St NY v. EPA

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 8, 2006 Decided March 17, 2006
No. 03-1380
STATE OF NEW YORK, ET AL.,
PETITIONERS
v.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
CLEAN AIR IMPLEMENTATION PROJECT, ET AL.,
INTERVENORS
Consolidated with Nos.
03-1381, 03-1383, 03-1390, 03-1402, 03-1453, 03-1454,
04-1029, 04-1035, 04-1064, 05-1234, 05-1287
On Petitions for Review of Final Actions of the
Environmental Protection Agency
J. Jared Snyder, Assistant Attorney General, Attorney
General’s Office of the State of New York, argued the cause for
2
Government Petitioners. With him on the briefs were Eliot
Spitzer, Attorney General, Peter Lehner and Michael J. Myers,
Assistant Attorneys General, Bill Lockyer, Attorney General,
Attorney General’s Office of the State of California, Matthew J.
Goldman, Deputy Attorney General, Richard Blumenthal,
Attorney General, Attorney General’s Office of the State of
Connecticut, Kimberly Massicotte and Matthew Levine,
Assistant Attorneys General, M. Jane Brady, Attorney General,
Attorney General’s Office of the State of Delaware, Valerie S.
Csizmadia, Deputy Attorney General, Lisa Madigan, Attorney
General, Attorney General’s Office of the State of Illinois,
Thomas Davis, Chief, G. Steven Rowe, Attorney General,
Attorney General’s Office of the State of Maine, Gerald D.
Reid, Assistant Attorney General, J. Joseph Curran, Jr.,
Attorney General, Attorney General’s Office of the State of
Maryland, Kathy M. Kinsey, Assistant Attorney General,
Thomas F. Reilly, Attorney General, Attorney General’s Office
of the Commonwealth of Massachusetts, James R. Milkey,
Assistant Attorney General, Kelly A. Ayotte, Attorney General,
Attorney General’s Office of the State of New Hampshire,
Maureen D. Smith, Senior Assistant Attorney General, Peter C.
Harvey, Attorney General, Attorney General’s Office of the
State of New Jersey, Stephanie Brand, Kevin Auerbacher, Jean
Reilly, and Ruth Carter, Assistant Attorneys General, Patricia
A. Madrid, Attorney General, Attorney General’s Office of the
State of New Mexico, Tracy M. Hughes, General Counsel,
Robert A. Reiley, Assistant Counsel, Commonwealth of
Pennsylvania, Department of Environmental Protection, Patrick
C. Lynch, Attorney General, Attorney General’s Office of the
State of Rhode Island, Tricia K. Jedele, Special Assistant
Attorney General, William H. Sorrell, Attorney General,
Attorney General’s Office of the State of Vermont, Erick Titrud
and Kevin O. Leske, Assistant Attorneys General, Peggy A.
Lautenschlager, Attorney General, Attorney General’s Office of
the State of Wisconsin, Thomas L. Dosch, Assistant Attorney
3
General, Robert J. Spagnoletti, Attorney General, Attorney
General’s Office of the District of Columbia, Edward E.
Schwab, Deputy Attorney General, Donna M. Murasky, Senior
Litigation Counsel, Barbara Baird, District Counsel, South
Coast Air Quality Management District, Daniel C. Esty,
Christopher P. McCormack, Christopher G. King, Assistant
Corporation Counsel, City of New York, Kristine Poplawski,
Deputy City Attorney, City and County of San Francisco. John
V. Dorsey, Assistant Attorney General, Attorney General’s
Office of the State of Maryland, William L. Pardee, Assistant
Attorney General, Attorney General’s Office of the
Commonwealth of Massachusetts, Eric Ames and J. Brent
Moore, Attorneys, Attorney General’s Office of the State of
New Mexico, and Lisa S. Gelb, Counsel, City and County of San
Francisco, entered appearances.
Howard I. Fox argued the cause for Environmental
Petitioners and Intervenor. With him on the briefs were Keri N.
Powell, John D. Walke, Jonathan F. Lewis, Ann B. Weeks, Leah
Walker Casey, and Michael D. Fiorentino. Blair W. Todt
entered an appearance.
