1
The
core
of
the
New
Source
Review
program
is
its
application
to
new
sources.
Congress
specifically
decided
that
itthe
program
generally
should
not
apply
to
existing
sources.
These
considerations
are
the
starting
point
for
understanding
its
application
to
"
modifications"
and
the
meaning
we
should
give
that
term.

The
NSR
program's
scope
is
closely
related
to
the
scope
of
the
NSPS
program,
created
seven
years
earlier
in
the
Clean
Air
Act
Amendments
of
1970.
In
Section
111
of
that
Act,
which
sets
forth
the
NSPS
provisions,
Congress
applied
the
New
Source
Performance
Standards
to
"
new
sources,"
secs.
111(
b)(
1)(
B),

111(
b)(
4).
Congress
determined
that
as
a
general
matter
it
would
not
impose
the
NSPS
standards
on
existing
sources,
instead
leaving
to
the
State
and
local
permitting
authorities
the
decision
of
the
extent
to
which
to
regulate
those
sources
through
"
State
Implementation
Plans"
designed
to
implement
National
Ambient
Air
Quality
Standards
(
NAAQS).
See
sec.
110.

Congress
followed
a
similar
approach
in
determining
the
scope
of
the
major
NSR
program
established
by
the
1977
Amendments
to
the
Clean
Air
Act.
As
amended,
the
Act
specifies
that
State
Implementation
Plans
must
contain
provisions
that
require
sources
to
obtain
major
NSR
permits
at
the
point
of
"
construction"
of
a
source.
Secs.
172(
c)(
5);
169(
2)(
C).
By
contrast,
the
Act
generally
leaves
to
State
and
local
permitting
authorities
in
the
2
first
instance
the
question
of
the
extent,
means
and
timetable
for
obtaining
reductions
from
existing
sources
needed
to
comply
with
National
Ambient
Air
Quality
Standards.
See
secs.

172(
c)(
1),
161.

NSR's
applicability
to
existing
sources
to
which
a
"
modification"
is
made
finds
at
least
part
of
its
genesis
in
the
fact
thatis
an
exception
to
this
general
rule.
This
exception
likewise
finds
its
roots
in
the
NSPS
program,
enacted
in
1970,

applied
not
onlyprogram's
applicability
to
new
sources
but
to
"
modifications"
of
existing
sources.
In
the
1970
Act,

CongressThe
1970
Act
made
the
NSPS
program
applicable
to
modifications
through
its
definition
of
a
"
new
source,"
which
it
defined
as
"
any
stationary
source,
the
construction
or
modification
of
which
is
commenced
after
the
publication
of
regulations
...
prescribing
a[
n
applicable]
standard
of
performance
.
.
.
."
Section
111(
a)(
2).
Section
111(
a)(
4),
in
turn,
defined
a
"
modification"
as
"
any
physical
change
in,
or
change
in
the
method
of
operation
of,
a
stationary
source
which
increases
the
amount
of
any
air
pollutant
emitted
from
such
source
or
which
results
in
the
emission
of
any
air
pollutant
not
previously
emitted."
I
Congress
did
not
further
define
the
terms
"
physical
change"

or
"
change
in
the
method
of
operation"
in
the
NSPS
program.

Therefore
we
issued
regulations
to
clarify
their
meaning.
As
3
early
as
our
1971
NSPS
regulations,
and
since
then,
we
have
made
clear
that
many
activities
that
do
not
affect
the
contemplated
operation
of
a
unit
in
a
manner
consistent
with
its
original
design
are
not
physical
or
operational
changes.
Specifically,
in
our
regulations
to
carry
out
the
NSPS
program,
we
determined
1)

that
rphysical
or
operational
changes
do
not
include:

1)
"
Routine
maintenance,
repair
and
replacement
of
equipment
at
an
existing
source
was
not
a
"
change";
2)
that
changesreplacement"
of
equipment;

2)
"
An
increase
in
the
production
rate,
if
such
increase
does
not
exceed
the
operating
design
capacity
of
the
affected
facility";

3)
"
An
increase
in
the
hours
of
operation
or
rate
of
production
of
a
source
likewise
were
not
a
"
change";
and
3)

that
for
purposes
of
NSPS,
an
activity
at
a
source
"
increased"
the
amount
of
an
air
pollutant
emitted
only
if
the
activity
caused
the
source
to
emit
more
of
that
pollutant
than
it
previously
had
the
potential
to
emit
on
an
hourly
basis.

operation";
and
4)
"
Use
of
an
alternative
fuel
or
raw
material
if
...
the
affected
facility
is
designed
to
accommodate
such
alternative
use."

