July 29, 2009

EPA Has Ample Legal Authority to Establish De Minimis Exemptions in Area 

Source Rulemakings

In area source rulemakings, EPA is clearly authorized to establish HAP thresholds below 

which it may impose different requirements than those applicable to larger area source

facilities, units or operations – or, indeed, below which it will not impose any 

requirements. This authority can be found in both (i) EPA’s discretion in setting 

Generally Available Control Technology (GACT) standards, and (ii) EPA’s inherent 

ability not to regulate in cases where doing so would produce trivial or no benefits. EPA 

can also accomplish the same result via its ability to categorize and subcategorize area 

sources.

A. EPA’s Discretion in Setting GACT Standards

EPA itself has ably explained the breadth of its discretion to set MACT standards. The 

following is taken essentially verbatim from the preamble from the recent final area 

source rule regarding Aluminum, Copper and Other Nonferrous Foundries, 74 Fed. Reg. 

3035, 30371-72 (June 25, 2009):

[I]n section 112(d)(5), Congress gave EPA explicit authority to issue alternative 

emission standards for area sources. Specifically, section 112(d)(5), which is 

titled ``Alternative standard for area sources,'' provides:

With respect only to categories and subcategories of area sources listed 

pursuant to subsection (c) of this section, the Administrator may, in lieu of

the authorities provided in paragraph (2) and subsection (f) of this section, 

elect to promulgate standards or requirements applicable to sources in 

such categories or subcategories which provide for the use of generally 

available control technologies or management practices by such sources to 

reduce emissions of hazardous air pollutants.

See CAA section 112(d)(5) (emphasis added). There are two critical aspects to 

section 112(d)(5). First, section 112(d)(5) applies only to those categories and 

subcategories of area sources listed pursuant to section 112(c). . . . Second, 

section 112(d)(5) provides that for area sources listed pursuant to section 

112(c)(3), EPA ``may, in lieu of'' the authorities provided in section 112(d)(2) and 

112(f), elect to promulgate standards pursuant to section 112(d)(5). Section 

112(d)(2) provides that emission standards established under that provision 

``require the maximum degree of reduction in emissions'' of HAP (also known as 

MACT). Section 112(d)(3), in turn, defines what constitutes the ``maximum 

degree of reduction in emissions'' for new and existing sources. See section 

112(d)(3).[] Webster's dictionary defines the phrase ``in lieu of'' to mean ``in the 
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place of'' or ``instead of.'' See Webster's II New Riverside University (1994). 

Thus, section 112(d)(5) authorizes EPA to promulgate standards under section 

112(d)(5) that provide for the use of GACT, instead of issuing MACT standards 

pursuant to section 112(d)(2) and (d)(3). The statute does not set any condition 

precedent for issuing standards under section 112(d)(5) other than that the area 

source category or subcategory at issue must be one that EPA listed pursuant to 

section 112(c)(3). . . .

[ ] EPA [does not need to] provide a rationale for issuing GACT standards under 

section 112(d)(5), instead of MACT standards. . . . Had Congress intended that 

EPA first conduct a MACT analysis for each area source category, Congress 

would have stated so expressly in section 112(d)(5). Congress did not require 

EPA to conduct any MACT analysis, floor analysis or beyond-the-floor analysis 

before the Agency could issue a section 112(d)(5) standard. Rather, Congress 

authorized EPA to issue GACT standards for area source categories listed under 

section 112(c)(3). . . .

Although EPA need not justify its exercise of discretion in choosing to issue a 

GACT standard for an area source listed pursuant to section 112(c)(3), EPA still 

must have a reasoned basis for the GACT determination for the particular area 

source category. The legislative history supporting section 112(d)(5) provides that 

GACT is to encompass: 

methods, practices and techniques which are commercially available and 

appropriate for application by the sources in the category considering 

economic impacts and the technical capabilities of the firms to operate and 

maintain the emissions control systems.

