United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT 

 

 

 

Argued September 24, 2012 Decided January 22, 2013 

 

No. 10-1413 

 

SIERRA CLUB, 

PETITIONER 

 

v. 

 

ENVIRONMENTAL PROTECTION AGENCY AND LISA PEREZ 
JACKSON, ADMINISTRATOR, 

RESPONDENTS 

 

UTILITY AIR REGULATORY GROUP, 

INTERVENOR 

 

 

 

On Petition for Review of Final Actions of 

the United States Environmental Protection Agency 

 

 

 

 David S. Baron argued the cause for petitioner. With him 
on the briefs were Seth L. Johnson and Emma C. Cheuse. 

 

 Jessica O'Donnell, Attorney, U.S. Department of Justice, 
argued the cause for respondents. With her on the brief were 
Brian L. Doster, Assistant General Counsel, U.S. 
Environmental Protection Agency, and Scott J. Jordan, 
Attorney. 


 

 Andrea Bear Field, Makram B. Jaber, Lucinda Minton 
Langworthy, and Elizabeth L. Horner were on the brief for 
intervenor Utility Air Regulatory Group in support of 
respondent. 

 

 Before: SENTELLE, Chief Judge, GRIFFITH, Circuit Judge, 
and EDWARDS, Senior Circuit Judge. 

 

 Opinion for the Court filed by Chief Judge SENTELLE. 

 

SENTELLE, Chief Judge: In October 2010, the 
Environmental Protection Agency (�EPA�) issued a final rule 
establishing regulations for particulate matter less than 2.5 
micrometers (�PM2.5�) under � 166 of the Clean Air Act (�the 
Act�), 42 U.S.C. � 7476. See Prevention of Significant 
Deterioration (PSD) for Particulate Matter Less Than 2.5 
Micrometers (PM2.5)�Increments, Significant Impact Levels 
(SILs) and Significant Monitoring Concentration (SMC), 75 
Fed. Reg. 64,864 (Oct. 20, 2010). In this rule, the EPA 
established Significant Impact Levels (�SILs�) and a 
Significant Monitoring Concentration (�SMC�) for PM2.5, 
screening tools the EPA uses to determine whether a new 
source may be exempted from certain requirements under � 
165 of the Act, 42 U.S.C. � 7475. 75 Fed. Reg. at 64,890�
91, 64,895. Petitioner Sierra Club seeks review of this 
regulation. 

 

After the Sierra Club filed its petition, the EPA 
acknowledged that portions of the rule establishing SILs did 
not reflect its intent in promulgating the SILs, and now 
requests that we vacate and remand some (but not all) parts of 
its PM2.5 SIL regulations. Notwithstanding the EPA�s 
concession, the Sierra Club maintains that the EPA lacks 
authority to establish SILs and requests that we rule 


accordingly. The Intervenor, Utility Air Regulatory Group 
(�UARG�), on the other hand, urges us to uphold the SIL 
provisions EPA established, or alternatively, to remand the 
SIL provisions without ordering that they be vacated. 

 

Although the EPA conceded that it needs to revise some 
of the SIL provisions, it continues to assert that the portions of 
its rule establishing the SMC were valid. For the reasons 
stated below, we accept the EPA�s concession on the SILs, 
and vacate and remand some portions of the EPA�s rule 
establishing SILs. We further conclude that the EPA 
exceeded its authority in establishing the SMC, and grant the 
Sierra Club�s petition as to those portions of the EPA�s rule. 

 

I. BACKGROUND 


 

A. The Clean Air Act 


 

The Clean Air Act requires the EPA to set National 
Ambient Air Quality Standards (�NAAQS�) for various 
harmful air pollutants at levels necessary to protect the public 
health and welfare. 42 U.S.C. �� 7401, 7409. Under the Act, 
the EPA must designate areas as attainment, nonattainment, or 
unclassifiable for each NAAQS. Id. � 7407(d)(1)(A). States 
have primary responsibility for implementing the NAAQS, 
and must submit a state implementation plan (�SIP�) 
specifying how the State will achieve and maintain 
compliance with the NAAQS. Id. � 7407(a). 

