SIERRA CLUB, ET AL., PETITIONERS v. ENVIRONMENTAL PROTECTION AGENCY AND ANDREW WHEELER, ADMINISTRATOR, U.S. ENVIRONMENTAL PROTECTION AGENCY, RESPONDENTS
No. 15-1465
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided January 29, 2021
Argued September 22, 2020
Consolidated with 19-1024
On Petitions for Review of Administrative Action of the United States Environmental Protection Agency
Seth L. Johnson argued the cause and filed the briefs for petitioners.
David O‘Brien Frederick and Amy Catherine Dinn were on the brief for amicus curiae Caring for Pasadena Communities in support of petitioners.
Perry M. Rosen, Senior Attorney, United States Department of Justice, argued the cause for the respondents. With him on the brief were Jeffrey Bossert Clark, Assistant Attorney General, and Jonathan D. Brightbill, Principal Deputy Assistant Attorney General.
Ken Paxton, Attorney General, Office of the Attorney General for the State of Texas, Jeffrey C. Mateer, First Assistant Attorney General, Priscilla M. Hubenak, Chief, Environmental Protection Division, and Linda B. Secord, Assistant Attorney General, were on the brief for intervenor-respondents the State of Texas and the Texas Commission on Environmental Quality.
Bayron T. Gilchrist, Barbara Baird, and Megan E. Lorenz Angarita were on the brief for amicus curiae South Coast Air Quality Management District in support of respondents.
Aaron M. Flynn, Lucinda Minton Langworthy, Daryl L. Joseffer, Michael B. Schon, and Peter Tolsdorf were on the brief for amicus curiae American Chemistry Council, et al. in support of respondents.
Before: TATEL and KATSAS, Circuit Judges, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL,
I.
Under the Clean Air Act, the Environmental Protection Agency (EPA) must publish a list of air pollutants that “may reasonably be anticipated to endanger public health or welfare.”
“Once EPA establishes NAAQS for a particular pollutant,” those NAAQS become “the centerpiece of a complex statutory regime aimed at reducing the pollutant‘s atmospheric concentration.” Natural Resources Defense Council v. EPA (NRDC I), 777 F.3d 456, 458 (D.C. Cir. 2014) (internal quotation marks omitted). After setting NAAQS, EPA establishes air quality control regions,
This case concerns the implementation of the NAAQS for ozone, “an essential presence in the atmosphere‘s stratospheric layer” that is “dangerous at ground level.” South Coast Air Quality Management District v. EPA (South Coast I), 472 F.3d 882, 887 (D.C. Cir. 2006). Not directly emitted through human activity, ozone “forms when other atmospheric pollutants—ozone ‘precursors‘—react in the presence of sunlight.” American Trucking Associations, Inc. v. EPA, 283 F.3d 355, 359 (D.C. Cir. 2002). These precursors include volatile organic compounds (VOCs) and oxides of nitrogen (NOx). South Coast I, 472 F.3d at 887.
In 1990, Congress amended the Clean Air Act, finding that the statute had failed to produce the anticipated reductions of ozone and certain other pollutants. Accordingly, it “abandoned the discretion-filled approach of two decades prior in favor of more comprehensive regulation of six pollutants,” including ozone, “that Congress found to be particularly injurious to public health.” South Coast I, 472 F.3d at 887. Congress first redesignated the existing approach as Subpart 1, and that approach “continued to apply as a default matter to pollutants not specifically addressed in the amended portions of the Act.” NRDC I, 777 F.3d at 460. Congress then added Subpart 2, which focuses on ozone and its precursors. See
Setting the stage for this case, EPA promulgated a new NAAQS for ozone in 2008. National Ambient Air Quality Standards for Ozone, 73 Fed. Reg. 16,436 (Mar. 27, 2008). Seven years later, in 2015, it promulgated a rule implementing the 2008 NAAQS. Implementation of the 2008 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements (2015 Implementation Rule), 80 Fed. Reg. 12,264 (Mar. 6, 2015). Several petitioners in this case challenged various provisions of that 2015 Implementation Rule, and our court resolved all but one of those challenges in South Coast II, 882 F.3d 1138. That remaining challenge related to a provision called the “interprecursor trading program.” While South Coast II was pending, EPA granted an administrative petition to reconsider that program, so the South Coast II panel severed the challenge, leaving it unresolved. Order, South Coast Air Quality Management District v. EPA, No. 15-1115 (D.C. Cir. Dec. 18, 2015).
