24 ELR 10003 -- Allowable Emissions and Unallowable Discretion: EPA Acid Rain Regulations Violate Congressional Intent of the 1990 Clean Air Act Amendments

24 ELR 10003 | Environmental Law Reporter | copyright © 1994 | All rights reserved

Allowable Emissions and Unallowable Discretion: EPA Acid Rain Regulations Violate Congressional Intent of the 1990 Clean Air Act Amendments

William G. Schiffbauer and Molly A. Sellman

Editors' Summary: In 1993, EPA issued its final rules for sulfur dioxide allowance allocations under the acid rain provisions added to the Clean Air Act by the Clean Air Act Amendments of 1990 (1990 Amendments). As part of these rules, EPA interpreted the term "allowable 1985 emissions rate" in CAA § 402(18) to mean that all sulfur dioxide emissions from utility plants must be expressed on an annualized basis. EPA incorporated this interpretation into a regulation known as the "emissions limitation annualization factor."

The authors contend that EPA exceeded its statutory authority in so interpreting the Act. They argue that the statute directs EPA to calculate an "annual equivalent" limitation for sulfur dioxide emissions in pounds per million British thermal units (Btus) only for utility plants whose emission limitations are not expressed in pounds per million Btus and for utility plants whose averaging periods for emission limitations are not expressed in pounds per million Btus and are not expressed on an annual basis. This statutory directive does not apply to utilities whose limitations are already expressed in pounds per million Btus. By interpreting the Act to allow it to recalculate the emissions limitations of these utilities, EPA could significantly reduce a utility plant's allowances for sulfur dioxide emissions.

Applying the standards for reviewing agency interpretations of statutory language, set forth by the U.S. Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, 14 ELR 20507 (1984), the authors first examine the language of the Act. They conclude that the plain language of the statute does not support EPA's interpretation. They next examine the legislative history of the 1990 Amendments, and conclude that no evidence exists that Congress intended EPA to annualize the emissions limitations of all utility plants. Finally, they suggest that EPA's annualization method was originally created to determine compliance with emissions standards that applied before enactment of the 1990 Amendments and that the application of this method to all utility emission rates is contrary to the emission allowance scheme created by the 1990 Amendments.

William G. Schiffbauer, an energy and environmental attorney, is a partner in the Washington, D.C. firm of Groom & Nordberg and former Counsel and Legislative Assistant to Sen. J. James Exon (D-Neb.). Molly A. Sellman is an environmental and land use attorney practicing in San Jose, California. The authors have LL.M. degrees in environmental and land use law from the George Washington University National Law Center in Washington, D.C.

[24 ELR 10003]

The U.S. Environmental Protection Agency (EPA or the Agency) has promulgated its final rules1 for the Acid Rain Program's sulfur dioxide (SO2) allowance allocations pursuant to title IV of the Clean Air Act2 (the 1990 Act) as amended by the Clean Air Act Amendments of 19903 (1990 Amendments).4 The centerpiece of the Acid Rain Deposition [24 ELR 10004] Control Program (Acid Rain Program)5 is the allocation of SO2 emission allowances for electric generating utility plants to combat the adverse effects of acidic deposition, or as it is more commonly known "acid rain." These regulations serve to increase pollution controls for large fossil fuel-fired (coal burning) steam generating units6 by tightening restrictions on their emissions of SO2 into the air.

As part of the vast rulemaking required to implement the 1990 Amendments, EPA proposed a regulation known as the "emissions limitation annualization factor,"7 that is based on its expansive interpretation of two statutory words: "annual basis." This sweeping regulation has become engulfed in controversy that has its historical roots in the legislative process leading up to the enactment of the 1990 Amendments. A number of utility firms operating coal-fired units (utility plants) and other interested parties submitted comments to EPA8 objecting to the Agency's annualization proposal contained in the July 19, 1991, Federal Register Notice on the Availability of National Allowance Data Base, Version 2.9 This regulatory dispute originated with EPA's interpretive reading of a phrase included in the definition of the term "allowable 1985 emissions rate" as set forth in § 402(18) of the 1990 Act.10

It is the precise definition or meaning of this statutory term -- particularly as it relates to the policies of the Acid Rain Program -- that is problematic, and at the very heart of this controversy. In its administrative wisdom, EPA interpreted a provision of § 402(18) of the 1990 Act to mean that all utility plants' SO2 emissions must be expressed on an annualized basis. In order to achieve realpolitik, the Agency decreed it would apply an "emissions limitation annualization factor" to all utility plants. Opponents of EPA's position read hubris into the proposed rule bringing into question the validity of the Agency's rulemaking authority. From the opposition's point of view, the universal application of the regulation is inappropriate and would result in an allowable emissions rate used to calculate SO2 allowances that is less than the allowable rate specified in an electric utility plant's permit.11

EPA, undaunted by the opposition's protestations and congressional defeat on the issue during debate on the 1990 Amendments, proceeded with its annualization regulation formulated on its intractable interpretation of the term "allowable 1985 emissions rate." The controversy has now evolved to the point where critics question whether the Agency exceeded its rulemaking authority by promulgating a regulation that will have the effect of annualizing allowable emission rates for all utility plants. In support of their position, opponents of EPA's position point to that stalwart principle of administrative law that mandates that all regulations promulgated by an administrative agency must be within the scope of what Congress intended when it drafted the legislation.

This Article will examine the soundness of EPA's interpretation of the term "allowable 1985 emissions rate" and the validity of its application of the "emissions limitation annualization factor." To take the vagaries out of thisdefinitional debate, this Article will scrutinize the Act's statutory language and legislative history.12 Against the backdrop of this statutory and legislative analysis, this Article will look to the watershed Chevron U.S.A., Inc. v. Natural Resources Defense Council13 decision and its progeny for guidance on the principle of deference to the allowed discretion of an administrative agency's rulemaking authority.

Background

The Acid Rain Program

The 1990 Amendments are a detailed, technical, and comprehensive response to solving this country's problem of air pollution. A portion of the statute, title IV of the 1990 Act, contains the Acid Rain Program created to remedy the vexing problem of acid rain.14 The Acid Rain Program targets the coal burning electric utility plants by establishing a two-phase pollution control program for reducing SO2 [24 ELR 10005] emissions into the atmosphere. The stated purpose of the Acid Rain Program is to reduce acid rain by reducing SO2 by 10 million tons from 1980 emission levels.15

The 1990 Amendments targets the electric utility generating industry for emissions reductions because, according to EPA, "[o]f the approximately 232 million tons of SO2 and 19 million tons of nitrogen oxide (NOx) emitted annually from all sources in the United States in 1985, about 16 million tons of SO2 and 7 million [tons of] NOx were emitted by electric utilities."16 In order to rectify the adverse effects of acid rain, title IV of the 1990 Act mandated that EPA establish an Acid Rain Program as well as a national emissions cap of 8.90 million tons per year17 on electric utility SO2 emissions, which was to be implemented in two phases.

Beginning in 1995, Phase I requires the 110 highest emitting utility units to meet intermediate SO2 emissions limitations.18 Phase II, which begins in the year 2000, requires virtually all utility units19 to collectively meet more stringent emissions limitations.20 As a result, total annual SO2 emissions will be reduced by 10 million tons below 1980 levels, a reduction in total SO2 emissions of approximately 40 percent. Title IV of the 1990 Act also requires that certain coal-fired utility plants reduce their emissions of NOx to a level achievable through the installation of low-NOx burner technology at the same time that they are required to comply with SO2 emissions limitations.21

Coal-fired Electric Power Utilities

Currently, all coal-fired steam generators or units22 of electric utility plants are subject to different regulatory controls based upon their date of construction. There are three classifications for regulating SO2 emissions. The first category provides that all utility plant steam generators built before August 17, 1971, are regulated solely by the states.23 The second category, which regulates all utility plant steam generators built after August 17, 1971, but before September 19, 1978, requires compliance with certain federal standards or new source performance standards (NSPS) for controlling the rate of emissions of SO2.24 They are allowed to emit no more than 1.2 pounds of SO2 per million British thermal units of heat input (lbs/mmBtu).25 Generally, the rate of allowable emissions specified in these post-1971 plants' permits is stated simply as 1.2 lbs/mmBtu.26 The third category, those utility plant steam generators built after September 18, 1978, are subject to the revised new source performance standards (RNSPS) which require these post-1978 plants to use "scrubbers" or fuel gas desulfurization equipment27 and to remove a specified percent of sulfur in the fuel burned rather than meet a specified rate of emissions.28 For plants constructed after 1978, the limit may be expressed as a rate in pounds per mmBtu, or more likely, it may be expressed as a limitation on the percentage of sulfur content of the plant's fuel supply. In addition, many states have incorporated these federal requirements into their permit systems while others have imposed more stringent standards. States have established, pursuant to EPA regulations, tests for determining compliance with these limitations.29

