Opinion ID: 413378
Heading Depth: 2
Heading Rank: 3

Heading: Potential to Emit

Text: 83 Because section 120 imposes more extensive liability on major stationary sources than on other sources, subjecting them to penalties for violations of any applicable SIP standard, the definition of major stationary source is a crucial factor in determining liability. Section 120 does not define major stationary source, but the general definitional section of the Act stipulates that a stationary source is major if it directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant (including any major emitting facility or source of fugitive emissions of any such pollutant, as determined by rule by the Administrator). Sec. 302(j). The regulations implementing section 120 track this definition. See 40 C.F.R. Sec. 66.3(g) (1981). The term potential to emit is not defined in either section 120 or in the general definitional section of the Act. EPA's regulations implementing section 120 define the term as follows: 84 Potential to emit means the capability at maximum design capacity to emit a pollutant after the application of air pollution control equipment. Annual potential shall be based on the larger of the maximum annual rated capacity of the stationary source assuming continuous operation, or on a projection of actual annual emissions. Enforceable permit conditions on the type of materials combusted or processed may be used in determining the annual potential. Fugitive emissions, to the extent quantifiable, will be considered in determining annual potential for those stationary sources whose fugitive emissions are regulated by the applicable state implementation plan. 85 40 C.F.R. Sec. 66.3(j) (1981). Petitioners object, first, that this definition measures emission potential on the assumption that a source is in continuous operation. Second, they contend that EPA improperly included so-called fugitive emissions--emissions that come from a source, but not from an identifiable point within it, such as a smokestack--in calculating the total emission level for a source. 86 EPA's effort to define potential to emit under section 120 was interwoven with its efforts to define the same term in rulemaking implementing the section of the 1977 Amendments setting forth standards to prevent significant deterioration of air quality, see 42 U.S.C. Sec. 7479(1) (Supp. IV 1980). EPA's original definition in those regulations measured a source's potential to emit by what it would emit, when operating at full capacity, in the absence of air pollution control devices. See 40 C.F.R. Sec. 52.21(b)(3) (1978). The original definition, in other words, ignored already-installed pollution control equipment in the determination of whether a source was to count as major. This court rejected the definition, and directed EPA to look to the facility's 'design capacity'--a concept which not only includes a facility's maximum productive capacity (a criterion employed by EPA) but also takes into account the anticipated functioning of the air pollution control equipment designed into the facility. Alabama Power Co. v. Costle, 636 F.2d 323, 353 (D.C.Cir.1979). 87 Like the original regulations implementing the Prevention of Significant Deterioration (PSD) section, EPA's proposed regulations implementing section 120 ignored air pollution control equipment designed into a facility. See 44 Fed.Reg. 17,319 (1979). The final section 120 rules, however, refer only to a source's maximum design capacity, i.e., to what the source can be expected to emit, operating at full capacity, as it is designed. 40 C.F.R. Sec. 66.3(j) (1981). EPA made the change to conform the section 120 regulations both to this court's decision in Alabama Power and to EPA's ongoing efforts to promulgate PSD regulations. 45 Fed.Reg. 50,087 (1980). 88 EPA's original PSD regulations also assumed that fugitive emissions were to be included in the determination of what counts as a major source for purposes of PSD standards. In Alabama Power, this court held that the general definitional section of the Act requires rulemaking by EPA in any case in which a determination is made to include fugitive emissions in calculating whether a source is major for purposes of implementing a requirement under the Act. 636 F.2d at 370. The regulations were thus remanded to EPA for further rulemaking. 89 The final regulations implementing section 120 include fugitive emissions only to the extent that they are regulated under a SIP. That is, if SIP standards regulate fugitive emissions from a source, they count towards determining that source's potential to emit; otherwise, they do not. See 40 C.F.R. Sec. 66.3(j) (1981). EPA explained this choice, too, as an effort to conform the section 120 regulations to Alabama Power and to ongoing development of the PSD regulations. 45 Fed.Reg. 50,087 (1980). 90 EPA's new PSD regulations were promulgated within a month after the section 120 regulations and resemble them closely. They base potential to emit on maximum design capacity and include fugitive emissions for twenty-six categories of sources. 45 Fed.Reg. 52,752-43 (1980). A petition for review of the PSD regulations is pending before this court and settlement efforts are continuing. Chemical Manufacturers Association v. EPA, No. 79-1112 (D.C.Cir. filed Jan. 26, 1979). EPA has suggested that the outcome of the PSD proceedings may prompt revisions of the section 120 regulations. 45 Fed.Reg. 50,087 (1980). Such concerns, however, are purely speculative; our task here is to evaluate EPA's section 120 regulations on the current state of the law. 91 We affirm EPA's definition of potential to emit. As to the decision to base potential to emit on maximum design capacity, we find it is reasonable in light of the statutory language and the remedial goals of section 120. The very term itself--potential to emit--is clear indication that Congress did not intend determinations of whether a source is major to be based on actual emissions in day-to-day operations. Sources that generally operate at only a fraction of capacity, if needs or economic conditions change, may suddenly function at a far greater level. If so, they will reap economic benefits of noncompliance concomitant with those of other sources operating at similar levels of capacity, and it is reasonable to penalize them in a similar manner. One of the important goals of section 120 was equalizing the competitive situations of polluters and nonpolluters, and EPA's definition of potential to emit advances that goal. Moreover, EPA's definition is consistent with this court's mandate in Alabama Power that a determination of whether a source is major for purposes of the PSD requirements should be based on maximum design capacity. 636 F.2d at 353. The flaw in EPA's original PSD regulations was that they ignored pollution control devices built into a source and hence measured the source as it would never be. EPA's section 120 regulations, however, measure the source as it can be at its fullest, and thus reasonably implement the statute. 92 EPA's treatment of fugitive emissions is also reasonable. Section 120 penalties against major stationary sources are to be assessed for violations of state SIPs. The use of SIPs to determine whether fugitive emissions should be included in calculating a source's potential to emit reasonably links the noncompliance penalties against major sources with the SIPs that give rise to their assessment. 93 Moreover, EPA has engaged in the rulemaking required for inclusion of fugitive emissions in the calculation of whether a source is major. See Sec. 302(j). In promulgating the PSD regulations, EPA assumed that the rulemaking requirement was inapposite. Here, by contrast, EPA followed SIP regulations in determining whether to include fugitive emissions. As we emphasized in Alabama Power, the purpose of the rulemaking requirement may have been to enable EPA to tailor the inclusion of fugitive emissions to particular industrial conditions. Adoption of a SIP involves an exploration of whether industrial conditions in that state warrant limiting fugitive emissions from a particular source. EPA's reliance on the SIP itself to determine whether to include fugitive emissions in the calculation of a source's potential to emit thus met the statutory rulemaking requirement, and we affirm that action.