Air v. Usepa

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ASSOCIATION OF IRRITATED No. 13-73398

RESIDENTS, a California non-profit

corporation,

Petitioner, OPINION

v.

U.S. ENVIRONMENTAL PROTECTION

AGENCY; GINA MCCARTHY, in her

official capacity as Administrator of

the U.S. Environmental Protection

Agency; JARED BLUMENFELD, in his

official capacity as Regional

Administrator for region IX of the

U.S. Environmental Protection

Agency,

Respondents,

FOSTER POULTRY FARMS; FOSTER

FARMS LLC; DAIRY CARES; SAN

JOAQUIN VALLEY UNIFIED AIR

POLLUTION CONTROL DISTRICT; AIR

COALITION TEAM,

Respondents-Intervenors.

2 ASS’N OF IRRITATED RESIDENTS V. EPA

On Petition for Review of an Order of the

Environmental Protection Agency

Argued and Submitted

February 10, 2015—San Francisco, California

Filed June 23, 2015

Before: Mary M. Schroeder, Senior Circuit Judge, Barry

G. Silverman, Circuit Judge, and Marvin J. Garbis, Senior

District Judge. *

Opinion by Judge Garbis

SUMMARY **

Environmental Law

The panel denied a petition for review brought by the

Association of Irritated Residents seeking review of the

United States Environmental Protection Agency’s

promulgation of 40 C.F.R. § 52.245 under § 110(k)(6) of

the Clean Air Act, an error-correcting provision, after the

EPA determined that it had mistakenly approved certain

*

The Honorable Marvin J. Garbis, Senior United States District

Judge for the District of Maryland, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

ASS’N OF IRRITATED RESIDENTS V. EPA 3

New Source Review rules in 2004 as part of California’s

State Implementation Plan.

The panel held that the EPA was not arbitrary, nor did it

abuse its discretion, in correcting the prior approval of the

New Source Review rules after it learned that California

law, California Senate Bill 700, did not authorize the San

Joaquin Air Control District to require new source permits

or emissions for minor agricultural sources. The panel

further held that because those rules conflicted with state

law, they should not have been incorporated into the State

Implementation Plan, and the EPA did not act improperly

in correcting its prior approval.

The panel held, as a matter of first impression, that the

EPA reasonably interpreted § 110(k)(6) of the Clean Air

Act to grant the EPA authority to amend retroactively its

approval of the 2004 New Source Review rules.

COUNSEL

Brent Newell (argued), Center on Race, Poverty & the

Environment, Oakland, California; Sofia Parino, Center on

Race, Poverty & the Environment, San Francisco,

California, for Petitioners.

Robert Dreher, Acting Assistant Attorney General, and

Simi Bhat (argued), Environmental Defense Section,

Environmental & Natural Resources Division, United

States Department of Justice, Washington, D.C.; Jefferson

Wehling, United States Environmental Protection Agency,

Region IX, Office of Regional Counsel, San Francisco,

California; Scott Jordan, United States Environmental

4 ASS’N OF IRRITATED RESIDENTS V. EPA

Protection Headquarters, Office of General Counsel,

Washington, D.C., for Respondents.

Philip M. Jay (argued), Rissa A. Stuart, and Ann M.

Grottveit, Kahn, Soares & Conway, LLP, Sacramento,

California, for Respondent-Intervenor Air Coalition Team.

David E. Cranston and Sedina L. Banks, Greenberg

Glusker Fields Claman & Machtinger LLP, Los Angeles,

California, for Respondent-Intervenor Dairy Cares.

Timothy S. Bishop (argued), Mayer Brown LLP, Chicago,

Illinois; Carmine R. Zarlenga, Michael B. Kimberly, and

Matthew A. Waring, Mayer Brown LLP, Washington,

D.C., for Respondents-Intervenors Foster Farms, LLC and

Foster Poultry Farms, Inc.

Catherine T. Redmond, Special Advisory Counsel, and

Annette Ballatore-Williamson (argued), District Counsel,

San Joaquin Valley Unified Air Pollution Control District,

Fresno, California, for Respondent-Intervenor San Joaquin

Valley Unified Air Pollution Control District.

OPINION

GARBIS, District Judge:

Petitioner, Association of Irritated Residents (“AIR”),

petitions this court for review of the United States

Environmental Protection Agency’s (“EPA”) promulgation

of 40 C.F.R. § 52.245, a regulation that revised the scope of

a previous EPA decision. The EPA promulgated the

regulation under § 110(k)(6) of the Clean Air Act (“CAA,”

ASS’N OF IRRITATED RESIDENTS V. EPA 5

“Act”), an error-correcting provision, after the Agency

determined that it had mistakenly approved certain New

Source Review rules in 2004 as part of California’s State

Implementation Plan.

This case requires the court to address two matters.

First, this court must decide whether the EPA reasonably

determined that it made the error. This court holds that the

EPA was not arbitrary, nor did it abuse its discretion in

correcting its prior approval of the New Source Review

rules after it learned that California law, specifically Senate

Bill 700, did not authorize the San Joaquin Air Control

District to require new source permits or emissions offsets

for minor agricultural sources. Because those rules

conflicted with state law, they should not have been

incorporated into the State Implementation Plan in 2004;

thus, the EPA did not act improperly in correcting its prior

approval.

Second, as a matter of first impression, this court must

decide whether § 110(k)(6) of the CAA grants the EPA

authority to amend retroactively its approval of the 2004

New Source Review rules. Petitioner argues that the other

enumerated actions in § 110(k) strictly limit the EPA’s

methods of revising an error. Using the standard set forth

in Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984), we find that § 110(k)(6)

does not clearly speak to the issue at hand. In light of this

ambiguity, the EPA reasonably interpreted § 110(k)(6)’s

requirement that the EPA “revise such [erroneous] action as

appropriate” to encompass a retroactive limitation of its

previous approval. Accordingly, we deny the petition for

review.

6 ASS’N OF IRRITATED RESIDENTS V. EPA

I. Background

A. The Clean Air Act

Congress enacted the CAA amendments in 1970 “to

protect and enhance the quality of the Nation’s air

resources so as to promote the public health and welfare

and the productive capacity of its population.” 42 U.S.C.

§ 7401(b)(1). At that time, Congress also created the EPA

and charged it with setting National Ambient Air Quality

Standards (“NAAQS”) for various harmful air pollutants at

levels necessary to protect the public health and welfare.

42 U.S.C. §§ 7408, 7409. The EPA must designate areas

for each NAAQS as attainment (it meets the EPA-set

pollutant level), nonattainment (it does not meet the EPA-

set pollutant level), or unclassifiable. 42 U.S.C.

§ 7407(d)(1). The EPA is charged with assuring

compliance with environmental laws and taking

enforcement action against violations. See 42 U.S.C.

§ 7413(a), (b).