1990 Amendments Alter Regulation and the Use of Allowable Emissions Rate

The 1990 Amendments have fundamentally altered these three regulatory classifications by prescribing SO2 emission limitations for all utility plants including those built before 1971. However, rather than setting a limitation on a plant's rate of emissions, the statute restricts the actual tons of SO2 emitted annually. This is accomplished through specified tonnage limitation formulas or "allowances"30 set forth in the 1990 Amendments.31

Under the Act, all utility plants are classified according [24 ELR 10006] to their actual rate of SO2 emissions achieved in 1985, i.e., above or below 1.2 lbs/mmBtu. The tonnage limitation formula for each "class" is calculated by the following method: the specified rate of emissions is multiplied by average fuel consumed during 1985, 1986, and 1987 (known as the "baseline")32 or at a specified annual capacity factor, i.e., fuel consumed at 60 percent or 65 percent of capacity, and then divided by 2,000, i.e., pounds per ton. The operation of this tonnage limitation will culminate in a specified number of tons of SO2 that may be emitted annually by any utility plant.33

Importantly, pursuant to § 402(18) of the 1990 Act, in certain cases with respect to the rate of emissions employed in the tonnage limitation formula, EPA must calculate an "annual equivalent" limitation in lbs/mmBtu in cases where a utility plant's emissions limitation is not expressed in lbs/mmBtu or where the averaging period of that emissions limitation which is not expressed in lbs/mmBtu also is not expressed on an "annual basis." That provision is, however, silent with respect to the treatment of utility plants that have an allowable emissions limitation already expressed as a rate in lbs/mmBtu. However, under the rubic of its administrative rulemaking authority, EPA also determined that it would apply an "annual equivalent emissions limitation factor" (or "annualization" factor) to all utility plants' "allowable 1985 emissions rate,"34 including those utility plants with an emissions limitation that is already expressed as a rate in lbs/mmBtu.

What is the significance of EPA's interpretation of the Acid Rain Program to those utility plants with an emissions limitation already expressed as a rate? It would, simply stated, have the effect of significantly reducing a utility plant's allowances by altering its allowable (and permitted) standard of performance for SO2 emissions (i.e., emissions rate limitation).35 For example, a coal burning utility plant (unscrubbed), subject to an NSPS allowable emissions limit of 1.2 lbs/mmBtu stated in its permit, would have its "allowable" standard of performance reduced (by an annualization factor of 0.89) to 1.06 lbs/mmBtu in its SO2 tonnage limitation formula under EPA's rule. As a result, a utility plant's emission allowances would be reduced outside of and in addition to the pro rata reduction or "rachet"36 authorized under the 1990 Act if EPA's "emissions limitation annualization factor" is sustained.

Administrative Rulemaking Authority and Chevron

Under the principles of modern administrative law, EPA's rulemaking authority extends only so far as its statutory authority. Any administrative decision made within the broad scope of EPA's statutorily delegated discretion may be accorded great deference provided it is not contrary to plain congressional intent.37 EPA's "emissions limitations annualization factor" is a final regulation which, if history guides us, circumvents the intent of Congress making the matter ripe for judicial review.

In order to pass constitutional muster, EPA may not impute to Congress the intention to adopt the disputed meaning in absence of clear evidence. In the landmark case of Chevron U.S.A., Inc. v. Natural Resources Defense Council, the U.S. Supreme Court defined the parameters for reviewing the validity of an administrative agency's interpretation of a challenged statute. To illustrate the application of this test, a court reviewing EPA's interpretation of the Acid Rain Program is required to employ traditional tools of statutory construction. Specifically, a court must first ask whether Congress has directly spoken to the precise question at issue. According to the tenets of Chevron, "[i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously express intent of Congress …" as set forth in the Act.38 If the court determines that Congress did not directly address the precise question at issue, and "if 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 construction of the statute."39 "The power of an administrative agency to administer a congressional created … program," the Chevron Court explained, quoting the Court in Morton v. Ruiz,40 "necessarily requires the formulation of policy and the [24 ELR 10007] making of rules to fill any gap left, implicitly or explicitly, by Congress."41

Answering the first question enunciated in Chevron, i.e., what was the intent of Congress, readily crystallizes the proper meaning of the term "allowable 1985 emissions rate" for two reasons. As discussed below, Congress spoke directly to the meaning of an "allowable 1985 emissions rate," and the intent of Congress on that issue is clear. The underlying reasons compelling the conclusion that EPA exceeded its rulemaking authority by promulgating its "emissions limitation annualization factor" as it relates to the Act's "allowable 1985 emissions rate" are set forth below.

To Annualize or Not to Annualize, That Is the Question

Interpreting Clear Statutory Language

As discussed in the preceding section, an important principle of statutory construction dictates that EPA's rulemaking authority is restricted by the explicit statutory language contained in § 402(18). It does not allow the Agency to draft a regulation that embraces the 1990 Amendments' sweeping purpose. As one authority on statutory construction succinctly explained,

The purpose of a statute may often be stated in broad terms, but that purpose is effectuated only through the 'working provisions' of the statute. The enactment of a statute does not ipso facto result in enactment of the broad purpose that motivated the statute, and judges [one may also assume administrative agencies] must resist the urge to treat the statute's purpose as a source of positive law.42

Keeping in mind that the 1990 Amendments seek to combat "the adverse effects of acid deposition through reductions in annual emissions of sulfur dioxide of ten million tons from 1980 emission levels …,"43 the above-quoted cautionary rule of statutory construction is relevant to EPA's rulemaking in the present case.

To illustrate this point, § 402(16) of the Act defines specifically the rate of SO2 emissions to be employed in the various SO2 tonnage emission limitation formulas, i.e., "actual 1985 emissions rate."44 The statute further provides several tonnage limitation formulas that employ a utility plant's "allowable" rate of emissions, which is generally higher than its actual rate of emissions. Section 402(18) provides in pertinent part:

The term "allowable 1985 emissions rate" means a federally enforceable emissions limitation for sulfur dioxide or oxides of nitrogen, applicable to the unit in 1985 or the limitation applicable in such other subsequent year as determined by the Administrator if such a limitation for 1985 does not exist.45

This definition of "allowable 1985 emissions rate" reveals that Congress intended that such emissions limitation must be expressed as a rate. This is because the tonnage limitation formulas require an emissions rate component. Where a limitation for 1985 does not exist, i.e., the plant did not operate, EPA may then apply a subsequent year's limitation to the utility plant.

This first part of § 402(18) is juxtaposed with a second part of that section requiring EPA to calculate a utility plants' annual equivalent emissions limitation in lbs/mmBtu.

Where the emissions limitation for a unit is not expressed in pounds of emissions per million Btu, or the averaging period of that emissions limitation is not expressed on an annual basis, the Administrator shall calculate the annual equivalent of that emissions limitation in pounds per million Btu to establish the allowable 1985 emissions rate.46

It must be noted that this express authority to calculate an annual equivalent or to annualize, although delegated to EPA by Congress, was also restricted by Congress. The limited mission of the second part of § 402(18) is unequivocal. Under the purview of the statute, EPA is authorized to calculate the annual equivalent limitations only where a unit's emissions limitation is not expressed in lbs/mmBtu, or the averaging period of that limitation is not expressed in lbs/mmBtu on an annual basis.

EPA, however, proffered an alternate view of § 402(18), under which the Agency was empowered to annualize all emissions limitations including those already expressed as a rate. By way of explanation, the Agency propounded the following oblique justification for its plenary powers. To annualize only those emission limitations not expressed in lbs/mmBtu "runs contrary to the statutory language.… An interpretation limiting the calculation of an annualized rate only to emission limitations that are not in lb/mmBtu," according to EPA "render[s] superfluous the portion of Section 402(18) referencing cases where an annual averaging period is not used."47 By arriving at the conclusion that it was specifically directed to calculate an annual equivalent rate for some units, EPA illogically deducted it must do so for all units. If EPA's expansive interpretation of the Acid Rain Program is sustained, the effect would be to extend the scope of the Agency's power under the 1990 Act beyond that intended by Congress.