 

In 1977, Congress amended the Act to add the Prevention 
of Significant Deterioration (�PSD�) provisions �to protect 
the air quality in national parks and similar areas of special 
scenic or recreational value, and in areas where pollution was 
within the national ambient standards, while assuring 
economic growth consistent with such protection.� 


Environmental Defense Fund v. EPA, 898 F.2d 183, 184 
(D.C. Cir. 1990) (citing 42 U.S.C. � 7470). When Congress 
enacted the PSD provisions, it established maximum 
allowable increases over baseline concentrations � also 
known as �increments� � for certain pollutants in � 163 of 
the Act. See 42 U.S.C. � 7473; Environmental Defense Fund, 
898 F.2d at 184. For other pollutants, Congress delegated to 
the EPA the task of promulgating regulations to prevent the 
significant deterioration of air quality that would result from 
the emissions of these pollutants. 42 U.S.C. � 7476(a). For 
pollutants that the EPA began regulating after Congress 
enacted the PSD provisions, which includes PM2.5, the EPA 
must promulgate PSD regulations within two years of 
establishing the NAAQS for that pollutant. Id. 

 

The PSD provisions also establish requirements for 
preconstruction review and permitting of new or modified 
sources of air pollution. See id. � 7475. Subsection 165(a) of 
the Act lists the requirements an owner or operator proposing 
to construct a new source or modify an existing source must 
meet before starting construction, which include acquiring a 
PSD permit for the facility. Id. � 7475(a)(1)�(2). Of 
relevance to this petition, � 165(a)(3) requires that an owner 
or operator proposing to construct a new major emitting 
facility or modify an existing facility demonstrate that 
emissions from construction or operation of the facility will 
not cause or contribute to any violations of the increment 
more than once per year, or to any violation of the NAAQS 
ever. Id. � 7475(a)(3). 

 

Before a review of the � 165(a) requirements may be 
undertaken, however, either a State or the owner or operator 
of a facility applying for a PSD permit must conduct an 
analysis of the ambient air quality at the proposed site and in 
areas that may be affected by emissions from the facility for 


the relevant pollutants. Id. � 7475(e)(1). This analysis must 
include continuous air quality monitoring data gathered to 
determine whether the facility will exceed either the 
increments or the NAAQS. Id. � 7475(e)(2). The Act further 
mandates that this data be collected for a year before the date 
the applicant applies for a permit unless a State, in accordance 
with EPA regulations, �determines that a complete and 
adequate analysis for such purposes may be accomplished in a 
shorter time period.� Id. The results of the analysis must be 
made available to the public at the time of the public hearing 
on the application for a PSD permit. Id. 

 

The Act requires States to address the PSD provisions in 
their SIPs. Id. � 7410(a)(2). The EPA has promulgated 
extensive regulations setting forth requirements and 
guidelines on how SIPs are to implement the PSD provisions. 
See 40 C.F.R. � 51.166. For States without an EPA-approved 
SIP, the EPA has promulgated separate regulations 
implementing the PSD provisions. See 40 C.F.R. � 52.21. 

 

B. Regulatory Background: Establishing the PM2.5 
Increment, SILs, and SMC 


 

In 1997, the EPA revised its NAAQS to include 
standards for PM2.5, see 62 Fed. Reg. 38,652 (July 18, 1997), 
and in 2006 revised the PM2.5 NAAQS, see 71 Fed. Reg. 
61,144 (Oct. 17, 2006). In 2007, the EPA proposed a rule 
establishing increments for PM2.5. See 72 Fed. Reg. 54,112 
(Sept. 21, 2007). In this rulemaking, the EPA also proposed 
two screening tools that would exempt a permit applicant 
from some of the air quality analysis and monitoring required 
under the Act and EPA regulations: significant impact levels 
(�SILs�) and significant monitoring concentration (�SMC�). 
See id. at 54,138�42. 