Under the CAA, the EPA works with the states

pursuant to a model of cooperative federalism to achieve

the statute’s environmental goals. Vigil v. Leavitt, 381 F.3d

826, 830 (9th Cir. 2004). The Act delegates to the states

“primary responsibility for assuring air quality” within their

respective boundaries and requires each state to develop a

State Implementation Plan (“SIP”), “which will specify the

manner in which [the NAAQS] will be achieved and

maintained.” 42 U.S.C. § 7407(a). In California’s San

Joaquin Valley, the San Joaquin Valley Unified Air

Pollution Control District (the “District”) promulgates and

enforces regulations to meet the standards set by the EPA.

A state submits its SIP to the EPA for review and approval

whenever the NAAQS are updated. 42 U.S.C. § 7410(a).

Once an adequate SIP (one that meets the Act’s

ASS’N OF IRRITATED RESIDENTS V. EPA 7

requirements) is approved by the EPA, it has “the force and

effect of federal law.” Safe Air for Everyone v. EPA, 488

F.3d 1088, 1091 (9th Cir. 2007). The CAA requires states

to give the EPA “necessary assurances” that state law

authorizes the air control districts to carry out any rules

contained in the SIP. 42 U.S.C. § 7410(a)(2)(E).

In 1977, Congress enacted the CAA’s New Source

Review (“NSR”) program “to strengthen the safeguards

that protect the nation’s air quality.” New York v. EPA,

413 F.3d 3, 10 (D.C. Cir. 2005). The NSR program

requires new and modified major sources, 1 in non-

attainment areas, to acquire construction permits, install

Best Available Control Technology (“BACT”), and

purchase offsets from other sources (emission reductions).

42 U.S.C. §§ 7502(c), 7503(a). A minor source is subject

to the EPA regulations, although it is not required to have

NSR permits for all construction activities. A minor source

is not subject to offset requirements unless the state

chooses to establish them as part of the SIP.

B. California’s Implementation of the Clean Air

Act

California’s Central Valley, which includes the San

Joaquin Valley, has, and at all times relevant hereto, had, a

major air pollution problem. In 2004, the EPA designated

1

A major source is defined as a source that emits above a threshold

level of any air pollutant. See, e.g., 42 U.S.C. § 7511a(e) (designating a

source as major when it has the potential to emit at least ten tons of

volatile organic compounds a year). A minor source is one that is not

major.

8 ASS’N OF IRRITATED RESIDENTS V. EPA

the San Joaquin Valley as a non-attainment area for the 8-

hour ozone standard. See 69 Fed. Reg. 23,858, 23,889

(Apr. 30, 2004).

Ground-level ozone (aka smog) forms when volatile

organic compounds (“VOCs”) react with nitrogen oxides in

the presence of heat and sunlight during the summer.

Ozone pollution causes serious health problems, including

damaging lung tissue and exacerbating asthma and other

respiratory diseases. 69 Fed. Reg. at 23,859–60.

The District estimated that, even with air pollution

controls, confined animal facilities were among the largest

sources of VOCs in the Valley. Nevertheless, California’s

former California Health & Safety Code § 42310(e)

exempted agricultural operations, including those that

would be considered major sources under the CAA, from

the NSR permit obligations until 2003. Due to this blanket

exemption, the EPA would not accept the District’s

proposed NSR Rules to the SIP because California could

not “give necessary assurances” that it had authority under

state law to carry out the SIP. See 68 Fed. Reg. 37,746,

37,747 (June 25, 2003).

In order to avoid sanctions and loss of federal highway

funding, the California legislature passed Senate Bill 700

(“SB 700”) in September 2003, which removed the blanket

exemption that had previously excused all agricultural

sources from the CAA’s NSR requirements. California

state law then required major agricultural sources to meet

the pollution controls required by the CAA and the

proposed NSR Rules. However, SB 700 retained narrow

ASS’N OF IRRITATED RESIDENTS V. EPA 9

exemptions 2 that excused certain minor agricultural sources

from NSR permitting and offset requirements.

Around this same time, the EPA considered District

Rules 2020 and 2201 (the “2004 NSR Rules”), which the

District had submitted in 2002 to the EPA for approval.

The 2004 NSR Rules required new source permits and

offset requirements for all new and modified stationary

sources of air pollution, whether major or minor. See

68 Fed. Reg. 7,330, 7,331 (Feb. 13, 2003). In evaluating

the 2004 NSR Rules, the EPA failed to realize that the

Rules conflicted with SB 700, which continued to exempt

certain minor agricultural sources. The EPA approved the

2004 NSR Rules – sans exemptions for minor agricultural

sources – which became effective on June 16, 2004. See

69 Fed. Reg. 27,837 (May 17, 2004).

Beginning in 2005, AIR filed three citizen suits 3 in the

Eastern District of California against dairy farms that were

minor agricultural sources under the CAA. See Assoc. of

Irritated Residents v. C & R Vanderham Dairy, No. 05-

01593 (E.D. Cal. Dec. 15, 2005) (“Vanderham”); Assoc. of

Irritated Residents v. Fred Schakel Dairy, No. 05-00707

(E.D. Cal. June 1, 2005); Assoc. of Irritated Residents v.

Foster Farms, LLC, No. 06-01648 (E.D. Cal. Nov. 15,

2006). AIR alleged that the dairies violated the 2004 NSR

Rules by not obtaining a permit, purchasing offsets, or

2

Cal. Health & Safety Code § 42301.18(c) (“Offset Provision”). See

also Cal. Health & Safety Code § 39011.5(b) ,(c) (“Savings Clauses”).

3

An approved SIP may be enforced by citizens in federal court as

well as by the EPA. 42 U.S.C. § 7604(a).

10 ASS’N OF IRRITATED RESIDENTS V. EPA

installing BACT. See, e.g., Vanderham, 2007 WL

2815038, at *1 (E.D. Cal. Sept. 25, 2007). In Vanderham,

the district court granted summary judgment in favor of

AIR and held that the defendants violated the 2004 NSR

Rules. Id. at *29.

C. The EPA’s Error

After the Vanderham decision, the EPA realized that it

had made an error in approving the 2004 NSR Rules,

because the District did not have authority under SB 700 to

enforce the permit and offset provisions of those Rules

against certain minor agricultural sources. Specifically, the

EPA found that the District did not have authority under

SB700 “to require permits for new or modified minor

agricultural sources with actual emissions less than 50

percent of the major source threshold or to require new

minor agricultural sources or minor modifications to

agricultural sources to obtain emission reduction offsets.”

See 78 Fed. Reg. 46,504, 46,505-06 (Aug. 1, 2013); Cal.

Health & Safety Code §§ 42301.16, 42301.18(c).

However, the CAA requires SIP revisions to be supported

by necessary assurances from the State that the District will

have adequate authority under State law to carry out the

revised SIP. See 78 Fed. Reg. at 46, 511; 42 U.S.C.

§ 7410(a)(2)(E).

