Genon Rema, LLC v. United States Environmental Protection Agency

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-1022
_____________
GENON REMA, LLC,
Petitioner
v.
UNITED STATES ENVIRONMENTAL PROTECTION
AGENCY,
Respondent
___________
On Petition for Review of Final Agency Action
of the United States Environmental Protection Agency
(EPA-HQ-OAR-2011-0081)
____________
Argued March 18, 2013
Before: FUENTES, CHAGARES, and BARRY,
Circuit Judges
(Opinion Filed: July 12, 2013)
William M. Bumpers, Esq. [ARGUED]
Brook Detterman, Esq.
Debra J. Jezouit, Esq.
BAKER BOTTS L.L.P.
1299 Pennsylvania Ave., NW
Washington, D.C. 20004
Walter Stone, Esq.
GenOn Energy Inc.
601 13th Street, N.W.
Suite 850N
Washington, D.C. 20005
Counsel for Petitioner, GenOn REMA, LLC
George P. Sibley, III, Esq. [ARGUED]
HUNTON & WILLIAMS LLP
951 E. Byrd Street
Richmond, VA 23219
Andrea B. Field, Esq.
Elizabeth L. Horner, Esq.
HUNTON & WILLIAMS LLP
2200 Pennsylvania Avenue, N.W.
Washington, D.C. 20037
Counsel for Petitioner-Intervenor, Utility Air
Regulatory Group
Thomas A. Lorenzen, Esq.
U.S. Department of Justice
Environmental Enforcement Section
2
P.O. Box 7611
Washington, D.C. 20044
T. Monique Peoples, Esq. [ARGUED]
U.S. Department of Justice
Environmental Defense Section
Suite 8000
601 D. Street, N.W.
Washington, D.C. 20004
Stephanie L. Hogan, Esq.
Office of General Counsel (2344A)
United States Environmental Protection Agency
1200 Pennsylvania Ave., N.W.
Washington, D.C. 20460
Counsel for Respondent, United States Environmental
Protection Agency
Jon C. Martin, Esq.
Ruth E. Musetto, Esq. [ARGUED]
Lisa J. Morelli, Esq.
Office of Attorney General of New Jersey
Division of Law
Richard J. Hughes Justice Complex
P.O. Box 093
25 Market Street
Trenton, NJ 08625
Counsel for Respondent-Intervenor, State of New
Jersey
3
Joseph O. Minott, Esq.
Clean Air Council
135 South 19th Street, Suite 300
Philadelphia, PA 19103
Zachary M. Fabish, Esq. [ARGUED]
The Sierra Club
50 F Street NW, 8 th Floor
Washington, D.C. 20001
Counsel for Respondent-Intervenors, Greenpeace,
Clean Air Council and The Sierra Club
____________
OPINION OF THE COURT
____________
FUENTES, Circuit Judge:
Portland Generating Station (―Portland‖) is a 427-
megawatt, coal-fired, electricity generating plant located in
Upper Mount Bethel Township in Northampton County,
Pennsylvania. Portland is directly across the Delaware River
within 500 feet of Knowlton Township in Warren County,
New Jersey. The EPA has found that Portland emits sulfur
dioxide in amounts that significantly interfere with the control
of air pollution across state borders. Sulfur dioxide is a toxic
air pollutant that endangers life and health, causing burning of
the nose and throat, difficulty breathing, and obstruction of
4
the lungs and airways. 1 Because of its location, Portland‘s
sulfur dioxide emissions travel directly across the river into
areas of New Jersey. In response to a petition under the
Clean Air Act, the EPA issued a rule imposing direct limits
on Portland‘s emissions and a schedule of restrictions to
reduce its contribution to air pollution within three years.
GenOn REMA, LLC (―GenOn‖), the owner and operator of
Portland, challenges the EPA‘s rule as inconsistent with the
agency‘s authority under the Clean Air Act and as arbitrary
and capricious. We will uphold the rule and deny GenOn‘s
petition for review.
I. BACKGROUND
A. Statutory Background
The Clean Air Act authorizes the Environmental
Protection Agency (the ―EPA‖) to establish air quality
standards and empowers the states to achieve those standards.
Concerned Citizens of Bridesburg v. EPA, 836 F.2d 777, 779
(3d Cir. 1987) (internal citations omitted). This ―cooperative
federalism‖ structure is a defining feature of the statute.
Appalachian Power Co. v. EPA, 249 F.3d 1032, 1046 (D.C.
Cir. 2001). The Clean Air Act gives the EPA authority to
establish national ambient air quality standards (―NAAQS‖)
for certain pervasive air pollutants to protect public health and
welfare. 42 U.S.C. §§ 7408, 7409. Under Section 110 of the
1
See Sulfur Dioxide FAQS, AGENCY FOR TOXIC SUBSTANCES
AND DISEASE REGISTRY, (1999), http://www.atsdr.cdc.gov/
tfacts116.pdf.