Richard E. Ayers was on the brief of amicus curiae Calpine
Corporation in support of petitioners.
Hope M. Babcock was on the brief of amici curiae
American Thoracic Society, et al. in support of environmental
petitioners.
Victor B. Flatt was on the brief of amici curiae Senator
Hillary Rodham Clinton, et al. in support of petitioners.
Geoffrey M. Klineberg was on the brief of amicus curiae
Atlantic Salmon Federation in support of petitioners.
4
Angeline Purdy and Cynthia J. Morris, Attorneys, U.S.
Department of Justice, argued the cause for respondent. With
them on the brief was John C. Cruden, Deputy Assistant
Attorney General. Michael B. Heister, Attorney, and Carol S.
Holmes, Counsel, U.S. Environmental Protection Agency,
entered appearances.
F. William Brownell argued the cause for Industry
Intervenors in support of respondent. With him on the brief
were William H. Lewis, Jr., Henry V. Nickel, Makram B. Jaber,
David S. Harlow, Katherine D. Hodge, John L. Wittenborn,
Leslie Sue Ritts, Lorane Hebert, and Charles H. Knauss. Russell
S. Frye entered an appearance.
Judith Williams Jagdmann, Attorney General, Attorney
General’s Office of the Commonwealth of Virginia, William E.
Thro, State Solicitor General, D. Mathias Roussy, Associate
State Solicitor General, Carl Josephson, Senior Assistant
Attorney General, Troy King, Attorney General, Attorney
General’s Office of the State of Alabama, Robert D. Tambling,
Assistant Attorney General, David W. Marquez, Attorney
General, Attorney General’s Office of the State of Alaska,
Steven E. Mulder, Assistant Attorney General, Mike Beebe,
Attorney General, Attorney General’s Office fo the State of
Arkansas, Teresa Marks, Deputy Attorney General, Lawrence
E. Long, Attorney General, Attorney General’s Office of the
State of South Dakota, Roxanne Giedd, Deputy Attorney
General, Mark L. Shurtleff, Attorney General, Attorney
General’s Office of the State of Utah, Fred Nelson, Assistant
Attorney General, Patrick J. Crank, Attorney General, Attorney
General’s Office of the State of Wyoming, Vicci M. Colgan,
Senior Assistant Attorney General, Phill Kline, Attorney
General, Attorney General’s Office of the State of Kansas,
David W. Davies, Assistant Attorney General, Jeremiah W.
(Jay) Nixon, Attorney General, Attorney General’s Office of the
5
State of Missouri, James R. Layton, State Solicitor, Jon Bruning,
Attorney General, Attorney General’s Office of the State of
Nebraska, Wayne Stenehjem, Attorney General, Attorney
General’s Office of the State of North Dakota, and Lyle G.
Witham, Assistant Attorney General, were on the brief of
Intervening States. Michael R. O’Donnell, Assistant Attorney
General, Attorney General’s Office of the State of Wyoming, R.
Craig Kneisel, Assistant Attorney General, Attorney General’s
Office of the State of Alabama, Roger L. Chafee, Senior
Assistant Attorney General, Attorney General’s Office of the
Commonwealth of Virginia, entered appearances.
Jim Petro, Attorney General, Attorney General’s Office of
the State of Ohio, Henry McMaster, Attorney General, Attorney
General’s Office of the State of South Carolina, Steve Carter,
Attorney General, Attorney General’s Office of the State of
Indiana, Thomas M. Fisher, Solicitor General, Valerie Tachtiris,
Deputy Attorney General, and John J. Bursch were on the brief
of amici curiae States of Indiana, Ohio, and South Carolina in
support of respondent. Steven D. Griffin, Assistant Attorney
General, Attorney General’s Office of the State of Indiana,
entered an appearance.
Daniel J. Popeo, Paul D. Kamenar, and Paul M. Seby were
on the brief of amicus curiae Washington Legal Foundation in
support of respondent.
