LOUISIANA ENVIRONMENTAL ACTION NETWORK, Petitioner, versus UNITED STATES ENVIRONMENTAL PROTECTION AGENCY and MICHAEL O. LEAVITT, Administrator, United States Environmental Protection Agency, Respondents.
No. 02-60991
United States Court of Appeals, Fifth Circuit
September 8, 2004
Petition for Review of an Order of the Environmental Protection Agency
CARL E. STEWART, Circuit Judge:
The Louisiana Environmental Action Network (“LEAN“) petitions for review of several final rules by the Environmental Protection Agency (“EPA“), pursuant to the Clean Air Act (“CAA” or “the Act“),
Arising out of the shadows of our ruling in Sierra Club, LEAN presently asserts that the EPA erroneously approved Louisiana‘s revised state implementation plan, as consistent with the CAA, based on criteria relevant only under the now defunct extension policy. LEAN therefore challenges, as arbitrary and capricious, the EPA‘s decision to approve Louisiana‘s revised state implementation plan attainment demonstration and Louisiana‘s inter-precursor trading provision. LEAN presents a separate challenge to the EPA‘s approval of Louisiana‘s substitute contingency measure consisting of emission reductions occurring outside the Baton Rouge area. For the following reasons, we deny the petition in part, and grant it in part, and remand to the EPA for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
A. Regulatory Background
The CAA, first enacted in 1970 and extensively revised in 1977 and 1990, establishes a complex and comprehensive regulatory system to reduce air pollution nationwide.
The 1990 Amendments also specified certain measures each nonattainment area was required to take and limited the number of years each area had to achieve compliance, ranging from 1993 to 2010, depending on an area‘s classification.
Congress further required a permit program, designated the New Source Review (“NSR“), as a component of the CAA.
The CAA also established a federal-state partnership, recognizing that prevention and control of air pollution at its source is the primary responsibility of States and local governments, and delegated to the States primary responsibility for implementing the NAAQS standards.
In areas of ozone nonattainment, a State must submit, “as expeditiously as practicable,” SIP revisions to the EPA in order to attain NAAQS compliance.
The SIPs, and any revisions to the SIPs, must be adopted by the State after reasonable notice and public hearing.
B. Present Facts
The EPA first designated the Baton Rouge area, which encompasses five parishes, as an ozone nonattainment area in 1978. 43 Fed. Reg. 8,964, 8,998 (March 3, 1978). In 1991, the EPA re-designated the Baton Rouge area as a “serious” ozone attainment area in accordance with the 1990 CAA amendments, with a statutory attainment deadline of November 15, 1999. 56 Fed. Reg. 56,694, 56,770 (Nov. 6, 1991). The Baton Rouge area is subject to ozone pollution from upwind sources outside the State of Louisiana, which have contributed to the failure of the Baton Rouge area to attain the ozone NAAQS. 67 Fed. Reg. 61,786, 61,790 (Oct. 2, 2002) (to be codified at 40 C.F.R. pts. 52 and 81). To this day, the Baton Rouge area has failed to attain the ozone NAAQS.
On November 22, 2000, LEAN brought a citizen suit against the Administrator for failure to perform a nondiscretionary act or duty.
On June 24, 2002, the EPA determined that the Baton Rouge area did not attain the ozone NAAQS by the November 15, 1999, deadline for serious ozone non-attainment areas. 67 Fed. Reg. 42,688, 42,688 (June 24, 2002). In a separate rulemaking, the EPA withdrew its determination, based on its ozone extension policy, and extended the attainment date for the Baton Rouge area to November 15, 2005, while retaining Baton Rouge‘s status as a serious ozone non-attainment area. Id.
On December 11, 2002, in an action concerning the Beaumont-Port Arthur, Texas ozone nonattainment area, this court rejected the EPA‘s ozone extension policy as inconsistent with the CAA. See Sierra Club, 314 F.3d at 741. The EPA then requested a voluntary remand of its extension policy to the Baton Rouge area, and this court granted the remand. LEAN v. EPA, No. 02-60991, order at 1 (2003). The EPA vacated its extension of the attainment date for the Baton Rouge area and reinstated its June 24, 2002, rule making action bumping the Baton Rouge area, by operation of law, to severe non-attainment status. 68 Fed. Reg. at 20,077.