Three years later, EPA included the interprecursor trading program in a rule implementing new ozone NAAQS that it had issued in 2015. See National Ambient Air Quality Standards for Ozone, 80 Fed. Reg. 65,292 (Oct. 26, 2015); Implementation of the 2015 National Ambient Air Quality Standards for Ozone: Nonattainment Area State Implementation Plan Requirements (2018 Implementation Rule), 83 Fed. Reg. 62,998 (Dec. 6, 2018). That 2018 Implementation Rule is the focus of this case.
Petitioners Sierra Club, Conservation Law Foundation, Downwinders at Risk, Physicians for Social Responsibility—Los Angeles, and National Parks Conservation Association challenge four features of the 2018 Rule: (1) the interprecursor trading program, as well as provisions (2) allowing states to demonstrate compliance with the Act‘s reasonable further progress milestone requirements through an implementation-based method, (3) allowing states to choose between two options for the reasonable further progress baseline year, and (4) allowing nonattainment areas to use already-implemented measures to satisfy the Act‘s contingency measures requirements. Petitioners argue that these four provisions are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
II.
Because Petitioners challenge all four provisions on the ground that they violate the Clean Air Act, we apply the familiar two-step framework of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See NRDC I, 777 F.3d at 463 (“review[ing] EPA‘s interpretation of the Clean Air Act pursuant to the two-step Chevron framework“). We first ask whether Congress has “directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. But if “the statute is silent or ambiguous with respect to the specific issue,” we defer to
A.
We start with Petitioners’ challenge to the interprecursor trading program for permitting offsets. Under the Act‘s Nonattainment New Source Review program, SIPs must require permits for the modification or construction of major stationary sources “to assure” that the relevant NAAQS “are achieved.”
Subpart 2 extends the permit requirements to ozone and its precursors. See
The 2018 Implementation Rule interprets these provisions to allow interprecursor trading programs for offsets. Under these programs, which states may choose to establish, when ozone-related offsets are required for permits under the Act‘s Nonattainment New Source Review program, the offset requirement can be satisfied by “trading” reductions in emissions of ozone precursors, i.e., VOCs and NOx. 2018 Implementation Rule, 83 Fed. Reg. at 63,016–21. Put differently, the 2018 Rule interprets the statute as requiring offsets of ozone for these permits, and accordingly allows offsets—emissions reductions—of one ozone precursor (VOCs or NOx) to stand in for the other (NOx or VOCs, respectively) in most circumstances. Id. Because reductions in one precursor‘s emissions are not always equivalent, in terms of their impact on ozone levels, to
An example in the 2018 Implementation Rule helps to clarify what this arrangement might look like in practice. See id. at 63,016 n.39. Suppose that a major source subject to Nonattainment New Source Review in a moderate area seeks to offset an increase in NOx emissions of 200 tons per year with reductions in VOC emissions. Id. Under the 2018 Rule, that 200 tons per year increase is first subject to the moderate area offset ratio of 1.15 to 1 set by the Act, see
Petitioners urge us to vacate the interprecursor trading program, arguing that (1) the Clean Air Act unambiguously prohibits interprecursor trading, (2) EPA has provided no rational basis for authorizing the program, and (3) interprecursor trading violates the Act‘s anti-backsliding provision. Petitioners also contend that the program impermissibly allows required emissions reductions for one precursor to be offset with “banked allowances” of emissions reductions of the other precursor. Because we agree with Petitioners that the interprecursor trading program violates the statute‘s plain text, we have no need to address their other arguments.
Recall that Subpart 2‘s offset provisions related to ozone and its precursors specify that “the ratio of total emission reductions of volatile organic compounds to total increased emissions of such air pollutant shall be” the various ratios previously laid out.