In 2008 and 2009, California submitted SIP revisions to

amend the 2004 NSR Rules to include the state law

exemptions. In 2010, the EPA proposed a rule that would

modify its 2004 approval and correct the mismatch between

state law and the SIP. See 75 Fed. Reg. 4,745 (Jan. 29,

2010). The new 2010 NSR Rules, complete with the state

exemptions, replaced the 2004 NSR Rules and were

incorporated into the SIP. See 75 Fed. Reg. 26,102 (May

11, 2010). However, this fix was only prospective and did

ASS’N OF IRRITATED RESIDENTS V. EPA 11

not eliminate the mismatch between the SIP and state law

that existed from 2004 to 2010.

To correct this error retroactively, the EPA relied on

§ 110(k)(6) of the CAA which states:

Whenever the Administrator determines that

the Administrator’s action approving,

disapproving, or promulgating any plan or

plan revision (or part thereof), . . . was in

error, the Administrator may in the same

manner as the approval, disapproval, or

promulgation revise such action as

appropriate without requiring any further

submission from the State. Such

determination and the basis thereof shall be

provided to the State and public.

42 U.S.C. § 7410(k)(6). Specifically, the EPA proposed

correcting its error by amending its previous approval of

the 2004 NSR Rules so that the approval was limited to be

consistent with state law. 78 Fed. Reg. at 46,506. The EPA

considered a retroactive limited approval to be the most

appropriate response because it was a “narrowly tailored”

approach that retained most of the pollution control aspects

of the 2004 NSR Rules but still remedied the mismatch

between the SIP and state law. See 78 Fed. Reg. at 46,511.

In light of this proposed action, the district court stayed the

Vanderham and other citizen suits cases pending judicial

review of the EPA’s final action. See Vanderham, 2008

WL 678590, at *2 (E.D. Cal. Mar. 11, 2008); Fred Schakel

Dairy, 634 F. Supp. 2d 1081, 1096 (E.D. Cal. 2008); Foster

Farms, 06-1648, Minute Order (E.D. Cal. Aug. 13, 2013)

(No. 66).

12 ASS’N OF IRRITATED RESIDENTS V. EPA

Before the EPA finalized its error correction in 2013, it

requested the California Attorney General to interpret SB

700 and its bearing on the District’s authority to require

permits and offsets from minor agricultural sources. In two

letters, the Attorney General confirmed the EPA’s view

that SB 700 did not give the District authority to apply the

2004 NSR Rules to certain minor agricultural sources or

require offsets.

The EPA then revised the scope of its 2004 approval,

78 Fed. Reg. at 46,511, and promulgated the final rule

limiting its 2004 approval to cover only the air pollution

controls allowed by state law. See 40 C.F.R. § 52.245. The

new regulation states:

(a) Approval of the [2004] New Source

Review rules for the San Joaquin Valley

Unified Air Pollution Control District Rules

2020 and 2201 as approved on May 17,

2004 in § 52.220(c)(311)(i)(B)(1), and in

effect for Federal purposes from June 16,

2004 through June 10, 2010, is limited, as it

relates to agricultural sources, to the extent

that the permit requirements apply:

(1) To agricultural sources with potential

emissions at or above a major source

applicability threshold; and

(2) To agricultural sources with actual

emissions at or above 50 percent of a

major source applicability threshold.

(b) Approval of the [2004] New Source

Review rules . . . is limited, as it relates to

agricultural sources, to the extent that the

ASS’N OF IRRITATED RESIDENTS V. EPA 13

emission offset requirements apply to major

agricultural sources and major modifications

of such sources.

40 C.F.R. § 52.245. The error correction was in the form

of notice-and-comment rulemaking, the same procedure the

EPA had used to approve the 2004 rules.

D. The Instant Lawsuit

AIR challenges the EPA’s promulgation of 40 C.F.R.

§ 52.245, the regulation that corrected the EPA’s approval

of the 2004 NSR rules, on two grounds. First, AIR claims

that § 110(k)(6) of the CAA authorizes the EPA to correct

only its own erroneous approval or disapproval and does

not give the EPA authority retroactively to limit or amend a

SIP. Second, AIR asserts that even if the EPA has

authority retroactively to revise its approval of the 2004

SIP, it did not need to correct the approval because (a) the

plain meaning of SB 700 does not exempt minor

agricultural sources from obtaining permits and offsets

under the District Rules and (b) the Savings Clauses grant

the District with the authority to regulate minor agricultural

sources regardless of the other provisions. AIR requests

that this court vacate 40 C.F.R. § 52.245. The following

Intervenors, representing various agricultural interests,

organizations and an air pollution control district, appear on

the EPA’s behalf: Air Coalition Team (“ACT”), Dairy

Cares, Foster Farms, LLC, Foster Poultry Farms, and San

Joaquin Valley Unified Air Pollution Control District.

14 ASS’N OF IRRITATED RESIDENTS V. EPA

Petitioner filed a petition for review of the EPA’s

promulgation of 40 C.F.R. § 52.245 in this court on

September 27, 2013. This court has jurisdiction under the

CAA § 307(b)(1), 42 U.S.C. § 7607(b)(1). 4

II. Discussion

A. Standard of Review

The CAA does not specify a standard of review of the

EPA actions. Therefore, this court reviews the EPA’s

action under the standard set forth in the Administrative

Procedure Act (“APA”). Sierra Club v. EPA, 671 F.3d

955, 961 (9th Cir. 2012).

Section 706 of the APA provides that a court may

reverse an agency action found to be “arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with

4

Intervenors ACT and Foster Farms contend that AIR’s individual

members do not have standing because (a) their injuries are not “fairly

traceable” to the EPA’s action and (b) vacating the EPA’s finalized

error correction will not redress their injuries. This court finds that

both causation and redressability are established for purposes of this

suit and thereby rejects the Intervenors’ challenge. In light of studies

which show that dairy and poultry facilities greatly contribute to the

amount of VOCs in the Valley, it stands that AIR’s members’ injuries

are enhanced by the EPA’s rule, which retroactively lessens the

controls on pollution-emitting agricultural sources. Also, were it not

for the EPA’s proposed correction, AIR would have been able to

continue with its citizen suits enforcing the 2004 NSR Rules.

Therefore, this court concludes that the Petitioners have standing to

challenge the EPA’s promulgation of 40 C.F.R. § 52.245. See, e.g.,

WildEarth Guardians v. EPA, 759 F.3d 1064, 1072 (9th Cir. 2014);

Sierra Club v. EPA, 762 F.3d 971, 977 (9th Cir. 2014).

ASS’N OF IRRITATED RESIDENTS V. EPA 15

law.” 5 U.S.C. § 706(2)(A). When applying this standard,

the court does not “substitute its judgment for that of the

agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); Nw.