Before: ROGERS, TATEL and BROWN, Circuit Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: In New York v. EPA, 413 F.3d 3(D.C. Cir. 2005) (“New York I”), the court addressed the first of
two rules promulgated by the Environmental Protection Agency
providing ways for stationary sources of air pollution to avoid
6
triggering New Source Review (“NSR”). The court upheld in
part and vacated in part the first rule. Id. at 10-11. We now
address the second rule, the Equipment Replacement Provision
(“ERP”), which amends the Routine Maintenance, Repair, and
Replacement Exclusion (“RMRR”) from NSR requirements.
Under section 111(a)(4) of the Clean Air Act, 42 U.S.C. §
7411(a)(4), sources that undergo “any physical change” that
increases emissions are required to undergo the NSR permitting
process. See also id. §§ 7501(4), 7479(2)(C)(cross-referencing
id. § 7411(a)(4)). The exclusion has historically provided that
routine maintenance, repair, and replacement do not constitute
changes triggering NSR. The ERP both defined and expanded
that exclusion. EPA explained:
[The] rule states categorically that the replacement of
components with identical or functionally equivalent
components that do not exceed 20% of the replacement
value of the process unit and does not change its basic
design parameters is not a change and is within the
RMRR exclusion.
Equipment Replacement Provision of the Routine Maintenance,
Repair and Replacement Exclusion, 68 Fed. Reg. 61,248, 61,270
(Oct. 27, 2003) (“Final Rule”); see also 70 Fed. Reg. 33,838(June 10, 2005)(“Reconsideration”). Hence, the ERP would
allow sources to avoid NSR when replacing equipment under the
twenty-percent cap notwithstanding a resulting increase in
emissions. The court stayed the effective date of the ERP on
December 24, 2003. We now vacate the ERP because it is
contrary to the plain language of section 111(a)(4) of the Act.
The Clean Air Act requires new and modified sources of
pollution to undergo NSR, a permitting process that imposes
specific pollution control requirements depending upon the
7
geographic location of the source.1 Section 111(a)(4) of the Act
describes when a source is to be considered “modified”:
The term “modification” means any physical change
in, or change in the method of operation of, a stationary
source which increases the amount of any air pollutant
emitted by such source or which results in the emission
of any air pollutant not previously emitted.
42 U.S.C. § 7411(a)(4) (emphasis added). Since the inception
of NSR, RMRR has been excluded from the definition of
“modification.” See 39 Fed. Reg. 42,510, 42,514 (Dec. 5,
1974); 43 Fed. Reg. 26,388, 26,403-04 (June 19, 1978).
Heretofore, EPA applied the RMRR exclusion through “a case-
by-case determination by weighing the nature, extent, purpose,
frequency, and cost of the work as well as other factors to arrive
at a common sense finding.” 67 Fed. Reg. 80,290, 80,292-93
(Dec. 31, 2002). Consistent with Alabama Power Co. v. Costle,
636 F.2d 323 (D.C. Cir. 1980), which recognized EPA’s
discretion to exempt from NSR “some emission increases on
grounds of de minimis or administrative necessity,” id. at 400,
1
NSR consists of two programs: prevention of significant
deterioration (“PSD”) and nonattainment NSR. See New York I, 413
F.3d at 11-14. New and modified sources in attainment areas, i.e.,
where air quality standards have been met, and in unclassifiable areas
are required to follow PSD rules, which means they must obtain a
preconstruction permit, prove that the construction will not cause
violations of certain air quality standards, and show that their
operations are in compliance with the Best Available Control
Technology (“BACT”) requirements. See 42 U.S.C. § 7475. In
nonattainment areas, i.e., where air quality standards have not been
met, new and modified sources are required to obtain preconstruction
permits, to offset emissions increases with emissions reductions from
other sources in the area, and to install “lowest achievable emissions
rate” technology (“LAER”). See id. § 7503.
8
EPA has for over two decades defined the RMRR exclusion as
limited to “de minimis circumstances.” 68 Fed. Reg. at 61,272.
The ERP provides a bright-line rule and expands the traditional
scope of the RMRR by exempting certain equipment
replacements from NSR. See, e.g., 40 C.F.R. §
2
52.21(cc)(2005).
