Appendix — National-Southwire Aluminum Co. v. United States Environmental Protection Agency

(1) |

?* 8-3 l 5 (| Supreme Court, U.S.

. FILED

JUN 23 1988

No. SOSEPH F. SPANIOL, JR,

CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1987

NATIONAL-SOUTHWIRE ALUMINUM COMPANY,

Petitioner,

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY,

LEE A. THOMAS, Administrator, and

JACK E. RAVEN, Regional Administrator,

Respondents.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

APPENDIX ATO |

PETITION FOR WRIT OF CERTIORARI

Chester R. Babst Ill, Esquire

Babst, Calland, Clements & Zomnir, P.C.

Two Gateway Center

Pittsburgh, Pennsylvania 15222

Counsel of Record for Petitioner

National-Southwire Aluminum Company —

4

No.

NATIONAL-SOUTHWIRE ALUMINUM COMPANY,

Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY,

LEE A. THOMAS, Administrator, and

JACK E. RAVEN, Regional Administrator

Respondents.

APPENDIX A TO PETITION FOR WRIT OF CERTIORARI

Petitioner, National-Southwire Aluminum

Company, by its attorneys Babst, Calland, Clements &

Zomnir, P.C., files the following Appendix A for the

above-captioned Petition for Writ of Certiorari.

1/"F submitted,

Chester R. Babst Ill, Esquire

Babst, Calland, Clements & Zomnir, P.C.

Two Gateway Center

Pittsburgh, Pennsylvania 15222

(412) 394-5400

Counsel of Record for Petitioner

Naticnal-Southwire Aluminum Company

TABLE OF CONTENTS

APPENDIX A

Opinion of the Court of Appeals

by Guy, Cir. J. filed February 1988 ......

Formal Determination of

Environmental Protection Agency

dated September 22, 1986 .............

judgment of the Court of

Appeals entered April6,1988 ........

Order of the Court of Appeals

denying Petitioner's Petition

for Rehearing and Suggestion

for Rehearing En Banc entered

a

RECOMMENDED FOR FULL TEXT PUBLICATION

See, Sixth Circuit Rule 24

No. 86-3982

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

NATIONAL-SOUTHWIRE ALUMINUM

Co.,

Petitioner-Appellant,

V. ON PETITION to Review

UNITED STATES ENVIRONMENTAL %... Decision of the U.S.

PROTECTION AGENCY; LEE A. Environmental Pro-

Tuomas, Administrator; and Jack | tection Agency.

E. RAVEN, Regional

Administrator,

Respondents-Appellees.

Decided and Filed February 1, 1988

Before: GUY and BOGGS, Circuit Judges; and WOODS,

District Judge.*

GUY, Circuit Judge, delivered the opinion of the court,

in which WOODS, District Judge, joined. BOGGS, Circuit

Judge, (pp. 15-18) delivered a separate dissenting opinion.

*Honorable George E. Woods, United States District Court for the

Eastern District of Michigan, sitting by designation.

la.

2 National-Southwire Aluminum v. EPA No. 86-3982

GUY, Circuit Judge. National-Southwire Aluminum Com-

pany (NSA) petitions this court for review of a determination

by the United States Environmental Protection Agency

(EPA) that the turning off of certain pollution control equip-

ment (i.e., wet scrubbers) at NSA’s aluminum reduction plant

in Hawesville, Kentucky, would constitute a “modification”

of a stationary source within the meaning of section | 1 1(a)(4)

of the Clean Air Act, 42 U.S.C. § 741 i(a)(4). If turning off

the equipment is such a modification, the plant would be sub-

ject to the New Source Performance Standards (NSPS) pro-

mulgated by the EPA pursuant to section 1 11(b) of the Act,

42 U.S.C. § 7411(b), which, NSA claims, could only be met

by tearing out the wet scrubbers and installing a new system

utilizing dry scrubbers at a prohibitive expense.

The EPA’s determination was issued pursuant to 40 C.F.R.

§ 60.5 which requires the Agency, at the request of an owner

or operator of a source of pollution, to determine whether

a proposed action would be a modification of the source. The

EPA's determination is a final agency action subject to judi-

cial review in the court of appeals under section 307(b)(1)

of the Clean Air Act, 42 U.S.C. § 7607(b)(1). The standard

of review of an EPA determination of NSPS applicability is

specified in the Administrative Procedure Act, 5 U.S.C.

§ 706(2)(A), which provides that agency action may be set

aside only if it is found to be “arbitrary, capricious, an abuse

of discretion, or otherwise not in accordance with law.”

Because we do not find the EPA’s determination here to have

been arbitrary or capricious, the petition will be denied.

NSA owns and operates a primary aluminum reduction

plant which emits fluoride in both gaseous and particulate

forms. The EPA has determined that fluoride air pollution

presents a serious threat to public welfare by injuring natural

vegetation, herbivorous animals, and agricultural crops. See

Ze.

No. 86-3982 National-Southwire Aluminum v. EPA 3

39 Fed. Reg. 37,730 (1974). As a welfare-related pollutant,

regulation of fluoride emissions is based upon the require-

ments of section 111(d) of the Act, which provides i in perti-

nent part that:

[E]jach State shall submit to the Administration a

plan which (A) establishes standards of performance

for any existing source for any air pollutant (i) for

which air quality criteria have not been issued ...

but (ii) to which a standard of performance under

this section would apply if such existing source were

a new source, and (B) provides for the implementa-

tion and enforcement of such standards of perfor-

mance.

