 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT




Argued September 24, 2012          Decided January 22, 2013

                        No. 10-1413

                       SIERRA CLUB,
                        PETITIONER

                             v.

  ENVIRONMENTAL PROTECTION AGENCY AND LISA PEREZ
             JACKSON, ADMINISTRATOR,
                  RESPONDENTS

             UTILITY AIR REGULATORY GROUP,
                       INTERVENOR



         On Petition for Review of Final Actions of
     the United States Environmental Protection Agency



     David S. Baron argued the cause for petitioner. With him
on the briefs were Seth L. Johnson and Emma C. Cheuse.

    Jessica O'Donnell, Attorney, U.S. Department of Justice,
argued the cause for respondents. With her on the brief were
Brian L. Doster, Assistant General Counsel, U.S.
Environmental Protection Agency, and Scott J. Jordan,
Attorney.
                              2

     Andrea Bear Field, Makram B. Jaber, Lucinda Minton
Langworthy, and Elizabeth L. Horner were on the brief for
intervenor Utility Air Regulatory Group in support of
respondent.

    Before: SENTELLE, Chief Judge, GRIFFITH, Circuit Judge,
and EDWARDS, Senior Circuit Judge.

    Opinion for the Court filed by Chief Judge SENTELLE.

     SENTELLE, Chief Judge:         In October 2010, the
Environmental Protection Agency (“EPA”) issued a final rule
establishing regulations for particulate matter less than 2.5
micrometers (“PM2.5”) under § 166 of the Clean Air Act (“the
Act”), 42 U.S.C. § 7476. See Prevention of Significant
Deterioration (PSD) for Particulate Matter Less Than 2.5
Micrometers (PM2.5)—Increments, Significant Impact Levels
(SILs) and Significant Monitoring Concentration (SMC), 75
Fed. Reg. 64,864 (Oct. 20, 2010). In this rule, the EPA
established Significant Impact Levels (“SILs”) and a
Significant Monitoring Concentration (“SMC”) for PM2.5,
screening tools the EPA uses to determine whether a new
source may be exempted from certain requirements under §
165 of the Act, 42 U.S.C. § 7475. 75 Fed. Reg. at 64,890–
91, 64,895. Petitioner Sierra Club seeks review of this
regulation.

    After the Sierra Club filed its petition, the EPA
acknowledged that portions of the rule establishing SILs did
not reflect its intent in promulgating the SILs, and now
requests that we vacate and remand some (but not all) parts of
its PM2.5 SIL regulations. Notwithstanding the EPA’s
concession, the Sierra Club maintains that the EPA lacks
authority to establish SILs and requests that we rule
                                3
accordingly. The Intervenor, Utility Air Regulatory Group
(“UARG”), on the other hand, urges us to uphold the SIL
provisions EPA established, or alternatively, to remand the
SIL provisions without ordering that they be vacated.

     Although the EPA conceded that it needs to revise some
of the SIL provisions, it continues to assert that the portions of
its rule establishing the SMC were valid. For the reasons
stated below, we accept the EPA’s concession on the SILs,
and vacate and remand some portions of the EPA’s rule
establishing SILs. We further conclude that the EPA
exceeded its authority in establishing the SMC, and grant the
Sierra Club’s petition as to those portions of the EPA’s rule.

                   I.      BACKGROUND

A. The Clean Air Act

     The Clean Air Act requires the EPA to set National
Ambient Air Quality Standards (“NAAQS”) for various
harmful air pollutants at levels necessary to protect the public
health and welfare. 42 U.S.C. §§ 7401, 7409. Under the Act,
the EPA must designate areas as attainment, nonattainment, or
unclassifiable for each NAAQS. Id. § 7407(d)(1)(A). States
have primary responsibility for implementing the NAAQS,
and must submit a state implementation plan (“SIP”)
specifying how the State will achieve and maintain
compliance with the NAAQS. Id. § 7407(a).

