UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


ST MI

v.

EPA


98-1497a

D.C. Cir. 2000


*	*	*


Opinion Per Curiam.*


Dissenting opinion filed by Circuit Judge Sentelle.


Introduction Under the Clean Air Act the Environmental Protection 
Agency promulgates national ambient air quality standards  ("NAAQS")
for air pollutants, and states must then adopt  state implementation
plans ("SIPs") providing for the imple- mentation, maintenance, and
enforcement of the NAAQS;  such plans are then submitted to EPA for
approval. See  Clean Air Act ("CAA") s 110(a)(1), 42 U.S.C. s
7410(a)(1)  (1994). Even after a SIP is approved, EPA may at a later 
time call for SIP revisions if the Administrator finds a SIP  


__________

n * Judge Williams wrote Parts I.B-C and II.B; Judge Sentelle  wrote
Parts I.A, II.A, II.C, and III.A; Judge Rogers wrote Parts  III.B and
IV.


inadequate to attain or maintain the NAAQS, to meet the  dictates of
pollutant transport commissions, or "to otherwise  comply with any
requirement of this chapter." CAA  s 110(k)(5), 42 U.S.C. s


In October 1998 EPA issued a final rule mandating that 22  states and
the District of Columbia revise their SIPs to  mitigate the interstate
transport of ozone.1 See Finding of  Significant Contribution and
Rulemaking for Certain States  in the Ozone Transport Assessment Group
Region for Pur- poses of Reducing Regional Transport of Ozone ("Final 
Rule"), 63 Fed. Reg. 57,356 (1998). The statutory hook for  EPA's
action was a 1990 amendment to the Clean Air Act  which requires that
SIPs contain "adequate provisions" pro- hibiting


any source or other type of emissions activity within the  State from
emitting any air pollutant in amounts which  will ... contribute
significantly to nonattainment in, or  interfere with maintenance by,
any other State with  respect to any such national primary or
secondary am- bient air quality standard.


CAA s 110(a)(2)(D)(i)(I), 42 U.S.C. s 7410(a)(2)(D)(i)(I)  (1994). EPA
uniformly required that each state reduce nitro- gen oxides (NOx--an
ozone precursor) by the amount accom- plishable by what EPA dubbed
"highly cost-effective con- trols," namely, those controls EPA found
capable of removing  NOX at a cost of $2000 or less per ton. Numerous
petitions  for review challenge various aspects of EPA's decision.


In Part I we reject the following claims: that EPA could  not call for
the SIP revisions without convening a transport  commission; that EPA
failed to undertake a sufficiently  state-specific determination of
ozone contribution; that EPA  unlawfully overrode past precedent
regarding "significant"  contribution; that EPA's consideration of the
cost of NOx 




__________

n 1 The states are Alabama, Connecticut, Delaware, Georgia, Illi- nois,
Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mis- souri,
North Carolina, New Jersey, New York, Ohio, Pennsylvania,  Rhode
Island, South Carolina, Tennessee, Virginia, West Virginia,  and


reduction violated the statute; that EPA's scheme of uniform  controls
is arbitrary and capricious; that CAA  s 110(a)(2)(D)(i)(I) as
construed by EPA violates the nondele- gation doctrine.


In Part II we hold that the record does not support  including
Wisconsin in the SIP call, nor does it support  creating NOx budgets
based on the entire emissions of Mis- souri or Georgia. We reject the
claim that South Carolina  was improperly included in the SIP call.


In Part III we reject the claim that EPA impermissibly  intruded on the
statutory rights of states to fashion their  SIPs. We also reject the
claim that EPA violated the Regu- latory Flexibility Act.


In Part IV we reject the claim that EPA arbitrarily revised  the
definition of a "NOx budget unit." We reject all of the  claims raised
by the Council of Industrial Boilers save one:  we hold that EPA
failed to provide adequate notice of a  change in the definition of an
electric generating unit. We  also hold that EPA did not provide
adequate notice of a  change in the control level assumed for large,
stationary  internal combustion engines, but we reject the claim that 
EPA failed to follow its own standards in defining such  engines.
Finally, we uphold EPA's limits on early reduction  credits, and EPA's
use of a 15% multiplier for calculating  emissions from low mass


We note at the outset that one challenge has been stayed.  In 1979, EPA
set the acceptable level for ozone in the  ambient air at 0.12 parts
per million ("ppm"), averaged over  intervals of one hour. This
standard is commonly known as  the "1-hour standard." By 1997, EPA had
concluded that the  1-hour standard no longer adequately protected
public  health. See National Ambient Air Quality Standards for  Ozone,
62 Fed. Reg. 38,856 (1997). Pursuant to the agency's  statutory
mandate to review and revise NAAQS as appropri- ate, 42 U.S.C. s
7409(d)(1), EPA promulgated a new, more  stringent "8-hour standard"
which limits ozone levels to 0.08  ppm, averaged over an 8-hour
period. See 62 Fed. Reg.  38,856 (codified at 40 C.F.R. s 50.10).


EPA has undertaken the phasing out of the 1-hour stan- dard on an
area-by-area basis, mandating that the standard  would no longer apply
to an area once it is "determine[d] that  the area has air quality
meeting the 1-hour standard." 40  C.F.R. s 50.9(b). The call for SIP
revisions in question here  requires the covered upwind states to
submit SIP revisions  pursuant to the 8-hour standard even though EPA
was not  designating any 8-hour nonattainment areas prior to July 
1999. See 63 Fed. Reg. at 57,370; Transportation Equity Act  for the
21st Century, Pub. L. No. 105-178, s 6103, 112 Stat.  107, 465 (1998)
(providing that states submit suggested desig- nations no later than
July 1999 and EPA finalize those  designations no later than July
2000). EPA maintains that it  has the authority to include the 8-hour
standard in the  current s 110(a)(2)(D)-specific SIP call pursuant to
its au- thority under s 110(a)(1). Section 110(a)(1) provides that


[e]ach State shall ... adopt and submit to [EPA], within  3 years (or
such shorter period as [EPA] may prescribe)  after the promulgation of
a national primary ambient air  quality standard (or any revision
thereof) ..., a plan  which provides for implementation, maintenance,
and  enforcement of such primary standard in each air quality  control
region (or portion thereof) within such State.


42 U.S.C. s 7410(a)(1).


State and Industry/Labor petitioners initially attacked the  challenged
SIP call on the basis that EPA exceeded its  statutory authority and
acted arbitrarily in basing the SIP  call on the 8-hour standard when
the agency had not yet  designated any areas as being in nonattainment
under the  new standard. After petitioners' final briefs were
submitted,  we held in American Trucking Ass'ns, Inc. v. EPA, 175 F.3d
 1027, reh'g granted in part, den'd in part 195 F.3d 4 (D.C.  Cir.
1999), that the new NAAQS based on the 8-hour stan- dard was derived
from a construction of the Clean Air Act  that rendered the relevant
provision an unconstitutional dele- gation of legislative power and
remanded the case to the  agency. See id. at 1033-40. Seizing on this
holding, petition- ers added in their reply briefs that if this court


accept the contention in their original briefs as to why EPA 
impermissibly relied on the 8-hour standard, then we should  hold that
American Trucking means that EPA cannot rely on  the 8-hour standard
because it was promulgated in violation  of the non-delegation


Regardless, EPA moved to stay consideration of the issues  involving
the 8-hour standard because the agency has stayed  the 8-hour findings
contained in the challenged SIP call. We  granted the motion. Because
EPA's stay removes the 8-hour  findings as a basis for the SIP call,
we will resolve only the  issues involving the 1-hour standard.


I. General Claims


A. Transport Commission


States have the primary responsibility to attain and main- tain NAAQS
within their borders. See CAA s 107(a), 42  U.S.C. s 7407(a). When EPA
concludes that an "implemen- tation plan for any area is substantially
inadequate to attain  or maintain the relevant [NAAQS], to mitigate
adequately the  interstate pollutant transport described in section
[176A] or  [184], or to otherwise comply with any requirement of this 
chapter," the CAA requires EPA to order a state to revise  and correct
its SIP "as necessary" ("SIP call"). CAA  s 110(k)(5), 42 U.S.C. s
7410(k)(5). One such "requirement  of this chapter," is the "good
neighbor provision" of section  110(a)(2)(D). As amended, section
110(a)(2)(D) requires that  a SIP "contain adequate provisions"


(i) prohibiting, consistent with the provisions of this sub- chapter,
any source or other type of emissions activity  within the State from
emitting any air pollutant in  amounts which will ... contribute
significantly to nonat- tainment in, or interfere with maintenance by,
any other  State with respect to any such national primary or 
secondary ambient air quality standard ... [and]


(ii) insuring compliance with the applicable requirements  of sections
[126] and [115] ... (relating to interstate and  international
pollution abatement).


42 U.S.C. s 7410(a)(2)(D) (emphasis added). Section 126(b)  enables an
individual state or a political subdivision of a state  to petition
EPA to make a "finding that any major source or  group of stationary
sources emits or would emit any air  pollutant in violation of the
prohibition of [s 110(a)(2)(D)(ii)]."  42 U.S.C. s 7426(b). EPA may
make or deny such a finding.  See id. Section 115 pertains to
petitions made by foreign  countries. See 42 U.S.C. s 7415.


Title I, the subchapter referenced in section 110(a)(2)(D),  also
includes sections 176A and 184, the provisions referenced  in section
110(k)(5). In 1990, Congress added a provision to  section 176A
stating that EPA "may" establish an interstate  air pollution
transport region whenever EPA "has reason to  believe that the
interstate transport of air pollutants from one  or more States
contributes significantly to a violation of a  national ambient air
quality standard in one or more other  States." 42 U.S.C. s 7506a(a).
The section also provides  that whenever EPA "establishes a transport
region ...  [EPA] shall establish a transport commission." 42 U.S.C. 
s 7506a(b)(1). Among other things, a section 176A commis- sion is to
assess the interstate transport situation in the  relevant transport
region, assess interstate pollution mitiga- tion strategies, and
recommend to EPA measures necessary  "to ensure that the plans for the
relevant States meet the  requirements of [section 110(a)(2)(D)]." 42
U.S.C.  s 7506a(b)(2). In addition, section 176A permits a transport 
commission to request that EPA "issue a finding under  [section
110(k)(5)] ... that the implementation plan for one or  more of the
States in the transport region is substantially  inadequate to meet
[section 110(a)(2)(D) requirements]." 42  U.S.C. s 7506a(c). After
public comment, EPA has the au- thority to approve, approve in part,


In part, section 184, an ozone-specific provision, establishes  an
ozone transport region in the northeast ("NOTR") and sets  the
deadline for convening the transport commission required  as a result
of NOTR's establishment. See 42 U.S.C.  s 7511c(a). The section also
requires that "[i]n accordance  with [section 110] ... each State
included [or subsequently 


included] within a transport region established for ozone shall  submit
a State implementation plan or revision" regarding  vehicle inspection
programs and volatile organic compounds  control technology. 42 U.S.C.
s 7511c(b). In addition, section  184 contains provisions giving
states within an established  transport region the opportunity to use
their section  176A-established transport commission to help develop
addi- tional ozone control measures. See 42 U.S.C. s 7511c(c).


Efforts to control states' upwind contributions to ozone  pollution
continued to fall short during the early 1990s. In  1995, upon the
recommendation of the Environmental Council  of the States,
thirty-seven states and representatives from  EPA, industry, and
environmental groups formed a national  work-group called the Ozone
Transport Assessment Group  ("OTAG") to study and devise solutions to
the interstate  ozone transport problem. See 62 Fed. Reg. 60,318, at
60,319;  EPA, Ozone Transport Assessment Group Executive Report,  EPA
Document No. A 95-56, Doc. No. II-G-05 ("Executive  Report") at ii.
More specifically, OTAG's purpose was to  "identify and recommend a
strategy to reduce transported  ozone and its precursors, which, in
combination with other  measures, will enable attainment and
maintenance of the  ozone standard in the OTAG region." Executive
Report at ii.  OTAG concluded that upwind states needed to reduce NOx 
emissions in order to address the transport problem. Howev- er, the
OTAG members could not agree on specific control  measure
recommendations. See 62 Fed. Reg. at 60,320. In  response to OTAG's
efforts, EPA engaged in further analysis  and devised the SIP call


Industry/Labor petitioners argue that the CAA required  EPA to convene
a transport commission pursuant to sections  176A/184 prior to issuing
the challenged SIP call. EPA  concedes that OTAG was not a
statutorily-mandated 176A/184  transport commission as defined in the
CAA. If a transport  commission is required, EPA would be bound by
statute to  follow certain procedures in establishing and executing
its  commission obligation. However, we hold that the CAA does  not
require EPA to establish such a commission.


