Opinion ID: 413378
Heading Depth: 4
Heading Rank: 4

Heading: Strike;

Text: 105 (5) Inability to obtain capital, if that inability is the result of temporary market conditions; 106 (6) Failure of equipment to perform as designed, assuming expectations about performance were reasonable; and 107 (7) The complete inability of a supplier or contractor to furnish labor or materials. 108 40 C.F.R. Sec. 66.31(c)(1)-(7) (1981). Only if a source can show that it meets one of these conditions will EPA grant it an exemption for inability to comply. 109 Industry petitioners object, first, that this list should be expanded to include technological impossibility as a factor. EPA based its refusal to grant a general exemption for technological incapacity on its understanding of the technology-forcing character of the Act. See 45 Fed.Reg. 50,096 (1980). EPA recognized, however, the difficulties of assessing a penalty to reflect the economic benefits of noncompliance, when the technology was not yet available to outline the steps to be taken by the source to bring it into compliance. Estimating the costs of pollution control equipment, for example, may be impossible when it is not yet known what equipment will be necessary. EPA thus determined that 110 [w]here existing technology has not yet demonstrated compliance, the penalty will be based upon the cost of installing the best available controls as determined on a case-by-case basis, as well as a commitment to an appropriate research and development (R & D) program designed to develop the new means of emission control necessary to achieve the standards. Thus, a source that has taken and is continuing to take all possible steps to achieve compliance, including the installation of the best available controls and, where appropriate, participation in an appropriate R & D program, would be considered to be deriving no economic benefit from its failure to comply.... 111 Id. EPA's approach, in other words, is to deny an exemption for technological impossibility but to calculate the penalties to ensure that sources doing their best to surmount existing technology will not be assessed any penalties. In EPA's judgment, this approach would provide the best mix of incentives to bring about the goals of the Clean Air Act: sources would be deterred from hiding their inadequate efforts behind the excuse of technological impossibility, and would be encouraged to take advantage of and build upon technological advances as they occur. Id. at 50,097. 112 We agree with EPA that it is reasonable to exclude technological impossibility from the inability to comply exemption. At no time during the debates did Congress consider enumerating technological impossibility as one of the factors triggering the exemption, nor did Congress move towards the more flexible formulation of the exemption in order to incorporate technological impossibility. Indeed, Senator Muskie's explanation of the version of section 120 that emerged from the Senate and House conference stated explicitly that the exemption was not intended to cover a claim that needed technology is unavailable. 3 1977 LEGISLATIVE HISTORY at 347. Congress' emphasis that exemptions should be construed narrowly, to avoid diluting incentives created by the penalty provision, was repeated. 113 Furthermore, EPA's approach is a reasonable balance of statutory goals. Congress intended the Act to create incentives to develop the technology needed to abate air pollution. Perhaps the best that can be expected from sources in pursuit of this goal is use of the best available technology and continued efforts to develop better technology. EPA's treatment of technological impossibility encourages this progress, and we affirm such treatment. 114 Industry petitioners' second objection is that EPA erred in enumerating an exclusive list. EPA chose this approach because it was concerned that including a catch-all provision would open a loophole and defeat the purpose of the penalty scheme. 45 Fed.Reg. 50,096 (1980). While we agree with EPA that eligibility for this exemption should be determined by regulation rather than by adjudication, we find that in relying on an exclusive list of factors to trigger the exemption, EPA has overstepped Congress' intent. 115 Although Congress intended the exemption to be narrowly limited, it also required that some flexibility be written into the regulations. See 1977 HOUSE REPORT at 76, reprinted in 4 1977 LEGISLATIVE HISTORY at 2543. EPA argues that this requirement of flexibility is fully met by its power to expand in the future the list of situations that constitute inability to comply should this become necessary to prevent inequity in a particular case. 45 Fed.Reg. 50,096 (1980). EPA fails, however, to specify whether its power to prevent inequity has prospective application only. We hold that it cannot and that EPA must include in its enumerated factors a provision that allows it, in its discretion, to exempt a source in the first instance in which such circumstances arise. Without such a provision, the regulations lack the flexibility that the Act mandates. 116 There is no need for this provision to become the loophole EPA fears. The burden of proof is on a source to demonstrate that it meets the conditions of the exemption, which include a showing that the inability resulted from a factor entirely beyond the source's control. This is a heavy burden indeed, not subject to easy exploitation from sources claiming the exemption on spurious grounds. 117 We therefore remand the regulations to EPA insofar as they strictly enumerate an exclusive list of factors that will trigger the inability to comply exemption. We leave to the agency the fashioning of an additional provision to meet the congressional design. 118