The government and environmental petitioners contend that
the ERP is contrary to the plain text of the Act because the
statutory definition of “modification” applies unambiguously to
any physical change that increases emissions, necessarily
including the emission-increasing equipment replacements
excused from NSR by the rule. They maintain that the word
“any,” when given its natural meaning, requires that the phrase
“physical change” be read broadly, such that EPA’s attempt to
2
The ERP provides:
Without regard to other considerations, routine maintenance,
repair and replacement includes, but is not limited to, the
replacement of any component of a process unit with an
identical or functionally equivalent component(s), and
maintenance and repair activities that are part of the
replacement activity, provided that all of the requirements in
paragraphs (cc)(1) through (cc)(3)of this section are met.
40 C.F.R. § 52.21 (cc). Paragraph (cc)(1) establishes that the fixed
capital cost of the replacement component cannot exceed twenty
percent of the replacement value of the process unit. Paragraph
(cc)(2) states that the replacement cannot change the basic design
parameters of the process unit. Paragraph (cc)(3) requires that the
replacement activity not cause the process unit to exceed any
independent, legally enforceable emission limitation. The ERP also
amends 40 C.F.R. §§ 51.165, 51.166, and 52.24, but given the
similarity of the sections, the court will follow the practice of the
parties in citing only section 52.21.
9
read “physical change” narrowly would relegate the word “any”
to an insignificant role.
In evaluating the petitioners’ contention, we proceed under
the familiar two-part test of Chevron U.S.A., Inc. v. National
Resources Defense Council, Inc., 467 U.S. 837 (1984). If
“Congress has directly spoken to the precise question at issue .
. . that is the end of the matter; for the court, as well as the
agency, must give effect to the unambiguously expressed intent
of Congress.” Id. at 842-43. Only if the statute is silent or
ambiguous do we defer to the agency’s interpretation, asking
“whether [it] is based on a permissible construction of the
statute.” Id. at 843. “If a court, employing traditional tools of
statutory construction, ascertains that Congress had an intention
on the precise question at issue, that intention is the law and
must be given effect.” Id. at 843 n.9.
The petitioners and EPA agree that the phrase “physical
change” is susceptible to multiple meanings, each citing
dictionary definitions. However, “the sort of ambiguity giving
rise to Chevron deference ‘is a creature not of definitional
possibilities, but of statutory context.’” American Bar Ass'n v.
FTC, 430 F.3d 457, 469 (D.C. Cir. 2005) (quoting Brown v.
Gardner, 513 U.S. 115, 118 (1994)); see California Indep. Sys.
Operator Corp. v. FERC, 372 F.3d 395, 400 (D.C. Cir. 2004);
Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 40 F.3d
146, 152 (7th Cir. 1994). As the parties point out, the ordinary
meaning of “physical change” includes activities that “make
different in some particular,” “make over to a radically different
form,” or “replace with another or others of the same kind or
class.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY
373 (1981). To say that it is “physical,” in this context,
indicates that the change must be “natural or material,” rather
than “mental, moral, spiritual, or imaginary.” Id. 1706. The
10
parties agree that in “[r]eal-world, common-sense usage,” 68
Fed. Reg. at 61,271, “physical change” includes equipment
replacements. They further agree that the ERP would excuse
from NSR requirements certain emission-increasing activities
that EPA has historically considered to be “physical changes.”
See id. at 61,270.
The parties’ essential disagreement, then, centers on the
effect of Congress’s decision in defining “modification” to insert
the word “any” before “physical change.” According to the
petitioners, the word “any” means that the phrase “physical
change” covers any activity at a source that could be considered
a physical change that increases emissions. According to EPA,
“any” does nothing to resolve ambiguity in the phrase it
modifies. EPA maintains that because “physical change” is
“susceptible to multiple meanings,” id. at 61,271, “identifying
activities that are ‘changes’ for NSR purposes . . . requires an
exercise of Agency expertise,” “the classic situation in which an
agency is accorded deference under Chevron,” id. at 61,272.