Industry/Labor petitioners contend that the reference to  the transport
commission provisions in section 110(k)(5) and  the mandate of section
110(a)(2)(D) that SIP requirements be  consistent with Title I
provisions obligated EPA, prior to  issuing the SIP call, to create a
transport commission guided  by the terms in sections 176A and 184 of
the statute.  Industry/Labor petitioners also note that sections 176A
and  184 reference both sections 110(a)(2)(D) and 110(k)(5). See 42 
U.S.C. ss 7506a(b)(2), (c), 7511c(c)(5). From this hodgepodge  of
largely unrelated cross-references, Industry/Labor peti- tioners argue
that EPA can only issue a section 110(k)(5) SIP  call to enforce
section 110(a)(2)(D)'s requirement after form- ing a 176A/184
transport commission. We disagree.


As a threshold matter, subsections 176A(a) and (b)(1) make  clear that
EPA must establish a transport commission if the  agency exercises its
discretion to create a transport region  pursuant to section 176A(a).
See 42 U.S.C. ss 7506a(a),  (b)(1). However, EPA can address
interstate transport apart  from convening a 176A/184 transport
commission as subsec- tion (a) provides that EPA "may" establish a
transport region  and subsection (b)(1) only requires a transport
commission  upon the establishment of a transport region because 
"[w]henever the Administrator establishes a transport region  under
subsection (a) ..., the Administrator shall establish a  transport
commission." Moreover, the relevant section 184  requirements apply to
states within established transport  regions. See 42 U.S.C. s
7511c(a)-(c). Thus, Industry/Labor  petitioners cannot reason around
the determinative statutory  language contained in section 176A.
Statutory construction is  not an exercise in picking apart a complex
statute and piecing  the parts back togther in a manner to effect a
particular end.  Ideally, a statute's directive concerning a certain


B. State-Specific Analysis


Section 110(a)(2)(D)(I)(i) requires that the relevant offend- ing
emissions be "emissions activity within the State." Sever- al
petitioners charge that EPA did not sufficiently analyze 


each particular state in determining which states contributed  unduly
to ozone downwind.


In issuing its Notice of Proposed Rulemaking ("NPRM"),  EPA relied on
data collected from OTAG. The data were  multi-state and regional in
nature and were framed as a  model of how ozone was transported
downwind from 12  different regions that covered the eastern half of
the United  States. See Final Rule, 63 Fed. Reg. at 57,382. The OTAG 
regions do not track state boundaries, so several states are  split
between regions. EPA also relied upon the NOx emis- sions of the
individual states. See id. at 57,383-84. A  potential shortcoming of
the NPRM's approach was that it  was too multi-state in nature. EPA
knew how much NOx  each state was emitting, but a state's emissions as
a share of  total emissions do not necessarily correspond
proportionately  to its share in the creation of ozone in downwind
states.  OTAG's multi-state modeling of such downwind transporta- tion
painted with a rather broad brush.


We need not pass judgment on whether the evidence and  approach of the
NPRM would have supported the final rule.  After receiving comments
regarding the insufficiently state- specific analysis of the NPRM, EPA
performed state-specific  modeling. Id. at 57,384. According to EPA,
this confirmed  the results of the regional modeling. Id.


The two types of state-specific modeling go by the names  UAM-V and
CAMx. In the UAM-V approach, the research- ers model an affected
downwind area to establish a base case,  and then "zero-out" a
particular source state. Thus with  UAM-V it can be estimated what
ozone concentrations would  be like if a particular state contributed
no ozone or ozone  precursors. The CAMx modeling, on the other hand,
is a  source apportionment analysis which tracks modeled ozone  from
its precursors (NOx and volatile organic compounds  (VOCs)) through
the formation of ozone and subsequent  migration. Whereas UAM-V tells
modelers how much ozone  is missing when one state is zeroed out, CAMx
models an  ozone concentration and provides apportionment, i.e., who 
sent what. An advantage of the CAMx model used by EPA 


was that, unlike the UAM-V modeling, with CAMx EPA  could isolate
man-made emissions, or ozone creation based on  reactions between
man-made and biogenic emissions.  UAM-V modeling was less


Petitioners really do nothing more than quibble with the 
state-specific modeling. For example, Industry/Labor peti- tioners
argue that zero-out modeling is inappropriate because  it models an
impossible scenario--the elimination of all man- made NOx emissions;
but they do not suggest how much this  characteristic is likely to
distort the results. State petitioners  charge that sometimes the
results of the two models were  inconsistent, with, for example, the
CAMx showing a larger  migration of ozone from a state than the UAM-V
showed for  all man-made NOx in that state. EPA itself noted this 
infrequent inconsistency. See id. at 57,385. Neither criticism 
affords ground for non-expert judges to find a material  likelihood of
serious error. See Appalachian Power Co. v.  EPA, 135 F.3d 791, 802


Petitioners complain that EPA did not provide the data  sooner. EPA
made the new modeling available on the Inter- net six weeks prior to
the final rule, published its availability  in the Federal Register a
month before the final rule, and  during that time received and
responded to questions and  comments regarding the modeling. Other
than what we have  already mentioned, petitioners have evidently not
been able to  identify further flaws in the modeling used, and thus
have  failed to show any prejudice from EPA's timetable. Personal 
Watercraft Indus. Ass'n v. Department of Commerce, 48 F.3d  540, 544


C. Determining "Significant" Contribution


Section 110(a)(2)(D)(i)(I) applies only to states that "con- tribute
significantly" to nonattainment in a downwind state.  Petitioners make
essentially four arguments challenging  EPA's determination of
"significance": (1) EPA acted con- trary to precedent; (2) EPA
considered forbidden factors,  namely, costs of reduction; (3) EPA
irrationally imposed  uniform NOx controls on the states; (4) EPA's


was so devoid of intelligible principles as to violate the 
nondelegation doctrine.


1. Past Precedent


Before the 1990 amendments to the Clean Air Act,  s 110(a)(2)(E)(I)
directed the EPA to insist on SIP provisions  adequate to prevent
sources within a state from emitting air  pollution that would
"prevent attainment or maintenance [of  primary or secondary
standards] by any other State." 42  U.S.C. s 7410(a)(2)(E) (1982)
(emphasis added). In a number  of decisions EPA found, with approval
of the courts, that  various emissions of a particular state, having a
proportionate  impact on some downwind state greater than the impacts 
involved here, did not meet that standard. See New York v.  EPA, 852
F.2d 574 (D.C. Cir. 1988); Air Pollution Control  Dist. of Jefferson
County v. EPA, 739 F.2d 1071 (6th Cir.  1984); New York v. EPA, 716
F.2d 440 (7th Cir. 1983); New  York v. EPA, 710 F.2d 1200 (6th Cir.
1983); Connecticut v.  EPA, 696 F.2d 147 (2d Cir. 1982). According to
the states,  these decisions, and what they claim to be Congress's
implicit  endorsement in the 1990 amendments, bar EPA from regard- ing
the ozone emissions here as "significant" within the  meaning of s
110(a)(2)(D)(i)(I). Thus the states would equate  the old
standard--"prevent attainment"--with the new stan- dard: "contribute


Nothing in the text of the new section or any other  provision of the
statute spells out a criterion for classifying  "emissions activity"
as "significant." Nor did EPA, under the  then-existing provision,
bind itself to any criterion. Further,  given EPA's finding as to the
cumulative effects of the  pollutants that generate ozone, EPA might
well be able to  distinguish this case from the sulfur dioxide cases
that the  states have cited. See 63 Fed. Reg. at 57,359 ("The chemical
 reactions that create ozone take place while the pollutants are 
being blown through the air by the wind, which means that  ozone can
be more severe many miles away from the source  of emissions than it
is at the source."). But the states point  to nothing suggesting any
prior adoption by EPA of any 


binding concept of how much was too much, so the claim falls  short at
the threshold.


2. Consideration of costs


Petitioners claim s 110(a)(2)(D)(i)(I) does not permit EPA  to take
into consideration the cost of reducing ozone. The  full section
provides that SIPs must contain provisions ade- quately prohibiting


any source or other type of emissions activity within the  State from
emitting any air pollutant in amounts which  will ... contribute
significantly to nonattainment in, or  interfere with maintenance by,
any other State with  respect to any such national primary or
secondary am- bient air quality standard.


42 U.S.C. s 7410(a)(2)(D)(i)(I) (emphasis added).


Before reviewing the petitioners' attacks we must first  describe how
EPA went about the business at hand. It first  determined that 23
jurisdictions are "significant" contributors  to downwind
nonattainment. 63 Fed. Reg. 57,398. In mak- ing this listing EPA drew
lines based on the magnitude,  frequency, and relative amount of each
state's ozone contribu- tion to a nonattainment area. For example, in
one calculation  it looked at the number of NOx parts per billion
("ppb") that a  candidate state's emissions made to exceedances in
specific  downwind locations (examined as a proportion of those excee-
dances). Indiana was found to contribute at least 2 ppb to  4% of the
1-hour ozone exceedances in New York City, and  was deemed a
"significant contributor" to nonattainment  there. On the other hand,
Alabama, Georgia, Massachusetts,  Missouri, South Carolina, Tennessee,
and Wisconsin were not  deemed "significant contributors" to New York
City nonat- tainment because none of these states ever contributed
more  than 2 ppb to a 1-hour exceedance in that area. Although  EPA
looked at other measures, e.g., the percentage contribu- tion of a
state's emissions to total concentrations in a specified  area, no one
quarrels either with its use of multiple measures,  or with the way it


Although the dividing line was a very low threshold of  contribution,
in the end EPA's rule called for termination of  only a subset of each
state's contribution. EPA decided that  the 23 "significant
contributors" need only reduce their ozone  by the amount achievable
with "highly cost-effective con- trols." 63 Fed. Reg. at 57,403. Thus,
once a state had been  nominally marked a "significant contributor,"
it could satisfy  the statute, i.e., reduce its contribution to a
point where it  would not be "significant" within the meaning of  s
110(a)(2)(D)(i)(I), by cutting back the amount that could be 
eliminated with "highly cost-effective controls." EPA's de- sign was
to have a lot of states make what it considered  modest NOx
reductions, uniformly limited to ones that could  be achieved (in
EPA's estimate) for less than $2000 a ton. As  a result, naturally,
the ultimate line of "significance," whether  measured in volume of
NOx emitted or arriving in nonattain- ment areas, would vary from
state to state depending on  variations in cutback costs.


State and Industry/Labor petitioners argue that this ap- proach runs
afoul of s 110(a)(2)(D), which they read as pro- hibiting any
consideration of costs or cost-effectiveness in  determining what
contributions are "significant." So far as  appears, none of the
states proposes that EPA, if reversed,  must require complete
extirpation of their NOx emissions.  Rather, the gamble--at least of
the small contributors--is  evidently that if EPA were barred from
considering costs, it  would never have included such states. Because
the attacks  from the states and Industry/Labor are somewhat
dissimilar  and have shifted back-and-forth between the opening
briefs,  reply briefs, and oral argument, a summary of the relevant 
differences and vacillations is in order. We note that no  party makes
any claim that EPA was either confined to  adopting rules whose
benefits exceeded their costs, or permit- ted to use that criterion in




__________

n 2 Indeed, accepting EPA's belief that ozone cannot be held re-
sponsible for mortality effects, see Proposed Rule, 62 Fed. Reg. at 
60,321 (not listing death as a health effect of groundlevel ozone); 
compare Final Rule, 63 Fed. Reg. at 57,359 (listing "[p]ossible


been argued that the term "significant" required consider- ation of
costs.


State petitioners initially argued that it was "arbitrary and 
unlawful" for EPA to make cost effectiveness a "controlling  factor"
or "linchpin" in the determination of significant contri- bution under
s 110(a)(2)(D). Thus EPA's error, as the states  would have it, was in
considering costs too much: "Petitioning  States do not claim that
there is no role for cost consider- ations; Petitioning States simply
stress that EPA must estab- lish a definition of significance that is
dominated by air  quality factors, as air quality is the sole factor
mentioned in  the statute." Reply Br. of Petitioning States at 4. In 
support of this position, State petitioners cited our en banc 
decision in Natural Resources Defense Council v. EPA, 824  F.2d 1146,
1163 (D.C. Cir. 1987) (en banc), where we held that  a statutory
mandate for EPA to set a standard with an  "ample margin of safety to
protect the public health" did not  preclude the consideration of
costs and technological feasibili- ty, but that these concerns could
not be the "primary consid- eration."


