United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 8, 2000 Decided April 14, 2000
No. 98-1512
Appalachian Power Company, et al.,
Petitioners
v.
Environmental Protection Agency,
Respondent
Consolidated with
Nos. 98-1536, 98-1537, 98-1538, 98-1540 & 98-1542
On Petitions for Review of an Order of the
Environmental Protection Agency
Lauren E. Freeman argued the cause for petitioners.
With her on the briefs were Henry V. Nickel, Leslie Sue
Ritts, Michael H. Levin, Edmund B. Frost, David F. Zoll,
Alexandra Dapolito Dunn, John Reese, Charles F. Lettow,
Marcilynn A. Burke, L. Burton Davis, William H. Lewis,
Michael A. McCord and Ellen Siegler. Michael P. Mc-
Govern and Neal J. Cabral entered appearances.
Jon M. Lipshultz, Attorney, U.S. Department of Justice,
argued the cause for respondent. With him on the briefs
were Lois J. Schiffer, Assistant Attorney General, and Grego-
ry B. Foote, Attorney, Environmental Protection Agency.
Before: Williams, Henderson, and Randolph, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Randolph, Circuit Judge: These consolidated petitions for
judicial review, brought by electric power companies, and
trade associations representing the nation's chemical and
petroleum industry, challenge the validity of portions of an
EPA document entitled "Periodic Monitoring Guidance," re-
leased in 1998. In the alternative, petitioners seek review of
a 1992 EPA rule implementing Title V of the Clean Air
Amendments of 1990.
I.
Title V of the 1990 amendments to the Clean Air Act
altered the method by which government regulated the pri-
vate sector to control air pollution. Henceforth, stationary
sources of air pollution, or of potential air pollution, must
obtain operating permits from State or local authorities ad-
ministering their EPA-approved implementation plans. The
States must submit to EPA for its review all operating
permits and proposed and final permits. See 42 U.S.C.
s 7661d. EPA has 45 days to object; if it does so, "the
permitting authority may not issue the permit," id.
s 7661d(b)(3).1 Congress instructed EPA to pass regulations
establishing the "minimum elements of a permit program to
be administered by any air pollution control agency," includ-
__________
1 If the State permitting authority fails to revise the permit to
satisfy EPA's objection, EPA shall issue or deny the permit, at
which point EPA's action becomes subject to judicial review. See
42 U.S.C. s 7661d(c).
ing "Monitoring and reporting requirements." 42 U.S.C.
s 7661a(b). Under Title V, the Governor of each State could
submit to EPA a permit program by November 15, 1993, to
comply with Title V and with whatever regulations EPA had
promulgated in the interim. See 42 U.S.C. s 7661a(d). This
was to be accompanied by a legal opinion from the State's
attorney general that the laws of the State contained suffi-
cient authority to authorize the State to implement the pro-
gram. Id. If a State decided not to participate, or if EPA
disapproved the State's program, federal sanctions would kick
in, including a cut-off of federal highway funds and an EPA
takeover of permit-issuing authority within the State. See
Commonwealth of Virginia v. Browner, 80 F.3d 869, 873-74
(4th Cir. 1996).
EPA promulgated rules implementing the Title V permit
program in 1992. The rules list the items each State permit
program must contain,2 including this one:
(3) Monitoring and related record-keeping and report-
ing requirements. (i) Each permit shall contain the fol-
lowing requirements with respect to monitoring:
(A) All monitoring and analysis procedures or test
methods required under applicable monitoring and test-
ing requirements, including part 64 of this chapter and
any other procedures and methods that may be promul-
gated pursuant to sections 114(a)(3) or 504(b) of the Act.
If more than one monitoring or testing requirement
applies, the permit may specify a streamlined set of
monitoring or testing provisions provided the specified
monitoring or testing is adequate to assure compliance at
least to the same extent as the monitoring or testing
applicable requirements that are not included in the
permit as a result of such streamlining;
(B) Where the applicable requirement does not re-
quire periodic testing or instrumental or noninstrumental
monitoring (which may consist of record-keeping de-
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2 The list is nicely summarized in David R. Wooley, Clean Air
Act Handbook: A Practical Guide to Compliance s 5.02[1] (9th ed.
2000).
signed to serve as monitoring), periodic monitoring suffi-
cient to yield reliable data from the relevant time period
that are representative of the source's compliance with
the permit, as reported pursuant to paragraph(a)(3)(iii) of
this section. Such monitoring requirements shall assure
use of terms, test methods, units, averaging periods, and
other statistical conventions consistent with the applica-
ble requirement. Recordkeeping provisions may be suffi-
cient to meet the requirements of this paragraph
(a)(3)(i)(B) of this section; and
(C) As necessary, requirements concerning the use,
maintenance, and, where appropriate, installation of mon-
itoring equipment or methods....
40 C.F.R. s 70.6(a)(3).
The key language--key because this dispute revolves
around it--is in the first sentence of s 70.6(a)(3)(i)(B). Per-
mits contain terms and conditions with which the regulated
entities must comply. Some of the terms and conditions--in
regulatory lingo, "applicable requirements" (see
s 70.6(a)(3)(i)(B))3--consist of emission limitations and stan-
dards, State and federal. Experts in the field know that
federal emission standards, such as those issued for hazard-
ous air pollutants and new stationary sources, contain far
more than simply limits on the amount of pollutants emitted.
