Appalachian Power Co. et al. v. Environmental Protection Agency
Cite as: 208 F.3d 1015


APPALACHIAN POWER CO., et al., Petitioners

No. 98-1512

Consolidated with
Nos. 98-1536, 98-1537, 98-1538, 98-1540 & 98-1542

On Petitions for Review of an Order of the Environmental Protection Agency

Argued February 8, 2000
Decided April 14, 2000


Lauren E. Freeman argued the cause for petitioners. With her on the briefs were Henry V. Nickel, Leslie Sue Ritts, Michael H. Levin, Edmund B. Frost, David F. Zoll, Alexandra Dapolito Dunn, John Reese, Charles F. Lettow, Marcilynn A. Burke, L. Burton Davis, William H. Lewis, Michael A. McCord and Ellen Siegler. Michael P. Mc-Govern and Neal J. Cabral entered appearances.

Jon M. Lipshultz, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the briefs were Lois J. Schiffer, Assistant Attorney General, and Gregory B. Foote, Attorney, Environmental Protection Agency.

Before: Williams, Henderson, and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge:

These consolidated petitions for judicial review, brought by electric power companies, and trade associations representing the nation's chemical and petroleum industry, challenge the validity of portions of an EPA document entitled "Periodic Monitoring Guidance," released in 1998. In the alternative, petitioners seek review of a 1992 EPA rule implementing Title V of the Clean Air Amendments of 1990.


Title V of the 1990 amendments to the Clean Air Act altered the method by which government regulated the private sector to control air pollution. Henceforth, stationary sources of air pollution, or of potential air pollution, must obtain operating permits from State or local authorities administering their EPA-approved implementation plans. The States must submit to EPA for its review all operating permits and proposed and final permits. See 42 U.S.C. § 7661d. EPA has 45 days to object; if it does so, "the permitting authority may not issue the permit," id. § 7661d(b)(3). [FN 1] Congress instructed EPA to pass regulations establishing the "minimum elements of a permit program to be administered by any air pollution control agency," including "Monitoring and reporting requirements." 42 U.S.C. § 7661a(b). Under Title V, the Governor of each State could submit to EPA a permit program by November 15, 1993, to comply with Title V and with whatever regulations EPA had promulgated in the interim. See 42 U.S.C. § 7661a(d). This was to be accompanied by a legal opinion from the State's attorney general that the laws of the State contained suffi- cient authority to authorize the State to implement the program. Id. If a State decided not to participate, or if EPA disapproved the State's program, federal sanctions would kick in, including a cut-off of federal highway funds and an EPA takeover of permit-issuing authority within the State. See Commonwealth of Virginia v. Browner, 80 F.3d 869, 873-74 (4th Cir. 1996).

[FN 1] If the State permitting authority fails to revise the permit to satisfy EPA's objection, EPA shall issue or deny the permit, at which point EPA's action becomes subject to judicial review. See 42 U.S.C. § 7661d(c).
EPA promulgated rules implementing the Title V permit program in 1992. The rules list the items each State permit program must contain, [FN 2] including this one:
(3) Monitoring and related record-keeping and reporting requirements. (i) Each permit shall contain the following requirements with respect to monitoring:

(A) All monitoring and analysis procedures or test methods required under applicable monitoring and testing requirements, including part 64 of this chapter and any other procedures and methods that may be promulgated pursuant to sections 114(a)(3) or 504(b) of the Act. If more than one monitoring or testing requirement applies, the permit may specify a streamlined set of monitoring or testing provisions provided the specified monitoring or testing is adequate to assure compliance at least to the same extent as the monitoring or testing applicable requirements that are not included in the permit as a result of such streamlining;

(B) Where the applicable requirement does not require periodic testing or instrumental or noninstrumental monitoring (which may consist of record-keeping designed to serve as monitoring), periodic monitoring sufficient to yield reliable data from the relevant time period that are representative of the source's compliance with the permit, as reported pursuant to paragraph(a)(3)(iii) of this section. Such monitoring requirements shall assure use of terms, test methods, units, averaging periods, and other statistical conventions consistent with the applicable requirement. Recordkeeping provisions may be sufficient to meet the requirements of this paragraph (a)(3)(i)(B) of this section; and

(C) As necessary, requirements concerning the use, maintenance, and, where appropriate, installation of monitoring equipment or methods....