See Senate Report on the 1990 Amendments to the Act (S. Rep. No. 101-228, 

101st Cong. 1st session. 171-172). The discussion in the Senate report clearly 

provides that EPA may consider costs in determining what constitutes GACT for 

the area source category.

Congress plainly recognized that area sources differ from major sources, which is 

why Congress allowed EPA to consider costs in setting GACT standards for area 

sources under section 112(d)(5), but did not allow that consideration in setting 

MACT floors for major sources pursuant to section 112(d)(3). This important 

dichotomy between section 112(d)(3) and section 112(d)(5) provides further 

evidence that Congress sought to do precisely what the title of section 112(d)(5) 

states—provide EPA the authority to issue ``[a]lternative standards for area 

sources.'' 

. . . 
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[Further, cost is clearly] relevant to GACT determinations and [GACT standards 

relying on cost considerations are lawful]. The U.S. Court of Appeals for the DC 

Circuit has stated that cost effectiveness is a reasonable measure of cost as long as 

the statute does not mandate a specific method of determining cost. See 

Husqvarna AB v. EPA, 254 F.3d 195, 201 (D.C. Cir. 2001) (finding EPA's 

decision to consider costs on a per ton of emissions removed basis reasonable 

because CAA section 213 did not mandate a specific method of cost analysis).

. . . 

[C]onsideration of costs and economic impacts is especially important for 

determining GACT [where], given [a source category or subcategory’s] relatively 

low level of HAP emissions, requiring additional controls would result in only 

marginal reductions in emissions at very high costs for modest incremental 

improvement in control.

There appear to be no court decisions interpreting Section 112(d)(5), and so EPA enjoys 

the full measure of the discretion described above to interpret that provision in any 

reasonable way. See Chevron USA Inc. v. NRDC, 467 F.2d 837 (1984). Thus, EPA can 

conclude that, where work practice standards and management practices that have been 

implemented at a significant number of relevant area source facilities, and control 

equipment is not a cost-effective alternative, such work standards and practices are 

GACT. Likewise, where most sources do not employ any sort of controls or practices, 

and emissions are so minor that even work practice requirements would be highly costineffective, EPA has the discretion reasonably to conclude that no form of control 

requirement is “appropriate for application,” and hence that GACT may consist of no 

controls.

As noted earlier, cases involving MACT standards are inapplicable to GACT 

rulemakings. For example, both and Natural Resources Defense Council v. EPA, 489 

F.3d 1364 (D.C. Cir. 2007) and Sierra Club v. EPA, 479 F.3d 875 (D.C. Cir. 2007) 

involved the CAA’s requirements for establishing MACT standards for major sources, 

not GACT standards for area sources. Major sources by definition emit at least 10 TPY 

of one HAP or 25 TPY of total HAPs, and there is far less question that significant 

emissions reductions can be accomplished at these sources. Area sources, by contrast, 

have no emissions cutoff, and can thus have vanishingly small emissions. Neither 

decision addressed EPA’s specific responsibilities under section 112(d)(5) to consider the 

economic impacts on area sources to address such potentially miniscule emissions or the 

technical capabilities of area sources to operate and maintain control systems.

While the Court in NRDC cited in passing the language of section 112(d)(1) – the general 

requirement for emission standards (“EPA shall promulgate regulations establishing 

emission standards for each category or subcategory of major sources and area sources of 

hazardous air pollutants”) – it did not interpret section 112(d)(1) to take precedence over 
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section 112(d)(5) where area sources are involved. Indeed, under the canon of statutory 

interpretation that the specific controls the general, the more specific authorization of 

Subsection (d)(5) should be read as governing over any general ambiguity inherent in 

Subsection (d)(1). In sum, nothing in either of these two court decisions limits in any 

way EPA’s authority to determine that work practice standards and management 

practices constitute GACT for small area sources. Indeed, EPA can reasonably use its 

section 112(d)(5) authority to exempt low-emitting facilities, units or operations from an 

area source rulemaking altogether by establishing a de minimis exemption for such 

entities. 

