Env Def v. EPA

 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued March 20, 2007                   Decided June 19, 2007

                         No. 05-1446

                 ENVIRONMENTAL DEFENSE,
                       PETITIONER

                               v.

           ENVIRONMENTAL PROTECTION AGENCY,
                     RESPONDENT


        On Petition for Review of a Final Rule of the
            Environmental Protection Agency


   David S. Baron argued the cause for the petitioner.
    Michael C. Augustini, Attorney, United States Department
of Justice, argued the cause for the respondent. John C. Cruden,
Deputy Assistant Attorney General, and Brian L. Doster,
Counsel, Unites States Environmental Protection Agency, were
on brief.
   Before: HENDERSON, ROGERS and GRIFFITH, Circuit Judges.
   Opinion for the court filed by Circuit Judge HENDERSON.
   Concurring opinion filed by Circuit Judge ROGERS.
   KAREN LECRAFT HENDERSON, Circuit Judge: As part of the
Clean Air Act (CAA), the Congress created a program entitled
“Prevention of Significant Deterioration of Air Quality” (PSD),
which is designed to protect air quality in national parks and
                                2

similar scenic and recreational areas. 42 U.S.C. ch. 85, subch. I,
pt. C (CAA §§ 160-169b, 42 U.S.C. §§ 7470-92). In 1988 the
Environmental Protection Agency (EPA) promulgated
regulations to implement the PSD program for nitrogen oxides
(NOx). Prevention of Significant Deterioration for Nitrogen
Oxides, 53 Fed. Reg. 40,656 (October 17, 1988) (1988 Rule).
In 1990, the court reviewed the 1988 Rule and remanded the
regulations to EPA. Envtl. Def. Fund, Inc. v. EPA, 898 F.2d
183 (D.C. Cir. 1990). EPA issued a new final rule in 2005.
Prevention of Significant Deterioration for Nitrogen Oxides, 70
Fed. Reg. 59,582 (Oct. 12, 2005) (codified at 40 C.F.R.
§§ 51.166, 52.21) (2005 Rule). Petitioner Environmental
Defense seeks review of the 2005 Rule. Because EPA followed
our directives in Environmental Defense Fund and its
regulations reflect a reasonable interpretation of the applicable
CAA PSD provisions, we deny the petition for review.
                                I.
    The CAA requires that EPA promulgate a primary and a
secondary National Ambient Air Quality Standard (NAAQS) for
each air pollutant for which EPA has issued “air quality criteria”
pursuant to CAA section 108, 42 U.S.C. § 7408. 42 U.S.C.
§ 7409(a); see generally Whitman v. Am. Trucking Ass’ns, 531
U.S. 457, 462 (2001). After the NAAQS is established for a
particular pollutant, each state must submit to EPA a list of all
areas in the state, designating each area as “attainment” (i.e., it
meets the NAAQS); “nonattainment” (i.e., it does not meet the
NAAQS) or “unclassifiable” (i.e., it “cannot be classified on the
basis of available information as meeting or not meeting the
[NAAQS]”). 42 U.S.C. § 7407. The state must then develop
and submit to EPA a “State Implementation Plan” (SIP) which
“provides for implementation, maintenance, and enforcement of
[the NAAQs].” Id. § 7410(a)(1).
   In 1977, the Congress amended the CAA to add the PSD
provisions in order to “protect the air quality in national parks
                               3

and similar areas of special scenic or recreational value, and in
areas where pollution was within the national ambient standards,
while assuring economic growth consistent with such
protection.” Envtl. Def. Fund, 898 F.2d at 184 (citing CAA
§ 160, 42 U.S.C. § 7470). The PSD provisions require that each
applicable SIP “shall contain emission limitations and such other
measures as may be necessary, as determined under regulations
promulgated under this part, to prevent significant deterioration
of air quality in each region (or portion thereof) designated
pursuant to section 7407 of [title 42] as attainment or
unclassifiable.” 42 U.S.C. § 7471. The PSD establishes three
classes of subject attainment or unclassifiable areas:
   Class I—comprising mainly large national parks and
   national wilderness areas; Class II—regions where the
   ambient air quality levels more than meet the national
   standards; and Class III—regions meeting the definition of
   Class I or Class II areas but redesignated at the behest of a
   state for higher levels of industrial development.
Envtl. Def. Fund, 898 F.2d at 185 (citing CAA §§ 162, 164, 42
U.S.C. §§ 7472, 7474). For each of the three Classes, the
Congress required that EPA establish numerical emission limits
for specific pollutants.
    For “Set I” pollutants—i.e., sulfur oxide and particulate
matter—CAA § 163 establishes for each Class “maximum
allowable increases”—called “increments” and expressed in
micrograms per cubic meter (μg/m3)—“over baseline
concentrations.”     42 U.S.C. § 7473.            The “baseline
concentration” is defined as “the ambient concentration levels
which exist at the time of the first application for a permit” by
a major emitting facility. Id. § 7479(4).
   For “Set II” pollutants—namely, hydrocarbons, carbon
monoxide, photochemical oxidants and, at issue here, NOx —the
Congress declined to set specific incremental or other limits,
                                  4