36
Fed.
Reg.
At
24877
(
Dec.
23,
1971),
codified
at
40
C.
F.
R.
4
60.2(
h).
The
premise
behind
characterizing
these
activities
as
not
being
"
changes"
is
that
they
all
contemplate
that
the
plant
will
continue
to
be
operated
in
a
manner
consistent
with
its
original
design.

The
1977
Amendments
to
the
Clean
Air
Act
likewise
made
the
NSR
program
applicable
to
"
modifications".
The
original
1977
Amendments
did
so
explicitly
only
addressed
the
question
expressly
in
their
provisions
dealing
with
the
non­
attainment
portion
of
the
NSR
program,
see
CAA
sec.
171(
4),
b.
But
in
"
technical
and
conforming"
amendments
to
the
1977
Amendments,

Congress
clarified
that
it
intended
the
same
result
with
respect
to
the
prevention
of
significant
deterioration
provisions,
see
CAA
sec.
169(
2)(
C).

Notably,
Congress
did
not
enact
a
new
definition
of
"
modification"
in
either
the
original
1977
Amendments
or
the
"
technical
and
conforming
amendments,."
however.
Rather,
it
incorporated
the
NSPS
definition
of
"
modification"
by
crossreference
See
CAA
sec.
169(
2)(
C);
CAA
sec.
171(
4).
Explaining
their
thinking
in
tThe
Conference
Report
to
the
bill
adding
the
technical
and
conforming
amendments
{
check
if
that
is
what
the
citation
refers
to},
the
conferees
indicated
that
they
used
the
term
"
modification"
in
the
expectation
that
EPA
would
interpret
it
consistently
with
"
usage
indicates
that
this
was
a
deliberate
choice.
As
the
conferees
explained,
Congress
"
intended
to
5
conform
the
meaning
of
the
term
`
modification'
to
usage
in
other
parts
of
the
Act".
Act."
123
Cong.
Rec.
H11956
(
daily
ed.)(
Nov.

1,
1977).
We
have
understood
this
to
be
a
reference
to
our
preexisting
rules
interpreting
the
term
"
modification"
in
the
NSPS
context.
49
Fed.
Reg.
43211,
43213
(
1984)
{
not
sure
what
the
document
being
cited
is};
see
also
43
Fed.

Reg.
26388,
26394,
26397
(
June
19,
1978).

The
original
1978
NSR
rules
concerning
modifications
that
we
promulgated
after
enactment
of
the
1977
Amendments
tracked
the
NSPS
approach
on
all
fronts:
by
specifying
that
"
routine
maintenance,
repair
and
replacement"
was
not
a
change;
by
specifying
that
changes
in
hours
of
operation
and
rates
of
production
were
not
a
"
change";
and
by
using
the
same
approach
NSPS
used
to
the
question
of
what
constitutes
an
"
increase"

(
increase
to
a
source's
potential
to
emit).
43
Fed.
Reg.
26388
(
June
19,
1978).
Even
after
the
D.
C.
Circuit
struck
down
other
portions
of
our
1978
NSR
rules
in
its
original
per
curiam
decision
in
Alabama
Power
Co.
v.
Costle,
606
F.
2d
1068
(
D.
C.
Cir.

1979),
we
continued
to
propose
to
retain
the
RMR&
R
provision
and
the
"
potential
to
emit"
approach
to
emissions
increases
in
our
revised
rules,
although
to
drop
the
"
hours
of
operation
and
rate
of
production"
provisions
because
the
"
potential
to
emit"

provision
made
them
unnecessary.
44
Fed.
Reg.
51924,
51937
(
September
5,
1979).
In
our
final
1980
NSR
rules,
however,
6
issued
after
the
D.
C.
Circuit's
final
Alabama
Power
decision,
635
F.
2d
323
(
1980),
we
changed
our
approach
to
the
definition
of
"
increase"
in
the
NSR
context
to
specify
that
a
change
would
trigger
NSR
if
it
would
result
in
an
increase
over
"
actual
annual
emissions."
45
Fed.
Reg.
52676
(
August
7,
1980).
At
the
same
time,
and
notably,
we
restored
the
provisions
stating
that
increases
in
hours
of
operation
or
production
rate
were
not
"
changes."
Id.
at
52704.

