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# Hnttsfc &tat M (Cour

t o f Appeal * fo r Uj e deuenti i Clrnit t

Nos . 88-326

4 & 89-1339 WISCONSI

N ELECTRI C POWE

R COMPANY

, Petitioner, v. WJLLIAJ K K . REILLY , Administrato r an d UNITE D STATE S ENVIRONMENTA

L PROTECTIO

N ACENCY , Ihtpondentt.

O n Petition s t o Revie w Fina l Actio n o f th e Unite d State s Environmenta

l Protectio

n Agenc y

ARGUE D SEPTEMBE

R 15 , 1989-DECIDE D JANUAR Y 19 , 199 0

Before CUDAH

Y an d FLAUM , Circuit

Judges, an

d GRANT , SeniorDietriet

Judge.* CUDAHY , Circuit Judge. The Petitioner , Wisconsi n Elec tri c Powe r Compan

y ("WEPCO") , challenge s tw o final deter mination s issue d b y th e Environmenta l Protectio n Agenc

y (th e "EPA") . I

n thes e determinations , th e EP A conclude

d thatWEPCO' s propose

d renovation s t

o it s Por tWashing to n powe r plan twoul d subjec tth e plan tt o certai n pollu -

* Th e Honorabl e Rober tA . Grant , Senio r Distric tJudg e fo r th e Norther n Distric t0 / Indiana ^ U titlin g b

y designation .EPR*-6G C P. 3 TEL : 332761 5 Ja n 23,9 0 1 0 = 0 9 N

o .00 3 P.0 3

lAy. -

2 Nos . 88-326 4 ft89*133

9 tio n contro

l provision s o

f th e Gea n Ai r Act , a s amended , 4 2 U.S.C . ( I 740 1 et

uq. (1982) . W e affir

m i n part , vacat

e i n partan

d reman d t o th e EPA .

A. I . Th e Underlyin g Disput e Relevant Provisions of

the Clean Air

Act Some discussio n of

th e Qea n Ai r Ac ti s required befor e turnin g t o th e merit s o

f thi s case . I

n 1970 , Congres s enacte d th e Qea n Ai r Ac tAmendments , Pub . L No . 91-604, 8 4 Stat . 1676 , t o establis h minimu m ai r qualit

y standard s tha twoul d regulat

e th e emissio n o

f certai n pollutant

s int o th e atmosphere . T o thi s end , Congres s Instructe d th e EP A t o develo p Nationa

l AmbientAi r Qualit

y Standard s ("NAAQS" ) tha twoul

d specif y th e maximu

m permissibl e concentratio n o

f ai r pollutant s i n differen tarea s acros s th e country . I n sectio n 11 1 o

f th e 197 0 Amendments , Congres s re quire d th e EP A t o promulgat e Ne w Sourc e Performanc e Standard s CNSPS' O i n orde r t o regulat e th e emissio n of ai r pollutant

s from ne w sources . Thes e standard s addresse d hourl y rate s o f emissio n and , i n additio n t o ne w sources . applie d t o modifications o f existin g facilitie s tha tcreate d ne w o r increase d pollution . Indeed , sectio n Ul(aX2 ) o f th e Ac tstate d tha tNSP S woul d apply t o an y stationar y source , th e constructio n ormodification of whic h i s commence d afte r th e publicatio n of regulation s (or , I

f earlier , propose d regulations ) pre scribin g a standar

d o f performanc

e unde r thi s sectio n whic h wil l b e applicabl e t o suc h source . 4 2 U.S.C . ft7411(a)(2

) (emphasi s supplied) . Congres s the n define d "modification " a a any physical

change in , o r chang e i n th e metho d o f operatio n of

, a stationar

y sourc e which increase s tA * amount of any airpollutant

emitted b y suc h source o r which remit s I

n th e emissio n o f

an y ai r pollutan t no tpreviousl y emitted . 4 2 U.S.C . I 74UUX4 ) (emphaai a supplied) .P. 4

EPftHlSG C TEL : 3S2761 5 Ja n 23,9 0 10:0 9 N o .00 3 P.0 4

• • 1 • lU I

Nos . 8&-S26

4 ft89-133

9 3 Subsequently , face

d wit h onl y varyin g degree s o

f suc ces s i n controllin

g pollutio n i n differen tpart s o f th e country , Congres s enacted th e Qea n Ai r Ac tAmendment s o f 1977 , Pub . L . No . 95-96, 9 1 Sta t68 6 (codifie d a t4 2 U.& C M 7401-764

2 (1982)) . Congres s revise d th e NSP S s o tha t regulate d source s o

f pollutio n woul d hav e t o us e "the bes t syste m o f continuou

s emissio n reductio n whic h (takin g int o consideratio n th e cost s o f achievin g suc

h emissio n reduc tion , an d an y nonai r qualit y healt h an d environmenta

l impac tan d energ y requirements ) th e Administrato r deter mine s ha s bee n adequatel

y demonstrate

d "4 2 U.S.C . 5 7411(aXlXQ - I

n addition . Congres s adde d a progra

m fo r th e Preventio n o

f Significan

tDeterioratio n ("PSD") , concerned wit

h increase s i

n tota l annua l emissions , t o ensur

e tha toperator

s o f regulate d source s in relatively unpollute

d area s woul d no tallow a decline o f ai r qualit y t o th e minimu m leve l permitte d b y NAAQS . Ai r qualit y i s preserve d i n thi s progra

m b y requirin g source s t o limi tthei r emis sion s t o a "baseline rate" ; regulate d owner s or operator s i n area s tha thav e attaine d NAAQ S mus tobtai n a per mi tbefore constructin g or modifyin g facilities . 4 2 U.S.C . I 7475(aXl) . Congres s als o essentiall y adopted it s NSP S definition o

f "modification " fo

r th e PS D program . 4 2 U.S.C . I 7479(2X0 . Fro m thi s statutory framework, th e EP A promulgate d regulation s fo

r bot h th e NSP S an

d PS D programs . I

n thi s case , H a regulation s concernin

g modification

s ar e centra l Th e EP A defines "modification* * I n substantially th e same 

### term s use d b y Congress : (A]n y physica l o r operationa

l chang e t o a

n existin g facilit y whic h result s i

n a n increas e i

n th e emissio n rat e t o th e atmoapher

e o f an y pollutantt o whic

h a standard applie s shal

l b e considere d a modificatio n withi n th e meanin g o

f sectio n U l [4 2 U.S.C . I 7411 ] of th e Ac t 4 0 C.F.R . 160.14(a ) (1968) . T o determine whethe r a o l ca l chang e constitute s a modificatio n fo r purpose s o

f N£

__ , th a EP A mus tdetermin e whethe r th e chang e increaae aP. 5

EP'Pf-OG C 

### TE L S2761 5 Jan 23,9 0 10:0 9 No.00 3 P.0 5

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. • *••*& * 

### 4 Nos . 88-326 4 ft89-133 9 th e facility' s hourly rate o f emission . 4 0 C.F.R . 9 60.1 4 (1988) . Fo r PS D purposes , curren tEP A regulation s pro vid e tha ta n increaa e i n th e total amount o f emission s activate s th e modificatio n provision s o f th e regulations . 4 0 C.F. R ft52£l(bX3 ) (1988) . Eve n a tfirstblush , th e potentia l reach o f thes e modi fication provision s i s apparen tth e mos ttrivia l activities— th e replacemen to f

leaf y pipes , fo r example-ma y trigge r th e modificatio n provision s i f th e chang e result s in a n in creas e i n th e emission s o f

a facility . A s a result , th e EP A promulgate d specifi c exception s t o th e modificatio n pro visions : Th e followin g shal l not , b y themselves , b e consid ere d modification s unde r thi s par t (1 ) Maintenance , repair , an d replacemen twhic h th e Administrato r determine s t o b e routin e fo r a sourc e categor y . . . (2 ) A n increas e i n productio n rat e o f a n existin g facility , i f tha tincreas e ca n b e accomplishe d withou t • capita l expenditur e o n tha tfacility . (8 ) A n increas e i n th e hour s o f operation . . . . 4 0 CF.R . * 60.14(e ) (1988 ) (NSP S program) ; see 4 0 C.F.R . I 52-21(bX2Xiii) (1988 ) (PS D program) . Thes e regulation s (an d th e statute s from whic h the y derive ) ar e th e focal poin to f thi s case . A WEPCO'i Propose d Life-Eztention Project WEPCO' s Por tWashingto n electri c powe r plan ti s lo cate d o n Lak e Michiga n nort h o f Milwaukee , Wisconsin . Th e plan tconsist s o

f five coal-fired stea m generatin g unit s tha twer e place d i n operatio n betwee n 198 6 an a 1950 . Eac h generatin g uni tha s a desig n capacity o f 8 0 mega watts , bu tth e recen tperformanc e o f som e o f th e unit s ha s decline d du e t o age-relate d deterioratio n o f th e phys ica l plan tP. 6

,- ' EPA*-OG C TEL : 382761 5 Ja n 23,9 0 10:0 9 N o .00 3 P

• • • « . • • U b

Nos . 88-326

4 ft89-133

9 6 WEPC O an d it s consultant

, Bechte l Easter n Power Co r poration , conducted a Plan tAvailabilit y Stud y i n 198

3 t o examin e an

d asses s th e conditio

n of th e powe r plan tA s a resul to f th e Study , WEPC

O conclude

d "tha textensive renovation o

f th e five unit

s an d th e plantcommo

n facili tie s i s needed i

f operatio n o f th e plan ti s t o b e continued. " Lette r from Thoma

s J . Cassidy , Executiv e Vic e Presiden t o f WEPCO , t o Jacqueline K . Reynolds , Secretary t o th e Publi c Servic e Commission o f Wisconsin , a t2 (Jul

y 8,1987 ) (Cassid y Letter ] (emphasi

s supplied) . The Stud

y note d that th e ai r heater s o

n th e firstfou

r unit s ha

d deteriorate d severely , whil e th e rea r steam drum s i n unit s 2 throug

h 6 ha d experience d seriou s cracking. 1 Ai r heate r deteriora tio n prevente d unit

s 1 an d 4 from operatin g a tful l capacity , whil e th e potentia

l for stea m dru

m blowoutt-equure

d a reductio n i n pressure (an d output ) i n unit s 2 and a. Th e possibilit y o f catastrophi c failur

e (steam dru

m blowout

) i n uni t6 wa s s o grea ttha tWEPC O shu tdow n th e uni t completely . A s a resul to

f thi s Study . WEPC

O submitted a propose

d replacemen tprogra

m (whic h i tterme d a "lif

e extenaion " project) t o th e Wisconsin Public Servic e Commissio n fo r it s approval , a s required b y stat e law . Wis . Sta tft196.4 9 (1987 V WEPC O explaine d i n it * proposa l tha t"(renova tion i a necessar y t o allo w th e PortWashingto n unit s t o operat e beyon d thei r currently planned retiremen tdate s o f 199 2 (unit s 1 an

d 2 ) an d 199 9 (units 3 , 4 an

d 6) . . . [and tha trenovatio n would rende r th e plant ] capabl e of generatin g a tit s designe d capabilit y until yea r 2010.... " Caaaid y Lette r a t1-2

