"D.C. Circuit Decision May Significantly Impact the Process for Obtaining Clean Air Act Permits"

by Skadden, Arps, Slate, Meagher & Flom LLP

In Sierra Club v. Environmental Protection Agency, 2013 U.S. App. LEXIS 1408 (D.C. Cir. Jan. 22, 2013), the District of Columbia Circuit Court of Appeals issued a decision that is likely to have a significant impact on parties seeking Prevention of Significant Deterioration (PSD) permits.1 The court held that the United States Environmental Protection Agency (EPA) did not have the legal authority to adopt exemptions that would allow permit applicants to avoid mandatory preapplication ambient air quality monitoring in connection with emissions of the pollutant PM2.52 if the impact of the source on ambient air quality is below the Significant Monitoring Concentration (SMC) adopted by EPA. The court also vacated and remanded to EPA regulations that deemed permit applicants in compliance with a modeling exercise known as a “source impact analysis” for PM2.5 emissions if the applicant could demonstrate that the impact of the proposed emissions from the facility itself are less than the Significant Impact Levels (SILs) for PM2.5.

Although the decision only directly affects certain regulations relating to PM2.5 emissions from proposed new or modified sources, the ruling could impact the requirements related to the permitting of other air pollutants, such as SO2, NO2 and PM10.

1. PSD Source Impact Analysis and Preapplication Monitoring Requirement

Section 165(a) of the Clean Air Act requires a person seeking a PSD permit to demonstrate that “emissions from construction or operation of such facility will not cause or contribute to … air pollution in excess of any (A) maximum allowable increase or maximum allowable concentration for any pollutant in any area to which this part applies more than one time per year [and] (B) national ambient quality standard in any air quality control region …” 40 U.S.C. §7475(a)(3).

Section 165(e)(1) requires as part of the demonstration “an analysis of the ambient air quality at the proposed site and in areas which may be affected by emissions for each pollutant subject to regulations under this chapter which will be emitted from such facility.” 42 U.S.C. §7475(e)(1). To put this into effect, EPA requires an applicant to demonstrate, for each pollutant emitted from the proposed source that is subject to the PSD requirement, that the allowable emissions from the proposed source, combined with other applicable emissions increases and reductions in the relevant geographic area, will not cause or contribute to air pollution that will exceed the “maximum allowable increase” of each pollutant (known as “increments”) or result in a violation of the NAAQS for such pollutants. This is known as the “source impact analysis.” 40 CFR 51.166(k) and 52.21(k).3 As part of the air quality analysis required for PSD permit applications, Section 165(e)(2) requires that a permit applicant gather continuous air quality monitoring data for a period of one year prior to the submittal of a PSD permit application. 42 U.S.C. §7475(e)(2).4 EPA’s regulations implementing the preapplication monitoring requirement are set forth at 40 CFR 51.166(m) and 52.21(m).

2. SILs and SMCs

EPA developed SILs and SMCs as screening mechanisms to identify those circumstances where it was reasonable to allow sources (and regulators) to avoid the time and expense associated with conducting source impact analyses and/or monitoring in connection with preparing and reviewing PSD permit applications.


SILs were originally promulgated to evaluate whether the emissions from a source locating in an attainment or unclassifiable area would be deemed to be causing or contributing to a NAAQS violation in an adjacent downwind area. A source exceeding a SIL would be required to reduce or offset emissions in order to obtain a permit. 40 CFR 51.165(b)(2) and (3). EPA adopted SILs for NO2, SO2, PM10 and CO for this purpose.

EPA had not, prior to the adoption of SILs for PM2.5, issued a regulation that would allow a source to forego a cumulative source impact analysis if the source demonstrated that its emissions would not result in an ambient air quality impact above a SIL, but EPA’s long-standing guidance authorized this approach. See 72 Fed. Reg. 54112, 54139 (Sept. 21, 2007) (proposed rule); New Source Review Workshop Manual, at C.24-C.25 (draft 1990).5

EPA adopted SILs for PM2.5 on October 20, 2010. 75 Fed. Reg. 64864. Separate standards were adopted for the annual and 24-hour PM2.5 NAAQS. The standards were further broken down to address modeled impacts on Class I, II or III areas. 40 CFR 51.166(k)(2) and 52.21(k)(2). EPA expressly stated that if a permit applicant demonstrated that the air quality impact from the new source or modification alone was below the SILs set forth in the regulation, the applicant will have been deemed to have satisfied its obligation to demonstrate that emissions from the new source or modification, in combination with other applicable emissions increases or reductions, would not cause or contribute to a violation of the PM2.5 NAAQS or exceed the PM2.5 increment. Id.

EPA’s rationale for this exemption was that it had legal authority to be flexible in applying Clean Air Act obligations to circumstances that were inconsequential or insignificant, pursuant to Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979). EPA considered “a source whose individual impact falls below a SIL to have a de minimis impact on air quality concentrations.” 72 Fed. Reg at 54139. As a result, it “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.” Id.