    In 1977, Congress amended the Act to add the Prevention
of Significant Deterioration (“PSD”) provisions “to protect
the air quality in national parks and similar areas of special
scenic or recreational value, and in areas where pollution was
within the national ambient standards, while assuring
economic growth consistent with such protection.”
                              4
Environmental Defense Fund v. EPA, 898 F.2d 183, 184
(D.C. Cir. 1990) (citing 42 U.S.C. § 7470). When Congress
enacted the PSD provisions, it established maximum
allowable increases over baseline concentrations — also
known as “increments” — for certain pollutants in § 163 of
the Act. See 42 U.S.C. § 7473; Environmental Defense Fund,
898 F.2d at 184. For other pollutants, Congress delegated to
the EPA the task of promulgating regulations to prevent the
significant deterioration of air quality that would result from
the emissions of these pollutants. 42 U.S.C. § 7476(a). For
pollutants that the EPA began regulating after Congress
enacted the PSD provisions, which includes PM2.5, the EPA
must promulgate PSD regulations within two years of
establishing the NAAQS for that pollutant. Id.

     The PSD provisions also establish requirements for
preconstruction review and permitting of new or modified
sources of air pollution. See id. § 7475. Subsection 165(a) of
the Act lists the requirements an owner or operator proposing
to construct a new source or modify an existing source must
meet before starting construction, which include acquiring a
PSD permit for the facility. Id. § 7475(a)(1)–(2). Of
relevance to this petition, § 165(a)(3) requires that an owner
or operator proposing to construct a new major emitting
facility or modify an existing facility demonstrate that
emissions from construction or operation of the facility will
not cause or contribute to any violations of the increment
more than once per year, or to any violation of the NAAQS
ever. Id. § 7475(a)(3).

    Before a review of the § 165(a) requirements may be
undertaken, however, either a State or the owner or operator
of a facility applying for a PSD permit must conduct an
analysis of the ambient air quality at the proposed site and in
areas that may be affected by emissions from the facility for
                               5
the relevant pollutants. Id. § 7475(e)(1). This analysis must
include continuous air quality monitoring data gathered to
determine whether the facility will exceed either the
increments or the NAAQS. Id. § 7475(e)(2). The Act further
mandates that this data be collected for a year before the date
the applicant applies for a permit unless a State, in accordance
with EPA regulations, “determines that a complete and
adequate analysis for such purposes may be accomplished in a
shorter time period.” Id. The results of the analysis must be
made available to the public at the time of the public hearing
on the application for a PSD permit. Id.

     The Act requires States to address the PSD provisions in
their SIPs. Id. § 7410(a)(2). The EPA has promulgated
extensive regulations setting forth requirements and
guidelines on how SIPs are to implement the PSD provisions.
See 40 C.F.R. § 51.166. For States without an EPA-approved
SIP, the EPA has promulgated separate regulations
implementing the PSD provisions. See 40 C.F.R. § 52.21.

B. Regulatory Background: Establishing             the   PM2.5
   Increment, SILs, and SMC

     In 1997, the EPA revised its NAAQS to include
standards for PM2.5, see 62 Fed. Reg. 38,652 (July 18, 1997),
and in 2006 revised the PM2.5 NAAQS, see 71 Fed. Reg.
61,144 (Oct. 17, 2006). In 2007, the EPA proposed a rule
establishing increments for PM2.5. See 72 Fed. Reg. 54,112
(Sept. 21, 2007). In this rulemaking, the EPA also proposed
two screening tools that would exempt a permit applicant
from some of the air quality analysis and monitoring required
under the Act and EPA regulations: significant impact levels
(“SILs”) and significant monitoring concentration (“SMC”).
See id. at 54,138–42.
                               6

1. Significant Impact Levels

     Under EPA regulations, the owner or operator of a
proposed source or modification must undertake a source
impact analysis to demonstrate “that allowable emission
increases from the proposed source or modification, in
conjunction with all other applicable emission increases or
reductions (including secondary emissions), would not cause
or contribute to” a violation of the increments or the NAAQS.
40 C.F.R. § 51.166(k); id. § 52.21(k). In the proposed rule,
the EPA discussed adopting SILs for PM2.5, which the EPA
defines as “numeric values derived by EPA that may be used
to evaluate the impact a proposed major source or
modification may have on the NAAQS or PSD increment.”
72 Fed. Reg. at 54,138. This numerical value, measured in
micrograms per meter cubed (µg/m3), is the level of ambient
impact below which the EPA considers a source to have an
insignificant effect on ambient air quality. 72 Fed. Reg. at
54,139. According to the EPA’s proposed rule, “a source that
demonstrates its impact does not exceed a SIL at the relevant
location is not required to conduct more extensive air quality
analysis or modeling to demonstrate that its emissions, in
combination with the emissions of other sources in the
vicinity, will not cause or contribute to a violation of the
NAAQS at that location,” an analysis the EPA terms the
cumulative impact analysis, or the cumulative air quality
analysis. 72 Fed. Reg. at 54,139.