It
is
important
to
understand
what
we
did
 
and
did
not
 
decide
in
those
final
1980
NSR
rules.
What
we
did
decide
was
that
as
a
general
proposition,
we
would
better
serve
the
purposes
of
the
NSR
program
if
we
used
"
actual"
rather
than
"
potential"

emissions
as
a
baseline
for
determining
whether
an
activity
at
a
new
source
results
in
an
emissions
increase.
What
we
did
not
decide
was
that
the
purposes
of
the
NSR
program
never
allow
us
to
exclude
from
the
definition
of
"
change"
any
activity
at
a
plant
that
may
increase
its
actual
emissions
but
does
not
increase
its
"
potential"
emissions.
In
particular,
for
example,
we
decided
to
retain
the
"
hours
of
operation"
and
rate"
rate
of
production"

exclusions
even
though
such
changes
might
result
in
increases
in
"
actual"
emissions
because
not
having
the
provisions
"
would
severely
and
unduly
hamper
the
ability
of
any
company
to
take
advantage
of
favorable
market
conditions."
Id.
Similarly,
we
7
retained
the
exclusion
for
"
routine
maintenance,
repair
and
replacement"
even
though
it
too
ncan
have
a
similar
effect.
Yet
there
is
little
doubt
that
increases
in
hours
of
operation
and
rates
of
production
and
RMR&
R
arguably
could
be
understood
to
fall
within
the
statutory
definition
of
modification,
since
increases
in
hours
of
operation
and
rates
of
production
certainly
may
be
argued
to
be
changes
in
the
"
method
of
operation"
of
a
plant,
and
RMR&
R
certainly
may
be
argued
to
be
a
"
physical
change"
to
a
plant.

In
the
revisions
to
the
NSR
program
we
announced
last
December,
we
reiterated
our
adherence
to
the
view
that
as
a
general
matter
we
should
continue
to
use
"
actual"
rather
than
"
potential"
emissions
in
determining
what
activities
constitute
"
modifications"
under
NSR.
We
continue
to
believe
that
is
correct,
but
we
also
believe
we
should
amplify
our
reasons
for
holding
this
view
and
why
that
view
is
entirely
consistent
with
the
rule
we
are
promulgating
today.
In
determining
the
scope
to
give
to
"
modification,"
we
believe
it
is
important
to
give
weight
to
both
aspects
of
what
Congress
decided
in
1977.
It
decided
that
generally
speaking,
existing
plants
would
not
be
subject
to
NSR,
but
that
they
would
be
subject
to
NSR
when
they
made
"
modifications."
It
is
also
important
to
understand
why
Congress
chose
this
point
at
which
to
impose
NSR
on
existing
plants:
to
8
avoid
the
need
to
impose
costly
retrofits,
but
require
placement
of
new
control
technology
at
a
time
when
it
makes
the
most
sense
for
it
to
be
installed.
See
H.
R.
Rep.
No.
294,
95th
Cong.,
1st
Sess.
185,
reprinted
in
1977
U.
S.
Code
Cong.
&
Admin.
News
at
1254;
116
Cong.
Rec.
32,918
(
remarks
of
Sen.
Cooper).
See
also
WEPCO,
893
F.
2d
at
909­
910;
National­
Southwire
Aluminum
Co.
v.

EPA,
838
F.
2d
835,
843
(
6th
Cir.,
Boggs,
J.,
dissenting),
cert.

denied,
488
U.
S.
955
(
1988).
A
wholesale
exclusion
of
any
activity
that
restores
a
plant
to
its
potential
to
emit
fromOn
balance,
however,
we
rejected
that
interpretation
and
determined
that
the
definition
of
modification
is
not
consistent
with
this
balance,
since
there
are
many
activities
that
might
have
that
effect
but
the
conduct
of
which
would
be
an
extremely
effective
time
for
the
placement
for
new
control
technology.

At
the
same
time,
we
believe
it
is
also
important
to
give
equal
weight
to
the
converse
proposition,
at
the
heart
of
Congress's
decision
not
to
subject
existing
plants
to
NSR.
That
proposition
is
that
existing
plants
should
not
have
to
install
new
control
technology
in
the
ordinary
course
of
their
operations,
because
doing
so
would
subject
them
and
the
consumers
who
rely
on
them
to
enormous
dislocation
and
expense.
That
is
why
we
believe
we
have
rightly
excluded
increases
inbe
read
so
broadly
as
to
encompass
hours
of
operation
and
rates
ofor
9
production
from
the
definition
of
"
change."
That
is
also
why
we
believe
we
have
rightly
excluded
"
routine
maintenance,
repair
and
replacement"
of
existing
plants
from
that
definition.

For
similar
reasons,
we
believe
today's
rule
draws
an
appropriate
line
of
demarcation
between
replacements
that
should
not
be
treated
as
changes,
and
those
as
to
which
further
consideration
of
the
question
is
appropriate.
Our
rule
states
categorically
that
the
replacement
of
parts
or
components
with
identical
or
functionally
equivalent
parts
or
components
that
does
not
exceed
20%
of
the
replacement
value
of
the
process
unit
and
does
not
change
its
basic
design
parameters
is
not
a
change
and
is
within
the
RMR&
R
exclusion.
On
the
other
hand,
the
rule
contemplates
case­
by­
case
evaluation
of
identical
or
functionally
equivalent
equipment
replacements
that
do
not
have
these
characteristics.
We
believe
this
approach
israte
increases.