42 U.S.C. §7411(d).

The EPA promulgated NSPS for fluoride emissions from

new and modified primary aluminum reduction plants on

October 23, 1974. See 39 Fed. Reg. 37,730. Kentucky was

then required, under section 111(d), to adopt state standards

to limit fluoride emissions from existing, unmodified plants,

which included NSA. At the time of construction of the plant

in 1969, before passage of the Clean Air Act, NSA equipped

the plant with wet scrubbers, which represented the best

known technology at that time for the control of emissions

of gaseous fluoride. Kentucky adopted its standards in 1981

and the EPA approved Kentucky’s standards in 1982. These

standards did not require NSA to reduce the gaseous fluoride

emissions from its Hawesville plant but simply required the

"Regulated pollutants under the Clean Air Act are cither

“health-related,” based upon a link between exposure and human

health problems, or “welfare-related,” based upon a demonstrated rela-

tionship between exposure and damage to animals or vegetation. Cer-

tain “welfare-related” pollutants may be converted to a

“health-related” risk based upon increasingly sophisticated testing

methods or elapsed time documentation.

a».

4 National-Southwire Aluminum v. EPA No. 86-3982

same level of emission control that NSA had been achieving

with its wet scrubbers since 1969.’

In 1982, during a routine maintenance-related shutdown

of the wet scrubbers, NSA observed that its ambient air moni-

tors did not detect any appreciable change in ambient fluo-

ride levels as a result of not scrubbing the exhaust gases.’

Because of the substantial cost of operating the wet scrubbers,

____ NSA sought and obtained from Kentucky a relaxation of the

state’s section 1|11(d) standard by a factor of thirteen, from

1.0 pounds of fluoride emitted per ton of aluminum produced

to 290 pounds of fluoride emitted per hour, the equivalent

of 13.18 pounds of fluoride per ton of aluminum. This action

results in increasing gaseous fluoride emissions from the

plant by 1,174 tons per year. This relaxation is not effective,

however, unless and until it is approved by the EPA. See 40

C.F.R. §§ 60.23, 60.27.

Kentucky submitted a proposed form of its relaxed 11 1(d)

standard to the EPA for comment on March 22, 1985. This

proposed regulation included a stipulation to the effect that

—

?The NSPS established by the EPA would impose a maximum rate

of 1.9 pounds per ton of aluminum for both primary and secondary

emissions from new and modified sources. See generally 40 C.F.R.,

Part 60, Subpart S, § 60.192. Kentucky's original standard included,

inter alia, a 1.0 pound gaseous fluoride per ton limitation for primary

emissions and a 3.25 pounds per hour limitation for secondary emis-

sions.

3An ambient air quality standard differs from an emission or perfor-

mance standard, such as a NSPS. An ambient air quality standard spec-

ifies a maximum pollutant concentration in the ambient air, while a

performance standard specifies the maximum rate at which an individ-

ual source may emit pollution. The EPA has set national ambient air

quality standards for only six pollutants: lead, ozone, carbon monox-

ide, sulfur dioxide, nitrogen dioxide, and particulate matter. See 40

C.F.R. Part 50 (1986). Since ambient air quality standards have not

been set for gaseous fluoride emissions, such measurements are not

meaningfully transferrable to these emissions. ;

Yo. .

No. 86-3982 National-Souithwire Aluminum v. EPA §

if NSA turned off the wet scrubbers at its plant to take advan-

tage of the relaxed section 111(d) standard, such a change

in method of operation would not be considered a

“modification” that would render the plant subject to the

NSPS.‘ Section 111(a)4) of the Act defines a modification

as “any physical change in, or change in the method of opera-

tion of, a stationary source which increases the amount of

any air pollutant emitted by such source.” Despite having

been informed by the EPA that this latter stipulation would

not be approved, the revised standard submitted for final

approval on April 3, 1986, included the stipulation.

On August 27, 1986, the EPA received NSA’s request for

a formal determination of whether the turning off of the wet

scrubbers would be a modification that would trigger applica-

tion of the NSPS. In making its request, NSA argued that

such change should not be considered a modification because

(1) pollution control equipment is not part of a “stationary

source,” and therefore turning off such equipment is not a

modification of such a source, and (2) NSA’s plant is an exist-

ing facility subject to state regulation under section 1 1 1(d)

and therefore cannot be subject to the NSPS.

On September 22, 1986, the FPA issued the determination

which is the subject of this appeal. The Agency concluded

that, under the plain words of the statute, pollution control

equipment is part of a stationary source, and changes in such

equipment that cause increases in emissions are modifica-

tions of the source within the meaning of section | 1 1(a)(4).

It also determined that, under the plain words of both the

statute and the EPA’s regulations, an existing facility

becomes subject to the NSPS when it undergoes a modifica-

tion. On December 2, 1986, the EPA issued a notice of pro-

“The modification of an existing source renders it a “new source”

as defined in 42 U.S.C. § 7411(a\(2). All “new sources” are required

to comply with the NSPS. See 42 U.S.C. § 741 1(e).

Sa.

6 National-Southwire Aluminum v. EPA No. 86-3982

posed rulemaking (51 Fed. Reg. 43,395) proposing to

approve Kentucky’s relaxed standard but to take no action

on the purported exemption from application of the NSPS

since that provision is outside the scope of state regulation

authorized by section 111(d). The proposed approval was

based on the statutory scheme which gives substantial lati-

tude'to the states in setting emission standards for wel-

fare-related pollutants generated by local facilities but does

not speak directly to the potential impact of other sections

of the Act on revisions of those standards.

Our standard of review is a deferential one that presumes

the validity of agency action. Citizens to Preserve Overton

Park v. Volpe, 401 U.S. 402, 415-16 (1971). The EPA deter-

mination under review in this case hinges on the interpreta-

tion of section 111 of the Clean Air Act and of the EPA’s

regulations implementing that section. The Supreme Court

has established a two-step procedure for judicial review of

Statutory construction by an administrative agency. “First,

always, is the question whether Congress has directly spoken

to the precise question at issue. If the intent of Congress is

clear, that is the end of the matter ... .” Chevron U.S.A., Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842

(1984). If, however, “the statute is silent or ambiguous with

respect to the specific issue, the question for the court is

whether the agency’s answer is based on a permissible con-

struction of the statute.” Jd. at 843 (footnote omitted). “[A]

court may not substitute its own construction of a statutory

provision for a reasonable interpretation made by the admin-

istrator of an agency.” /d. at 844 (footnote omitted).