Ecosystem Alliance v. United States Fish & Wildlife Serv.,

475 F.3d 1136, 1140 (9th Cir. 2007). Instead, this court

“consider[s] whether the decision was based on a

consideration of the relevant factors,” Citizens to Preserve

Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), and

whether the agency articulated a “rational connection

between the facts found and the choice made,” Burlington

Truck Lines v. United States, 371 U.S. 156, 168 (1962).

When reviewing the EPA’s interpretation of

§ 110(k)(6) of the CAA, this court applies the two-step

analysis provided in Chevron U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 842–43 (1984). First, the

court must decide whether Congress has unambiguously

and “directly spoken to the precise question at issue.” Id. at

842. If so, this court will give effect to the congressional

intent expressed in the statute. Id. at 842–43. To discover

“the plain meaning of the statute, the court must look to the

particular statutory language at issue, as well as the

language and design of the statute as a whole.” K Mart

Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988). If,

however, “the statute is silent or ambiguous with respect to

the specific issue, the question for the court is whether the

agency’s answer is based on a permissible construction of

the statute.” Chevron, 467 U.S. at 843. “EPA’s

interpretation of its own regulations is given considerable

deference and ‘must be given controlling weight unless it is

plainly erroneous or inconsistent with the regulation.’”

Comm. for a Better Arvin v. EPA, — F.3d —, No. 11-

73924, 2015 WL 2384556, at *3 (9th Cir. May 20, 2015)

16 ASS’N OF IRRITATED RESIDENTS V. EPA

(quoting Thomas Jefferson Univ. v. Shalala, 512 U.S. 504,

512 (1994)).

B. The EPA’s Error Determination

We begin our inquiry by determining whether the EPA

made an error that needed to be corrected. We ask whether

the EPA acted arbitrarily or capriciously, abused its

discretion, or contradicted the CAA when it decided there

was a mismatch between state law and the SIP. See

5 U.S.C. § 706(2)(A). According to AIR, the District did

have authority under state law to carry out the 2004 SIP,

thus there was no mistake. The parties’ disagreement arises

out of conflicting interpretations of SB 700’s Offset

Provision and Savings Clauses.

In reviewing agency action pursuant to § 706:

Although we presume regulations to be

valid, our inquiry into their validity is a

“thorough, probing, in-depth review.”

...

To determine whether the agency action was

arbitrary and capricious, we must decide

whether the agency “considered the relevant

factors and articulated a rational connection

between the facts found and the choice

made.” An agency action must be reversed

when the agency has “relied on factors

which Congress has not intended it to

consider, entirely failed to consider an

important aspect of the problem, offered an

explanation for its decision that runs counter

to the evidence before the agency, or is so

ASS’N OF IRRITATED RESIDENTS V. EPA 17

implausible that it could not be ascribed to a

difference in view or the product of agency

expertise.” Our review of an agency

decision is based on the administrative

record and the basis for the agency’s

decision must come from the record. We

cannot substitute our judgment for that of

the agency.

Nat’l Ass’n of Home Builders v. Norton, 340 F.3d 835, 841

(9th Cir. 2003) (internal citations omitted). Thus, the court

will uphold the EPA’s action as long as the EPA employed

a rational, non-arbitrary process to determine if it had made

an error.

At the outset, we note that while our court is not

required to defer to the Attorney General, it need not

interpret SB 700 for itself as long as it determines that the

EPA did not clearly go against the plain meaning of the

statute. 5 The pertinent provisions of SB 700 are

5

ACT and the San Joaquin Valley District challenge this court’s

jurisdiction under 42 U.S.C. § 7607(b)(1) to hear AIR’s claims

involving the District’s, CARB’s, and the Attorney General’s

interpretation of SB 700. They claim that these types of challenges are

suited for a state forum and go beyond the scope of jurisdiction granted

in the CAA § 307. To the contrary, Congress granted this court broad

jurisdiction to hear challenges to “any other final action of the

Administrator,” 42 U.S.C. § 7607(b)(1), which encompasses issues of

state law involved in the EPA’s action. AIR is not required to exhaust

state law remedies before it can petition this court for review of the

EPA action.

18 ASS’N OF IRRITATED RESIDENTS V. EPA

ambiguous, and both the EPA and AIR provide permissible

interpretations. In light of this ambiguity, it was

appropriate and reasonable for the EPA to rely on the

interpretations of the Attorney General and the California

Air Resources Board (“CARB”) in its determination that

SB 700 provided certain exemptions that were not

accounted for in the 2004 NSR Rules. The EPA made a

“rational connection” between the state officials’

interpretations, the purposes of the CAA, and the choice it

made. See Burlington Truck Lines, 371 U.S. at 168.

The EPA insists that it made an error in its 2004

approval because there was a substantive mismatch

between the 2004 NSR Rules and state law, meaning that

the EPA had failed to get the “necessary assurances” that

the District had adequate “authority under State . . . law to

carry out” the SIP. See 42 U.S.C. § 7410(a)(2)(E); see

generally 78 Fed. Reg. 46,504 (Aug. 1, 2013). Both the

EPA and AIR offer logical readings of the SB 700

provisions at issue: the so-called Offset Provision and

Savings Clauses. Because there is more than one plausible

explanation, the wording of the statute is ambiguous. The

EPA gave adequate consideration to the relevant factors,

including the Attorney General’s interpretation, and arrived

at a rational conclusion on SB 700’s meaning; therefore,

the EPA’s error determination was not arbitrary or

capricious.

Even so, because we conclude that the EPA considered the

relevant factors and had a reasoned basis for concluding that SB 700

conflicted with the 2004 NSR Rules, there is no need for us to go

further and substantively interpret SB 700 for ourselves.

ASS’N OF IRRITATED RESIDENTS V. EPA 19

1. Interpretation of the Offset Provision

SB 700’s Offset Provision states:

A district may not require an agricultural

source to obtain emissions offsets for criteria

pollutants for that source if emissions

reductions from that source would not meet

the criteria for real, permanent, quantifiable,

and enforceable emission reductions.

Cal. Health & Safety Code § 42301.18(c).

According to the EPA, the Offset Provision exempts

minor agricultural sources from the emission offsets

requirement because minor agricultural sources did not

meet the statutory criteria during the time period that the

2004 NSR Rules were in effect. See 75 Fed. Reg. 4,745,

4,748 (Jan. 29, 2010). The minor sources did not meet the

criteria because, according to the EPA, the Attorney

General, and CARB, the words “real, permanent,

quantifiable, and enforceable emission reductions” referred

to the criteria for offset credit under the CAA. See

40 C.F.R. § 51.165(a)(3)(ii)(C)(1)(i) (to qualify for offset

credit, emissions reductions must be “surplus, permanent,

quantifiable, and federally enforceable”). Since minor

agricultural sources were not determined to meet these

criteria and were not eligible to receive offset credit for, or

bank, their emission reductions, they were not required to

purchase emissions offsets as an equitable matter. 78 Fed.