B. EPA’s Inherent De Minimis Authority

In addition to EPA’s discretion to require no controls for de minimis emitting area 

sources where no form of control is generally available (i.e., cost-effective), EPA also has 

inherent authority to set de minimis thresholds under Section 112(d)(5). The seminal 

case in de minimis jurisprudence is Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. 

Cir. 1979). In that case, the D.C. Circuit explained that categorical exemptions from the 

requirements of a statute may be permissible “as an exercise of agency power, inherent in 

most statutory schemes, to overlook circumstances that in context may fairly be 

considered de minimis.” 636 F.2d at 360. The Court explained: 

It is commonplace . . . that the law does not concern itself with trifling matters, 

and this principle has often found application in the administrative context. 

Courts should be reluctant to apply the literal terms of a statute to mandate 

pointless expenditure of effort . . . . The ability, which we describe here, to 

exempt de minimis situations from a statutory command is not an ability to depart 

from the statute, but rather a tool to be used in implementing the legislative 

design.

Id. (emphasis added). The Court also stated that:

The ability [to create categorical exemptions] is not an ability to depart from the 

statute, but rather a tool to be used in implementing the legislative design. [W]e 

think most regulatory statutes, including the Clean Air Act, permit such agency 

showings in appropriate cases.

Id. More recently, in EDF v. EPA, 82 F.3d 451 (D.C. Cir. 1996), the Court set forth the 

existing de minimis standard: 

As long as the Congress has not been extraordinarily rigid in drafting the statute . 

. . there is likely a basis for an implication of de minimis authority to provide an 

exemption when the burdens of regulation yield a gain of trivial or no value. 

Id. at 466 (quotations omitted and emphasis added). 

The D.C. Circuit has upheld EPA’s exercise of its de minimis authority because it allows 

the Agency to avoid undertaking continuing regulatory action where no meaningful risk 
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exists. See Ohio v. EPA, 997 F.2d 1520 (D.C. Cir. 1993). In Ohio, the Court found 

reasonable EPA’s exemption of certain remediated hazardous waste sites from a 

CERCLA review requirement because the exemption “square[d] with the healthprotective purpose of the statute.” Id. at 1535. The Court stated that, “[t]o go beyond 

that [the statutory purpose] is to adjudge Congress incompetent to fashion a rational 

legislative design.” Id. at 1534-35. 

As EPA itself has recognized, the Agency’s exercise of its de minimis authority, as well 

as its treatment by reviewing courts, uniformly has turned on the degree of risk at issue, 

not on the mass of emissions to be regulated. In a 1994 publication on de minimis 

emissions rates under Section 112(g) of the Act, EPA’s Emission Standards Division 

noted that “the concept of de minimis has been used by the courts for providing authority 

to regulatory agencies to make exceptions for regulation when the regulatory burdens of 

those affected by the rule would ‘yield a gain of trivial or no value.’”

1

 EPA explained 

that the Agency’s exercise of de minimis authority is important because it is “intended to 

prevent trivial emissions increases to be considered . . . subject to regulation and 

needlessly drain administrative resources”(emphasis added).2 

EPA’s practice of providing de minimis exemptions from CAA mandates was later 

articulated by then-EPA General Counsel Jonathan Cannon in a discussion of EPA’s 

proposal for implementing the then-recently promulgated NAAQS standards. In an 

October 6, 1997 letter to Congressman Bliley, Chairman of the House Commerce 

Committee, Cannon stated that:

In providing common sense solutions to problems, EPA has previously applied de 

minimis principles where the strict application of the literal text of the Clean Air 

Act would produce trivial or non-existent environmental benefits . . . . For 

example, EPA believed it appropriate under de minimis principles to exempt the 

“submarginal” and “incomplete data” ozone nonattainment areas referred to 

above from the otherwise applicable requirement of Section 172(c)(9) to submit 

SIPs providing for certain contingency measures.3

In the National Lime II decision, EPA persisted in using PM as a surrogate for 

nonvolatile metal HAPS despite the petitioner’s argument that it should refrain from 

doing so on de minimis grounds, given the high costs of PM monitoring and the very low 

levels of such metals in Portland cement PM emissions. The D.C. Circuit upheld this 

 1

 “Documentation of De Minimis Emission Rates – Proposed 40 CFR Part 63, Subpart B, 

Background Document,” EPA Office of Air Quality, Emission Standards Division, 

February 1994, at 3 (quoting Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1979)).