This court has recognized the mandate of the Supreme

Court that “ ‘great deference’ be accorded the ‘interpretation

given [a] statute by the officers or agency charged with its

administration.” ” McCown v. Secretary of HHS, 796 F.2d

151, 157 (6th Cir. 1986) (quoting Udall v. Tallman, 380 U:S.

(ga.

eect ineleeeeeemnemeniemiiiilill

No. 86-3982 National-Southwire Aluminum v. EPA 7

1, 16 (1965)). We have observed that, in reviewing agency

action under section 706 of the Administrative Procedure

Act, “[w]e are, therefore, normally ‘bound by the principle

that the construction of a statute by those charged with its

execution should be followed unless there are compelling

indications that it is wrong.’” United States Air Force v.

FLRA, 681 F.2d 466, 467 (6th Cir. 1982) (quoting Miller v.

Youakim, 440 U.S. 125, 145 n.25 (1979); Red Lion Broad-

casting Co. v. FCC, 395 U.S. 367, 381 (1969)).

In this case, the EPA’s interpretation of the Clean Air Act

is embodied in its regulations. The Agency’s interpretation

of its own regulations is entitled to special deference. “ “When

the construction of an administrative regulation rather than

a statute is in issue, deference is even more clearly in order.’ ”

Compton v. Tennessee Dep't of Public Welfare, 532 F.2d 561,

565 (6th Cir. 1976) (quoting Udall, 380 U.S. at 16-17). As

this court and the Supreme Court have explained:

Since this involves an interpretation of an adminis-

trative regulation a court must necessarily look to

the administrative construction of the regulation if

the meaning of the words used is in doubt....

“(T]he ultimate criterion is the administrative inter-

pretation, which becomes of controlling weight

unless it is plainly erroneous or inconsistent with

the regulation.”

Compton, 532 F.2d at 565 (quoting Udall, 380 U.S. at 16-17;

Bowles v. Seminole Rock Co., 325 U.S. 410, 413-14 (1945)).

III.

NSA raises three arguments on appeal:

1. an emission control system is not included

within the statutory definition of a “stationary

source”;

7a.

8 National-Southwire Aluminum v. EPA No. 86-3982

2. the proposed change in the operation of NSA’s

emission control system does not constitute a

“modification” of an existing facility; and

3. the imposition of NSPS would be inconsistent

with the legislative intent behind section 111 of the

Clean Air Act and regulations thereunder.

NSA claims that a “stationary source” consists only of pol-

lution generating equipment, and does not include attached

air pollution control equipment. Therefore, it argues, the

turning off of its wet scrubbers would not constitute a

“modification” of a “stationary source.” Under this theory,

the existence of a modification would depend on the amount

of pollutant created by the pollution-generating equipment,

without regard to the amount of pollution actually emitted

into the atmosphere after the pollution-control equipment

has done its work.

Section 111(a)(4) of the Act, 42 U.S.C. § 741 1(a)(4) pro-

vides:

The term “modification” means any physical

change in, or change in the method of operation of,

a stationary source which increases the amount of

any air pollutant emitted by such source or which

results in the emission of any air pollutant not previ-

ously emitted.

Section 111(a)(3), 42 U.S.C. § 7411(a)(3), defines the term

“stationary source” as “any building, structure, facility, or

installation which emits or may emit any air pollutant.”

Clearly, while the statutory definition does not specifically

reference or include pre-existing pollution control equip-

ment, it certainly does not exclude it either. Moreover, the

EPA explicitly considered and rejected NSA’s theory when

the agency amended the applicable regulations in 1975. The

current regulations define “modification” to include any

change in the method of operation of “an existing facility

Ba.

No. 86-3982 National-Southwire Aluminum v. EPA 9

which increases the amount of any air pollutant .. . emitted

into the atmosphere ....” 40 C.F.R. § 60.2. See also 40

C.F.R. § 60.14(a) (any change “which results in an increase

in the emission rate to the atmosphere” constitutes a modifi-

cation (emphasis added)). As the EPA explained at the time

it proposed the amendments:

The new phrase [‘emitted into the atmosphere’] clar-

ifies that for an existing facility to undergo a modifi-

cation there must be an increase in actual emissions

The Administrator considered defining

“modification” so that increases in pre-controlled

(potential) emissions would be modifications. How-

ever, the proposed definition of modification is lim-

ited to increases in actual emissions.

39 Fed. Reg. 36, 946 (October 15, 1974). As the agency fur-

ther explained:

If any increase in emissions that would result from

a physical or operational change to an existing facil-

ity can be offset by improving an existing control

system for that facility, such a change would not be

considered a modification because there would be

no increase in emissions to the atmosphere.

Id. It is clear from the foregoing that the agency considered

such a definition to be a limiting one which would allow a

facility to change or add to its operation such that increased

pollution would be generated but would not constitute a mod-

ification provided such increase were offset by a correspond-

ing increase in the effectiveness of its pollution control mech-

anisms. These regulations were duly promulgated by the

agency on December 16, 1975, and may not be challenged

in this appeal. As a result, we find the agency’s interpretation

5Since these regulations are nationally applicable, they may be chal-

lenged only by filing a petition for review in the United States Court

of Appeals for the District of Columbia Circuit within 60 days of their

promulgation. See section 301(b\(1) of the Clean Air Act, 42 U.S.C.

§ 7607(bx 1); Motor Vehicle Manufacturers’ Ass'n v. Costle, 647 F.2d

675, 677 n.3 (6th Cir. 1981).

Qa.

10 WNational-Southwire Aluminum v. EPA’ No. 86-3982

of the term “stationary source” as including a structure’s pol-

lution control equipment to be reasonable and not inconsis-

tent with the statutory language.