 


 

1. Significant Impact Levels 


 

Under EPA regulations, the owner or operator of a 
proposed source or modification must undertake a source 
impact analysis to demonstrate �that allowable emission 
increases from the proposed source or modification, in 
conjunction with all other applicable emission increases or 
reductions (including secondary emissions), would not cause 
or contribute to� a violation of the increments or the NAAQS. 
40 C.F.R. � 51.166(k); id. � 52.21(k). In the proposed rule, 
the EPA discussed adopting SILs for PM2.5, which the EPA 
defines as �numeric values derived by EPA that may be used 
to evaluate the impact a proposed major source or 
modification may have on the NAAQS or PSD increment.� 
72 Fed. Reg. at 54,138. This numerical value, measured in 
micrograms per meter cubed (�g/m3), is the level of ambient 
impact below which the EPA considers a source to have an 
insignificant effect on ambient air quality. 72 Fed. Reg. at 
54,139. According to the EPA�s proposed rule, �a source that 
demonstrates its impact does not exceed a SIL at the relevant 
location is not required to conduct more extensive air quality 
analysis or modeling to demonstrate that its emissions, in 
combination with the emissions of other sources in the 
vicinity, will not cause or contribute to a violation of the 
NAAQS at that location,� an analysis the EPA terms the 
cumulative impact analysis, or the cumulative air quality 
analysis. 72 Fed. Reg. at 54,139. 

 

As the legal basis for adopting the SILs, the EPA cited 
Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979). 
72 Fed. Reg. at 54,139. In that case we discussed an 
administrative agency�s de minimis authority to establish 
exemptions from statutory commands, holding that 
�[c]ategorical exemptions 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. We further stated 
that �[u]nless Congress has been extraordinarily rigid, there is 
likely a basis for an implication of de minimis authority to 
provide exemption when the burdens of regulation yield a 
gain of trivial or no value.� Id. at 360�61. But that implied 
authority does not apply to situations �where the regulatory 
function does provide benefits, in the sense of furthering the 
regulatory objectives, but the agency concludes that the 
acknowledged benefits are exceeded by the costs.� Id. at 361. 
Applying this de minimis authority, the EPA explains that 
when a source�s ambient impact does not exceed the SIL � 
i.e., is de minimis � the �EPA considers the conduct of a 
cumulative air quality analysis and modeling by such a source 
to yield information of trivial or no value with respect to the 
impact of the proposed source or modification.� 72 Fed. Reg. 
at 54,139. 

 

2. Significant Monitoring Concentration 


 

In 1980, the EPA �adopted regulations that exempt 
sources from preconstruction monitoring requirements [i.e., 
� 165(e)(2) of the Act] for a pollutant if the source can 
demonstrate that its ambient air impact is less than a value 
known as the [SMC].� Id. at 54,141. When the EPA first 
adopted SMCs for other pollutants in 1980,1 it described the 
SMCs as �air quality concentration de minimis levels for each 

1 When the EPA established the preconstruction monitoring 
exemption in 1980, it did not label the emissions values below 
which the exemption applied as �SMCs,� instead terming them �de 
minimis emissions levels.� See 45 Fed. Reg. 52,676, 52,709 (Aug. 
7, 1980). But because the de minimis emissions levels promulgated 
in 1980 serve the same function as the PM2.5 SMC, we will refer to 
the 1980 de minimis levels as SMCs throughout this opinion. 


pollutant for the purpose of providing a possible exemption 
from monitoring requirements.� Id. (internal alterations and 
citations omitted). In its proposed rule establishing an SMC 
for PM2.5, the EPA explained that �[i]f a source can show 
through modeling of its emissions alone that its impacts are 
less than the corresponding SMC, there is little to be gained 
by requiring that source to collect additional monitoring data 
on PM2.5 emissions to establish background concentrations for 
further analysis.� Id. The EPA proposed different 
methodologies for establishing a value for the SMC and, as 
with the SILs, relied on the de minimis discussion from 
Alabama Power as the legal basis for establishing an SMC for 
PM2.5. 72 Fed. Reg. at 54,141. 