Defining "Federally Enforceable Emissions Limitations"

Although the term "allowable 1985 emissions rate" is defined in part as "a federally enforceable emissions limitation,"48 this latter term is not defined by the Act because it is a currently employed regulatory phase. Current EPA regulations, however, define "a federally enforceable emissions limitation" to mean

all limitations and conditions which are enforceable by the Administrator, including those requirements developed pursuant to 40 CFR parts 60 and 61 [standards of [24 ELR 10008] performance for new stationary sources], requirements within any applicable State implementation plan, any permit requirements established pursuant to 40 CFR 52.21 or under regulations approved pursuant to 40 CFR part 51, subpart I, including operating permits issued under an EPA-approved program that are incorporated into the State implementation plan and that expressly require adherence to any permit issued under such program.49

The concept of a federally enforceable "allowable" emissions limitation is not unique to the Act and is currently utilized in various EPA and state regulations. The following EPA regulations shed some light on the proper definition of this term. For example, EPA regulations define the terms "allowable emissions,"50 "allowable annual emissions," and "allowable rates of emissions" governing the state implementation plans.51 Significantly, prior to the 1990 Amendments, EPA interpreted an "allowable" emissions limitation expressed as a rate to be an annual limitation. In an interpretive ruling, the Agency stated

allowable annual emissions shall be based on the applicable New Source Performance Standard (NSPS) set forth in 40 CFR Part 60 or the applicable SIP [State Implementation plan] emission limitation, whichever is less, and the maximum annual rated capacity of the source. If the source is not subject to either a[n] NSPS or SIP emission limitation, annual emissions shall be based on (1) the maximum annual rated capacity, and (2) the emission rate agreed to by the source as a permit condition.52

Interestingly, the concept of annualization of allowable emission rates did not appear in EPA regulations until the definition of "most stringent federally enforceable emissions limitation" was published in the January 11, 1993, Federal Register Acid Rain Program final rule.53

As evidenced by the above-cited regulations and interpretive rules, before the enactment of the 1990 Amendments, EPA did not require an emissions rate to be annualized in order to calculate "federally enforceable emissions limitations" or "allowable emissions." If EPA's own regulations are to be believed, an "allowable 1985 emissions rate" is the annual "federally enforceable emissions limitation" applicable in 1985 without bringing into play the all-inclusive "emissions limitation annualization factor."

Statutory Language

The Plain Meaning of the Statute

A plain reading of a statute is generally considered to mean the most plausible meaning of the statutory language without resorting to the legislative history.54 An analysis of the clear structure of § 402(18) reveals that the statute restricts the so-called annualization of allowable 1985 emission limits only where (1) a utility plant's allowable limitation is not expressed as a rate in lbs/mmBtu, or (2) the averaging period of that emissions limitation that is not expressed as a rate is not expressed on an annual basis. Section 402(18) provides in pertinent part:

Where the emissions limitation for a unit is not expressed in pounds of emissions per million Btu, or the averaging period of that emissions limitation is not expressed on an annual basis, the Administrator shall calculate the annual equivalent of that emissions limitation in pounds per million Btu to establish the allowable 1985 emissions rate.55

Apparently, EPA did not find this clear statutory elucidation persuasive. The Agency crossed the rulemaking Rubicon when it determined that the statutory definition of "allowable 1985 emissions rate" "requires the Administrator to convert all emissions limitations that are not expressed in pounds per million British thermal units to lb/mmBtu.…"56 The Agency concluded "[t]hus, section 402(18) requires both dimensional conversion and annualization."57 Waxing philosophical, the Agency reasoned that "[t]his process of annualization is in keeping with the underlying philosophy of the Acid Rain Program, which limits annual SO2 emissions.…"58

Neither the structure nor the language of the statute lend themselves to such a suppositious reading. On the contrary, [24 ELR 10009] a plain reading of the statute manifests a resolve by Congress to intentionally and purposely recognize the current bifurcated treatment of utility plants as discussed earlier into a two-tier standard for the NSPS and the RNSPS. This bifurcation is wholly dependent on whether a utility plant's emissions limitation is expressed in lbs/mmBtu, or is not as in the case of units subject to a percent of sulfur limit under a revised NSPS standard. Moreover, the particular language used by Congress at § 402(18) to describe the two-tier standard highlights the fact that it did not contemplate that all utility plants would be subject to identical regulation.

The Agency, however, responded in a rather Socratic soliloquy, theorizing that to adopt "such a reading of section 402(18) mixes two different processes to achieve an inequitable result."59 On the other hand, opponents of EPA's rule note that it is EPA's mixing of two different concepts -- allowable emission rates and compliance testing to enforce such rates -- that produces an inequitable result.

In defense of its rule, the Agency questioned "why, once a units' [sic] limitation is converted to lbs./mmBtu, that unit would be treated differently from a unit whose limitation was initially expressed in lbs./mmBtu."60 The Agency, however, did not stop there. To buttress its case, EPA pointed out that "[t]here is no evidence in the statute of an intent to treat such units differently, and to do so would be unfair. EPA believes that all emissions limitations not expressed on an annual basis must be annualized, thereby placing every affected unit on an equal footing in determining the lesser of a unit's actual or allowable annual emissions rates."61 EPA's hypothesis aside, it is inconceivable that Congress would have designed § 402(18) to modify its specifically stated intent on the matter of annualizing. On the contrary, there is ample evidence in the legislative history indicating that Congress sought only to "annualize" units without rate limitations to place them on an equal footing with those units already subject to a limit expressed as a rate.62

Statutory Construction

It has long been recognized that the rules of statutory construction and relevant case law63 dictate that EPA's interpretation must be based on a permissible construction of the statute. Therefore, to allow the Agency's misplaced reliance on its perception of the intended meaning at the expense of actual meaning converts the statute into what has been described as an "arbitrary concatenation of words."64 In the final analysis, the Agency's focus in developing the standard entrusted to its care under the Acid Rain Program must be on the ascertainment of the actual meaning of the statute.65

EPA's interpretation, however, eviscerates the statute. To illustrate this point, the Agency, with surgical precision, cast aside the significance of the demonstrative pronoun "that" in the § 402(18) clause "the averaging period of that emissions limitation is not expressed on an annual basis." In its July 7, 1992, response to comments, EPA tightened the screws considerably.66 The Agency's restatement of the Act leaves out the word "that." By arbitrarily reconstructing the statute, EPA was at liberty to draft a regulation harmonious with its expansive interpretation. The upshot of the Agency's action was the abrogation of the 1990 Amendments' clear directive to employ the "federally enforceable limitation" expressed as a rate and not to annualize a utility plant's emissions limit that is already expressed as a rate.

However, a reasonable construction of § 402(18) takes into account the fact that the pronoun "that" refers back to the preceding phrase denoting instances "[w]here the emissions limitation for a unit is not expressed in pounds of emissions per million Btu,"67 contrasting it with a utility plant whose emissions limitation is already expressed as a rate. In the limited instance where a utility plant's emissions limitation is "not expressed as a rate in pounds per million Btu," the Administrator must calculate the "annual equivalent" of the converted emissions limitation in pounds per mmBtu to establish the "allowable 1985 emissions rate."

A general rule of statutory construction dictates that referential and qualifying words and phrases refer solely to the last antecedent where no contrary intention appears. "The last antecedent is 'the last word, phrase, or clause that can be made an antecedent without impairing the meaning of the sentence.'"68 "Thus a proviso usually is construed [24 ELR 10010] to apply to the provisions or clause immediately preceding it."69 The inclusion of the qualifying word "that" in § 402(18) was portentous. Undoubtedly, Congress incorporated this word into the statute to prevent overinclusiveness, yet EPA chose to disregard its implication.

Additional language in § 402(18) lends credibility to the argument that EPA disregarded the protocols of statutory construction. The statute provides that "the Administrator shall calculate."70 The word "shall" is a mandatory not a permissive directive. By using the word "shall" to modify "calculate," Congress specifically commanded EPA to calculate "the annual equivalent" of a utility plant's emissions limitation in lbs/mmBtu only "where the emissions limitation is not expressed in lbs/mmBtu, or the averaging period of that emissions limitation is not expressed on an annual basis" in order to establish its "allowable 1985 emissions rate."