NSA next argues that its proposed change in operations

falls within the following regulatory exception to the defini-

tion of “modification”:

The following shall not, by themselves, be consid-

ered modifications under this part:

(5) The addition or use of any system or device

whose primary function is the reduction of air pollu-

tants, except when an emission control system is

removed or is replaced by a system which -the

Administrator determines to be less environmen-

tally beneficial.

40 C.F.R. § 60.14(e)(5). Although NSA did not specifically

raise this argument below, we will address it here since the

governing regulation, 40 C.F.R. § 60.5, requires the Adminis-

trator to render a decision on whether a proposed action will

constitute a modification “within the meaning of this part,”

and the exception NSA now urges is contained within part

60.

NSA’s proposal to turn off a portion of its air pollution

control equipment does not fit within the delineated excep-

tion. By its terms, the regulation does not apply to the

removal of such a system, nor to the replacement of such a

system with one that is “less environmentally beneficial.” The

purpose of this de minimis exception is to permit a source

to install a pollution control system that would bring about

a major decrease in emissions of one pollutant while causing

a smaller, incidental increase in emissions of another pollu-

tant. “The exemption ... would exempt changes such as the

addition of an afterburner to a control system to reduce odors

even though particulate emissions may increase due to the

lOa.

No. 86-3982 National-Southwire Aluminum v. EPA 11

afterburner.” 39 Fed. Reg. 36,948 (October 15, 1974). Rather

than an “addition or use” of a pollution control system,

NSA’s proposal contemplates the non-use, or subtraction of

a pollution control device, i.e., the wet scrubbers.

It should be noted that this “replacement” system would

leave gaseous fluorides virtually uncontrolled.® Such result

would be incompatible with a major purpose of the Clean

Air Act — to prevent or minimize any increases in existing

levels of pollution. This philosophy is embodied in 42 U.S.C.

§ 7411(b), which authorizes a system of nationally uniform

emission standards that apply to both newly-constructed

sources of pollution and to existing sources that increase their

emissions. ASARCO, Inc. v. EPA, 578 F.2d 319, 321-22 (D.C.

Cir. 1978). This purpose was unequivocally expressed by

Congress. “The maximum use of available means of prevent-

ing and controlling air pollution is essential to the elimination

of new pollution problems while cleaning up existing

sources.” S. Rep. No. 1196, 91st Cong., 2d Sess. at 16,

reprinted in 1 Senate Committee on Public Works, A Legisla-

tive History of the Clean Air Act Amendments of 1970, at

416. “[T]he emission standards shall provide that sources of

such emissions shall be designed and equipped to prevent

and control such emissions to the fullest extent compatible

with the available technology and economic feasibility.” H.R.

Rep. No. 1146, 91st Cong., 2d Sess., at 10, reprinted in 1970

U.S. Code Cong. & Admin. News 5356, 5365.

It is inconsistent with the Congressional purpose of maxi-

mum feasible control to have existing, functional air pollu-

tion control equipment sitting idle while the pollution that

*The elements of NSA’s system, minus the wet scrubbers, would be

hoods, multicyclones, dry electrostatic precipitators (ESPs), and a

smokestack. The hoods merely funnel emissions to the control devices;

the multicyclones and ESPs remove fluoride particles but do not sub-

stantially affect gaseous fluoride emissions; and the smokestack simply

disperses the emissions into the atmosphere but does not reduce them.

lla.

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12 National-Southwire Aluminum v. EPA No. 86-3982

the equipment could be preventing escapes into the atmo-

sphere. The turning off of NSA’s wet scrubbers would result

in an increase of 1,174 tons per year of fluoride emissions

with no decrease whatsoever in the emission of any other

pollutant.’ It is apparent that such a changed system would

be substantially “less environmentally beneficial” and cannot

be deemed so de minimis as to qualify it for exemption under

40 C.F.R. § 60.14(e)(5).°

Finally, NSA argues that imposition of the NSPS under

the facts of this case would be inconsistent with the purposes

of section 111 of the Act. In essence it argues that, since the

states have been given primary responsibility for developing

7NSA makes much of the fact that the EPA has proposed to approve

Kentucky’s relaxed section | 1 1(d) standard, acknowledging the State’s

evidence that the relaxation would have “insignificant environmental

impact.” See 51 Fed. Reg. 43,395 (December 2, 1986). The EPA pro-

posed approval of the relaxed standard because of the Agency’s prelim-

inary determination that the balance that the State had struck between

economic and environmental impacts was within the latitude given

the State under section 111(d). There is no such latitude, however, in

determining whether a change in a plant constitutes a “modification”

within the meaning of section 111(a\(4) which would trigger applica-

tion of section 111(b)’s NSPS. The regulatory scheme calls for the con-

sideration of costs and other factors in setting the level of the NSPS,

see 42 U.S.C. § 7411(aX(1X(C), but once that level is set, the standards

apply uniformly to all new and modified sources. Therefore, the ques-

tion of approval of a state’s proposed relaxed standard under 111(d)

is a wholly separate inquiry from the question whether such relaxation

constitutes a “modification” for purposes of section 111(a)4).

*The EPA has established levels of emissions of various pollutants,

including fluorides, that the agency considers de minimis for purposes

of its program for the prevention of significant deterioration of air qual-

ity under Part C of the Clean Air Act. See 42 U.S.C. §§ 7470-7479.

The de minimis level for fluoride emissions was determined to be three

(3) tons per year. 40 C.F.R. § 52.21(b\(23\i). The Agency found that

fluoride emissions greater than three tons per year could cause damage

to vegetation. See Fed. Reg. at 52,709. Thus, the proposed 1,174 tons

per year increase from NSA’s plant is nearly four hundred times the

level that the EPA has found to be significant.

{Za.

No. 86-3982 WNational-Southwire Aluminum v. EPA 13

and enforcing control plans under section | 1 1(d), the imposi-

ticn of NSPS under section 111(b) would undermine the

states’ authority under section | 1 1(d). As we have noted, sec-

tion 111(b) was “designed to prevent new [air] pollution

problems” by regulating both newly-constructed sources of

pollution and sources that increase their emissions. National

Asphalt Pavement Ass'n v.Train, 539 F.2d 775, 783 (D.C. Cir.

