Opinion ID: 501652
Heading Depth: 2
Heading Rank: 3

Heading: Partial Grandfathering of Stacks Merged Before July 8, 1985

Text: 158 Such mergers qualify for exemption if a source can demonstrate that its merger was accomplished as part of a change in operation to install pollution control equipment or for good economic or engineering reasons. 40 C.F.R. Sec. 51.1(ii)(2)(ii)(C). The rule creates a presumption of intent to gain emissions credit in two cases: (1) where there was an increase in the emission limitation after the merger; or (2) where there was no emission limitation in existence before the merging but the quantity of pollutants actually emitted increased in comparison to the pre-merger levels. Id. 159 NRDC attacks EPA's retroactivity analysis, claiming that the agency has not supported its decision to apply a more lenient rule to pre-1985 mergers than to post-1985 mergers. First, it maintains that before 1985 there was no well established practice of allowing credit for dispersion resulting from stack merger. NRDC finds evidence of a more severe approach in EPA's 1976 Guidelines and the 1979 proposed regulations. It substantiates the former solely with one letter from a regional EPA administrator disapproving credit for a particular merger, and the latter with quotation of the proposal's vague language (other selective handling of exhaust gas streams so as to increase the exhaust gas plume rise). NRDC Brief at 60, 61 n. 119. The agency asserts the existence of a uniformly permissive rule, pointing to three 1980 guidance documents which uniformly took the view that merging of separate stacks into a single stack 'is generally not considered a dispersion technique' absent other factors. 50 Fed.Reg. 27,903/2. We find the evidence in this regard to be somewhat inconclusive. 160 Second, NRDC argues that the agency erred in not requiring a demonstration of reliance. The agency responds that it is infeasible to require a demonstration of actual reliance when the reliance in question is upon general agency guidance rather than a specific formula or rule. EPA Brief at 66. The point is well taken. Thus, for us, the question comes down to whether the agency's rule for pre-1985 sources is sufficiently protective of the statutory purpose. 161 NRDC asserts that the regulations provide large loopholes for mergers that were significantly motivated by an intent to gain increased dispersion credit. As to mergers accompanying installation of pollution control equipment, it suggests that a source might intentionally install equipment for one pollutant in order to secure the right to increase emissions of another. On the facts, this seems most improbable. The rule applies only to pre-1985 mergers, and we doubt many source owners had the foresight to anticipate EPA's exemption and slip through its supposed loophole before its promulgation. Further protection is added by EPA's presumption of a significant dispersion motive where the merger was accompanied by a relaxation of emissions limits or an increase in emissions. 162 As to the exemption for mergers made for sound economic or engineering reasons, NRDC objects not on the basis of that language itself but by reference to language in a Guidance document later published by EPA, Implementation of Stack Height Regulations--Exceptions From Restrictions on Credit for Merged Stacks at 3 (October 28, 1985). In a separate suit brought by NRDC before this court we declined substantive review of that document on the ground that the guidelines represent tentative agency positions that may be modified in subsequent agency proceedings, and do not represent final agency action subject to judicial review under 42 U.S.C. Sec. 7607(b) (1982). NRDC v. Thomas, No. 85-1488 and consolidated cases (D.C.Cir. Aug. 3, 1986). NRDC has brought nothing to our attention that would increase their finality. 163 Accordingly, the substantive review now appropriate reveals no illegality in EPA's rules for pre-1985 stack mergers.