Opinion ID: 501652
Heading Depth: 2
Heading Rank: 1

Heading: Sheltering pre-October 1, 1983 Within-Formula Stack Increases from the Demonstration Requirement

Text: 99 At the outset, EPA invites us to discard NRDC's objection by means of an argument that to us is quite obscure: that the Sierra Club court did not insist on a retroactive demonstration requirement, or indeed on any demonstration requirement at all. EPA Brief at 34. The premise seems to be that because EPA's adoption of a demonstration requirement was voluntary, it need not explain its decision not to impose the requirement on pre-1983 increases. The argument does not add up. First, EPA's adoption of a demonstration requirement for increases could be viewed as wholly voluntary only if EPA had set out thoroughly to validate its H + 1.5L formula. This it did not really purport to do, although its preamble contains some favorable--and hotly disputed--observations on the subject. 16 100 In any event, the agency found, in light of this court's reading of Sec. 123 in Sierra Club, that a demonstration requirement was suitable. That being so, exemption of a large class of increased stacks is an important decision subject to attack as possibly arbitrary and capricious. It would fail that test if it is inconsistent with the retroactivity analysis set forth in Sierra Club. 101 Invoking the first factor identified by Sierra Club, NRDC argues that here there simply is no well established practice. A fluctuating rather than well-established practice presumably counts against grandfathering, as it undermines the actor's claim that its reliance was legitimate. In fact, the record indicates considerable waffling by EPA. There appear to have been new policy moves in 1973, 1976, 1979, 1980, and 1981 and 1982. In its 1973 Guidelines, it actively encouraged sources with short stacks to increase to GEP formula height. 38 Fed.Reg. at 25,701/2 (1973) (The increase of stack height up to a height consistent with good engineering practice is acceptable without qualification.... For fairly level terrain, good engineering practice is normally taken to be a stack height 2 1/2 times the height of the facility or nearby structure.). In 1976 it responded to the circuit courts' disparaging treatment of its 1973 effort with considerable severity: putting aside stack increases started before the Fifth Circuit's NRDC decision, the 1976 guidelines gave credit only for increases by sources that applied BACT (best available control technology). 41 Fed.Reg. at 7451/2-3 (1976). In 1979, after Congress's adoption of Sec. 123, the agency proposed regulations considerably less stringent, allowing sources that raised existing stacks automatic credit up to H + 1.5L, with the proviso that the EPA or a state or local control agency could order the source to justify use of the formula height by demonstrating, through fluid modeling, the existence of an air quality problem, attributable to downwash. 44 Fed.Reg. at 2614/1 (Jan. 12, 1979). In a 1980 policy change, sparked by a heightened concern that use of its GEP formula for stack height increases [was] increasing pollutant loadings and acid rain, the agency tightened again, announcing its intention to require fluid modeling demonstrations for all future stack height increases. 45 Fed.Reg. 42,282/1 (June 24, 1980). Eleven months later, the EPA drew back, leaving in place the scheme adopted in its 1979 proposed rules. 46 Fed.Reg. 28,650 (May 28, 1981). The agency's 1982 Final Regulations moved further in the direction of leniency, granting automatic credit up to formula height for sources raising existing stacks, with no provision for support through demonstrations. 47 Fed.Reg. 5868/3 (1982). Of course it was this rule that the Sierra Club court remanded for reconsideration. 719 F.2d at 458-59. 102 Clearly the legitimacy of increasing stack height in reliance on regulatory policy has varied radically from period to period. The equities for a firm increasing its stack in the 1976-79 era are slight compared to ones that increased under the 1973, 1979 or 1981 policies. Besides, the policies represent a scatter rather than a clear line, reducing the equities for reliance even on the moments of lax policy. Finally, equitable claims have some tendency to degrade over time; a 15-year 1973 contract for the purchase of high-sulphur coal may have loomed large in 1976 but hardly amounts to anything in 1987. 103 EPA's defense of its grandfathering decision failed to focus on any of these difficulties. See 50 Fed.Reg. at 27,899/3-900/1. Indeed, EPA's policy imposed no requirement of reliance at all, even though it was precisely that omission that persuaded this court to remand the grandfathering issue raised in Sierra Club. 719 F.2d at 468. 104 Against the seemingly weak claims for grandfathering is the possible frustration of the statutory goal. This looks significant. The vulnerability of the formula persuaded EPA to require demonstrations. These demonstrations are impaired by the circularity problem that EPA has recognized. Yet EPA's grandfathering rule allows most of the affected sources to escape even this modest check. 105 Administrative problems may partly explain EPA's generous grandfathering. An immediate run of demonstrations for all sources that have increased stack height since 1970 would evidently tax the capacity of the facilities for running such demonstrations. EPA Brief at 18. But this alone appears a weak justification, as EPA has the alternative of adopting a formula clearly valid enough to dispense with demonstrations altogether. 106 Thus we find it necessary to remand. We do not say there is no room for grandfathering on these facts, but the case for it seems unusually weak. Any grandfathering chosen should fit, to a reasonable degree, the variations in regulatory history and degrees of reliance. We recognize, of course, that administrative necessity or de minimis principles will prevent a perfect fit; EPA could not be expected to match the six layers of regulatory policy with a six-layer grandfathering scheme. But fidelity to the congressional purpose requires a far more careful effort to address the problem than the agency has yet made. 107