Reg. at 46,510. This led the EPA to conclude that the

Offset Provision did not grant the same authority to the

District as the exemption-free 2004 NSR Rules did.

According to AIR, the plain meaning of the Offset

Provision’s criteria requires agricultural sources to obtain

20 ASS’N OF IRRITATED RESIDENTS V. EPA

offsets when their emission reductions are SIP creditable,

not offset creditable. To support this contention, AIR

compares the words of the Offset Provision to the CAA’s

criteria for SIP credibility in the General Preamble for the

Implementation of Title I of the CAA. See 57 Fed. Reg.

13,498, 13,567–68 (Apr. 16, 1992) (suggesting principles

for a SIP strategy that includes “quantifiable” emissions,

“enforceable” measures, “replicable” measures, and an

“accountable” control strategy). AIR then argues that since

the EPA has approved SIP credit for emissions reductions

by several types of minor agricultural sources, those minor

agricultural sources meet the criteria of SB 700’s Offset

Provision and are thus compatible with the 2004 District

NSR Rules.

Because the listed criteria in the Offset Provision do not

correspond precisely with either the requirements of SIP

credibility or offset credibility, it is reasonable to interpret

the provision as requiring either one or even both. Since

the statute is ambiguous, as long as the EPA provides a

plausible and rational explanation for why it chose

interpretation X over interpretation Y, then the court must

uphold the EPA’s decision. See Bowman Transp., Inc. v.

Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)

(“[W]e will uphold a decision of less than ideal clarity if

the agency’s path may reasonably be discerned.”).

In reaching its final rule, the EPA spent several years

considering the issue of the interpretation of SB 700, issued

multiple notices, and accepted and responded to several

comments, but the EPA’s main source of support for its

decision was the Attorney General’s and CARB’s letters

interpreting the pertinent provisions of SB 700 in regard to

minor agricultural sources. 78 Fed. Reg. at 46,506,

46,509–10. Since the statute is ambiguous and technical, it

ASS’N OF IRRITATED RESIDENTS V. EPA 21

was rational for the EPA to request and accept the Attorney

General’s interpretation, especially since commenters,

including AIR, had requested that the EPA obtain the

Attorney General’s input. See 78 Fed. Reg. at 46,506. The

Attorney General’s second letter in March 2013, which

specifically addressed the application of the Offset

Provision to minor agricultural sources, stated that these

minor sources did not currently meet the criteria for “real,

permanent, quantifiable and enforceable emission

reductions,” so the statute “suspend[s] the duty of a minor

agricultural source to offset emissions from that source.”

Letter from Robert W. Byrne, Cal. Acting Sr. Asst. Attny.

Gen. to Jared Blumenfeld, EPA Regional Administrator, 1

(March 18, 2013). The letter stated that this position was

consistent with a CARB letter written in 2008. Id. at 2.

The 2008 CARB letter is the source of the EPA’s

argument that the Offset Provision’s “criteria” refer to

offset credit, not just SIP credit, as AIR argues.

Specifically the letter stated:

This limited exemption from the offset

requirement means that agricultural sources

that are not amenable to District prohibitory

rules or control measures that would qualify

for SIP credit—or that are unable to

generate emission reductions that would

qualify as offsets—because they fail to meet

one or more of the basic criteria for a

creditable rule or for offset credit cannot be

required to provide offsets.

Letter from James Goldstene, Exec. Officer, CARB to Air

Pollution Control Officers, 4 (Sept. 3, 2008) (emphasis

added). This interpretation reveals that the Offset

Provision’s criteria refer to both SIP creditability and offset

22 ASS’N OF IRRITATED RESIDENTS V. EPA

creditability. The EPA addressed this reading in its final

rule:

[T]he use of the conjunction “or” by CARB

in its discussion of [the Offset Provision] . . .

means that, under CARB’s interpretation,

even if SIP credit were approved for

prohibitory rules or control measures, new

or modified minor agricultural sources could

not be required to provide emission offsets if

they are unable to generate emission

reductions that would qualify as offsets.

78 Fed. Reg. at 46,510.

AIR argues that since the EPA had already approved

SIP credit for emissions reductions by agricultural sources,

it was arbitrary and capricious for the EPA to say those

sources do not meet the criteria under the Offset Provision.

AIR’s argument misses the point. Because the EPA

understands that the Offset Provision refers to both SIP-

credit and offset-credit requirements, it does not matter that

the EPA approved some minor agricultural sources for SIP

credit because those sources still do not meet the

requirements for offset credit. According to the EPA, none

of the sources mentioned by AIR receive offset credit for

the emission reductions required by the SIP. Therefore, the

EPA was not arbitrary or capricious in determining that the

District lacked the power under state law to require offsets

from minor agricultural sources from 2004–2010.

AIR argues that this court should not defer to the

California Attorney General’s interpretation of SB 700, nor

to CARB’s interpretation of the Offset Provision. If it were

clear from the plain meaning of the statute that the EPA’s

interpretation was erroneous or unreasonable, then it may

ASS’N OF IRRITATED RESIDENTS V. EPA 23

well have been erroneous for the EPA to defer to a clearly

wrong interpretation by the Attorney General. However,

that is not the situation presented by the instant case.

AIR seeks to rely on two decisions of this court, which

AIR states hold that this court does not have to defer to an

Attorney General’s opinion on state law. See Maldonado v.

Harris, 370 F.3d 945, 954 n. 5 (9th Cir. 2004); Virginia v.

Am. Booksellers Ass’n, Inc., 484 U.S. 383, 395, certified

question answered sub nom. Com. v. Am. Booksellers

Ass’n, Inc., 372 S.E. 2d 618 (Va. 1988). However, both

decisions concerned facial constitutional challenges to state

statutes that necessitated direct judicial review of the

statute, whereas the present case involves judicial review of

an agency’s use of the California Attorney General’s and

CARB’s informal interpretation of a state statute. See

Maldonado, 370 F.3d at 948 (involving First Amendment

challenge to California Outdoor Advertising Act); Am.

Booksellers Ass’n, Inc., 484 U.S. at 386 (interpreting the

scope of a Virginia statute prohibiting display of explicit

material in certain situations). Moreover, although the

court is not bound by the California Attorney General’s

opinion, the EPA may properly find an Attorney General’s

interpretation reasonable and persuasive.

Other circuits have applied the arbitrary and capricious

standard to the EPA’s reliance on an Attorney General’s or

agency’s interpretation of an ambiguous state law. In Ohio

Envtl. Council v. EPA, the Sixth Circuit held that the EPA’s

reliance on the Ohio Attorney General’s interpretation of

Ohio law was not arbitrary and capricious, particularly

because the petitioner did not take its challenge to the Ohio

state courts prior to the action. See 593 F.2d 24, 29 (6th Cir.

1979). The Sixth Circuit also held that the EPA’s

determination based on the Attorney General’s opinion was

24 ASS’N OF IRRITATED RESIDENTS V. EPA

“clearly consistent with its secondary role” in forming SIPs

under the CAA. Id.