1976). The effect of including modified as well as

newly-constructed sources under its provisions is to establish

existing levels of emissions as a baseline above which an

existing source may not pollute without becoming subject to

the NSPS. As the Court of Appeals for the District of Colum-

bia has explained:

[T]he operator of an existing facility can make any

alterations he wishes in the facility without becom-

ing subject to the NSPS as long as the level of emis-

sions from the altered facility does not increase.

Thus, the level of emissions before alterations take

place ... effectively defines the standard that an

altered facility must meet.

ASARCO, 578 F.2d at 328-29 (emphasis in original).

Section 111(d) requires states to develop, and submit to

the EPA for approval, plans that include measures for the

reduction of emissions from unmodified, existing sources, of

those pollutants for which the EPA has not promulgated

national ambient air quality standards, but for which the

Agency has promulgated NSPS under section 111(b). In this

case, Kentucky’s first section 111(d) standard was adopted

in 1981 and required nothing more of NSA than to continue

operating the scrubbers as it had been doing. NSA now claims

that because Kentucky adopted its original standard “in

error” and now wishes to relax that standard further, it should

be exempt from the NSPS. If accepted, this argument would

render the “modification” provisions of section | 11(b) mean-

ingless by authorizing unlimited increases in emissions from

(Za.

14 National-Southwire Aluminum v. EPA No. 86-3982

existing sources so long as the increases do not violate state

standards under section | 1 1(d). However, it is clear that Con-

gress intended ‘that federal enforcement of federal air pollu-

tion standards governing new or modified stationary sources

not be controlled by the states. United States v. City of Paines-

ville, 431 F. Supp. 496, 501 n.9 (N.D. Ohio 1977), aff'd, 644

F.2d 1186 (6th Cir.), cert. denied, 454 U.S. 894 (1981) (state

law may not determine what sources are subject to NSPS).

See also National Asphalt, 539 F.2d at 785 (state regulations

_ designed to reduce emissions do not preempt EPA authority

to prevent increases).

The EPA’s determination will require NSA either to con-

tinue operating its existing wet scrubbers (and thereby avoid

application of the NSPS) or to install new control equipment.

If, as NSA claims, the latter option is prohibitively expensive,

then presumably the company will choose the former option.

In contrast to NSA’s proposed plan permitting vastly

increased fluoride emissions, either of the above options will

further the Act’s stated purpose of protecting and enhancing

the quality of the nation’s air by virtue of increased federal

participation. ASARCO, 578 F.2d at 321 (citing Train v. Nat-

ural Resources Defénse Council, Inc., 421 U.S. 60, 64 (1975)).

In conclusion, since we find the EPA’s interpretation of

the governing statute and implementing regulations rational

and consistent with the purposes that inspired the Clean Air

Act, NSA’s petition will be DENIED.

No. 86-3982 National-Southwire Aluminum v. EPA 15

BOGGS, Circuit Judge, dissenting. This case involves

assessing EPA’s resolution of a conflict between two princi-

ples of the Clean Air Act. The first principle is that individual

states are allowed to set their own “welfare-related” standards

for pollution, though not health-related standards. That is,

states can decide for themselves what costs they wish to

impose for what level of protection of vegetation and inani-

mate objects. This policy is clearly spelled out in Section

111(d) of the Clean Air Act, 42 U.S.C. § 7411(d).

The second policy is that nationwide New Source Perfor-

mance Standards (NSPS) should apply to new or “modified”

sources of pollution, so as to address pollution problems

when those problems are easiest to fix, at the time of the new

construction. See Section 111(b) of the Clean Air Act, 42

U.S.C. § 7411(b). In the particular case before us, the first

principle can be accommodated without any significant dam-

age to the second. EPA’s resolution of this controversy does

not do that. Rather, it exalts formalistic rather than actual

adherence to the second principle, while completely vitiating

the first. I think this is an unreasonable construction of the

agency’s authority and thus violates the standard set forth

in Chevron v. Natural Resources Defense Council, 467 U.S.

837, 845 (1984). With regard to the application of the NSPS

to a change in the operation of a pollution control system,

I cannot find that “the Administrator’s view that it is appro-

priate in the context is a reasonable one.” /bid. I therefore

respectfully dissent.

It is important to recognize that the current conflict is, in

effect, an accident of timing. National Southwire originally

installed its wet scrubbers in 1969 voluntarily. Had it not

installed them in 1969, it would not have been subject to a

requirement to do so until December 1981. Had it simply

challenged enforcement of those first Kentucky standards, it

could almost certainly have delayed until Kentucky proposed

its new standards, without having to install the pollution con-

trol equipment it now has in place. It then cheerfully would

Sa.

16 National-Southwire Aluminum v. EPA No. 86-3982

have been granted the exemption it seeks, for failure to install

the scrubbers would not be a “modification.” As early as

March 1983, Kentucky granted an exemption permitting

operation without wet scrubbers. No decrease in ambient air

quality was noted during three years of operation without

the scrubbers.

Similarly, had Kentucky in December 1981 taken the posi-

tion which Kentucky now takes (and took as early as March

1983), the company would clearly not be forced to operate

the wet scrubbers.

A state is free, with EPA approval, to reduce the wel-

fare-related standards that it sets for pollution, and Kentucky

would have been free to set originally the standard for which

it has now obtained EPA’s approval. Thus, EPA’s interpreta-

tion in two ways applies a “minnow-trap” type of enforce-

ment, where any step at any time’ towards pollution control

is fatal to any effort at later reevaluation. It minnow-traps

this particular facility for its early and voluntary pollution

control activity and also effectively minnow-traps Kentucky

for having initially taken a more stringent approach, even

though Kentucky now deems its earlier policy unwise.