     As the legal basis for adopting the SILs, the EPA cited
Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979).
72 Fed. Reg. at 54,139. In that case we discussed an
administrative agency’s de minimis authority to establish
exemptions from statutory commands, holding that
“[c]ategorical exemptions may . . . be permissible as an
                                7
exercise of agency power, inherent in most statutory schemes,
to overlook circumstances that in context may fairly be
considered de minimis.” 636 F.2d at 360. We further stated
that “[u]nless Congress has been extraordinarily rigid, there is
likely a basis for an implication of de minimis authority to
provide exemption when the burdens of regulation yield a
gain of trivial or no value.” Id. at 360–61. But that implied
authority does not apply to situations “where the regulatory
function does provide benefits, in the sense of furthering the
regulatory objectives, but the agency concludes that the
acknowledged benefits are exceeded by the costs.” Id. at 361.
Applying this de minimis authority, the EPA explains that
when a source’s ambient impact does not exceed the SIL —
i.e., is de minimis — the “EPA considers the conduct of a
cumulative air quality analysis and modeling by such a source
to yield information of trivial or no value with respect to the
impact of the proposed source or modification.” 72 Fed. Reg.
at 54,139.

2. Significant Monitoring Concentration

    In 1980, the EPA “adopted regulations that exempt
sources from preconstruction monitoring requirements [i.e.,
§ 165(e)(2) of the Act] for a pollutant if the source can
demonstrate that its ambient air impact is less than a value
known as the [SMC].” Id. at 54,141. When the EPA first
adopted SMCs for other pollutants in 1980, 1 it described the
SMCs as “air quality concentration de minimis levels for each

1
   When the EPA established the preconstruction monitoring
exemption in 1980, it did not label the emissions values below
which the exemption applied as “SMCs,” instead terming them “de
minimis emissions levels.” See 45 Fed. Reg. 52,676, 52,709 (Aug.
7, 1980). But because the de minimis emissions levels promulgated
in 1980 serve the same function as the PM2.5 SMC, we will refer to
the 1980 de minimis levels as SMCs throughout this opinion.
                                8
pollutant for the purpose of providing a possible exemption
from monitoring requirements.” Id. (internal alterations and
citations omitted). In its proposed rule establishing an SMC
for PM2.5, the EPA explained that “[i]f a source can show
through modeling of its emissions alone that its impacts are
less than the corresponding SMC, there is little to be gained
by requiring that source to collect additional monitoring data
on PM2.5 emissions to establish background concentrations for
further analysis.”     Id.    The EPA proposed different
methodologies for establishing a value for the SMC and, as
with the SILs, relied on the de minimis discussion from
Alabama Power as the legal basis for establishing an SMC for
PM2.5. 72 Fed. Reg. at 54,141.

C. Final Rule

    In its final rule, the EPA adopted and set values for both
the SILs and SMC for PM2.5. See 75 Fed. Reg. at 64,864.
The EPA gave three purposes for the SILs in the final rule,
which were to determine:

       (1) When a proposed source’s ambient impacts
       warrant a comprehensive (cumulative) source impact
       analysis; (2) the size of the impact area within which
       the air quality analysis is completed, and (3) whether
       the emissions increase from a proposed new major
       stationary source or major modification is considered
       to cause or contribute to a violation of any NAAQS.

Id. at 64,890.

     In adopting the      SMC, the EPA emphasized that it
retained discretion “to   determine when it may be appropriate
to exempt a proposed      new major stationary source or major
modification from the     ambient monitoring data requirements
                                9
under the PSD rules.” Id. at 64,895. The rule codified the
SILs at 40 C.F.R. § 51.166(k)(2) and 40 C.F.R. § 52.21(k)(2),
and the SMC at 40 C.F.R. § 51.166(i)(5)(i)(c) and 40 C.F.R.
§ 52.21(i)(5)(i)(c). 75 Fed. Reg. at 64,902–07.

     The rule also codified the PM2.5 SILs in the EPA’s
regulations on new source review and permitting
requirements at 40 C.F.R. § 51.165(b)(2). Unlike the PSD
regulations (40 C.F.R. §§ 51.166, 52.21), § 51.165(b)(2) does
not use the SILs to exempt a source from conducting a
cumulative air quality analysis. Instead, § 51.165(b)(2) states
that a proposed source or modification will be considered to
cause a violation of a NAAQS when that source or
modification would, at a minimum, exceed the SIL in any
area that does not or would not meet the applicable NAAQS.