leaving the task to EPA. Subsection 166(a) directs that for these
pollutants EPA “shall conduct a study and not later than two
years after August 7, 1977, promulgate regulations to prevent
the significant deterioration of air quality which would result
from the emissions of such pollutants.” Id. § 7476(a).
Subsection 166(c) further directs that the regulations “shall
provide specific numerical measures against which permit
applications may be evaluated, a framework for stimulating
improved control technology, protection of air quality values,
and fulfill the goals and purposes set forth in section 7401 and
section 7470 of [title 42].” Id. § 7476(c). More specifically,
subsection 166(d) instructs that the regulations “shall provide
specific measures at least as effective as the increments
established in section 7473 of [title 42] to fulfill such goals and
purposes, and may contain air quality increments, emission
density requirements, or other measures.” Id. § 7476(d).1
                        A. 1988 PSD Rule
    EPA issued a proposed rule for PSD of NOx on February 8,
1988.2 Prevention of Significant Deterioration for Nitrogen
Oxides, 53 Fed. Reg. 3698 (Feb. 8, 1988). On October 17,
1988, EPA issued the final rule, in which it decided to adopt an
increment limitation system for NOx similar to the increment

    1
     The House version of the bill set identical percentage increments
for Set I and Set II pollutants. H.R. 6161, 95th Cong., § 108(a), at
294-95 (April 6, 1977). The Senate version prescribed the same
increments as the House bill for Set I pollutants but, for Set II
pollutants, directed EPA to conduct a study and report back to the
Congress with proposed increments. S. 252, 95th Cong., § 6, at 20-21
(May 10, 1977). The final bill retained the prescribed increments for
Set I pollutants but, for Set II pollutants, directed EPA, after
conducting a study, to establish the limits.
    2
    EPA had aborted an earlier rulemaking. See Envtl. Def. Fund,
898 F.2d at 184 n.3.
                                 5

scheme the Congress had prescribed for Set I pollutants—and
had contemplated that EPA might adopt for Set II pollutants, see
42 U.S.C. § 7476(d) (Set II regulations “may contain air quality
increments”). Accordingly, EPA established increment limits
“by reference to”—that is, as a percentage of—the NAAQS it
had promulgated for NOx pursuant to 42 U.S.C. § 7409 because
the “Congress used the NAAQS for [Set I] pollutants as the
benchmark for determining what constitutes ‘significant
deterioration’ ” and “because the NAAQS constitute the basic
measure of air quality under the Act.” 53 Fed. Reg. at 3700.
EPA also chose the same percentages for Set II that the
Congress had for Set I: 2.5% for Class I areas, 25% for Class II
areas and 50% for Class III areas. Id. at 3704-05. In addition,
EPA promulgated NOx increments for only one nitrogen oxide
compound, nitrogen dioxide (NO2), based on the NO2
NAAQS—notwithstanding the statute calls for regulating
“nitrogen oxides” generally—because NO2 was “the pollutant on
which the national ambient air quality standards (NAAQS) for
nitrogen oxides were based,” 53 Fed. Reg. at 40,656, and thus
was “the only compound for which it had established an ambient
standard” on which to base an increment, Envtl. Def. Fund, 898
F.2d at 185.
        B. Environmental Defense Fund, Inc. v. EPA
    In Environmental Defense Fund, the court reviewed the 1988
Rule and found it failed to comply with the Congress’s
directives in two respects.
    First, the court concluded that EPA’s incremental approach
was incomplete. The court approved as reasonable EPA’s
construction of subsection 166(d)’s mandate that EPA “provide
specific measures at least as effective as the increments
established in section 7473,” 42 U.S.C. § 74726(d), “as
requiring that the Set II rules be at least as stringent as those for
Set I, i.e., that increments be set no lower, as percentages of a
pollutant’s ambient standards, than the Set I increments were as
                                6

percentages of their respective ambient standards.” Envtl. Def.
Fund, 898 F.2d at 187 (emphasis original); see id. at 188
(approving “stringency” interpretation as “both workable and
completely faithful to a broad vision of the relevant goals and
purposes” (emphasis original)).           Nonetheless, the court
concluded EPA’s interpretation “overlook[ed]” two indicators
of the Congress’s intent in enacting section 166: (1) “the
language of subsection (c)” that mandates the Set II regulations
“fulfill the goals and purposes set forth in section 7401 and
section 7470 of [title 42],’ ” 42 U.S.C. § 7476(c); and (2) “the
vector of forces represented by the Senate bill,” which
“originally wanted more study conducted on the Set II
pollutants, with Congress to make the final choice,” see supra
note 1, and, in its final form, still “appears to manifest much of
this intention, merely substituting the EPA for Congress as
decisionmaker.” 898 F.2d at 188. Given EPA’s lapse, the court
concluded section 166 does not afford EPA an absolute safe
harbor to establish Set II increments that mimic the Set I
increments because “a failure to assess a pollutant in terms of
the PSD goals breaches the agency’s duty to consider all the
relevant statutory factors” and EPA “candidly admit[ted] it did
not make that inquiry.” Id. 188-89 (citing Motor Vehicle Mfrs.
Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29
(1983); Specialty Equip. Mkt. Ass’n v. Ruckelshaus, 720 F.2d
124, 132 (D.C. Cir. 1983)).
    While rejecting an absolute safe harbor, the court did
endorse a contingent safe harbor approach (among three
hypothesized interpretations). The court explained that EPA’s
selected increment methodology would provide a safe harbor “if
but only if the Administrator determines (without being arbitrary
and capricious) that the criteria under subsection (c) do not call
for a more, or a less, stringent standard.” Id. at 189 (footnote
omitted). The court then concluded it could not uphold EPA’s
regulations based on the contingent safe harbor theory: “The
reading that we have hypothesized of § 166(d) as a contingent
                                    7