At oral argument, counsel for the states abandoned this  position and
decided that the statute flatly prohibits EPA  from considering costs
at all. Transcript of Oral Argument at  14-17. Indeed, counsel
eventually went so far as to claim  that if faced with two states, one
of which could eliminate all  relevant emissions at a trivial cost,
while the other could  eliminate none at a cost of less than $5000 a
ton, EPA must  mandate the same cutback for each. Id. at 16-17.




__________

n term damage to the lungs or even premature death" as health 
effects), and mainly using EPA data, some outside observers have 
calculated the benefit per ton of NOx reduction as ranging from a 
high of $750 per ton (for mobile sources in certain areas) to a low of
 negative $6 per ton (for other mobile sources). Alan Krupnick & 
Virginia McConnell, "Cost-Effective NOx control in the Eastern  U.S."
(Draft July 1999) (Table 4); see Krupnick & Anderson, A  Dilemma
Downwind, 137 Resources for the Future 5, 7 (1999) ("If  one assumes
that ozone does not cause deaths, the EPA's proposal  is much too
restrictive, incurring costs far out of proportion with  the benefits


We should note here that the consequence of this position  is not so
extreme as it sounds. EPA's rule allows ton-for-ton  emissions trading
between firms based on allowances deter- mined by each state. See 63
Fed. Reg. 57,456. Obviously the  firms with the highest emission
reduction costs will, if permit- ted by their states, buy up pollution
allowances from firms  that are granted allowances because they have
over- controlled for NOx--firms, obviously, with low reduction  costs.
If transaction costs were zero, the only effect of the  initial
assignment of cutbacks would be distributional: firms  would make only
the cheaper cutbacks, but firms with high  emission-reduction costs
would buy allowances from those  with low costs and thereby transfer
wealth to them. See  Ronald H. Coase, The Problem of Social Cost, 3 J.
L. & Econ.  1 (1960). But transaction costs notoriously are not zero;3
so  the likely effect of the proposed statutory interpretation  would
be that any aggregate cutback would be achieved at  considerably
higher cost than under EPA's reading of  s 110(a)(2)(D)(i)(I), with
absolutely no offsetting environmen- tal benefit to the public. Of
course we are able to assume the  existence of EPA's allowance trading
program only because  no one has challenged its adoption. As the
program seems to  have no rationale other than cost reduction, see 63
Fed. Reg.  at 57,457, it would presumably be invalid under
petitioners'  proposed reading of s 110(a)(2)(D)(i)(I), in which case
the  states' position really is as extreme as it sounds.


Returning to the positions of the parties, we find Indus- try/Labor
engaging in a migration comparable to that of the  states, though in
the opposite direction. In its opening and  reply brief Industry/Labor
argued that "s 110(a)(2)(D) re- quires consideration of only air
quality impacts in determin- ing the significance of any
contribution." However, at oral  argument Industry/Labor offered a
construction of the stat- ute that seemed to restore to EPA via s
110(k)(5) what it  would take away via s 110(a)(2)(D). Industry/Labor




__________

n 3 A glance at EPA's regulations for allowance trading will con- vince
any doubter that transaction costs can safely be expected to  be
substantial. See 63 Fed. Reg. at 57,457-75.


that costs could be considered when EPA determines if a SIP  is
"adequate" under s 110(k)(5). Transcript of Oral Argu- ment at 28. The
states actually offered this same reading of  s 110(k)(5) in their
reply brief (back when they thought EPA  could consider costs) but
appeared to abandon it at oral  argument in favor of a flat
prohibition on EPA cost consider- ations. The argument that costs may
be considered under  s 110(k)(5) seems to concede that the structure
of the statu- tory scheme manifests no intention to bar the


And so we are indeed presented with the question whether  s
110(a)(2)(D) bars consideration of costs, but it is presented  to us
with the caveat that costs can be considered later on in  the process,
and accompanied by a false start by the states,  who initially said
that EPA could consider costs, just not too  much. Against this
backdrop, it would be at the very least  ironic for us to say there is
"clear congressional intent to  preclude consideration of cost" under
s 110(a)(2)(D). See  Natural Resources Defense Council v. EPA, 824
F.2d 1146,  1163 (D.C. Cir. 1987) (en banc).


For convenience we repeat the statutory language. Section 
110(a)(2)(D)(i)(I) provides that SIPs must contain provisions 
adequately prohibiting


any source or other type of emissions activity within the  State from
emitting any air pollutant in amounts which  will ... contribute
significantly to nonattainment in, or  interfere with maintenance by,
any other State with  respect to any such national primary or
secondary am- bient air quality standard.


42 U.S.C. s 7410(a)(2)(D)(i)(I) (emphasis added). By its  terms the
statute is focused on "amounts" of "emissions  activity" that
"contribute significantly to nonattainment."  The fundamental dispute
is over the clarity of the phrase  "contribute significantly." Must
EPA simply pick some flat  "amount" of contribution, based exclusively
on health con- cerns, such that any excess would put a state in the


zone of "significance"?4 Or was it permissible for EPA to  consider
differences in cutback costs, so that, after reduction  of all that
could be cost-effectively eliminated, any remaining  "contribution"
would not be considered "significant"? In  deciding on the permissible
ceiling, EPA used "significant" in  the second way.


The term "significant" does not in itself convey a thought  that
significance should be measured in only one dimension-- here, in the
petitioners' view, health alone. Indeed, "signifi- cant" is a very odd
choice to express unidimensionality;  consider the phrase "significant
other." In some contexts,  "significant" begs a consideration of
costs. In finding a  threshold requirement of "significant risk" in s
3(8) of the  Occupational Health and Safety Act, 29 U.S.C. s 652(8), a
 plurality of the Supreme Court understood a "significant" risk  as
something more than a "mathematical straitjacket," and  held that
"[s]ome risks are plainly acceptable and others are  plainly
unacceptable." Industrial Union Dept., AFL-CIO v.  American Petroleum
Institute ("Benzene"), 448 U.S. 607, 655  (1980) (plurality opinion).
The plurality withheld judgment  on whether the Act required a
"reasonable correlation be- tween costs and benefits," id. at 615, but
the upshot of  inserting the adjective "significant" was a
consideration of  which risks are worth the cost of elimination. OSHA
has  since interpreted s 3(8) and regulation of "significant risk" to 
require "cost-effective protective measures" and set stan- dards with
an eye toward "the costs of safety standards  [being] reasonably
related to their benefits." See Interna- tional Union v. OSHA
(Lockout/Tagout II), 37 F.3d 665, 668- 69 (D.C. Cir. 1994) (quoting
OSHA's final rule). OSHA's  reaction to the term "significant" seems
to confirm what some  commentators have asked rhetorically: "[C]an an
agency  sensibly decide whether a risk is 'significant' without also 
examining the cost of eliminating it?" Stephen G. Breyer, 




__________

n 4 We deal below with a related question: Did EPA act irrationally  in
setting the level of significance without regard for varying levels 
of downwind impact? See part I.C.3 below.


Richard B. Stewart, Cass R. Sunstein & Matthew L. Spitzer, 
Administrative Law and Regulatory Policy 65 (4th ed. 1999).


Petitioners conspicuously fail to describe the intellectual  process by
which EPA would determine "significance" if it  may consider only
health. EPA has determined that ozone  has some adverse health
effects--however slight--at every  level. See National Ambient Air
Quality Standards for  Ozone, 62 Fed. Reg. 38,856 (1997). Without
consideration of  cost it is hard to see why any ozone-creating
emissions should  not be regarded as fatally "significant" under  s
110(a)(2)(D)(i)(I). Perhaps EPA might (under such a rule)  let the
upwind states off at the stringency level of the  programs imposed on
non-attainment areas, but petitioners  do not explain how
"significance" can exclude cost but admit  equity.


Although the ambiguity of the word "significant" and the  implications
of a health-only reading are potentially fatal  flaws in petitioners'
theory (aside from their own inability to  discern the "plain
language" consistently), the most formida- ble obstacle is the settled
law of this circuit. It is only where  there is "clear congressional
intent to preclude consideration  of cost" that we find agencies
barred from considering costs.  NRDC, 824 F.2d at 1163; see also
George E. Warren Corp. v.  EPA, 159 F.3d 616, 622-24 (D.C. Cir. 1998),
reh'g granted,  164 F.3d 676 (D.C. Cir. 1999); Grand Canyon Air Tour 
Coalition v. FAA, 154 F.3d 455, 475 (D.C. Cir. 1998), cert.  denied,
119 S. Ct. 2046 (1999); NRDC v. EPA, 937 F.2d 641,  643-46 (D.C. Cir.
1991); cf. International Bhd. of Teamsters  v. United States, 735 F.2d
1525, 1528-29 (D.C. Cir. 1984)  (construing mandate to adopt
"reasonable requirements" for  safety as allowing consideration of


In NRDC we considered s 112 of the Clean Air Act,  requiring EPA to set
an air quality standard for hazardous  pollutants with an "ample
margin of safety" to protect the  public health. We held that this
phrase did not preclude a  consideration of costs. 824 F.2d at 1155,
1163. In George E.  Warren Corp. we acknowledged that the statutory
scheme for  the reformulated gasoline program had the "overall goal"


improving air quality and "reducing air pollution." 159 F.3d  at 622.
But because there was nothing "in the text or  structure of the
statute to indicate that the Congress intend- ed to preclude the EPA
from considering the effects a  proposed rule might have upon the
price and supply of  gasoline," id. at 623, we found no such
preclusion even though  the provision at issue contained no allusion
whatever to such  effects. Similarly, in Grand Canyon Air Tour the
statute  required the FAA to devise a plan for "substantial
restoration  of the natural quiet" in the Grand Canyon area, but we
found  nothing impermissible in the FAA's consideration of costs to 
the air tourism industry in deciding how "substantial" that 
restoration must be. 154 F.3d at 475. In NRDC v. EPA we  considered
whether EPA permissibly used cost-benefit analy- sis in refusing to
classify a particular polluting source as  "major." The petitioners
argued that cost considerations  were precluded, and we stated:
"[W]hile the statutory lan- guage and legislative history do not bar
petitioners' construc- tion, they provide little support and no
necessity for it." 937  F.2d at 645. We affirmed EPA's use of


These cases are unexceptional in their general view that  preclusion of
cost consideration requires a rather express  congressional direction.
See Edward W. Warren & Gary E.  Marchant, "More Good Than Harm": A
First Principle for  Environmental Agencies and Reviewing Courts, 20
Ecology  L.Q. 379, 421 (1993) ("The need to compare benefits and costs
 has long played a role in judicial review of agency actions 
regulating health and safety risks."); Cass R. Sunstein, Inter-
preting Statutes in the Regulatory State, 103 Harv. L. Rev.  405, 487
(1989) (suggesting an "interpretive principle" drawn  from case law,
including NRDC v. EPA, 824 F.2d 1146, that  reviewing courts will read
statutes as authorizing regulations  with benefits at least "roughly
commensurate with their costs,  unless there is a clear legislative
statement to the contrary").  Three of the cases, moreover--the two
NRDC cases and  Grand Canyon--, involve statutory language with just
the  same structure as here. A mandate directed to some envi-
ronmental benefit is phrased in general quantitative terms  ("ample
margin of safety," "substantial restoration," and "ma-


jor"), and contains not a word alluding to non-health trade- offs; in
each case we found that in making its judgments of  degree the agency
was free to consider the costs of demand- ing higher levels of
environmental benefit. So too here.


Petitioners point to no evidence of the requisite "clear  congressional
intent to preclude consideration of cost."  NRDC, 824 F.2d at 1163.
The text, we have already seen,  works no such preclusion. As for the
statutory structure,  petitioners willingly concede that costs may be
considered  under s 110(k)(5) in determining the adequacy of a state
plan.  Why would a Congress intent on precluding cost consider- ations
allow such an escape hatch? The petitioners cite no  legislative
history suggesting that cost considerations should  be barred.


In sum, there is nothing in the text, structure, or history of  s
110(a)(2)(D) that bars EPA from considering cost in its 


3. Uniform Controls


As we have seen, EPA required that all of the covered  jurisdictions,
regardless of amount of contribution, reduce  their NOx by an amount
achievable with "highly cost-effective  controls." Petitioners claim
that EPA's uniform control  strategy is irrational in two distinct
ways. First, they ob- serve that where two states differ considerably
in the amount  of their respective NOx contributions to downwind
nonattain- ment, under the EPA rule even the small contributors must 
make reductions equivalent to those achievable by highly 
cost-effective measures. This of course flows ineluctably  from the
EPA's decision to draw the "significant contribu- tion" line on a
basis of cost differentials. Our upholding of  that decision logically
entails upholding this consequence.