Similarly, in Defenders of Wildlife v. EPA, the Tenth

Circuit addressed the EPA’s reliance on a letter from New

Mexico’s Water Quality Control Commission (“WQCC”)

when interpreting an ambiguous New Mexico state

regulation. 415 F.3d 1121, 1127–28 (10th Cir. 2005). The

EPA based its approval of the regulation on WQCC’s

interpretation. The Tenth Circuit held that the EPA was not

arbitrary or capricious in doing so. See id. at 1128 (“[T]he

EPA did not act arbitrarily and capriciously in approving

the regulation, particularly since the agency reserved the

right to revoke approval if New Mexico interpreted the

regulation in the future in a way that would not comply

with the [Clean Water Act].”).

In the instant case, the EPA’s reliance on the Attorney

General’s and CARB’s letters to interpret the ambiguous

provisions of SB 700 was not arbitrary, capricious, or

unlawful.

2. Interpretation of the Savings Clauses

The EPA and AIR interpret the Savings Clauses in SB

700 differently and disagree on whether there was an error

or mismatch that the EPA needed to correct. The Savings

Clauses provisions state:

Any district rule or regulation affecting

stationary sources on agricultural operations

adopted on or before January 1, 2004, is

applicable to an agricultural source.

Cal. Health & Safety Code § 39011.5(b).

ASS’N OF IRRITATED RESIDENTS V. EPA 25

Nothing in this section limits the authority

of a district to regulate a source, including,

but not limited to, a stationary source that is

an agricultural source, over which it

otherwise has jurisdiction pursuant to this

division, or pursuant to the federal Clean Air

Act . . . or any rules or regulations adopted

pursuant to that act that were in effect on or

before January 1, 2003 . . . .

Cal. Health & Safety Code § 39011.5(c).

According to AIR, the Savings Clauses provisions

preserve the District’s authority to apply the 2004 District

NSR Rules (adopted prior to January 1, 2004) to certain

minor agricultural sources regardless of the meaning of the

Offset Provision. AIR refers to the broad language of the

Clauses and asks that the court adhere to their plain

meaning.

The EPA proposes a more limited interpretation,

contending that the provisions in the Savings Clauses do

not override the provisions of SB 700 that exempt minor

agricultural sources from air pollution controls. Nor,

according to the EPA, do the Savings Clauses authorize the

District’s 2004 NSR Rules. Instead they only serve to

preserve the District’s authority to regulate sources that

hadn’t previously been, but were now considered

“agricultural” because of SB 700’s new definition 6 for

6

The prior definition of agricultural source was “equipment used in

agricultural operations in the growing of crops or the raising of fowl or

animals.” Cal. Health & Safety Code § 42310(e) (1989) (emphasis

26 ASS’N OF IRRITATED RESIDENTS V. EPA

agricultural sources. 7 Moreover, section 39011.5(c) does

not grant authority to enforce the 2004 NSR Rules. Even

though the definitional section of SB 700 did not limit the

District’s authority, other sections, such as the Offset

Provision, might.

As was the case with the Offset Provision, the EPA’s

determination that the Savings Clauses did not give the

District overriding authority to enforce the 2004 NSR Rules

was based on the California Attorney General’s

interpretation in the 2012 letter. 78 Fed. Reg. at 46,508.

The Attorney General stated that the Savings Clauses “do

not authorize the Rules’ permit and offset requirements”

because they were meant to be read in light of the

definitional context of section 39011.5. Letter from Robert

W. Byrne, Cal. Acting Sr. Asst. Attny. Gen. to Jared

Blumenfeld, EPA Regional Administrator, 4 (November

14, 2012).

Before the legislature passed SB 700, California law

had provided an exemption to agricultural sources from all

added). The definition included in SB 700 is a source “used in the

production of crops, or the raising of fowl or animals located on

contiguous property under common ownership or control” that is a

“confined animal facility” or an “internal combustion engine” or a

CAA Title V source. Cal. Health & Safety Code § 39011.5(a)

(emphasis added).

7

The Attorney General gives the example of production equipment,

such as a stationary diesel engine, that would not have been considered

an agricultural source before SB 700, but were regulated by the

District. See Letter from Robert W. Byrne, Cal. Acting Sr. Asst. Attny.

Gen. to Jared Blumenfeld, EPA Regional Administrator, 4 (November

14, 2012).

ASS’N OF IRRITATED RESIDENTS V. EPA 27

New Source Review permitting requirements, but districts

were allowed to adopt non-New Source Review emission

rules of general application that applied to agricultural

stationary sources. Id. Section 39011.5(b) was meant to

preserve those rules only—not NSR rules. Id. The purpose

was to “preserve[] and validate[] those existing equipment-

governing regulations of general application that, without

such a savings clause, might be construed as invalid

because the regulated equipment was included as part of

SB 700’s ‘agricultural sources’ [definition].” Id. This

explanation is reasonable. If not limited to rule

preservation, section 39011.5(b) would be granting districts

new authority to apply NSR rules — authority that had

previously not existed under California’s blanket

exemption.

The Attorney General also interpreted section

39011.5(c). Id. “[S]ubdivision (c) clarifies that section

39011.5 itself does not limit a district’s existing authority,

but subdivision (c) does not concern whether some other

provision of SB 700 might limit a district’s authority.” Id.

This explanation accounts for the statute as a whole. If the

legislature intended for the Savings Clauses to allow the

District to ignore the exemptions located elsewhere in SB

700, then it would have said that a district’s prior authority

was not limited by any section in the statute. For the same

reasons set forth above regarding the Offset Provision, the

court finds that the EPA reasonably relied on this

interpretation from the Attorney General and was not

arbitrary or capricious in deciding that it had made an error

because it fully considered the effect of the Savings

Clauses on the District’s authority under state law.

28 ASS’N OF IRRITATED RESIDENTS V. EPA

3. The EPA Reasonably Respected State Law

The EPA’s desire to correct its 2004 approval to make

it align with state law is not an arbitrary one, considering

the aims and structure of the CAA’s model of cooperative

federalism. The CAA grants primary authority to the states

to develop emission limits. Train v. Natural Res. Def.

Council, 421 U.S. 60, 79 (1975). The EPA’s role under the

CAA’s scheme is secondary. Id. Therefore, by trying to

respect California’s statutory limits on air pollution

controls, the EPA is properly considering the purpose and

structure of the Act it is entrusted to enforce.

Before SB 700 was enacted, California’s law included a

blanket exemption for all agricultural sources, both major

and minor, from the NSR air pollution controls. See

75 Fed. Reg. 4745, 4747 (Jan. 29, 2010). This legislative

background indicates that California may have wished to

preserve some form of agricultural exemption in its laws

and intended for that exemption to carry into the SIP.