In
the
revisions
to
the
NSR
program
we
announced
last
December,
we
reiterated
our
adherence
to
the
view
that
as
a
general
matter
we
should
continue
to
use
"
actual"
rather
than
"
potential"
emissions
in
determining
what
activities
constitute
"
modifications"
under
NSR.
We
continue
to
believe
that
is
correct,
but
we
also
believe
we
should
amplify
our
reasons
for
holding
this
view
and
why
that
view
is
entirely
consistent
with
the
intended
scope
of
"
modification"
under
the
NSR
program.
10
Given
the
costs
associated
with
installing
state­
of­
the­
art
pollution
controls,
we
do
not
believe
it
plausible
that,
if
faced
with
the
choice
of
replacing
equipment
that
has
a
value
less
than
20%
of
a
process
unit
and
having
to
install
those
controls,
or
coming
up
with
another
solution
 
such
as
repairing
the
existing
equipment
or
limiting
hours
of
operation
so
as
to
be
confident
that
the
activity
will
not
trigger
NSR
 
the
owner
of
a
source
would
elect
to
replace
the
equipment
if
he
also
has
to
install
the
state­
of­
the­
art
controls.
Therefore
the
replacement
of
that
equipment
is
not,
in
fact,
an
opportune
time
for
the
installation
of
those
controls.

Nor
is
it
the
policy
of
the
Act
to
seek
to
promote
emissions
reductions
by
forcing
new
limits
on
hours
of
operation
or
rates
of
production
ofrule
we
are
promulgating
today.
In
determining
the
scope
to
give
to
"
modification,"
we
believe
it
is
important
to
give
weight
to
both
aspects
of
what
Congress
decided
in
1977.

Congress
decided
that
generally
speaking,
existing
plants,
as
we
explained
in
1980
when
we
determined
that
we
should
retain
such
an
exclusion
in
the
NSR
context.
To
the
contrary,
as
we
said
in
promulgating
the
1980
rules,
would
not
be
subject
to
NSR,
but
that
they
would
be
subject
to
NSR
when
they
made
"
modifications."

It
is
also
important
to
understand
why
Congress
chose
this
point
at
which
to
impose
NSR
on
existing
plants:
to
avoid
the
need
to
impose
costly
retrofits,
but
require
placement
of
new
control
11
technology
at
a
time
when
it
makes
the
most
sense
for
it
to
be
installed.
See
H.
R.
Rep.
No.
294,
95th
Cong.,
1st
Sess.
185,

reprinted
in
1977
U.
S.
Code
Cong.
&
Admin.
News
at
1254;
116
Cong.
Rec.
32,918
(
remarks
of
Sen.
Cooper)
{
add
quotation
if
useful}.
See
also
WEPCO,
893
F.
2d
at
909­
910;
National­
Southwire
Aluminum
Co.
v.
EPA,
838
F.
2d
835,
843
(
6th
Cir.,
Boggs,
J.,

dissenting),
cert.
denied,
488
U.
S.
955
(
1988).{
add
quotation
if
useful}
A
wholesale
exclusion
of
any
activity
that
restores
a
plant
to
its
potential
to
emit
from
the
definition
of
modification
is
not
consistent
with
this
balance,
since
there
are
many
activities
that
might
have
that
effect
but
the
conduct
of
which
would
be
an
extremely
effective
time
for
the
placement
for
new
control
technology.

At
the
same
time,
we
believe
it
is
also
important
to
give
equal
weight
to
the
converse
proposition,
at
the
heart
of
Congress's
decision
to
exclude
existing
sources
because
of
the
dislocation
that
covering
them
would
cause
can
reasonably
be
understood
as
allowing
those
sources
to
increase
hours
of
operation
or
production
up
to
permitted
levels
as
market
conditions
dictate.
We
note
that
this
does
not
leave
such
increases
outside
the
scope
of
the
CAA:
if
a
State
concludes
that
resulting
air
quality
considerations
warrant
revision
to
its
SIP
to
add
further
limitations
to
a
permit,
it
may
exercise
its
authority
to
impose
them
even
in
the
absence
of
anything
that
12
constitutes
a
"
change"
to
an
existing
plant.
But
we
believe
that
our
1980
conclusion
thatnot
to
subject
existing
plants
to
NSR.
That
proposition
is
that
existing
plants
should
not
have
to
install
new
control
technology
in
the
ordinary
course
of
their
operations.
To
do
so
would
subject
these
plants
and
the
consumers
who
rely
on
them
to
enormous
dislocation
and
expense.

That
is
why
we
believe
we
have
rightly
excluded
increases
in
hours
of
operation
or
production
at
existing
plants
should
not
trigger
NSR
remains
the
better
construction
of
the
Act.
That
being
the
case,
we
see
no
reason
why
the
fact
that
such
increases
may
occur
after
replacement
of
equipment
that
does
not
present
an
opportune
time
for
the
installation
of
controls
should
change
that
conclusion.