The second objection is that because of distance and the  vagaries of
pollutant migration and ozone formation, a mole- cule of NOx emitted
in Indiana (for example) may cause far  less adverse health impact
than a molecule emitted in eastern  Pennsylvania. EPA acknowledges
that "[s]ources that are  closer to the nonattainment area tend to
have much larger 


effects on air quality than sources that are far away." 63  Fed. Reg.
at 25,919. While EPA's cost-effectiveness standard  and emissions
trading seem to mean that EPA will secure the  resulting aggregate NOx
reduction at roughly the lowest  possible cost, they do not
necessarily mean that it will have  secured the resulting aggregate
health benefits at the lowest  cost. Petitioners ask, in effect, why
EPA did not, by one  means or another (e.g., in the emissions trading
system),  make reductions from sources near the nonattainment areas 
(or otherwise more damaging, molecule for molecule) more  valuable
than ones from distant sources?


EPA considered this approach, modeling the efficacy of  regional
alternatives compared to its uniform strategy. See  Final Rule, 63
Fed. Reg. at 57,423. Its researchers found  that non-uniform regional
approaches by comparison did not  "provide either a significant
improvement in air quality or a  substantial reduction in cost." Id.
The complaining states  offer no material critique of EPA's
methodology in reaching  this answer, which in fact some independent
investigators  have confirmed. See Krupnick & Anderson, A Dilemma 
Downwind, 137 Resources for the Future 5, 6 (1999) ("[Even  with]
spatial differences, when viewed across the entire study  region, RFF
concluded that there was no clear benefit to an  exposure-based
trading system, compared with simple ton- for-ton NOx trading. Public
health benefits would be approx- imately the same, and there would be
no significant difference  in costs to the utilities."). We have no


4. Nondelegation


In their opening brief and more prominently in their reply  brief,
state petitioners argue that EPA has not determined  "significant
contribution" based on any intelligible principles.  Petitioners rely
heavily on our decision in American Truck- ing Ass'ns, Inc. v. EPA,
175 F.3d 1027, reh'g granted in part,  den'd in part 195 F.3d 4 (D.C.
Cir. 1999), essentially arguing  that nothing about EPA's analysis
explains how much of a  NOx contribution was too much (i.e., worthy of
a SIP call).


We must recognize here that EPA's cost-effectiveness cri- terion is a
radically incomplete line-drawing device. EPA has  effectively ruled
that each affected state must get down to the  NOx emissions levels
that would prevail if it removed all NOx  emissions costing $2000/ton
or less to remove. This satisfies  its "cost-effectiveness" criterion
because (if states also seek to  minimize costs subject to the EPA's
constraint) only these  relatively low-cost tons will be removed. But
while EPA  indicates that it rested the $2000/ton figure on "NOx emis-
sions controls that are available and of comparable cost to  other
recently undertaken or planned NOx measures," Final  Rule, 63 Fed.
Reg. at 57,400, it neither rests that benchmark  on anything in the
language or function of s 110(a)(2)(D)(i)(I),  nor otherwise explains
why the resulting cut-off point repre- sents the right degree of
"cost-effectiveness" (i.e., why "high- ly cost-effective" should be at
that "height"). Accordingly, we  must read EPA as having understood
that its selection of the  cut-off point was essentially unbounded.


But petitioners have ignored a limit to the nondelegation  doctrine
that we relied on in American Trucking and even  more emphatically in
its immediate precursor, International  Union, UAW v. OSHA
("Lockout/Tagout I"), 938 F.2d 1310  (D.C. Cir. 1991). There we noted
that the scope of the  agency's "claimed power to roam" was "immense,
encompass- ing all American enterprise." Id. at 1317. Quoting verbatim
 from Synar v. United States, 626 F. Supp. 1374, 1383 (D.D.C.  1986)
(three-judge panel), aff'd sub nom. Bowsher v. Synar,  478 U.S. 714
(1986), we said, "When the scope increases to  immense proportions, as
in [A.L.A. Schecter Poultry Corp. v.  United States, 295 U.S. 495
(1935)], the standards must be  correspondingly more precise."
Lockout/Tagout I, 938 F.2d  at 1317. We noted that a mass of cases in
courts had upheld  delegations of effectively standardless discretion,
and distin- guished them precisely on the ground of the narrower scope
 within which the agencies could deploy that discretion. Id.  American
Trucking, perhaps too succinctly for petitioners to  notice,
incorporated the Lockout/Tagout I discussion of the  point. American


Nominally, of course, s 110(a)(2)(D)(i)(I) encompasses "all  American
enterprise." But as a practical matter EPA must  make a number of
threshold determinations that in practice  appear to have confined the
statute to a modest role. Before  assessing "significance," EPA must
find (1) emissions activity  within a state; (2) show with modeling or
other evidence that  such emissions are migrating into other states;
and (3) show  that the emissions are contributing to nonattainment. We
do  not mean to minimize the scope of EPA's action in the  present
case. Nearly half of the nation is affected and  control costs will be
substantial. And it may ultimately prove  that the dam constituted by
these criteria will burst, subject- ing "all American industry" to
EPA's s 110(a)(2)(D)(i)(I) dis- cretion. But in practice, so far,
these threshold criteria  appear to have so limited EPA's activity
under the section as  to make the rule in question here the sole
example of  s 110(a)(2)(D)(i)(I) rulemaking. Accordingly, the grounds
on  which we remanded in Lockout-Tagout I and American  Trucking for
confining agency constructions are absent here.


II. Inclusion of Specific States


A. Wisconsin


Wisconsin industry petitioners separately challenge Wis- consin's
inclusion in the SIP call. The Wisconsin petitioners  argue that the
emissions from the state do not contribute  significantly to
nonattainment in any other state. Section  110(a)(2)(D)(i)(I) requires
that a state "contribute significantly  to nonattainment in ... any
other State" in order to be  included in the challenged SIP call. 42
U.S.C.  s 7410(a)(2)(D)(i)(I) (emphasis added). As explained below, 
EPA erroneously included Wisconsin in the SIP call because  EPA failed
to explain how Wisconsin contributes to nonattain- ment in any other


EPA contends that Wisconsin contributes significantly to  other states'
nonattainment because the state significantly  contributes ozone over
the Lake Michigan region. Despite  EPA's Lake Michigan concerns, the
agency does not show on  the record that Wisconsin's ozone
contribution affects any 


onshore state nonattainment. At oral argument, counsel for  EPA
conceded that "[t]he part that's missing [from the  record] is a
thorough explanation to support our modeling  data and things of that
nature between the Lake Michigan  receptor area and the onshore
states." Oral Arg. Tr. at 107.  When asked for more, counsel could
only respond that "the  best evidence ... is simply the narrative
statements in the  [final rule's] preambles.... There's nothing else
there." Id.  Because EPA conceded at oral argument that it has no
record  evidence directly linking Wisconsin's ozone contribution over 
Lake Michigan to nonattainment in any state and because  EPA must
"demonstrate[ ] a reasonable connection between  the facts on the
record and its decision" made pursuant to its  statutory authority,
Ethyl Corp. v. EPA, 51 F.3d 1053, 1064  (D.C. Cir. 1995), we hold that
EPA acted unlawfully by  including Wisconsin in a SIP call limited by
statute to states  contributing significantly to nonattainment in any
other state  and therefore set aside Wisconsin's inclusion in the SIP
call.  See 5 U.S.C. s 706(2)(A), (C) (1994) ("The reviewing court 
shall ... hold unlawful and set aside agency action ... found  to be
... arbitrary, capricious, an abuse of discretion, or  otherwise not
accordance with law [or] in excess of statutory  jurisdiction,
authority, or limitations, or short of statutory  right.").


B. Missouri and Georgia


Missouri and Georgia were on the geographical perimeter  of EPA's SIP
call. No state west of Missouri was included,  nor were the two states
directly to its north (Iowa and  Minnesota) and south (Arkansas).
Georgia was a bit more in  the thick of things, surrounded on three
sides by included  states--Alabama, Tennessee, North Carolina, and
South Car- olina; but the southern portion of Georgia borders the ex-
cluded state of Florida. Industrial petitioners within Mis- souri and
Georgia challenge EPA's decision to calculate NOx  budgets for these
two states based on the entirety of NOx  emissions in each state.
Petitioners argue that there is  record support only for the
proposition that emissions from,  roughly speaking, the eastern half
of Missouri and the north- ern two-thirds of Georgia "contribute" to


trations; accordingly, they say, the NOx budgets for Missouri  and
Georgia should be based solely on those emissions.


We must here explain how EPA calculated NOx budgets.  It projected the
total amount of NOx emissions that sources in  a state would emit in
the year 2007, in light of expected  growth and other controls
required by the CAA. EPA then  projected total NOx emissions if
"highly cost-effective con- trols" were implemented. The resulting
calculation became  the state's NOx budget, with the difference
between the base  case and the controlled case being the "significant"
contribu- tion discussed above. Obviously a state's NOx budget will 
vary depending on whether EPA considers all of the NOx  emissions in
the state, or instead considers only emissions  located in a smaller
portion of the state (assuming emissions  are dispersed throughout the
state, which is the case here  and without which the issue would be
immaterial, as nonexis- tent emissions need not be controlled). For
Missouri and  Georgia, as for all other included states, NOx budgets
were  calculated using all NOx emissions in the state.


The challenge basically stems from the character of  OTAG's modeling,
and its resulting recommendations to EPA.  OTAG's ozone transport
model used grids drawn across most  of the eastern half of the United
States. The first grid was  the most precise, with grid cells of 12
kilometers squared (244  square kilometers)--the "fine grid." A second
grid extended  beyond the perimeter of the fine grid and had cells of
36  kilometers squared resolution--the "coarse grid." For a  variety
of reasons to be discussed shortly, the fine grid did  not track state
boundaries, and Missouri and Georgia were  among several states that
were split between the fine and  coarse grids. OTAG then ran modeling
for both grids, but in  the final analysis did not find emissions from
the coarse grid  worthy of special concern. OTAG's executive summary
stat- ed: "[T]he focus on ozone air quality impacts in the fine grid 
raised questions about the need for controls in the coarse  grid. The
recommendations adopted by the Policy Group  recognize that the OTAG
analyses demonstrated that trans- port impacts of the coarse grid
areas on the fine grid are  minimal and therefore, do not include the
coarse grid areas 


for recommended control measures other than those that  would be
applied nationally." Petitioners argue that EPA  should base NOx
budgets for Missouri and Georgia only on  portions of these states
within the fine grid.


EPA offers three reasons for including the entire states of  Missouri
and Georgia:


(1) The division of individual States by OTAG was based,  in part, on
computational limitations in OTAG's modeling  analyses; (2) the
additional upwind emissions from full,  as opposed to partial, States
would provide additional  benefit to downwind nonattainment areas;
and, (3) State- wide emissions budgets create fewer administrative
diffi- culties than a partial-State budget.


Final Rule, 63 Fed. Reg. at 57,424. We review deferentially,  searching
for the reasonableness of EPA's action, Appala- chian Power, 135 F.3d
at 802, whether that be EPA's inter- pretation of the statute, see
Chevron, 467 U.S. at 842-43, or  EPA's explanation for its policy
choice, see Motor Vehicle  Mfrs. Ass'n v. State Farm Mutual Auto. Ins.
Co., 463 U.S.  29, 43 (1983). The two inquiries can and do overlap.
See  Animal Legal Defense Fund v. Glickman, No. 97-5009, slip  op. at
9 (D.C. Cir. Feb. 1, 2000).


On its face the statute neither mandates nor prohibits an 
all-or-nothing statewide perspective. It directs EPA to make  sure
that SIPs (which of course are state plans) adequately  prohibit "any
source or other type of emissions activity within  the State from
emitting" in excess of the substantive limit.  The critical issue is
whether the targeted "source" or "emis- sions activity" "contribute[s]
significantly to nonattainment"  in another state.


EPA's first argument is that the fine grid split Missouri  and Georgia
in part because of computer limitations--every  extension of the fine
grid modeling was costly in terms of  both computer memory and data
collection. Document No.  II-A-14, Draft OTAG Final Report Regional
and Urban  Scale Modeling--Chapter 2, 2-7 (undated). But the OTAG 


modelers allocated their scarce resources purposefully, by  reference
to known air quality data, explicitly taking into  consideration the
"locale of various problem areas (as repre- sented by urban-area
modeling domains), and emissions den- sity." Id. Thus it was no mere
techno-fortuity that the fine  grid included enough of Missouri to
include the city of St.  Louis and enough of Georgia to include
Atlanta: both cities  are designated nonattainment areas for ozone
under the  1-hour NAAQS. See Final Rule, 63 Fed. Reg. at 57,359. 
Moreover, the fine grid portions of both states are the closest  to
other nonattainment areas, such as Chicago and Birming- ham, and
generally higher ozone density.