40 C.F.R. § 70.6(a)(3).

[FN 2] The list is nicely summarized in David R. Wooley, Clean Air Act Handbook: A Practical Guide to Compliance § 5.02[1] (9th ed. 2000).
The key language -- key because this dispute revolves around it -- is in the first sentence of § 70.6(a)(3)(i)(B). Permits contain terms and conditions with which the regulated entities must comply. Some of the terms and conditions -- in regulatory lingo, "applicable requirements" (see § 70.6(a)(3)(i)(B)) [FN 3] -- consist of emission limitations and standards, State and federal. Experts in the field know that federal emission standards, such as those issued for hazardous air pollutants and new stationary sources, contain far more than simply limits on the amount of pollutants emitted.
[FN 3] One EPA official explained:

Permits must incorporate terms and conditions to assure compliance with all applicable requirements under the Act, including the [state implementation plan], title VI, sections 111 and 112, the sulfur dioxide allowance system and NOx limits under the acid rain program, emission limits applicable to the source, monitoring, recordkeeping and reporting requirements, and any other federally-recognized requirements applicable to the source.

John S. Seitz, Director, Office of Air Quality Planning and Standards, Developing Approvable State Enabling Legislation Required to Implement Title V, at p. 4 (Feb. 25, 1993).

Take for instance the following examples drawn at random from the Code of Federal Regulations. The national emission standard for hazardous air pollutants from primary lead smelting is contained in 40 C.F.R. §§ 63.1541-.1550. In addition to emission limits, [FN 4] the operator must comply with detailed and extensive testing requirements contained in § 63.8 of the regulations, and must monitor certain pressure drops daily; make weekly checks to ensure that dust is being removed from hoppers; perform quarterly inspections of fans, and so forth. Id. § 63.1547. Or consider the standards of performance for new stationary sources contained in 40 C.F.R. part 60, one of the thickest of the dozen or so volumes EPA commands in the C.F.R. In the "beverage can surface coating industry," those subject to these regulations must -- if they use "a capture system and an incinerator" -- install some sort of "temperature measurement device," properly calibrated and having a specified accuracy stated in terms of degrees Celsius. 40 C.F.R. § 60.494. [FN 5] Or if the new source is in the rubber tire manufacturing industry, an operator doing a "green tire spraying operation" using organic solvent-based sprays must install "an organics monitoring device used to indicate the concentration level of organic compounds based on a detection principle such as infrared ..., equipped with a continuous recorder, for the outlet of the carbon bed." Id. § 60.544(a)(3).
[FN 4] See 40 C.F.R. § 63.1543(a):

No owner or operator of any existing, new, or reconstructed primary lead smelter shall discharge or cause to be discharged into the atmosphere lead compounds in excess of 500 grams of lead per megagram of lead metal produced ... from the aggregation of emissions discharged from the air pollution control devices used to control emissions from the sources [listed].

[FN 5] If the facility does not use a capture system, it must calculate its emission limits using a series of equations provided by EPA. For some idea of the complexity of this exercise, consider that the facility must figure its total volume of coating solids per month using the following equation:

Ls = E LciVsi

40 C.F.R. § 60.493(b)(1)(i)(B). It would serve no useful purpose to explain this or the many other equations in the sequence.

Typically, EPA delegates to the States its authority to require companies to comply with these federal standards. The States incorporate the federal standards in their implementation plans and, under Title V of the 1990 law, the applicable standards become terms and conditions in permits. States too have their own emissions limitations and standards in their implementation plans, which they need in order to comply with national ambient air quality standards. See 40 C.F.R. part 52; Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 846 (1984); Union Electric Co. v. EPA, 427 U.S. 246, 249-50 (1976); Commonwealth of Virginia v. EPA, 108 F.3d 1397, 1406 (D.C. Cir.), modified, 116 F.3d 499 (D.C. Cir. 1997). Petitioners tell us that States may formulate their emission standards not only by limiting the amount of air pollutants, but also by imposing practices, including the monitoring of emissions. [FN 6]
[FN 6] In some instances, States may adopt emission standards or limitations that are more stringent than federal standards. 42 U.S.C. § 7416. States may also adopt more stringent permit requirements. 40 C.F.R. § 70.1(c).
On one thing the parties are in agreement. If an applicable State emission standard contains no monitoring requirement to ensure compliance, EPA's regulation requires the State permitting agency to impose on the stationary source some sort of "periodic monitoring" as a condition in the permit or specify a reasonable frequency for any data collection mandate already specified in the applicable requirement. According to petitioners this sort of gap-filling is all § 70.6(a)(3)(i)(B) -- the so-called periodic monitoring rule -- requires of State permit programs. By petitioners' lights, if a federal or State emission standard already contains some sort of requirement to do testing [FN 7] from time to time, this portion of the standard must be incorporated in the permit, not changed by the State to conform to EPA's imprecise and evolving notion of what constitutes "periodic monitoring." [FN 8] Otherwise, State authorities will wind up amending federal emission standards in individual permits, something not even EPA could do without conducting individual rulemakings to amend the regulations containing the federal standards. And with respect to State standards, the State agency will in effect be revising its implementation plan at EPA's behest, without going through the procedures needed to accomplish this. See, e.g., 42 U.S.C. § 7410(k)(5) & (l).
[FN 7] By testing we mean to include instrumental and noninstrumental monitoring as well.