As Petitioners argue, the phrase “such air pollutant” in these subsections unambiguously refers back to VOCs. In general, “the adjective ‘such’ means ‘of the kind or degree already described or implied.‘” Culbertson v. Berryhill, 139 S. Ct. 517, 522 (2019) (quoting H. Fowler & F. Fowler, Concise Oxford Dictionary of Current English 1289 (5th ed. 1964)). The closest potential “air pollutant” preceding the “such air pollutant” language is “volatile organic compounds,” which appears in the very same sentence just five words earlier. See
Seeking to avoid the definitional and grammatical consequences of “such,” EPA focuses on the statute‘s general offset provision in Subpart 1,
In addition to ignoring the word “such,” EPA‘s argument runs afoul of the “basic principle of statutory construction that a specific statute . . . controls over a general provision . . . particularly when the two are interrelated and closely positioned.” Adirondack Medical Center v. Sebelius, 740 F.3d 692, 698 (D.C. Cir. 2014) (alterations in original) (quoting HCSC-Laundry v. United States, 450 U.S. 1, 6 (1981)). It is true that section 7602(g) gives EPA general authority to define “air pollutant,” but section 7511a(a)(4) and its counterparts expressly recognize that VOCs and NOx are precursors for the purpose of offsets, precluding EPA from determining otherwise. It is especially clear that whatever discretion section 7602(g) affords EPA cannot trump the precursor-specific provisions given that, as the Supreme Court has made clear, “[t]he principal distinction between Subpart 1 and Subpart 2 is that the latter eliminates regulatory discretion that the former allowed.” Whitman v. American Trucking Associations, Inc., 531 U.S. 457, 484 (2001).
Moreover, EPA‘s interpretation of “such air pollutant” as referring to ozone conflicts with the plain text of the general offset provision and the ozone-specific offset provisions. Those provisions all relate to “emissions” of “such air pollutant,” see
EPA attempts to distinguish section 7511a(a)(4) and its counterparts from other provisions of Subpart 2 that specifically refer to one or both precursors instead of using the phrase “such air pollutant.” According to EPA, Congress‘s use of the phrase “such air pollutant” in section 7511a(a)(4) when it could have specified VOC emissions reductions demonstrates an intent to allow the agency to define what “such air pollutant” is. This argument overlooks the word “such” and ignores the differing contexts of section 7511a(a)(4) and the provision that EPA relies on, section 7511a(b)(1)(A)(i). The latter addresses “volatile organic compound emission reductions” before addressing both “reductions in emissions of volatile organic compounds and oxides of nitrogen.”
Next, EPA relies on section 7511a(c)(2)(C), which it claims allows interprecursor trading in the context of the second progress requirement. See
EPA‘s remaining argument, that its interpretation better aligns with section 7511a(f)(1)‘s exception for when the precursor-specific offset provisions extend to NOx, is “post hoc,” as it appears nowhere in the 2018 Rule. NRDC I, 755 F.3d at 1020. Accordingly, we cannot sustain the interprecursor trading program on that basis. See Motor Vehicle Manufacturers Ass‘n of the United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 50 (1983) (“It is well-established
B.
Petitioners next challenge EPA‘s interpretation of the statutory provisions governing how states are to demonstrate that they have achieved reasonable further progress milestones. Specifically, SIPs for nonattainment areas must “require reasonable further progress,”
“Baseline emissions” are defined as “the total amount of actual VOC or NOx emissions from all anthropogenic sources in the area during the” baseline year, originally 1990, excluding certain emissions not at issue here.
Beginning six years after the baseline year, and every three years thereafter, states must determine whether each serious or above ozone nonattainment area “has achieved a reduction in emissions during the preceding intervals equivalent to the total emission reductions required to be achieved by the end of such interval” by the reasonable further progress provisions.
The 2018 Rule allows states to demonstrate milestone compliance in one of two ways: either with “actual emissions reductions, as demonstrated with periodic emissions inventory data,” or “[c]ompliance with control measures requirements in” the relevant reasonable further progress plan. 2018 Implementation Rule, 83 Fed. Reg. at 63,011. Petitioners challenge the implementation-based method, which allows states to demonstrate that they have met a milestone by showing “percent implementation,” that is, that the area has implemented measures from the relevant plan projected to meet that milestone, rather than by presenting actual emissions data. Id. at 63,011–12. Petitioners argue that EPA‘s interpretation is unlawful and unreasonable, and that the agency failed to respond adequately to comments raising concerns with its approach.