Simultaneous to the EPA issuing its final rule extending the attainment date for the Baton Rouge area, the EPA also approved the State‘s attainment demonstration SIP for the Baton Rouge area. 67 Fed. Reg. at 61,786. In a separate rule making, the EPA approved revisions to Louisiana‘s non-attainment NSR procedures which, inter alia, included a process known as inter-precursor trading. 67 Fed. Reg. 61,260 (Sept. 30, 2002) (to be codified at 40 C.F.R. pt. 52). Under inter-precursor trading, regulated companies are allowed to trade an increase in volatile organic
DISCUSSION
I. Mootness
The issue presented at the outset is whether we properly have jurisdiction to reach the merits of LEAN‘s challenges to the EPA‘s approval of the attainment demonstration SIP and the NSR inter-precursor trading provision.
There can be no doubt that LEAN‘s request for relief concerning the attainment demonstration SIP and the interprecursor trading provisions are moot. The EPA recognized that due to the Baton Rouge area‘s reclassification from a “serious” to a presently “severe” nonattainment area, the attainment demonstration SIP had to be revised in the aftermath of our Sierra Club decision. The agency‘s approval of the inter-precursor trading provision was also based in part on the EPA‘s finding that an approvable attainment demonstration existed for the Baton Rouge area. EPA hence requested, and we granted, a voluntary vacatur of the agency‘s final rules approving the Baton Rouge‘s attainment demonstration SIP and the corollary inter-precursor trading provision. Because there is no longer any possibility that LEAN can obtain relief for either claim, we dismiss those claims as moot, and hence resolve only the issues remaining alive.
LEAN‘s sole remaining claim is that the EPA erroneously approved a substitute contingency measure, contained in Louisiana‘s revised SIP, which the State initiated in response to our remand in Sierra Club. The substitute contingency measure consists of a 6.1 tons per day VOC emissions reductions from the Trunkline facility in St. Mary‘s Parish. LEAN argues that the EPA acted arbitrarily and capriciously by approving an illegal substitute contingency measure that will not promote attainment. Because the contingency measure is prohibited, LEAN asks that we vacate revisions of the 1990 Base Year Emissions Inventory and the EPA‘s rescission of the prior contingency measure in favor of the substitute.
We review the EPA‘s interpretation of the CAA under the standards set forth in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984); see also Sierra Club v. U.S. Fish and Wildlife Serv., 245 F.3d 434, 440-41 (5th Cir. 2001). The first step of the Chevron inquiry requires us to determine whether Congress has “directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. If Congress “has directly spoken to the precise question at issue,” then we must “give effect to [its] unambiguously expressed intent.” Id. at 842-43. Reversal is warranted only where an agency interpretation is contrary to “clear congressional intent.” Id. at 843 n.9.
Step two of Chevron applies when the statute is either silent or ambiguous. Under these circumstances, the court determines whether the agency interpretation is a “permissible construction of the statute.” Id. at 843. Deference is warranted where the agency‘s construction is permissible. Id. at 843. Consistent with § 706 of the Administrative Procedure Act (“APA“), we reverse only where the agency‘s construction of the statute is “arbitrary, capricious, an abuse of discretion, or
We recognize that under this deferential standard, a court reviewing an agency action may not substitute its own judgment for that of the agency. City of Abilene, 325 F.3d at 664. While our deference to the agency‘s expertise is significant, we may not defer to an agency decision that “is without substantial basis in fact.” Fed. Power Comm‘n v. Florida Power & Light Co., 404 U.S. 453, 463 (1972). Our court will find an agency action arbitrary and capricious “if 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 implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Texas Oil & Gas Ass‘n v. EPA, 161 F.3d 923, 934 (5th Cir. 1998) (citing Motor Vehicle Mfrs. Assn. v. State Farm Mut., 463 U.S. 29, 43 (1983)). We therefore limit the scope of our inquiry to determining if the agency‘s judgment conforms to minimum standards of rationality—whether the agency action “bears a rational relationship to the statutory purposes” and is there “substantial evidence in the record to support it.” Id.