[FN 8] In support of their view, petitioners point to the Title V rule's preamble which states: "If the underlying applicable requirement imposes a requirement to do periodic monitoring or testing ..., the permit must simpl[y] incorporate this provision under § 70.6(a)(3)(i)(A)." 57 Fed. Reg. 32,278 (1992).

In a document entitled "Periodic Monitoring Guidance for Title V Operating Permits Programs," released in September 1998, EPA took a sharply different view of § 70.6(a)(3) than do petitioners. The "Guidance" was issued over the signature of two EPA officials -- the Director of the Office of Regulatory Enforcement, and the Director of the Office of Air Quality Planning and Standards. It is narrative in form, consists of 19 single-spaced, typewritten pages, and is available on EPA's internet web site (www.epa.gov). "Periodic monitoring," the Guidance states, "is required for each emission point at a source subject to title V of the Act that is subject to an applicable requirement, such as a Federal regulation or a SIP emission limitation." Periodic Monitoring Guidance for Title V Operating Permits Programs (hereinafter "Guidance") at 5. New source performance standards, and national emission standards for hazardous pollutants, if EPA promulgated the standards after November 15, 1990, the effective date of the Clean Air Act amendments, are "presumed to have adequate monitoring." Id. Also, for "emission units subject to the acid rain requirements," EPA has determined that its "regulations contain sufficient monitoring for the acid rain requirements." Id. Outside of these categories and one other, the Guidance states that "periodic monitoring is required ... when the applicable requirement does not require ... monitoring sufficient to yield reliable data from the relevant time period that are representative of the source's compliance with the permit." Id. at 6. How to determine this? Clearly, according to the Guidance, if an "applicable requirement imposes a one-time testing requirement, periodic monitoring is not satisfied ...," presumably because one time is not from time to time, which is what periodic means. Id.


The phenomenon we see in this case is familiar. Congress passes a broadly worded statute. The agency follows with regulations containing broad language, open-ended phrases, ambiguous standards and the like. Then as years pass, the agency issues circulars or guidance or memoranda, explaining, interpreting, defining and often expanding the commands in the regulations. One guidance document may yield another and then another and so on. Several words in a regulation may spawn hundreds of pages of text as the agency offers more and more detail regarding what its regulations demand of regulated entities. Law is made, without notice and comment, without public participation, and without publication in the Federal Register or the Code of Federal Regulations. With the advent of the Internet, the agency does not need these official publications to ensure widespread circulation; it can inform those affected simply by posting its new guidance or memoranda or policy statement on its web site. An agency operating in this way gains a large advantage. "It can issue or amend its real rules, i.e., its interpretative rules and policy statements, quickly and inexpensively without following any statutorily prescribed procedures." Richard J. Pierce, Jr., Seven Ways to Deossify Agency Rulemaking, 47 Admin. L. Rev. 59, 85 (1995). [FN9] The agency may also think there is another advantage -- immunizing its lawmaking from judicial review.

[FN 9] How much more efficient than, for instance, the sixty rounds of notice and comment rulemaking preceding the final rule in Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 34 (1983).


EPA tells us that its Periodic Monitoring Guidance is not subject to judicial review because it is not final, and it is not final because it is not "binding." [FN 10] Brief of Respondent at 30. See Guidance at 19. It is worth pausing a minute to consider what is meant by "binding" in this context. Only "legislative rules" have the force and effect of law. See Chrysler Corp. v. Brown, 441 U.S. 281, 302-03 & n.31 (1979). A "legislative rule" is one the agency has duly promulgated in compliance with the procedures laid down in the statute or in the Administrative Procedure Act. [FN 11] If this were all that "binding" meant, EPA's Periodic Monitoring Guidance could not possibly qualify: it was not the product of notice and comment rulemaking in accordance with the Clean Air Act, 42 U.S.C. § 7607(d), and it has not been published in the Federal Register. [FN 12] But we have also recognized that an agency's other pronouncements can, as a practical matter, have a binding effect. See, e.g., McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1321 (D.C. Cir. 1988). If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency's document is for all practical purposes "binding." See Robert A. Anthony, Interpretative Rules, Policy Statements, Guidances, Manuals, and the Like -- Should Federal Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1328-29 (1992), and cases there cited.