Therefore, the EPA’s interpretation of SB 700 and its

decision to correct its 2004 approval were reasonable and

pass arbitrary and capricious review.

In sum, this court holds that the EPA reasonably

determined that California’s SB700 was inconsistent with

the 2004 NSR rules. It was appropriate and reasonable for

the EPA to rely on the interpretations of the Attorney

General and CARB when determining that the ambiguous

California law provided certain exemptions that were not

ASS’N OF IRRITATED RESIDENTS V. EPA 29

accounted for in the 2004 NSR Rules. 8 The EPA made a

“rational connection” between the Attorney General’s and

CARB’s interpretations, the purposes of the CAA, and the

choice it made. Burlington Truck Lines, 371 U.S. at 168.

C. The EPA’s Authority Under § 110(k)(6) of the

Clean Air Act

Concluding that the EPA reasonably decided it made an

error that needed revising, we now address whether the

EPA had the statutory authority to correct the error in the

way that it did. Whether § 110(k)(6) of the CAA gives the

EPA authority to retroactively revise the scope of an earlier

approval of a state’s NSR Rules presents a question of first

impression.

The Eleventh Circuit has previously considered the

EPA action taken under § 110(k)(6), but it did not interpret

the meaning of the provisions in question. Alabama Envtl.

Council v. Adm’r, EPA, 711 F.3d 1277, 1289–90 (11th Cir.

2013) (determining that the EPA had not made an error

determination as required by the Act).

8

AIR argues that even if the 2004 NSR Rules conflict with SB700,

that conflict does not matter because once the 2004 NSR Rules were

approved by the EPA in 2004, they became federal law trumping any

inconsistent state law. It is true that when the EPA approves a SIP, it

becomes federal law. See Safe Air for Everyone, 488 F.3d at 1097.

But, AIR’s argument fails to address the relevant time period. The

error at issue in this case is the EPA’s apparent failure to recognize that

the 2004 NSR Rules conflicted with SB700 prior to the EPA’s issuing

its May 2004 final approval of the Rules. See 78 Fed. Reg. at 46,505-

06. At that point in time, the 2004 NSR Rules had not yet been

approved, and, thus, were not yet federal law.

30 ASS’N OF IRRITATED RESIDENTS V. EPA

Section 110(k)(6) reads:

Whenever the [EPA] determines that [its]

action approving, disapproving, or

promulgating any plan . . . was in error, the

[EPA] may in the same manner as the

approval, disapproval, or promulgation

revise such action as appropriate without

requiring further submissions from the State.

Such determination and the basis thereof

shall be provided to the State and public.

42 U.S.C. § 7410(k)(6) (emphasis added).

This broad provision was enacted to provide the EPA

with an avenue to correct its own erroneous actions and

grant the EPA the discretion to decide when to act pursuant

to the provision. See Alabama Envtl. Council, 711 F.3d at

1287 (“Through the use of the terms ‘whenever’ and ‘may,’

Section 110(k)(6) confers discretion on the EPA to decide

if and when it will invoke the statute to revise a prior

action.”); see also 75 Fed. Reg. 82,536, 82,543 (Dec. 30,

2010) (discussing Congress’ implementation of § 110(k)(6)

to overturn a Third Circuit decision that held that the EPA’s

inherent authority to correct errors was narrow and could

be used only to correct typographical errors, suggesting that

Congress intended to grant the EPA broad authority to

revise an error).

Pursuant to the statute, to correct an error, the EPA

must first determine that it, in fact, made an error.

42 U.S.C. § 7410(k)(6). The EPA clearly articulated its

alleged error and the basis thereof in the Federal Register

and even received and replied to comments on the matter.

See, e.g., 78 Fed. Reg. at 46511. The EPA determined that

it erred because it approved the 2004 NSR Rules even

ASS’N OF IRRITATED RESIDENTS V. EPA 31

though it did not receive “necessary assurances” that

California had authority to carry out the Rules as mandated

by the CAA. See 42 U.S.C. § 7410(a)(2)(E). Therefore,

this court concludes that the error determination

requirement was met.

Having determined that it erred, the EPA is required by

§ 110(k)(6) to “revise such action” (1) “in the same

manner as the approval, disapproval, or promulgation,” and

(2) “as appropriate without requiring further submissions

from the State.” 42 U.S.C. § 7410(k)(6).

1. Interpretation of “in the same manner”

a. Chevron Step One

Under Chevron, the court must first look at the statutory

language of § 110(k)(6) to determine whether Congress

clearly designated “in the same manner” to be a procedural

requirement. That is, whether the EPA must revise its

action by employing the same APA or CAA procedures

used in the original rulemaking. See 78 Fed. Reg. at

46,511. AIR contends that the words “in the same manner”

limits the EPA’s actions to either an approval or a

disapproval of a state-submitted plan since those were the

only actions originally available to the EPA when presented

with the SIP.

The words “in the same manner” refer to the EPA’s

original action of “approving, disapproving, or

promulgating any plan” that was taken in error. 42 U.S.C.

§ 7410(k)(6). The statute itself does not clearly state

whether “in the same manner” is a procedural or

substantive requirement. Because Congress has not

directly spoken to the issue at hand, the court will proceed

to the second Chevron step.

32 ASS’N OF IRRITATED RESIDENTS V. EPA

b. Chevron Step Two

The EPA reasons that “in the same manner” refers to

procedural processes when read in the context of the

provision as a whole. See Gustafson v. Alloyd Co., Inc.,

513 U.S. 561, 575 (1995) (applying the principle that “a

word is known by the company it keeps”). Specifically, the

section authorizes the EPA to act “without requiring any

further submission from the State” and requires it to

provide the “determination and the basis thereof” of its

error. 42 U.S.C. § 7410(k)(6). Both state submissions and

“determination and the basis” are procedural requirements,

lending support to the EPA’s procedural reading of “in the

same manner.” The Supreme Court has also interpreted the

phrase “in the same manner,” as it existed in the Affordable

Care Act, as a procedural one. See Nat’l Federation of

Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2583–84 (2012)

(holding that the statute’s directive to assess a penalty “in

the same manner” as taxes meant the Secretary of the

Treasury should apply the “same ‘methodology and

procedures’” used to collect taxes). The EPA has held to

this interpretation of “in the same manner” for as long as it

has applied § 110(k)(6). See 58 Fed. Reg. 49,254, 49,257

(Sept. 22, 1993); see also Barnhart v. Walton, 535 U.S.

212, 220 (2002) (declaring that the court “normally

accord[s] particular deference to an agency interpretation of

‘longstanding’ duration”).

This court determines that the EPA reasonably

interpreted “in the same manner” as a procedural

requirement. In this instance, the EPA acted through a

notice-and-comment rulemaking, the same process used to

approve the 2004 NSR Rules into the SIP. Therefore, the

EPA did not exceed its authority under the CAA and its

ASS’N OF IRRITATED RESIDENTS V. EPA 33

promulgation of 40 C.F.R. § 52.245 comported with the

procedural requirements of § 110(k)(6).