C. Final Rule 


 

In its final rule, the EPA adopted and set values for both 
the SILs and SMC for PM2.5. See 75 Fed. Reg. at 64,864. 
The EPA gave three purposes for the SILs in the final rule, 
which were to determine: 

 

(1) When a proposed source�s ambient impacts 
warrant a comprehensive (cumulative) source impact 
analysis; (2) the size of the impact area within which 
the air quality analysis is completed, and (3) whether 
the emissions increase from a proposed new major 
stationary source or major modification is considered 
to cause or contribute to a violation of any NAAQS. 

 

Id. at 64,890. 

 

In adopting the SMC, the EPA emphasized that it 
retained discretion �to determine when it may be appropriate 
to exempt a proposed new major stationary source or major 
modification from the ambient monitoring data requirements 


under the PSD rules.� Id. at 64,895. The rule codified the 
SILs at 40 C.F.R. � 51.166(k)(2) and 40 C.F.R. � 52.21(k)(2), 
and the SMC at 40 C.F.R. � 51.166(i)(5)(i)(c) and 40 C.F.R. 
� 52.21(i)(5)(i)(c). 75 Fed. Reg. at 64,902�07. 

 

The rule also codified the PM2.5 SILs in the EPA�s 
regulations on new source review and permitting 
requirements at 40 C.F.R. � 51.165(b)(2). Unlike the PSD 
regulations (40 C.F.R. �� 51.166, 52.21), � 51.165(b)(2) does 
not use the SILs to exempt a source from conducting a 
cumulative air quality analysis. Instead, � 51.165(b)(2) states 
that a proposed source or modification will be considered to 
cause a violation of a NAAQS when that source or 
modification would, at a minimum, exceed the SIL in any 
area that does not or would not meet the applicable NAAQS. 

 

II. ANALYSIS 


 

A. Significant Impact Levels 


 

The Sierra Club argues that the EPA lacks de minimis 
authority to promulgate the SILs. Specifically, the Sierra 
Club contends that the language of � 165 is so extraordinarily 
rigid that it bars de minimis exemptions, and that adoption of 
the SILs is contrary to the legislative design of the Act. Even 
if � 165 of the Act were not so extraordinarily rigid as to bar 
any de minimis exemption, the Sierra Club asserts that 
pollution increases below the SILs are not so trivial as to be 
de minimis. 

 

To illustrate the latter point, the Sierra Club explains that 
if a proposed source or modification is in an area that is close 
to violating the NAAQS or an increment, that source could 
violate the NAAQS or increment even if its emissions would 
have an ambient impact below the SIL. For example, if a 


proposed source�s emission of PM2.5 would have a projected 
air quality impact of 1 �g/m3 over a 24-hour average (below 
the SIL of 1.2 �g/m3 over a 24-hour average), and that source 
proposes to build in an area that already has an ambient PM2.5 
concentration of 35 �g/m3 (the PM2.5 NAAQS over a 24-hour 
average), the construction of that source could cause a 
violation of the NAAQS. See id. �� 50.13(c) (PM2.5 
NAAQS), 51.166(k)(2) (PM2.5 SIL). The Sierra Club further 
notes that because the EPA�s regulation automatically 
exempts a source with a proposed impact below the SIL from 
demonstrating it will not cause or contribute to a violation of 
the NAAQS, unlimited numbers of sources whose impacts are 
less than the SILs could cumulatively cause a violation of the 
NAAQS or increments. Also, the Sierra Club points out that 
sources whose impact is below the SILs that construct in an 
upwind attainment area could worsen existing violations in a 
downwind nonattainment area. As the SIL regulations are 
currently written, sources in these scenarios would not be 
required to demonstrate that they would not cause or 
contribute to a violation of the NAAQS or increment, even 
though they likely would cause a violation (in an attainment 
area) or contribute to a violation (in a downwind 
nonattainment area), thus contravening the statutory 
command in � 165(a) of the Act. 