To
summarize:
With
respect
to
existing
sources,
the
purpose
of
the
NSR
provisions
is
simply
to
force
the
installation
of
controls
at
an
appropriate
and
opportune
time.
The
kind
of
replacements
that
automatically
fall
within
the
equipment
replacement
provision
established
today
do
not
represent
such
an
appropriate
and
opportune
time.
Accordingly,
and
given
that
it
is
consistent
with
the
meaning
of
"
change"
to
treat
this
kind
of
replacement
as
not
being
a
"
change,"
we
believe
excluding
them
on
that
basis
and
rates
of
production
from
the
definition
of
"
modification"
as
used
in
the
NSR
program
is
well
calculated
to
13
serve
all
of
the
policies
of
the
NSR
provisions
of
the
Clean
Air
Act,
and
is
therefore
a
legitimate
exercise
of
our
discretion
under
Chevron
to
construe
an
ambiguous
term.
Likewise,

we"
change."
That
is
also
why
we
believe
we
have
rightly
excluded
"
routine
maintenance,
repair
and
replacement"
of
existing
plants
from
that
definition.

For
similar
reasons,
we
believe
today's
rule
draws
an
appropriate
line
of
demarcation
between
replacements
that
should
not
be
treated
as
changes,
and
those
as
to
which
further
consideration
of
the
question
is
appropriate.
Our
rule
states
categorically
that
the
replacement
of
parts
or
components
with
identical
or
functionally
equivalent
parts
or
components
that
does
not
exceed
20%
of
the
replacement
value
of
the
process
unit
and
does
not
change
its
basic
design
parameters
is
not
a
change
and
is
within
the
RMR&
R
exclusion.
On
the
other
hand,
the
rule
contemplates
case­
by­
case
evaluation
of
identical
or
functionally
equivalent
equipment
replacements
that
do
not
have
these
characteristics.

We
believe
this
approach
is
consistent
with
the
holding,
and
much
of
the
reasoning
(
although
not
all
of
the
language
used
by
the
court)
in
the
WEPCO
case.

Today's
rule
treats
the
activities
excluded
from
the
definition
of
"
change"
as
a
category
of
"
routine
maintenance,
14
repair
and
replacement."
In
our
proposed
rule,
we
inquired
whether
if
we
were
to
adopt
the
equipment
replacement
provision,

we
should
do
so
as
a
form
of
elaboration
on
this
longstanding
exclusion,
or
whether
it
would
better
be
viewed
as
a
new
exclusion.
We
believe
there
are
legitimate
arguments
both
ways.

The
phrase
"
routine
maintenance,
repair
and
replacement"
may
certainly
be
read
as
limited
to
the
day­
to­
day
maintenance
and
repair
of
equipment
and
the
replacement
of
small
parts
of
a
plant
that
frequently
require
replacement.
That
is
the
reading
of
the
phrase
we
have
adopted
since
the
mid­
1990s
in
the
enforcement
context,
and
it
is
a
reading
suggested
in
a
number
of
applicability
determinations
as
well.
That
reading
is
particularly
plausible
if
the
phrase
is
considered
standing
alone,
without
full
consideration
of
the
purpose
it
serves
inintended
scope
of
"
modification"
under
the
NSR
program.

The
record
of
this
rulemaking
demonstrates
that
there
are
substantial
categories
of
replacement
activities
undertaken
in
order
to
assure
the
safety,
reliability
and
efficiency
of
existing
plants
that,
if
conducted
at
the
same
time,
meet
the
20%

replacement
cost
threshold.
It
also
demonstrates
that
there
are
sound
business
reasons
why
an
owner
or
operator
may
find
it
makes
sense
to
conduct
some
of
these
activities
at
the
same
time.

On
the
other
hand,
as
explained
above,
our
efforts
to
understand
the
term
"
modification"
in
light
of
Congress's
15
decision
to
exclude
existing
plants
from
NSR
as
a
general
proposition,
but
to
include
them
when
an
activity
at
a
plant
presents
a
good
opportunity
forgiven
the
costs
associated
with
installing
state­
of­
the­
art
pollution
controls,
we
do
not
believe
it
plausible
that,
if
faced
with
the
choice
of
replacing
equipment
that
has
a
value
less
than
20%
of
a
process
unit
and
having
to
install
those
controls,
or
coming
up
with
another
solution
 
such
as
repairing
the
existing
equipment
or
limiting
hours
of
operation
so
as
to
be
confident
that
the
activity
will
not
trigger
NSR
 