safe harbor requires the agency first to adopt that view, then to
determine that the inquiry under subsection (c) does not require
a more stringent standard. It has done neither.” Id. at 189.
    Second, the court found fault with EPA’s promulgating an
increment based solely on the NAAQS, which “resulted in
EPA’s defining increments for only one compound of nitrogen
oxides (NO2), and defining them only in terms of annual
averages.” Id. at 190. The court concluded EPA’s decision
ignored the different natures of the NAAQS and the PSD
measures, noting that the NAAQS provisions “seem to
encompass everything imaginable,” id. (citing 42 U.S.C.
§ 7409(b)(2), which requires NAAQS “requisite to protect the
public welfare”), while the PSD program “emphasizes special
considerations, such as national wilderness areas and their
‘natural, recreational, scenic, or historic value[s],’ ” id. (quoting
42 U.S.C. §7470(2) (alteration in original)). “Thus a pollutant
that has only mild public health effects but severe effects on
wilderness areas might demand a lower increment (measured as
a percentage of its ambient standards) than one with severe
health effects but only mild effects on wilderness areas.” Id.
    Based on these two shortcomings, the court remanded the
1988 Rule to EPA “to develop an interpretation of § 166 that
considers both subsections (c) and (d), and if necessary to take
new evidence and modify the regulations.” Id. It did not vacate
the regulations, which have therefore remained in effect.3




    3
     The court gave the following reason for not ordering vacatur: “No
party to this litigation asks that the court vacate the EPA’s regulations,
and to do so would at least temporarily defeat petitioner’s purpose, the
enhanced protection of the environmental values covered by the PSD
provisions.” 898 F.2d at 190.
                                   8

                          C. 2005 PSD Rule
    On February 23, 2005, EPA issued a proposed rule,
Prevention of Significant Deterioration for Nitrogen Oxides, 70
Fed. Reg. 8880 (Feb. 23, 2005), in which it “responded to the
court’s opinion” in Environmental Defense Fund and proposed
to adopt the contingent safe harbor interpretation of subsections
166(c) and (d) endorsed by the court and, based thereon, NOx
increments as in the 1988 Rule. Final Rule, 70 Fed. Reg. at
59,586. On October 12, 2005, EPA issued its final rule, which
followed the same path. EPA there set out “five central
elements” as the basis for its regulations. Id.
     First, EPA “read section 166 of the Act to direct EPA to
conduct a holistic analysis that considers how a complete system
of regulations will collectively satisfy the applicable criteria,
rather than evaluating one individual part of a regulatory scheme
in isolation.” Id. Accordingly, it “did not look at increments in
isolation, but also considered how these increments work in
conjunction with other measures”—namely, “[Air Quality
Related Values] review in Class I areas, additional impacts
analysis, and [Best Available Control Technology]
requirements”—“to satisfy the statutory criteria.” Id.4
    Second, EPA determined that the contingent safe harbor
approach reflects a reasonable interpretation of subsection 166,
which, it concluded, can be read to require that EPA first,
pursuant to subsection (d), “identify a minimum level of
effectiveness, or safe harbor, for the body of pollutant-specific
PSD regulations adopted under section 166” and then “conduct
further review to determine whether, based on the criteria in
subsection (c), EPA’s pollutant-specific PSD regulations under
section 166 should contain measures that deviate from the
minimum ‘safe harbor’ identified under subsection (d),” which


   4
       On these additional measures, see infra pp. 13-14.
                                9

subsection requires measures that are “ ‘at least as stringent’ as
the statutory increments set forth in section 163.” Id. at 59,587.
    Third, EPA identified “eight statutory factors that EPA must
apply when promulgating pollutant-specific regulations to
prevent significant deterioration of air quality.” Id. at 59,586.
The first three are based on the “three stand-alone criteria in
section 166(c),” which “indicate that PSD regulations for
specific pollutants should provide (1) specific numerical
measures for evaluating permit applications; (2) a framework for
stimulating improved control technology; and (3) protection of
air quality values.” Id. at 59,587 (citing 42 U.S.C. § 7476(c)).
The remaining five factors were “incorporated into the analysis
by virtue of the fourth criterion in section 166(c), which directs
that EPA’s pollutant-specific PSD regulations ‘fulfill the goals
and purposes’ set forth in sections 160 and 101 of the Act.” Id.
(quoting 42 U.S.C. 7476(c)). They are the five “goals and
purposes listed in section 160 as factors applicable to
pollutant-specific PSD regulations established under section
166,” id.:
     (1) to protect public health and welfare from any actual
   or potential adverse effect which in the Administrator's
   judgment may reasonably be anticipate [sic] to occur
   from air pollution or from exposures to pollutants in
   other media, which pollutants originate as emissions to
   the ambient air) [sic], notwithstanding attainment and
   maintenance of all national ambient air quality
   standards;
     (2) to preserve, protect, and enhance the air quality in
   national parks, national wilderness areas, national
   monuments, national seashores, and other areas of
   special national or regional natural, recreational, scenic,
   or historic value;
                                 10

