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

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

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