Take for instance the following examples drawn at random
from the Code of Federal Regulations. The national emission
__________
3 One EPA official explained:
Permits must incorporate terms and conditions to assure
compliance with all applicable requirements under the Act,
including the [state implementation plan], title VI, sections 111
and 112, the sulfur dioxide allowance system and NOx limits
under the acid rain program, emission limits applicable to the
source, monitoring, recordkeeping and reporting requirements,
and any other federally-recognized requirements applicable to
the source.
John S. Seitz, Director, Office of Air Quality Planning and Stan-
dards, Developing Approvable State Enabling Legislation Required
to Implement Title V, at p. 4 (Feb. 25, 1993).
standard for hazardous air pollutants from primary lead
smelting is contained in 40 C.F.R. ss 63.1541-.1550. In
addition to emission limits,4 the operator must comply with
detailed and extensive testing requirements contained in
s 63.8 of the regulations, and must monitor certain pressure
drops daily; make weekly checks to ensure that dust is being
removed from hoppers; perform quarterly inspections of
fans, and so forth. Id. s 63.1547. Or consider the standards
of performance for new stationary sources contained in 40
C.F.R. part 60, one of the thickest of the dozen or so volumes
EPA commands in the C.F.R. In the "beverage can surface
coating industry," those subject to these regulations must--if
they use "a capture system and an incinerator"--install some
sort of "temperature measurement device," properly calibrat-
ed and having a specified accuracy stated in terms of degrees
Celsius. 40 C.F.R. s 60.494.5 Or if the new source is in the
rubber tire manufacturing industry, an operator doing a
"green tire spraying operation" using organic solvent-based
sprays must install "an organics monitoring device used to
indicate the concentration level of organic compounds based
on a detection principle such as infrared ..., equipped with a
__________
4 See 40 C.F.R. s 63.1543(a):
No owner or operator of any existing, new, or reconstructed
primary lead smelter shall discharge or cause to be discharged
into the atmosphere lead compounds in excess of 500 grams of
lead per megagram of lead metal produced ... from the
aggregation of emissions discharged from the air pollution
control devices used to control emissions from the sources
[listed].
5 If the facility does not use a capture system, it must calculate its
emission limits using a series of equations provided by EPA. For
some idea of the complexity of this exercise, consider that the
facility must figure its total volume of coating solids per month
using the following equation:
n
Ls =E LciVsi
i=1
40 C.F.R. s 60.493(b)(1)(i)(B). It would serve no useful purpose to
explain this or the many other equations in the sequence.
continuous recorder, for the outlet of the carbon bed." Id.
s 60.544(a)(3).
Typically, EPA delegates to the States its authority to
require companies to comply with these federal standards.
The States incorporate the federal standards in their imple-
mentation plans and, under Title V of the 1990 law, the
applicable standards become terms and conditions in permits.
States too have their own emissions limitations and standards
in their implementation plans, which they need in order to
comply with national ambient air quality standards. See 40
C.F.R. part 52; Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 846 (1984); Union Elec-
tric Co. v. EPA, 427 U.S. 246, 249-50 (1976); Commonwealth
of Virginia v. EPA, 108 F.3d 1397, 1406 (D.C. Cir.), modified,
116 F.3d 499 (D.C. Cir. 1997). Petitioners tell us that States
may formulate their emission standards not only by limiting
the amount of air pollutants, but also by imposing practices,
including the monitoring of emissions.6
On one thing the parties are in agreement. If an applica-
ble State emission standard contains no monitoring require-
ment to ensure compliance, EPA's regulation requires the
State permitting agency to impose on the stationary source
some sort of "periodic monitoring" as a condition in the
permit or specify a reasonable frequency for any data collec-
tion mandate already specified in the applicable requirement.
According to petitioners this sort of gap-filling is all
s 70.6(a)(3)(i)(B)--the so-called periodic monitoring rule--re-
quires of State permit programs. By petitioners' lights, if a
federal or State emission standard already contains some sort
of requirement to do testing7 from time to time, this portion
of the standard must be incorporated in the permit, not
changed by the State to conform to EPA's imprecise and
__________
6 In some instances, States may adopt emission standards or
limitations that are more stringent than federal standards. 42
U.S.C. s 7416. States may also adopt more stringent permit
requirements. 40 C.F.R. s 70.1(c).
7 By testing we mean to include instrumental and noninstrumen-
tal monitoring as well.
evolving notion of what constitutes "periodic monitoring."8
Otherwise, State authorities will wind up amending federal
emission standards in individual permits, something not even
EPA could do without conducting individual rulemakings to
amend the regulations containing the federal standards. And
with respect to State standards, the State agency will in
effect be revising its implementation plan at EPA's behest,
without going through the procedures needed to accomplish
this. See, e.g., 42 U.S.C. s 7410(k)(5) & (l).
In a document entitled "Periodic Monitoring Guidance for
Title V Operating Permits Programs," released in September
1998, EPA took a sharply different view of s 70.6(a)(3) than
do petitioners. The "Guidance" was issued over the signature
of two EPA officials--the Director of the Office of Regulatory
Enforcement, and the Director of the Office of Air Quality
Planning and Standards. It is narrative in form, consists of
19 single-spaced, typewritten pages, and is available on EPA's
internet web site (www.epa.gov). "Periodic monitoring," the
Guidance states, "is required for each emission point at a
source subject to title V of the Act that is subject to an
applicable requirement, such as a Federal regulation or a SIP
emission limitation." Periodic Monitoring Guidance for Title
V Operating Permits Programs (hereinafter "Guidance") at 5.