       (3) to insure that economic growth will occur in a
    manner consistent with the preservation of existing clean
    air resources;
       (4) to assure that emissions from any source in any
    State will not interfere with any portion of the applicable
    implementation plan to prevent significant deterioration
    of air quality for any other State; and
      (5) to assure that any decision to permit increased air
    pollution in any area to which this section applies is
    made only after careful evaluation of all the
    consequences of such a decision and after adequate
    procedural opportunities for informed public
    participation in the decisionmaking process.
42 U.S.C. § 7470.5
    Fourth, EPA interpreted the requirement that it
“simultaneously satisfy each of these factors to establish a
balancing test in cases where certain objectives may be at odds
with each other.” 70 Fed. Reg. at 59,586. Specifically, EPA
noted the need to strike a balance between the potentially
conflicting goals set out in section 160(3): “to simultaneously
protect air quality and maximize opportunities for economic
growth,” id. at 59,588.
    Fifth, EPA recognized that “the requirements of section 166
may be satisfied by adopting other measures besides an
increment and that EPA may allow States to demonstrate that


    5
     EPA took the view that “PSD measures that satisfy the specific
goals and purposes of section 160 also satisfy the more general
purposes and goals identified in section 101 of the Act,” noting that
“[t]he overall goals and purposes of the CAA listed in sections 101(b)
and 101(c) are general goals regarding protecting and enhancing the
nation's air resources and controlling and preventing pollution.” 70
Fed. Reg. at 59,587 n.1.
                                11

alternatives to increment [sic] contained in a SIP meet the
requirements of sections 166(c) and 166(d).” Id. at 59,586.
    Based on these five elements, EPA announced it was
“retaining the existing NO2 increments without change” and
“amending the text of [its] PSD regulations at 40 CFR 51.166 to
clarify that any State may employ an alternative approach to the
NO2 increments if the State’s approach meets certain
requirements.” Id. at 59,595-96 (footnote omitted). See 40
C.F.R. § 51.166(c)(2) (new subsection allowing State to
“demonstrate that it has alternative measures in its plan other
than maximum allowable increases that satisfy the requirements
in sections 166(c) and 166(d) of the Clean Air Act for nitrogen
oxides”). EPA then set out in detail the balancing analysis it had
conducted, explaining how six components of its NOx PSD
regulations advance the eight statutory factors it had identified.
See 70 Fed. Reg. at 59,596-99.
    1. Increment System: First, EPA determined that using an
increment system fulfills “[t]wo of the factors applicable under
section 166(c)”: (1) the “obligation . . . to provide ‘specific
numerical measures against which permit applications may be
evaluated’ ” because each increment is “a quantitative value that
establishes the ‘maximum allowable increase’ for a particular
pollutant” and “functions, therefore, as a specific numerical
measure that can be used to evaluate whether an applicant’s
proposed project will cause or contribute to air pollution in
excess of allowable levels,” id. at 59,596; and (2) the
requirement of “providing ‘a framework for stimulating
improved control technology’ ” because increments “establish
an incentive to apply more stringent control technologies in
order to avoid violating the increment,” id.
    2. Area Classifications: Second, EPA determined that
setting increments “at different levels for each class of PSD
area” also fulfills two of the applicable factors: (1) “Establishing
the most stringent increments in Class I areas helps fulfill
                               12

EPA’s obligation to establish regulations for NOX that ‘preserve,
protect, and enhance the air quality’ in parks and special areas”
because “Class I areas are primarily the kinds of parks and
special areas covered by section 160(2),” id. at 59,597 (quoting
42 U.S.C. § 7470(2)); and (2) setting less stringent increments
for Class II (“an intermediate level”) and Class III (“a higher
level”) “help[s] satisfy the goal in section 160(3) that EPA
‘insure that economic growth will occur in a manner consistent
with preservation of clean air resources,’ ” id. (quoting 42
U.S.C. § 7470(3)), because “[i]n those areas where clean air
resources may not require as much protection, more growth is
allowed” and thus “this classification scheme helps ensure that
growth can occur where it is needed (Class III areas) without
putting as much pressure on existing clean air resources in other
areas where some growth is still desired (Class II areas).” Id.
Further, “[b]y redesignating an existing Class II area to Class
III,” EPA observed, “States may accommodate economic
growth and air quality in areas where the Class II increment is
too stringent to allow the siting of new or modified sources.” Id.
EPA noted that the redesignation procedures require “a
commitment of the State government to the creation of such an
area, extensive public review, participation in the SIP area
redesignation process, and a finding that the redesignation will
not result in the applicable increment being exceeded in a nearby
Class I or Class II area.” Id. (citing 42 U.S.C. § 7474(a)-(b)).
    3. Permitting Procedures: Third, EPA determined that its
pre-construction “permitting procedures” for new major sources
and major modifications of existing sources fulfill the goals set
out in CAA section 160(4) and 160(5), which “require that PSD
programs in one State not interfere with the PSD programs in
other States and that PSD programs assure that any decision to
permit increased air pollution is made after careful evaluation
and public participation in the decisionmaking process.” 70
Fed. Reg. at 59,597.
                                  13

    4. Air Quality Related Values Review by Federal Land
Manager and Permitting Authority: Fourth, EPA determined
that its regulatory scheme for review of Air Quality Related
Values (AQRVs) in Class I areas—to be conducted by the
Federal Land Manager (FLM) and State permitting
authority—required under CAA section 165(d), 42 U.S.C.
§ 7475(d), “helps to satisfy the factors in sections 166(c) and
160(2), which require that EPA’s PSD regulations for NOX
protect air quality values, and parks and other special areas,
respectively”—because the AQRV scheme “helps to provide
protection for parks and special areas (which are generally the
Class I areas subject to this review) and air quality values
(which are factors considered in the review).” Id. at 59,597-98.6