                      II.     ANALYSIS

A. Significant Impact Levels

     The Sierra Club argues that the EPA lacks de minimis
authority to promulgate the SILs. Specifically, the Sierra
Club contends that the language of § 165 is so extraordinarily
rigid that it bars de minimis exemptions, and that adoption of
the SILs is contrary to the legislative design of the Act. Even
if § 165 of the Act were not so extraordinarily rigid as to bar
any de minimis exemption, the Sierra Club asserts that
pollution increases below the SILs are not so trivial as to be
de minimis.

     To illustrate the latter point, the Sierra Club explains that
if a proposed source or modification is in an area that is close
to violating the NAAQS or an increment, that source could
violate the NAAQS or increment even if its emissions would
have an ambient impact below the SIL. For example, if a
                              10
proposed source’s emission of PM2.5 would have a projected
air quality impact of 1 µg/m3 over a 24-hour average (below
the SIL of 1.2 µg/m3 over a 24-hour average), and that source
proposes to build in an area that already has an ambient PM2.5
concentration of 35 µg/m3 (the PM2.5 NAAQS over a 24-hour
average), the construction of that source could cause a
violation of the NAAQS.           See id. §§ 50.13(c) (PM2.5
NAAQS), 51.166(k)(2) (PM2.5 SIL). The Sierra Club further
notes that because the EPA’s regulation automatically
exempts a source with a proposed impact below the SIL from
demonstrating it will not cause or contribute to a violation of
the NAAQS, unlimited numbers of sources whose impacts are
less than the SILs could cumulatively cause a violation of the
NAAQS or increments. Also, the Sierra Club points out that
sources whose impact is below the SILs that construct in an
upwind attainment area could worsen existing violations in a
downwind nonattainment area. As the SIL regulations are
currently written, sources in these scenarios would not be
required to demonstrate that they would not cause or
contribute to a violation of the NAAQS or increment, even
though they likely would cause a violation (in an attainment
area) or contribute to a violation (in a downwind
nonattainment area), thus contravening the statutory
command in § 165(a) of the Act.

    In its brief, the EPA concedes that the SIL provisions, as
codified, were flawed.      When the EPA responded to
commenters in the final rule, it explained that
“notwithstanding the existence of a SIL, permitting authorities
should determine when it may be appropriate to conclude that
even a de minimis impact will ‘cause or contribute’ to an air
quality problem and to seek remedial action from the
proposed new source or modification.” 75 Fed. Reg. at
64,892. But as the EPA acknowledges in its brief, “the
regulatory text it adopted does not allow permitting
                             11
authorities the discretion to require a cumulative impact
analysis, notwithstanding that the source’s impact is below
the SIL, where there is information that shows the proposed
source would lead to a violation of the NAAQS or
increments.” Resp’t Br. at 34. Because the EPA asserts that
it did not intend to automatically exempt a proposed source
from the requirements of the Act without affording the
permitting authorities discretion in applying the SILs, it
requests that we vacate and remand the regulatory text
promulgated in the rule at 40 C.F.R. §§ 51.166(k)(2) and
52.21(k)(2).

     Despite the EPA’s concession, the Sierra Club asserts
that vacatur and remand, while warranted, does not fully
resolve its challenge, and asks that we determine whether the
EPA has authority to promulgate SILs. We disagree with the
Sierra Club that it is necessary to decide the EPA’s authority
to promulgate SILs at this point. To do so would require that
we answer a question not prudentially ripe for determination.
On remand the EPA may promulgate regulations that do not
include SILs or do include SILs that do not allow the
construction or modification of a source to evade the
requirements of the Act as do the SILs in the current rule. In
such an event, we would not need to address the universal
disallowance of all de minimis authority. If the EPA
promulgates new SIL provisions for PM2.5 and those
provisions are challenged, we can then consider the
lawfulness of those SIL provisions.

     While the Sierra Club argues that simply vacating and
remanding the SIL provisions does not go far enough, the
UARG intervenes to argue that vacatur and remand go too far.
The UARG asserts that remanding the SIL provisions for
further rulemaking is unnecessary for two reasons. First,
intervenor asserts, the SIL provisions, as informed by the
                               12
EPA’s statements during rulemaking, do allow permitting
authorities discretion in how they apply the SILs. Second, it
argues that if a source with an ambient impact below the SIL
does cause a NAAQS or increment violation in an area, the
permitting authority for that area is already obligated to revise
its SIP to address the violation. See 40 C.F.R. § 51.166(a)(3).