As a general matter, this hardly seems a sensible strategy.

It might conceivably achieve some actual benefits in a single

case (although that is contradicted in this case’ ), but it creates

a national enforcement strategy completely hostile to any

willing compliance with pollution control standards.

The most compelling argument in favor of EPA’s interpre-

tation, well expressed at pages 13-14 of the court’s opinion,

is that acceptance of National Southwire’s argument means

that a state would, in general, be able to override the require-

‘Company monitoring, accepted by both Kentucky and EPA as far

as it goes, indicates that turning off the scrubbers creates no increase

in concentrations of fluoride in the atmosphere.

lea.

No. 86-3982 National-Southwire Aluminum v. EPA 17

ment to apply NSPS to “modified” plants. This would be a

serious matter, as the NSPS is a major part of Congress’s

plans to control and reduce pollution.

Fortunately, resolution of this case in accordance with

Kentucky's desires, does not, in my opinion, create such a

precedent. The purpose of the “modification” rule is to ensure

that pollution control measures are undertaken when they

can be most effective, at the time of new or modified construc-

tion. See 116 Cong. Rec. 32,918. (remarks of Sen. Cooper),

reprinted in | Senate Committee on Public Works, A Legisla-

tive History of the Clean Air Act Amendments of 1970

(1974), at 260. Here there is no new construction, or any new

modification, so there is no opportunity for effective place-

ment of new control technology. Should there be a later deci-

sion that a higher level of pollution control is needed, the

scrubbers can be turned on again. Thus, the true purposes

of the modification rule are preserved in the action Kentucky

and National Southwire seek.

There thus remains only the familiar question of what level

of pollution control should there be, and at what cost. In

many areas of environmental law, this question is explicitly

or implicitly excluded from consideration. However, in the

question of welfare-related standards, this is exactly the

determination confided to the states, under EPA’s supervi-

sion. It is exactly this judgment which the state has made

and which EPA has approved. It is thus anomalous to have

the effective implementation of one congressional policy

thwarted by an interpretation of another policy that in this

circumstance“does nothing to @ctually) advance that policy.

In this particular type of circumstance, EPA’s application of

its general policy is unreasonable, and I would uphoid Ken-

tucky’s action.

In addition, I believe that the plain intent of EPA’s regula-

tions at 40 C.F.R. § 60.14(e)(5) would permit the change

sought here. That section states that it is not a modification

(7a.

18 National-Southwire Aluminum v. EPA No. 86-3982

when there is the “use of any system . . . whose primary func-

tion is the reduction of air pollutants, except when an emis-

sion control system ... is replaced by a system which the

Administrator determines to be less environmentally

beneficial.” In our case National Southwire wants to replace

its existing system which uses wet scrubbers and many other

devices with a system to reduce air pollutants which includes

all of the aspects of that system except for the wet scrubbers.

This is exactly the replacement which took place between

1983 and 1986, with Kentucky’s permission, and which

resulted in no increase in concentration of fluoride.

If the Administrator were to make an affirmative determi-

nation that the new system is less environmentally beneficial

(which might be difficult to do in the face of EPA’s approval

of Kentucky’s reduced standards, Kentucky’s approval of

those standards, and the ambient air monitoring) then the

Administrator might be able to avoid the operation of this

section of EPA’s own regulations. Otherwise, those regula-

tions would exempt National Southwire from having to com-

ply with prohibitively expensive new standards as the price

of obtaining an accommodation that Kentucky is entitled to

grant and desires to grant. However, in the absence of such

a determination, I would hold that EPA’s denial of the peti-

tion was 'nreasonable on this ground, as well.

ISa.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY

REGION IV

345 Courtland Street

Atlanta, Georgia 30365

Ref: 4RC-WDA

September 22, 1986

Richard M. Zomnir, Esquire

Babst, Calland, Clements and Zomnir

Two Gateway Center, Eighth Floor East

Pittsburgh, Pennsylvania 15222

SUBJECT: National Southwire Aluminum,

Applicability Determination Pursuant to

40 C.F.R. §60.5

Dear Mr. Zomnir:

This is in response to your August 12, 1986,

request for a determination pursuant to 40 C.F.R.

§60.5 as to the yng wre of the provisions of 40

C.F.R. Part 60, Subpart S, to the Nationa! Southwire

Aluminum (NSA) plant in Hawesville, Kentucky, in the

event certain contemplated actions are taken at the

plant. Specifically, you asked whether reducing the

son" efficiency of the wet scrubbers, in order to

benefit from a relaxed emission standard under

Section 111(d) of the Clean Air Act (Act), would

constitute a modification as defined in Section

111(a)(4) of the Act. It is EPA’s determination that an

intentional reduction in operating efficiency of the

wet scrubbers that causes an increase in the emission

rate of any pollutant emitted by NSA would

constitute a modification and subject the affected

facilities to 40 C.F.R. Part 60, Subpart S.

19 a

|

FACTUAL BACKGROUND

The factual background presented in your request can

be summarized as follows. NSA is a primary

aluminum reduction plant built in the late 1960's.

The plant was constructed with wet scrubbers, to

control both particulate and gaseous fluoride

emissions. Later, electrostatic precipitators were

added to better control particulate matter. The wet

scrubbers were constructed and operated prior to the

promulgation of 40 C.F.R. Part 60, Subpart S.

On May 26, 1982, EPA approved Kentucky’s plan for

controlling gaseous fluoride from existing primary

aluminum reduction plants, which was required

under Section 111(d) of the Act. The plant limits

NSA’‘s gaseous fluoride emissions to one pound per

ton of aluminum produced through the primary

control system, and to 3.25 pounds per hour through

any potroom roof monitor. A revision to the plant

that relaxes the standard to 290 pounds per hour for

the pi contro! system at NSA has been submitted

by Kentucky to EPA for approval, and is pending.

Information submitted in support of the relaxation

documents the cost of operating the wet scrubbers

and assesses the environmental impact of shutting off

the scrubbers; NSA believes the former to be

exorbitant and the latter to be insignificant.