    6
      Under section 165(d), the FLM and the State permitting authority
must review the impacts on AQRVs of any proposed new or modified
source’s emissions. If the emissions satisfy the Class I increment
limit, the FLM may object to or concur in a PSD permit based on
identified AQRV impacts and make a recommendation to the
permitting authority (either the State or EPA). The permit may still
issue unless the FLM “demonstrat[es] to the satisfaction of the
permitting authority that the source or modification will have an
adverse impact on AQRVs.” 70 Fed. Reg. at 59,597. If the emissions
will violate a Class I increment, the permit may not issue unless the
permitting authority “demonstrates to the satisfaction of the FLM that
there will be no adverse impact on AQRVs.” Id. at 59,597-98. EPA
observed that “[t]he CAA does not define AQRV, except to note that
it includes visibility, id at 59,598 (citing 42 U.S.C. § 7475(d)(1)(B)).
EPA added, however:
    Some additional insight can be gained from the following
    description in legislative history:
        The term “air quality related values” of Federal lands
        designated as class I includes the fundamental
        purposes for which such lands have been established
        and preserved by the Congress and the responsible
        Federal agency. For example, under the 1916
                                 14

    5. Additional Impacts Analysis: Fifth, EPA determined
that its regulatory requirement that an owner or operator conduct
an “additional impacts analysis,” i.e., “an analysis of the
impairment to visibility, soils and vegetation” resulting from a
new or modified source under 40 C.F.R. §§ 51.166(o)(1) and
52.21(o)(1), “helps fulfill the criteria and goals and purposes in
sections 166(c) and 160.” Id. at 59,599. EPA noted this
requirement “is especially helpful for satisfying the
requirements of section 166(c) in Class II and Class III areas,”
which are not subject to the AQRV review applicable to Class
I areas. Id.
    6. Installation of Best Available Control Technology:
Sixth, EPA determined that requiring new and modified sources
to use the Best Available Control Technology (BACT) also
helps “satisfy the factors in sections 166(c) and 160(2)” because
the BACT standard “is rigorous and in practice has required
significant reductions in the pollutant emissions from new and
modified sources” and “helps to protect air quality values, public
health and welfare, and parks and other special areas.” Id. at
59,599.
    Finally, EPA justified its decision to prescribe increments
for NO2 only and based on the NAAQS on the ground that the
NO2 increment, in conjunction with EPA’s impending fine
particulate matter increment rule, will limit emissions of other
nitrogen oxide compounds as well.


        Organic Act to establish the National Park Service
        (16 U.S.C. 1), the purpose of such national park lands
        “is to conserve the scenery and the natural and
        historic objects and the wildlife therein and to
        provide for the enjoyment of the same in such
        manner and by such means as will leave them
        unimpaired for the enjoyment of future generations.”
Id. (quoting S. Rep. No. 95-127 at 36 (1977)).
                                15

   The petitioner filed its petition for review on December 12,
2005.
                                II.
    Because “we read the ambiguities and perplexities of the
statute as delegating to the agency a broad interpretive authority,
as we must under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837,
843-44 (1984),” Envtl. Def. Fund, 898 F.2d at 189 (parallel
citation omitted), we defer to EPA’s “permissible construction
of the statute,” Chevron, 467 U.S. at 843. Where, as here, the
Congress “has explicitly left a gap for the agency to fill, there is
an express delegation of authority to the agency to elucidate a
specific provision of the statute by regulation” and “[s]uch
legislative regulations are given controlling weight unless they
are arbitrary, capricious, or manifestly contrary to the statute.”
Id. at 843-44. Applying this deferential standard, we uphold
EPA’s 2005 PSD Rule as reflecting a reasonable statutory
interpretation.
    As our summary of EPA’s 2005 PSD Rule demonstrates, on
remand EPA scrupulously followed the court’s instructions in
Environmental Defense Fund. EPA expressly adopted the
court’s contingent safe harbor approach (in lieu of EPA’s earlier
absolute safe harbor), explaining in detail how the NAAQS-
based increments, along with other measures, fulfill the PSD’s
statutory goals (expressed as eight “factors”), as section 166(c)
requires. EPA also explained why it did not promulgate
standards, incremental or otherwise, for nitrogen oxide
compounds other than NO2. Nonetheless, the petitioner
challenges the 2005 PSD Rule on several grounds.
   A. Duty to Preserve, Protect and Enhance Air Quality
   The petitioner’s primary objection is that EPA violated its
duty under section 160(2), as incorporated into section 166, to
make a finding that the NOx PSD regulations fulfill the statutory
goal to “preserve, protect and enhance” the air quality in parks
                                16

and other natural areas. See 42 U.S.C. § 7470(2); see also id.
§ 7401. Additionally, the petitioner argues, EPA could not
reasonably have made such a finding because the increments as
promulgated do not fulfill this goal. We find this double-
barreled challenge unpersuasive.
     First, EPA did expressly find that the PSD regulations fulfill
the statutory goal to preserve, protect, and enhance air
quality—among the several goals EPA is called upon to balance.
See Envtl. Def. Fund, 898 F.2d at 189 (“subsection (c)
commands a broad weighing of factors”). In particular EPA
must, as it recognized in the 2005 Rule, see 70 Fed. Reg. at
59,588, balance the potentially conflicting goals in subsections
160(2) and 160(3) to protect air quality and to promote
economic growth. See 898 F.2d at 184 (“The stated purpose of
these ‘PSD’ provisions was (roughly) to protect the air quality
in national parks and similar areas of special scenic or
recreational value, and in areas where pollution was within the
national ambient standards, while assuring economic growth
consistent with such protection.” (citing 42 U.S.C. § 7470)); id
at 187-88 (“ ‘protectiveness’ reading of subsection (d) escapes
the extreme intractability of the optimality reading, but it
accomplishes this only by slighting the ‘economic growth’ goal
of § 160”); see also NRDC v. EPA, 937 F.2d 641, 645-46 (D.C.
Cir. 1991) (“Nothing in the legislative history undermines the
inference that Congress believed that its PSD provisions should
balance the values of clean air, on the one hand, and economic
development and productivity, on the other, and much confirms
it.”). And this is precisely what EPA did. The 2005 Rule
includes an extensive explanation of how EPA balanced the
eight statutory factors and how the repromulgated regulations
satisfy various of them. See 70 Fed. Reg. at 59,596-99. Of
particular importance here, EPA expressly found that the
statutory goal to preserve, protect and enhance air quality is
fulfilled through the area classifications system, id. at 59,597,
the AQRV review, id. at 59,597-98, the Additional Impacts
                                17