Under this approach, once EPA has identified an activity as a
“physical change,” the word “any” requires that the activity be
subject to NSR. We conclude that the differences between the
parties’ interpretations of the role of the word “any” are resolved
by recognizing that “[r]ead naturally, the word ‘any’ has an
expansive meaning, that is, ‘one or some indiscriminately of
whatever kind,’” United States v. Gonzales, 520 U.S. 1, 5
(1997), and that courts must give effect to each word of a
statute, see, e.g., TRW, Inc. v. Andrews, 534 U.S. 19, 31 (2001).
Because Congress used the word “any,” EPA must apply NSR
whenever a source conducts an emission-increasing activity that
fits within one of the ordinary meanings of “physical change.”
In a series of cases, the Supreme Court has drawn upon the
word “any” to give the word it modifies an “expansive meaning”
11
when there is “no reason to contravene the clause’s obvious
meaning.” Norfolk S. Rwy. Co. v. Kirby, 543 U.S. 14, 31-32
(2004); see also Dep’t of Hous. and Urban Dev. v. Rucker, 535
U.S. 125, 130-31 (2002); Gonzalez, 520 U.S. at 5. Indeed, the
Court has read the word “any” to signal expansive reach when
construing the Clean Air Act. In Harrison v. PPG Industries,
Inc., 446 U.S. 578 (1980), the Court resolved a jurisdictional
dispute under section 307(b)(1) by interpreting the phrase “any
other final action,” which the Court “discern[ed to have] no
uncertainty.” Id. at 588. The Court never suggested that the
term “final action” was itself devoid of multiple meanings
depending on the context, but rather stated that when Congress
amended the Act in 1977, “it expanded its ambit to include not
simply ‘other final action,’ but rather ‘any other final action.’”
Id. at 589. “[I]n the absence of legislative history to the
contrary,” the Court held that the statutory phrase “must be
construed to mean exactly what it says, namely, any other final
action.” Id.Although EPA is correct that the meaning of “any” can
differ depending upon the statutory setting, see Nixon v.
Missouri Mun. League, 541 U.S. 125, 132 (2004), the context of
the Clean Air Act warrants no departure from the word’s
customary effect. Unlike Nixon, the question of statutory
interpretation here does not arise in a setting in which the
Supreme Court has required heightened standards of clarity to
avoid upsetting fundamental policies. See id. at 132-33, 140-41
(citing Gregory v. Ashcroft, 501 U.S. 452 (1991)). EPA points
to no “strange and indeterminate results,” id. at 133, that would
emerge from adopting the natural meaning of “any” in section
111(a)(4) of the Act. Given Congress’s goal in adopting the
1977 amendments of establishing a balance between economic
and environmental interests, see Wisconsin Elec. Power Co. v.
Reilly, 893 F.2d 901, 909-10 (7th Cir. 1990)(“WEPCo”), it is
12
hardly “farfetched,” Nixon, 541 U.S. at 138, for Congress to
have intended NSR to apply to any type of physical change that
increases emissions. In this context, there is no reason the usual
tools of statutory construction should not apply and hence no
reason why “any” should not mean “any.” Indeed, EPA’s
interpretation would produce a “strange,” if not an
“indeterminate,” result: a law intended to limit increases in air
pollution would allow sources operating below applicable
emission limits to increase significantly the pollution they emit
without government review.
Even without specific reliance on the effect of “any,” this
court has construed the definition of “modification” broadly. In
Alabama Power, the court explained that “the term
‘modification’ [in section 111(a)(4)] is nowhere limited to
physical changes exceeding a certain magnitude.” 636 F.2d at
400. Although the legislative history indicated that one Senator
intended the term to apply only to “major expansion
program[s],” id. at 400 n.47, the court observed that “the
language of the statute clearly did not enact such limit into law,”
id. at 400. The court further observed that “[i]mplementation of
the statute’s definition of ‘modification’ will undoubtedly prove
inconvenient and costly to affected industries; but the clear
language of the statute unavoidably imposes these costs except
for de minimis increases.” Id. More recently, in New York I, the
court looked to the plain meaning of section 111(a)(4) and the
absence of contrary legislative history in holding that even
pollution control projects constituted “physical changes.” New
York I, 413 F.3d at 40-42. Likewise, the Seventh Circuit
concluded in WEPCo that the purposes of the 1977 amendments
to the Act required an expansive reading of the plain language
of section 111(a)(4). See WEPCo, 893 F.2d at 908-10.