     The UARG bases the first of these arguments on the
premises that an agency’s interpretation of its own regulations
is given deference, and that the EPA has interpreted the SIL
provisions so that permitting authorities retain discretion in
applying the SILs. See Auer v. Robbins, 519 U.S. 452, 461
(1997) (explaining that an agency’s interpretation of its own
regulations is “controlling unless plainly erroneous or
inconsistent with the regulation.”) (internal citations and
quotation marks omitted). Although the first premise is true,
the latter premise is contradicted by the EPA’s statements in
its brief that the regulatory text it adopted does not give
permitting authorities sufficient discretion to require a
cumulative air quality analysis. That the EPA itself requests
that we remand these provisions strongly argues that the
current SIL provisions do not give permitting authorities
sufficient discretion in applying the SILs.

     The text of the SIL regulations as codified in the Code of
Federal Regulations supports the EPA’s interpretation that the
SILs do not allow a permitting authority sufficient discretion.
Cf. Auer, 519 U.S. at 461 (opining that a critical phrase in the
contested regulation “comfortably bears the meaning the
[agency] assigns.”). Although 40 C.F.R. § 51.166(k)(2),
which applies to SIPs, states that a plan “may provide” for the
use of SILs to exempt a proposed source or modification from
undertaking a cumulative air quality analysis, it does not give
permitting authorities that implement the SILs discretion to
require a cumulative air quality analysis for sources that are
                              13
below the SIL, but could nevertheless cause a violation of the
NAAQS or increment. And 40 C.F.R. § 52.21(k)(2), which
applies to states without an approved SIP, goes even further
and simply states that the demonstration required under
§ 165(a)(3) is deemed to have been made if a proposed source
or modification’s air quality impact is below the SIL.

     The UARG’s second argument, that remand is
unnecessary because the EPA requires permitting authorities
to address violations by revising their SIPs, also does not
persuade us that we should deny the EPA’s request to remand
its regulations on the PM2.5 SILs. The PSD provisions
Congress enacted may not have specified how the owner or
operator of a proposed source or modification must
demonstrate compliance, but they do require demonstration
that the source will not cause or contribute to a violation of
the NAAQS or increment as a precondition to construction.
See 42 U.S.C. § 7475(a)(3). As the Sierra Club notes, relying
on permitting authorities to address violations, rather than to
prevent violations by requiring demonstration that a proposed
source or modification will not cause a violation, conflicts
with this statutory command.

     The UARG finally argues that if we remand the SIL
regulations, we should not vacate the regulations, based on
our holding in Fertilizer Institution v. EPA, 935 F.2d 1303
(D.C. Cir. 1991), where we stated that “when equity demands,
an unlawfully promulgated regulation can be left in place
while the agency provides the proper procedural remedy.” Id.
at 1312. According to the UARG, leaving the SIL provisions
in place during the new rulemaking would cause no harm to
air quality, while vacating the SIL provisions would have
“disruptive consequences” for economic growth — i.e., by
adding additional burdens to sources with de minimis impacts.
                              14
Therefore, the UARG asserts that equity requires we do not
vacate the SIL provisions.

     The UARG’s equitable argument does not persuade us.
In Fertilizer Institution we left in place administrative
exemptions the EPA adopted without providing adequate
notice and comment, a procedural defect, while in this case
the EPA has requested we vacate and remand the SILs
because it did not have authority to promulgate such a broad
exemption. See id. Because this is a substantive defect, and
because the EPA explicitly requested we vacate and remand
some of its SIL provisions, we will grant its request
notwithstanding the UARG’s opposition.