Analysis, id. at 59,599, and the use of the BACT standard, id. at
59,599; see supra pp. 8, 13-14.
    For the second part of its argument, the petitioner relies
largely on the historical evidence that in the fifteen years since
the Set II increments were first promulgated in 1988, air quality
in parks and natural areas has deteriorated. We see two flaws in
the petitioner’s reasoning.
    First, it overlooks the Congress’s apparent intent when it
expressly adopted an increment program for Set I pollutants in
section 163 and authorized EPA to do so for Set II pollutants in
section 166. By its nature, such an increment limitation system
does not reduce existing concentration levels but rather limits
increases. Thus, EPA reasonably viewed the statutory PSD
program as “designed to be a growth management program that
limits the deterioration of air quality beyond baseline levels that
may be caused by the construction of major new and modified
sources.” Id. at 59,589. The petitioner’s real beef is with EPA’s
determination that this goal is met by using the same increment
methodology for Set II pollutants (and NOX in particular) that
the Congress used for Set I and thereby setting the significant
deterioration bar at the same level as the Congress did for Set I.
Given EPA’s adherence to the statute’s requirements, as the
court delineated them in Environmental Defense Fund, we do
not believe that in doing so EPA abused the considerable
discretion that section 166 grants it to establish Set II PSD
measures.
    Second, in the 2005 Rule, EPA noted that the deterioration
that has occurred has not been nationwide but is limited to
specific areas, “primarily in the West,” id. at 59,603, a problem
EPA did not believe could be directly alleviated through the
PSD program because the Congress intended EPA to establish
nationally uniform PSD measures (as the Congress itself
established for Set II pollutants). EPA explained:
                               18

   We continue to believe that the PSD program is intended
   to allow the air quality in each area of the country
   attaining the NAAQS, and with the same area
   classification, to “deteriorate” by the same amount for
   each subject pollutant, regardless of the existing air
   quality when the increment is initially triggered in a
   particular area, as long as such growth allowed within
   the constraints of the increment does not cause adverse
   impacts on site-specific AQRVs or other important
   values. In this way, the PSD increments avoid having a
   disproportionate impact on growth that might
   disadvantage some communities, recognizing that the
   increments in themselves would not address existing
   negative impacts but cannot allow significant new
   adverse impacts. Congress established the foundation for
   uniform national increments when it created increments
   for SO2 and PM under section 165 of the Act.
Id. at 59,601 (footnote omitted); see also id. at 59,602 (“[W]e do
not believe it is permissible or appropriate for us to establish
uniform increments at levels so stringent that they prevent any
adverse impact on the most sensitive receptors in any part of the
U.S.”). EPA’s construction of the statute is consistent with the
path the Congress chose in mandating specific uniform national
increments for Set I pollutants in section 163. It is also
supported by the legislative history of section 163, which
indicates that the Congress deliberately selected uniform
increments because it deemed locally individualized increments
to be inequitable. See H.R. Rep. No. 95-294, at 153 (1977)
(expressing belief that “the adoption of increments based on
percentage of the national standards means equity for all areas
of a similar class” and rejecting “suggestions . . . that the
pollution increments should be calculated as a function of
existing levels of pollution in each area” because “the inequities
inherent in such an approach are readily evident”); S. Rep. No.
                                  19

95-127, at 30 (1977) (“These increments are the same for all
nondeterioration areas, thus providing equity for all areas.”).
    B. PSD Regulations for Ozone and Particulate Matter
     Next, the petitioner contends EPA unlawfully “ignored the
contribution of NOX to formation of ozone and fine particulate
matter,” Pet’r Br. at 31, which are secondary pollutants “formed
in part by reactions of NOX emissions with other pollutants in
the atmosphere,” 70 Fed. Reg. at 59,590. We believe that EPA
reasonably justified its decision not to address either fine
particulate matter or ozone in the NOX PSD regulations on the
ground that the statutory PSD provisions require EPA to
establish regulations specific to both fine particulate matter, 42
U.S.C. §§ 7473, 7476(f), and ozone (“photochemical oxidants”),
id. § 7476(a), and EPA intends to do just that in separate
rulemakings.7 The petitioner asserts that EPA has abrogated its
responsibility to do so—having promulgated PSD regulations
for neither pollutant thus far—but, as EPA notes, the petitioner’s
appropriate avenue of relief is to seek by judicial mandate that
EPA conduct those rulemakings within a certain time frame,
which is precisely the procedure Environmental Defense Fund
followed when EPA was slow to repromulgate the regulations
at issue here. See In re Envtl. Def., No. 03-1220 (filed July 31,
2003) (mandamus petition seeking order directing EPA to
complete NOX PSD regulation remand by date certain).