5
Clean Air Act, states are required to implement NAAQS
through state implementation plans (―SIPs‖) that specify how
NAAQS will be achieved and maintained in the state. Id. §§
7407, 7410. States must adopt and submit SIPs to the EPA
that provide for the ―implementation, maintenance, and
enforcement‖ of NAAQS within their borders no later than
three years after the EPA promulgates a particular NAAQS.2
Id. § 7410(a)(1).
If the EPA approves the SIPs, they become
enforceable as federal law. Id. § 7413. If the EPA finds that
a SIP is inadequate to attain or maintain a NAAQS or
otherwise does not comply with the Clean Air Act, the EPA
issues a ―SIP call‖ requiring the state to submit a revised SIP
to correct the inadequacies. Id. § 7410(k)(5). The EPA may
also promulgate a Federal Implementation Plan (―FIP‖) to
establish direct federal controls on sources of air pollution if
the EPA disapproves a SIP in whole or in part, or finds that a
2
After the promulgation of a new or revised NAAQS, the
EPA designates a list of areas in each state that are in
―nonattainment,‖ ―attainment,‖ or ―unclassifiable‖ with the
NAAQS. 42 U.S.C. § 7407(d)(1)(B). An area designated as
in ―nonattainment‖ is one ―that does not meet (or contributes
to ambient air quality in a nearby area that does not meet)‖
the NAAQS for the pollutant. Id. § 7407(d)(1)(A)(i). An
area in ―attainment‖ meets the NAAQS for the pollutant. Id.
§ 7407(d)(1)(A)(ii). An area designated as ―unclassifiable‖ is
one that ―cannot be classified on the basis of available
information as meeting or not meeting‖ the NAAQS for the
pollutant. Id. § 7407(d)(1)(A)(iii).
6
state has failed to submit either a SIP or SIP revision. Id. §
7410(c).
Section 126(b) of the Clean Air Act allows downwind
states to petition the EPA for a finding that a source in an
upwind state affects the petitioning state‘s attainment or
maintenance of NAAQS due to air pollution emanating from
the source in the upwind state. See id. § 7426(b). Section
126(b) of the Clean Air Act provides:
Any State or political subdivision may petition
the [EPA] for a finding that any major source or
group of stationary sources emits or would emit
any air pollutant in violation of the prohibition
of section 7410(a)(2)(D)(ii) 3 of this title or this
section. Within 60 days after receipt of any
petition under this subsection and after public
hearing, the [EPA] shall make such a finding or
deny the petition.
Id.
3
The cross-reference to ―section 7410(a)(2)(D)(ii)‖ in Section
126(b) has been determined to be a scrivener‘s error and the
correct cross-reference in this provision is to Section
7410(a)(2)(D)(i) of the Clean Air Act. See Appalachian
Power Co. v. EPA, 249 F.3d 1032, 1040-44 (D.C. Cir. 2001).
We agree with this determination, and the parties do not
dispute it. Accordingly, we will refer to Section 126(b) of the
Clean Air Act as referencing Section 7410(a)(2)(D)(i) of the
Clean Air Act.
7
In turn, Section 7410(a)(2)(D)(i), also known as the
―good neighbor provision,‖ prohibits sources or emissions
activity within a state from emitting air pollutants in amounts
that will:
(I) contribute significantly to nonattainment in, or
interfere with maintenance by, any other State with
respect to any such national primary or secondary
ambient air quality standard, or
(II) interfere with measures required to be included in
the applicable implementation plan for any other State
. . . to prevent significant deterioration of air quality or
to protect visibility.
Id. § 7410(a)(2)(D)(i).
If the EPA finds, pursuant to a Section 126(b) petition,
that the upwind state is violating the good neighbor provision
of the Clean Air Act, the polluting source must cease
operations within three months of the EPA‘s finding. Id. §
7426(c). The EPA may, however, allow the source to
continue operations beyond three months if the source
―complies with such emission limitations and compliance
schedules (containing increments of progress)‖ as the EPA
deems necessary to reach the compliance requirements. Id.
B. NAAQS Regulating Sulfur Dioxide
Emissions
Sulfur dioxide, or SO2, is a ―highly reactive colorless
gas‖ that derives mainly from fossil fuel combustion. Am.
8
Lung Ass‘n v. EPA, 134 F.3d 388, 389 (D.C. Cir. 1998). It
smells like rotten eggs and causes acid rain at elevated
concentrations in the air. Id. The presence of sulfur dioxide
in the air creates adverse health effects, especially for people
with asthma. Id. On June 22, 2010, the EPA revised the
NAAQS that had previously regulated sulfur dioxide
emissions to enact stricter standards and ensure the continued
protection of public health with an ―adequate margin of
safety.‖ Primary National Ambient Air Quality Standard for
Sulfur Dioxide, 75 Fed. Reg. 35,520, 35,521 (June 22, 2010)
(to be codified at 40 C.F.R. pts. 50, 53, 58) (―1-hour SO2
NAAQS‖). Specifically, the EPA replaced the 24-hour and
the annual standards that had been in place with a new short-
term, more stringent standard that sets the level of sulfur
dioxide emissions at 75 ppb (parts per billion) per the hour.