New source performance standards, and national emission
standards for hazardous pollutants, if EPA promulgated the
standards after November 15, 1990, the effective date of the
Clean Air Act amendments, are "presumed to have adequate
monitoring." Id. Also, for "emission units subject to the
acid rain requirements," EPA has determined that its "regu-
lations contain sufficient monitoring for the acid rain require-
ments." Id. Outside of these categories and one other, the
__________
8 In support of their view, petitioners point to the Title V rule's
preamble which states: "If the underlying applicable requirement
imposes a requirement to do periodic monitoring or testing ..., the
permit must simpl[y] incorporate this provision under
s 70.6(a)(3)(i)(A)." 57 Fed. Reg. 32,278 (1992).
Guidance states that "periodic monitoring is required ...
when the applicable requirement does not require ... moni-
toring sufficient to yield reliable data from the relevant time
period that are representative of the source's compliance with
the permit." Id. at 6. How to determine this? Clearly,
according to the Guidance, if an "applicable requirement
imposes a one-time testing requirement, periodic monitoring
is not satisfied ...," presumably because one time is not from
time to time, which is what periodic means. Id.
II.
The phenomenon we see in this case is familiar. Congress
passes a broadly worded statute. The agency follows with
regulations containing broad language, open-ended phrases,
ambiguous standards and the like. Then as years pass, the
agency issues circulars or guidance or memoranda, explain-
ing, interpreting, defining and often expanding the commands
in the regulations. One guidance document may yield anoth-
er and then another and so on. Several words in a regulation
may spawn hundreds of pages of text as the agency offers
more and more detail regarding what its regulations demand
of regulated entities. Law is made, without notice and com-
ment, without public participation, and without publication in
the Federal Register or the Code of Federal Regulations.
With the advent of the Internet, the agency does not need
these official publications to ensure widespread circulation; it
can inform those affected simply by posting its new guidance
or memoranda or policy statement on its web site. An
agency operating in this way gains a large advantage. "It
can issue or amend its real rules, i.e., its interpretative rules
and policy statements, quickly and inexpensively without fol-
lowing any statutorily prescribed procedures." Richard J.
Pierce, Jr., Seven Ways to Deossify Agency Rulemaking, 47
Admin. L. Rev. 59, 85 (1995).9 The agency may also think
__________
9 How much more efficient than, for instance, the sixty rounds of
notice and comment rulemaking preceding the final rule in Motor
there is another advantage--immunizing its lawmaking from
judicial review.
A.
EPA tells us that its Periodic Monitoring Guidance is not
subject to judicial review because it is not final, and it is not
final because it is not "binding."10 Brief of Respondent at 30.
See Guidance at 19. It is worth pausing a minute to consider
what is meant by "binding" in this context. Only "legislative
rules" have the force and effect of law. See Chrysler Corp. v.
Brown, 441 U.S. 281, 302-03 & n.31 (1979). A "legislative
rule" is one the agency has duly promulgated in compliance
with the procedures laid down in the statute or in the
Administrative Procedure Act.11 If this were all that "bind-
ing" meant, EPA's Periodic Monitoring Guidance could not
possibly qualify: it was not the product of notice and com-
__________
Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
34 (1983).
10 Our jurisdiction extends to "any ... nationally applicable ...
final action taken by" the EPA "Administrator." 42 U.S.C.
s 7607(b)(1). The Guidance issued over the signatures of two high
level EPA officials rather than the Administrator. EPA does not,
however, contest petitioners' assertion that because "the document
was drafted, and reviewed by, high ranking officials in several EPA
offices, including EPA's lawyers, there is no reason to doubt the
authors' authority to speak for the Agency." Brief of Petitioners at
42. See Her Majesty the Queen v. EPA, 912 F.2d 1525, 1531-32
(D.C. Cir. 1990); Natural Resources Defense Council, Inc. v. Thom-
as, 845 F.2d 1088, 1094 (D.C. Cir. 1988).
11 We have also used "legislative rule" to refer to rules the agency
should have, but did not, promulgate through notice and comment
rulemaking. See, e.g., American Mining Congress v. Department
of Labor, 995 F.2d 1106, 1110 (D.C. Cir. 1993). In this case, by
"rule" we mean the following:
... the whole or a part of an agency statement of general or
particular applicability and future effect designed to implement,
interpret, or prescribe law or policy or describing the organiza-
tion, procedure, or practice requirements of an agency....
5 U.S.C. s 551(4).
ment rulemaking in accordance with the Clean Air Act, 42
U.S.C. s 7607(d), and it has not been published in the Federal
Register.12 But we have also recognized that an agency's
other pronouncements can, as a practical matter, have a
binding effect. See, e.g., McLouth Steel Prods. Corp. v.
Thomas, 838 F.2d 1317, 1321 (D.C. Cir. 1988). If an agency
acts as if a document issued at headquarters is controlling in
the field, if it treats the document in the same manner as it
treats a legislative rule, if it bases enforcement actions on the
policies or interpretations formulated in the document, if it
leads private parties or State permitting authorities to believe
that it will declare permits invalid unless they comply with
the terms of the document, then the agency's document is for
all practical purposes "binding." See Robert A. Anthony,
Interpretative Rules, Policy Statements, Guidances, Manu-
als, and the Like--Should Federal Agencies Use Them to
Bind the Public?, 41 Duke L.J. 1311, 1328-29 (1992), and
cases there cited.