The statute is silent with regard to the calculation of an annual equivalent where a utility plant's allowable limitation is already expressed as a rate in lbs/mmBtu. In the absence of specific language to the contrary, this silence can be strictly construed to exclude those allowable limitations expressed as a rate from the purview of the "annual equivalent" provision in § 402(18). This exclusion is logical because: (1) § 402(18) defines the term allowable emissions rate, and a limitation expressed as a rate readily falls within the ambit of "allowable 1985 emissions rate;" and (2) an allowable emissions rate is a continuous, and thus, an annual limitation in and of itself.

In the final analysis, a plain reading of the clear structure and context of § 402(18) is dispositive. To the extent that congressional intent can be discerned from this language, it is apparent that Congress intended to confine the scope of EPA's power to recalculate utility plants' emissions limits in order to effectuate the policies of the Acid Rain Program.

Legislative History of the Act

"Allowable 1985 Emissions Rate"

The congressional message conveyed by the plain language of the 1990 Amendments is confirmed by an examination of its legislative history.71 There is an abundance of particularly compelling evidence that Congress intended to treat an "allowable 1985 emissions rate" as the limit expressed in a utility plant's operating permit. In fact, it was EPA that forced Congress to develop a legislative history on the matter.

During the debate on the 1990 Amendments, EPA sought to interpret the term "allowable" rate to mean the lesser of a plant's actual or allowable rate. Because of the position taken by the Agency, during debate on the conference agreement on the 1990 Amendments, numerous statements were made in both the House and the Senate clarifying the point that "allowable rate" means the rate specified in a plant's permit.72

In documents exchanged among conferees during consideration of the 1990 Amendments, Senate conferees declared that the term "allowable 1985 emissions rate" requires a unit's permitted rate to be used in calculating allowances.73 For example, the Memorandum of Joint House & Senate Staff Recommendations74 to all House and Senate conferees on S. 1630 from Sen. Max Baucus (D-Mont.), Chairman of the Senate Conferees, and Rep. John Dingell (D-Mich.), Chairman of the House Conferees, summarized the joint recommendations on acid rain provisions. The memorandum stated that "'allowable emissions rate' for purposes of calculating a plant's allowance allocation, should reflect [the plant's] permit."75 It further provided, for example, that the tonnage limitation formula, enacted as § 405(d)(4) of the 1990 Act, would be the "SIP rate X baseline at a 65% capacity factor,"76 the "SIP rate" being the limitation specified in a utility plant's permit under a state implementation plan.

Sen. Burdick (D-N.D.), then the Chairman of the Senate Committee on Environment and Public Works, in correspondence to Sen. Baucus, stated that it was his intention to limit the application of "annualization" of emissions limitations. Sen. Burdick observed that "[i]f no emissions rate is expressed in lbs/mmbtu under the permit or applicable implementation plan, the Administrator shall determine such rate … by taking into account emissions limitations expressed in a mass per unit of time, heat input, heating value, and fuel type allowable under the permit or applicable implementation plan."77 Helpful in resolving the current controversy is Sen. Burdick's statement acknowledging that "[i]f the unit is subject to the permitting requirements for sulfur dioxide under part C or part D [title I of the Act], the Administrator may not annualize emissions limitations applicable to a unit under a permit issued under Part C or Part D."78

Annualization of Emissions Rates

There is simply nothing in the 1990 Amendments authorizing the annualization of all utility plants' emissions limits and/or the term "emissions annualization limitation factor." Moreover, neither the conference report nor the House and [24 ELR 10011] Senate reports accompanying the respective versions of the 1990 Amendments provide any reference or explanation relative to these terms, although several senators, but not representatives, addressed specifically the issue of annualization during floor consideration of the final conference agreement.

For example, Sen. Baucus, Senate manager of the bill, expressed his intent that the definition of "allowable" be based on the emission rate set forth in the unit's permit or state implementation plan, "although expressed on an annualized basis."79 In order to clarify the term "allowable 1985 emission rate," the senator emphasized

I want to confirm that we intended the allowable 1985 emission rate, the Senate definition of which the conferees retained, to be based on the emission rate set forth in the units' permits or State implementation plans, although expressed on an annualized basis. Of course, not all units' permits and State implementation plans contain such specific emissions rates. In those instances, we expect the Administrator of EPA to develop an emission rate based on fuel use, variability of sulfur content, use of scrubbers and other appropriate factors.80

The senator concluded that an annualization requirement would be necessary "because the whole acid rain allowance system is based on limiting annual SO2 emissions."81 In order to annualize, the senator explained, EPA must begin by using the numerical rate listed in a utility plant's permit. However, "if this rate is not expressed in pounds per million Btu, the EPA shall calculate an equivalent rate in pounds per million Btu based on the permitted heat input rate. Then the EPA will annualize this rate.…"82 Surprisingly, EPA cited portions of these congressional comments for its authority to annualize all utility plants' emission limitations.83 However, misconstrued congressional comments are an inappropriate, if not flawed, source of rulemaking authority because "'mute intermediate legislative maneuvers' are not reliable indicators of congressional intent."84

EPA's July 7, 1992, response to comments85 is paradoxical. On the one hand, the Agency saw fit to take a portion of Sen. Baucus' remarks out of context, while on the other hand it ignored his remarks on annualization, which are the only specific examples of annualization in the congressional debates. To illustrate his point, the senator had described a utility plant constructed after September 18, 1978, subject to the RNSPS. In this hypothetical, a plant's "federally enforceable" limitation is not expressed as a rate in pounds per mmBtu but rather as a 30-day limit "for the highest sulfur content fuel" that a utility plant is permitted to consume. In this case, Sen. Baucus emphasized that EPA must then calculate the annual equivalent and convert it to lbs/mmBtu.86

Interestingly, the above-mentioned example used by Sen. Baucus had been proposed earlier by other Senate conferees as an amendment to statutory language during conference committee consideration of the 1990 Amendments. It was not adopted by the conference participants. However, this amendment applied special calculation rules for utility plants that commenced construction after September 18, 1978, and were not subject to a rate limitation but rather a 30-day emissions limit for SO2 content. Because the utility plant's emissions limitation was neither expressed in lbs/mmBtu nor expressed on an annual basis, EPA would be required to calculate an equivalent rate. This example is completely compatible with a plain reading of § 402(18) as enacted by Congress.87

Sens. David Boren (D-Okla.), Carl Levin (D-Mich.), Don Nickles (R-Okla.), and James Exon (D-Neb.)88 expressed views consistent with Sen. Baucus' reading of § 402(18). These members noted a distinction between utility plants subject to the tonnage limitations of § 405(d)(4)89 and those utility plants subject to § 405(g)(1).90 For example, § 405(d)(4) does not contain language found in § 405(g)(1) that directs EPA to convert, if necessary, an "allowable" emissions limitation to lbs/mmBtu. These senators emphasized that it was their intention that annualization only apply where an allowable emissions limit must be converted to lbs/mmBtu. Sen. Boren, speaking directly on the issue, stated, "My understanding is that under section 405(d)(4), if my Oklahoma utilities have an otherwise qualifying unit with a sulfur dioxide rate in their Federal permit or in the applicable State implementation plan of 1.2 lbs/mm BTU, [24 ELR 10012] that rate without further adjustment in the calculation, is to be used in the calculation of that unit's allowances."91

Thus, the requirement of § 402(18) to "calculate the annual equivalent of that emissions limitation" in order to establish the "allowable 1985 emissions rate" arguably applies only to tonnage limitation formulas such as those in § 405(g)(1) which specifically directs EPA to convert an "allowable" emissions limit to lbs/mmBtu. This reading is wholly consistent with the intent expressed by the Senate sponsor92 of the amendment that eventually became § 405(g)(1). In stark contrast, EPA's analysis of § 405(g)(1) "converted, if necessary to pounds per mmBtu" language represents a sharp departure from the stated intentions of Congress.93

The legislative history is devoid of any evidence that Congress intended EPA to annualize the emissions limitations of all utility plants. Nor did Congress ever indicate any approval of a flexible reading of the statute. As a result, the Agency's rulemaking authority suffers from grave legal and constitutional infirmities. Because EPA's administrative discretion is not entitled to deference on the issue, the annualization regulation, promulgated pursuant to § 402(18) to enforce the Acid Rain Program, is invalid.