Id. 1-hour SO2 NAAQS became effective on August 23,
2010. As part of the implementation process of the 1-hour
SO2 NAAQS, states are required to submit their SIPs by June
2013 and to achieve attainment, implementation,
maintenance, and enforcement of the NAAQS by August
2017. Id. at 35,577.
C. The New Jersey Department of
Environmental Protection’s Section 126(b)
Petition
On September 17, 2010, the State of New Jersey
Department of Environmental Protection (the ―NJ
Department‖) filed a petition under Section 126(b) of the
Clean Air Act, 42 U.S.C. § 7426(b), (the ―Section 126(b)
petition‖), requesting that the EPA issue an order restricting
sulfur dioxide emissions from Portland. Specifically, the NJ
Department requested that the EPA make a finding that the
9
trans-boundary sulfur dioxide emissions from the nearby
Portland plant significantly contribute to nonattainment
and/or interfere with maintenance of the 1-hour SO2 NAAQS
in New Jersey. In support of its petition, the NJ Department
submitted air quality and aerial dispersion modeling analyses4
to show that emissions from Portland cause violations of the
1-hour SO2 NAAQS in Warren, Sussex, Morris, and
Hunterdon Counties in New Jersey.
On April 7, 2011, the EPA published a proposed
response to the NJ Department‘s Section 126(b) petition,
finding that sulfur dioxide emissions from Portland violate
the interstate air pollution transport provisions of the Clean
Air Act and suggesting emissions limitations and compliance
schedules to remedy the problem. See Response to Petition
from New Jersey Regarding SO2 Emissions from the Portland
Generating Station, 76 Fed. Reg. 19,662 (Apr. 7, 2011) (to be
codified at 40 C.F.R. pt. 52) (―Proposed Rule‖). The EPA
invited public comments on the Proposed Rule and
4
Dispersion modeling simulates air pollutant emissions as
they are carried throughout the atmosphere. These models
replicate the conditions of the atmosphere, providing ―an
estimate of the concentration of pollutants as they travel away
from an emission source‖ and can be used ―to determine
whether a new source will adversely impact an area or to
predict whether the control of an individual source will have a
beneficial effect.‖ Dispersion Modeling , AIR QUALITY
MANAGEMENT ONLINE PORTAL, EPA,
http://www.epa.gov/oaqps001/aqmportal/management/modeli
ng/dispersion.htm (last visited June 19, 2013).
10
announced a public hearing to be held on April 27, 2011 in
Warren County, New Jersey. The EPA received numerous
public comments from inter alia, individuals, government
officials, environmental groups, the Pennsylvania Department
of Environmental Protection, the NJ Department, GenOn, and
the American Lung Association of the Mid-Atlantic. Many
of these comments favored the Proposed Rule. The
Pennsylvania Department of Environmental Protection
submitted a comment in which it acknowledged that residents
of Pennsylvania would realize public health and
environmental benefits from a reduction in sulfur dioxide
emissions but suggested some alterations to the proposed
compliance schedule.
On November 7, 2011, the EPA issued its final rule
granting the NJ Department‘s Section 126(b) petition, which
finds that Portland‘s sulfur dioxide emissions significantly
contribute to nonattainment and interfere with maintenance of
the 1-hour SO2 NAAQS in New Jersey. See Final Response
to Petition from New Jersey Regarding SO2 Emissions from
the Portland Generating Station, 76 Fed. Reg. 69,052, 69,053
(Nov. 7, 2011) (to be codified at 40 C.F.R. pt. 52) (―Portland
Rule‖). The EPA authorized the continued operation of
Portland but imposed emissions limits and compliance
schedules to bring Portland into compliance as expeditiously
as practicable.
The EPA based its finding on a review of the NJ
Department‘s air quality modeling, its independent
assessment of the American Meteorological
Society/Environmental Protection Agency Regulatory Model
(AERMOD) dispersion modeling, and other highly technical
analyses. Portland Rule, 76 Fed. Reg. at 69,053. The
11
Portland Rule requires Portland to reduce its sulfur dioxide
emissions by approximately 81% at its two coal-fired
generating units within three years of the rule‘s effective date
and to adhere to interim sulfur dioxide emissions limits to
ensure that Portland demonstrates the requisite increments of
progress towards achieving final compliance. Portland Rule,
76 Fed. Reg. at 69,053, 69,064.
GenOn petitioned for our review of the Portland Rule,
challenging the EPA‘s authority to impose direct regulations
on Portland before the time that Pennsylvania is required to
complete its Section 110 SIP process for the 1-hour SO2
NAAQS. GenOn contends that this action offends the
cooperative federalism structure of the Clean Air Act by
undermining a state‘s power to determine how to achieve air
control standards.