Of course the fine grid modeling of parts of Missouri and  Georgia
showed emissions in the aggregate meeting the  EPA's threshold
"contribution" criteria. Thus fine grid mod- eling of each in its
entirety would presumably also have done  so. But that is a simple
arithmetic necessity (a state is  necessarily composed of its parts)
and provides no reason for  EPA to ignore the very air quality factors
that influenced the  design of the modeling that did occur. OTAG
itself clearly  did not think those factors magically lost their
force, for it  recommended against controlling the rump areas. And EPA
 itself acknowledged part of the reason this should be so when  it
observed, "Sources that are closer to the nonattainment  area tend to
have much larger effects on air quality than  sources that are far
away." 63 Fed. Reg. at 25,919. Indeed,  even if the line between areas
for which there was evidence  and ones for which there was none were
explained solely by  fortuity, EPA would still be required to act upon
the evidence  that was generated. See Chemical Manufacturers Ass'n v. 
EPA, 859 F.2d 977, 989 (D.C. Cir. 1988) (holding that EPA  must
consider "all the evidence--including the industry evi- dence").


This leads us to EPA defenses other than modeling design.  The first is
that "the larger the geographic area that is  controlled, the greater
the downwind benefits." Final Rule,  63 Fed. Reg. at 57,424. This
reason can only stand if the  emissions at issue contribute
significantly to nonattainment in  another state. OTAG concluded they
did not. Id. EPA 


claims that its state-specific modeling, which supplemented  OTAG's
more regional modeling, supports including the  coarse grid areas. See
id. Yet EPA's explanation and  technique make clear that emissions
from the fine grid areas  may have been the sole source of the
finding. Indeed, EPA  says as much: "[I]f emissions from part of a
State contribute  significantly to downwind nonattainment or
maintenance  problems, emissions from the entire State contribute
signifi- cantly to downwind nonattainment or maintenance problems." 
Id. This of course is also true as a matter of logic (a state is  the
sum of its parts). But it is completely consistent with the  rump
portion being innocent of downwind effect, and thus is  scarcely a
reason for ruling that significant contributions  from a border city


Aware of this problem, EPA simply throws the burden of  persuasion onto
the states. "[T]here is no peculiar meteoro- logical phenomenon that
would indicate that emissions from  some portion of [each of the
affected states] would not impact  downwind nonattainment or
maintenance problems." Id. In  addition, "the atmosphere is constantly
in motion and has no  limitations at geo-political boundaries." Id. If
this is "evi- dence" of contribution, it proves too much. If the
simple  proposition that the prevailing westerlies carry pollutants 
eastward were enough, EPA could, on the basis of a plant in 
Pennsylvania, use s 110(a)(2)(D)(i)(I) to control all NOx emis- sions
east of the Rocky Mountains. While we uphold EPA's  determination that
a "significant" contribution is a cost- effectively controllable
contribution, EPA must first establish  that there is a measurable
contribution. Interstate contribu- tions cannot be assumed out of thin


In the end administrative convenience is EPA's only real  defense for
basing NOx budgets on the entirety of a state's  emissions. There seem
to be two species of this argument.  First, EPA seems to claim that it
is just easier to calculate a  NOx budget based on all the emissions
in the state instead of  only a portion of such emissions. EPA
provides no explana- tion of why this is so, and it seems dubious.
Within a state  are counties, air quality control regions, and for
some unfor- tunate states, nonattainment areas. EPA also has emissions


data on specific sources, some of which may be susceptible of  "highly
cost-effective controls," and others of which may not  be. See, e.g.,
Emissions Data For Power Plants,  (visited January 26,  2000). Without
data from such state subdivisions and specific  sources, EPA could
never have performed modeling or even  set a statewide budget. EPA has
not explained how calcula- tion of a budget for sources in only half
of the state would be  any more onerous than for all sources in the
state. Unless it  is relying on data that exist only for the state as
a whole,  calculation seems on its face easier for a half than for a
whole.


EPA offers a second administrative problem. If the con- cern for not
allowing s 110(a)(2)(D)(i)(I) to encompass un- proven areas compels an
insistence on proof of contribution  from ever smaller geographic
subdivisions, any area's specific  contribution may appear
insubstantial, even though collective- ly there are significant
contributions. In other words, unlike  bologna, which remains bologna
no matter how thin you slice  it, significant contribution may
disappear if emissions activity  is sliced too thinly.


While this argument was stressed on appeal, it is nowhere  to be found
in the proposed or final rule, except insofar as it  may have lurked
behind the vague invocation of "administra- tive difficulties." See
Final Rule, 63 Fed. Reg. at 57,424;  Proposed Rule, 62 Fed. Reg. at
60,342. As a result it is quite  undeveloped. But it appears to be
based on a distortion of  the claims of Missouri and Georgia. They are
not asserting a  right to bologna tactics, to slice down the unit of
measure- ment to a point of insignificance. All they are claiming is
that  where the data--calculated under EPA's supervision--incul- pate
part of a state and not another, EPA should honor the  resulting


Such a proposition would of course leave EPA free to select  states as
the unit of measurement. In turn, states (or the  areas of states that
believed themselves innocent of material  contributions, or sources
located therein), might respond by  offering finer-grained
computations. Such a process seems 


more like a healthy search for truth than the collapse into  infinite
regress that EPA claims to fear.


EPA also points to state flexibility: "Since each State has  the
flexibility to determine which sources to control in order  to meet
the budget, a State can structure its control strategy  to require
fewer reductions in certain portions of the State  and greater
controls in other areas." Final Rule, 63 Fed.  Reg. at 57,424. This
theory presents at least two difficulties.  First, it overlooks the
fact that state budgets not only encom- pass the whole state but are
calculated on the basis of  hypothesized cutbacks from areas that have
not been shown  to have made significant contributions. Thus the
"flexibility"  comes at the cost of a burden that is heavier in the
aggregate,  where the added weight accomplishes no purpose relevant to
 s 110(a)(2)(D)(i)(I). Second, a state's use of flexibility to  pursue
a purely in-state set of tradeoffs between cost and  benefit (and thus
unrelated to the goals of s 110(a)(2)(D)(i)(I))  may actually diminish
the cutbacks in areas that are making  a contribution to other states'


Thus nowhere has EPA reasonably explained why NOx  budgets based on
every state source are the best stopping  point with respect to states
on the perimeter of the ozone  problem.


Therefore we vacate EPA's final rule with respect to  Missouri and
Georgia and remand to the agency for reconsid- eration in light of
this opinion.


C. South Carolina


Petitioner Santee Cooper challenges South Carolina's inclu- sion in the
SIP call by alleging that the state's downwind  ozone nonattainment
impact is "minuscule" and therefore not  significant. We will hold
unlawful EPA's decision to include  South Carolina in the SIP call if
we find EPA's decision  "arbitrary, capricious, an abuse of
discretion, or otherwise not  accordance with law." 5 U.S.C. s
706(2)(A). In order for  EPA's decision to include South Carolina in
the SIP call to  survive review, the agency must "demonstrate[ ] a
reasonable  connection between the facts on the record and its


Ethyl Corp., 51 F.3d at 1064. We conclude that the record  supports
EPA's decision to include the state as a significant  contributor to
downwind nonattainment. See Proposed Rule,  62 Fed. Reg. at
60,337-339. EPA considered the analyses  submitted by the objecting
petitioner but disagreed with the  petitioner's conclusions as drawn
from the relevant informa- tion. Specifically, EPA conducted
additional modeling and  interpreted the data in context and found
that South Carolina  significantly contributed to ozone nonattainment.
See id.;  Final Rule, 63 Fed. Reg. at 57,394-396.


For example, under the 1-hour standard, the UAM-V zero- out modeling
results indicated that South Carolina had a high  maximum contribution
(16 ppb) and a high frequency of  contribution (at least 2 ppb to 15%
of the exceedences and at  least 10 ppb to 5% of the exceedences) to
Atlanta. See  Office of Air and Radiation, U.S. Environmental
Protection  Agency, Doc. No. VI-B-11, Air Quality Modeling Technical 
Support Document for the NOx SIP Call C-5, H-2 (1998).  The CAMx
modeling results were comparable (25 ppb maxi- mum contribution and a
frequency of at least 2 ppb to 30% of  the exceedences). See id. at
C-5, G-6. Among the upwind  states, only Alabama had a higher maximum
contribution.  See id. at Apps. G & H. Moreover, South Carolina's
contribu- tion to 1-hour nonattainment in Atlanta was no more "insig-
nificant" than many of the other linkages that were found to  be
significant (e.g., Indiana's contribution to New York City).  See id.


In contrast, the petitioner seeks to show that the data,  when viewed
in isolation, makes South Carolina's contribution  appear
insignificant. In the end, we reject the challenge  made on behalf of
South Carolina because the petitioner  attacks, not so much the
accuracy of EPA's data, but rather  EPA's reasonable analysis and
application of the data.


III. Federalism and Regulatory Flexibility Act


A. NOx Budgets


Building on OTAG's work, EPA ordered the challenged  SIP call under the
authority of section 110(k)(5) in order to 


address significant contribution to 1-hour ozone nonattain- ment as
described under section 110(a)(2)(D).5 In fashioning  the SIP call,
EPA focused on OTAG's determination that  "[r]egional NOx emissions
reductions are effective in produc- ing ozone benefits." Proposed
Rule, 62 Fed. Reg. 60,318, at  60,320. EPA also took into
consideration OTAG's conclusion  that while NOx controls are effective
in addressing regional  ozone problems, VOC controls are most
effective locally and  are most advantageous to urban nonattainment
areas. See  id. Because OTAG concluded that NOx reductions provide the
 key to addressing regional ozone problems, EPA's SIP call  addresses
regional ozone nonattainment through NOx emis- sions "budgets"
established by the agency for each covered  state. The budgets
represent the amount of allowable NOx  emissions remaining after a
covered state prohibits the NOx  amount contributing significantly to
downwind nonattainment.  See Final Rule, 63 Fed. Reg. 57,356, at
57,368. While EPA  calculated the budgets using highly cost-effective
emission  controls, the agency allows the states to choose the control
 measures necessary to bring their emissions within the bud- get
requirements. See id. at 57,377; id. at 57,400. Under  EPA's budget
plan, a state "may choose from a broader menu  of cost-effective,
reasonable alternatives" including alterna- tives that "may even be
more advantageous in light of local  concerns." Id. at 57,369-370. In
fact, EPA has stated that  the states have "full discretion in
selecting the controls, so  that [the states] may choose any set of
controls that would  assure achievement of the budget." Id. at 57,378.
In addi- tion, each state has the option of adopting an interstate 
trading program that allows it to purchase NOx "allowances"  from
sources that have elected to over-control. Id. at 57,430.  The SIP
call also gives the states the option in some circum- stances to use
"banked" allowances (i.e. allowances from prior  years) to comply with


Petitioners assert that EPA's NOx budget program imper- missibly
intrudes on the statutory right of the states to 




__________

n 5 As noted above, we will not address the 8-hour portion of the  SIP
call.


fashion their SIP submissions in the first instance. In sup- port of
this position, the petitioners primarily rely on our  decision in
Virginia v. EPA, 108 F.3d 1397 (D.C. Cir.),  modified on other
grounds, 116 F.3d 499 (D.C. Cir. 1997),  where we held that EPA may
not use a section 110(k)(5) SIP  call to order states to adopt a
particular approach to achiev- ing the SIP requirements listed in
section 110. Under the  rule at issue in Virginia, EPA required states
to adopt  California's vehicle emission program and in effect set the 
numerical emissions limitations and mandated the means for  the states
to achieve the necessary emissions reductions.  That case involved an
EPA rule that required several states  to reduce ozone precursors by a
particular program and only  allowed states to implement a more
stringent program as an  alternative or substitute. We held that EPA's
approach  exceeded its authority under section 110 because each state 
retains the authority to determine in the first instance the 
necessary and appropriate control measures needed to satisfy  section
110's standards. See id. at 1407-09 (citing Train v.  NRDC, 421 U.S.