the
owner
of
a
source
would
elect
to
replace
the
equipment
if
he
also
has
to
install
the
state­
of­
the­
art
controls.
Rather,
we
believe
he
will
repair
the
existing
equipment
or
artificially
constrain
production.
Therefore
the
replacement
of
that
equipment
is
not,
in
fact,
an
opportune
time
for
the
installation
of
such
controls.
It
follows
that
treating
such
replacements
as
an
NSR
trigger
will
not
lead
to
the
installation
of
controls,
are
highly
relevant
to
how
this
exclusion
is
best
understood.
We
believe
these
considerations
lie
behind
the
view,
also
suggested
in
a
number
of
Agency
documents,
most
notably
the
preamble
to
our
1992
WEPCO
rule,
that
the
RMR&
R
exclusion
should
also
include
less
common
replacements
that
are
nevertheless
important
for
the
continued
safe,
reliable
and
efficient
operation
of
a
plant,
and
that
are
to
be
expected
with
respect
to
a
source
category,
such
as
the
replacement
of
an
16
important
part
that
happens
to
be
defective
(
a
rare
occurrence)

or
once­
in­
a­
plant­
lifetime
replacement
of
a
large
component
that
nevertheless
can
be
expected
to
be
replaced
that
one
time.

Viewing
the
exclusion
for
"
routine
maintenance,
repair
and
replacement"
in
the
context
of
the
policies
of
the
Act,

therefore,
we
also
believe
it
may
properly.
Rather,
it
will
merely
create
incentives
to
make
a
plant
less
productive
than
its
design
capacity
would
allow
it
to
be.

We
do
not
believe
it
is
the
policy
of
the
Act
to
seek
to
promote
emissions
reductions
by
forcing
new
limits
on
hours
of
operation
or
rates
of
production
of
existing
plants.
We
made
that
point
clear
in
1980
when
we
determined
that
we
should
retain
the
hours
of
operation
and
rate
of
production
exclusions
in
the
NSR
context.
To
the
contrary,
as
we
said
in
promulgating
the
1980
rules,
Congress's
decision
to
exclude
existing
sources
because
of
the
dislocation
that
covering
them
would
cause
can
reasonably
be
understood,
and
indeed
all
things
considered
is
properly
best
understood,
to
encompass
those
replacement
activities
within
the
latter
category
that
today's
rule
determines
to
be
within
its
scope.
Accordingly
that
is
the
view
we
adopt
today.

We
believe
it
is
appropriate
to
add
one
final
note
regarding
the
fact
that
this
approach
represents
a
change
from
17
the
approach
we
have
taken
in
the
recent
past.
As
the
Supreme
Court
explained
in
Chevron,
where
it
upheld
a
considerably
more
significant
shift
in
the
Agency's
understanding
of
Title
I
of
the
CAA,
to
wit,
as
allowing
those
sources
to
increase
hours
of
operation
or
production
up
to
permitted
levels
as
market
conditions
dictate.
We
note
that
this
does
not
leave
such
increases
outside
the
scope
of
the
term
"
stationary
source,"

there
is
nothing
inherently
suspect
about
a
change
of
approach
of
this
type
by
an
expert
Agency
concerning
how
best
to
understand
a
technical
statutory
term
so
as
best
to
effectuateCAA:
if
a
State
concludes
that
resulting
air
quality
considerations
warrant
revision
to
its
SIP
to
add
further
limitations
to
a
permit,
it
may
exercise
its
authority
to
impose
them,
even
in
the
absence
of
anything
that
constitutes
a
"
change"
to
an
existing
plant.
But
we
believe
that
our
1980
conclusion
that
increases
in
hours
of
operation
or
production
at
existing
plants
should
not
trigger
NSR
remains
the
better
construction
of
the
Act.
That
being
the
case,

we
see
no
reason
why
the
fact
that
such
increases
may
occur
after
replacement
of
equipment
that
does
not
present
an
opportune
time
for
the
installation
of
controls
should
change
that
conclusion.

To
summarize:
With
respect
to
existing
sources,
the
purpose
of
the
NSR
provisions
is
simply
to
require
the
installation
of
controls
at
the
appropriate
and
opportune
time.
The
kind
of
replacements
that
automatically
fall
within
the
equipment
18
replacement
provision
established
today
do
not
represent
such
an
appropriate
and
opportune
time.
Accordingly,
and
given
that
it
is
consistent
with
the
meaning
of
"
change"
to
treat
this
kind
of
replacement
as
not
being
a
"
change,"
we
believe
excluding
them
on
that
basis
from
the
definition
of
"
modification"
as
used
in
the
NSR
program
is
well
calculated
to
serve
all
of
the
policies
of
the
statute.
To
the
contrary,
this
is
part
of
an
Agency's
job,

particularly
in
a
circumstance
like
the
one
at
issue
here,
where
the
underlying
Congressional
command
 
not
to
apply
NSR
toNSR
provisions
of
the
Clean
Air
Act,
and
is
therefore
a
legitimate
exercise
of
our
discretion
under
Chevron
to
construe
an
ambiguous
term.
Likewise,
we
believe
this
approach
is
consistent
with
the
holding
in
the
WEPCO
case,
and
with
some
though
not
all
of
that
case's
reasoning.