II. ANALYSIS
This Court has jurisdiction pursuant to Section
307(b)(1) of the Clean Air Act, which allows us to review a
final EPA action that is locally or regionally applicable within
our Circuit. 42 U.S.C. § 7607(b)(1); see Harrison v. PPG
Indus., Inc., 446 U.S. 578, 584-94 (1980); W. Penn Power
Co. v. EPA, 860 F.2d 581, 584 (3d Cir. 1988). Because the
Portland Rule affects a facility located in the Commonwealth
of Pennsylvania and its repercussions affect counties in the
State of New Jersey, we have jurisdiction to review this
matter. Although Section L of the Portland Rule, entitled
―Judicial Review,‖ indicates that petitions for review must be
filed in the D.C. Circuit, the parties agree that this was noted
in error. Jurisdiction in the D.C. Circuit is appropriate only
for specifically enumerated EPA actions and for regulations
12
with national scope or impact. Id. The Portland Rule neither
fits into the enumerated EPA actions nor is of nationwide
scope or effect that would make jurisdiction in the D.C.
Circuit proper.
We are asked to consider whether the prohibition
against transmitting interstate air pollutants that is referenced
in Section 126(b) relates to emissions limitations that are
specifically contained in the Section 110 SIP of the upwind
state or, more generally, to all interstate air pollution. GenOn
and the Utility Air Regulatory Group (―UARG‖), 5 contending
the former, view the Section 126(b) petition process as
expressly linked to the SIP requirement of Section
110(a)(2)(D)(i), arguing that there can be no valid Section
126(b) petition until Pennsylvania is afforded an opportunity
to establish its SIP for the 1-hour SO2 NAAQS and has failed
to do so. The EPA, however, agrees with the latter approach,
claiming that it can make a finding on a Section 126(b)
petition without regard to the Section 110 SIP process.
We follow the Chevron two-step framework when
reviewing an administrative agency‘s construction of a
statute. Hagans v. Comm‘r of Soc. Sec., 694 F.3d 287, 294
(3d Cir. 2012). If the statute is clear, we give effect to the
unambiguous expressed intent of Congress. De Leon–Ochoa
v. Att‘y Gen. of U.S., 622 F.3d 341, 348 (3d Cir. 2010)
(citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 842-43 (1984)). However, if the statute is
5
UARG has submitted an amicus brief in support of GenOn
as petitioner-intervenor.
13
silent or ambiguous regarding a specific issue, we move to
step two and give deference to the implementing agency‘s
reasonable construction of the statute. Id.
A. Chevron Step One
We begin by determining whether Congress has
―unambiguously expressed [its] intent‖ by examining the
―plain‖ and ―literal‖ language of the statute. United States v.
Geiser, 527 F.3d 288, 294 (3d Cir. 2008) (internal citations
omitted). ―To determine whether the statutory language is
ambiguous, we must examine ‗the language itself, the specific
context in which that language is used, and the broader
context of the statute as a whole.‘‖ Rosenberg v. XM
Ventures, 274 F.3d 137, 141 (3d Cir. 2001) (internal citations
omitted). We ―must not be guided by a single sentence or
member of a sentence, but look to the provisions of the whole
law, and to its object and policy.‖ Prestol Espinal v. Att‘y
Gen. of U.S., 653 F.3d 213, 217 (3d Cir. 2011) (internal
citations and quotations omitted).
The operative language of Clean Air Act Section
126(b) is that a petition under this section may be granted
when a major source or group of stationary sources emits air
pollutants ―in violation of the prohibition of section
7410(a)(2)(D)[(i)].‖ 42 U.S.C. § 7426(b). The language of
Section 7410(a)(2)(D)(i) states that each SIP for primary or
secondary NAAQS ―shall contain adequate provisions
prohibiting . . . emissions activity within the [s]tate from . . .
contribut[ing] significantly to nonattainment in, or
interfer[ing] with maintenance by, any other [s]tate‖ with
respect to such NAAQs or ―interfer[ing] with measures
required to be included in the applicable [SIP] for any other
14
[s]tate . . . to prevent significant deterioration of air quality or
to protect visibility.‖ Id. § 7410(a)(2)(D)(i).
While GenOn contends that the ―prohibition‖ refers to
a violation of an emissions limitation specific to the Section
110 SIP of the upwind state, its argument fails to take into
account the entirety of the statutory scheme. When we
consider the applicable language of the Clean Air Act in light
of the overall statute and its interplay with other related
sections, we conclude that the relevant language of the statute
is unambiguous.
Section 126(b) contains no temporal limitation on a
state‘s right to petition the EPA. This section obligates the
EPA to grant or deny a Section 126(b) petition ―[w]ithin 60
days after receipt . . . and after public hearing.‖ Id. § 7426(b).
This language demonstrates that the EPA must act quickly on
a Section 126(b) petition—and not wait the potential several
years that it would take for states to fully adopt SIPs
implementing new NAAQS. As the EPA has correctly
expressed, ―nothing in the statutory language in section 126
prohibits a downwind state from filing a section 126 petition
until after an upwind state, in which the source or sources are
located, has submitted, or is required to submit, a section
110(a)(2)(D) SIP to the EPA for approval.‖ Portland Rule, 76
Fed. Reg. at 69,055. We also agree with the EPA that there is
no indication anywhere in the text of Section 126 that a
Section 126(b) petition is conditional upon the initiation or
completion of the SIP process. If such a condition were
present, Section 126(b) petitions could stand still for several
years until the SIP relating to a new NAAQS is adopted by a
state, approved by the EPA, and all necessary revisions to it
have been made. Such a result violates the statute‘s
15
requirement that the EPA act on Section 126(b) petitions
within sixty days.