EPA’s PSD regulations provide that a regulatory authority may exempt a proposed stationary source or modification from the preapplication monitoring requirement for a particular pollutant if the emissions increase from the new source or net emissions increase from the modification would cause an ambient air quality impact less than de minimis amounts established in the regulations. 40 CFR 51.166 (i)(5)(i) and 52.21(i)(5)(i). A monitoring exemption for de minimis impacts from particular pollutants has been part of the regulatory scheme since 1980. 72 Fed. Reg. at 54141. The 2010 rule added a SMC for PM2.5.

EPA’s rationale for adopting SMCs was the same as its rationale for adopting SILs. EPA stated 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.

3. The Sierra Club Decision

A. The PM2.5 SILs Are Partially Vacated

The Sierra Club challenged the adoption of the SILs for PM2.5 on the ground that Section 165 of the Clean Air Act does not allow EPA to establish a de minimis exemption from the requirement that an applicant demonstrate that its proposed emissions would not cause or contribute to a violation of the PM2.5 NAAQS or an exceedance of the PM2.5 increments. The Sierra Club further argued that even if Section 165 “were not so extraordinarily rigid as to bar any de minimis exemption … pollution increases below the SILs are not so trivial as to be de minimis.” Sierra Club. 2-1 U.S. App. LEXIS 1408, at *12. Among other examples, the Sierra Club argued that in areas in which the ambient air concentration of PM2.5 is just meeting the NAAQS, the construction of a source of PM2.5 emissions whose modeled impact is below the SIL will still cause a violation of the NAAQS. Id. Similarly, a source with modeled impacts below the SIL that is constructed in an upwind state could contribute to worsening conditions in a downwind nonattainment area. Id at *13. EPA’s regulations would allow such sources to avoid demonstrating that their emissions would not cause or contribute to a violation of the NAAQSs or an increment. Id.

EPA did not concede that it lacked authority to promulgate SILs. However, EPA acknowledged in its brief that the codified SILs provisions were flawed because the text of the regulations was inconsistent with EPA’s intent, as explained in the preamble to the final rule, that “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.” Id. at *13-14 (quoting the preamble to the final regulations at 75 Fed. Reg. 64892). EPA recognized that the regulations did not provide permitting authorities with such discretion. Id. at *14. Accordingly, the court granted EPA’s request to vacate and remand the PM2.5 SILs regulations codified at 40 CFR 51.166(k)(2) and 52.21(k)(2).6 The court found that it was not necessary to reach the question of whether EPA had statutory authority to promulgate SILs because such a question was not ripe for adjudication. Id. at *15.

B. The SMC Is Vacated

The Sierra Club also argued that EPA did not have de minimis authority to promulgate a SMC for PM2.5. In finding in favor of the Sierra Club, the court declared that Section 165(e)(2) of the Clean Air Act was an “extraordinarily rigid mandate that a PSD permit applicant undertake preconstruction monitoring.” Id. at *25. The court stated that

Congress’s use of the word “shall” in each sentence [of Section 165(e)(2)] … evidences a clear legislative mandate that the preconstruction monitoring requirement applies to PSD permit applicants. That Congress provided only one exception to this monitoring requirement — a shorter monitoring period — suggests that the Congress did not intend any other exceptions.

Id. (underline added). The court noted that its interpretation was supported by the fact that Section 165(e)(2) requires that the results of the air quality analysis “be made available to the public at the time of the hearing for a PSD permit” and that this is consistent with one of the stated purposes of the PSD program, to allow for “adequate procedural opportunities for informed public participation in the decision making process.” Id. at *28-29 (quoting 42 USC § 7470(5)). Although EPA asserted a number of policy arguments in support of the monitoring exemption, the court stated that “the statute leaves no room for such exemptions …” Id. at *30.

EPA argued that as a threshold matter the Sierra Club’s challenge was time-barred “because the EPA has used SMCs as a screening tool since 1980.” Id. at *21. The court rejected this argument, holding that “by establishing a new monitoring exemption for a new pollutant, the EPA exposes its PM2.5 regulations, including whether it has authority to adopt the SMC exemption for PM2.5 and whether it used an appropriate method to determine the level of the SMC, to challenge by a timely filed petition.” Id. at *23.

4. What Happens Next

EPA has not said whether it will seek a rehearing en banc of the court’s decision vacating the SMC exemption or file a petition for certiorari to the Supreme Court, although neither course of action seems probable. EPA has already announced that it intends to issue new rules to address the court’s decision. This will at a minimum include a rule to address the voluntary remand of the rules that exempted applicants whose modeled emissions were below the SILs for PM2.5 from a cumulative source impacts analysis.