     Although the EPA asks us to vacate and remand the parts
of its rule codifying SILs at §§ 51.166(k)(2) and 52.21(k)(2),
it requests that we let the promulgation of SILs in
§ 51.165(b)(2) remain operative, emphasizing that the Sierra
Club’s challenge of the EPA’s authority to promulgate SILs
was directed only at the first two regulations. We agree that
the parts of the EPA’s rule codifying SILs in § 51.165(b)(2)
should remain. We are remanding the other regulations
because they allow permitting authorities to automatically
exempt sources with projected impacts below the SILs from
having to make the demonstration required under 42 U.S.C. §
7475(a)(3), even in situations where the demonstration may
require a more comprehensive air quality analysis. These
concerns, which are based on whether the EPA has authority
to exempt those requirements, are not present in §
51.165(b)(2), which simply states that a source may be
deemed to violate the NAAQS if it exceeds the SILs in certain
situations. Apparently, for that reason, the Sierra Club only
addresses § 51.165(b)(2) in the section of its brief challenging
the EPA’s methodology in setting SILs, and not in the section
challenging the EPA’s authority to promulgate SILs. See
                              15
Pet’r Br. at 32 n.12, 37 n.17. We are not now ruling on the
methodology the EPA used to determine the SILs. Instead,
we are vacating and remanding §§ 51.166(k)(2) and
52.21(k)(2) based on the EPA’s lack of authority to exempt
sources from the requirements of the Act. Therefore, vacatur
and remand of § 51.165(b)(2) is not necessary at this point.

     Accordingly, we vacate and remand the portions of the
EPA’s rule regarding SILs, with the exception of those
portions codified in 40 C.F.R. § 51.165(b)(2).

B. Significant Monitoring Concentrations

     As with the SILs, the Sierra Club argues that the EPA
does not have de minimis authority to promulgate an SMC for
PM2.5 that can be used to exempt an owner of a proposed
source or modification from undertaking the year-long pre-
construction air quality monitoring requirement under
§ 165(e)(2) of the Act. As a threshold issue, however, the
EPA argues that the Sierra Club’s challenge is time-barred
under § 307(b)(1) of the Act because the EPA has used SMCs
as a screening tool since 1980. See 42 U.S.C. § 7607(b)(1);
45 Fed. Reg. 52,676, 52,710 (Aug. 7, 1980) (explaining that a
source owner may be exempt from preconstruction
monitoring if the source’s projected impact is de minimis).
We disagree with the EPA that the Sierra Club’s petition is
time-barred, and we agree with the Sierra Club that the EPA
did not have de minimis authority to promulgate the SMC
because we hold Congress was “extraordinarily rigid” in
mandating preconstruction air quality monitoring.

     Section 307(b)(1) of the Act requires a petitioner seeking
review of an EPA regulation to file its petition within sixty
days from the date the challenged regulation was published in
the Federal Register. 42 U.S.C. § 7607(b)(1). The EPA relies
                              16
on our decision in Medical Waste Institute and Energy
Recovery Council v. EPA, 645 F.3d 420 (D.C. Cir. 2011), to
argue that § 307(b)(1) bars the Sierra Club’s challenge to the
PM2.5 SMC. In that case, the petitioner challenged the EPA’s
approach to setting the level of emissions control for
pollutants emitted by medical waste incinerators. Id. at 422.
The EPA had initially set these levels in 1997, but we
remanded its regulations after granting an environmental
organization’s petition for review. Id. at 423. The EPA
issued a new rule in 2009 setting even more stringent levels
for emissions control than it had in 1997, prompting another
petition for review, this time by an industry organization. Id.
at 424. In remaking the rule, the EPA used the same approach
to setting the levels of emissions control for the same set of
pollutants as it did in 1997, but used a different data set. Id.
at 426–27. We held that because no one challenged the
approach to setting levels of emissions control in 1997 — the
same approach the EPA used in its 2009 regulation — the
petitioners had failed to file a timely petition, and their
challenge was thus barred by § 307(b)(1). Id. at 427.

     Our holding in Medical Waste Institute, however, does
not apply in this case. The EPA has promulgated new
regulations for a pollutant it did not regulate in 1980. See 45
Fed. Reg. at 52,733–34 (listing SMCs for various pollutants
that does not include PM2.5). By establishing a new
monitoring exemption for a new pollutant, the EPA exposes
its PM2.5 regulations, including whether it has authority to
adopt the SMC exemption for PM2.5 and whether it used an
appropriate method to determine the level of the SMC, to
challenge by a timely filed petition. In Ohio v. EPA, 838 F.2d
1325, 1328 (D.C. Cir. 1988), we opined that “the period for
seeking judicial review may be made to run anew when the
agency in question by some new promulgation creates the
opportunity for renewed comment and objection.” Although
                             17
not a parallel to this case in that the Ohio case concerned a
reopening, we consider its reasoning instructive.