The language of Section 126(c) also supports our view.
This section provides that it ―shall be a violation of this
section and the applicable implementation plan in such State .
. . for any major existing source to operate more than three
months after such [Section 126(b)] finding has been made
with respect to it.‖ 42 U.S.C. 7426(c) (emphasis added). We
agree with the EPA that the underlined language would serve
no purpose if we were to adopt GenOn‘s view since there
would have been no need for Congress to separately state
under Section 126(c) that a Section 126(b) finding constitutes
a SIP violation if operation of the polluting source continues.
―It is a cardinal principle of statutory construction that a
statute ought, upon the whole, to be so construed that, if it can
be prevented, no clause, sentence, or word shall be
superfluous, void, or insignificant.‖ TRW Inc. v. Andrews,
534 U.S. 19, 31 (2001) (internal citations and quotations
omitted).
Our conclusion that the language of the statute is
unambiguous is also supported by the D.C. Circuit‘s
examination of three specific provisions of Section 126(b) in
Appalachian Power Co. v. EPA, 249 F.3d 1032 (D.C. Cir.
2001). In Appalachian, several states submitted Section
126(b) petitions requesting that the EPA regulate sources
emitting nitrogen oxide that contributed significantly to
downwind air pollution in those states. Id. at 1036-37. The
EPA ultimately issued a rule under Section 126(b) requiring
upwind sources to conform to certain emissions limits and
engage in an emissions trading program. Id. at 1039. At the
time that the EPA issued this rule, the upwind states were also
16
subject to an ongoing Section 110 nitrogen oxide SIP call
previously issued by the EPA, requiring deadlines by which
these states had to revise their SIPs to comply with nitrogen
oxide emissions reductions. Id. at 1037-38. Certain
petitioners contested the EPA‘s Section 126(b) rule and,
specifically, the EPA‘s interpretation of the interplay between
Sections 110 and 126(b) of the Clean Air Act. Id. at 1045-46.
The petitioners contended that Sections 110 and 126(b)
prevented the EPA from making any Section 126(b) findings
while the nitrogen oxide SIP call was ongoing because
allowing the EPA to act in these circumstances would amount
to a violation of the ―cooperative federalism‖ structure of the
Clean Air Act that gives states primary responsibility to
address interstate transport in the first instance. Id. The D.C.
Circuit rejected this argument. Recognizing that states indeed
retain the power under Section 110 to determine how to
achieve NAAQS and that the EPA may not ―dictate‖ to a state
a specific means to do so, the D.C. Circuit held that ―this
principle . . . cannot be absolute in the face of § 126, which
contemplates that in at least some circumstances the EPA will
directly regulate sources within a state.‖ Id. at 1046.
The court in Appalachian reasoned that ―three critical
provisions of § 126 would lose their force if, as the petitioners
suggest, the lengthened timetable of the nitrogen oxide SIP
call were to suspend the § 126 process.‖ Id. at 1047. First,
Section 126‘s requirement that a source contributing to
downwind nonattainment may not operate for more than three
years after such finding would be eliminated if the EPA had
to wait for completion of the SIP process to make Section 126
findings. Id. The second reason is that Section 126 provides
for relief independent of any action by the upwind state, while
a SIP revision requires action from that state. Id. Third,
17
relief under Section 126, unlike SIP calls, is independent of
the discretionary policy preferences of the EPA since it must
act on a petition within sixty days. Id. These provisions
support our view that the statute unambiguously allows the
EPA to make a Section 126 finding independently of the
Section 110 SIP process.
In response to the petitioners‘ argument that the EPA‘s
construction would effectively deprive Section 110 of its
force by binding states to emissions limits set by the EPA and
not by their own SIP, the court in Appalachian responded that
it has never been suggested that under Section 110, states may
―develop their plans free of extrinsic legal constraints.‖ Id.
―SIP development, like any environmental planning process,
commonly involves decisionmaking subject to various legal
constraints. That § 126 imposes one such limitation—and it is
surely not the only independent provision of federal law to do
so—does not affect a state‘s discretion under § 110.‖ Id.
This line of reasoning supports our conclusion that the
language of the Clean Air Act regarding the interplay of
Section 126(b) and Section 110 is unambiguous. The plain
language of the relevant portions of the statute and the
context in which such language is used convey that Congress
intended Section 126(b) as a means for the EPA to take
immediate action when downwind states are affected by air
pollution from upwind sources. Any other interpretation
would defeat the underlying objective of the Section 126(b)
petition process. For these reasons, we conclude that the
plain language of the statute is unambiguous and supports the
EPA‘s issuance of the Portland Rule.
18
Given the novelty of the issue before us, we find it
appropriate to engage in an ―in the alternative‖ analysis where
we conduct step two of Chevron to determine whether the
EPA has reasonably construed the statute. See Pennsylvania
Dep‘t of Pub. Welfare v. U.S. Dep‘t. of Health & Human
Servs., 647 F.3d 506, 512 (3d Cir. 2011) (conducting the
second step of the Chevron analysis even after finding the
statute unambiguous). Even if the relevant language of the
Clean Air Act were deemed ambiguous, we still find that the
EPA‘s action was proper.