. Amon g th e renovation s require d wer e repai r an

d replacemento

f th e turbine-generator* , boflers . mechanica

l an d electrica

l auxiliarie s an

d th e com mo n plan tsuppor

tfacilities . Id. a t1 . Afte r preliminar y revie w o f th e program , th e Publi c Servic e Commission

* Ai r heate n prehea

tcombustio

n si r t o Improv

e tb e efficienc

y o f th e ftoara generatin

g units . Sttasm: lit

(toierati m en d Use 1* 4 (19TB ) (Beheac k ftWilcox) . Stea

m drum s separat e tsturated stea

m from wate r withi

n th e boiler. Id

a t1-6 .P. 7

EPPKOG C TEL : 382761 5 Ja n 23,9 0 1 0 = 0 9 No.00 3 P.0 1

6 Nos . 88-326 4 ft89-1339 consulte d th e Wisconsi

n Departmen

to f Natura l Resource

s (whic h the n consulte d EP A Regio n V ) t o determine whethe r WEPC O needed t

o obtai n a PS D permi

tbefor e commenc

in g th e repai r an

d replacementprogram . David Kee , th e Directo r o

f EPA Region V s Ai r an d Radiatio

n Division , the n referre d th e matte r t

o EP A Headquarters . See, e.g., 4 0 C.F.R . ft60. 5 (1988) (discussin g th e EPA' s procedure s regardin g determination s o f constructio n or modification) . EP A staf f member s conferre d wit h WEPC O represen tative s betwee n Marc

h an d Septembe r 198

8 t o gai n additiona l informatio

n regardin g th e proposed repai r an d replacementproject , O

n Septembe r 9 , 1988 , EP A Actin g Assistan tAdministrato r Do n R . Qa y issue d a memorandu m in whic h h e preliminaril

y conclude

d tha tth e projec

t would subjec tth e plantt o bot h NSP S an

d PS D require ments . Memorandu

m fro m Do n R . Qay , Actin g Assistan t Administrator fo

r Ai r an d Radiatio

n o f th e EPA , t

o Davi d A . Kee , Directo r o

f Ai r an d Radiation Division , Regio n V (Sep t9 , 1988

) [Cla y Memorandum] . Th

e Cla y Memoran

du m pointe d outtha tth e projectwoul d constitute a "phys ica l change " resultin g i

n a n increas e o

f production an

d emissions , whic

h woul d therefore subjectth e plan tt o th e relevan tstricture s o

f th e Qea n Ai r Act . Id. a

t34 . Further , th e Cla y Memorandu

m dismisse d WEPCO' s contentio n tha t th e progra

m wa s routine an

d wa s therefor

e exemp tfrom th e requirement

s o f NSP S an

d PSD . Thi s conclusion was adopte d in toto b y EP A Administrato r Le e M . Thomas . Lette r from Le e M

. Thomas , Administrato r o f th e EPA , t o Joh n Boston , Vic e Presiden to f WEPCO (Oct

. 14,1988 ) [Thoma s Letter] . Followin g th e Thoma

s Letter , WEPCO continue d t o conduc tcapacit y tests o n th e units . Base d upo

n thes e teste, Assistan tAdministrato r Qa y issued a "revise d final determination " tha tgenerall y affirme d th e EPA' s earlie r findings, bu tmodifie

d th e baselin e figures use d b y th e EP A To r unit e 2 an d 8 . Lette r from Do

n R . day , Actin g Assistan tAdministrato r fo r Ai r an d Radiation o

f th e EPA , t o John W . Boston , Vic e Presiden to f WEPC O (Feb . 16 , 1989 ) [Supplementa

l Determination] . _P. 8 EPf-HOG C TEL : 382 ^ 61 5 Ja n 23,9 0 10=0 9 No.00 3 P.O S

Nos . 8&S26

4 4 89-1839 « Allegin g tha

tth e EP A ha s misconstrue

d bot h th e Qea n Ai r Ac tan d it s ow n regulations , WEPC

O appeal s th e EPA' s final determination . W

e hav e jurisdictio n t o hear thi s ap pea l pursuan tt o 4 2 U.S.C . 9 7607(b) (1982) . II . Standar d o f

Revie w Court s hav e generally accorde

d substantia

l deferenc e t o th e EPA' s interpretatio n o f th e Qea n Air Ac tAmendments , reasonin g tha t"considerable weigh tshould b e accorde d t o a n executiv e department' s constructio n o f a stat utor y schem e i ti s entruste d t o administer.... " Chevron U.S.A. Inc. v. Natural

Resources Defense Council* Inc., 46 7 U.S . 837 , 844 (1984) ; ss s Union Else Co. v. EPA, 42 7 U.S . 246 , 25 6 (1976) ; Train v . Natural Resources De* feme Council, Inc., 42 1 U.S . 60 , 75 , 8 7 (1975) ; ASARCO Inc. v. EPA, 57 8 F.2 d 319 , 326 (D.C . Cir . 1978) . Thi s deferenc e wit

h regard t

o th e Qea n Ai r Ac tfollow s logi cally from th e highl y technica l provision s o

f th e Amend ments , Chevron, 46

7 U.S . a t848 , an

d i s consisten twit

h th e Administrativ e Procedur e Act , whic

h provide s tha t agenc y action s ar

e t o b e se tasid e onl

y i f the v ar e "arbi trary , capricious , a

n abus e o f discretion , or otherwis e no t in accordanc

e wit h law. " 5 U.S.C . 5 706(2) . T o b e sure , thi s standar d doe s no tgiv e th e EP

A unbridle d discretio n t o constru e th e Qea n Ai r Ac tAmend ment s free from judicia l oversight . W

e mus tconside r whethe r th e EPA r s constructio n comport s wit h it s stat utor y mandat e an d Congress' s inten ti

n enacting clea

n ai r legislation . Butw e canno tsimpl y substitut

e ou r judgmen

t for tha tof

th e EPA . Ou

r rol e ha s bee n sharpl

y defined an d limite d b y th e Suprem e Court ; Whe n a cour

treview s a

n agency' s constructio n o f th e statut e whic

h i tadministers , i ti s confronte d wit h tw o questions . First , always , i s th e questio n whethe r Congres s ha s directl y spoke n t o th e precis e questio n a tissue . If

th e Inten to

f Congres s I s dear , tha ti s th e en d o f th e matter , fo r th e court , a a wel l a a th e agency , mus tgiv e effec tt o th e unambiguousl y ex - -_*y>.<EPfl.-OG

C P. 9 TEL : 382751 5 Ja n 23,9 0 10:0 9 No.00 3 P.0 9



## *$? 

## '&"' W8 Nos . 88-826 4 & 89-1339 presse d inten to

f Congress . If

, however , th e cour

t determine s Congres s ha s no tdirectl y addresse d th e precis e questio n a tissue , th e cour tdoe s notsimpl y impos e it s ow

n constructio n on th e statute , a s woul d b e necessary i n th e absenc e o f a n administrativ e in terpretation . Rather , i f

th e statut e t s silen to r ambiguou s with respec tt o th e specifi c issue , th e ques tion fo r th e cour

ti s whethe r th e agency' s answe r i s base d o n a permissibl e constructio n o f th e statute . CJurvron. 46

7 U.S . a t8424 3 (footnote s omitted) . Further , w e defe r eve n mor e t o a n agency' s construc tion o f it s ow n regulations . Lyng v. Pavru, 47 6 U.S . 926 , 98 9 (1986) ; see Wlkins v. Sullivan, 889 Fi d 135,18 9 (7t h Or. 1989) ; Homernaken North Shore, Ine. v . Bourn, 83 2 F i d 408 , 41 1 (7th Cir . 1987 ) (agenc y constructio n o

f it s regulation s usuall y upheld) . A n agency' s interpretatio n mus tb e uphel d "^unles s i ti s plainly erroneou s or incon sisten twit

K th e regulation.' " UdaU v. Tollman, 380 U.S . 1,16-1 7 (1966

) (quoting , i n part , Bowls* v. Seminole Rock is Sand Co,, 82 5 U.S . 410 , 413-1 4 (1945)) , Th e principl e o f deferenc e ha s particular forc e where , a s I

s th e cas e here , th e subjec toein g regulate d I s technica l an d com plex . Aluminum Co. of

Am. v . Central

Lincoln Peoples' VtiL Dist, 46

7 U.S . 8S0 , 89 0 (1984) ; Wilkin* v. Sullivan, 88 9 Fi d a t140 ; *es also Shidmor* v . Swift & Co., 32 3 U.S . 184 , 14

0 (1944 ) (ruling s o

f agenc y constitut e bodie s o f experienc e an d informed judgment) . HI . like-Kin d Replacemen tan d Modificatio n

unde r th e Ac t A . The Underlying Statutory Framewfrk Wit h thes e principle s i n mind , w e ma y addres s th e merits . W e mus tfirstconside r whethe r WEPCO' s PortWashing to n replacementprogra

m constitute a a modificatio n unde r this terms of

th e controllin g statute , 4 2 U.S.C . sectio n 7411(a)(4) . Cf. Blue Chip Stamp* v. ManorDrug Stores, 421 U JB* 723,75 6 (1975 ) frowell, J- » concurring

) ("Th e start in g poin ti n ever y cas e involvin g constructio n o f a statut e i sP.1 0

EPFC-QG C "EL = 382761 5 Ja n 23,9 0 10=0 9 No.00 3 P

. 1 0

Nos . 88-326

4 & 89-133

9 » the languag

e itself.") . Section 7411(aX4 ) defines modificatio

n a s "an y physica l chang e . . . whic

h increase s th e amoun

t o f an y ai r pollutan temitte d "4 2 U.S.C . $ 7411(aX4) . Bot h part s o f thi s definition—an

y physica l chang e an d a n increas e i n emissions—mustb e satisfie d befor e a replace men twil l b e considere d a "modification. " 1. Physical

Change Certainly , unde

r th e plai n term s o f th e Act , WEPCO' s replacemen

tprogra m constitute s a "physica l change. " WEPC O propose s t

o replac e rear stea

m drum s o n units 2 , 3 , 4 an

d 6 ; eac h o f thes e steam drum

s measure s 60 fee ti n length , 50. 5 inche s i

n diamete r an

d 5.2 5 inche s I n thicknesB . cla y Memorandu m a t4 . I n addition , WEPCO plan s t o replac e anothe r majo r component