     This, of course, does not mean that a petitioner’s
challenge to the EPA’s authority will always survive, as the
EPA’s authority to promulgate certain regulations could be
well-settled. The solution, however, is not to bar any
challenges to that authority under § 307(b)(1) of the Act, but
instead to consider the timely challenge and any relevant
precedent demonstrating that the EPA has the authority in
dispute. Because we have not yet decided whether the EPA’s
de minimis authority allows it to establish SMCs as a
screening tool to determine when to exempt sources from the
Act’s preconstruction monitoring requirement, we will
consider whether the EPA had authority to adopt an SMC for
PM2.5.

    Subsection (e) of § 165 of the Act requires that before a
PSD permit application can be reviewed, either the State or
the permit applicant must conduct an analysis of the ambient
air quality at the proposed site and in areas which the
applicant’s facility may affect. 42 U.S.C. § 7475(e)(1).
Under subsection (e)(2), this analysis

       shall include continuous air quality monitoring data
       gathered for purposes of determining whether
       emissions from such facility will exceed the
       [increment] or the maximum allowable concentration
       permitted under [the NAAQS]. Such data shall be
       gathered over a period of one calendar year preceding
       the date of application for a permit under this part
       unless the State, in accordance with regulations
       promulgated by the [EPA], determines that a complete
       and adequate analysis for such purposes may be
       accomplished in a shorter period. The results of such
                              18
       analysis shall be available at the time of the public
       hearing on the application for such permit.

Id. § 7475(e)(2).

     We read § 165(e)(2) of the Act as an “extraordinarily
rigid” mandate that a PSD permit applicant undertake
preconstruction monitoring. Indeed, we recognized the
rigidity of this subsection in Alabama Power when we held
that “[t]his is a plain requirement for inclusion of monitoring
data.” Alabama Power, 636 F.2d at 372 (holding that the
EPA did not have authority to dispense with monitoring
where Congress mandated the use of that technique, even
though monitoring technology at the time was limited).
Congress’s use of the word “shall” in each sentence of the Act
evidences a clear legislative mandate that the preconstruction
monitoring requirement applies to PSD permit applicants.
That Congress provided only one exception to this monitoring
requirement — a shorter monitoring period — suggests that
Congress did not intend any other exceptions. See Sierra
Club v. EPA, 294 F.3d 155, 160 (D.C. Cir. 2002). If Congress
sought to give the EPA discretion to eliminate the monitoring
requirement it could have used less rigid language to achieve
that result, as it has in other subsections of § 165. For
example, in 42 U.S.C. § 7475(e)(2), Congress provided that
“[air quality] data shall be gathered over a period of one
calendar year preceding the date of application for a permit
under this part unless the State, in accordance with regulations
promulgated by the [EPA], determines that a complete and
adequate analysis for such purposes may be accomplished in a
shorter period.” (emphasis added). In contrast, § 7475(a)(7)
requires as a condition for obtaining a PSD permit, that an
owner or operator of a proposed source or modification agree
to post-construction monitoring as “may be necessary to
determine the effect which emissions” from the facility may
                               19
have on air quality. (emphasis added). Moreover, the
exception for a shorter monitoring period only applies when
the permitting authority determines that a complete and
adequate analysis may be accomplished in a shorter period.
EPA has not explained how a “complete and adequate”
analysis may be accomplished without any of the monitoring
data required by § 165(e)(2).

     Given how extraordinarily rigidly Congress stated its
monitoring mandate in § 165(e)(2), we are not persuaded by
the EPA’s arguments that it has de minimis authority to
exempt the preconstruction monitoring requirement. The
EPA argues that the Sierra Club fails to show that the statute
is so rigid that it precludes the exercise of the EPA’s de
minimis authority. The EPA, however, does not explain how
the statute is ambiguous, but instead asserts that there is a
“virtual presumption” of inherent agency authority. Resp’t
Br. at 46; see Public Citizen v. Young, 831 F.2d 1108, 1113
(D.C. Cir. 1987). This argument is circular. Even if a
“virtual presumption” exists, that presumption can be rebutted
by an “extraordinarily rigid” statutory mandate. See Public
Citizen, 831 F.2d at 1113. Whether we call preconstruction
monitoring a “plain requirement” or a requirement mandated
by an “extraordinarily rigid” statute, the result is the same: the
EPA has no de minimis authority to exempt the requirement.