I

STATUTORY ARGUMENT

NSA’‘s request presents several arguments in support

of its position that the contemplated action would

not constitute a modification. It first argues that

applying new source performance standards (NSPS)

because of this action would be inconsistent with the

Act and would not make sense. The sole basis for the

inconsistency argument is NSA‘s interpretation of the

definition of “stationary source” in Section 111(a)(3)

of the Act to exclude air pollution control equipment.

20 a

Thus, according to NSA, a physical change, or change

in the operation of the wet scrubbers (which are air

pollution control equipment) would not be a

modification as defined in Section 111(a)(4).

EPA finds this argument and its underlying basis to be

erroneous. Section 111(a)(4) defines a “stationary

source” as “any building, structure, facility or

installation which emits or has the potential to emit

any air pollutant.” Both process equipment and

control equipment emit, or have the potential to

emit, air pollutants. Little, if any, air pollution control

equipment is one hundred percent efficient in design,

let alone operation. Thus, the proposition that the

definition of “stationary source” excludes pollution

control equipment is contrary to the plain words of

the definition.

Further, inclusion of air pollution control equipment

as part of a stationary source is essential if the

Administrator is to implement Section 111(b) and if

regulated entities are to be able to comply with NSPS.

The Administrator is required to promulgate

standards of performance that “reflect the degree of

emission limitation and the percentage reduction

achievable through application of the best

technological system of continuous emission

reduction which .. . the Administrator determines has

been adequately demonstrated.” Section 111(a)(1).

Owners and operators are prohibited by Section

111(e) from operating new sources in violation of any

standard of performance applicable to them. And

Section 111(a)(2) defines new sources as stationary

sources. If NSA’s argument that air pollution control

equipment is not part of a stationary source were

correct, the Administrator would have to prescribe,

and affected facilities would have to show

compliance with, a standard that reflected the best

demonstrated technological system of emission

reduction; yet the Administrator could not recognize

and the facility could not claim the emission control

of the air pollution control equipment in

2ia

demonstrating compliance with the standard,

because the stationary source without control

equipment would have to be operated in compliance

with the standard. Such a result is impossible, and

therefore NSA’s interpretation cannot be correct. It is

both logical and necessary to include air pollution

contro! equipment as part of the stationary source. It

follows that physical changes in, or changes in the

operation of air pollution control equipment that

increase the amount of air pollutants emitted is a

modification as defined in Section 111(a)(4).

The case cited by NSA, North Sanitary Landfill, Inc. v.

Nichols, does not construe either the term

"satisfactory source” or “modification” within the

context of Section 111, and is not even related to the

applicability of NSPS. Rather, this case construes Ohio

regulations on preconstruction review, which were

apparently intended to meet the requirements of

Parts C and D of the Act. An Ohio court's

interpretation of these terms outside the framework

of Section 111 (which contains no preconstruction

review requirements) is not precedent for

interpretation of Section 111.

Finally, EPA has historically interpreted the term

“stationary source”, as defined in Section 111(a)(3), to

include control equipment. When EPA clarified what

constituted a eaviestina. it added 40 C.F.R.

§60.14(e)(5) 40 Fed. Reg. 58416 which provides

(e) the following shall not, by

themselves, be considered

modifications under this part:

(5) The addition or use of any

system or device whose primary

function is the reduction of air

pollutants, except when an

emission control system is removed

or is replaced by a system which the

22a

Administrator determines to be

less environmentally beneficial.

(emphasis added)

The emphasized language provides that removal of

an emission control system is a modification of a

——— source. Since removal is a modification, it

follows that the emission control system has to be a

part of the stationary source to begin with. In the

absence of any specific intent by Congress as to

whether control equipment is part of a stationary

source (and NSA has not presented evidence of any

such intent), EPA’‘s interpretation is entitled to a

deference so long as it is reasonable. Chevron U.S.A.,

inc. v. NRDC, 467 U.S. 837 (1984). As demonstrated

above, EPA’s interpretation is not only reasonable but

necessary if Section 111 is to be implemented.

Wl

REGULATORY ARGUMENT

NSA argues, based upon various provisions in 40 C.F.R.

Part 60, that “affected facilities” and “designated

facilities” are mutually exclusive, and that only the

former can become subject to NSPS. EPA explained

over ten years ago that these two types of facilities

are not mutually exclusive. in the preambie to the

promulgation of revisions to 40 C.F.R. Part 60 on

December 15, 1975, (40 Fed. Reg. 58416), which

followed less than one month after promulgation of

the Section 111(d) plan requirements in Subpart B,

EPA stated:

Understandably there has been

some confusion as to the

difference between the various

types of “sources” and “facilities”

efined in §60.2 of these

regulations. Generally speaking,

“sources” are entire plants, while

“facilities” are identifiable pieces

of process equipment or individual

23 a

components which when taken

together would comprise a source.

“Affected facilities” are facilities

subject to standards of

performance and are specifically

identified in the first section of

each subpart of Part 60. An

“existing facility” is generally a

piece of equipment or component

of the same type as an affected

facility, but which differs in that it

was constructed prior to the date

of proposal of an applicable

standard of performance. This

distinction is somewhat

complicated because an existing

facility which undergoes a

modification within the meaning

of the Act and these regulations

becomes an affected facility.

However, generally speaking, the

distinction between “affected

facilities” and “existing facilities”

depends on the date of

construction. The terms are

intended to be direct regulatory

counterparts of the statutory

definitions of “new source” and

“existing source” appearing in

section 111 of the Act.

“Designated facilities” form a

subcategory of “existing facilities.”

A “designated facility” is an

existing facility which emits a

“designated pollutant,” i.e., a

petisscns which.is neither a

azardous pollutant, as defined by

section 112 of the Act, nor a

pollutant subject to national

ambient air wualies standards. The

term “designated facilities, ”

24a

however, has no special relevance

to the issue of modification.