, th e ai r heaters , in unit s 14 . T o implemen

tthi s four-yea

r program , WEPC O wil l need t

o mak e th e replacements b y takin g th e units successivel y ou

to f servic e fo

r nine-mont

h periods . Id, Thes e step s clearl

y amoun tt o a "physica

l change " i

n th e Por tWashington plant . See Butler , New Source Netting in NcmUainment

Areas underthe Clean AirAct, 1 1 Ecolog y L.Q . 343 , 349-5

0 (1984 ) ("fflh e ne

w sourc e review requirement

s ar e triggere d no tonl

y when a

n operato r build s a ne

w plant , bu tals o wheneve r th e operato r in* stalls oralters a piece of equipment

in an existing tdant an d thereb y increase s emissions." ) (emphasi s supplied) . WEPC O doe s no tdisput e tha tit s Btea

m dru m an d ai r heate r replacements wil l resul ti n a n altere d plant . But WEPC O doe s asser ttha

tCongres s di

d no tinten d fo r simpl e equipmen

treplacemen

tt o constitut

e a physica

l chang e fo r purpose s o

f th e Qea n Ai r Act' s modificatio n provi sions : Th e plain meanin g o

f "modify " i s "t

o change o r al

ter " [Webster' s Ne w Worl d Dictionary ! or ,r t o mak e basi c or fundamenta

l change s in. " [Webster' s Nint h Ne w Collegiat

e Dictionary ] Reflectin

g th e plai n meanin g o f thi s \jtrm, Congres s provide d thata facilit y (1 ) mus tunderg o a physica l o r operationa

l "change "P.1 1 EP'R-OG C TEL : 382761 ! Ja n 23,9 0 10:0 9 N o .00 3 P.1 1

1 0 Nos . 88-326 4 & 89-1339 befor e i ti s evaluate d under th e modificatio n provi sion . .. . Thus , unde

r th e plai n meaning o

f th e Act , a uni tshoul d notb e deeme d "modifie d a s a resul t o f replacemento

f equipmen

twit h equipmen

tsimila r t o tha treplaced . A s in th e cas e o f PortWashington , suc h like-kin d replacemen

tdoes not"chang

e o r alter 1 ' th e desig n o r natur

e o f th e facility . Rather , i tmere l y allows th e facilit

y t o operat e agai n a s i tha d befor e th e specifi c equipmen

tdeteriorated . Petitioner' s Brie

f a t32-33 . Chevron instruct s u s t o rel y mor e o n congressiona

l directio n an

d on agenc

y constructio n (pursuan

tt o congres siona l delegation ) tha

n on glosse s foun

d in th e dictionary . Wha tWEPC O call s "plain " i s anythin g butplai n an d take s th e definitio

n fa r beyon d th e words enacted b

y Congress . Chevron, 46

7 U.S . a t843-45 ; see Generally, R . Anthony , Report

to the Administrative Conference of the Untied States: Which Agency Interpretations Should Bind the Courts and

the Public? (1989

) (explainin g Chevron ap proach) . Thus , whethe r th e replacemen to f ai r heater s an

d stea m drums i s a "basic o r pindamental change " I

n th e Por tWashingto n plan ti s irrelevan tfo r our purposes , give n Congress' s direction s o n th e subject ; "Th

e term ^modification ' mean s an y physica l change "4 2 U.S.C . 8 7411(a)(4

) (emphasis supplied) . W

e follo w Congress' s defi

nitio n o f *hnodification"--no

tWebster's-whe n interpretin g thi s term withi n th e contex to f th e Clea n Ai r Act . Cf. Chevron, 46

7 U.S . a t86 1 ("[T]h

e meaning o

f a wor d mus t b e ascertaine d in th e contex to f achievin g particular ob jectives . . . .") • No r ca n w e find an

y suppor ti n th e relevan tcas e la w for th e narrow construction s o f "modification " an

d "phys ica l change " offered b y WEPCO . The Supreme Cour tre porte d i n Chevron tha tSenato r Muskie , on e o f th e prin cipa l supporter s o

f th e Qea n Ai r Act , remarked : " A sourc e

. . . i a subjec tt o all th e nonattainmentrequirement s a s a modified sourc e i

f i tmake s any physical

change whic

h Increase s th e amoun

to f an y air pollutant . . . . " 46

7 U.S .EPfi-OG ( TEL : 332761 5 Ja n 23,9 0 10=0 9 N o .00. 3 P

. 1 2



### Nos

. 88-326

4 & 89-133 9 1 1

at 85 3 (quotin

g 12 3 Cong

. Rec

. 2684

7 (1977) ) (emphasi s supplied)

. An

d othe r court s considering th e modificatio n provision s o

f NSP S an d PS D have assumed tha t "an y physica l change " mean s precisel

y that

. See, e.g., NationalSouthivir* Aluminum Co. v . EPA, 83 8 Fi d 83 5 (6t h Cir.) , cert, denied, 10

9 S

. Ct

. 39

0 (1988 ) (turnin g of

f pollutio n contro l equipmen

t constitute s "physica

l change " an

d mod

ification) ; Alabama PowerCo. v. Costle, 63 6 Fi d 323, 40

0 (D.C

. Cir

. 1979

) ("CTlh e term'modification ' i s nowher e limite d t o physica

l change s exceeding acertai n magni

tude.") ; ASARCO Inc. v. EPA, 57 8 Fi d 819 , 82 2 (D.C

. Cir

. 1978 ) (NSP S applie s t o an

y stationar

y sourc e tha t i s "physicall

y o r operationall

y change d i n suc h awa y tha t it s emissio

n o f an y ai r pollutan t increases." ) (emphasi s removed) . Cf, United

States v. NarraganseU

Improvement Co., 57 1 F

. Supp

. 688 , 694*9 5 (D.R.f

. 1983) (replacemen

t progra mno t modificatio

n because , despit

e physica l change , n o increas e i

n emissions)

. Further , t o adop t

WEPCO' s definition o

f "physica l change " woul

d ope n vista s o f indefinit e immunit

y from th e provision s o

f NSP S an d PSD

. Wer

e w e t o hol d tha t th e replacemen

t o f majo r generatin g statio n systems—in

cludin g stea mdrum s an

d air heaters-doe s no

t constitut e aphysica l chang e (an

d i s therefor

e no t amodification) , th e application o

f NSP S an d PS D t o importan t

facilitie s migh t h e postpone d int

o th e indefinit

e future

. Ther e i s n o reaso n t o believ e tha t

suc h aresul t wa s intende d by Congress

. Th

e Clea n Ai r Act Amendment s wer

e enacte d t o "spee d up , expand , an

d intensif y th e wa r agains t ai r pollutio n i n th e unite d State s wit

h avie w t o assurin g tha t th e ai r w e breath e throughou t

th e Natio n i s whole

som e once again. " H.R

. Rep

. No

. 91-1146 , 91s t Cong. , 2 d Sesa . 1 , 1 , revrinted

in 197 0 U.S

. Cod

e Cong , & Admin

. New s 5356,5356

. I

n particular , th e permi t

progra mestab

lished b y th e 197 7 Amendments t o tho Qea n Ai r Ac t re p resente d abalanc e between "th e economi c interest s I

n permittin g capita

l improvement s t o continu e an d th e en vironmenta

l Interes t i n Improvin

g si r quality. " Chevron, 46 7 U.S

. a t 851

. Th e Hous e echoe

d thi s them

e i n it s Com

-P.1 3 EPS-06 C 

### TEL 82761 5 Ja n 23,9 0 10=0 9 Mo.00 3 P.1 3

1 2 Nos . 88-326 4 & 89-1339 mitte e report : "[Th

e complianc

e progra m i s designed , i

n part, } C o allow reasonabl e economic growt h t o continue i

n a n area whil e makin

g reasonabl e furthe r progres s t o as sure attainmen to

f th e [pollution-control ] standard s b y a fixed dat e " H.R . Rep . No . 294 , 95t h Cong. , 1stSese . 211 , reprinted

in 197 7 U.S . Code Con

g 6 Admin . New s 1077 , 1290 . A to o restrictiv e interpretatio n o f "modifica

tion " mightupse tth e economic-environmenta l balanc e i n unintende d ways . Consisten t

wit h it s balance d approach , Congres s chos e no tt o subjec texistin g plant s t o tn e requirement s o f NSP S an d PSD . Member

s o f th e Hous e recognize d tha t"[bluildin g contro l technology int

o ne w plant s a

ttime o f construction will plainl y b e les s costl y the n [sic ] requiring retrofit whe n pollutio n contro

l ceiling s ar

e reached. " H.R . Rep . No . 294 , 96t

h Cong. , 1s tSess . 185 , reprinted in 197 7 U.S . Cod e Cong . A Aomin . New s a t1264 . Bu tCongres s di

d notpermanently exemp texistin g plant s from thes e re ouirements ; sectio n 7411(aX2 ) provides thatexistin g plant s tha thav e bee n modifie

d ar e subjectt

o th e Qea n Ai r Ac t program s a tIssu e here . A s Judg e Boggs , dissentin g in National-SouthvAre, reasoned : "Tn e purpos e of

th e 'modification' rul e i s t

o ensur e tha tpollutio n control measure s ar e undertake n when the y ca n b e mos teffective , a

tth e tim e o f ne w o r modifie d construction . See 11 6 Cong . Rec . 32,918 . (remarks o f

Sen . Cooper) , reprinted in 1 Senat e Committe e on Publi c Works , A Legislativ e Histor y o f th e Qea n Ai r Ac tAmendment s o f 197 0 (1974) , a t260. " Natwnal'Southwire Aluminum Co. v. EPA, 83 8 Fi d 836 , 848 (6t

h Cir. ) (Boggs , J. , dissenting) , cert, denied, 10 9 S . Ct . 39 0 (1988) . Judg e Bogg s argued tha tth e shuttin g dow n of pollutio n control equipmenti n a n existin g plant shoul d notb e considere d a modification becaus e i twoul d no taffor d th e utilit

y a n opportunit

y fo r "effectiv e place men to f ne w control technology." /a . Her e th e recor d l a silen to n thi s point(althoug

h tn e poin

ti s important) . How eas y o r difficul twoul d b e "th e effectiv e placemen to f ne w control technology" in thes e renovate d unit s i s no tdear , bu tw e d o kno w tha tth e projec talready contemplate sP. M EPfi-OG C TEL : 382761 5 J* n 23,9 0 10=0 9 No.00 3 P. H

Nos . 88-326

4 & 89-133

9 1 3 replacemen

to f stea m drums , air heater s an d othe r com

ponents ; eac

h uni twould , therefore , i

n an y even tb e shu

t dow n fo r nine months . Ou r reading o

f th e phras e "an

y physica l change " i s als o consisten twit

h anothe r o

f th e basi c goal s o

f th e 197 7 Amendments : technology-forcing. The legislativ e histor y suggest s an

d court s have recognized tha

ti n passin g th e Qea n Ai r Ac

tAmendments , Congres s intende d t o stimu lat e the advancemen

to f pollutio n contro l technology . See, e.g. , S . Rep . No . 91-1196 , 91s tCong. , 2 d Sess . 17 (1970

) ("Standards o

f performanc

e should provide a

n incentiv e fo r industrie s t

o wor k towar d constantimprovemen

ti n techniques fo r preventin g an d controllin g emission s from stationar y sources . . . .'* ; Duauesne Light Co. v. EPA, 69 8 F.2 d 456 , 47 5 (D.C . Cir . 1983) ; A/o6om a Power, 63 6 Fi d a t372 ; ASARCO, 57 8 Fi d a t327 ; United State* v . SCM Corp., 66 7 F . Supp . 1110 , 1126-2