Our holding in Virginia was mandated by the Supreme  Court's decision
in Train v. NRDC, 421 U.S. 60 (1975).  Train involved a challenge to
Georgia's procedures for revis- ing source-specific emission limits
adopted in a SIP. See id.  at 68-71. The Train Court held that states
have the au- thority under the CAA to initially propose specific
emission  limitations. See id. at 79. The Court defined "emission lim-
itations" as "regulations of the composition of substances  emitted
into the ambient air from such sources as power  plants, service
stations, and the like. They are the specific  rules to which
operators of pollution sources are subject,  and which if enforced
should result in ambient air which  meets the national standards." Id.
at 78 (emphasis added).  The Court further held that EPA has only "a
secondary role  in the process of determining and enforcing the
specific,  source-by-source emission limitations." Id. at 79 (emphasis
 added). The Train decision and subsequent precedent make  clear that
section 110 left to the states "the power to [initial- ly] determine
which sources would be burdened by regula-


tion and to what extent." Union Elec. Co. v. EPA, 427 U.S.  246, 269
(1976) (emphasis added); cf. Virginia, 108 F.3d at  1399, 1401, 1408
(involving a source-specific program); Riv- erside Cement Co. v.
Thomas, 843 F.2d 1246, 1247-48 (9th  Cir. 1988) (citing Train and
noting EPA's secondary role in  enforcing source-by-source emissions
limitations). As we  elaborated in Virginia, "the Supreme Court
decided ... that  [section 110] did not confer upon EPA the authority
to  condition approval of [a state's] implementation plan ... on  the
state's adoption of a specific control measure." Virgi- nia, 108 F.3d
at 1408. For the reasons set forth below, we  conclude that the NOx
budgets do not fall within the realm  of impermissible SIP call
regulation as defined in Virginia  and Train.


Given the Train and Virginia precedent, the validity of the  NOx budget
program underlying the SIP call depends in part  on whether the
program in effect constitutes an EPA-imposed  control measure or
emission limitation triggering the Train- Virginia federalism bar: in
other words, on whether the  program constitutes an impermissible
source-specific means  rather than a permissible end goal. However,
the program's  validity also depends on whether EPA's budgets allow
the  covered states real choice with regard to the control measure 
options available to them to meet the budget requirements.


Section 110(a)(2)(D) requires SIPs to contain adequate  provisions
prohibiting emissions from "any source or other  type of emissions
activity within the State" that "contribute  significantly" to NAAQS
nonattainment in another state.  Here, EPA mandates that 22 states and
the District of  Columbia implement section 110(a)(2)(D) using its NOx
bud- get system. In essence, the NOx budget in question is an  EPA
mandate prohibiting NOx emissions in the 23 jurisdic- tions from
exceeding a tonnage specific to that jurisdiction.  See 63 Fed. Reg.
57,356 at 57,491-493 (1998). Of concern to  petitioners, the budget
rule prohibits states from seeking  compliance, in whole or part, by
controlling VOC emissions  even though VOCs as well as NOx emissions
contribute to  ozone problems. See, e.g., id. at 57,359; see also 40
C.F.R.  s 52.31(b)(7) (1998) (defining ozone precursors).


Yet, the budget plan's defining aspects do not necessarily  cause the
program to conflict with the limiting principles  contained in Train
and Virginia. Analyzing the budget rule  together with the relevant
precedent, we hold that based on  section 110's silence, EPA
reasonably interpreted section 110  as providing it with the authority
to determine a state's NOx  significant contribution level and agree
with EPA that the  NOx budget plan does no more than project whether
states  have reduced emissions sufficiently to mitigate interstate 
transport. See 63 Fed. Reg. at 57,368.


Under section 110, EPA must "approve a [SIP] submittal  as a whole if
it meets all of the applicable requirements of  [the Act]." 42 U.S.C.
s 7410(k)(3). While the states have  considerable latitude in
fashioning SIPs, the CAA "nonethe- less subject[s] the States to
strict minimum compliance re- quirements" and gives EPA the authority
to determine a  state's compliance with the requirements. Union Elec.
Co.,  427 U.S. at 256-57 (referring to the requirements contained  in
the statute). Given EPA's authority to ensure that submit- ted SIPs
adequately prohibit significantly contributing emis- sions, EPA
permissibly relied on its general rulemaking  authority to
prospectively inform the states of EPA's signifi- cance


Moreover, EPA does not tell the states how to achieve SIP  compliance.
Rather, EPA looks to section 110(a)(2)(D) and  merely provides the
levels to be achieved by state-determined  compliance mechanisms.
Specifically, EPA set NOx reduction  levels based, in part, on
assumptions about reductions obtain- able through highly
cost-effective controls. See Final Rule,  63 Fed. Reg. at 57,426.
However, EPA made clear that  states do not have to adopt the control
scheme that EPA  assumed for budget-setting purposes. See id. at
57,369-370.  States can choose from a myriad of reasonably
cost-effective  options to achieve the assigned reduction levels. See,
e.g., id.  at 57,438 (noting possibilities with regard to mobile
sources);  id. at 57, 378 (noting possibilities with regard to
stationary  sources); id. at 57,416. While EPA bases the budgets here 
on "highly cost-effective" control measures, the states remain  free


effective" measures in place of the ones identified by EPA.  See id. at
57,378; 63 Fed. Reg. 60,318 at 60,328 (1997) (noting  that "one State
may choose to primarily achieve emissions  reductions from stationary
sources while another State may  focus on emissions reductions from
the mobile source sec- tor"). More importantly, EPA went so far as to
give the  states "full discretion in selecting ... controls," 63 Fed.
Reg.  at 57,378, thereby allowing states to attain their budgets by 
imposing even quite unreasonable, very cost-ineffective con- trols. In
Virginia, we did not bar EPA from permitting  more costly alternatives
but rather alternatives states would  consider "unreasonable or
impracticable." Here, EPA ac- commodates Virginia's mandate by
allowing reasonable con- trol alternatives and allowing states to
focus reduction efforts  based on local needs or preferences. See 63
Fed. Reg. at  57,369; id. at 57,399-405; 62 Fed. Reg. at 60,328. Thus,
real  choice exists for the covered states.


Regarding EPA's decision not to rely on VOC reductions,  EPA reasonably
concluded that long-range ozone transport  can only be addressed
adequately through NOx reductions.  Petitioners' reliance and emphasis
on VOC reductions in lieu  of NOx reductions ignores the scientific
basis for EPA's rule.  OTAG and EPA concluded that VOC controls would
not  effectively address interstate ozone transport. Furthermore, 
states can cure any NOx reduction "disbenefits" with corre- sponding
optional VOC controls. See 62 Fed Reg. at 60,344- 345; 63 Fed. Reg. at
57,425. Thus, the SIP call cannot be  invalidated merely because EPA
reasonably chose not to  regulate VOCs.


In sum, we conclude that EPA's NOx budget program  reasonably
establishes reduction levels and leaves the control  measure selection
decision to the states. In addition, unlike  the rule invalidated in
Virginia, states implementing alterna- tive control measures will not
be penalized with more strin- gent emissions targets. Since the
challenged budget pro- gram does not mandate a "specific,
source-by-source emission  limitation[ ]," the NOx budget plan does
not run afoul of  Train or Virginia.


B. Regulatory Flexibility Act


The Regulatory Flexibility Act ("RFA"), 5 U.S.C. ss 601- 612, as
amended in 1996 by the Small Business Regulatory  Enforcement Fairness
Act ("SBREFA"), Pub. L. No.  114-121, Title II, 110 Stat. 847, 857-74,
ss 201-253 (codified  at 5 U.S.C. ss 601-612 (1994 & Supp. II 1996)),
requires an  agency, when proposing a rule for notice and comment, to 
"prepare and make available for public comment an initial  regulatory
flexibility analysis.... [that] describe[s] the im- pact of the
proposed rule on small entities," 5 U.S.C. s 603(a),  including small
businesses, small organizations, and small  governmental
jurisdictions. See id. s 601(6). In addition,  when promulgating a
final rule, an agency must "prepare a  final regulatory flexibility
analysis" that describes, among  other things, "a summary of the
significant issues raised by  the public comments in response to the
initial regulatory  flexibility analysis, a summary of the assessment
of the  agency of such issues," and "the steps the agency has taken 
to minimize the significant economic impact on small entities."  Id. s


However, these analyses are not required if the agency  "certifies that
the rule will not, if promulgated, have a signifi- cant economic
impact on a substantial number of small enti- ties." Id. s 605(b). In
the instant case, EPA certified that  the proposed and final rule will
not have a significant econom- ic impact on a substantial number of
small entities and,  accordingly, did not perform any regulatory
flexibility analy- sis. See Final Rule, 63 Fed. Reg. at 57,478;
Proposed Rule,  62 Fed. Reg. at 60,375. RFA petitioners contend that
EPA's  certification was improper and in violation of the RFA. We 


The court has consistently held that the RFA imposes "no  obligation to
conduct a small entity impact analysis of effects  on entities which
it does not regulate." Motor & Equip.  Mfrs. Ass'n. v. Nichols, 142
F.3d 449, 467 (D.C. Cir. 1998)  (quoting United Distribution Cos. v.
FERC, 88 F.3d 1105,  1170 (D.C. Cir. 1996)); see also American
Trucking, 175 F.3d  at 1044. Therefore, the key issue in evaluating


s 605(b) certification is whether the NOx SIP call "regulates"  small
entities.


EPA based its certification on its view that the NOx SIP  call "would
not establish requirements applicable to small  entities" because "it
would require States to develop, adopt,  and submit SIP revisions that
would achieve the necessary  NOx reductions and would leave to the
States the task of  determining how to obtain those reductions,
including which  entities to regulate." Final Rule, 63 Fed. Reg. at
57,478. We  agree with EPA's statement that the SIP call does not 
directly regulate individual sources of emissions. The instant  case
is thus analogous to American Trucking, which upheld  EPA's
certification under s 605(b) because the revised  NAAQS at issue
"regulate small entities only indirectly--that  is, insofar as they
affect the planning decision of the States."  American Trucking, 175
F.3d at 1044. Therefore, we con- clude that EPA's certification under


IV. Remaining Claims


A. Definition of "NOx Budget Unit"


RFA petitioners also contend that EPA arbitrarily revised  the
definition of a "NOx budget unit" to bring certain small  sources
within the scope of the core group of emission- producing sources to
which the NOx Budget Trading Rule  ("model trading rule") applies.6
This contention is meritless.




__________

n 6 To assist states in meeting their budgets and to facilitate the 
most cost-effective reductions, the SIP call established a model rule 
for interstate trading of NOx "allowances." Each state can choose 
whether to adopt the model rule, which will be administered by  EPA,
to adopt its own trading program, or to have no trading  program at
all. See Final Rule, 63 Fed. Reg. at 57,456-58.


The core group definition is used to set the minimum require- ments
that a State would have to include in its trading rule in order  to
participate in the EPA-managed multi-state trading program.  See id.
at 57,461. EPA viewed that setting such requirements was  necessary
for controlling the administrative costs of managing the  trading
program. See id.


In the proposed rule, a "NOx budget unit" was defined as a  boiler that
either serves electricity generators with a capacity  greater than 25
megawatts ("MW") or does not serve genera- tors but has a design heat
capacity of greater than 250 million  Btu/hr ("mmBTu/hr"). See
Supplemental Notice for the  Finding of Significant Contribution and
Rulemaking for Cer- tain States in the Ozone Transport Assessment
Group Region  for Purposes of Reducing Regional Transport of Ozone
("Sup- plemental Notice of Proposed Rule"), 63 Fed. Reg. 25,902, 
25,978 (1998). EPA sought comment on "the appropriateness  of
including [such] categories ..., whether the size cut-offs  should be
higher or lower for these source categories, and the  appropriateness
of including other source categories in the  core group." Id. at
25,923. In the final rule, EPA discussed  and revised the definition
to expand the core group by  including large boilers--those with
design heat capacity of  greater than 250 mmBtu/hr--even if they
served generators  with a capacity less than 25 MW. See Final Rule, 63
Fed.  Reg. at 57,518. EPA explained that it was making this  change in
order to address the concern raised in the com- ments about excluding
large boilers with high levels of emis- sion just because they happen
to serve small generators. See  id. at 57,461.


EPA's revision is reasonable. The only argument that  RFA petitioners
seem to have against the change is that it  contradicts EPA's
statement elsewhere that "small electrical  generators less than 25 MW
... will be exempt under the  final model rule." Id. at 57,463. It is
unclear why this  statement renders EPA's final action arbitrary.
EPA's defi- nition of a NOx budget unit and the reasons for its change
are  set forth in the preamble to the final rule, and the most that 
the RFA petitioners have demonstrated is that EPA made at  least one
statement that was, as EPA concedes in its brief,  "incomplete in that
it did not address the case of large boilers  with small generators."
Such a minor oversight in the draft- ing of the preamble to the final
rule does not render the  substantive decision by EPA arbitrary.