    7
     In 1990, the Congress amended the PSD to add section 166(f),
which authorizes EPA “to substitute, for the maximum allowable
increases in particulate matter specified in section 7473(b)” a separate
increment limitation for fine particulate matter (“particulate matter
with an aerodynamic diameter smaller than or equal to 10
micrometers”), which “shall be of equal stringency in effect as those
specified in the provision[]for which they are substituted.” 42 U.S.C.
§ 7476(f).
                               20

           C. Promulgating Only NO2 Increment
    Finally, the petitioner asserts EPA arbitrarily adopted
increments for NO2 only, based on the NO2 NAAQS, objecting
in particular to EPA’s decision not to consider other NOX
compounds. In Environmental Defense Fund, the court noted
EPA had “regulated only one nitrogen oxide compound,
nitrogen dioxide or NO2, as this is the only compound for which
it had established an ambient standard,” 898 F.2d at 185, and
concluded that EPA’s basis for choosing NO2 only was
inadequate because “the ‘goals and purposes’ of the PSD
program, set forth in § 160, are not identical to the criteria on
which the ambient standards are based, §§ 108(a) and 109(b), 42
U.S.C. §§ 7408(a), 7409(b),” and “[s]ubsection (c) . . .
commands the Administrator to inquire into a pollutant’s
relation to the goals and purposes of the statute.” Id. at 190.
The court further noted that it found “nothing in the language or
legislative history suggesting that this duty could be satisfied
simply by referencing the ambient standards.” Id.
    On remand, EPA “decided not to add any additional
increments based on other forms of NOX to the existing
increments for NO2.” 70 Fed. Reg. at 59,606. This time,
however, EPA did not rely on a rote conversion of the NO2
NAAQS to a corresponding increment. EPA concluded “it is
not feasible to develop broader-based increments for NO at this
time,” largely because “the available scientific and technical
evidence available for [its] consideration did not exist . . . to
adequately establish a quantifiable relationship between NOX
emissions (NO/NO2) and nitrogen deposition products, including
nitrates.” Id. at 59,606-07. In any event, EPA explained, it is
“not necessary to adopt individual increments for nitrate”
because: (1) “anthropogenic emissions of NOX predominantly
originate as NO and quickly oxidize into NO2,” id. at 59,606; (2)
“the existing NO2 increments, which limit the allowable increase
of NO2 in a given area, serve also to limit the amount of nitrate
                                 21

in the atmosphere,” thereby placing “some limit” “on downwind
formations of nitrate compounds as well,” id.; see also Envtl.
Def. Fund, 898 F.2d at 185 n.5 (noting that “regulations of NO2
can also indirectly limit other nitrogen oxide compounds
because atmospheric processes convert NO2 into other nitrogen
oxide compounds” (citing EDF’s comments)); and (3) “ambient
nitrate often exists in the atmosphere in particulate form,”
which, EPA believed, “could be more effectively regulated
under our national [particulate matter] program,” 70 Fed. Reg.
at 59,606.8 EPA has offered a reasonable scientific justification
for adopting only NO2 increments, and we may not second-guess
its judgment. See Am. Coke & Coal Chems. Inst. v. EPA, 452
F.3d 930, 941-42 (D.C. Cir. 2006) (“The court owes particular
deference to EPA when its rulemakings rest upon matters of
scientific and statistical judgment within the agency's sphere of
special competence and statutory jurisdiction.”) (citing West
Virginia v. EPA, 362 F.3d 861, 871 (D.C. Cir. 2004); Small
Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506,
535 (D.C. Cir. 1983); Kennecott v. EPA, 780 F.2d 445, 447-48
(4th Cir. 1985)). And EPA’s decision is consistent with the
court’s discussion in Environmental Defense Fund. The court
there recognized that, although the petitioner “m[ight] still . . .
make the argument on remand that under subsection (c)
short-term increments or increments for other nitrogen oxide
compounds are needed to ‘protect[ ] air quality values, and
fulfill the goals and purposes’ of the statute,” “[n]evertheless the
ambient standards are the ‘basic measure of air quality under the
[Clean Air Act],’ Proposed Rules, 53 Fed. Reg. at 3700/3, and
the controlling standards by no means exclude any value that is


    8
     EPA also noted that using the NO2 increment is “ ‘at least as
effective’ as the statutory increments in section 163 of the Act”
because “Congress established statutory increments in section 163 for
only those forms of PM and sulfur oxides for which [EPA] had
promulgated a NAAQS.” 70 Fed. Reg. at 59,606.
                             22

the subject of focus under the PSD provisions.” Envtl. Def.
Fund, 898 F.2d at 190 (emphasis original) (first alteration
added).
    In sum, the Congress expressly conferred on EPA broad
discretion to establish PSD limitation measures and EPA did so
in conformance with the statutory directives. Under our
deferential standard of review, we therefore uphold the 2005
Rule for Prevention of Significant Deterioration for Nitrogen
Oxides as a reasonable implementation of the Set II PSD
statutory provisions and, accordingly, deny the petition for
review.
                                                  So ordered.
     ROGERS, Circuit Judge, concurring: I join the court in
denying the petition challenging the final rule implementing the
program for the Prevention of Significant Deterioration of Air
Quality (“PSD”) for Nitrogen Oxides. 70 Fed. Reg. 59,582
(Oct. 12, 2005) (codified at 40 C.F.R. §§ 51.66, 52.21) (“2005
Rule”). I write separately because the rule sits at the outer
boundary of reasonableness — the “holistic” approach adopted
by EPA in the 2005 Rule is at present less than the sum of its
parts.