2 Id. at 3-4 (stating that, in the context of CAA § 112(g)(1), EPA “seeks to demonstrate 

levels of emissions increases that would result in a trivial risk to human health”).

3

 Quoted in “State Implementation Plans,” 57 Fed. Reg. 13,498, 13,525 (1992) 

(emphasis added). See generally Hays and Wetzler, “Federal Recognition Of Variances: 

A Window Into The Turbulent Relationship Between Science And Law Under The 

Clean Air Act,” 13 Journal of Environmental Law and Litigation 115 (1998) at n. 211. 
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decision, stating that “EPA reasonably rejected this argument on the ground that the 

statute ‘does not provide from exceptions from emission standards based on de minimis 

principles where a MACT floor exists.’” Nat’l Lime Ass’n v. EPA, 233 F. 3d 625, 640 

(D.C. Cir. 2000). 

In fact, however, EPA appears to have created a de minimis exemption in a MACT 

standard for precisely such cost reasons, and to have done so four years after the National 

Lime II decision. The Metal Parts MACT rule exempts surface coatings used at a facility 

in volumes of less than 50 gal/yr, provided the total amount of coatings exempted on that 

basis does not exceed 250 gal/yr at the facility. See 40 C.F.R. § 63.3881(c)(3) (first 

published at 68 Fed. Reg. 129, 158 (Jan. 2, 2004)). In explaining the basis for this 

exemption, EPA’s response to comments document states: “The purpose of the small 

volume exemption . . . is to reduce the burden on sources that use small quantities of 

specialty materials that may have higher HAP contents than otherwise allowed by the 

emission limits.” See http://www.epa.gov/ttn/atw/misc/mmmm_bid_082003.pdf at 59. 

The basis for such an exemption seems particularly strong in this case because EPA was 

not using a de minimis argument to exempt entire subcategories of sources or particular 

pollutants from regulation, but only to avoid imposing the standards that it did apply on 

specific activities at major sources where the cost of regulation would have been 

especially burdensome.

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Whatever the legality of establishing a de minimis exemption for major sources, EPA’s

legal basis for creating such an exemption is particularly assured in the case of GACT 

standards, where EPA can freely take costs and benefits into account when exercising its 

inherent power not to regulate de minimis circumstances. Alabama Power stated that 

agencies’ implied power to “overlook [de minimis] circumstances” may only be 

employed “to make cost-benefit decisions . . . based . . . on a fair reading of the specific 

statute, its aims and legislative history.”5 However, as just noted above, Section 

112(d)(5) does allow EPA to take such considerations into account, precisely because 

they are being imposed on smaller, non-major sources that are less able to afford them. 

As EPA noted in the preamble to the Chemical Manufacturing Area Sources proposed 

rule:

[T]he Senate report on the legislation . . . describes GACT as:

 * * * methods, practices and techniques which are commercially available and 

appropriate for application by the sources in the category considering economic 

impacts and the technical capabilities of the firms to operate and maintain the 

emissions control systems.

 4

 Another example of a de minimis exemption in a MACT standard is the definition of a 

“batch process vent” under the MON, which does not include “[a] vent from a unit 

operation, or a vent from multiple unit operations that are manifolded together, from 

which total uncontrolled HAP emissions are less than 200 lb/yr . . . .” See 40 C.F.R. § 

63.2550(i) (definition of “batch process vent,” paragraph (8)).