7 (D . Md . 1987) . The developmento

f emission s contro

l system s i s no

tfurthere d i f operator s could , withou texposur e t o th e stan dard s o f th e 197 7 Amendments , increas e production (an d pollution) throug

h th e extensiv e replacemento f deterio rate d generatin g systems . 2. Increase in Emissions Th e controvers y involving WEPCO' s allege d increas e i n emission s primaril

y concern s th e regulations , no

tth e stat ute ; WEPC O argue s tha tth e EPA' s regulatory metho d o f measurin g emissions i s arbitrar

y an d capricious , Fro

m a statutor y standpoint

, however , th e modificatio n provision s ot th e Clea n Ai r Ac tAmendment

s ar e activate d onc

e a physica l chang e i s couple

d wit h a n "increas e ] [in ] th e amoun to f an y ai r pollutan temitted. " 4 2 U.S.C , 8 7411(aX4) . See, e.g., Umted

States v. Narragansett

Improvement

Co., 67 1 F . Supp . a t694 . I n th e cas e befor e us , WEPC O doe s no tdisput

e tha tit e replacemen tprogram-Intende d to enabl e it s deteriorate d generator s t o operat e a tlull capac

ity—wil l caus e it s emission s t

o increas e from thei r curren t operatin g levels . Th e questio n fo r resolution , however , i sEPH-OG C TEL : 382761 5 Ja n 23,9 0 1 0 = 0 9 No.00 3 P.1 5

1 4 Nos . 88-326 4 6 89-1339 whethe r th e EP

A properl

y construe d it s regulation s b y comparin g actua l emissio n rate s wit

h so-called "baseline " rate s t o determin e th e increas e i n emission s fo

r NSP S an d PS D purposes . W

e wil l discus s thi s subjec

tlater ; bu

t fo r purpose s o

f th e statutory requirement, w e simpl y ob serv e thatth e rejuvenate d Por tWashington plan

twil l produc e mor e emission s afte r th e completion o f the reno vatio n projec

ttha n th e operatin g deteriorate d plan tpro duce d shortl y befor

e th e projec

twas undertaken . B. The EPA's Regulations Althoug h we hav e determine

d tha tWEPCO' s repai

r an d replacemen

tprogra m satisfie s th e modificatio n provision s o f th e Qea n Ai r Ac tAmendments , thi s i s notth e en d o f ou r inquiry . WEPCO' s attac k focuse s primaril y o n EP A regulations , whic

h i n a number o

f respect s are narrowe r tha n th e statute . WEPC O argue s tha tth e EP A applie d it e regulation s arbitrarily an d capriciously t o th e Por t Washingto n project . 1. Physical

Change and

the "Routine" Exception EPA regulation s define "modification " a s "an y physica l o r operationa

l chang e to a

n existin g facilit

y whic h result s i n a n increas e in th e emissio n rat e to th e atmosphere o f an y pollutan tto whic

h a standar

d applies. " 40 C.F.R . S 60.14(a ) (1988) . T o a majo

r degree , thi s definition parallel s 4 2 U.S.C . sectio n 74U(aX2) , an d i ti s unnecessar

y t o repea tth e analysi s already applied t o th e statute . See supra IIKAXD- However , th e EPA has , i n addition , use d it s regulation s to exemp ta numbe r o f activitie s from th e broaae r definition . Th e exemptio n tha tma y b e relevan t her e i s accomplishe d b y th e followin g language : Th e followin g shal

l not , b y themselves , b e consid ere d modifications unde r thi s part : (1 ) Maintenance , repair , an d replacemen twhic

h th e Administrato r determine s t o b e routin e for a source categoiy . .. . _ _P.1 6

' EPft-OG C TE L = !2761 5 Ja n ,9 0 10:0 9 N o .00 3 P.1 6

Nos . 88-326

4 4 89-1339 1 6 40 C.F.R . I

60.14(e ) (1988) . See 4

0 C.F.R . 5 52il(bX2Xiii) . WEPCO relie s o

n thi s language to argu e that , eve n i f it e repai r an d replacemen

tprogra m amount

s to a physica

l change , i twa s specificall y exempte d b y th e regulations . Again , w e accor

d substantia

l deferenc e t

o a n agency' s interpretatio n o

f it s ow n regulations , especiall y wit h re spec tto technical an

d comple x matters . Lyng v. Payne, 47 6 U.S . 926 , 939 (1986) ; Aluminum Co. of Am. v. Central Lincoln Peoples' UHL Dist., 46 7 U.S . 380 , 39 0 (1984) . I n thi s connection , t o determin e whethe r proposed wor k a ta facilit

y i s routine , "EP

A makes a case-by-cas e deter mination b y weighin g th e nature , extent , purpose , freJjuency , an d cos to f tn e work , a s wel l a s othe r relevan t actors , t o arriv e a ta common-sens

e finding." Cla

y Memorandu m a t3 . The EP

A considere d al l thes e factors I n determinin g tha tth e Por tWashingto n projec twa s no t routine ; first, th e EPA observe d tha tth e natur e an d ex tento f th e projec twa s substantial : WEPC O propose d to replac e sixty-foo tstea

m drum s (I n unit e 2 , 3 , 4 an

d 5 ) an d ai r heater s (i

n unit e 1 , 2 , 3 an

d 4 ) durin g successiv e nine mont h outage s a teac

h unit . Id. a t4 . Certainly , th e magnitud e o f th e projec t(as wel l a s th e down-tim e required t o implemen

tit ) suggests ' tha ti tI

s mor e tha n routine . Further , th e EP

A point s to WEPCO' s admissio n in it e application tha t"[wor

k items ] fallin g int o th e categor y o f repetitive maintenance that are normally performed durin g schedule d equipmen

toutage s . . . are not

included in this application/' Caasid y Lette r a t1 (emphasi s sup plied) . Thi s admissio

n suggest s tha

tWEPCO a

tfirstblus

h di d no tregar d th e repai r an d replacemen tprojecta s o r dinai y o r routine . I n addition , th e EP A note d tha tfa r from bein g routine , tb a Por tWashingto n projec tapparently wa s unprece dented : "WEPCO di

d no tidentify , an

d EP A di d no tfind, eve n a singl e instanc e o

f renovatio n wor

k a tan y electri c utilit y generatin g statio n tha tapproache d th e PortWash ingto n lif e extensio n projec ti

n nature , scop e o r extent. " Respondent' s Brief

a t44 ; see Qa y Memorandu m a t4P.1 7

EPFi-OG C TEL : 382761 5 Ja n 23,9 0 10:0 9 N o .00 3 P.1 7

1 6 Nos . 88-326 4 & 89-133

9 CT-Hhi s i s a highl

y unusual, i

f no tunprecedented , an

d costl y project.") - W

e surmise , althoug

h th e recor

d i s silent , tha tth e "cas

e o f firstimpression " characte r o f th e projec

t ma y reflecthistorica

l practic e i

n th e electri c utilit

y industr y o f replacin g ol

d plant e (a tth e expiratio n o

f thei r useful lives ) wit

h ne w plants , employin g improve d technologie s an

d achieving improve

d emaendee . Thi s wa s the typica l practice , rathe r tha

n th e mer e extensio n o

f lif e o f existin g plant

s throug h massiv e like-kin

d replacements . Cf. Qa y Memorandu

m a t4 ("[Th

e PortWashingto

n proj ect's ] purpos e i s t

o completel y rehabilitat

e agin g power generatin g unit

e whos e capacit

y ha s significantly deteri orate d ove r a perio

d o f yean , thereb y restoring thei r origina l capacit y an d substantiall y extendin g th e perio d o f thei r utilizatio n a s a

n alternativ e t o retirin g the m a s the y approac h th e en d o

f their - useful physica

l an d economi

c lift.") . WEPC O ask s u s t o overloo k th e factors outline d i n th e Cla y Memorandu

m an d revers e th e EPA primarily o n th e basi s o f earlie r EP A decision s characterizin g certai n re placemen tprogram s a s routine ; WEPC O argue s tha tth e natur e an

d exten to

f thes e "routine " projects paralle l thos e o f it s Por tWashingto

n project . Fo r example , WEPCO presente d th e EP A wit

h a lis to f fort y air heaters i

n othe r plant s tha tha

d bee n replace d withou ttriggerin g NSP S o r PS D provisions . Lette r from Mar k P . Steinberg , Super

intendent-Ai r Qualit

y o f WEPCO , to Dal e Ziege , Wisconsi n Departmen to

f Natura l Resource s (Jan . 11,1989) . Bu t a a WEPC O has acknowledged , th e plate-typ e air heater s a tissu e in th e PortWashingto n projectmus tb e replace d in whole; in contrast , th e fort y unit s wher e replacement wa s apparentl

y considere

d routin e containe d a Ljungatro

m baske to r tubular typ e heater , a typ e tha tpermit s th e replacemen to

f th e hea ttransfe r surface withou trequir in g th e remova

l o f th e entir e unit . Supplementa l Deter minatio n a t6-7 . Obviously , th e precis e natur e o f th e phys ica l chang e i s a materia

l facto r in determinin g whethe r th e chang e i s routine , an d fo r thi s purpos e i ti s importan ttha tth e subjec

to f pas tEP A practice b e closely com -EF'A-OG C TEL : 382761 5 Ja n 23,9 0 10=0 9 N o .00 3 P.1 8

Noa . 88-326 4 & 89-133 9 

### 1 7 parabl e wit h th e chang e unde r consideratio n here . See Thomaa Lette r a t3 ("PS D an d NSP S applicability deter mination s ar e mad e o n a case-by-cas e basis.") . WEPC O ha s no tdemonstrate d tha tth e EPA' s conclusio n tha tth e forty othe r ai r heate r replacement s wer e dissimila r i s ar bitrar y an d capricious. ' Th e puipose , frequenc y an d cos to f th e wor k als o sup por tth e EPA' B decisio n here . WEPC O admit s tha tth e plan s fo r extensiv e renovatio n "represen ta life extension o f th e unite from thei r planned retirement

dates," Cassid y Lette r a t2- 3 (emphasi s supplied) , an d i trecognize s tha t "th e renovatio n wor k item s include d i n thi s appUcatio n ar e thos e tha twoul d normall y occu r onl y onc e o r twic e durin g a unit' s expecte d lif e cycle. " id. a t1 . Indeed , WEPC O reporte d tha ti tha d neve r previousl y replace d a stea m dru m o r "header " o f comparabl e siz e a tan y o f it e coal-fire d electrica l generatin g facilities . Qa y Memoran du m a t5 . Further , th e Por tWashingto n renovatio n proj ec twil l coa ta tleas t$70. 5 million . Lette r from Joh n W . Boston , Senio r Vic e Presiden to f WEPCO , to Gary D . McCutchen , Chie f

Ne w Sourc e Revie w Sectio n o f th e EPA , a t4 (Ma y 19,1988) . Thes e factor s sugges ttha tth e projec t i s no troutine . WEPC O urge s tha tth e EPA' s conclusion s ar e supporte d b y neithe r th e evidenc e no r th e provision s o f th e Qea n Ai r Ac tAmendments . WEPC O reason s tha tbecaus e any replacemen tprojec twil l presumabl y exten d th e lif e o f a facility , th e EPA' s relianc e o n lif e extensio n a s a facto r