LEAN posits that the EPA‘s approval of the substitute contingency measure is unlawful for three reasons: (1) historical reductions in emissions cannot qualify as a contingency measure; (2) emissions reductions already required by law cannot qualify as a contingency measure; and (3) reductions outside the Baton Rouge nonattainment area, without a finding that such reductions improve air quality within the Baton Rouge area, cannot qualify as a contingency measure. We address each argument in turn.
A. Early Activated Continuing Reductions
Section 172(c)(1) and §182(c)(9) of the Act direct that a state‘s revised SIP shall include “contingency measures to take effect in any such case without further action by the State or the Administrator” if an area fails to attain the NAAQS standard by the applicable date or comply with a Rate of Progress Plan deadline.
The Act, on its face, creates an ambiguity as to the meaning of the terms “to take effect” and “to be undertaken.” On one hand, a plain reading of the terms “to take effect” and “to be undertaken” imply a prospective, forward looking orientation. Such a prospective reading of the text would seemingly preclude the use of past reductions which have already failed to achieve attainment. On the other hand, although the CAA uses the present tense, the Act neither affirms nor prohibits continuing emissions reductions — measures which originate prior to the SIP failing, but whose
Due to the ambiguity, the EPA contends that we should defer to the agency‘s unpublished General Preamble, which takes the position that nonattainment areas may implement their contingency measures early, meaning reductions may be achieved before the contingency measure is triggered, as long as such measures are continuing in nature. Id. Although normally we extend such deference to an agency, the Supreme Court and this court have made clear that interpretations of statutes not arrived at by “formal adjudication or notice-and-comment rulemaking,” e.g. opinion letters, “policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron-style deference.” Christensen v. Harris County, 529 U.S. 576, 587 (2000); Henrikson v. Guzik, 249 F.3d 395, 398 (5th Cir. 2001). Although such interpretations lack the “power to control,” they are entitled to respect to the extent that they have the “power to persuade.” Id. (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). Because the General Preamble relied upon by the EPA contains preliminary interpretations made prior to notice-and-comment rulemaking, we cannot grant it Chevron-style deference, but we may nonetheless find the General Preamble persuasive.
Here, the EPA‘s allowance of early reductions to be used as contingency measures comports with a primary purpose of the CAA — the aim of ensuring that nonattainment areas reach NAAQS compliance in an efficient manner — and necessary requirements of the CAA. The EPA‘s early contingency plan allows areas classified moderate and above, such as the Baton Rouge area, to include sufficient contingency measures to ensure that “upon implementation of such measures,
Moreover, in compliance with § 172(c)(1) of the Act, early reductions are necessary in order to create an incentive for nonattainment areas to implement “all reasonably available control measures as expeditiously as practicable.”
Furthermore, we find the EPA‘s contention that the positive effects from the Trunkline reduction are continuing in nature equally persuasive. We note that the reductions credits from the Trunkline facility, although already implemented, are in effect set aside, “to be applied in the event that attainment is achieved” and such reduction credits “are not available for any other use.” 67 Fed. Reg. at 60,592 (citing 57 Fed. Reg. at 13,511 (EPA‘s General Preamble)). The setting aside of a continuing, surplus emissions reduction fits neatly within the CAA‘s requirement that a necessary element of a contingency measure is that it must “take effect without further action by the State or [EPA].”3 Id. Thus, although the General Preamble is not entitled to full Chevron deference, we find
the EPA‘s argument persuasive, that the early activation of continuing contingency measures is consistent with the purpose and requirements of the CAA statute.
B. Trunkline Reduction Required By Law
LEAN next argues that the continuing Trunkline emissions reduction cannot be a valid contingency measure because the reduction is required by Louisiana state waste gas disposal regulations. According to LEAN, an emission reduction that is already required to be undertaken by law cannot be a future contingency measure, nor can it be a surplus reduction. LEAN has waived this argument because it failed to raise the challenge before the EPA during the comment period on the final rule regarding the substitute contingency measure. Public Citizen, Inc. v. EPA, 343 F.3d 449, 461 (5th Cir. 2003) (“Absent exceptional circumstances, a party cannot judicially challenge agency action on grounds not presented to the agency at the appropriate time during the administrative proceeding.“). The comment period on the proposed substitute contingency measures rule closed on June 19, 2002. 67 Fed. Reg. at 35,468. While LEAN did raise the argument to the EPA in its September 3, 2002, comment letter on another EPA rulemaking, it had already missed the deadline for submitting comments on the substitute contingency measure rulemaking. Because the comment was not presented to the EPA during the approval process, we therefore conclude that this issue is not properly before us.