B. Chevron Step Two
Under step two of the Chevron framework, we
consider whether the EPA‘s interpretation is reasonable in
light of the language, policies, and legislative history of the
Clean Air Act. United States v. Riverside Bayview Homes,
Inc., 474 U.S. 121, 131 (1985). While GenOn and UARG
argue that the Clean Air Act‘s legislative history emphasizes
the concept of cooperative federalism, including states‘
primary responsibility in implementing regulations
promulgated by the EPA, this view is not dispositive to our
determination of reasonableness. We neither disagree that the
Clean Air Act is structured on cooperative federalism nor
seek to minimize the essential role that the states play in this
process. Rather, we believe that reliance on the Clean Air
Act‘s legislative history that promotes the concept of
cooperative federalism does not assist us in examining the
rationale behind the enactment of Section 126(b) itself.
Congress enacted Section 126(b) as part of the Clean
Air Act Amendments of 1977. Pub. L. No. 95-95, 91 Stat.
685, § 123 (1977). In a report accompanying its version of
19
the bill, the House of Representatives recognized that the law
prior to 1977 had inadequately addressed the problem of
interstate air pollution and that an effective program must rely
on the state that actually receives the pollution and has an
―incentive and need to act.‖ H.R. REP. NO. 95-294, at 330
(1977), reprinted in 4 1977 LEGISLATIVE HISTORY OF THE
CLEAN AIR ACT AMENDMENTS OF 1977, at 2797. The House
of Representatives report states that Section 126(b) would
remedy this problem so that any state could petition the EPA
for a finding that ―any new, modified, or existing stationary
source in any other [s]tate is (or would be) emitting pollutants
which cause or contribute to impermissible interstate air
pollution.‖ Id. In doing so, the House of Representatives
acknowledged that the Section 126 mechanism would be a
separate and alternative method for states to address interstate
air pollution. Id. at 331.
[A Section 126] petition process is intended to
expedite, not delay, resolution of interstate
pollution conflicts. . . . [T]he committee intends
to create a second and entirely alternative method
and basis for preventing and abating interstate
pollution. The existing provision prohibiting any
stationary source from causing or contributing to
air pollution which interferes with timely
attainment or maintenance or a national ambient
air standard (or a prevention of significant
deteriorating or visibility protection plan) in
another State is retained. A new provision
prohibiting any source from emitting any
pollutant after the Administrator has made the
requisite finding and granted the petition is an
20
independent basis for controlling interstate air
pollution.
Id. (emphasis added).
Additionally, the House of Representatives report
indicated that an effective program addressing the problem of
interstate air pollution ―must include a Federal mechanism for
resolving disputes which cannot be decided through
cooperation and consultation between the States or persons
involved.‖ Id. at 330.
A report of the Senate Committee on Environment and
Public Works accompanying the 1977 Clean Air Act
amendments similarly explained that the previous structure
that had been in place to address interstate pollution created a
disadvantage for states that had stricter air pollution control
requirements. S. REP. NO. 95-127, at 42 (1977), reprinted in
3 1977 LEGISLATIVE HISTORY OF THE C LEAN AIR ACT
AMENDMENTS OF 1977, at 1415. The Senate Committee
offered the example of the State of Ohio, which, despite being
ordered by the 1970 amendments to the Clean Air Act to
implement a plan to reduce emissions that would interfere
with air quality standards, had not done so by 1976. Id. at 41-
42. This situation caused emissions from plants in Ohio to be
transported across the Ohio River to West Virginia, which
was forced to cope with pollution ―not generated by a source
under its own control; [requiring] more stringent control of
West Virginia sources to attain the ambient air quality
standards.‖ Id. at 42. The Committee concluded:
In the absence of interstate abatement
procedures, those plants in States with more
stringent control requirements are at a distinct
21
economic and competitive disadvantage.
[Section 126(b)] is intended to equalize the
positions of the States with respect to interstate
pollution by making a source at least as
responsible for polluting another State as it
would be for polluting its own State.
Id.
This legislative history demonstrates that Congress
viewed the Federal government as continuing to play an
essential role in the fight against interstate pollution despite
the fact that the states are the primary actors for implementing
NAAQS and formulating SIPs. Congress recognized the
importance of ensuring that the Federal government maintain
its role in managing interstate air pollution, as the entity that
―can and must provide the technical information and
enforcement assistance that States and localities need.‖ Id. at
10. Thus, we conclude that Section 126(b) was intended to
allow the EPA, as a federal regulator, to intervene when states
fail to adhere to the air pollution control process. This
interpretation supports the EPA‘s construction of the statute.
Existing case law also supports the notion that the EPA
has reasonably construed the statute. In New York v. EPA,
852 F.2d 574 (D.C. Cir. 1988), the D.C. Circuit interpreted a
Section 126(b) petition to not obligate the EPA to review
existing SIPs as part of the EPA‘s Section 126(b)
enforcement process, as the ―language of §126(b) is quite
specific and focuses on ‗major sources,‘ not the validity of a
state‘s SIP.‖ Id. at 578. This case supports the idea that the
―prohibition‖ referred to in Section 126(b) is not dependent
22
on a standard established in a SIP that has already been
approved or is in the process of being revised.