* W e simflari y vie w supplementa

l evidenc e mardalle d b y WEPC

O o n thi s poin tWEPC

O argues tha

tth tEP A ha s treated the replacemen to f coa l culvert*** * an

d regenerator eyelons s as routine ; nowem , WEPC

O fail s t o demonstrat

e th e similarities betwee

n thes e unit s snd th e air heater

s sn d stea m drum s s tissu e here . Whil e i ti s tru e tha tsom e repai r an d replacemen

tprogram s ar e routine , H does no

tnecessaril

y follo w tha tal l suc h program

s ar e routine . Withou

tmor e evidence , w e ar

e no tconvince d tha tth e EPA' s characterisatio

n o f th e massiv

e Por tWashingto

n projec t M non-routin

e i s inconsisten

twit h it s prio r rulings .P.1 9 EPA-OG C TEL = 382761 5 Ja n 23,9 0 10=0 9 No.00 3 P.1 9

1 8 Nos . 88-326 4 6 89-133 9 i n denyin g th e "routine " natur e o f a projec tis overbroad . Petitioners ' Brie f

a t44 . Althoug h perhap s persuasiv e o n it s face , WEPCO' s analysi s is ultimatel y wid e o f th e mark . Whil e i ti s certainl y tru e tha tth e repai r o f deteriorate d equipmen twil l contribut e t o th e usefu l lif e o f an y facility , i tdoe s no tnecessaril y follo w tha tth e repair s i n questio n woul d exten d th e life exoectancy o f th e facility . Th e nee d fo r som e repair s alon g tn e lin e i s a give n i n determinin g i n th e firstinstanc e th e lif e expectanc y o f

a plant . WEPC O canno tseriousl y argu e tha tit e unit e planne d retiremen t date s of 199 2 (unit e 1 an d 2 ) an d 199 9 (unit s 3 , 4 an d 5 ) di d no ttak e int o accoun ta tleas tmino r equipmen trepair s an d replacements. ' An d WEPC O concede s tha tth e Por t Washingto n progra m wil l extend th e lif e expectanc y o f

th e plan tunti l 2010 . Th e EP A conclude d tha tth e propose d projec twil l Increas e th e lif e expectanc y o f

th e Por tWash ingto n facility , an d thi s conclusio n wa s a facto r i n th e findin g tha tth e wor k wa s no troutine . Thes e determination s wer e no tarbitrar y an d capricious . Still , WEPC O assert s tha tth e cost , magnitud e an d natur e o f it e Por tWashingto n projec tar e irrelevan tfo r purpose s o f

th e "routine " exceptio n to NSP S an d PSD . WEPC O contend s tha tth e EP A ha s alread y addresse d thes e factors-Includin g th e perpetuatio n o f existin g sources—throug h it e so-calle d ''reconstruction " rule : (a ) A n existin g facility , upo n reconstruction , be come s a n affecte d facilit y [subjec tto NSPS] , irrespec tiv e o f an y chang e i n emissio n rate .

• B y WEPCO' s ow

n admission, "eve

n a ne w facilit y coul d no t Operat e normall y bu tfo r a relatively shor

tperio d o f time . . . [withou tan

y repair o r replacement

. . . . " Petitioner' s Brie

f a t 44 . Becaus e the plant

s wer e plaes d int o servic e between 193

5 an d 1960-tn d becaus e WEPCO acknowledge s tha tth e lif e expectan c y o f thes e plant

s wa s approximatel

y fifty years-i ti s clea

r tha t WEPC O include d mino r par trepai r an d replacemen

ti n its calcula

tions . O f course , th e planne

d retiremen

tdates appea

r t o b e merel y estimate s an

d d o no tseem t o b e binding .EPA-OG ( TEL : <2761 5 Ja n 23,9 0 10=0 9

••• • •• , N o .00 3 P.2 0 P.2 0

Nos . 88-326

4 & 89-1339 1 9 (b ) "Reconstruction " mean s th e replacemen

to f component

s o f a n existin g facilit

y t o suc h a n exten t that ; (1 ) The fixe

d capita l cos to f th e ne w component

s exceed s 5

0 percento

f th e fixe d capita l cos ttha t would b e required t

o construc

ta comparabl

e entire l y ne w facility . . . . 4 0 C.F.R . 5 60.1 6 (1988). 4 See Unite d State s Environmen ta l Protectio n Agency , Electric Utility Steam Generating Units: Background

Information forProposed Particulate MatterEmission Standards 5- 7 (1978) . WEPC O believe s that , becaus e th e air heate r replacement s wil l presumabl

y cos tles s tha

n si x percen to

f a wholl y ne w facility , th e reconstructio n provision s ar e nottriggered . Therefore , WEPC O argue s tha tth e cos tan d scop e o

f th e project ar e relevan tonl

y t o a "reconstruction ' analysi s an d are no tmateria

l fo r purpose s o

f th e routine exceptio n to th e modificatio

n provisions . Petitioner' s Brie f a t46 . WEPCO' s analysi s fails t

o note , however , th e fundamenta l differences distinguishin g th e reconstruction an d modificatio n provisions . Th

e reconstructio n provisio n applie s t o an y substantia

l replacemen

t(mor e tha n 50 % o f th e cos t o f a ne w facility ) even if

the replacement

causes no subseauent increase in emissions. I

n shar p contrast , th e modi

ficatio n provision s appl

y onl y when a physica

l chang e i s accompanie

d by an increase in emissions. T o argue , therefore , tha tth e reconstructio n provisio n i s th e exclusive determinan to

f whethe r th e cost , nature an d magni tud e o f a projectwil l requir

e th e application o

f NSP S i a to Ignor e th e substantiall y differentobjective s of th e reconstruction an

d modificatio

n provisions : The reconstruc tion provisio n i s aimed principall y a t"discouraging ] th e perpetuatio n o

f a facility , instea d o

f replacin g i ta tth e

« Th e reconstructio

n provision

s o f th e regulation

s apol y onl y t o NSPS ; give n th e existin g regulator y framework

, th e EP A decide d tha tthe y woul d no tb e necessar y fo r PSD . See 4 6 Fed , Reg . 62676 , 6270 8 (1980) .EPft-OG C P.2 1 TEL : 382761 5 Ja n 23,9 0 10=0 9 N o .00 3 P.2 1

2 0 Nos . 88-326 4 I t89-133 9

en d o f It s usefu l lif e wit h a newl y constructe d affected facility, " without

regard to emissions, 8 9 Fed . Reg . 36946 , 36948 (1974) , whil e th e modificatio n provisio n applie s t

o any physica

l change , withou tregar

d to cost , tha tcause s a n increas e i

n emissions . See, e.g., ASARCO Inc. v. EPA, 57 8 F.2 d 31 9 (D.C . Cir . 1978) ; United States v. Narragansett Improvement

Co., 57 1 F . Supp . 688 , 696 (D.R.1.1983 ) (" a 'reconstruction ' o

f a n existin g facilit

y woul d occu r 'Irrespectiv e o f

an y change i n emissio n rate ' upo n th e re placemen to f a 'substantia

l portio n o f th e existin g facility' s components. ' ") . Hence , w e cannotagre e tha tth e EPA' s consideratio n o

f th e cost , magnitud e an d natur e o f th e Por tWashington project, fo r purpose s o f th e modificatio

n 

# £ revision o

f th e regulation s (an

d it e "routine " exception) , \ someho w preempted " b y th e reconstructio n provision

s o f th e regulations . Th e EPA' s examinatio n o f thes e factors, therefore , wa s no tarbitrar y o r capricious . t. Increase in Emissions Thus far , w e hav

e no tha d t o addres s th e importan

tdifference s betwee n th e PS D an d NSP S programs . A tthi s point , however , th e difference s becom e crucial , becaus e each progra

m measure s emission s i

n a fundamentall

y dis tinctmanner .

a . NSPS Measurements A a previousl y noted , th e EPA' s NSP S progra m I s concerne d primaril

y wit h increase s in emissio n rateB , ex presse d i n kilogram s pe r hou r o f discharge d pollutants . 4 0 C.F.R , } 60.1 4 (1958) . Th e EP A compares th e hourl y emission s o

f th e unita

tite curren tmaximu

m capacit y t o it e potentia

l emission s a tmaximu

m capacit

y afte r th e change . Cla

y Memorandu

m a t9 ; see 4 0 C.F.R . . 6 0 App . C (1988 ) (providin g comple x formula e fo r determin in g emissio n rat e change) . I n thi s calculation , th e agenc y disregard s th e unit' s maximu m design capacity ; thi s fac-P.2 2

EPfl-OGC

- TEL : 332761 5 Ja n 23,9 0 10=0 9 No.00 3 P.2 2 

# i s



# 1 Nos . 88-326 4 & 89-133 9 2 1 to r ofte n shed s littl e lifh to

n th e unit' s oritur

/ current capacit y t o produc e emissions. ' The EP A applie d thes e procedure s i

n examinin g th e generatin g unit

e a tPor tWashington . Th e EP

A asked wEPC O t

o submi tfigure s fo

r th e actua

l operation s an

d emission s o

f eac h unita tth e Por

tWashington plan

tfor th e year s 197

8 t o 1987 ; th e EP

A then relie d upo

n th e 198 7 flgures t o calculat

e th e emission s baselin e agains t whic h post-replacemen temission s coul d b e compared . WEPCO , however , challenge d th e EPA' s acceptance o f thes e preliminar

y baselin e figures , arguin g thatunit e 1 , 2 , 3 an d 4 wer e capabl e o

f operatin g a

thighe r rate s o

f productio n tha n thos e calculated b

y tn e EP A base d upo

n th e 198 7 flgures. WEPC O conducte d five ten-hour test e a teac h unitt o determin e it s maximu m capacity . Upo

n reviewin g th e testresults , th e EP A agree d tha tunit

e 2 an d 3 coul d b e operate d a tthei r desig n capacities , sn d i trevise d th e baselin e level s fo r thes e unite . Th e agenc

y conclude d tha tbecaus e ther e woul

d b e n o increas e i

n productio n o r emissions , NSP S woul

d no tappl y to thes e unit

e followin g th e renovatio n project . Nonetheless , th e EP A refuse d to alte r th e baselin e level s fo r unit e 1 an d 4 , notin g tha tWEPCO' s test a ha d no tbee n conducte

d pursuantto th e testprotocol a s required b y th e regulation s an d th e Wisconsi

n Stet e Implementatio

n Pla n (unit s 1 an d 4 exceede d certai n maximu m allowabl e emissio n limits) . Supplementa

l Determination a

t8-9. Comparin

g thes e 198

7 baselin e level s t o th e maximu m capacit y o f th e plan tafte r renovation , th e EP