EPA’s attempt to avoid the persuasive force of these
13
decisions and to find ambiguity in the phrase “any physical
change” fails for a variety of reasons. Even assuming that the
decisions construing section 111(a)(4) are not “judicial
precedent holding that the statute unambiguously forecloses the
agency’s interpretation,” Nat’l Cable & Telecomms. Ass’n v.
Brand X Internet Servs., 125 S. Ct. 2688, 2700 (2005), Brand X,
on which EPA principally relies, does not drain those decisions
of all precedential value. The fact that previous judicial
interpretations of section 111(a)(4) have all reached the
conclusion that the text must be read broadly supports the
petitioner’s argument at Chevron step one, particularly because
those decisions — both before and after Chevron — used
language indicating the text was “clear” and “plain.” See New
York I, 413 F.3d at 40; WEPCo, 893 F.2d at 907; Alabama
Power, 636 F.2d at 400.
Even in the absence of such precedent, EPA’s approach to
interpreting “physical change,” as well as a similar approach by
industry intervenors that focuses on the thirty-nine words
following “any,” contravenes several rules of statutory
interpretation. EPA’s position is that the word “any” does not
affect the expansiveness of the phrase “physical change”; it only
means that, once the agency defines “change” as broadly or as
narrowly as it deems appropriate, everything in the agency-
defined category is subject to NSR. To begin, that reading,
contrary to “a cardinal principle of statutory construction,”
would make Congress’s use of the word “any” “insignificant” if
not “superfluous.” TRW, 534 U.S. at 31 (quoting Duncan v.
Walker, 533 U.S. 167, 174 (2001)). Reading the definition in
this way makes the definition function as if the word “any” had
been excised from section 111(a)(4); there is virtually no role for
“any” to play. Additionally, the approaches of EPA and
industry would require Congress to spell out all the applications
covered by a definition before a court could conclude that
14
Congress had directly spoken regarding a particular application,
ignoring the fact that a definition, like a general rule, need not
list everything it covers. See NPR v. FCC, 254 F.3d 226, 229
(D.C. Cir. 2001); see also Shays v. FEC, 414 F.3d 76, 108 (D.C.
Cir. 2005). EPA’s approach would ostensibly require that the
definition of “modification” include a phrase such as “regardless
of size, cost, frequency, effect,” or other distinguishing
characteristic. Only in a Humpty Dumpty world3 would
Congress be required to use superfluous words while an agency
could ignore an expansive word that Congress did use. We
decline to adopt such a world-view.
In contrast, the petitioners’ approach, by adopting an
expansive reading of the phrase “any physical change,” gives
natural effect to all the words used by Congress and reflects both
their common meanings and Congress’s purpose in enacting the
1970 and 1977 amendments. See New York I, 413 F.3d at 11-13;
WEPCo, 893 F.2d at 909. To improve pollution control
programs in a manner consistent with the balance struck by
Congress in 1977 between “the economic interest in permitting
capital improvements to continue and the environmental interest
in improving air quality,” Chevron, 467 U.S. at 851, Congress
defined the phrase “physical change” in terms of increases in
emissions. After using the word “any” to indicate that “physical
change” covered all such activities, and was not left to agency
interpretation, Congress limited the scope of “any physical
change” to changes that “increase[] the amount of any air
pollutant emitted by such source or which result[] in the
emission of any air pollutant not previously emitted.” 42 U.S.C.
§ 7411(a)(4). Thus, only physical changes that do not result in
3
See TVA v. Hill, 437 U.S. 153, 173 n.18 (1978) (quoting Through
the Looking Glass, in THE COMPLETE WORKS OF LEWIS CARROLL 196
(1939)).
15
emission increases are excused from NSR. Because Congress
expressly included one limitation, the court must presume that
Congress acted “intentionally and purposely,” Barnhart v.
Sigmon Coal Co., 534 U.S. 438, 452 (2002) (quoting Russello
v. United States, 464 U.S. 16, 23 (1983)), when it did not
include others. Cf. New York I, 413 F.3d at 39. So construed,
each word in the phrase “any physical change” has a meaning
consonant with congressional intent and the scope of the
definitional phrase is limited only by Congress’s determination
that such changes be linked to emission increases.