Today's
rule
treats
the
activities
excluded
from
the
definition
of
"
change"
as
a
category
of
"
routine
maintenance,

repair
and
replacement."
In
our
proposed
rule,
we
inquired
whether
if
we
were
to
adopt
the
equipment
replacement
provision,

we
should
do
so
as
a
form
of
elaboration
on
this
longstanding
exclusion,
or
whether
it
would
better
be
viewed
as
a
new
exclusion.
We
believe
there
are
legitimate
arguments
both
ways.

The
phrase
"
routine
maintenance,
repair
and
replacement"
could
be
read
as
limited
to
the
day­
to­
day
maintenance
and
repair
of
equipment
and
the
replacement
of
relatively
small
parts
of
a
19
plant
that
frequently
require
replacement.
That
is
the
reading
of
the
phrase
we
have
adopted
since
the
mid­
1990s
in
the
enforcement
context,
and
it
is
a
reading
suggested
in
a
number
of
applicability
determinations
as
well.
{
is
this
accurate?}
That
reading
is
more
plausible
when
the
phrase
is
considered
standing
alone,
without
full
consideration
of
the
purpose
it
serves
in
the
NSR
program.
On
the
other
hand,
as
explained
above,
our
efforts
to
understand
the
term
"
modification"
in
light
of
Congress's
decision
to
exclude
existing
plants
from
NSR
as
a
general
matter,

but
to
apply
it
to
"
modifications"
 
requires
a
careful
weighing
of
the
competingproposition,
but
to
include
them
when
an
activity
at
a
plant
presents
a
good
opportunity
for
the
installation
of
controls,
are
highly
relevant
to
how
this
exclusion
is
best
understood.
We
believe
these
considerations
underlying
this
dual
mandate.
In
these
circumstances,
changes
in
an
Agency's
understanding
informed
by
greater
experience
are
not
only
not
surprising,
theylie
behind
the
view,
also
suggested
in
a
number
of
Agency
documents,
most
notably
the
preamble
to
our
1992
WEPCO
rule,
that
the
RMR&
R
exclusion
should
also
include
less
common
replacements
that
are
nevertheless
important
for
the
continued
safe,
reliable
and
efficient
operation
of
a
plant,
and
that
are
to
be
expected.
As
the
with
respect
to
a
source
category,
such
as
the
replacement
of
an
important
part
that
happens
to
be
defective
(
a
rare
occurrence)
or
once­
in­
a­
plant­
lifetime
20
replacement
of
a
large
component
that
nevertheless
can
be
expected
to
be
replaced
that
one
time.
Viewing
the
exclusion
for
"
routine
maintenance,
repair
and
replacement"
in
the
context
of
the
policies
of
the
Act,
therefore,
we
also
believe
it
may
properly
be
understood,
and
indeed
all
things
considered
is
properly
best
understood,
to
encompass
those
replacement
activities
within
the
latter
category
that
today's
rule
determines
to
be
within
its
scope.
Accordingly
that
is
the
view
we
adopt
today.

{
insert
re:
bright
line
rules}

We
believe
it
is
appropriate
to
add
one
final
note
regarding
the
fact
that
this
approach
represents
a
change
from
the
approach
we
have
taken
in
the
recent
past.
As
the
Supreme
Court
explained
in
Chevron,
where
it
upheld
a
considerably
more
significant
shift
in
the
Agency's
understanding
of
Title
I
of
the
CAA,
to
wit,
the
scope
of
the
term
"
stationary
source,"
there
is
nothing
inherently
suspect
about
a
change
of
approach
of
this
type
by
an
expert
Agency
seeking
to
interpret
a
technical
statutory
term
so
as
best
to
accommodate
competing
interests
that
Congress
has
charged
the
Agency
with
reconciling.

In
section
101
of
the
Clean
Air
Act,
Congress
stated
that
Title
I
of
the
Act
has
a
dual
purpose:
"
to
protect
and
enhance
the
quality
of
the
Nation's
air
resources
so
as
to
promote
the
public
health
and
welfare
and
the
productive
capacity
of
its
21
population"
(
emphasis
added).
This
duality
is
reiterated
in
the
statement
of
purpose
of
the
PSD
provisions
and
in
the
House
Report
accompanying
the
1977
Amendments
in
connection
with
the
non­
attainment
provisions.
See
sec.
160(
1)
(
purposes
of
the
PSD
program
are,
inter
alia,
"
to
protect
public
health
and
welfare
from
any
actual
or
potential
adverse
effect"
of
air
pollution
and
"
to
insure
that
economic
growth
will
continue
to
occur
consistent
with
the
preservation
of
existing
clean
air
resources");
H.
R.