A conclude

d tha tth e renovatio

n projec t would b e subjec tto th e provision s o f NSPS . WEPC O ask s u s t o overtur n th e EPA' s final rulin

g tha t th e Por tWashingto n projec ttrigger s NSPS . Specifical ly , WEPC O argue s that , b y usin g 198 7 flgures i

n deter 1 O f course , i f th tuni tis currentl

y operatin g a tmaximu m desig n capacity , ther e wil l b e n o differenc e betwee n th e measur e o f emission s s tmaximu

m desig n capacit y an d s tcurren tmaximu m capacity. Sinc e th e unit s s tPor tWashingto

n wer e operatin g wel l belo w maximu m dssig n capacit y (an d uni t6 w u completel

y shu tdown) , tha tis no tth e cas e here .P.2 3 EPfl-QG C TEL = 382761 5 Ja n 23.9 0 10=0 9 No.00 3 P.2 3 

# 1

2 2 Nos . 88-326 4 & 89-133 9 minin g th e emission s baseline , th e EP A faile d t o appl y it e ow n regulations : WEPC O assert s tha tthes e figure s "reflecte d voluntar y decision s b y WEPQO ] regardin g safet y consideration s (e.2. , th e 'zero ' rat e fo r Uni t5 ) an d a n electricit y deman d whic h di d no trequir e operatio n o f th e unit s a thighe r capacities. " Petitioner' s Brie f a t15-16 . WEPC O als o posit s tha tth e EPA' s refusa l to compar e representative pre-renovatio n emission s wit h actual post renovatio n emission s i s contrar y t o EP A regulation s an d amount s to a n abus e o f agenc y discretion. ' WEPCO' s firstassertio n i s easil y dismissed . Th e EPA' s choic e o f th e 198 7 figures wa s base d entirel y upo n WEPCO' s ow n data . And , whe n WEPC O complaine d tha tit s ow n dat a di d no treflec tWEPCO' s pre-renovatio n capabilities , th e EP A permitte d WEPC O t o conduc tne w teste (pur suan tto 4 0 C.F.R . i 6 0 App , C (1988) ) tha teventuall y resulte d i n th e revisio n o f th e baseline s fo r unit e 2 an d 3 . WEPCO' s secon d charg e i s fa r mor e substantial . WEPC O argue s tha tNSP S regulation s requir e th e EP A t o us e a "representative " yea r i n determinin g a baselin e rat e o f emissions . Th e EP A dispute s thi s claim , arguin g tha t"(a] s to NSPS , ther e i s n o 'representativ e emissions ' concept .

. . . Rathe r .. . th e baselin e emissio n rate s fo r unit e 1- 5 ar e determine d b y hourl y maximu m capacit y jus tprio r to th e renovations." 7 Thoma s Lette r a t5 . 1 A s a preliminar

y matter , w e not

e tha tWEPC O ha s no taske d u s t o revie w th e propriet

y o f th e NSP S regulation s themselves . Indeed , w e hav

e n o jurisdiction t o conduc

tsuc h a n inquiry : 4 2 U.S.C . sectio n 7607(b)(1 ) reserve s suc h question s fo

r th e Unite d Stete s Cour

to f Appeal s fo

r th e Districto

f Columbi a Circuit . I n thi s case , WEPC

O simpl y request s tha tw e conside r whethe r th e EP A properl y applie d thes e regulation

s t o th e Por tWashingto

n generatin g units . W

e hav e jurisdictio n t

o undertak e suc h a n inquiry . 4 2 U.S.C . I 76Q7(bXl). 1 Th e regulations themselve s provide , i n part : (a ) .. . an y physica l o r operationa

l chang e t o a n existin g facilit y whic h results i n a n Increase i

n th e emission rat

e t o (Tootno u ooatmiM d o n follovin f pace )P.2 4 EPfl-OG C TEL = 332761 5 Ja n 23,9 0 10:0 9 N o .00 3 P.2 4

• • • • • • * ,i

_

Nos . 88-326 4 & 89-133 9 2 3 WEPCO' a interpretatio n o f th e regulations , a tfirs tblush , seem s sensible : sinc e th e regulation s require tha tth e man ua l emissio n teat s an d continuou s monitorin g system s b e base d upo n th e "representetiv e performance " o f th e facil ity , th e emissio n facto r testapproac h mus tals o b e base d upo n "representativ e performance. " 4 0 C.F.R . f 60.1 4

continued th e atmosphere o

f an y pollutan tt o whic

h a standard applie s shal l b e considere d a modification . . . . (b) Emissio n rat

e shal l b e expresse d a s kg/h r o f an y pollu tan tdischarge d into th e atmospher e fo r whic h a atandar

d I s applicable . Th e Administrato r shal l us e th e followin g t

o deter min e th e emissio n rate : (1 ) Emissio n factor

s as specified i

n th e lates tissu e o

f "Compilatio n o f Ai r Pollutan tEmissio n Factors, " EP A Publicatio n No . AP-42 , o

r othe r emissio n factor s determine d b y th e Ad ministrato r t o b e superio r t o AP-4 2 emissio n factors , i n ease s wher e utilizatio n o

f •missio n factor

s demonstrat

e tha tth e emis sio n leve l resultin g from th e physica l o r operationa

l chang e wil l eithe r clearl y increas e o r clearl y no tincreaae . (2 ) Materia

l balances , continuou s monito r date , o r manua l emissio n test s i

n case s wher e utilizatio n o f emissio n factor s a s reference d i

n paragraph (bXl ) o

f thi s sectio n doe s no tdem onstrat e t o th e Administrator' s satisfactio n whethe r th e emis sio n leve l resultin g from th e physica l o r operational chang e wil l eithe r clearl y increas e or dearl y no tincrease , o r wher e a n owne r o r operato r demonstrate s t o th e Administrator' s sat * Ufactio n tha tther e are reasonabl e ground s t o disput e th e re sul tobtaine d b y th e Administrato r utilizin g emissio n factor s s a reference d t

n paragrap h (bX

D o f thi s section . Whe n th e emissio n rate i s base d on result s firom manua l emissio n tests o r continuou s monitorin g systems , th e procedure s specifie d in Appendi x C o

f thi s par tsnai l b e use d t o determin e whethe r a n increas e i

n emissio n rate ha s occurred . Test e shal l b e con ducte d unde r suc

h conditions a s th e Administrato r shal l specif y t o th e owne r o r operato r base d o n representativ e performanc e o f th e facUity. A tleas tthre e valid tes trun s mus tb e conducted befor e an

d a tleas tthre e afte r th e physica l o r operational change . Al

l operatin g parameter s whic h ma y affectemission s mus tb e hel d constan tt o th e maximu m feasibl e degre e fo r all testruns . 4 0 C.F.R . I 60.1 4 (1988) .EPH~OG ( TEL : 332761 5 Ja n 23,9 0 10:0 9 No.00 3 P.2 !



### 2 4 Nos . 8S-326 4 & 89-133

9 (1988) ; see 39 Fed . Reg . 36946 , 3694 7 (1974 ) (explaining provision). ' Otherwise , th e teste migh treac h inconsistent results , makin

g th e rat e o f emission s entirel y dependent upo n th e typ e o

f testuse d b y th e facility . Hence , argue s WEPCO , th e EP

A mus texamin e th e emissio n rate s durin g a representetiv e period , not1987 . WEPCO' s analysis , however , relie s upo n a flawed prem

ise . WEPCO assume

s tha tth e phras e ''representativ e performanc e o f th e facility " suggest s tha tth e EP A must choos e a representetiv e year . Rea d in context , however , th e phras e refers generall y t o al l th e conditions of

the test, notspecificall

y t o it e timing ; Test e shal l b e conducte

d unde r suc h condition

s a s th e Administrato r shal

l specif y t o th e owne r or operato r baae d o n representativ e performanc e o f th e facility . A tleas tthre e vali d testruns mus tb e conducte d befor e an d a tleas tthre e afte r th e physica l o r operationa l change . All operatin g parameter s whic h ma y affec temission s mus tb e hel d constan tt o th e maximu m feasibl e degre e fo

r al l tes truns . 4 0 C.F.R . ft60.14(bX2

) (1988) . Compare 4 0 C.F.R . 5 52.21 - (bX2lXii ) (1988) (PS D program ) ("Th e Administrato r shal

l allo w th e us e o

f a different

time period

upo n a determination that it is more representative o f norma l sourc e operation." ) (emphasi s supplied) . Pu tsimply , sectio n 60.1 4 en sure s tha tth e operato r will no tdocto r testin g conditions to produc e favorabl e emissio n results . Th

e EPA' s explanation o f it e regulations , whic

h o f cours e i s give n deference , support s thi s interpretation : "According t o th e proposed regulation , eac

h se tof emissio n tests (usin g manua l teste or continuou

s monitors) conducte

d befor e an d afte r a phys ical or operationa

l chang e would consis to f a tleas tthre e

• Th e emissio n facto r tea tI s th e onl y technique tha

tca n prtdiet emissio n rate s afte r renovations

. Becaus e th e determinatio

n a tissu e her e mus tb e mad e befor e th e renovation

s ar e undertaken

, th e EP A relie d o n thi s testi n evaluatin

g th e Por tWashingto

n project .P.2 6

:pfi-OG C TE L 52761 5 

### Ja n 9 0 10:0 9 N

o .00 3 P.2 6

-133 9 Nos . 88-326 4 & 89-133 9 

### 2 5 anin g .sten t aden t rgue s * durprem e per mus t ever , ->fthe \& th e >rato r dlity . ucte d >perai may max 52.21 - 'shal l •minaapera1 4 en ition s plana rence , pose d teste phys thre e

ortdict ta tia - -taken , ingto n runs , an d would be conducted

underrepresentative operating conditions." 3 9 Fed . Reg . 36946 , 3694 7 (1974 ) (em phasi s supplied) . WEPC O ha s no targue d tha ti tconducte d it s ow n teste unde r unrepresentativ e conditions , no r ha s i tchallenge d an y othe r par to f th e testprotocol. * An d WEPC O doe s no tclai m tha tth e teste wer e conducte d durin g a perio d o f

operation s tha tsubstantiall y differe d fro m th e norma

l operation s o

f th e deteriorate d Por tWash ingto n plant . Further , th e fac ttha tth e EP A permitte d WEPC O t o conductadditiona l emission s teste o n th e unit e (durin g which , presumably , WEPC O coul d maintai n repre sentativ e operatin g conditions ) undermine s WEPCO' s as sertio n tha tth e regulation s wer e applie d arbitraril y o r capriciously . 6 . PSD Measurements Unlik e NSPS , PS D i s concerne d wit h change s i n total annual emissions, expresse d i n tons pe r year . Th e PS D regulation s requir e preconstructio n revie w o f th e construc tio n o r modificatio n o f

majo r emittin g facilities . Thes e reg * ulation s defin e thei r ke y term-"majo r modificatio n "-a s "an y physica l chang e in o r chang e i n th e metho d o f opera tio n o f a majo r stationar y sourc e tha twoul d resul ti n a significant 1 0 ne temission s increas e o f an y pollutan tsub -