Allowable Emissions Differ From the Test for Compliance With the Standard

EPA Erroneously Mixed Allowable Standard With the Compliance Test Standard

EPA equated the "averaging period" used for testing a plant's compliance with its allowable emissions limitation as if it were the limitation itself. It is important to note that the allowable rate as specified in a utility plant's permit is, by definition under the Act, a "standard of performance" that is distinguishable from the means employed to measure actual emissions to determine a plant's compliance with the "standard of performance."94

Section 111 of the Clean Air Act, as amended by the Clean Air Act Amendments of 1970,95 required the EPA Administrator to promulgate "standards of performance" for new stationary sources of air pollution. The August 17, 1971, proposed standards for new coal-fired electric generating stations,96 finalized on December 23, 1971,97 established the standard for sulfur emissions as a ceiling at 1.2 pounds per mmBtu.98

For example, under the NSPS subpart D, EPA's test for compliance is the average of any "contiguous" three-hour period of monitoring.99 Compliance demonstration is required through use of EPA's Reference Method 6 for a minimum three-hour test period.100 While compliance is determined on the basis of a test measure of three hours, the "allowable" rate is a continuous standard that must be met. As a result, the "allowable rate" may not be exceeded for any three-hour test period. To measure compliance, states generally compare the actual annual rate to the allowable rate specified in the unit's permit. "Actual emissions" are defined in current EPA regulations to equal the average rate, in tons per year, which a unit actually emitted. Calculating a unit's actual annual emissions requires using a unit's actual annual operating hours, production rates, and types of fuel used.101

Precedent for Annualization Factors Was Based on Fuel Compliance With Emission Rate Limitations

Historically, EPA developed its "emissions limitation annualization factor" in the mid-1980s as an accounting method for estimating the statistical characteristics of measured coal emissions and the possibilities for a specific coal to comply with given emission limits. This accounting method takes into consideration the variability of sulfur content in coal or other fuels and the environmental controls installed. In terms of practical application, the use of this accounting method enables a utility plant to determine the maximum sulfur content of coal that could be burned to produce actual emissions below allowable emissions.102

After adopting the RNSPS in 1978, EPA extensively discussed the need to address fuel sulfur content variability in "averaging periods."103 In 1983, the Agency proposed [24 ELR 10013] but did not adopt rules to establish Subpart D compliance demonstration for all utility plants as a 30-day rolling average test period rather than the current minimum three-hour "test period." The rationale for the proposed change was based on a number of factors. For example, EPA noted that the sulfur content of coal may vary and interact with other pollutants causing complex sulfur variability patterns. As a result, the variability of sulfur content makes it difficult for utility plants to predict or manage allowable emissions on a short-term basis. EPA further noted that the averaging time associated with a SO2 emissions limit might affect the availability of coals that could comply with the 30-day standard because shorter averaging periods require a lower mean sulfur content.104

Later in 1983, EPA reversed its position when it deemed averaging periods of longer than 30 days to be unnecessary. The Agency reasoned that longer averaging periods would have relatively little additional effect on the mitigation of coal sulfur variability compared to the 30-day rolling average. In defense of this reversal, EPA reiterated that its primary reason for its proposed change in averaging periods was that shorter averaging periods would severely limit compliance coal supplies for utility plants subject to the 30-day standard resulting in the employment of costly coal blending facilities.105

Tonnage Limits Are Annual Limits Without Rate Annualization

EPA proposed and made final a set of various "annualization factors" by which each utility plant's allowable rate is multiplied and thus "annualized."106 These factors, incorporated into EPA's National Allowance Data Base (NADB), vary for each utility plant depending upon its compliance test averaging time, fuel, control technology, and other factors that are similar if not identical to those used earlier in developing the Gleit compliance models.107

The primary rationale proffered by EPA for creation of these "annualization factors" was a utility plant's compliance averaging time.108 As discussed above, this concept is important for a regulatory scheme that measures compliance by comparing actual emission rates with allowable emission rates. However, once the Act's "allowance" system is implemented this measure of compliance is no longer operative. This is because Congress rejected outright the concept of regulating the emission rates of all utility plants in favor of total annual tonnage emission limits.109

Under the Act, compliance is not to be measured by comparing the actual emissions rate of a utility plant or even its maximum actual rate to its allowable emissions rate. Rather, the ultimate measure of compliance for a utility plant will be its ability to match its annual emissions in tons with the tons of "allowances" held and allocated under the annual tonnage limitation formulas in addition to any unused allowances "banked" from previous years.110

To demonstrate compliance at the end of each year after a "true-up" period, a utility plant is required to submit to EPA its continuous emissions monitoring data and allowances allocated for that year or remaining from previous years that equal the unit's emissions.111 In its application of annualization to all utility plants, EPA is mixing this compliance-related method of measuring fuel-sulfur variability and estimating a utility plant's maximum actual emissions in a manner that is contrary to the 1990 Amendments' stated purpose and intent.

When Congress debated this issue, it determined that "allowable" was not to be considered synonymous with a utility plant's so-called maximum actual emission rate.112 In fact, during the conference committee deliberation of the Act, it was proposed that "annualization factors" applicable to all utility plants and identical to those included in EPA's NADB, Version 1, should be incorporated into the definition of "allowable 1985 emission rate" in § 402(18).113 The conference participants rejected the proposal and they were not incorporated into the 1990 Act. Thus, on the one hand, both the conference committee and Congress expressly disapproved of the concept of affording EPA authorization to apply annualization factors to allowable rates of the various proposed classes of all utility plants. On the other hand, EPA by implication read into the 1990 Amendments an authority for discretion to apply what Congress rejected.

Significantly, the only specific authority granted to EPA to reduce a utility plant's allowances outside of the specified tonnage formulas may occur when a pro rata reduction of all basic allowances is required under the 1990 Amendments. This pro rata reduction is contingent on whether the total annual basic allowance issued to all utility plants exceeds the 8.90 million ton annual "cap" established by the 1990 Amendments.114 Ultimately, this safety net assures that should the total number of SO2 allowances allocated [24 ELR 10014] exceed the aggregate tonnage limit or national "cap," all utility plants' allowances will be reduced proportionately.

EPA based its authority to annualize SO2 emissions on the 1990 Amendments' stated purpose of reducing "annual emissions of sulfur dioxide."115 However, the Agency's action is not only inappropriate but unwarranted. By restricting SO2 emissions to specific annual tonnage limitations, these formulas set forth in the Act inherently establish annual limits on emissions without the need to further alter allowable emission limits that are expressed as rates.116 This is because each formula limits the tons of SO2 emitted on the basis of the annual quantity of fossil fuel consumed by an affected unit.117

Congress, however, did not need to specify that emissions rate components of the tonnage limitation formulas were to be calculated on an annual basis except where EPA must convert an allowable limitation to a rate in lbs/mmBtu because those emission limits expressed as a rate are already on an annual basis. For example, in calculating "basic" allowances for certain units, the annual tonnage limits are determined by multiplying a unit's "baseline" by an emission rate equal to 1.20 lbs/mmBtu. The emissions rate component is simply stated as the numerical rate in pounds per mmBtu.118

In the end, the decision by Congress not to adopt the annualization of all emission limitations cannot be simply nullified by an agency arbitrarily refashioning the statute vis-a-vis the broad purpose that had prompted the enactment of the legislation. EPA's decision to annualize all utility plants' emission limitations is illustrative of what may happen when an agency's rulemaking exceeds its authority.

Conclusion

EPA's broad application of its "emissions limitation annualization factor" to all utility plants controverts the intent of Congress and alters the meaning of an "allowable 1985 emissions rate." The Agency's misinterpretation that the 1990 Amendments require the annualization of all "allowable 1985 emissions" limitations, including those already expressed as a rate, imputes to Congress the intention to adopt the disputed meaning in the absence of clear evidence. In drafting the legislation, Congress was concise in providing that the 1990 Amendments' emission limitations, to be used in annual tonnage limitation formulas, would serve to accomplish the statute's primary goal "to reduce the adverse effects of acid deposition through reductions in annual emissions of sulfur dioxide of 10 million tons from 1980 emission levels"119 without resorting to the overinclusive concept of annualization.

EPA would be well-advised to reevaluate its position with respect to its interpretation of § 402(18). By rethinking its interpretation of the statute, the Agency would do well to promulgate regulations that enforce the letter as well as the spirit of the Acid Rain Program and the 1990 Amendments as intended by Congress.

1. Acid Rain Program: General Provisions and Permits, Allowance System, Continuous Emissions Monitoring, Excess Emissions and Administrative Appeals, 58 Fed. Reg. 3590 (1993) (to be codified at 40 C.F.R. pt. 73.10) [hereinafter Acid Rain Program General Provisions]; Acid Rain Allowance Allocations and Reserves, 58 Fed. Reg. 15634 (1993) (to be codified at 40 C.F.R. pts. 72, 73 & 75).