 

In its brief, the EPA concedes that the SIL provisions, as 
codified, were flawed. When the EPA responded to 
commenters in the final rule, it explained that 
�notwithstanding the existence of a SIL, permitting authorities 
should determine when it may be appropriate to conclude that 
even a de minimis impact will �cause or contribute� to an air 
quality problem and to seek remedial action from the 
proposed new source or modification.� 75 Fed. Reg. at 
64,892. But as the EPA acknowledges in its brief, �the 
regulatory text it adopted does not allow permitting 


authorities the discretion to require a cumulative impact 
analysis, notwithstanding that the source�s impact is below 
the SIL, where there is information that shows the proposed 
source would lead to a violation of the NAAQS or 
increments.� Resp�t Br. at 34. Because the EPA asserts that 
it did not intend to automatically exempt a proposed source 
from the requirements of the Act without affording the 
permitting authorities discretion in applying the SILs, it 
requests that we vacate and remand the regulatory text 
promulgated in the rule at 40 C.F.R. �� 51.166(k)(2) and 
52.21(k)(2). 

 

 Despite the EPA�s concession, the Sierra Club asserts 
that vacatur and remand, while warranted, does not fully 
resolve its challenge, and asks that we determine whether the 
EPA has authority to promulgate SILs. We disagree with the 
Sierra Club that it is necessary to decide the EPA�s authority 
to promulgate SILs at this point. To do so would require that 
we answer a question not prudentially ripe for determination. 
On remand the EPA may promulgate regulations that do not 
include SILs or do include SILs that do not allow the 
construction or modification of a source to evade the 
requirements of the Act as do the SILs in the current rule. In 
such an event, we would not need to address the universal 
disallowance of all de minimis authority. If the EPA 
promulgates new SIL provisions for PM2.5 and those 
provisions are challenged, we can then consider the 
lawfulness of those SIL provisions. 

 

 While the Sierra Club argues that simply vacating and 
remanding the SIL provisions does not go far enough, the 
UARG intervenes to argue that vacatur and remand go too far. 
The UARG asserts that remanding the SIL provisions for 
further rulemaking is unnecessary for two reasons. First, 
intervenor asserts, the SIL provisions, as informed by the 


EPA�s statements during rulemaking, do allow permitting 
authorities discretion in how they apply the SILs. Second, it 
argues that if a source with an ambient impact below the SIL 
does cause a NAAQS or increment violation in an area, the 
permitting authority for that area is already obligated to revise 
its SIP to address the violation. See 40 C.F.R. � 51.166(a)(3). 

 

 The UARG bases the first of these arguments on the 
premises that an agency�s interpretation of its own regulations 
is given deference, and that the EPA has interpreted the SIL 
provisions so that permitting authorities retain discretion in 
applying the SILs. See Auer v. Robbins, 519 U.S. 452, 461 
(1997) (explaining that an agency�s interpretation of its own 
regulations is �controlling unless plainly erroneous or 
inconsistent with the regulation.�) (internal citations and 
quotation marks omitted). Although the first premise is true, 
the latter premise is contradicted by the EPA�s statements in 
its brief that the regulatory text it adopted does not give 
permitting authorities sufficient discretion to require a 
cumulative air quality analysis. That the EPA itself requests 
that we remand these provisions strongly argues that the 
current SIL provisions do not give permitting authorities 
sufficient discretion in applying the SILs. 