B. Council of Industrial Boiler Owners


1. Introduction


In the rulemaking, EPA distinguished between electricity  generating
units ("EGUs") and non-electricity generating  units ("non-EGUs").
Council of Industrial Boiler Owners  ("CIBO"), a trade association
whose membership consists of  companies and universities operating
industrial boilers and  turbines ("industrial boilers"), which
constitute one category  of non-EGUs, challenges the NOx SIP call for
being based on  the following arbitrary and capricious actions by EPA:
EPA's  failure to determine whether non-EGUs are significant con-
tributors, EPA's flawed cost assumptions in its determination  of
cost-effective control measures for non-EGUs, EPA's erro- neous
calculation of non-EGU budgets, and EPA's arbitrary  redefinition of
the term "EGU." We agree only that EPA's  redefinition of EGUs was


2. Significant Contribution of Industrial Boilers


CIBO challenges EPA's decision to include non-EGU boil- ers in the rule
without having isolated non-EGU emissions to  determine whether they
"significantly contribute" to the in- terstate ozone transport problem
and whether implementing  highly cost-effective emissions reduction
measures on indus- trial boilers would ameliorate nonattainment in
downwind  states. CIBO maintains that non-EGU boilers typically have 
significantly shorter stacks than EGUs and that their emis- sions, as
a result, fall below the "mixing layer" that promotes  long-range NOx
transport. Therefore, CIBO contends, indus- trial boilers as a group
can have no impact on long-range  ozone transport. However, this
factual claim fails in view of  contrary evidence in the record.
OTAG's Executive Report  states as one of its major conclusions that
"[b]oth elevated  (from tall stacks) and low-level NOx reductions are
effective."  Executive Report at 4. EPA reiterated this finding by
OTAG  in the NPRM, see Proposed Rule, 62 Fed. Reg. at 60,332, it 
relied on the finding, and it appears that members of CIBO  never
challenged it during the comment period. Therefore,  we cannot say
EPA's inclusion of non-EGUs in the group of  significantly


3. Cost-Effectiveness Calculation for Industrial Boilers'  Control
Measures


CIBO also challenges EPA's conclusion that industrial boil- ers could
achieve a 60% emissions reduction using highly  cost-effective control
measures, see Final Rule, 63 Fed. Reg.  at 57,418, as based on flawed
cost calculations. More specifi- cally, CIBO lists the following
alleged problems in EPA's cost  assumptions:


- EPA's assumption of 10 years as the lifetime of all  control measures
for industrial boilers, except for selective  catalytic reduction and
selective non-catalytic reduction con- trols, for which 20 years was
assumed.


- EPA's use of a 10% discount rate, not 7%, in its cost- effectiveness
analysis.


- EPA's failure to take into account the fact that control 
effectiveness can vary by as much as 10% to 20%.


- EPA's failure to take into account cost and feasibility  implications
of load variability and firing of multiple fuels.


- EPA's assumption of NOx emission allowance costs of  $2,000 per ton,
when emission allowances trade for $5,500 to  $6,300 per ton.


The general problem of these criticisms is that CIBO  merely lists
several items as problems and labels all of them  "irrational" without
explaining why its claims should concern  the court. Given that almost
all of CIBO's challenges involve  technical details on which the court
generally defers to the  agency's expertise, CIBO's failure to explain
why the so- called problems it identifies amount to an arbitrary and 
capricious decisionmaking is fatal to its claims.7 Therefore, 




__________

n 7 For instance, the last item on the list, that it is arbitrary and 
capricious for EPA to assume NOx emission allowance costs of  $2,000
per ton when emission allowances now trade for $5,500 to  $6,300 per
ton, is insufficiently explained. Of course, if the firms in  the
market generating entitlement prices of $5,500 to $6,300 per ton  were
regulated at the same degree of stringency as EPA contem- plates for
firms expected to be burdened under the present rule, the 


we reject CIBO's claims regarding EPA's underlying cost  assumptions
about industrial boilers.


4. Determination of Non-EGU Component of State NOx  Budgets CIBO
contends that EPA's calculation of the non-EGU  component for the
State NOx budget lacks adequate support  in the record and lists the
following as problems:


- Non-EGU inventories had errors.


- EPA's use of Bureau of Economic Analysis growth factor  to project
2007 emission levels have "inherent error."


- EPA employed "crude extrapolations" to identify large  non-EGU
boilers.


- The "default boiler capacity file" is not in the record and  the
record does not reveal how EPA manipulated the data.


- The source of Bureau of Economic Analysis growth  factors is not
identified in the record, and the record does not  show how EPA
manipulated the data.


- It is unknown whether EPA credited NOx reductions  from fluidized-bed
combustion technology.


Again, CIBO merely presents a list of problems without  explaining why
these alleged errors render EPA's rulemaking  arbitrary or capricious.
In addition, CIBO members had  repeated opportunities to provide
correct information for  some of these items during the rulemaking
process. CIBO's  poorly articulated, blanket accusations at this late
stage con- tribute little to improve the quality of agency rulemaking;
 therefore, we reject CIBO's challenges regarding EPA's cal- culation
of NOx budgets for non-EGUs. 


__________

n market price would be strong evidence that compliance would cost  far
more than the $2,000 per ton figure that EPA has used. No one  would
pay $6,000 for an entitlement to emit a ton that he could  remove at a
cost of $2,000; the price of an entitlement could not  exceed the
marginal removal cost. But if the prices to which CIBO  points arose
among firms more stringently regulated, there would  be no such
contradiction. CIBO has not even endeavored to show  equivalent


5. Definition of EGU


More persuasively, CIBO contends that EPA revised the  definition of
"EGU" without adequate notice. Throughout  the rulemaking, EPA defined
an EGU as it did under the acid  rain program, which excludes from the
category of "utility  units" those cogeneration units that sell less
than one-third of  their potential electrical output capacity or less
than 25 MW  per year. See 42 U.S.C. s 7651a(17)(C). However, two 
months after the promulgation of the rule, EPA redefined an  EGU as a
unit that serves a "large" generator (greater than  25MW) that sells
electricity. CIBO contends that EPA did  not provide sufficient notice
and opportunity to comment on  this revision, especially considering
that the industrial boilers  have relied on the previous definition
for a number of years.  We agree.


EPA maintains that it provided adequate notice in the May  1998
supplemental notice, stating that "deregulation of elec- tric
utilities" means that "it is not clear how ownership of the 
electricity generating facilities will evolve." Supplemental  Notice
of Proposed Rule, 63 Fed. Reg. at 25,923. Given that  "there is no
relevant physical or technological difference  between utilities and
other power generators," EPA pro- posed, "all large electricity
generating sources, regardless of  ownership," should be treated the
same. Id. There are  several problems with EPA's response. First, it
is undisput- ed that EPA was departing from the definition of EGUs as 
used in prior regulatory contexts, and EPA was not explicit  about the
departure from the prior practice until two months  after the rule was
promulgated. Neither the proposed rule- making in November 1997 nor
the final rule in October 1998  introduced the new definition. EPA
waited until the Decem- ber 1998 correction notice to announce that it
will "classify as  an EGU any boiler ... that is connected to a
generator  greater than 25 MWe from which any electricity is sold." 
Correction and Clarification to the Finding of Significant 
Contribution and Rulemaking for Purposes of Reducing Re- gional
Transport of Ozone ("Correction Notice to Final  Rule"), 63 Fed. Reg.
71,220, 71,223 (1998). After the Decem- ber correction notice, EPA


sixty days for comments on this and other issues. In EPA's  May 1999
response to the comments, EPA, for the first time,  discussed why the
change was necessary and offered a justifi- cation largely based on
recent changes in the electric power  industry. See Responses to the
2007 Baseline Sub-Inventory  Information and Significant Comments for
the Final NOx SIP  Call 10-12 (May 1999) ("Responses to Final


As to the statement in the May 1998 supplemental notice  that EPA
claims constitutes notice, this statement was given  in EPA's
discussion of how the core group of sources for the  model trading
rule should be defined, and not in the context  of a discussion about
the general distinction between EGUs  and non-EGUs for the purposes of
calculating state budgets.  Cf. Small Refiner Lead Phase-Down Task
Force v. EPA, 705  F.2d 506, 550 (D.C. Cir. 1983). Moreover, EPA also
explicitly  observed in the same May notice discussion about the model
 trading rule that "[m]any of the definitions ... are the same  as
those used in ... the Acid Rain Program regulations, in  order to
maintain consistency among programs." Supple- mental Notice of
Proposed Rule, 63 Fed. Reg. at 25,923.  Given the vague and
conflicting signals that EPA was send- ing, it is an exaggeration to
state that some general "theme"  of the regulatory consequences of
deregulation of the utility  industry throughout rulemaking meant that
EPA's last- minute revision of the definition of EGU should have been 
anticipated by industrial boilers as a "logical outgrowth" of  EPA's
earlier statements. See American Water Works  Ass'n. v. EPA, 40 F.3d


EPA contends that even assuming that CIBO did not have  adequate notice
and opportunity to comment on the EGU  definition, the error has been
cured because it reopened the  comment period on this issue after its
announcement of the  revision. See Correction Notice to Final Rule, 63
Fed. Reg.  at 71,221-23. This response is to no avail. During the new 
comment period, some commenters complained that there had  not been
sufficient notice and opportunity to comment on the  EGU redefinition.
See Responses to Final Comment, at 12.  EPA's response to this charge
primarily relied on the claim 


that there had been adequate notice prior to the redefinition,  see
id., and we have already rejected that argument.


Therefore, we conclude EPA did not provide sufficient  notice and
opportunity to comment for its redefinition of  EGUs and remand the
rulemaking to EPA for further consid- eration in light of this


C. INGAA


Interstate Natural Gas Association of America ("INGAA"),  a trade
association that represents major interstate natural  gas transmission
companies in the United States, contends  that EPA did not provide
adequate notice and opportunity to  comment on the control level
assumed for "large" stationary  internal combustion ("IC") engines in
its determination of  state NOx budgets. We agree.


EPA's NPRM in November 1997 assumed a 70% control  level for large IC
engines, see Proposed Rule, 62 Fed. Reg. at  60,354, after considering
and rejecting an 80% control level.  See id. at 60,348. Then, in the
supplemental notice in May  1998, EPA continued to assume the 70%
control level. See  Supplemental Notice of Proposed Rule, 63 Fed. Reg.
at  25,908. EPA stated in the same notice that it "intends to  further
analyze" control approaches for IC engines and said  that "[a]s the
above analyses are completed, EPA intends to  place them in the
docket." Id. at 25,909. EPA did not  present a new analysis until
September 4, 1998, when it  concluded that a 90% control level was
more appropriate for  large IC engines. See Technical Support Document
for Sta- tionary International Combustion Engines 2 (September 4, 
1998). When the rule was finally promulgated in October  1998, EPA
stated that it was assuming a 90% control level.  See Final Rule, 63


INGAA contends that EPA's switch from 70% to 90% for  large IC engines
was unanticipated and that EPA should  have allowed comments on the
issue. Considering EPA's  repeated affirmation of the 70% assumption
throughout rule- making and rejection of a higher, 80% assumption
earlier, a 


revision in its assumption less than one month before the final  rule
was promulgated hardly provided adequate notice, espe- cially given
the magnitude of the consequences of the pro- posed change on the
regulated bodies. Therefore, we remand  for further consideration on
this issue.8


In addition, INGAA challenges EPA's definition of large IC  engines.
EPA, in the final rule, distinguished between large  and small sources
by defining a "cutoff level." 63 Fed. Reg.  at 57,414. EPA assumed no
control for sources below the  cutoff level and defined small sources
as units with a capacity  less than or equal to 250 mmBtu/hr and with
emissions less  than or equal to one ton per day. See id. at 57,415.
EPA  added that "EPA is relying on a capacity approach first and a 
tons per day approach second (where a capacity data is not  available
or appropriate)" to define small sources. Id. at  57,416. Then, in the
December correction notice, EPA large- ly repeated the same
methodology for determining the cutoff  level, but added that "[a]
stationary internal combustion  engine and a cement plant were
determined to be 'large' if its  1995 average daily ozone season
emissions were greater than  one ton." Correction Notice to Final


INGAA contends that EPA did not follow its own standard  in the
correction notice and singled out IC engines and  cement plants
without explanation. Although EPA's various  statements on this issue
throughout rulemaking have not  always been very clear or entirely
consistent, EPA went  through an extensive comment period on this
issue, see Final  Rule, 63 Fed. Reg. at 57,415-17, and we agree with
EPA that  the change that INGAA criticizes for being arbitrary is 
merely a minor clarification that satisfies the reasonableness 




__________

n 8 INGAA further contends that, even putting aside the notice  issue,
the documents that EPA relies on do not support EPA's  assumption of
90% control level. Because we are remanding on the  basis of the
conclusion that there was inadequate notice, we do not  reach the
merits of the issue.