2. 42 U.S.C. §§ 7401-7671q.

3. Pub. L. No. 101-549, 104 Stat. 2399.

4. The date of enactment of the Clean Air Act Amendments of 1990 was November 15, 1990.

5. 42 U.S.C. §§ 7651-7651o, ELR STAT. CAA §§ 401-416. The acid rain provisions were enacted as title IV of the Clean Air Act of 1990, Pub. L. No. 101-549, 104 Stat. 2584.

6. The term "utility unit" means "(i) a unit that serves a generator in any State that produces electricity for sale, or (ii) a unit that, during 1985, served a generator in any State that produced electricity for sale." 42 U.S.C. § 7651a(17)(A)(i) & (ii), ELR STAT. CAA § 402(17)(A)(i) & (ii).

7. Acid Rain Allowance Allocations and Reserves (preamble), 57 Fed. Reg. 29940, 29948 (1992).

8. See EPA Air Docket No. A-91-36 (1991).

9. 56 Fed. Reg. 33282 (1991). The database consists of plant-specific information on items to be used in determining a unit's historical emissions and other matters relevant to the allowance program.

10. CAA § 402(18) provides, "Where the emissions limitation for a unit is not expressed in pounds of emissions per million Btu, or the averaging period of that emissions limitation is not expressed on an annual basis, the Administrator shall calculate the annual equivalent of that emissions limitation in pounds per million Btu to establish the allowable 1985 emissions rate." 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18).

11. See EPA Air Docket No. A-91-36 (1991).

12. See generally OFFICE OF LEGAL POLICY, U.S. DEPARTMENT OF JUSTICE, REPORT TO THE ATTORNEY GENERAL, USING AND MISUSING LEGISLATIVE HISTORY: A RE-EVALUATION OF THE STATUS OF LEGISLATIVE HISTORY IN STATUTORY INTERPRETATION (1989) [hereinafter USING AND MISUSING LEGISLATIVE HISTORY].

13. 467 U.S. 837, 14 ELR 20507 (1984); see also Mead Corp. v. Tilley, 490 U.S. 714 (1989); Immigration and Naturalization Serv. v. Cardoza-Fonseca, 480 U.S. 421 (1987).

14. EPA defines the term "acid rain" as

a complex set of phenomena that begins with emissions from electric and steam generating plants and certain industrial processes, includes the transport and transformation of those emissions through the atmosphere, and ends with the effects of those emissions and their resulting transformation products on the environment. Specifically, the burning of fossil fuels, particularly coal and oil, releases emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) into the atmosphere. Combustion of wood and other biomass materials also emit SO2. In the atmosphere, SO2 and NOx may undergo various chemical reactions, resulting in their transformation into chemical products such as sulfates, nitrates, sulfuric acid, and nitric acid. These compounds can fall to earth near the source or be transported hundreds of miles. They may be deposited during any stage of their transformation, returning to earth as dry deposition in the form of gases, aerosols, and particles as well as wet deposition through precipitation such as rain, fog, or snow. The presence of these emissions and their transformation products in the atmosphere contributes to reduced visibility and is suspected of posing a threat to human health at current levels. The acidic deposition resulting from SO2 and NOx emissions and their byproducts damages both ecosystems and human-made materials.

Acid Rain Allowances Allocations and Reserves (preamble), supra note 7, at 29940.

15. The Acid Rain Program was enacted by Congress

to reduce the adverse effects of acid deposition through reducing annual emissions of sulfur dioxide of ten million tons from 1980 emission levels, and, in combination with other provisions of [this Act], of nitrogen oxides emission of approximately two million tons from 1980 emissions levels.… It is the intent of this [title] to effectuate such reductions by requiring compliance by affected sources with prescribed emission limitations by specified deadlines, which limitations may be met through alternative methods of compliance provided by an emission allocation and transfer system. It is also the purpose of this [title] to encourage energy conservation, use of renewable and clean alternative technologies, and pollution prevention as a long-range strategy, consistent with the provisions of this [title], for reducing air pollution and other adverse impacts of energy production and use.

42 U.S.C. § 7651(b), ELR STAT. CAA § 401(b) (purposes).

16. Acid Rain Allowance Allocations and Reserves, supra note 1, at 15635.

17. 42 U.S.C. § 7651b(a), ELR STAT. CAA § 403(a).

18. See 42 U.S.C. § 7651c(a), ELR STAT. CAA § 404(a) (Phase I sulfur dioxide requirements).

19. Approximately 2,200 existing units and most new utility units will be affected when they commence commercial operation. See Acid Rain Allowance Allocations and Reserves, supra note 1, at 15635.

20. See 42 U.S.C. § 7651d, ELR STAT. CAA § 405 (Phase II sulfur dioxide requirements).

21. 42 U.S.C. § 7651f, ELR STAT. CAA § 407 (nitrogen oxides emission reduction program). For proposed regulations for the nitrogen oxides control program pursuant to CAA § 407, see 57 Fed. Reg. 55632 (1992) (to be codified at 40 C.F.R. pt. 76) (proposed Nov. 25, 1992).

22. The term "unit" means "a fossil fuel-fired combustion device." 42 U.S.C. § 7651a(15), ELR STAT. CAA § 402(15).

23. There is no specific provision to that effect in federal regulations except that the standards apply from the date of the proposed rulemaking on August 17, 1971. See 36 Fed. Reg. 15704 (1971).

24. See 40 C.F.R. § 60.40 (1992). See generally id. subpt. D.

25. British thermal units (Btus) are a measure of heat energy. A single Btu is the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit. This measure is appropriate because utility plants combust coal to heat water, which produces steam used for generating electricity.

26. See 40 C.F.R. § 60.43(a)(2) (1992).

27. For plants burning high-sulfur coal, this standard is achieved only by cleansing the sulfur byproducts from the gases emitted from the stack. This process is known as fuel gas desulfurization (FGD), or "scrubbing," and is used to clean emissions from existing as well as new sources. Plants burning low-sulfur coal achieve the 1.2 lbs/mmBtu standard without using any technology at all.

28. See 40 C.F.R. § 60.40a. See generally id. subpt. Da.

29. See id. § 60.24.

30. The term "allowance" means "an authorization, allocated to an affected unit by the Administrator under this [title], to emit, during or after a specified calendar year, one ton of sulfur dioxide." 42 U.S.C. § 7651a(3), ELR STAT. CAA § 402(3).

31. See 42 U.S.C. § 7651c(e), ELR STAT. CAA § 404(e) (allocation of allowances). This section sets forth the total number of allowances for Phase I in Table A, entitled Affected Sources and Units in Phase I and Their Sulfur Dioxide Allowances (Tons). 42 U.S.C. § 7651, ELR STAT. CAA § 404(e), tbl. A.

32. The term "baseline" means "the annual quantity of fossil fuel consumed by an affected unit, measured in millions of British Thermal Units (mmBtus)." 42 U.S.C. § 7651a(4), ELR STAT. CAA § 402(4).

33. 42 U.S.C. § 7651c(a), ELR STAT. CAA § 404(a).

34. EPA determined that "[i]n calculating allowances from equations which involve the 1985 allowable SO2 emissions rate, EPA will use the 1985 Annualized Boiler SO2 Emission Limit (ANNLIM85) from the National Allowance Data Base (NADB) V 2.1. This limit was calculated by multiplying the 1985 allowable SO2 emissions limitation by the annualization factor, both supplied in the NADB V 2.1." See Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29948.

35. The term "standard of performance" means "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." 42 U.S.C. § 7411(a), ELR STAT. CAA § 111(a).

36. The term "rachet" refers to the zero-sum directive by the Congress that requires EPA to issue no more than 8.90 million tons of allowances annually. If the tonnage limitation formulas should result in an aggregate number of tons in excess of that amount all utility plants are subject to a pro rata reduction. See 42 U.S.C. § 7651b(a), ELR STAT. CAA § 403(a).

37. The principle of deference to an administrative agency was addressed in Chevron U.S.A,., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 14 ELR 20507 (1984), in which the Court stated,

We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer and the principle of deference to administrative interpretations "has been consistently followed by this Court whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations.… If this choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned.

Id. at 844-45, 14 ELR at 20509 (citation omitted).

38. Id. at 842-43, 14 ELR at 20508.

39. Id. at 843, 14 ELR at 20509.

40. 415 U.S. 199, 231 (1974).