2. Interpretation of “appropriate”

a. Chevron Step One

The court must determine next whether § 110(k)(6)

enables the EPA to revise an error by retroactively limiting

the scope of its approval to cover only certain parts of the

NSR Rules. In other words, was the EPA’s correction

“appropriate” under the plain meaning of § 110(k)(6)?

The word “appropriate” “means only ‘specially

suitable: fit, proper.’” Ruckleshaus v. Sierra Club,

463 U.S. 680, 682 (1983) (quoting Webster’s Third

International Dictionary). Section 110(k)(6) itself does not

clearly define what is an “appropriate” action. Thus, this

court concludes that the language does not directly speak to

the matter at hand and will proceed to Chevron step two.

b. Chevron Step Two

As long as the EPA’s interpretation of “appropriate” is

“based on a permissible construction of” § 110(k)(6), then

the court must accept it. Chevron, 467 U.S. at 843.

AIR argues that § 110(k)(6) does not allow the EPA to

“sua sponte promulgate a regulation that substantively

amends or limits a SIP.” This reading, however, ignores

the direction of § 110(k)(6) that the EPA revise its actions

when an error has been made “without requiring any

further submission from the State.” 42 U.S.C.

§ 7410(k)(6). The plain meaning of these words indicates

unilateral action by the EPA. While it is true that agencies

do not have plenary authority in absence of congressional

34 ASS’N OF IRRITATED RESIDENTS V. EPA

limitation, Louisiana Pub. Serv. Comm’n v. F.C.C., 476

U.S. 355, 374 (1986) (“an agency literally has no power to

act . . . unless and until Congress confers power upon it”),

the Supreme Court has interpreted Congress’s command

elsewhere to take “appropriate action” as giving an agency

“a substantial amount of latitude in choosing the programs

and techniques they would use to meet their obligations

under the [statute].” Horne v. Flores, 557 U.S. 433, 440–41

(2009) (quoting Castaneda v. Pickard, 648 F.2d 989, 1009

(5th Cir. 1981)).

Under the circumstances of this case, the court finds

that the EPA’s understanding of “appropriate” was

permissible. First, the EPA’s interpretation of

“appropriate” contemplated the goals and purposes of the

CAA as a whole. See Richards v. United States, 369 U.S.

1, 11 (1962) (affirming that “in fulfilling our responsibility

in interpreting legislation, ‘we . . . (should) look to the

provisions of the whole law, and to its object and policy’”).

The EPA’s action preserves the “strengthening aspects” of

the 2004 NSR Rules, which removed the total exemption

for agricultural sources, while still ensuring that the SIP

matches state law. See 78 Fed. Reg. 46,504, 46,511 (Aug.

1, 2013). The EPA considered a complete retroactive

disapproval of the 2004 NSR Rules, but determined it

would have had a “deleterious effect” on the SIP by

loosening the air pollution controls even further. Id. When

faced with a choice between a narrower revision that serves

to improve air quality and a broader one that undoes the

progress made in the SIP, the EPA permissibly reasoned it

was more appropriate to choose the former.

Second, the EPA’s method of correction is

“appropriate” because it is the only method that would fix

the unusual problem at issue here. See 78 Fed. Reg. at

ASS’N OF IRRITATED RESIDENTS V. EPA 35

46,510. AIR argues that the only “appropriate” responses

the EPA could take to correct its error are the ones

provided in § 110(k), namely a partial approval/partial

disapproval, a limited approval/limited disapproval, a

conditional approval, a SIP Call, or a complete disapproval.

See U.S.C. § 7410(k). The EPA demonstrates, however,

why each of those options fails to correct the error in this

specific instance.

Section 110(k)(3) authorizes the EPA to make a partial

approval/partial disapproval if portions of the SIP do not

comply with the CAA and are separable, but NSR Rules

are not separable. 78 Fed. Reg. at 46,511. A limited

approval/limited disapproval is similarly unsuitable

because it would “incorporate the entire rule into the

California SIP, and thus would not remedy the problem of

the mismatch.” Id. at 46,510. A conditional approval under

§ 110(k)(4) requires the state to correct deficiencies within

a year, but as the EPA explains, even though California had

corrected its deficiencies by submitting the new 2010 NSR

Rules, this did nothing to correct its mistake retroactively.

Likewise, a SIP Call requiring a state to submit a revision

provides only a prospective, not a retroactive solution. See

Alabama Envtl. Council, 711 F.3d at 1290 (distinguishing

§ 110(k)(6) from a § 110(k)(5) SIP Call as an alternative

way to revise a SIP). 9

9

AIR argues that just because a SIP Call does not facilitate the EPA’s

desired retroactive outcome, does not mean it is inappropriate. But if

an option is not “suitable” or “fit” to revise an erroneous action, then

that option is not “appropriate” by the definition of the word. See

Ruckleshaus, 463 U.S. at 682.

36 ASS’N OF IRRITATED RESIDENTS V. EPA

Perhaps most significantly, the EPA’s revision was

“appropriate” because it respected state law. The CAA

imposes a duty on the states to meet the standards for air

quality through state control programs. 42 U.S.C.

§ 7407(a). AIR argues that the EPA’s action violates the

“Clean Air Act’s state-federal partnership” because it is

stepping out of its role of a “regulatory backstop” to amend

the SIP. However, California did not intend the 2004 NSR

Rules to omit SB 700’s limited exemptions for minor

agricultural sources. After AIR brought the citizen suits,

California submitted amended District NSR Rules with the

explicit limitations taken from SB 700. See 75 Fed. Reg.

4745 (January 29, 2010). By revising its past approval to

align with the intent of the state, the EPA did not impose its

own policy choices on the state. Instead, the EPA

appropriately respected California’s role as envisioned in

the CAA.

This court determines that the EPA’s interpretation of

§ 110(k)(6) prevails under the second step of Chevron

because it is reasonable that Congress, by amending the

CAA to add § 110(k)(6), was providing the EPA with the

authority to act in ways other than those enumerated in

§ 110(k). The EPA has shown that its chosen method was

a method – albeit not the only one – that enabled it to fix its

mistake in light of the particular circumstances and goals of

the CAA. Therefore, this court defers to its interpretation

under the circumstances of the instant case.

III. Conclusion

As discussed herein, this court holds that the EPA did

not abuse its discretion in correcting its prior approval of

the 2004 NSR Rules. Its action was permissible in light of

the fact that California law (SB 700) did not authorize the

San Joaquin Air Control District to require permits for the

ASS’N OF IRRITATED RESIDENTS V. EPA 37

agricultural sources involved here. Because those rules

conflicted with state law, they should not have been

incorporated into the State Implementation Plan in 2004.

Moreover, the EPA properly acted to revise retroactively

the scope of its approval of the 2004 NSR Rules.

The Petition for Review is DENIED.