     In the fifteen years between this court’s remand in
Environmental Defense Fund, Inc. v. EPA, 898 F.2d 183 (D.C.
Cir. 1990), and promulgation of the 2005 Rule, air quality has
deteriorated seriously. See 70 Fed. Reg. at 59,593-95. One of
the express purposes of the PSD program adopted by Congress
in the Clean Air Act Amendments of 1977 was “to preserve,
protect, and enhance the air quality” in national parks,
wilderness areas, and similar scenic and recreational areas. 42
U.S.C. § 7470(2); see Envtl. Def. Fund, 898 F.2d at 184 (citing
42 U.S.C. § 7470); Op. at 1-2. Nonetheless, EPA has chosen “a
growth management” approach designed to “limit[] the
deterioration of air quality,” Op. at 17 (quoting 70 Fed. Reg. at
59,589); see 70 Fed. Reg. at 59,588-89, 59,600, which is not
quite the same as preserving, protecting, and enhancing.

     In 1990, the court noted that if EPA had kept to the
statutory two-year deadline for issuing Set II PSD limits and
“piggybacked the PSD increments on the ambient [air quality]
standards . . . , the increments would have been at risk of being
rendered obsolete almost immediately after promulgation.”
Envtl. Def. Fund, 898 F.2d at 190. By waiting fifteen years,
EPA has promulgated a rule with no change in the increments
that may already be obsolete, especially because no other
programs, such as reviews by the Federal Land Manager and
State permitting authority, have prevented substantial
environmental deterioration in the interim, see 70 Fed. Reg. at
                                2

59,593-95; see also Petitioner’s Reply Br. at 8 & n.4.

     EPA deflects petitioner’s individual criticisms of its
approach by responding that its holistic approach “satisf[ies]”
the statutory requirements. See 70 Fed. Reg. at 59,596, 59,605.
No doubt, a holistic approach is permissible. But the parts of a
holistic rule must still comport with the statutory requirements,
and EPA offers no opinion that its balancing approach will
ameliorate the decline in air quality experienced in the last
fifteen years much less enhance air quality, as the statute
contemplates, see 42 U.S.C. § 7470(2). See, e.g., 70 Fed. Reg.
at 59,587-89, 59,610. The court struggles to find such an
opinion. See Op. at 16-17. Despite the requirement to
accommodate both the interests of environmental protection and
economic growth, see 42 U.S.C. § 7470 (2)-(3), EPA has
focused on “maximiz[ing] opportunities for economic growth,”
70 Fed. Reg. at 59,588. Allowing the States to redesignate Class
II areas as Class III, see id. at 59,597; Op. at 12, does not
suggest an accommodation so much as a capitulation to
economic growth at the expense of environmental concerns.
Additionally, to demonstrate that it has met the statutory
requirements, EPA relies on regulatory controls for ozone and
fine particulate matter that it has yet to propose much less
promulgate, see 70 Fed. Reg. at 59,590; Op. at 19.

     To the extent EPA relies in the 2005 Rule on programs to
bring about improvements in the future, e.g., the Clean Air
Interstate Rule (“CAIR”), 70 Fed. Reg. at 59,600, its
interpretation of the statutory goal of enhancement of air quality
as extending only to improving visibility in national parks,
wilderness areas, and other Class I areas and to remedying
violations of PSD increments, id. at 59,589, and its
interpretation of regional increments as inconsistent with
congressional intent, id. at 59,601, means that its chosen holistic
approach bears a heavy burden to fulfill Congress’s mandates,
                                3

even acknowledging that some of those mandates may require
EPA to balance goals, see Op. at 16; 42 U.S.C. §§ 7470,
7476(c). Although the court may defer to EPA’s judgment that
it is more reasonable to promulgate rules in a separate
proceeding to address the contribution of nitrogen oxides and
other pollutants to the formation of particulate matter and ozone,
to deny the petition for review the court must treat EPA’s
representations as a promise that it will promulgate additional
regulatory controls as a further step in an incremental approach
to fulfill its statutory obligations. See Advocates for Highway &
Auto Safety v. Fed. Motor Carrier Safety Admin., 429 F.3d 1136,
1147 (D.C. Cir. 2005). As a practical matter, the involvement
of interested parties may be necessary to ensure that EPA does
so, much as occurred here when Environmental Defense filed a
petition for a writ of mandamus to compel EPA to respond to the
1990 remand of its rule. See Op. at 19. After fifteen years in
which EPA did not give priority to the PSD program for
nitrogen oxides, its current approach in the 2005 Rule suggests
a less than rigorous enforcement regime to protect, much less
enhance, air quality.

     Nonetheless, as the court observes, EPA has adhered to the
interpretation deemed permissible by the court in 1990, see Op.
at 2, 15, 17, 21; Envtl. Def. Fund, 898 F.2d at 188-89, and
considered the relevant statutory factors, see Op. at 22; 70 Fed.
Reg. at 59,596-99. Additionally, there are expert judgments that
underlie the 2005 Rule, see Op. at 21, and EPA has offered a
minimally cogent explanation of its approach, see id. at 20-22.
Accordingly, the petition for review fails to show that EPA’s
interpretation is not permissible under Chevron U.S.A. Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837, 842-44 (1984).