For these reasons, EPA's contention must be that the
Periodic Monitoring Guidance is not binding in a practical
sense. Even this, however, is not an accurate way of putting
the matter. Petitioners are not challenging the Guidance in
its entirety. Under the Administrative Procedure Act, a
"rule" may consist of "part of an agency statement of general
or particular applicability and future effect...." 5 U.S.C.
s 551(4), quoted in full in supra note 11; see 5 U.S.C.
ss 551(13), 702. "Interpretative rules" and "policy state-
ments" may be rules within the meaning of the APA and the
Clean Air Act, although neither type of "rule" has to be
promulgated through notice and comment rulemaking. See
42 U.S.C. s 7607(d)(1), referring to 5 U.S.C. s 553(b)(A) &
(B).13 EPA claims, on the one hand, that the Guidance is a
__________
12 5 U.S.C. s 552(a)(1)(D) requires publication in the Federal
Register of all "interpretations of general applicability." Compare
5 U.S.C. s 552(a)(2)(B), requiring agencies to make available for
inspection and copying "those statements of policy and interpreta-
tions which have been adopted by the agency and are not published
in the Federal Register."
13 We quoted, in Panhandle Eastern Pipeline Co. v. FERC, 198
F.3d 266, 269 (D.C. Cir. 1999), the statement in Pacific Gas &
Electric Co. v. Federal Power Commission, 506 F. 2d 33, 38 (D.C.
policy statement, rather than an interpretative rule, and is
not binding.14 On the other hand, EPA agrees with petition-
ers that "the Agency's position on the central legal issue
here--the appropriateness of a sufficiency review of all Title
V monitoring requirements--indeed is settled...." Brief of
Respondent at 32. In other words, whatever EPA may think
of its Guidance generally, the elements of the Guidance
petitioners challenge consist of the agency's settled position, a
position it plans to follow in reviewing State-issued permits, a
__________
Cir. 1974), that a policy statement is not a "rule," apparently within
the meaning of 5 U.S.C. s 551(4). Dicta in Syncor International
Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997), suggests the same
without referring to s 551(4). See also Hudson v. FAA, 192 F.3d
1031 (D.C. Cir. 1999).
On the other hand, in Batterton v. Marshall, 648 F.2d 694, 700
(D.C. Cir. 1980), we interpreted the term "rule" in s 551(4) as
"broad enough to include nearly every statement an agency may
make...." Quoting this language, we held in Center for Auto
Safety v. National Highway Safety Administration, 710 F.2d 842,
846 (D.C. Cir. 1983), that agency policy statements accompanying
the withdrawal of a notice of proposed rulemaking fell within the
definition of a "rule." A few years later, then-Judge Scalia--citing
Batterton--wrote for the court that under APA s 551(4), it is
"clear" that "the impact of an agency statement upon private
parties is relevant only to whether it is the sort of rule that is ... a
general statement of policy." Thomas v. New York, 802 F.2d 1443,
1447 n.* (D.C. Cir. 1986). See also National Tank Truck Carriers,
Inc. v. Federal Highway Admin., 170 F.3d 203, 207 n.3 (D.C. Cir.
1999).
There is no need for us to try to reconcile these two lines of
authority. Nothing critical turns on whether we initially character-
ize the Guidance as a "rule."
14 EPA is under the impression that policy statements can never
be "rules" within the meaning of APA s 551(4): "even if the
Guidance were somehow deemed to be a 'rule' (a conclusion that
would, in EPA's view, be erroneous due to the non-binding nature
of the Guidance), Petitioners' procedural challenge would still fail
because the Guidance undoubtedly would be an interpretive (not
legislative) rule...." Brief of Respondent at 43-44 n.40.
position it will insist State and local authorities comply with in
setting the terms and conditions of permits issued to petition-
ers, a position EPA officials in the field are bound to apply.
Of course, an agency's action is not necessarily final merely
because it is binding.15 Judicial orders can be binding; a
temporary restraining order, for instance, compels compliance
but it does not finally decide the case. In the administrative
setting, "two conditions must be satisfied for agency action to
be 'final': First, the action must mark the 'consummation' of
the agency's decisionmaking process, Chicago & Southern
Airlines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 113
(1948)--it must not be of a merely tentative or interlocutory
nature. And second, the action must be one by which 'rights
or obligations have been determined,' or from which 'legal
consequences will flow,' Port of Boston Marine Terminal
Assn. v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71
(1970)." Bennett v. Spear, 520 U.S. 154, 178 (1997). The first
condition is satisfied here. The "Guidance," as issued in
September 1998, followed a draft circulated four years earlier
and another, more extensive draft circulated in May 1998.
This latter document bore the title "EPA Draft Final Period-
ic Monitoring Guidance."16 On the question whether States
must review their emission standards and the emission stan-
__________
We should note that the Guidance itself states that it "interprets"
s 70.6(a)(3) of the regulations. Guidance at 4 n.1.
15 We add that agency action does not necessarily have binding
effect--that is, does not necessarily alter legal rights and obli-
gations--merely because it is final. Denials of petitions for rule-
making, for instance, may be final although no private person is
required to do anything. In the past, when this court examined the
binding effect of agency action, we did so for the purpose of
determining whether the non-legislative rule should have undergone
notice and comment rulemaking because it was, in effect, a regula-
tion. See, e.g., Florida Power & Light Co. v. EPA, 145 F.3d 1414,
1418-19 (D.C. Cir. 1998); American Portland Cement Alliance v.
EPA, 101 F.3d 772, 776 (D.C. Cir. 1996); Kennecott Utah Copper
Corp. v. Dep't of Interior, 88 F.3d 1191, 1207 (D.C. Cir. 1996);
National Solid Waste Mgmt. Ass'n v. EPA, 869 F.2d 1526, 1534
(D.C. Cir. 1989).