[FN 10] Our jurisdiction extends to "any ... nationally applicable ... final action taken by" the EPA "Administrator." 42 U.S.C. § 7607(b)(1). The Guidance issued over the signatures of two high level EPA officials rather than the Administrator. EPA does not, however, contest petitioners' assertion that because "the document was drafted, and reviewed by, high ranking officials in several EPA offices, including EPA's lawyers, there is no reason to doubt the authors' authority to speak for the Agency." Brief of Petitioners at 42. See Her Majesty the Queen v. EPA, 912 F.2d 1525, 1531-32 (D.C. Cir. 1990); Natural Resources Defense Council, Inc. v. Thomas, 845 F.2d 1088, 1094 (D.C. Cir. 1988).

[FN 11] We have also used "legislative rule" to refer to rules the agency should have, but did not, promulgate through notice and comment rulemaking. See, e.g., American Mining Congress v. Department of Labor, 995 F.2d 1106, 1110 (D.C. Cir. 1993). In this case, by "rule" we mean the following:

... the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency....

5 U.S.C. § 551(4).

[FN 12] 5 U.S.C. § 552(a)(1)(D) requires publication in the Federal Register of all "interpretations of general applicability." Compare 5 U.S.C. § 552(a)(2)(B), requiring agencies to make available for inspection and copying "those statements of policy and interpretations which have been adopted by the agency and are not published in the Federal Register."

For these reasons, EPA's contention must be that the Periodic Monitoring Guidance is not binding in a practical sense. Even this, however, is not an accurate way of putting the matter. Petitioners are not challenging the Guidance in its entirety. Under the Administrative Procedure Act, a "rule" may consist of "part of an agency statement of general or particular applicability and future effect...." 5 U.S.C. § 551(4), quoted in full in supra note 11; see 5 U.S.C. §§ 551(13), 702. "Interpretative rules" and "policy statements" may be rules within the meaning of the APA and the Clean Air Act, although neither type of "rule" has to be promulgated through notice and comment rulemaking. See 42 U.S.C. § 7607(d)(1), referring to 5 U.S.C. § 553(b)(A) & (B). [FN 13] EPA claims, on the one hand, that the Guidance is a policy statement, rather than an interpretative rule, and is not binding. [FN 14] On the other hand, EPA agrees with petitioners that "the Agency's position on the central legal issue here -- the appropriateness of a sufficiency review of all Title V monitoring requirements -- indeed is settled...." Brief of Respondent at 32. In other words, whatever EPA may think of its Guidance generally, the elements of the Guidance petitioners challenge consist of the agency's settled position, a position it plans to follow in reviewing State-issued permits, a position it will insist State and local authorities comply with in setting the terms and conditions of permits issued to petitioners, a position EPA officials in the field are bound to apply.

[FN 13] We quoted, in Panhandle Eastern Pipeline Co. v. FERC, 198 F.3d 266, 269 (D.C. Cir. 1999), the statement in Pacific Gas & Electric Co. v. Federal Power Commission, 506 F. 2d 33, 38 (D.C. Cir. 1974), that a policy statement is not a "rule," apparently within the meaning of 5 U.S.C. § 551(4). Dicta in Syncor International Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997), suggests the same without referring to § 551(4). See also Hudson v. FAA, 192 F.3d 1031 (D.C. Cir. 1999).

On the other hand, in Batterton v. Marshall, 648 F.2d 694, 700 (D.C. Cir. 1980), we interpreted the term "rule" in § 551(4) as "broad enough to include nearly every statement an agency may make...." Quoting this language, we held in Center for Auto Safety v. National Highway Safety Administration, 710 F.2d 842, 846 (D.C. Cir. 1983), that agency policy statements accompanying the withdrawal of a notice of proposed rulemaking fell within the definition of a "rule." A few years later, then-Judge Scalia -- citing Batterton -- wrote for the court that under APA § 551(4), it is "clear" that "the impact of an agency statement upon private parties is relevant only to whether it is the sort of rule that is ... a general statement of policy." Thomas v. New York, 802 F.2d 1443, 1447 n.* (D.C. Cir. 1986). See also National Tank Truck Carriers, Inc. v. Federal Highway Admin., 170 F.3d 203, 207 n.3 (D.C. Cir. 1999).

There is no need for us to try to reconcile these two lines of authority. Nothing critical turns on whether we initially characterize the Guidance as a "rule."

[FN 14] EPA is under the impression that policy statements can never be "rules" within the meaning of APA § 551(4): "even if the Guidance were somehow deemed to be a 'rule' (a conclusion that would, in EPA's view, be erroneous due to the non-binding nature of the Guidance), Petitioners' procedural challenge would still fail because the Guidance undoubtedly would be an interpretive (not legislative) rule...." Brief of Respondent at 43-44 n.40. We should note that the Guidance itself states that it "interprets" § 70.6(a)(3) of the regulations. Guidance at 4 n.1.

Continued in Part Two