The expansiveness of the petitioners’ approach does not
leave the definition of “any physical change” without limits.
The modifier “any” cannot bring an activity that is never
considered a “physical change” in ordinary usage within the
ambit of NSR. But when Congress places the word “any”
before a phrase with several common meanings, the statutory
phrase encompasses each of those meanings; the agency may
not pick and choose among them. EPA, through its historical
practice and its words, has acknowledged that the equipment
replacements covered by the ERP are “physical changes” under
one of the ordinary meanings of the phrase. See 68 Fed. Reg. at
61,271-72. EPA may not choose to exclude that “[r]eal-world,
common-sense usage of the word ‘change.’” Id. at 61,271.
Moreover, a physical change is not the sole criterion for
triggering NSR under the definition of “modification.” The
expansive meaning of “any physical change” is strictly limited
by the requirement that the change increase emissions. See 42
U.S.C. § 7411(a)(4).4
4
The court has no occasion to decide whether part replacements or
repairs necessarily constitute a “modification” under the definition
taken as a whole.
16
The fact that EPA, through the RMRR exclusion, has
historically interpreted “any physical change” to exclude
changes of trivial regulatory concern on a de minimis rationale,
see Alabama Power, 636 F.2d at 360-61, does not demonstrate
that the meaning of “physical change” is ambiguous. Rather, it
reflects an agency’s inherent power to overlook “trifling
matters,” id. at 360, a “principle [that] is a cousin of the doctrine
that, notwithstanding the ‘plain meaning’ of a statute, a court
must look beyond the words to the purpose of the act where its
literal terms lead to ‘absurd or futile results,’” id. at 360 n.89
(citations omitted). As the Supreme Court has instructed, “the
venerable maxim de minimis non curat lex (‘the law cares not
for trifles’) is part of the established background of legal
principles against which all enactments are adopted, and which
all enactments (absent contrary indication) are deemed to
accept.” Wisconsin Dep’t of Revenue v. William Wrigley, Jr.,
Co., 505 U.S. 214, 231 (1992). Reliance on the de minimis
doctrine invokes congressional intent that agencies diverge from
the plain meaning of a statue only so far as is necessary to avoid
its futile application. Thus, the court in Alabama Power
acknowledged that “EPA does have discretion, in administering
the statute’s ‘modification’ provision, to exempt from PSD
review some emission increases on grounds of de minimis or
administrative necessity.” 636 F.2d at 400. As applied, the
court explained that de minimis standards served to alleviate
“severe” administrative and economic burdens by lifting
requirements on “minuscule” emission increases. See id. at 405.
While the court today expresses no opinion regarding EPA’s
application of the de minimis exception, given the limits on the
scope of the de minimis doctrine, see Shays, 414 F.3d at 113-14,
EPA appropriately has not attempted to justify the ERP as an
exercise of de minimis discretion. As EPA has disclaimed the
assertion that its prior expansive interpretations of “any physical
change” were “absurd or futile,” 70 Fed. Reg. at 33,842, it is in
17
no position to claim that the ERP is necessary to avoid
absurdity.
EPA’s remaining arguments also fail to demonstrate that the
phrase “any physical change” is ambiguous. The fact that the
court concluded that the word “increases” in section 111(a)(4)
is ambiguous, see New York I, 413 F.3d at 23, does not suggest
that the phrase “any physical change” is also ambiguous; unlike
the latter, the former is unaccompanied by a qualifier signaling
Congress’s intent. Congress’s use of the word “increases”
necessitated further definition regarding rate and measurement
for the term to have any contextual meaning. No such further
definition of “physical change” is required because Congress’s
use of the word “any” indicates the intent to cover all of the
ordinary meanings of the phrase, as evidenced by EPA’s
decades-long understanding and practice. Also, because the
court in New York I rejected industry’s contention that Congress
ratified the New Source Performance Standards (“NSPS”)
regulations on “modification” in the 1977 amendments, see id.
at 19-20, EPA’s reliance on its NSPS regulations to demonstrate
the ambiguity of “any physical change” is unavailing. As
discussed, the early emergence of a RMRR exclusion based on
a de minimis rationale does not blur the clarity of the phrase
“any physical change.” To the extent industry intervenors rely
on the NSPS regime to reargue their position that
“modifications” require an increase in maximum emission rates,
that issue was resolved in New York I, 413 F.3d at 19-20, 40; see
also New York v. EPA, 431 F.3d 801, 802-03 (D.C. Cir. 2005)
(Williams, J., concurring in denial of rehearing), and is
irrelevant because it does not address what constitutes a
“physical change.”