16 In the title to the Guidance we have before us, EPA dropped
the word "final."
dards EPA has promulgated to determine if the standards
provide enough monitoring, the Guidance is unequivocal--the
State agencies must do so. See Guidance at 6-8. On the
question whether the States may supersede federal and State
standards and insert additional monitoring requirements as
terms or conditions of a permit, the Guidance is certain--the
State agencies must do so if they believe existing require-
ments are inadequate, as measured by EPA's multi-factor,
case-by-case analysis set forth in the Guidance. See Guid-
ance at 7-8.
EPA may think that because the Guidance, in all its
particulars, is subject to change, it is not binding and there-
fore not final action. There are suggestions in its brief to this
effect. See, e.g., Brief of Respondent at 3, 33 n.30. But all
laws are subject to change. Even that most enduring of
documents, the Constitution of the United States, may be
amended from time to time. The fact that a law may be
altered in the future has nothing to do with whether it is
subject to judicial review at the moment. See McLouth Steel
Prods. Corp. v. EPA, 838 F.2d at 1320.
On the issue whether the challenged portion of the Guid-
ance has legal consequences, EPA points to the concluding
paragraph of the document, which contains a disclaimer:
"The policies set forth in this paper are intended solely as
guidance, do not represent final Agency action, and cannot be
relied upon to create any rights enforceable by any party."
Guidance at 19. This language is boilerplate; since 1991
EPA has been placing it at the end of all its guidance
documents. See Robert A. Anthony, supra, 41 Duke L.J. at
1361; Peter L. Strauss, Comment, The Rulemaking Contin-
uum, 41 Duke L.J. 1463, 1485 (1992) (referring to EPA's
notice as "a charade, intended to keep the proceduralizing
courts at bay"). Insofar as the "policies" mentioned in the
disclaimer consist of requiring State permitting authorities to
search for deficiencies in existing monitoring regulations and
replace them through terms and conditions of a permit,
"rights" may not be created but "obligations" certainly are--
obligations on the part of the State regulators and those they
regulate. At any rate, the entire Guidance, from beginning to
end--except the last paragraph--reads like a ukase. It
commands, it requires, it orders, it dictates. Through the
Guidance, EPA has given the States their "marching orders"
and EPA expects the States to fall in line, as all have done,
save perhaps Florida and Texas. See Natural Resources
Defense Council, Inc. v. Thomas, 845 F.2d 1088, 1094 (D.C.
Cir. 1988); Community Nutrition Inst. v. Young, 818 F.2d
943, 947-48 (D.C. Cir. 1987).
Petitioners tell us, and EPA does not dispute, that many of
them are negotiating their Title V permits, that State authori-
ties, with EPA's Guidance in hand, are insisting on continuous
opacity monitors17 for determining compliance with opacity
limitations although the applicable "standard specifies EPA
Method 9 (a visual observation method) as the compliance
method (and, in some cases, already provides for periodic
performance of that method)." Brief of Petitioners at 43-44.
See Natural Resources Defense Council, Inc. v. EPA, 22 F.3d
1125, 1133 (D.C. Cir. 1994).
The short of the matter is that the Guidance, insofar as
relevant here, is final agency action, reflecting a settled
agency position which has legal consequences both for State
agencies administering their permit programs and for compa-
nies like those represented by petitioners who must obtain
Title V permits in order to continue operating.18
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17 A continuous opacity monitor employs "a calibrated light source
that provides for accurate and precise measurement of opacity at all
times." See Credible Evidence Revisions, 62 Fed. Reg. 8319 (1997).
In contrast, "Method 9 requires that a trained visible emissions
observer (VEO) view a smoke plume with the sun at a certain angle
to the plume" to determine the opacity of the plume released. Id.
18 EPA also claims that the Guidance is not ripe for review
because the court's review would be more focused in the context of
a challenge to a particular permit. We think there is nothing to
this. Whether EPA properly instructed State authorities to con-
duct sufficiency reviews of existing State and federal standards and
to make those standards more stringent if not enough monitoring
was provided will not turn on the specifics of any particular permit.
Furthermore, EPA's action is national in scope and Congress
clearly intended this court to determine the validity of such EPA
actions. See 42 U.S.C. s 7607. A challenge to an individual permit
would not be heard in this court. (Petitioners contend that only
state courts could adjudicate such cases. We express no view about
that.)
B.
As to the validity of the Guidance, petitioners' arguments
unfold in the following sequence. First, they contend that the
Guidance amended the "periodic monitoring rule" of
s 70.6(a)(3)(i)(B). Although the rule only allowed State au-
thorities to fill in gaps, that is, to require periodic monitoring
when the applicable State emission standard contained no
monitoring requirement, a one-time startup test, or provided
no frequency for monitoring, the Guidance applies across the
board, charging State authorities with the duty of assessing
the sufficiency of all State and federal standards.19 With the
Guidance in place, regional EPA offices have solid legal
grounds for objecting to State-issued permits if the State
authorities refuse to bend to EPA's will. Therefore, as peti-
tioners see it, the Guidance is far more than a mere interpre-
tation of the periodic monitoring rule and it is far more than
merely a policy statement. In practical effect, it creates a
new regime, a new legal system governing permits, and as
such it should have been, but was not, promulgated in compli-
ance with notice and comment rulemaking procedures. Peti-
tioners say that if they are wrong about this, if the Guidance
represents a valid interpretation of the periodic monitoring
rule in s 70.6(a)(3)(i)(B), then the rule itself is invalid. Con-
gress did not authorize EPA to require States, in issuing Title
V permits, to make revisions to monitoring requirements in
existing federal emission standards.