Rep.
No.
95­
294,
p.
211
(
The
"
two
main
purposes"
of
the
nonattainment
permitting
program
are
"(
1)
to
allow
reasonable
economic
growth
to
continue
in
an
area
while
making
reasonable
further
progress
to
assure
attainment
of
the
standards
by
a
fixed
date;
and
(
2)
to
allow
States
greater
flexibility
for
the
former
purpose
than
EPA's
present
interpretative
regulations
afford").

More
specifically,
with
regard
to
the
question
at
issue
here,
Congress
directed
EPA
not
to
apply
NSR
preconstruction
permitting
requirements
to
existing
plants
as
a
general
matter,

but
to
apply
them
to
"
modifications."
Both
directives
are
entitled
to
receive
appropriate
weight.

In
these
circumstances,
changes
in
an
Agency's
understanding
informed
by
greater
experience
are
not
only
not
surprising,
they
are
to
be
expected.
Effectuating
these
underlying
Congressional
commands
requires
a
careful
weighing
and
accommodation
of
the
competing
considerations
underlying
them.
Sensitivity
to
22
unintended
consequences,
and
a
willingness
to
adjust
policies
in
a
manner
informed
by
a
better
understanding
of
those
consequences,
are
a
central
element
of
the
responsibilities
of
an
Agency
given
such
a
charge.
As
the
Chevron
Court
explained:

Our
review
of
the
EPA's
varying
interpretations
of
the
word
"
source"
­­
both
before
and
after
the
1977
Amendments
­­

convinces
us
that
the
agency
primarily
responsible
for
administering
this
important
legislation
has
consistently
interpreted
it
flexibly
­­
not
in
a
sterile
textual
vacuum,

but
in
the
context
of
implementing
policy
decisions
in
a
technical
and
complex
arena.
The
fact
that
the
agency
has
from
time
to
time
changed
its
interpretation
of
the
term
"
source"
does
not,
as
respondents
argue,
lead
us
to
conclude
that
no
deference
should
be
accorded
the
agency's
interpretation
of
the
statute.
An
initial
agency
interpretation
is
not
instantly
carved
in
stone.
On
the
contrary,
the
agency,
to
engage
in
informed
rulemaking,
must
consider
varying
interpretations
and
the
wisdom
of
its
policy
on
a
continuing
basis.
Moreover,
the
fact
that
the
agency
has
adopted
different
definitions
in
different
contexts
adds
force
to
the
argument
that
the
definition
itself
is
flexible,
particularly
since
Congress
has
never
indicated
any
disapproval
of
a
flexible
reading
of
the
23
statute.

467
U.
S.
at
863­
64.

The
Court
went
on
to
point
out:

In
these
cases
the
Administrator's
interpretation
represents
a
reasonable
accommodation
of
manifestly
competing
interests
and
is
entitled
to
deference:
the
regulatory
scheme
is
technical
and
complex,
the
agency
considered
the
matter
in
a
detailed
and
reasoned
fashion,
and
the
decision
involves
reconciling
conflicting
policies.
Congress
intended
to
accommodate
both
interests,
but
did
not
do
so
itself
on
the
level
of
specificity
presented
by
these
cases.
.
.
.

[
A]
n
agency
to
which
Congress
has
delegated
policymaking
responsibilities
may,
within
the
limits
of
that
delegation,
properly
rely
upon
the
incumbent
administration's
views
of
wise
policy
to
inform
its
judgments.
While
agencies
are
not
directly
accountable
to
the
people,
the
Chief
Executive
is,
and
it
is
entirely
appropriate
for
this
political
branch
of
the
Government
to
make
such
policy
choices
­­
resolving
the
competing
interests
which
Congress
itself
either
inadvertently
did
not
resolve,
or
intentionally
left
to
be
resolved
by
the
agency
charged
with
the
administration
of
the
statute
in
light
of
everyday
realities.
.
.
.

We
hold
that
the
EPA's
definition
of
the
term
"
source"
24
is
a
permissible
construction
of
the
statute
which
seeks
to
accommodate
progress
in
reducing
air
pollution
with
economic
growth.
`
The
Regulations
which
the
Administrator
has
adopted
provide
what
the
agency
could
allowably
view
as
.
.
.
[
an]

effective
reconciliation
of
these
twofold
ends.
.
.
.'

Id.
at
865­
66
(
citations
and
footnotes
omitted).

We
believe
the
same
reasoning
applies
here,
and
makes
it
entirely
appropriate
for
us
to
adopt
the
equipment
replacement
provision
today.