41. Chevron, 467 U.S. at 843, 14 ELR at 20509.

42. USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 67-68.

43. 42 U.S.C. § 7651(b), ELR STAT. CAA § 401(b).

44. 42 U.S.C. § 7651a(16), ELR STAT. CAA § 402(16). The term "actual 1985 emission rate" for electric utility units is defined in part to mean "the annual sulfur dioxide or nitrogen oxides emission rate in pounds per million Btu as reported in the NAPAP Emissions Inventory, Version 2, National Utility Reference File." Id.

45. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18) (emphasis added); see also Notice of Availability, Acid Rain Provisions, 56 Fed. Reg. 33278, 33281 (1991).

46. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18) (emphasis added).

47. See Acid Rain Allowance and Allocations and Reserves (preamble), supra note 7, at 29998.

48. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18).

49. 40 C.F.R. § 51.165(a)(1)(xiv) (1990); 40 C.F.R. § 51.166(b)(17); 40 C.F.R. § 52.21(17).

50. The term "allowable emissions" means

the emissions rate of a stationary source calculated using the maximum rated capacity of the source (unless the source is subject to federally enforceable limits which restrict the operating rate, or hours of operation, or both) and the most stringent of the following: (A) The applicable standards set forth in 40 C.F.R. pt. 60 or 61; or (B) Any applicable State Implementation Plan emissions limitation including those with a future compliance date; or (C) The emissions rate specified as a federally enforceable permit condition, including those with a future compliance date.

40 C.F.R. § 51.165(a)(1)(xi) (1990); 40 C.F.R. § 51.166(b)(16); 40 C.F.R. § 52.21(16).

51. EPA's regulations require state implementation plans (SIPs) to prescribe emission standards for "allowable rates of emissions" in adopting their air quality control plans. 40 C.F.R. § 60.24(b) (1989) (emphasis added). Pursuant to EPA's regulations for New Source Performance Standards (NSPS), 40 C.F.R. pt. 60 (1989), the term "emission standard" means, in part, "a legally enforceable regulation setting forth an allowable rate of emissions into the atmosphere.…" Id. § 60.21(f) (emphasis added). EPA's regulations also specify minimum federal emission limitations. In the case of fossil fuel-fired steam generating units built after August 17, 1971, a state must require that "no plant may discharge sulfur dioxide into the atmosphere in excess of 1.2 lbs per million Btu." 40 C.F.R. § 60.43(a)(2) (1990) (emphasis added).

52. Interpretive Ruling for Implementation of the Requirements of 40 C.F.R. 51.18, 41 Fed. Reg. 55528 (1976) (emphasis added).

53. The term "most stringent federally enforceable emissions limitation" is defined to mean

the most stringent emissions limitation for a given pollutant applicable to the unit, which has been approved by the Administrator under the Act, whether in a State Implementation plan approved pursuant to title I of the Act, a new source performance standard, or otherwise. To determine the most stringent emissions limitation for sulfur dioxide, each limitation shall be converted to lbs./mmBtu, using the appropriate conversion factors in appendix B of this part; provided that for determining the most stringent emissions limitation for sulfur dioxide for 1985, each limitation shall also be annualized, using the appropriate factors in appendix A of this part.

Acid Rain Program General Provisions, supra note 1, at 3656 (emphasis added).

54. See generally USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 57-73 (discussing the plain meaning rule).

55. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18) (emphasis added).

56. Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29948.

57. Id.

58. Id.

59. Id. The Agency was convinced that if it were to adopt a two-tier classification, "a unit with a permit limitation expressed in pounds of sulfur per ton of coal on a weekly basis would have that limitation converted to lbs/mmBtu and annualized (for a yearly basis) whereas a unit with its limitation expressed lbs/mmBtu on a weekly basis would not have such a limitation annualized." Id.

60. Id.

61. Id.

62. See infra notes 71-93 and accompanying text.

63. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 14 ELR 20507 (1984); Mead Corp. v. Tilley, 490 U.S. 714 (1989); Immigration and Naturalization Serv. v. Cardoza-Fonseca, 480 U.S. 421 (1987).

64. See USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 23. According to the report, "the choice of intended meaning at the expense of actual meaning converts the statute into an arbitrary concatenation of words, because so long as the intent is clear -- from the legislative history, for example -- that intent is controlling, and it hardly matters which words are used in the statute." USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 23.

65. USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 21. The report discusses the issue of actual meaning versus intended meaning, pointing out that the goal of statutory interpretation is to "ascertain the meaning of words by the legislature. To go beyond it is to usurp a power which our democracy has lodged in its elected legislature." For that reason, the most useful versions of legislative intent are the actual meaning of the statute -- that is, the meaning the words of the statute convey to a typical member of the statutory audience -- and the legislature's intended meaning.… [Thus,] in cases in which the actual and intended meanings of a statute differ, proper statutory interpretation requires that the actual meaning be preferred. USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 21.

66. See Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29948. EPA, in defense of its beleaguered interpretation, noted that "a number of commenters on the data base interpreted section 402(18) to allow the Administrator to annualize emissions limitations only if those limitations are not expressed in lbs/mmBtu." Id. According to the Agency, "[t]his reading runs contrary to the statutory language. Section 402(18) provides that '[w]here the emissions limitation for a unit is not expressed in pounds of emissions per million Btu, or the averaging period of emissions limitation is not expressed on an annual basis,' an annual lb/Btu rate must be calculated. An interpretation limiting the calculation of an annualized rate only to emission limitations that are not in lb/Btu render superfluous the portion of section 402(18) referencing cases where an annual averaging period is not used." Id.

67. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18) (emphasis added).

68. C. DALLAS SANDS & NORMAN J. SINGER, SUTHERLAND STATUTES AND STATUTORY CONSTRUCTION § 47.33 (4th ed. 1985).

69. Id.

70. 42 U.S.C. § 7651a(18), ELR STAT. CAA § 402(18).

71. See USING AND MISUSING LEGISLATIVE HISTORY, supra note 12, at 73-97 (discussing use of legislative history to illuminate most plausible meaning).

72. See 136 CONG. REC. H12886 (daily ed. Oct. 26, 1990) (colloquy of Reps. Pursell and Lent); id. at H12888-89 (daily ed. Oct. 26, 1990) (statement of Rep. Slattery); id. at H12911 (daily ed. Oct. 26, 1990) (colloquy of Reps. Pickle and Dingell); id. at H12911-12 (daily ed. Oct. 26, 1990) (colloquy of Reps. Wolpe and Dingell); see also id. at S16897-98 (daily ed. Oct. 27, 1990) (statement of Sen. Burdick); id. at S16984 (daily ed. Oct. 27, 1990) (statement of Senator Boren); id. at S16988 (daily ed. Oct. 27, 1990) (statement of Sen. Levin); id. at S16989-90 (daily ed. Oct. 27, 1990) (statement of Sen. Nickles); id. at S17245-46 (daily ed. Oct. 26, 1990) (statement of Sen. Simpson); id. at S17255 (daily ed. Oct. 26, 1990) (statement of Sen. Exon).

73. See JOINT HOUSE & SENATE STAFF OF THE HOUSE & SENATE CONFERENCE COMM. ON S. 1630, SUMMARY AND OUTLINE OF SENATE ACID RAIN OFFER (Oct. 17, 1990).

74. STAFF OF THE HOUSE & SENATE COMM. ON ENV'T & PUB. WORKS, 101ST CONG., 2D SESS., MEMORANDUM: SUMMARY OF JOINT HOUSE & SENATE STAFF RECOMMENDATIONS (Comm. Print 1990).

75. Id. at 2.

76. Id. at 3.

77. Letter from Sen. Quentin N. Burdick, Chairman, Senate Committee on Environment and Public Works, to Sen. Max Baucus (Oct. 24, 1990) (on file with William G. Schiffbauer).

78. Id.

79. See 136 CONG. REC. S17242 (daily ed. Oct. 26, 1990) (statement of Sen. Baucus).

80. Id. (emphasis added).

81. Id. (emphasis added).

82. Id.

83. EPA relied upon the following comments of Senator Baucus: "Now keep in mind that emissions limitations in permits are often not expressed in annual terms. Because the whole acid rain allowance system is based on limiting annual SO2 emissions, we included in the calculation these two allowable emissions rates ['allowable 1985 emissions rates' and 'allowable sulfur dioxide emission rate'] an 'annualization' requirement.… Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29948, n.2 (quoting 136 CONG. REC. S17242 (daily Oct. 26, 1990)).