The case is presented to us in pure abstraction. Neither
side cites any specific federal or State emission standard.
Although petitioners complain that State officials will revise
federal standards promulgated before November 1990, peti-
tioners' briefs identify no specific federal standard potentially
subject to revision. Which, if any, federal standards are
susceptible to State revision in a permit for lack of periodic
monitoring is thus something about which we can only guess.
The same is true regarding State emission standards.
__________
19 Petitioners also claim that the Guidance revised EPA's "Com-
pliance Assurance Monitoring" rule, sustained in Natural Resources
Defense Council, Inc. v. EPA, 194 F.3d 130 (D.C. Cir. 1999), an
argument we find unnecessary to consider.
Perhaps petitioners should not be faulted. They disagree
with EPA's general principle, with the agency's position that
it can give State permit officials the authority to substitute
new monitoring requirements in place of existing State or
federal emission standards already containing some sort of
monitoring requirements. The validity of that general princi-
ple does not turn on the specifics of any particular emission
standard, although its application does. Besides, EPA is
currently developing even more detail in far more extensive
"guidance" using concrete examples of what would, and would
not, constitute "periodic monitoring" in EPA's opinion. See
Draft--Periodic Monitoring Technical Reference Document
(Apr. 30, 1999).
It is well-established that an agency may not escape the
notice and comment requirements (here, of 42 U.S.C. s 7607
(d)) by labeling a major substantive legal addition to a rule a
mere interpretation. See Paralyzed Veterans v. D.C. Arena
L.P., 117 F.3d 579, 588 (D.C. Cir. 1997); American Mining
Congress v. MSHA, 995 F.2d 1106, 1109-10 (D.C. Cir. 1993).
"We must still look to whether the interpretation itself carries
the force and effect of law, ... or rather whether it spells out
a duty fairly encompassed within the regulation that the
interpretation purports to construe." (citations and internal
quotations omitted). See Paralyzed Veterans, 117 F.3d at
588. With that in mind, we will deal first with petitioners'
claim that the Guidance significantly expanded the scope of
the periodic monitoring rule. Section 70.6(a)(3)(i)(B) tells us
that "periodic monitoring" must be made part of the permit
when the applicable State or federal standard does not pro-
vide for "periodic testing or instrumental or noninstrumental
monitoring."20 If "periodic" has its usual meaning,21 this
__________
20 EPA identified the source of its authority for s 70.6(a)(3) as 42
U.S.C. s 7661c(b). This provides that EPA "may by rule" set forth
methods and procedures "for monitoring and analysis of pollutants
regulated under this chapter, but continuous emissions monitoring
need not be required if alternative methods are available that
provide sufficiently reliable and timely information for determining
compliance."
21 Although EPA defined many terms in its regulations governing
permits, 40 C.F.R. s 70.2, it provided no definition of "periodic" or
of "monitoring."
signifies that any State or federal standard requiring testing
from time to time--that is yearly, monthly, weekly, daily,
hourly--would be satisfactory. The supplementing authority
in s 70.6(a)(3)(i)(B) therefore would not be triggered; in-
stead, the emission standard would simply be incorporated in
the permit, as EPA acknowledged in the rule's preamble, see
supra note 8. On the other hand, if the State or federal
standard contained merely a one-time startup test, specified
no frequency for monitoring or provided no compliance meth-
od at all, s 70.6(a)(3)(i)(B) would require the State authorities
to specify that some testing be performed at regular intervals
to give assurance that the company is complying with emis-
sion limitations.
So far, our parsing of the language of s 70.6(a)(3)(i)(B)
corresponds with petitioners' view that the rule serves only a
gap-filling function. If this is what the rule means, there is
no doubt that it is much narrower than the Guidance issued in
1998. There, EPA officials stated that regardless whether an
emission standard contained a "periodic testing" or monitor-
ing requirement, additional monitoring "may be necessary" if
the monitoring in the standard "does not provide the neces-
sary assurance of compliance."22 E.g., Guidance at 7-8. Pe-
titioners describe that aspect of the Guidance this way: "The
Guidance unequivocally directs state permitting authorities,
as a minimum element of continued EPA program approval,
to conduct wide-ranging sufficiency reviews and upgrade
monitoring in nearly all individual permits or permit applica-
tions, even where the underlying applicable requirement in-
corporates 'periodic testing or instrumental or noninstrumen-
__________
22 By measuring the adequacy of monitoring in this manner,
EPA's position introduces circularity. The Guidance instructs per-
mitting authorities that monitoring is sufficient if it provides "a
reasonable assurance of compliance with requirements applicable to
the source." Guidance at 7. But some of the applicable require-
ments are themselves methods for testing a source's compliance
with other standards. For instance, in the case of a requirement to
conduct an annual stack test, EPA's methodology suggests that
performance of the one-time test would be sufficient as it provides
"a reasonable assurance of compliance" with the applicable require-
ment. The problem is this gives permitting authorities no assis-
tance in evaluating the proper frequency of such tests.
tal monitoring' in facial compliance with s 70.6(a)(3)(i)(B)."
Reply Brief of Petitioners at 13.