Similarly, in Connecticut v. EPA, 656 F.2d 902, 907
(2d Cir. 1981), the Second Circuit held that where a state files
a Section 126(b) petition to challenge a proposed SIP revision
of a neighboring state, completion of the Section 126(b)
procedure is ―not a prerequisite to EPA approval‖ of the SIP
revision. Although it recognized that Sections 126(b) and
110 call for the same substantive inquiry, the court held that
the two provisions are intended to be used in differing
procedural settings and that one need not be a prerequisite to
another. Id. at 907-08. Although the court also held that
Section 126(b) ―appears to have been primarily designed as a
means for resolving interstate pollution disputes in situations
where [a] SIP is not being revised,‖ id. at 907 (emphasis
added), we believe that the court was merely stating the
primary intent of Section 126(b) and not necessarily its full
scope and extent.
GenOn and UARG rely on EME Homer City
Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), cert.
granted, 570 U.S. __ (2013) for support, where the D.C.
Circuit found that the EPA had exceeded its authority by
issuing FIPs without first giving states the opportunity to
implement the required reductions through SIPs or SIP
revisions. Id. at 28-30. However, far from helping GenOn
and UARG, language in this case actually supports the EPA‘s
construction of the statute. See EME Homer, 696 F. 3d at 34
(stating that Section 126 is ―a separate provision [from
Section 110] that explicitly contemplates direct EPA
regulation of specific sources that generate interstate
pollution.‖).
23
The foregoing examination of the Clean Air Act‘s
legislative history and applicable legal precedent support our
finding that the EPA‘s construction of the statute is both
permissible and reasonable so as to merit our deference under
Chevron. For these reasons, we will deny the petition for
review of the Portland Rule.
C. The EPA’s Prior Interpretation of Section
126(b)
GenOn and UARG also argue that the EPA‘s prior
interpretation of the meaning of the ―prohibition‖ referenced
in Section 126(b) related to a SIP‘s failure to address
interstate nonattainment and ran contrary to the EPA‘s current
position. GenOn and UARG cite the EPA‘s issuance of a
final rule in May 1999 governing ozone transport (the ―May
1999 Rule‖), where the EPA stated that it ―interprets Section
126 to provide that a source is emitting in violation of the
prohibition of section 110(a)(2)(D)(i) where the applicable
SIP fails to prohibit . . . a quantity of emissions from that
source that [the] EPA has determined contributes significantly
to nonattainment or interferes with maintenance in a
downwind state.‖ Findings of Significant Contribution and
Rulemaking on Section 126 Petitions for Purposes of
Reducing Interstate Ozone Transport, 64 Fed. Reg. 28,250,
28,272 (May 25, 1999) (emphasis added).
The May 1999 Rule is not necessarily inconsistent
with the EPA‘s current position. As part of the Portland
rulemaking process, the EPA responded to this alleged
inconsistency by noting that the May 1999 Rule was
24
prompted by an EPA determination that the elimination of
excessive trans-boundary emissions would be obtained
through a pending SIP call that was in play. Unlike the
circumstances surrounding the issuance of the May 1999
Rule, there is no guarantee that an imminent SIP submission
will manage the interstate sulfur dioxide transport problem
stemming from Portland within the three-year time period
required by Section 126. Therefore, immediate action under
Section 126(b) is warranted in this case because no other
mechanism, such as a pending SIP call, exists in these
circumstances that would remedy the Portland problem.
Even if the May 1999 Rule is deemed inconsistent
with the EPA‘s current interpretation, it does not undermine
our decision to grant Chevron deference to the EPA‘s action.
See generally Smiley v. Citibank, 517 U.S. 735, 742 (1996).
A revised agency interpretation is still worthy of Chevron
deference because ―[a]n initial agency interpretation is not
instantly carved in stone and the agency, to engage in
informed rulemaking, must consider varying interpretations
and the wisdom of its policy on a continuing basis.‖ Rust v.
Sullivan, 500 U.S. 173, 186 (1991) (internal quotations
omitted) (citing Chevron, 467 U.S. at 863-64). The EPA is
not forever held to its prior interpretations, as the continued
validity and appropriateness of the agency‘s rules is an
evolving process. For these reasons, we hold that the
existence of a prior conflicting EPA interpretation does not
have the effect of rendering the agency‘s current construction
of the statute unreasonable in these circumstances.
D. Whether the Portland Rule is Arbitrary,
Capricious, or Abusive of the EPA’s
Discretion
25
Lastly, GenOn contends that the Portland Rule is
arbitrary and capricious because it requires a reduction in
sulfur dioxide emissions at Portland before requiring similar
reductions from sources in New Jersey and prior to the time
that SIPs addressing the new NAAQS are required. GenOn
argues that it is arbitrary and capricious to require a single
facility to address out-of-state nonattainment issues before
other facilities are required to address the same problems.