C. Reductions Outside Baton Rouge Area
The Baton Rouge nonattainment area consists of five surrounding parishes — Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge. 67 Fed. Reg. at 71,787. To the north of the Baton Rouge area are four parishes — East Feliciana, Pointe Coupee, St. Helena, and West Feliciana — that have attained all NAAQS standards, but nevertheless, have been identified as parishes influencing the Baton Rouge area‘s ozone nonattainment matter.
The EPA attempts to justify its approval of the Trunkline emissions reduction as a reasonable interpretation consistent with the CAA. The EPA argues that by approving the Trunkline contingency measure, the agency “has proposed approval of an adjustment of Louisiana‘s 1990 baseline to include the Trunkline emissions. Once these emissions are included in the baseline . . . reducing them will lower emissions in the [Baton Rouge] area on a continuing basis.” 67 Fed. Reg. at 60,592. In other words, according to the EPA, it could only approve Louisiana‘s use of “credit
In addressing the EPA‘s contention we return to the Chevron doctrine, and look first to the text of the CAA. Under the Act, “baseline emissions” are defined as “the total amount of actual VOC emissions from all anthropogenic sources in the area during the calendar year 1990.”
Moving to step two of Chevron, we must ascertain whether the agency‘s interpretation is reasonable. LEAN urges us to consider that the EPA‘s own interpretation of the Act limits baseline emissions to the designated nonattainment area. In the agency‘s General Preamble, the EPA explained that “baseline emissions are defined to be all emissions ‘in the area,’ which EPA interprets to mean in the designated nonattainment area.” 57 Fed. Reg. 13,498 13,517 (April 16, 1992) (emphasis added). The General Preamble, however, represents only the EPA‘s “preliminary interpretations” and it expressly stated that the EPA would take further action, id., and with a later un-promulgated 1997 policy guidance the EPA made good on its promise. In addressing whether the EPA‘s baseline argument is a reasonable interpretation of the CAA, we must turn to analyzing the 1997 policy.
Under the un-promulgated 1997 policy guidance, States are allowed to “take credit for emissions reductions obtained from sources outside the designated nonattainment area” to be used
The un-promulgated 1997 policy has no such persuasive appeal. The EPA‘s 1997 policy focuses solely on distance — i.e., the Trunkline facility is 40 kilometers from Baton Rouge — but we find no mention of an inquiry into geographical location — i.e., a demonstration that pollution reductions at the Trunkline facility in St. Mary Parish would effectively promote ozone attainment in the Baton Rouge area.4 Quite the contrary, while the Trunkline facility is located more than 24 miles to the south of the nonattainment area, the State identified four attainment parishes to the north which influence attainment in the Baton Rouge area. Moreover, the 1997 policy expressly applies to “reasonable further progress” demonstrations, which were not at issue in this approval. Hence, the EPA does not persuasively demonstrate that the 1997 policy has any rational connection with the relevant issue of what contingency measures to apply when an attainment deadline passes.
In sum, we find no record support to demonstrate that reductions outside the Baton Rouge area can qualify as a contingency measure. Because the record fails to support the agency‘s decision, we remand to the EPA for additional investigation or explanation. See Florida Power, 470 U.S. at 744 (stating that if an agency decision cannot be affirmed on the basis of the administrative record, then “the matter [should be] remanded to [the agency] for further consideration“). We therefore reject LEAN‘s request to order the EPA to reinstate Louisiana‘s previous contingency measure and we reject LEAN‘s request to vacate revisions of the 1990 Base Year Emissions Inventory.
CONCLUSION
For the aforementioned reasons, we DENY that part of LEAN‘s petition challenging the EPA‘s approval of the State‘s attainment demonstration and inter-precursor trading. We GRANT