* WEPC O doe s asser ttha tth e EP A improperl

y examine d onl y the lowes thourl

y capacit y achieve d durin g th e tes tperiods . Eve

n i f th e EP A ha d accepte d th e highestcapacit

y tests , however , th t rat e o f emission s o x unit s 1 , 4 an d 5 stil l woul

d hav e subjecte d thos e unit s t o NSP S afte

r th e renovation. Further, th e EP A acknowledge

s tha tther e wil l b e n o differenc

e between th e rate o

f emission s o f unit s 2 an d 3 befor e an d afte r the renovation

, regardles s o f th e chose n capacit y level . & * Lette r from Wal tStevenson t o Jac k Fanne r (Jan

. 5 , 1989 ) (summarizin

g Por tWashingto

n capacit y tests). W

e therefor e nee d no tconside r whethe r the Admin

istrato r ma

y rel y upo n the lowes tcapacit

y level . 1 9 Th e regulation

s defin e "significant " i

n term s o f threshol d emis sions increases o

f individua l pollutants : fo

r example , a

n increas e o f 4 0 tons pe r yea r o f nitroge n oxide s U a "significant " ne

temis sion s increase . See 4

0 C.F.R . I S2.21(bX28

) (1988) .P.2 7

; EPfl-OG

C TEL : 3S2761 5 Jan 23,9 0 10=0 9 N o .00 3 P.2 7



### 2 6 Nos . 88-326 4 & 89-1339 jec tt o regulatio

n unde r th e Act. " 40 C.F.R . ft52.21(bX2Xi ) (1988) (footnot

e supplied) . Her e the question i s whethe r WEPCO' s renovation proj ec twil l resul ti

n " a significantne temission s increase" ' s o a a to trigge r th e "majo

r modification " provision o f th e regulation s and , a s a result , PSD . T o determin e whethe r th e projec twoul d resulti n a n emissions increase , the EP A compare d actua l pre-renovatio n emission s wit h potentia

l post-renovatio n emission s a tth e PortWashington plant . Specifically , th e EP A firstexamine d th e two-yea r period o f 198 3 throug h 198 4 a s th e pre-renovatio

n baselin e period , pursuan tt o 4 0 C.F.R . sectio n 52.2l(bX2 1 Xii) : I n general , actua

l emission s a s o

f a particular dat

e shal l eaua l th e averag e rate , i

n tons pe r year , a

t whic h th e uni tactuall y emitte d th e pollutantduring a two-yearperiod

which precedes the particulardate and which is representative of normal source operation. The Administratorshall allow the use of

a different lime period

upon a determination that it is more representative of

normal source operation. Ac

tua l emission s shal

l b e calculated usin g th e unit' s actua l operatin g hours , production rates , an d type s o f material s processed , stored , or combuste d durin g th e selecte d tun e period . 4 0 C.F-R . s 62.21(bX21Xii ) (1988 ) (emphasi s supplied) . Be caus e Administrato r Thoma s determine d thattn e discov er y o f crack s i n th e rea r stea m drum s le d t o a mor

e re cen t"sourc e curtailment, " h e relie d upo n th e dat a fro m earlie r years , 198

3 an d 1984 , a s th e baselin e to determine whethe r th e renovatio n woul d caus e a n increas e i

n emis * sions . Thoma

s Lette r a t5 . WEPC O doe s notchalleng e thi s componen

to f th e EPA' s calculation . Second , th e EPA calculate d th e actua l emission s o

f th e plantfollowing completio n of th e project . Generally , i n orde r t o apply PSD , th e regulation s require th e EP A t o find a n "increaa

e i n actual emissions fro

m a particular physica l chang e o r chang e i n metho d o f operation. " 4 0 C.F.R . 9 52.21(bX3XiXa

) (1988 ) (emphasi s supplied) . Th e: Epfl-OG C TEL : 332761 5 Ja n 23,9 0 10=0 9 No.00 3 P.2 8

Nos . 88-326 4 & 89-133 9 2 7 EP A reasoned , however , tha tbecaus e th e sourc e "hstd l no tye tbegu n operation s followin g th e renovation , 'actua l emissions ' followin g th e renovatio n (were j deeme d to b e th e source' s 'potentia l t o emit.' " Cla y Memorandu m a t7 . I n suppor to i it e relianc e o n WEPCO' s potentia l t o emit , th e EP A pointe d t o th e regulations : "Fo r an y emission s uni twhic h ha s no tbegu n norma l operation s o n th e par ticula r date , actua l emission s shal l equa l th e potentia l t o emi to f th e uni to n tha tdate. " 4 0 C.F.R . ft52.21(bX21Xiv) (1988) . WEPC O object s strenuously , an d wit h goo d reason . I n calculatin g th e plant' s post-renovatio n potentia l to emit , th e EP A oase s it s figure s o n round-the-cloc k operation s (2 4 hour s pe r day , 36 5 day s peryear ) becaus e WEPC O could potentially operat e it s facilit y continuously , despit e th e fac ttha tWEPC O ha s neve r don e s o i n th e past . An d th e EP A ha s admitte d tha ti t"assume d tha temission s increase s a tPor tWashingto n woul d com e no tfrom a n in creas e i n emissio n rate , bu trathe r from increase s i n pro ductio n rat e o r hour s o f

operation. " Supplementa l Deter minatio n a t9 ; see Cla y Memorandu m a t7-8 . Th e EP A respond s tha tWEPC O ca n avoi d thes e maximu m calcula tions simpl y b y consentin g t o federall y enforceabl e restric tion s o n productio n rate s an d hour s o f operation , bu t WEPC O decline s t o d o so . Qa y Memorandu m a t8 ; see 4 0 C.F.R . ftft52.21(bX4) . 62.21(bX16 ) (1988) . Thus , srvue s th e EPA , i tha s n o choic e bu tto assum e tha tth e plan t wil l b e operate d continuously. 1 1

> • Despit e WEPCO' s protestations , w

e not e initiall y tha tth e EPA' s refusa l t o appl y th e "productio

n rate/hours o

f operation " exclusio

n wa s proper

, 4 0 C.F.R . ftS2.21(bX2XiiiX/ ) (1988) . Thi

s exelusion whlc h state s tha t"ta

] physica l chang e o r chang e i n th e metho

d o f operatio n shal l no tinclud

e . . . la) n increas e i

n th e hour* o

f operatio n o r in th e productio

n rate , td.-wa s provide

d t o allo w facilitie s t o tak e advantag

e o f fluctuating marke

tconditions , no

t constructio n o r modificatio

n activity . See 4

6 Fed * Reg . 62676, 6270

4 (1880) .EPR-OGC TEL : 3S2761 5 Ja n 23,9 0 10=0 9 No.00 3 P.2 9

2 8 Nos . 88-326 4 & 89-1339 Th e firstissu e t o b e addresse d i s whethe r th e EP A prop , eri y invoke d th e "potentia

l t o emit " conceptI

n calculatin

g th e emission s increase . A s explained above , th e PS D reg ulation s stet e thatth e EP A ma y rel y upo

n a facility' s potential to emi ti

f th e uni t"ha

s no tbegun normal

operations o n th e particular date. " 4 0 C.F.R . ft52.21(bX2lXiv ) (1988) (emphasi s supplied) . WEPC O argue s tha tthi s phras e shoul d b e interprete d t o includ e onl y thos e unit

e tha thav e neve r bee n i

n operation , whil e th e EP A urge s tha tth e phras e ca

n b e applie d t o bot

h ne w an

d modifie d units . Th e regulator

y history o

f thi s phras e shed s littl e ligh t o n it s prope r interpretation . Th e EPA argue s tha ti tna s alway s interprete d thi s phras e t o include modifie d units ; i tassert s tha tit e formula e fo r determinin g emission s in crease s hav e consistentl y assumed that"ne w or modified units" woul d b e deeme d t o operat e a tmaximu m physica

l o r federally enforceabl e levels . 4 6 Fed . Reg . 52676 , 5271 8 (1980) (emphasi s supplied) . Bu tth e EPA' s analysi s her e seem s circula r i n orde r t o demonstrat

e tha tth e Port Washingto n like-kin d replacementprojec tconstitute s a modification , th e EP A applie s th e potential t o emi tconcep t(to sho w a

n increas e in emissions) . And i n orde r to appl y th e potentia l to emi tconcep tt o like-kin d replace ment , th e EP A assume s tha tth e planti s a "modified " unit . Although w e accor d grea tdeferenc e t o a

n agenc y construin g th e statut e i tadministers , Chevron, 46 7 U.S . a t844 , an d eve n mor

e deferenc

e to a n agenc y Interpretin

g it e ow n comple

x regulations , Aluminum Co. of Am. v. Central Lincoln Peoples' Util. Dist, 46 7 U.S . a t390 , w e canno tdefe r t o agency interpretation s that , a s applied here , appea r to assum e whatthe y see k t o prove. 1 1

u I n a supplementa

l filin g pursuan tt o Sevent h Circui tRul e 28(j) , th e EP A intimate s tha tth e Pin tCircuit' s recen tdecisio n in Puerto Rican Cement

Co. v. EPA, 88 9 F2 d 29 2 (1s tCir . 1989) , permit s th e us e o f

th e potentia l t o emi tconcep ti n simila r circumstances . However , unlik e th e cas e a tissu e here , .Puert o Rican Cement

Involve d th e constructio n o f a new emissions-uni ta ta n existin g (Footnot e continue d o n foilowta g pif« >i EPA-OG

C TEL : 332761 5 Ja n 23,9 0 10=0 9 No.00 3 P.3 0

Nos . 88-326 4 & 89-133 9 

### 2 9 W e ar e als o trouble d b y th e EPA' s assumptio n o f con tinuou s operation s i n calculatin g potentia l t o emi ta tth e Por tWashingto n plant . Althoug h w e agre e tha tth e EP A canno treasonabl y rel y o n a utility' s ow n unenforceable_ , estimate s o

f it s annua

l emissions, 1 ' w e find no suppor t i n th e regulation s fo r th e EPA' s decisio n wholl y to dis regar d pas toperatin g condition s a tth e plant . Indeed , Alabama PowerCo. v, Costle, 63 6 F.2 d 32 3 (D.C . Cir . 1979) , whic h contribute s importantl y to th e EPA' s cu r ren tPS D program , suggest s otherwise . There , th e D. C Circui theld , i n part , tha tth e EP A mus t"teke ( ] int o a c coun tth e anticipate d functionin g o f th e ai r pollutio n co n tro l equipmen tdesigne d int o th e facility " whe n calculatin g th e facility' s potentia l t o emit . Id. a t353 . Mor e importan t fo r ou r purposes , however , wa s th e court' s discussio n o f a unit' s potentia l t o emit :