We review the contents of the EPA‘s Portland Rule to
determine whether it is ―arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law.‖ 42
U.S.C. § 7607(d)(9)(A); North Carolina v. EPA, 531 F.3d
896, 906 (D.C. Cir. 2008). This is a narrow standard of
review in which a court cannot substitute its judgment for that
of the agency. Motor Vehicle Mfrs. Ass‘n v. State Farm Mut.
Auto Ins. Co., 463 U.S. 29, 42-43 (1983). In reviewing
agency action, we must ensure that, in reaching its decision,
the agency ―examined the relevant data and articulated a
satisfactory explanation for its action, including a rational
connection between the facts found and the choice made.‖
Prometheus Radio Proj. v. FCC, 373 F.3d 372, 389-90 (3d
Cir. 2004) (internal quotations omitted). Therefore, our
review of an administrative agency‘s action is highly
deferential, especially in the context of reviewing a federal
agency‘s scientific determinations. New Jersey Envtl. Fed‘n
v. U.S. Nuclear Regulatory Comm‘n, 645 F.3d 220, 228 (3d
Cir. 2011).
Here, the Portland Rule was issued pursuant to the
EPA‘s authority to find that ―any major source or group of
stationary sources‖ is emitting air pollution that violates
26
interstate pollution controls. 42 U.S.C. § 7426(b) (emphasis
added). This language clearly dictates that direct federal
regulation of a single source or facility is justified when the
EPA makes a Section 126(b) finding. Once the EPA
independently determined that Portland was contributing to
nonattainment and interfering with New Jersey‘s air quality, it
reasonably abided by the Clean Air Act in enacting the
Portland Rule to require emissions reductions ―as
expeditiously as practicable, but in no case later than three
years after the date of such finding.‖ Id. § 7426(c). We find
nothing arbitrary, capricious, or abusive about the EPA‘s
discretion in imposing emissions reductions on a single
source like Portland.
Further, we are satisfied after a review of the record
that the EPA thoroughly examined the relevant scientific data
and clearly articulated a ―satisfactory explanation for its
action, including a rational connection between the facts
found and the choice made.‖ Prometheus Radio, 373 F.3d at
389-90 (internal quotations omitted). The EPA examined the
dispersion modeling results that New Jersey submitted with
its Section 126(b) petition to show that emissions from
Portland alone caused downwind violations of the 1-hour SO2
NAAQS in New Jersey. Portland Rule, 76 Fed. Reg. at
69,057-59. The EPA also conducted its own modeling results
and, in doing so, considered various components such as
model selection and meteorological data, which supported its
conclusion that the imposition of emissions limits on Portland
would address New Jersey‘s nonattainment issues. Id. at
69,059-63. The portions of the EPA‘s Portland Rule that
describe its methodology for the establishment of emissions
limits and the increments of progress are extensive and well-
documented. The EPA carefully calculated the emissions
27
reductions that were needed to eliminate Portland‘s
contribution to nonattainment in New Jersey; the technical
and economic feasibility of the emissions limits; and the
appropriateness of imposing interim emissions limits towards
achieving the final remedy. 6 Portland Rule, 76 Fed. Reg. at
69,063-75.
Moreover, the EPA published a proposed response to
New Jersey‘s Section 126 petition on April 7, 2011.
Proposed Rule, 76 Fed. Reg. at 19,662. The EPA solicited
and received many public comments, and considered such
comments during the course of conducting its findings. The
EPA‘s responses to these public comments further elaborate
the underlying technical details and justifications for its final
plan of action, including the imposition of emission limits and
the timing required for the changes. In the final Portland
Rule, the EPA provided a thorough summary of the
―significant changes‖ that it made since its initial proposal,
6
Section 126(c) of the Clean Air Act gives the EPA authority
to include ―increments of progress‖ in the emissions
limitations and compliance schedules required for a source
subject to a Section 126(b) finding to continue operating
beyond three months after such finding. 42 U.S.C. § 7426(c).
Although ―increments of progress‖ is not defined in the
statute, it can only be interpreted to mean interim measures in
the context of the emission limitations and compliance
schedules. In any event, GenOn offers nothing to undermine
the reasonableness of this interpretation of ―increments of
progress.‖ Therefore, it is accorded deference under
Chevron.
28
demonstrating that it took all suggestions into consideration
to establish an effective remedy. Portland Rule, 76 Fed. Reg.
at 69,053.
Based on the foregoing, the EPA set forth ample
support that explains its rationale in promulgating the
Portland Rule, establishing a rational connection between the
facts that it found and the choice that it made. For these
reasons, we hold that the EPA‘s action of promulgating the
Portland Rule was neither an abuse of discretion nor arbitrary
or capricious.
III. CONCLUSION
For the foregoing reasons, we will uphold the EPA‘s
Portland Rule and deny the petition for review. We hold that
it was reasonable for the EPA to interpret Section 126(b) to
be an independent mechanism for enforcing interstate
pollution control, thereby giving it authority to promulgate
the Portland Rule. We also hold that the contents of the
Portland Rule are not arbitrary, capricious, or abusive of the
EPA‘s discretion.
29