 

 The text of the SIL regulations as codified in the Code of 
Federal Regulations supports the EPA�s interpretation that the 
SILs do not allow a permitting authority sufficient discretion. 
Cf. Auer, 519 U.S. at 461 (opining that a critical phrase in the 
contested regulation �comfortably bears the meaning the 
[agency] assigns.�). Although 40 C.F.R. � 51.166(k)(2), 
which applies to SIPs, states that a plan �may provide� for the 
use of SILs to exempt a proposed source or modification from 
undertaking a cumulative air quality analysis, it does not give 
permitting authorities that implement the SILs discretion to 
require a cumulative air quality analysis for sources that are 


below the SIL, but could nevertheless cause a violation of the 
NAAQS or increment. And 40 C.F.R. � 52.21(k)(2), which 
applies to states without an approved SIP, goes even further 
and simply states that the demonstration required under 
� 165(a)(3) is deemed to have been made if a proposed source 
or modification�s air quality impact is below the SIL. 

 

 The UARG�s second argument, that remand is 
unnecessary because the EPA requires permitting authorities 
to address violations by revising their SIPs, also does not 
persuade us that we should deny the EPA�s request to remand 
its regulations on the PM2.5 SILs. The PSD provisions 
Congress enacted may not have specified how the owner or 
operator of a proposed source or modification must 
demonstrate compliance, but they do require demonstration 
that the source will not cause or contribute to a violation of 
the NAAQS or increment as a precondition to construction. 
See 42 U.S.C. � 7475(a)(3). As the Sierra Club notes, relying 
on permitting authorities to address violations, rather than to 
prevent violations by requiring demonstration that a proposed 
source or modification will not cause a violation, conflicts 
with this statutory command. 

 

 The UARG finally argues that if we remand the SIL 
regulations, we should not vacate the regulations, based on 
our holding in Fertilizer Institution v. EPA, 935 F.2d 1303 
(D.C. Cir. 1991), where we stated that �when equity demands, 
an unlawfully promulgated regulation can be left in place 
while the agency provides the proper procedural remedy.� Id. 
at 1312. According to the UARG, leaving the SIL provisions 
in place during the new rulemaking would cause no harm to 
air quality, while vacating the SIL provisions would have 
�disruptive consequences� for economic growth � i.e., by 
adding additional burdens to sources with de minimis impacts. 


Therefore, the UARG asserts that equity requires we do not 
vacate the SIL provisions. 

 

The UARG�s equitable argument does not persuade us. 
In Fertilizer Institution we left in place administrative 
exemptions the EPA adopted without providing adequate 
notice and comment, a procedural defect, while in this case 
the EPA has requested we vacate and remand the SILs 
because it did not have authority to promulgate such a broad 
exemption. See id. Because this is a substantive defect, and 
because the EPA explicitly requested we vacate and remand 
some of its SIL provisions, we will grant its request 
notwithstanding the UARG�s opposition. 

 

Although the EPA asks us to vacate and remand the parts 
of its rule codifying SILs at �� 51.166(k)(2) and 52.21(k)(2), 
it requests that we let the promulgation of SILs in 
� 51.165(b)(2) remain operative, emphasizing that the Sierra 
Club�s challenge of the EPA�s authority to promulgate SILs 
was directed only at the first two regulations. We agree that 
the parts of the EPA�s rule codifying SILs in � 51.165(b)(2) 
should remain. We are remanding the other regulations 
because they allow permitting authorities to automatically 
exempt sources with projected impacts below the SILs from 
having to make the demonstration required under 42 U.S.C. � 
7475(a)(3), even in situations where the demonstration may 
require a more comprehensive air quality analysis. These 
concerns, which are based on whether the EPA has authority 
to exempt those requirements, are not present in � 
51.165(b)(2), which simply states that a source may be 
deemed to violate the NAAQS if it exceeds the SILs in certain 
situations. Apparently, for that reason, the Sierra Club only 
addresses �