As for the former argument, it is true, as EPA points out, that the statute provides that the milestone compliance demonstration “shall be submitted in such form and manner, and shall contain such
Two closely related statutory provisions are particularly relevant here. First, the “baseline emissions” from which milestone compliance is to be measured are defined in terms of “actual VOC or NOx emissions.”
Highlighting the unreasonableness of EPA‘s position, a 2004 Evaluation Report by the Office of the Inspector General details how emissions may outpace projections and how a SIP‘s control measures may be less effective than anticipated. Evaluation Report: EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions in Some Major Metropolitan Areas, Office of the Inspector General (Sept. 29, 2004), Joint Appendix (J.A.) 244–46. According to the Evaluation Report‘s executive summary, review of data from the 1990s revealed that “States may have used inaccurate data, assumptions, and projections of emission growth, resulting in fewer reductions planned than appropriate.” Id. at ii, J.A. 246. For example, it points to the Atlanta metropolitan area, where the relevant ozone reduction plan “assumed a [population] growth rate that was about half of the population growth rate” that the area actually experienced during the relevant period. See id., J.A. 246. Indeed, the Report devotes an entire section to explaining how emissions reductions were “underestimated due to inaccurate growth projections and other factors.” See id. at 22–25, J.A. 249–52. The Report also explains how implementation plans may be less effective than anticipated, pointing out that Georgia‘s program had projected that its VOC emissions reductions plan would be 100% effective but was ultimately only 81% effective. Id. at 20, J.A. 247. These problems, the Report finds, were compounded by “[l]imited EPA oversight of the development and implementation of emission control
EPA has failed to address these shortfalls. When Petitioners raised them during the rulemaking, EPA “encourage[d] air agencies to work with their EPA Regional office to develop a [milestone compliance demonstration] suitable for the specific facts and circumstances of the attainment plan,” which it claimed would “address[], as appropriate, the potential emissions growth.” Response to Comments on Implementation of the 2015 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements, EPA (Oct. 31, 2018), J.A. 518. Yet, as Petitioners point out, EPA never explained how that suggestion would address the referenced shortfalls of the implementation-based approach. Nor has EPA suggested that the problems identified in the 2004 Evaluation Report are somehow inapplicable or outdated today. Given such problems, EPA has failed to show how its implementation-based approach can be squared with the quantitative statute. That failure is all the more glaring in light of the fact that the 1990 Amendments were “purposefully crafted to limit EPA discretion” and to ensure that actual emissions reductions were made. South Coast I, 472 F.3d at 887, 894–95; see H.R. Rep. No. 101-490, pt. 1, at 229 (1990) (“The objective is to achieve the standard as early as possible with effective and enforceable measures and without gaming by the States, industry, and others.“).
According to EPA, it “makes sense” for baseline emissions to be actual emissions “because those emissions are historic, as a baseline should be.” EPA Br. 41. Consequently, it insists, the provision‘s reference to actual emissions says nothing about “how States or EPA are to assess compliance with a milestone.” Id.; see
EPA argues that the flexibility afforded by the implementation-based approach is required by time schedules established in other regulations. Specifically, although the statute directs states to demonstrate milestone compliance within ninety days of that milestone being met,
EPA makes two final arguments: that actual emissions data is just as fallible as the modeling underlying the implementation-based method, and that its review, together with the contingency measures, will ensure that actual reductions occur. But EPA made neither of these arguments
Given that the implementation-based approach is “[un]reasonable in light of the Act‘s text, legislative history, and purpose,” we cannot defer to it. Southern California Edison Co. v. FERC, 116 F.3d 507, 511 (D.C. Cir. 1997). We thus have no need to reach Petitioners’ other arguments.
C.
Petitioners’ next challenge also relates to the 2018 Implementation Rule‘s interpretation of the reasonable further progress requirements. Specifically, they challenge the provision allowing states to choose between two alternative baseline years.
As explained above, the Act measures reasonable further progress from a starting baseline year. See South Coast II, 882 F.3d at 1152. Although the statute establishes a baseline year of 1990, it does not define baseline years for any future NAAQS.
