Natural Resources Defense Council v. E.P.A.

Decision Date10 July 2009
Docket NumberNo. 06-1046.,No. 07-1311.,No. 06-1047.,No. 06-1214.,No. 06-1045.,06-1045.,06-1046.,06-1047.,06-1214.,07-1311.
Citation571 F.3d 1245
PartiesNATURAL RESOURCES DEFENSE COUNCIL, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY, Respondent National Petrochemical & Refiners Association, et al., Intervenors.
CourtU.S. Court of Appeals — District of Columbia Circuit

Before: GINSBURG, HENDERSON and ROGERS, Circuit Judges.

Opinion for the Court filed PER CURIAM.

Opinion concurring in part and dissenting in part filed by Circuit Judge ROGERS.

PER CURIAM:

In 1997, the EPA revised the National Ambient Air Quality Standard (NAAQS) for ozone from a 1-hour standard to an 8-hour standard. These consolidated petitions for review challenge aspects of the Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard — Phase 2, 70 Fed.Reg. 71,612 (2005) (Phase 2 Rule), and Phase 2 of the Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard — Notice of Reconsideration, 72 Fed.Reg. 31,727 (2007) (Reconsideration Notice). We hold the Phase 2 Rule is inconsistent with the Clean Air Act (CAA or Act) in allowing participation in a regional cap-and-trade program to satisfy an area-specific statutory mandate. We further hold the EPA arbitrarily eliminated one safeguard and violated the anti-backsliding provision of the Act insofar as it eliminated another from its regulations governing review of new sources of pollution. We therefore grant the petitions with respect to those aspects of the Phase 2 Rule. In view of our decision in North Carolina v. EPA, 531 F.3d 896 (2008), in which we granted a petition for review of the Clean Air Interstate Rule (CAIR), we defer consideration of the Phase 2 Rule and Reconsideration Notice insofar as they relate to the CAIR program. We deny the petitions in all other respects.

I. Background

The Act requires the EPA to designate areas as attainment, nonattainment, or unclassifiable for each NAAQS. CAA § 107(d)(1)(B), 42 U.S.C. § 7407(d)(1)(B). States have primary responsibility for implementing those standards, and must submit a state implementation plan (SIP) that specifies how the state will achieve and maintain compliance with the NAAQS. Id. § 7407(a). Part D of the Act provides the SIP for a nonattainment area must include certain control measures. Id. § 7501 et seq. Subpart 1 applies to all nonattainment areas, id. §§ 7501-7509a, whereas Subpart 2 specifies additional requirements for ozone nonattainment areas, id. § § 7511-7511 f. Section 181 of the Act classifies ozone nonattainment areas from "marginal" to "extreme" based upon the degree to which the ozone level in the area exceeds the NAAQS. Id. § 7511. An area that exceeds the NAAQS by a greater margin is given more time to meet the standard but is subjected to progressively more stringent emissions controls for ozone precursors, namely, volatile organic compounds (VOCs) and oxides of nitrogen (NOx). See CAA § 182, 42 U.S.C. § 7511a.

In 1997, the EPA determined the NAAQS for ozone, expressed as the amount of ozone in the ambient air averaged over one hour, was inadequate to protect public health. The EPA therefore promulgated a new NAAQS of .08 ppm of ozone averaged over eight hours. Under the 8-hour standard, some ozone nonattainment areas are subject only to the more flexible requirements of Subpart 1, while areas with higher levels of ozone are subject to the additional requirements of Subpart 2. See S. Coast Air Quality Mgmt Dist. v. EPA, 472 F.3d 882, 893-95 (D.C.Cir.2006).

The EPA implemented the 8-hour NAAQS in two phases; the Phase 2 Rule and Reconsideration Notice here under review implement the requirements of Subpart 1 and Subpart 2 for areas not attaining the 8-hour NAAQS. The consolidated petitions challenge those rules as follows. The Natural Resources Defense Council, the States of New Jersey, Connecticut, and New York, and the National Petrochemical and Refiners Association challenge provisions implementing the statutory requirement that each nonattainment area provide for such emissions reductions as may be obtained by the adoption of reasonably available control technology (RACT). The NRDC and New Jersey challenge provisions governing review of new sources of pollution. The NRDC also challenges two provisions implementing the statutory requirements that a SIP for a nonattainment area provide for specific percentage reductions in emissions and for contingency measures. Finally, the Chamber of Greater Baton Rouge and affiliated petitioners1 challenge the imposition of reformulated gasoline requirements in the Baton Rouge area.

We review the EPA's interpretation of the Act pursuant to Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984): We ask first whether the Congress has "directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. 2778. If so, then we must "give effect to the unambiguously expressed intent of Congress." Id. at 843, 104 S.Ct. 2778. If, however, the "statute is silent or ambiguous with respect to the specific issue," then we defer to the EPA's interpretation as long as it is "based on a permissible construction of the statute." Id. The Act requires us to review the Phase 2 Rule deferentially to determine only whether it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." CAA § 307(d)(9)(A), 42 U.S.C. § 7607(d)(9)(A); see Bluewater Network v. EPA, 372 F.3d 404, 410 (D.C.Cir.2004) ("We give particular deference to the EPA when it acts under unwieldy and science-driven statutory schemes like the Clean Air Act") (internal quotation marks omitted).

II. Reasonably Available Control Technology

Section 172(c)(1) of the Act requires that the SIPs for nonattainment areas "provide for the implementation of all reasonably available control measures as expeditiously as practicable (including such reductions in emissions from existing sources in the area as may be obtained through the adoption, at a minimum, of reasonably available control technology)." 42 U.S.C. § 7502(c)(1) (emphasis added). Ozone nonattainment areas that are subject to Subpart 2 of Part D are subject to more specific reasonably available control technology requirements. E.g., id. § 7511a(b)(2)(C); id. § 7511a(f). Petitioners challenge three aspects of the implementation of the RACT requirement in the Phase 2 Rule. First, the NRDC challenges the rule providing that RACT is satisfied for Subpart 1 areas by SIPs "demonstrating that the area has adopted all control measures necessary to demonstrate attainment as expeditiously as possible," Phase 2 Rule, 70 Fed.Reg. at 71,701 (codified at 40 C.F.R. § 51.912(c)(1)). Second, the State of New Jersey challenges the EPA's decision to allow states to meet the RACT requirement under the 8-hour NAAQS by certifying that RACT is met under the 1-hour NAAQS, see id. at 71,652-53. Third, the NRDC, New Jersey, the States of Connecticut and New York, and the National Petrochemical and Refiners Association challenge the EPA's conclusion that states may satisfy the RACT requirement by participating in two cap-and-trade programs, the NOx SIP Call and CAIR, see id. The court has stayed consideration of the CAIR-RACT determination.2

A. RACT in Subpart 1 Nonattainment Areas

The NRDC challenges the Phase 2 Rule's treatment of the "reasonably available control technology" requirement of CAA § 172(c)(1), 42 U.S.C. § 7502(c)(1). Under the Phase 2 Rule, nonattainment areas governed by Subpart 1 that request an attainment deadline within five years of their designation "shall meet the RACT requirement by submitting an attainment demonstration SIP demonstrating that the area has adopted all control measures necessary to demonstrate attainment as expeditiously as practicable." Phase 2 Rule, 70 Fed.Reg. at 71,701/3 (codified at 40 C.F.R. § 51.912(c)(1)). The NRDC contends that this provision is an unlawful waiver of the RACT requirement of § 172(c)(1) because, under the Phase 2 Rule, a state need not require RACT at all in such areas. It views the statutory phrase "at...

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