EPA's view of the scope of the Guidance is about the same
as petitioners'. But the agency thinks statements in the
preamble to its 1992 rule and its responses to comments in
the final rulemaking alerted interested onlookers to its cur-
rent position and show that the Guidance issued in 1998 is no
broader than the rule itself. EPA's strongest point is the
following statement made in 1992: "To the extent commenta-
tors assert that Title V does not authorize EPA to require
monitoring beyond that provided for in the applicable require-
ment, EPA disagrees with the commenters." EPA Response
to Comments (hereinafter "RTC") at 6-3. On the face of it,
this assertion of statutory authority may have reflected
EPA's claim--which no one now disputes--that if an "applica-
ble requirement" contained a one-time stack test, the federal
agency could insist that the State authority insert in the
permit a requirement that the test be performed at regular
intervals. If that is all the EPA statement signified, it would
be entirely consistent with petitioners' interpretation of the
final rule.23
In its response to comments and in the preamble to the
Title V regulations, EPA promised that if there is "any
federally promulgated requirement with insufficient monitor-
ing, EPA will issue a rulemaking to revise such requirement."
57 Fed. Reg. 32,278 (1992); RTC at 6-4.24 The Guidance, of
course, charts a very different course. Now, it is initially up
to the States to identify federal standards with deficient
__________
23 According to EPA's response to comments:
Examples of situations where Section 70.6(a)(3)(i)(B) would
apply include a SIP provision which contains a reference test
method but no testing obligation, or a NSPS which requires
only a one time stack test on startup. Any Federal standards
promulgated pursuant to the Act amendments of 1990 are
presumed to contain sufficient monitoring and, therefore, only
Section 70.6(a)(3)(i)(A) applies.
RTC at 6-4.
24 Later in its response to comments, EPA repeated this promise:
"... EPA will revise federal regulations that need additional speci-
fication of test methods, including specification of frequency and
degree of testing." RTC at 6-5.
monitoring, doubtless with EPA's input, formal or informal.
And it is the State and local agencies that must alter the
standards by requiring permittees--such as petitioners--to
comply with more stringent monitoring requirements. Need-
less to say, EPA's approach--delegating to State officials the
authority to alter duly promulgated federal standards--raises
serious issues, not the least of which is whether EPA possess-
es the authority it now purports to delegate. One would
suppose, and EPA did in 1992, that if federal regulations
proved inadequate for one reason or another, EPA would
have to conduct a rulemaking to amend them. See Clean Air
Implementation Project v. EPA, 150 F.3d 1200, 1203-04 (D.C.
Cir. 1998).
EPA thinks two other statements in its response to com-
ments alerted everyone that its new rule would set in motion
an across-the-board review of the existing monitoring require-
ments contained in federal and State emission standards.
The first of these statements is: "In many cases, the monitor-
ing requirements in the underlying regulation will suffice for
assessing compliance." RTC at 6-3. EPA treats the "in
many cases" as a qualification. What does this tell the
careful reader? Only that sometimes the State or federal
emission standard will need to be supplemented. But the
critical question is when--when the monitoring in the stan-
dard consists only of a one-time test? or when the yearly or
monthly or weekly or daily testing specified in the standard is
not enough, as determined by State authorities or EPA
during the permit process?
The second statement is this:
The EPA reiterates that permits must be enforceable,
and must include periodic monitoring, which might in-
volve the use of, or be based on, appropriate reference
test methods.... Where EPA has not provided ade-
quate guidance in regard to source testing or monitoring,
permitting authorities are allowed to establish additional
requirements, including requirements concerning the de-
gree and frequency of source testing on a case-by-case
basis, as necessary to assure compliance with Part 70
[Title V] permit terms or conditions. However, in no
case may such frequency be less stringent than any
frequency required by an underlying applicable require-
ment.
Id. at 6-5. If "periodic monitoring" means testing from time
to time, the first sentence in this passage hardly advances
EPA's current position. And the second sentence seems set
against it. Only when "EPA has not provided adequate
guidance in regard to source testing or monitoring," may
State authorities provide additional monitoring. So what is
"adequate guidance"? Once again the only concrete example
EPA gave in 1992 was a one-time stack test, which rather
makes petitioners' point.
The short of the matter is that the regulatory history EPA
offers fails to demonstrate that s 70.6(a)(3)(i)(B) initially had
the broad scope the Guidance now ascribes to it. Nothing on
the face of the regulation or in EPA's commentary at the time
said anything about giving State authorities a roving commis-
sion to pore over existing State and federal standards, to
decide which are deficient, and to use the permit system to
amend, supplement, alter or expand the extent and frequency
of testing already provided. In fact, EPA's promise in the
1992 rulemaking--that if federal standards were found to be
inadequate in terms of monitoring it would open rulemaking
proceedings--is flatly against EPA's current position. (EPA
makes no attempt to square this promise with the argument
it makes today.)