“Therefore, for EPA to avoid a literal interpretation at
Chevron step one, it must show either that, as a matter of
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historical fact, Congress did not mean what it appears to have
said, or that, as a matter of logic and statutory structure, it
almost surely could not have meant it.” Engine Mfrs. Ass’n v.
EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996). The discussion in
New York I, 413 F.3d at 12-13, and WEPCo, 893 F.2d at 909(quoting H.R. REP. NO. 95-294, at 211, (1977), as reprinted in
1977 U.S.C.C.A.N. 1077, 1290)), of Congress’s basic goals in
enacting the 1977 amendments — to intensify the war against
air pollution, to establish a permit program that struck a balance
between economic and environmental interests, and to stimulate
technology to control pollution — demonstrate the futility of
EPA’s endeavor. EPA cannot show that historical fact prevents
a broad reading of “any physical change” inasmuch as EPA for
decades has interpreted that phrase to mean “virtually all
changes, even trivial ones, . . . generally interpret[ing] the
[RMRR] exclusion as being limited to de minimis
circumstances.” 68 Fed. Reg. at 61,272.
As for logic, EPA cannot show any incoherence in Congress
requiring NSR for equipment replacements that increase
emissions while allowing replacements that do not increase
emissions to avoid NSR. EPA acknowledges the reasonableness
of its past expansive interpretation of “any physical change.”
See id.; 70 Fed Reg. at 33,842; Respondent’s Br. at 29. To the
extent that EPA relies on the argument that allowing ERP
projects has the potential to lower overall emissions through
increased efficiency even if emissions increase at a source, the
court in New York I rejected EPA’s similar argument in support
of an exemption from NSR for pollution control projects. The
court stated that “Congress could reasonably conclude, for
example, that tradeoffs between pollutants are difficult to
measure, and thus any significant increase in emissions of any
pollutant should be subject to NSR.” New York I, 413 F.3d at
41. Absent a showing that the policy demanded by the text
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borders on the irrational, EPA may not “avoid the Congressional
intent clearly expressed in the text simply by asserting that its
preferred approach would be better policy.” Engine Mfrs., 88
F.3d at 1089.
Likewise, EPA offers no reason to conclude that the
structure of the Act supports the conclusion that “any physical
change” does not mean what it says. EPA does not address the
Act’s structure except in defending the reasonableness of the
ERP as a policy choice. In that context, EPA points to the Act’s
“many other systematic air programs,” particularly “model
market-based programs,” as support for its view that economic
and environmental interests can be effectively balanced while
limiting the application of NSR to existing sources. See 70 Fed.
Reg. at 33,844. Although EPA might prefer market-based
methods of controlling pollution, Congress has chosen a
different course with NSR.
Accordingly, we hold that the ERP violates section
111(a)(4) of the Clean Air Act in two respects. First, Congress’s
use of the word “any” in defining a “modification” means that
all types of “physical changes” are covered. Although the
phrase “physical change” is susceptible to multiple meanings,
the word “any” makes clear that activities within each of the
common meanings of the phrase are subject to NSR when the
activity results in an emission increase. As Congress limited the
broad meaning of “any physical change,” directing that only
changes that increase emissions will trigger NSR, no other
limitation (other than to avoid absurd results) can be implied.
The definition of “modification,” therefore, does not include
only physical changes that are costly or major. Second,
Congress defined “modification” in terms of emission increases,
but the ERP would allow equipment replacements resulting in
non-de minimis emission increases to avoid NSR. Therefore,
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because it violates the Act, we vacate the ERP.