84. Mead Corp. v. Tilley, 490 U.S. 714, 723 (1989).

85. See Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29948.

86. See 136 CONG. REC. S17242 (daily ed. Oct. 26, 1990) (statement of Sen. Baucus).

87. See HOUSE & SENATE CONFERENCE COMM. ON S. 1630, Language Proposed to "Insert in lieu of [lines] 14-22, page 759" in SIDE-BY-SIDE COMPARISON OF S. 1630 AND THE HOUSE AMENDMENTS THERETO; THE CLEAN AIR ACT AMENDMENTS OF 1990 (1990).

88. See 136 CONG. REC. S16984 (daily ed. Oct. 27, 1990) (statement of Sen. Boren); id. at S16988 (daily ed. Oct. 27, 1990) (statement of Sen. Levin); id. at S16990 (daily ed. Oct. 27, 1990) (statement of Sen. Nickles); id. at S16994 (daily ed. Oct. 27, 1990) (statement of Sen. Exon).

89. 42 U.S.C. § 7651d(d)(4), ELR STAT. CAA § 405(d)(4). This section provides, "Notwithstanding any other provision of this section, at the election of the owner or operator, after January 1, 2000, the Administrator shall allocate in lieu of allocation … allowances for a unit subject to the emissions limitation requirements of this subsection which commenced commercial operation on or after January 1, 1981 and before December 31, 1985, which was subject to, and in compliance with, section 7411 of this title in an amount equal to the unit's annual fuel consumption, on a Btu basis, at 65 percent capacity factor multiplied by the unit's allowable 1985 emissions rate, divided by 2,000."

90. 42 U.S.C. section 7651d(g)(1), ELR STAT. CAA § 405(g)(1). This section provides that "[a]fter January 1, 2000, it shall be unlawful for any utility unit that has commenced commercial operation on or after January 1, 1986, but not later than September 30, 1990 to exceed an annual tonnage emissions limitation equal to the product of the unit's annual fuel consumption, on Btu basis, at a 65 percent capacity factor multiplied by the unit's allowable 1985 sulfur dioxide rate (converted, if necessary, to pounds per mmBtu), divided by 2,000 unless the owner or operator of such unit holds allowances to emit not less than the unit's total annual emissions." (Emphasis added.)

91. 136 CONG. REC. S16984 (daily ed., Oct. 27, 1990) (statement of Sen. Boren) (emphasis added).

92. See id. at S16984 (daily ed. Oct. 27, 1990) (statement of Sen. Levin).

93. Acid Rain Allowance Allocations and Reserves (preamble), supra note 7, at 29949.

94. For a definition of "standard of performance," see 42 U.S.C. § 7411(a), ELR STAT. CAA § 111(a).

95. Pub. L. No. 91-604, § 4(a), 84 Stat. 1676 (codified as amended at 42 U.S.C. § 7411 (1991)).

96. See Standards of Performance for New Stationary Sources, 36 Fed. Reg. 15704, 15706 (1971) (to be codified at 42 C.F.R. pt. 466) (proposed Aug. 17, 1971).

97. Standards of Performance for New Stationary Sources, 36 Fed. Reg. 24876 (1971) (to be codified at 40 C.F.R. pt. 60).

98. Id.

99. See 40 C.F.R. § 60.45(g)(2)(i) (1990).

100. See id. § 60.45(g)(2); see also Standards of Performance for New Stationary Sources; Fossil Fuel-Fired Steam Generators, 48 Fed. Reg. 48960 (1983) (to be codified at 40 C.F.R. pt. 60) (proposed Oct. 21, 1983) [hereinafter Standards for Fossil Fuel-Fired Generators].

101. See 40 C.F.R. §§ 51.165(a)(1)(xii), 51.166(b)(21)(i), 52.21(b)(21) (1990).

102. See Alan Gleit, SO[2] Emissions and Time Series Models, 35 J. OF AIR POLLUTION CONTROL ASS'N 115 (1985); see also Alan Gleit, SO[2] Emissions and Time Series Models II, 37 INT'L J. AIR POLLUTION CONTROL & HAZARDOUS WASTE MGMT. 1445 (1987).

103. The "emissions limitation annualization factor" formula promulgated by EPA is the most recent of prior proposals on the matter. The four earlier proposals were developed primarily as compliance-based models to estimate maximum fuel sulfur content to produce actual emissions that remain in compliance with emission limits. In 1985, one method of conversion was proposed by Alan Gleit. See Gleit, SO[2] Emissions and Time Series Models, supra note 102. This study was updated subsequently by Gleit in 1987, producing another model for converting short-term averaging tests to annual estimates. See Gleit, SO[2] Emissions and Time Series Models II, supra note 102.

EPA also conducted a study for a comprehensive data file on all electric utilities including proposed "annual equivalent" SO2 standards. Interestingly, under this EPA study most utilities with a 1.2 lbs/mmBtu "allowable rate" retained a 1.2 lbs/mmBtu annual rate. U.S. EPA, THE 1985 NAPAP EMISSIONS INVENTORY (VERSION 2): DEVELOPMENT OF THE NATIONAL UTILITY REFERENCE FILE (Nov. 1989).

Finally, an environmental consulting firm, in a 1990 memorandum to EPA, proposed a set of conversion factors in its preliminary analysis of annualized SIP limits different from those included in the National Allowance Data Base (NADB), Version 1, or Version 2. See generally Memorandum from Bruce Braine, staff member, ICF Resources, Inc., to Mr. Larry Montgomery, staff member, Acid Rain Division, EPA (May 30, 1990) (on file with William G. Schiffbauer); see also Memorandum from Bruce Braine, staff member, ICF Resources, Inc., to Larry Montgomery, staff member, Acid Rain Division, EPA (Sept. 7, 1990) (on file with William G. Schiffbauer). In Version 1 of the National Allowance Data Base, these conversion factors included: (1) oil/gas units -- 1.00; (2) coal units subject to NSPS Subpart Da rules -- 0.95; (3) coal units (scrubbed) -- 0.95; (4) coal units subject to NSPS rules -- 0.90; (5) coal units subject to SIP limits greater than a 30-day averaging period -- 0.90; (6) coal units subject to SIP limits less than a 30-day averaging period -- 0.80; and (7) coal units with an unspecified averaging period -- 0.90. See Letter and materials from Eileen B. Claussen, Director, Office of Atmospheric and Indoor Air Programs, EPA, to William G. Schiffbauer (Nov. 5, 1990) (in response to request under the Freedom of Information Act for NADB, Version 1.0).

104. Standards for Fossil Fuel-Fired Generators, supra note 100.

105. See Standards for Fossil Fuel-Fired Generators, supra note 100, at 48961.

106. See Notice of Availability of the National Allowance Data Base, 58 Fed. Reg. 15719 (1993). The notice announces the availability of NADB supporting documents, including the Final Report: Development of Annualized SO[2] Emission Conversion Factors (June 5, 1991), prepared by Radian Corporation.

107. For a discussion of the Gleit models, see supra note 103.

108. See Notice of Availability, Acid Rain Provisions, supra note 45, at 33282.

109. See 136 CONG. REC. S232 (daily ed. Jan. 24, 1990) (statement of Sen. Baucus).

110. See S. REP. No. 228, 101st Cong., 1st Sess. 315 (1989).

111. 42 U.S.C. § 7651k, ELR STAT. CAA § 412.

112. See 136 CONG. REC. H12888 (daily ed. Oct. 27, 1990) (statement of Rep. Slattery, a House conferee); id. at S17246 (daily ed. Oct. 27, 1990) (statement of Sen. Simpson, a Senate conferee); id. at S17255 (daily ed. Oct. 27, 1990) (statement of Sen. Exon).

113. See Language Fixes in Senate Bill for Allowance Calculations (Oct. 18, 1990) (memorandum provided by Roger Claussen, Legislative Assistant to U.S. Rep. Jim Slattery (D-Kan.), and described as an EPA proposal).

114. 42 U.S.C. § 7651b(a), ELR STAT. CAA § 403(a).

115. 42 U.S.C. § 7651(b), ELR STAT. CAA § 401(b).

116. See 42 U.S.C. § 7651a(4), ELR STAT. CAA § 402(4) (definition of "baseline").

117. See 42 U.S.C. §§ 7651c(a) & 7651d, ELR STAT. CAA §§ 404(a) & 405.

118. 42 U.S.C. § 7651d(b)(1), ELR STAT. CAA § 405(b)(1).

119. 42 U.S.C. § 7651(b), ELR STAT. CAA § 401(b).

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