     Without pointing out any ambiguity in Congress’s
mandate, the EPA asserts that the purpose of the statute’s
preconstruction monitoring requirement “is to provide data
for purposes of performing an air quality analysis,” and that it
can reasonably conclude “the statute permits an exemption for
collection of data that is not useful to carrying out the
purposes of the statute.” Resp’t Br. at 49. The EPA confuses
the purpose of § 165(e)(2)’s monitoring requirement. The
statute explicitly states that one purpose of the monitoring
                              20
requirement is to determine whether emissions from a
proposed source or modification will exceed the increments or
NAAQS. 42 U.S.C. § 7475(e)(2). We logically infer from
this statement that Congress intended the monitoring
requirement to establish the baseline air quality in an area
before the owner of a proposed source or modification even
applies for a PSD permit. If an area’s pre-existing ambient
PM2.5 concentration is so high that a violation of the NAAQS
or increment is imminent, a source below the SMC may
nevertheless cause a violation if built or modified. This is
true even if the source’s projected ambient impact on PM2.5 is
so low that the difference in air quality before and after
construction would be impossible to measure with accuracy.
But a permitting authority cannot know how close an area is
to violating the NAAQS or increment unless it knows the
existing ambient concentrations of PM2.5 before a source is
constructed or modified.

     The EPA’s argument also fails to address Congress’s
mandate that the results of the air quality analysis required by
§ 165(e) be made available to the public at the time of a
hearing for a PSD permit. Id. § 7475(e)(2). Indeed, one of
Congress’s stated purposes in enacting the PSD provisions
was “to assure that any decision to permit increased air
pollution in any area to which” the PSD provisions apply be
made only after careful evaluation by the permitting authority
and “after adequate procedural opportunities for informed
public participation in the decisionmaking process.” 42
U.S.C. § 7470(5) (emphasis added). Congress’s express
statement that the public shall have air quality data to allow
for informed participation in PSD application hearings
bolsters our conclusion that the EPA has no authority to
exempt the monitoring requirement.
                               21
     In addition to arguing that § 165(e)(2) was
extraordinarily rigid, the Sierra Club contends that the EPA
has no de minimis authority because the PM2.5 SMC thwarts
the legislative design of the Act. The EPA addresses this
argument by making two arguments. First, the EPA states
that it has advised permitting authorities not to apply the
monitoring exemption when an area’s ambient concentration
is close to the NAAQS or the consumption of the increment.
Second, the EPA asserts that exempting preconstruction
monitoring in areas where the ambient concentration itself is
below the SMC (and thus not capable of accurate
measurement, regardless of a proposed source’s projected
impact) furthers legislative design by avoiding pointless
expenditures of effort.

     Both these points ignore the rigidity of the statute.
Because the statute leaves no room for exemptions, such as
those at issue, granting the permitting authorities discretion to
apply the exemption is beyond the EPA’s statutory authority.
As to the EPA’s second point, we agree with the Sierra Club
that the estimation that an area is below the SMC does not
render monitoring superfluous because monitoring could
reveal that the estimate was incorrect. More importantly,
Congress provided a clear mandate that the EPA does not
have authority to disregard, even if the mandated
requirements appear to it to be superfluous.

     To authorize the EPA to exempt the plain requirement of
preconstruction monitoring and to retain (and delegate)
discretion on when such an exemption should apply would
allow the EPA to engage in an impermissible cost-benefit
analysis. As we explained in Alabama Power, “implied
authority is not available for a situation where the
regulatory function does provide benefits, in the sense of
furthering the regulatory objectives, but the agency concludes
                               22
that the acknowledged benefits are exceeded by the costs.”
Alabama Power, 636 F.2d at 361. To engage in cost-benefit
decisions, the EPA’s implied authority “must be based not on
a general doctrine but on a fair reading of the specific statute,
its aims and legislative history.” Id. The monitoring
requirement is a regulatory function that provides benefits,
and the statute precludes the EPA from exempting that
requirement.       Although the year-long preconstruction
monitoring requirement may be onerous and, in some cases,
EPA deems it more costly than beneficial, the EPA may not
substitute its policy for that of Congress.

                   III.    CONCLUSION

     For the foregoing reasons, we vacate and remand to the
agency for further consideration the portions of the EPA’s
rule addressing SILs, except for the parts of its rule codifying
PM2.5 SILs in 40 C.F.R. § 51.165(b)(2). We grant the Sierra
Club’s petition as to the parts of the EPA’s rule establishing a
PM2.5 SMC, and vacate them because these parts of the rule
exceed the EPA’s statutory authority. See 42 U.S.C.
§ 7607(d)(9)(3).

                                                    So ordered.