' * continued source. Further, the Firs tCircui tdistinguishe

d it s holdin

g from controversie

s havin g somethin

g i n commo n wit h th e on e befor e us . On e ca n imagin e circumstance

s tha tmigh ttes tth e reason

ablenes s o f EPA' s regulation . A

n electricit

y company

, fo r ex ample , migh twis h t o replac e a pea k loa d generator-on e tha

t operate s onl y a fe w day s per year-wit h a ne

w pea k loa d gen erato r tha tthe Ar m could , bu

talmos tcertainl y wil l not , operat e ever y day . . . . Whateve

r th e argument

s abou tth e "irrationality 1 ' o

f EPA' s Interpretatio

n i n suc h circumstances , however , thos e circumstance

s ar e no tpresen there . Id. a t297-98 . 1 1 Th e EP A argue s tha tWEPC O ca n avoi d the presumptio

n o f continuou s operation

s simpl y b y consentin

g t o federall y enforceabl

e emissio n limits . However, the EP A ha s no tbrough tt o ou r atten tio n a clea r regulator

y basis fo r H a conclusio

n tha tthe provisio

n o f thi s alternat e justifies th e assumptio

n o f continuou s operatio n i f th e utilit y refuse s t o consen tAn

d WEPC O ma y hav e legitimat e reason s fo r declinin g t o submi tt o federall y enforceabl

e emissio n limits : "[Ufcertainties abou tth e precis e shap e o f futur e electricit y pea k deman d migh tmak e th e fir m hesitat e t o promis e EP A i tw m neve r increas e actua l emissions.. , . " Puerto Rican Cement Co. v . EPA, 88 9 F2 d 292 , 29

6 (1stCir . 1989) .P.3 1

1 EPft-OG

C TEL : 332761 5 Jan 23,9 0 10:0 9 No.00 3 P.3 1



### 3 0 Nos . 88-326 4 & 89-1339 I f th e sourc

e has n o actua l emission s becaus e i tha s ye tto commenc

e operating , it

e hypothetical , projecte

d emission s are included in th e baseline . // , however, the source is an established operation, a more realistic assessment

of its impact

on ambient

airquality levels is possible, and

thus is directed. Id. a t37 9 (emphasi

s supplied) . Th e distric

tcour tI n United States v, Louxsiana-Pacific Corp., 68 2 F . Supp . 114 1 (D . Colo . 1988) , reivin g o

n Alabama Power, recentl y reached th e sam e conclusion : Th e broa d holdin g o f Alabama Poweri s tha

tpoten tia l t o emi tdoes no trefe r to th e maximu m emission s tha tca n b e generate d b y a source hypothesizin g th e wors tconceivabl e operation . Rather, th e conceptcontemplates th e maximu

m emission s tha tca

n b e gen erate d whil e operatin g th e source a s i ti s intende d to b e operate d an

d a s i ti s normall

y operated . O

f course , f ti s possible thata sourc e could b e operate d withou tth e contro

l eauipmen

tdesigne d int o i to r tha

t a Konu a heate r coula b e operate d s o badl y thatth e fire woul d g o out . Yet , Alabama Powerstand s fo r th e propositio n tha thypothesizin g th e wors tpossi bl e emission s from th e wors tpossible operatio n i s th e wron g wa y t o calculat

e potentia

l to emit . Id. a t1168 . I n sum , w e certainl y d

o notsugges ttha tth e EP A ma y neve r subjec treplace d unit s to th e potentia l to emi tcon

cep tunde r it e regulations . Th e EPA may , i f i twishes , undertake notic e an

d commen

tprocedure s t

o appl y th e potentia l to emi tconcep tto like-kin d replacement . See 42 U.S.C . ft7607(d) . Bu texistin g regulation s d o notsee m to u s to suppor

tsuc h a n appUcation

. W e therefor e believ e tha tth e EPA' s relianc e on a n assume d continuous opera tio n a a a basi s fo r finding a

n emission s increas e i s not properly supported . Th e EPA' s determinatio n tha tther eP.3 2

t EPfl-OG C TEL : 382761 5 Ja n 23,9 0 1 0 = 0 9 N

o .00 3 P.3 2

Nos . 88-326

4 & 89-1339 3 1 ha s been a majo

r modificatio

n fo r PS D purpose s mustb e se taside. 1 4 IV . Fue l Switchin g Th e fina l significan

tdisput e in thi s cas e involve s fue l switching . WEPCO propose d t o th e EP A tha tit s "replace men tprojec tcombine

d wit h a n enforceabl e fue

l switc h would no t'resuJtf } i n a n increas e i

n th e [sulfu r dioxid e an d particulat

e matter ] emissio

n ratefs) ' from thos e unite. " Petitioner' s Brie

f a t5 0 (bracket s i n original) ; see 40 C.F.R . ft60.14(a ) (1988) . Nonetheless , th e EP A refuse d to per mitWEPCO t

o utiliz e lowe r sulfu r coa l instea d o

f imple mentin g pollution contro l technologies t o preven ta n in > creas e i n emissions . Th

e EP A explained tha t"th e stetut e reflects a basi c politica l decisio n tha tfossi l fuel-fire d source s no

trel y onl y o n natura l occurring less-pollutin g fuel s t o compl

y wit h th e NSPS . Instead , Congres s de clared tha tcomplianc

e mus tdepen

d i n par tupo n th e appU

catio n o f flue ga s treatmento r othe r pollutio n contro l technologies. " Supplementa

l Determinatio

n a t10. Further , th e EP A pointe d to 4 0 C.F.R . sectio n 60.14(bX2 ) (1988) , whic

h require s tha

t"operatin g parameters"-includin g fue l an d ra w materials-mus tb e hel d constan ti n measurin g emis sion s befor

e an d afte r renovation s to determin e whethe r th e utility ha s undertaken a modification . WEPC O dis pute s th e EPA' s interpretatio n o f th e relevan tprovision s o f th e Clea

n Ai r Ac tAmendments . Consisten twit

h th e Suprem

e Court' s approac

h i n Chev* rm, w e firstexamin e whethe r th e stetut e evince s a clea r

14 I tappear s tha tWEPC O neve r submitte d polhitant-ipedfl

c dat a t o th e EPA . Cla y Memorandu

m a t7-8 . Consequently

, th e EP A coul d not , a tth e time th e matte r w u befor

e it , conclud e whethe r th e renovate d plan twoul d caus e a significan

tne temission s increas e i f ftwer e operate d unde r presen thour s sn d conditions

. WEPC O shoul d mak e suc h dat a availabl e a o tha tth e EP A ca n determin e o n tha tbasi s whethe r th e Por tWashingto

n plan twil l b e subjec tt o th e PS D program .P.3 3 EPfl-OG C TEL : 3S2761 5 11. ' • - > Ja n 23,9 0 1 0 = 0 9 N o .00 3 P.3 3 U U • • •••» • I • •

3 2 Nos . 88-326 4 6 89133 9 congressiona

l inten to n th e matter . W

e believ e i tdoes . Although th e plai

n languag e o

f 4 2 U.S. C sectio n 741 1 doe s notresolv e th e issue , th e relevantlegislativ e histor y provides ampl

e suppor tfo r th e EPA' s position . Th

e House Conference Report , fo r example , states : Th e agreementremiires (1 ) tha tth e standard

s o f performanc e for fossi l fuel-fire

d boilers b e substantiall y upgrade d to requir

e th e us e o

f th e bes ttechnologica

l syste m o f continuou s emissio n reductio n an d to preclude us* of

untreated

low sulfur

coal alone as a means of compliance; ... (3) thatfor fossi l fuel-fire d sources , th e ne

w sourc e performanc

e standard s must b e comprise d o

f bot h a standar

d o f performanc

e for emission s an

d a n enforceabl e requirementfor a per centag e reductio n in poUutio n from untreate d fuel . H.R . Rep , No . 564 , 96t

h Cong. , 1s tSess . 130 , reprinted m 197 7 U.S . Cod

e Cong . & Admin . New s 1077, 161 0 (emphasi s supplied) . I

n addition , passage s fro

m th e congres siona l debate s reflec tCongress' s refusa l t o allo w sta tionar y source s to substitut e lo w sulfu r fuel s t o avoi d a requiremen tof

pollutio n contro

l technology. See, e.g., Il l Senat e Committe e o

n Environmen t6 Publi c Works , A Legislative History ofthe Clean Air Act Amendments of 1977, a t823 , 363 (1978 ) (disapprovin g substitutio n o f lo w sulfu r coa

l fo r poUution contro

l technology); I V Senat e Committe e o n Environmen tftPubli c Works , supra, a t 266 3 (same) . I

n thes e reports , Congres s reasoned thatth e Administrator' s pnvious standards-whic h ha d allowe d ftiel switchin g i n lie u of

pollutio n contro

l technology-di i-veti y conflicted wit

h th e purpose s o

f th e NSP S program : 1 . Th e standard s giv e s competitiv e advantag e t o thos e State s wit

h cheape r low-sulfu r coa l an d create a disadvantag e fo r Midwester n an d Easter n State s wher e predominantl

y higher sulfu

r coal s ar e available ; 2 . Thes e standard s d

o no tprovid e for maximu m 

# S racticabl e emissio n reductio n usin g locall y availabl e lels , an d therefor e d

o no tmaximiz e potential fo r long-ter m growth ;EP-P-CG C TEL = 382761 5 Ja n 23,9 0 10=0 9 No.00 3 P.3 4

Nos . 88-326

4 & 89-133

9 3 3 3 . Thes e standard s d

o no thel p t o expand th e enere y resource s (tha

tis , highe r sulfu r coal) tha t coula b e burne

d i n complianc

e wit h emissio n limit

s a s intended ; 4 . Thes e standard

s aggravat

e complianc

e problem s fo r existin g coal-burnin

g stationar

y source s whic h canno tretrofitan

d whic h mus tcompet e wit h larger , ne

w source s fo r low-sulfur coal ; 5 . Thes e standards increas e th e risk o f earl y plan

t shutdown s b

y existin g plant

s (fo r th e reason s state d above) , wit

h greate r risk o

f unemployment ; an

d 6. Thes e standard

s operat e a s a disincentiv

e t o th e improvemen

to f technology o

f ne w sources , sinc e un

treate d fuel s coul

d b e burne

d instea d o

f usin g suc

h new , mor e effectiv e technology. Il l Senat e Committe e o

n Environment& Publi c Works , supra, a t323 . Thes e purposes , reflectin g technological an d politica l choices , demonstrat

e thatCongres s rejecte d fue l switchin g a s a metho

d o f avoidin g th e impac

to f NSPS . W e believ e Congres s lef tu s n o choic e on thi s issue . V . CONCLUSIO N I n a n er a o f increasing environmenta

l concern , Congres s enacte d th e Clea

n Ai r Ac tto "spee d up . expand , an d in * tensify th e wa r agains tai r pollutio n in tn e unite d State s wit h a vie w to assurin g tha tth e ai r w e breath e through ou tth e Natio n i s wholesom e once again. " H.R . Rep . No . 1146 , 91s tCong. , 2

d Sesa . 1 , 1 , 197

0 U.S . Code Cong . £ Admin . New s 5366 , 5366 . The EP A i s entitle d t o substan tial deferenc e i

n interpretin g th e technical provision s o f th e Ac tan

d it e ow n regulations . W e cannotgran tdefer ence , however , wher e th e EPA ha s attempte d to imple men tth e Act' s loft

y soal s i n contraventio n o

f it e ow n statutor y regime. W e therefore affir m i n par tan d vacate i n part , remanding th e caus e to th e EP A fo r furthe r pro ceeding s no tInconsistentwit h thi s opinion .