did not sufficiently explain the agency's reasons for the certification. According to the intervenor, the sta tement is
deficient because it mentions neither the number of small
entities that the EPA believes the rule will affect , nor the
number of small entities that the EPA believes to b e "substantial."

We hold that the EPA's statement is sufficient to s atisfy the requirements of §605(b). Directly applicable to this

31inquiry is Colorado State Banking Bd. v. Resolution Trust

Corp. , 926 F.2d 931 (10th Cir. 1991). In that case, the Resolution Trust Corporation ("RTC") adopted a rule that would allow banks to operate acquired insolvent thr ifts as bank branches, notwithstanding Colorado and New Mex ico laws that prohibited such operation. These two stat es contended that the RTC's adoption of the rule did n ot satisfy the §605(b) criteria for exemption from the obligation to undertake a regulatory flexibility analysis. In promulgating the rule, the RTC published the follow ing
certification statement:

The basis for the RTC's certification is its determination that the rule will not impose complia nce requirements on depository institutions of any size . It imposed no performance standards, no fees, no reporting or recordkeeping criteria, nor any other type of restriction or requirement with which depository institutions must comply. Thus, it does not have th e type of economic impact addressed by the EPA.

Id . at 948.

The Tenth Circuit held that the RTC's brief stateme nt "present[ed] a valid basis for certification" becau se it addressed the RFA's concern for "the high cost to s mall entities of compliance with uniform regulations." I d ., quoting Mid-Tex Elec. Coop., Inc. v. FERC , 773 F.2d 327, 342 (D.C. Cir. 1985). Similarly, the EPA's statemen t in the instant case, which closely resembles the RTC's sta tement in Colorado State Banking Board , adequately addressed this concern by noting that the denial of redesignation" does not affect any existing requirements applicable to smal l entities nor does it impose new requirements." 61 Fed. Reg. 19,193, 19,197.

We also find no merit in the intervenor's contentio n that
the EPA erred when it concluded that the final rule would not affect the requirements applicable to small ent ities. The intervenor argues that the EPA's disapproval of Pennsylvania's redesignation request will soon resu lt in a "bump up" of the Area's nonattainment classificatio n from "moderate" to "severe." This will happen, the inter venor posits, because 42 U.S.C. §7511(b)(2)(A) provides t hat an

32area that fails to attain the NAAQS by the applicab le

attainment date "shall be reclassified by operation of law" to the next higher classification. Since reclassificat ion to "severe" status will impose stricter pollution cont rol requirements upon small entities in the Area, the
intervenor contends that the EPA erred when it cert ified that the denial of redesignation would not alter th e requirements applicable to small entities in the Ar ea.

Although the intervenor accurately describes the operation of §7511(b)(2)(A), its argument isflawed because the more stringent pollution controls will result f rom the rulemaking process that will accompany the reclassi fication under §7511(b)(2)(A), not the rulemaking process th rough which the EPA denied the redesignation request. Whe n the time comes for §7511(b)(2)(A) to reclassify the Are a by operation of law, the EPA will provide notice and a n opportunity for the public to comment, which will i nclude the opportunity to comment on the requirements of t he
RFA. The EPA made this observation in its certifica tion statement, when it said that "to the extent that th e area must adopt regulations, based on its nonattainment status,
EPA will review the effect of those actions on smal l entities at the time the Commonwealth submits those regulati ons." For this reason, we conclude that the EPA correctly
determined that small entities would not be affecte d by the particular rulemaking at issue in this case, namely , the EPA's denial of Pennsylvania's request to redesigna te the

Area.

IV.

For the reasons discussed above, we deny the petiti on for review of the EPA's final rule denying Pennsylvania 's request to redesignate the Pittsburgh-Beaver Valley area from nonattainment to attainment status.

33BECKER, Circuit Judge , concurring.

I join in Judge Alito's fine opinion. This brief co ncurrence is merely to record my view that there is something amiss, or at least unfair, in the EPA's treatment of regio ns such as the Pittsburgh-Beaver Valley nonattainment area whi ch, because of the geographical configuration of the je t stream, receives a constant infusion of transported ozone f rom highly industrialized upwind sources. Although I la ck the technical expertise of the agency, my immersion in the
record in this case has left the distinct and indel ible impression that, while laudably attempting to fulfi ll its statutory mission of assuring cleaner air, the EPA has paid insufficient attention to: (1) the difficulty that downwind areas such as Southwestern Pennsylvania have in mee ting the ozone NAAQS, and (2) more importantly, the impe rative of infusing its regulations with equity. The econom ic consequences to the area as the result of continued nonattainment status are enormous, as this record demonstrates, and surely assuring equity vis-a-vis other areas of the nation is within the agency's charter. I suspect there are several avenues through which the EPA cou ld afford relief to the Pittsburgh-Beaver Valley regio n and other similarly situated areas without violating it s statutory
mandate.

Modest escape valves already exist within the curre nt regulatory structure. For example, an EPA guideline permits the "flagging" of data affected by certain exceptional events in carrying out various regulatory tasks. As Judge Alito explains, this guideline authorizes the EPA t o disregard ozone data influenced by the phenomenon o f stratospheric ozone intrusion. See U.S. Environmental Protection Agency, Office of Air and Radiation, Off ice of Air Quality Planning and Standards, Monitoring and Data Analysis Division, Guideline on the Identification and Use of Air Quality Data Affected by Exceptional Events , EPA450/4-86-007 (July 1986). Additionally, the EPA has acknowledged that it has, in the past, excluded ozo ne data affected by forest fires in evaluating other redesi gnation requests.

The presence of these exceptions highlights the pro blem faced by communities such as the Pittsburgh-Beaver Valley

34area, whose herculean and largely successful effort s to

combat air pollution may be derailed due to circums tances (upwind ozone) beyond its control. The tremendous remedial efforts undertaken by those regions seem t o have been inadequately considered when contrasted with t he aforementioned regulatory mollifications.

I would urge Congress to address the burdens faced by the Pittsburgh-Beaver Valley nonattainment region a nd other areas in the same predicament. Congress has t aken into account the problem of transported ozone in th e past, excusing certain so-called "rural transport areas" from certain pollution control requirements. See 42 U.S.C. § 7511a(h). I see no reason to treat metropolitan a reas differently, especially where, as here, a region ha s achieved such significant emissions improvements. I acknowle dge the potentially ameliorative effects of the Regulat ory Flexibility Act, 5 U.S.C. § 601 et seq. , but it does not directly address the problems facing Southwestern Pennsylvania.

I would also urge the EPA to address these problems in the regulatory context. If the EPA and Congress satisfactorily address the referenced issues, we ma y be able to avoid a succession of expensive and burdensome litigations like this one. Judge Scirica joins in t his

concurrence.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

35