Thus, as far as EPA is concerned, NSA’s position was

rejected long ago.

The language NSA relies upon to make this argument

does not compel the conclusion it advocates. For

example, NSA contends that because 40 C.F.R. §60.24

allows states the latitude to balance emission

guidelines and other factors of public concern in

adopting Section 111(d) standards for welfare related

pollutants, and because 40 C.F.R. §60.28 allows states

to revise their plans to relax those standards, then

EPA must have intended that existing sources subject

to those standards could increase their emissions to

benefit from the relaxed standards without

triggering NSPS. NSA’s argument appears to assume

that a state would never, in its initial Section 111(d)

plan, require more emission control that was already

in place on existing sources. That assumption is

contradicted by the specific provision in 40 C.F.R.

§60.24 for compliance schedules in plans to allow

existing sources time to comply with Section 111(d)

standards. If an existing source could not comply over

time with the plan, 40 C.F.R. §60.28 allows the state to

relax the standard, presumably to a level the source

could achieve. Thus, both 40 C.F.R. §§60.24 and 60.28

can be fully utilized without existing sources

increasing their emissions to benefit from use of those

powers.

NSA further argues that the language of 40 C-F.R.

§60.1 and the lack of use of the term “modification”

in Subpart B precludes EPA from applying the

definition of modification in 40 C.F.R. §60.14 to NSA.

Given that “modification” is defined in the Act and

that it includes increases in emissions caused by

changes in the operation of control equipment,

whether or not the term appears in Subpart B is not

determinative, as the statute controls. Regarding 40

C.F.R. §60.1, there is no explanation as to why this

25a

language was added. 40 Fed. Reg. 53346. However,

NSA‘s interpretation of it is unnecessarily broad. The

language “Except as provided in Subparts B and C”

need not mean if Subpart B applies the other

Subparts do not. Rather, it is more reasonable, in

light of the Act, that the language means that

Subparts B and C apply to the extent they are

inconsistent with Subpart A. As discussed above,

there is nothing inconsistent under the Act in

applying NSPS to existing facilities that undergo

modification, regardless of whether the existing

facilities are designated facilities. And there is no

language in Subpart B that either states or suggests

that it is independent and exclusive of Subpart A.

Similarly, the fact that 40 C.F.R. §62.09 does not

require the Administrator to determine consistency

with Subpart A in promulgating Section 111(d) plan

revisions for states is not determinative. The Act

defines the contemplated action as a modification

that triggers NSPS. Besides, this section does require a

determination of consistency with the Act.

IV

CONCLUSION

The “poste language of the Act makes the wet

scrubbers part of the stationary source. Accordingly,

a physical change in or change in the operation of the

scrubbers that causes an increase in emissions is a

modification that makes the stationary source a new

source subject to NSPS. The provisions of 40 C.F.R.

Part 60 are not, and cannot be, to the contrary.

Therefore, if NSA reduces the operating efficiency of

its wet scrubbers and causes an increase in the

amount of any air poliutant it emits, the provisions of

40 C.F.R. Part 60, Subpart S, would apply.

Sincerely,

Jack E. Ravan

Regional Administrator

26a

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 86-3982

NATIONAL-SOUTHWIRE ALUMINUM CO.,

Petitioner-Appellant,

V.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY;

LEE A. THOMAS, Administrator, JACK E.

RAVEN, Regional Administrator,

Respondents-Appellees.

Before: GUY and BOGGS, Circuit Judges; and

WOODS, District Judge.

JUDGMENT

ON PETITION TO REVIEW a decision of the

United States Environmental Protection Agency.

THIS CAUSE came on to be heard on the

transuipt of record from the said agency and was

argued by counsel.

ON CONSIDERATION WHEREOF, it is now here

ordered and adjudged by this court that the decision

of the said agency in this cause be and the same is

hereby affirmed.

iT iS FURTHER ORDERED that the Respondents-

Appellees recover from Petitioner the costs on

petition, as itemized below.

27a

ENTERED BY ORDER OF THE

COURT

John P. Hehman, Clerk

Clerk

Issued as Mandate: April 6, 1988 A True Copy.

COSTS: None

FilingFee ......... $ Attest:

ME < Sn vogiewes $

ME Sat 6 owe $

Deputy Clerk

28 a

No. 86-3982

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

NATIONAL-SOUTHWIRE ALUMINUM CO., )

Petitioner,

Vv. ORDER

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ET AL., )

Respondents.

BEFORE: GUY and BOGGS, Circuit Judges and

WOODS *, United States District Judge

The Court having received a petition for

rehearing en banc, and the petition having been

circulated not only to the original panel members but

also to all other active judges of this Court, and no

judge of this Court having requested a vote on the

suggestion for rehearing en banc, the petition for

i has been referred to the original hearing

panel.

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in the

petition were fully considered upon the original

submission and decision of the case. Accordingly, the

petition is denied.

ENTERED BY ORDER OF THE COURT

Jonn P. Henman, Clerk

*Hon. George E. Woods sitting by designation from

the Eastern District of Michigan

29 a

CERTIFICATE OF SERVICE

| hereby certify that | served three true and

correct copies of the foregoing Appendix to be

mailed first class, postage prepaid, this 19th day of

August, 1988 upon:

Solicitor Gerieral

Department of Justice

Washington, D.C. 20530

Brian Faller, Attorney

Environmental Defense Section

Land and Natural Resources Division

U.S. Department of Justice

Post Office Box 23986

Washington, D.C. 20026-3986

Earl C. Salo, Esquire

Office of General Counsel

U.S. Environmental Protection Agency

401 M Street, S.W.

Washington, D.C. 20460

Chester R. Babst Ili, Esquire

Babst, Calland, Clements & Zomnir, P.C.

Two Gateway Center

Pittsburgh, Pennsylvania 15222

(412) 394-5400

Counsel of Record for

National-Southwire Aluminum Company