D. PP&L


1. EPA's Restrictions on Early Reduction Credits


PP&L, an electric utility that owns several generating  stations in
Pennsylvania, contends that EPA arbitrarily limit- ed the number of
"early reduction credits" ("ERCs"). We  disagree.


Under the SIP call, a source can generate ERCs if it  reduces its NOx
emissions before May 2003 to a level below  that is required by any
regulatory scheme. ERCs can then  be used to compensate for emitting
emissions above required  levels in a later time period. See Final
Rule, 63 Fed. Reg. at  57,430. EPA limited the amount of available
ERCs for each  state to the size of each state's compliance supplement
pool  ("CSP"). See id. at 57,474. The CSP is an additional allow- ance
of emissions that allows states to emit 200,000 tons of  NOx in the
2003-2004 ozone seasons over the state emissions  budgets. Id. at
57,428. EPA created the CSP in response to  the comments that if all
utilities had to install pollution  control equipment by May 1, 2003,
there might be disruptions  in electricity supply. See id. If a state
chooses to use the  CSP, it can either provide ERCs or distribute the
allowances  to sources that demonstrate a need for the compliance
supple- ment. See id. at 57,429-30.


PP&L contends that imposing this limit on the number of  ERCs is
arbitrary and capricious because placing any limit on  ERCs is
environmentally counterproductive. We do not find  this contention
persuasive. EPA noted during the comment  period that ERCs, although
generally beneficial, can be costly  in that they allow states to
exceed their budgets. See Re- sponses to Significant Comments on the
Proposed Finding of  Significant Contribution and Rulemaking for
Certain States  in the Ozone Transport Assessment Group (OTAG) Region 
for Purposes of Reducing Regional Transport of Ozone 346  (September
1998) ("Responses to Comments"). EPA noted  further that the CSP, by
establishing a cap on the number of  allowances to be distributed,
limited such potential costs. Id.  EPA's decision is thus


PP&L also contends that EPA has not demonstrated why  the "flow control
mechanism" is not sufficient to address its  concern. Under the flow
control mechanism, the use of  banked allowances exceeding 10% of the
emissions budget for  sources in the trading program is either flatly
prohibited or  discouraged by discounting the value of ERCs used as
such,  and states can choose between either method. See Final  Rule,
63 Fed. Reg. at 57,431-32. This complaint by PP&L  overlooks the fact
that EPA included the flow control mecha- nism in the regulatory
scheme "[a]s a final safeguard limiting  the impact of additional
allowances eligible for banking in the  system." Responses to
Comments, at 346. Therefore, it was  a safeguard created in addition
to the CSP limitation. It was  within EPA's discretion to devise
multiple limitations to con- tain the environmental cost of ERCs.


PP&L further contends that, even if it is rational for EPA  to place a
limit on the amount of ERCs, EPA's choice of  setting the limit at the
same amount as the CSP is arbitrary  and capricious. This contention
fails as well. The record  shows that EPA allowed ERCs merely as a
mechanism for  managing the CSP, not as an independent program with a 
purpose separate from that of the CSP. See Final Rule, 63  Fed. Reg.
at 57,428-33. Therefore, EPA's decision to limit  the amount of ERCs
to the size of the CSP was reasonable.


2. Emissions Multiplier for Low Mass Emission Units


PP&L also contends that EPA arbitrarily required "low  mass emission
units" ("LMEUs") to use a 15% multiplier to  calculate their
emissions. We disagree.


EPA allows LMEUs either to use a generic default NOx or  to determine a
unit-specific NOx emission rate by conducting  a stack test once every
five years. Because EPA found that  the stack test results can vary by
15% or more depending on  atmospheric conditions, EPA requires an LMEU
to calculate  its emissions rate by adding 15% to the stack test
result. See  Final Rule, 63 Fed. Reg. at 57,490.


PP&L contends that this is unreasonable because EPA has  stated that
the testing would likely underestimate emissions 


during cooler less humid conditions. See id. PP&L reasons  that because
the SIP call applies only during summer seasons  (when ozone forms),
that the stack test underestimates emis- sions during the winter
cannot justify the 15% multiplier.  This contention is to no avail.
Because the record contains  evidence that NOx rates determined by the
stack test can  vary widely even during the ozone season, EPA's
decision was  reasonable. See Docket A-97-35, Item IV-A-1 at 43-54 
(August 26, 1998).


Conclusion


We vacate EPA's final rule with respect to Wisconsin,  Missouri, and
Georgia (see Part II.A-B). These cases are  remanded for further
consideration in light of this opinion.  We hold that EPA failed to
provide adequate notice of a  change in the definition of an electric
generating unit (see  Part IV.B.5), and that EPA did not provide
adequate notice of  a change in the control level assumed for large
stationary  internal combustion engines (see Part IV.C). These cases
are  also remanded.


In all other respects, the petitions for review are denied.


So ordered.


Sentelle, Circuit Judge, dissenting: Unlike the majority's  journey
through this regulatory scheme, mine is neither  lengthy nor complex,
because I get off at the first stop. In  promulgating the regulations
at issue, EPA purported to  exercise the authority Congress conferred
upon it to enforce  the requirements of 42 U.S.C. s
7410(a)(2)(D)(i)(I) which  empowers the Administrator to police the
contents of State  Implementation Plans ("SIPs"), specifically to
ensure that  such plans contain


adequate provisions ... prohibiting ... any source or  other type of
emissions activity within the State from  emitting any air pollutant
in amounts which will ...  contribute significantly to nonattainment
in, or interfere  with maintenance by, any other State with respect to
any  such national primary or secondary ambient air quality 
standard.... 


42 U.S.C. s 7410(a)(2)(D)(i)(I) (1994) (emphasis added). EPA  is a
federal agency--a creature of statute. It has no constitu- tional or
common law existence or authority, but only those  authorities
conferred upon it by Congress. If there is no  statute conferring
authority, a federal agency has none. The  only statute upon which EPA
purports to rely in the current  controversy is s 7410(a)(2)(D)(i)(I).
That section provides  authority for EPA to require States to act in a
certain fashion  based upon the presence of sources or activities
which emit  "pollutants in amounts which will ... contribute
significantly  to nonattainment." It would appear to me that Congress 
clearly empowered EPA to base its actions on amounts of  pollutants,
those amounts to be measured in terms of signifi- cance of
contribution to downwind nonattainment. Instead,  EPA has chosen,
doubtless in the pursuit of beneficent ends,  to assert authority to
require the SIPs to contain provisions  based not on the amounts of
pollutants, nor even on the  relative significance of the
contributions of such pollutants to  downwind nonattainment, but on
the relative cost effective- ness of alleviation. I agree with the
State petitioners that it  is undeniable that EPA has exceeded its


We have before had occasion to remind EPA that its  mission is not a
roving commission to achieve pure air or any  other laudable goal. In
American Petroleum Institute v.  United States EPA, 52 F.3d 1113 (D.C.
Cir. 1995), we re- viewed an EPA rule requiring that thirty percent of
the  oxygen in reformulated gasoline be derived from renewable 
sources, such as ethanol. The statutory authority under  which EPA
operated, 42 U.S.C. s 7545(k)(1) empowered EPA  to promulgate
regulations achieving "the greatest reduction  in emissions of ozone
forming volatile organic com- pounds...." 42 U.S.C. s 7545(k)(1).
Although EPA ad- vanced commendable goals of economic benefit for its
inclu- sion of the additional goal of ethanol market protection, we 
struck down the overreaching and reminded EPA that "it is  axiomatic
that an administrative agency's power to promul- gate legislative
regulations is limited to the authority delegat- ed by Congress." API,
52 F.3d at 1119 (quoting Bowen v.  Georgetown Univ. Hosp., 488 U.S.


Similarly, in Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir.  1995), we
considered EPA's denial of a Clean Air Act waiver  application based
on health considerations. We did not sug- gest that EPA acted in bad
faith or that health considerations  were not important, but we
repaired to the statutory grant of  authority in 42 U.S.C. s
7545(f)(4), which based the Adminis- trator's authority to deny waiver
solely on the property of an  additive to "cause or contribute to a
failure of any emission  control device or system...." 42 U.S.C. s
7545(f)(4). We  again granted the petition for review of the
Administration's  action, reminding EPA that where "the plain language
of a  provision makes it clear that ... decisions are to be based on 
one criterion, the EPA cannot base its decision on other  criteria,"
even on a criterion as laudable as the health of the  public. Ethyl


For all the majority's discussion of inconsistent arguments  by States
and the possibility of taking costs into account  elsewhere raised by
the Administration and adopted by the  majority, I do not see why the
present controversy does not  fall squarely within the four corners of
API and Ethyl Corp. 


Congress set forth one criterion: the emission of an amount  of
pollutant sufficient to contribute significantly to downwind 
nonattainment. EPA adopted a different criterion: the cost 
effectiveness of alleviation. I would remind the agency once  more of
the lessons of API and Ethyl Corp., allow the  petitions for review,


The majority makes a fundamental mistake by divorcing  the adverb
"significantly" from the verb it modifies, "contrib- ute." The
majority compounds its error by divorcing signifi- cantly from the
rest of the statutory provision in issue. Maj.  Op. at 19-23. By
focusing on "significance" or what it means  to be "significant," the
majority ignores the fact that the  statute permits EPA to address
that which is "contribut[ed]  significantly." 42 U.S.C. s
7410(a)(2)(D)(i)(I) (emphasis add- ed). And what should EPA look for
as being contributed  significantly? Congress clearly answered that
question for  the agency as being an "amount" of an "air pollutant."
Id.  Considering that Congress expressly gave EPA authority  with
regard to "any air pollutant in amounts which will ...  contribute
significantly to nonattainment ...," id. (emphasis  added), I marvel
at an interpretation that permits cost effec- tiveness to find a place
in a statutory provision addressing  amounts of air pollutant
contribution. While the contribution  must affect nonattainment
significantly, no reasonable read- ing of the statutory provision in
its entirety allows the term  significantly to springboard costs of
alleviation into EPA's  statutorily-defined authority. Given s
7410(a)(2)(D)(i)(I)'s  mandate as a whole, it becomes clear that EPA
and the  majority have to contort the statute's language by isolating 
the term significantly and ignoring the terms air pollutant,  amounts,
and contribute in order to work cost considerations  into the statute.
I just cannot agree with such an unusual  exercise in statutory


I see nothing in Chevron U.S.A. Inc. v. NRDC, Inc., 467  U.S. 837
(1984), that either compels or counsels the majority's  result. EPA
argues that Congress did not define significant  contribution. True,
it did not. Neither did it define amount.  But neither EPA nor the
majority have offered any reason- able interpretation of those words
which makes them depend 


upon or even relate to the cost effectiveness of alleviation.1  EPA
comes close to arguing: Congress has not expressly  forbidden us to
use this criterion, therefore we may use it.  As we said in Ethyl


To suggest, as the [EPA] effectively does, that Chevron  step two is
implicated any time a statute does not  expressly negate the existence
of a claimed administra- tive power ..., is both flatly unfaithful to
the principles  of administrative law ... and refuted by precedent.


51 F.3d at 1060. Because the majority's deference to EPA's 
unreasonable statutory interpretation as couched in the agen- cy's
scurrilous "second-step" cost effectiveness analysis ven- tures off
track, as I said, I am getting off at the first stop.


Because I would invalidate the regulatory scheme before us  at its
inception, I will not address the subsidiary issues  pursued by my
colleagues.




__________

n 1 Contrary to the suggestion of the majority, neither of the cases 
cited by the majority bear any implication that the cost of alleviat-
ing or otherwise dealing with risk expressed as a noun or a verb has 
any effect upon the definition of "significant" or "significantly"
used  as an adjective or adverb modifying that noun or verb. The
portion  of Industrial Union Department v. American Petroleum
Institute,  448 U.S. 607, 655 (1980) (plurality opinion) quoted by the
majority  to the effect "that a 'significant' risk ... is not a
mathematical  straitjacket," (Maj. Op. at 20) does not deal in any
fashion with the  cost of alleviation. Rather, Justice Stevens in that
opinion was  contrasting the significance of a one-in-a-billion chance
of cancer  from drinking chlorinated water against the
one-in-a-thousand risk  that regular inhalation of certain
benzene-containing vapors would  be fatal. Obviously, the
"significance" of the risk deals with its  importance, not the cost of
its alleviation. Equally off point is  International Union, United
Auto Workers v. OSHA, 37 F.3d 665,  668-69 (D.C. Cir. 1994), which
concerned the cost-effectiveness of  alleviating measures directed at
risk theretofore determined to have  been significant, not with the
use of cost-effectiveness in determin- ing the significance of the