Furthermore, we attach significance to EPA's recognition,
in its 1992 permit regulations, that "Title V does not impose
substantive new requirements," 40 C.F.R. s 70.1(b). Test
methods and the frequency of testing for compliance with
emission limitations are surely "substantive" requirements;
they impose duties and obligations on those who are regulat-
ed. Federal testing requirements contained in emissions
standards are promulgated after notice and comment rule-
making. Testing requirements in emission standards in State
standards are presumably adopted by the State's legislature
or administrative agency, and approved by EPA as part of
the State's implementation plan. We have recognized before
that changing the method of measuring compliance with an
emission limitation can affect the stringency of the limitation
itself. Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375,
396-97 (D.C. Cir. 1973), discussed in Clean Air Implementa-
tion Project v. EPA, 150 F.3d at 1203. In addition, monitor-
ing imposes costs. Petitioners represent that a single stack
test can "cost tens of thousands of dollars, and take a day or
more to complete," which is why "stack testing is limited to
once or twice a year (at most)." Brief of Petitioners at 22
n.75. If a State agency, acting under EPA's direction in the
Guidance, devised a permit condition increasing a company's
stack test obligation (as set forth in a State or federal
standard) from once a year to once a month, no one could
seriously maintain that this was something other than a
substantive change.25
There is still another problem with EPA's position. Al-
though its Guidance goes to great lengths to explain what is
meant by the words "periodic monitoring," it almost com-
pletely neglects a critical first step. On the face of
s 70.6(a)(3)(i)(B), "periodic monitoring" is required if and only
if "the applicable requirement does not require periodic test-
ing or instrumental or noninstrumental monitoring (which
may consist of record-keeping designed to serve as monitor-
ing)." While the Guidance is quick to say that all Title V
permits must contain "periodic monitoring," it never explains
what constitutes "periodic testing" or what constitutes "in-
strumental or noninstrumental monitoring." Instead,
throughout the Guidance, EPA either yokes these three items
together, or treats the terms as synonymous, without saying
why. Yet if "periodic testing" and "instrumental or nonin-
strumental monitoring" mean the same thing as "periodic
monitoring," there is no accounting for why s 70.6(a)(3)(i)(B)
was written as it was. The regulation could simply have said
"periodic monitoring" is required for all permits, period.26
__________
25 The Guidance, at p. 8, provides a six-point bullet point list for
permit-writers, making clear that EPA expects them to engage in
an intricate regulatory trade off (often on a unit-by-unit basis),
assessing the costs and benefits of available technologies for the
particular pollutant. This six-part list has mutated into a complex
flow chart in the Draft Periodic Monitoring Technical Reference
Document, and is reprinted as an Addendum to this opinion.
26 EPA argues that our opinion in Natural Resources Defense
Council, Inc. v. EPA, 194 F.3d 130, 135-36 (D.C. Cir. 1999), reflects
In sum, we are convinced that elements of the Guidance--
those elements petitioners challenge--significantly broadened
the 1992 rule. The more expansive reading of the rule,
unveiled in the Guidance, cannot stand. In directing State
permitting authorities to conduct wide-ranging sufficiency
reviews and to enhance the monitoring required in individual
permits beyond that contained in State or federal emission
standards even when those standards demand some sort of
periodic testing, EPA has in effect amended s 70.6(a)(3)(i)(B).
This it cannot legally do without complying with the rulemak-
ing procedures required by 42 U.S.C. s 7607(d).27 See Alas-
__________
an understanding of s 70.6(a)(3) "nearly identical" to that contained
in the Guidance. Supplemental Brief of Respondent at 4. The
opinion stated:
[T]he 1990 Clean Air Act Amendments did not mandate that
EPA fit all enhanced monitoring under one rule and EPA has
reasonably illustrated how its enhanced monitoring program,
when considered in its entirety, complies with s 114(a)(3).
Specifically, EPA demonstrated that many of the major station-
ary sources exempt from CAM are subject to other specific
rules, and if they are not, they are subject to the two residual
rules: (1) "[The permit shall contain] periodic monitoring suffi-
cient to yield reliable data ... that are representative of the
source's compliance with the permit...." 40 C.F.R.
s 70.6(a)(3)(i)(B); (2) "All part 70 permits shall contain the
following elements with respect to compliance: (1) Consistent
with paragraph (a)(3) of this section, compliance certification,
testing, [and] monitoring ... requirements sufficient to assure
compliance with the terms and conditions of the permit." Id.
s 70.6(c)(1).
Id. The bracketed portion of the quotation reads out of subsection
(B) the conditions that "periodic monitoring" is required only when
"the applicable requirement does not require periodic testing or
instrumental or noninstrumental monitoring (which may consist of
record-keeping designed to serve as monitoring)." When that
clause is reinserted, it becomes clear that the quotation does not
speak to the situation of permits which already provide for periodic
testing, addressed in 40 C.F.R. s 70.6(a)(3)(i)(A).
27 Unless EPA certifies that the amendments to the Title V rule
would not "have a significant economic impact on a substantial
ka Professional Hunters Ass'n v. FAA, 177 F.3d 1030, 1034
(D.C. Cir. 1999); Caruso v. Blockbuster-Sony Music Enter-
tainment Centre, 174 F.3d 166, 176-78 (3d Cir. 1999); Para-
lyzed Veterans, 117 F.3d at 585-86.
For the reasons stated, we find setting aside EPA's Guid-
ance to be the appropriate remedy. Though petitioners
challenge only portions of the Guidance, partial affirmance is
not an option when, as here,"there is 'substantial doubt' that
the agency would have adopted the severed portion on its
own." Davis County Solid Waste Management v. EPA, 108
F.3d 1454, 1458 (D.C. Cir. 1997) (quoting North Carolina v.
FERC, 730 F.2d 790, 795-96 (D.C. Cir. 1984)). In view of the
intertwined nature of the challenged and unchallenged por-
tions of the Guidance, the Guidance must be set aside in its
entirety. See 42 U.S.C. s 7607. State permitting authorities
therefore may not, on the basis of EPA's Guidance or 40
C.F.R. s 70.6(a)(3)(i)(B), require in permits that the regulated
source conduct more frequent monitoring of its emissions
than that provided in the applicable State or federal standard,
unless that standard requires no periodic testing, specifies no
frequency, or requires only a one-time test.
So ordered.
__________
number of small entities," 5 U.S.C. s 605(b), it must also comply
with the various procedural requirements of the Small Business
Regulatory Enforcement Fairness Act, 5 U.S.C. ss 601-612.
[Addendum not available electronically]