Where EPA is the permitting authority, PSD applicants will be required to include an analysis of ambient air quality based on preapplication monitoring data for PM2.5. This will add to the time, burden and expense of preparing such applications and will be a particular problem for applicants in areas that do not have existing ambient air quality monitors for this pollutant. EPA has announced, in a document posted to its website on February 6, 2013,77 that it is assessing the impact of the court’s decision on pending PSD permits that rely on the PM2.5 SILs and/or SMC. We are aware of at least one instance in which EPA is holding up for further review a permit that was on the verge of issuance.

EPA has not stated whether it also is reviewing pending permits that relied on SILs or SMCs for other pollutants. However, EPA’s use of SILs as a tool to exempt sources from conducting cumulative impact analyses for other pollutants was based on guidance and historic agency practice, not regulation. Therefore, pending permits that rely on modeled emissions showing that ambient air quality impacts from the source itself are below SILs for other pollutants also may be delayed pending EPA assessment of the effect of the court’s decision on such applications.

The regulations promulgated over 30 years ago that allow permit applicants to avoid collecting pre-application ambient air quality monitoring data for pollutants other than PM2.5, by demonstrating that their emissions are below a SMC, are still in effect following Sierra Club. However, EPA has stated that “given the court’s broadly stated holding that SMCs are not permissible, [it] is also assessing the decision’s impact on SMCs for other pollutants.”8 EPA may conclude that in order to ensure that its regulatory program is fully consistent with the Clean Air Act, it should amend its PSD regulations to eliminate the SMC exemption for other pollutants.

Under the “cooperative federalism” structure of the Clean Air Act, most permits to construct or operate air emissions sources, including PSD permits, are issued by state (or local) environmental regulators pursuant to state laws and regulations that have been approved by EPA and are incorporated into a state SIP. EPA has stated that “it is assessing the impact of the court’s decision on pending requests to approve state PSD rules containing the PM2.5 SILs and SMC” (emphasis added).9 EPA has not indicated what it intends to do about the use of SILs and/or SMCs that are already included in state SIPs for other pollutants subject to PSD permitting. For the time being, a permit applicant that demonstrates that its projected emissions will not exceed an applicable SMC (or SIL) should be able to rely on existing state or local regulations exempting it from preapplication ambient air quality monitoring (or cumulative impacts analysis).10 However, depending on the outcome of EPA’s review of SMCs and SILs for other pollutants, EPA could issue a “SIP call” requiring states to amend their SIPs to eliminate exemptions from monitoring and ambient air quality analyses based on SILs and SMCs.


1 PSD permits are major source air construction permits required for sources locating or located in an area that is classified as “attainment” or “unclassifiable” with the National Ambient Air Quality Standard (NAAQS) for a subject pollutant. Assuming other conditions are met, a pollutant is subject to the PSD requirements if the net emissions increase of the pollutant from the proposed new or modified source exceeds significance thresholds established in EPA or state regulations.

2 Particles less than 2.5 micrometers in diameter.

3 EPA’s regulations set forth at 51.166 establish the minimum requirements that must be included by states in State Implementation Plans (SIPs). The parallel regulations at 52.21 apply where EPA is the permitting authority.

4 Section 165(e)(2) allows a regulating authority to reduce the preapplication monitoring period if the regulator determines that this is sufficient for an adequate analysis. Id. EPA has established the minimum period for preapplication monitoring at four months. 40 CFR 51.166 (m)(1)(iv) and 52.21(m)(1)(iv).

5 See also In Re: Prairie State Generating Company, PSD Appeal No. 05-05 (EAB, Aug. 24, 2006) (discussing application and use of SILs in permitting decisions).

6 The court did not vacate the SILs provision in 40 CFR 51.165(b)(2) and (3) because the text of this regulation does not exempt a source from ambient air quality analysis; instead, this regulation affirmatively states that a source that exceeds a SIL in a downwind nonattainment area is deemed to have caused or contributed to a violation of the NAAQS (and must make changes to avoid this impact). Id. at *20. Moreover, EPA’s legal authority to promulgate this specific regulation was not challenged by the Sierra Club. Id. at *19.

7 http://www.epa.gov/airquality/nsr/documents/summ_court_020613.pdf (last checked on February 26, 2013).

7 Id.

9 Id.

10 Similar to EPA, states that relied on EPA’s guidance in using SILs as a screening tool to allow permit applicants to avoid cumulative impacts analysis (as opposed to implementing this mechanism through a regulation approved by EPA as part of its SIP) may be forced to consider the impact of Sierra Club on PSD permits that are currently pending.

Download PDF

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Skadden, Arps, Slate, Meagher & Flom LLP | Attorney Advertising

Written by:

Skadden, Arps, Slate, Meagher & Flom LLP

Skadden, Arps, Slate, Meagher & Flom LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.