In South Coast II, we considered a challenge to a similar provision in EPA‘s 2015 Implementation Rule. That provision allowed states to select an alternative baseline year between 2008 and 2012 if they provided appropriate justification. South Coast II, 882 F.3d at 1152. We found that the 2015 Rule‘s default year—2011, the year for the most recently available triennial emissions inventory preceding nonattainment designation—was reasonable because it was “tied to the three-year statutory cycle for emissions inventories.” Id. But because “EPA ha[d] failed to provide a statutory justification” when it came to the choice of an alternative baseline year, we vacated the alternative baseline year portion of the 2015 Rule. Id. at 1152–53.
Unlike in South Coast II, here EPA has “ground[ed] its reasons for” both baseline year alternatives “in the statute, rather than on reasoning divorced from the statutory text.” Id. at 1152 (internal quotation marks omitted). The default year definition in the 2018 Implementation Rule is the same one that we sustained in South Coast II as grounded in the statute. See id. at 1152–53. And the alternative year—“the year of the effective date of an area‘s designation,” 2018 Implementation Rule, 83 Fed. Reg. at 63,005—is also rooted in the statute, as 1990 was the year when nonattainment designations first took effect, see NRDC I, 777 F.3d at 464. Either option, then, represents a reasonable interpretation of the ambiguous baseline year provision.
Although Petitioners concede as much, see Oral Arg. Rec. 15:10-15:30, 18:18–18:30, they nonetheless take issue with EPA allowing states to choose between the two years. They argue that this choice has no grounding in the statute. But it does.
D.
Lastly, Petitioners dispute EPA‘s approach to the contingency measure requirements. SIPs must include contingency measures, or “specific measures to be undertaken if the area fails to make reasonable further progress, or to attain the national primary ambient air quality standard by the [applicable] attainment date.”
Petitioners challenge the 2018 Rule‘s provision “allow[ing] approval of already implemented measures as contingency measures, so long as” those measures meet other relevant parameters and the state does not rely on them for reasonable further progress or attainment demonstrations. 2018 Implementation Rule, 83 Fed. Reg. at 63,026. The Rule explains that this policy applies only outside of the Ninth Circuit, which has “rejected” EPA‘s interpretation “that allowed states to rely on control measures that are already in effect as a valid means to meet the contingency measure requirement.” Id.; see Bahr v. EPA, 836 F.3d 1218, 1235–36 (9th Cir. 2016). Instead, the Rule invokes a Fifth Circuit decision “upholding” EPA‘s interpretation as applied to a particular SIP. 2018 Implementation Rule, 83 Fed. Reg. at 63,026; see Louisiana Environmental Action Network v. EPA, 382 F.3d 575, 582–84 (5th Cir. 2004).
We agree with Petitioners and the Ninth Circuit that Congress has “directly spoken to the precise question at issue“—that is, that previously implemented measures cannot qualify as contingency measures. Chevron, 467 U.S. at 842–43. The Act‘s plain text expressly provides that valid contingency measures become operative only when the triggering conditions set forth in the statute occur, and not any earlier.
Using conditional and prospective language, both provisions require SIPs to include
EPA argues that “Congress was silent as to whether already-implemented measures could serve as contingency measures.” EPA Br. 53. As our court has explained, however, “[t]o suggest . . . that Chevron step two is implicated any time a statute does not expressly negate the existence of a claimed administrative power (i.e. when the statute is not written in ‘thou shalt not’ terms), is both flatly unfaithful to the principles of administrative law and refuted by precedent.” Railway Labor Executives’ Ass‘n v. National Mediation Board, 29 F.3d 655, 671 (D.C. Cir. 1994) (en banc). Nor, contrary to EPA‘s argument, does it make any difference that four judges in other circuits—three in the Fifth and one in the Ninth—have found the statute ambiguous. See, e.g., Adams Fruit Co. v. Barrett, 494 U.S. 638 (1990) (finding a provision unambiguous on an issue about which circuits had disagreed). Although we are always interested in knowing how our sister circuits have approached the same question in other cases, it is this court that is interpreting the statute here, and this court has concluded that the statute is unambiguous. That ends the matter. See Chevron, 467 U.S. at 842–43. EPA “cannot rely on its gap-filling authority to supplement the Clean Air Act‘s provisions when,” as here, “Congress has not left the agency a gap to fill.” Natural Resources Defense Council v. EPA, 749 F.3d 1055, 1064 (D.C. Cir. 2014).
III.
For the foregoing reasons, we grant in part and deny in part the petitions for
So ordered.