5 Id. at 361.
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Consistent with the legislative history, we can consider costs and economic 

impacts in determining GACT, which is particularly important when developing 

regulations for source categories, like this one, that have many small businesses.

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GACT standards are, therefore, an area where EPA can freely take costs and benefits into 

account when exercising its inherent power not to regulate de minimis circumstances. If 

it is legally permissible, and sensible, to determine the costs of GACT regulation by 

reference to the ability of smaller sources to operate under those costs, it should be just as 

permissible – because it is just as sensible – to conclude that, at some point, the amount 

of emissions reductions at a source are so miniscule or inconsequential that they do not 

warrant any cost of regulation.

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C. EPA’s Ability to Categorize and Subcategorize Area Sources

A third way that EPA can effectively create an exemption for de minimis sources is 

through its ability to Section 112(c)(1) and (3) to define categories and subcategories of 

area sources in any reasonable way, subject possibly only to a requirement not to do so in 

a way that defeats the purpose of the section.

The legal basis for EPA to categorize and subcategorize area sources is categories into 

large and small facilities is well established. Section 112(d)(1) of the Clean Air Act 

provides that EPA “may distinguish among classes, types, and sizes within a source 

category or subcategory in establishing [ ] standards [under Section 112].” 42 U.S.C. § 

7412(d)(1). In particular, EPA’s power to categorize and subcategorize may be exercised 

differently for MACT and GACT purposes, so that EPA may, for example, (i) establish a 

category solely of area sources (e.g., “open burning scrap tires,” 64 Fed. Reg. 38721, July 

19, 1999); and (ii) establish a subcategory within an area source category without doing 

so for the same category of major sources (e.g., “small” and “large” prepared feed 

manufacturing facilities, 74 Fed. Reg. 36985, July 27, 2009).

Thus – in a GACT rulemaking, at least -- EPA could establish (or revise) a category to 

exclude sources with emissions below a certain threshold, or it could subcategorize an 

existing category by the basis of the same threshold and impose few or no requirements 

on the ‘below-the-threshold’ subcategory. For the reasons discussed in Part A above, 

nothing in Section 112(d)(1) should prevent either action, since EPA would be acting 

under Section 112(d)(5). Thus, whatever Natural Resources Defense Council v. EPA, 

489 F.3d 1364 (D.C. Cir. 2007) may mean for subcategorization for MACT purposes, 

that decision has no bearing on EPA’s ability to subcategorize for area source purposes.

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 73 Fed. Reg. 58354.

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 This may have been the reason that EPA created a de minimis exemption in the 

acrylic/modacrylic fibers production area source standard, where the definition of 

“equipment” is limited to a device “in organic HAP service which contains or contacts 

greater than 10 percent by weight of acrylonitrile and operates more than 300 hours per 

year. See 40 C.F.R. § 63.11398 (definition of “equipment”).
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Finally, EPA’s obligation under Section 112(k) to capture 90 percent of the emissions of 

each of the 30 area source HAPs would not necessarily prevent such categorization or 

subcategorization steps, even in the middle of an area source rulemaking. EPA's final 

Integrated Urban Air Toxics Strategy, which said that EPA "still intend[ed] to meet [its] 

statutory obligation to list area sources accounting for 90 percent of the emissions of each 

of the 30 area source HAPs," added that EPA had "chosen to complete this list in stages, 

adding to, deleting from, or shuffling the list as we gather more and improved data."8

Under this "iterative approach," EPA said "listing of a particular source category isn't 

considered a final agency action until EPA issues emission standards for that source 

category. Thus, we feel the list of area source categories is flexible both for the addition 

of new area source categories and/or the removal of area source categories, through 

public notice."9 If EPA can shuffle the category list at any time, and each category is 

fluid until final standards are issued, then it should certainly be able to drop off some 

low-emitting sources from a given category in the final rulemaking for that category. 

 8

 64 Fed. Reg. 38720 (July 19, 1999).

9 Id. at 38721.