Indiana v. Envtl. Prot. Agency, 14–3214.

• Decision Date: 07 August 2015
• Docket Number: No. 14–3214.,14–3214.
• Citation: 796 F.3d 803
• Parties: State of INDIANA, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

796 F.3d 803

State of INDIANA, Petitioner

v.ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 14–3214.

United States Court of Appeals, Seventh Circuit.

Argued June 5, 2015.

Decided Aug. 7, 2015.

Frances Barrow, David L. Steiner, Timothy J. Junk, Deputy Assistant Attorney General, Office of the Attorney General, Indianapolis, IN, for Petitioner.

Avi S. Garbow, Environmental Protection Agency, Patrick Jacobi, Department of Justice, Washington, DC, Bharat Mathur, Environmental Protection Agency, Chicago, IL, for Respondent.

Before WOOD, Chief Judge, and FLAUM and EASTERBROOK, Circuit Judges.

Opinion

FLAUM, Circuit Judge.

Pursuant to the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., the Environmental Protection Agency sets standards that specify the maximum permissible atmospheric concentrations for certain harmful air pollutants, including ozone. Geographic areas (which do not necessarily respect state borders) are classified by EPA as “attainment” or “nonattainment” depending on whether they meet the standard for a given pollutant. All states are required to draft a State Implementation Plan (“SIP”) for each pollutant, which outlines the state's plan for how it seeks to achieve or maintain attainment, and which must be approved by EPA. All SIPs are subject to certain statutory and regulatory requirements; the requirements are more stringent for states with areas in nonattainment. States cannot revise their SIPs without EPA approval.

If an area within a state is in nonattainment for ozone, the state's SIP must include an automobile emissions testing program. States have some leeway in designing their programs, as long as they meet certain performance standards. Prior to 2005, Illinois used an emissions testing program that tested the emissions of vehicles from all model years; that program was included in the state's SIP. In 2005, though, Illinois passed a law which relaxed its emissions testing program by exempting pre–1996 model-year vehicles that met certain standards. That change went into effect in 2007, but Illinois did not seek EPA approval at the time. Finally, in late 2012, Illinois submitted a proposed SIP revision to EPA seeking approval of the changes to its emissions testing program.

After the requisite notice-and-comment period, during which the state of Indiana objected to the proposed change, EPA approved Illinois's SIP revision in 2014. Indiana then filed this petition for review, challenging the EPA approval. Indiana argues, essentially, that the relaxation of Illinois's emissions testing program will decrease the likelihood that the “Chicago area”—which includes two Indiana counties—will achieve attainment with regard to ozone in the near future. As evidence, Indiana points to its own scientific analysis, which suggests that Illinois's (unauthorized) use of a relaxed testing procedure was a but-for cause of a single measured Chicago-area violation of the national ozone standard in 2011. That single violation, in turn, resulted in the Chicago area being classified as nonattainment. In other words, Indiana argues that, if Illinois had not relaxed its testing program, Chicago's ozone levels would have met the national standard, and the area would now be in attainment. According to Indiana, this evidence demonstrates that the change in Illinois's testing program will impermissibly “interfere with ... attainment,” and therefore that the SIP revision should have been disallowed by EPA pursuant to Section 110(l ) of the CAA. 42 U.S.C. § 7410(l ).

On the preliminary question of whether a justiciable controversy exists, we conclude that Indiana has standing to bring this petition for review. However, because EPA did not act arbitrarily and capriciously in approving the SIP revision, we deny Indiana's petition.

I. Background

A. Regulatory Background

We summarized much of the relevant regulatory background for this case in Sierra Club v. U.S. EPA, 774 F.3d 383 (7th Cir.2014) :

The Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., establishes a comprehensive program for controlling and improving the nation's air quality through both state and federal regulation. Title I of the CAA charges the Environmental Protection Agency Administrator with identifying air pollutants that endanger public health and welfare and with formulating National Ambient Air Quality Standards (“NAAQS”) that specify the maximum permissible concentration of those pollutants in the ambient air. Id. §§ 7408–09. Pursuant to the CAA, EPA designates areas of the country as either “attainment,” “nonattainment,” or “unclassifiable” for specific NAAQS, based on whether the area has attained the standard and/or contributes to a nearby area's nonattainment. Id. § 7407(d).

Primary responsibility for ensuring that ambient air quality satisfies the NAAQS falls to the states. Id. § 7407(a). Each state must draft a state implementation plan (“SIP”) for each pollutant, the review of which is conducted by EPA according to the process outlined in section 110(k) of the CAA. Id. § 7410(a), (k). Although certain SIP requirements apply to an area regardless of its designation, nonattainment areas are subject to more regulations as compared to attainment areas.See id. § 7501–15.1.

Relevant to this case, ozone is among the pollutants that EPA has identified and, consequently, for which EPA has promulgated NAAQS. See 40 C.F.R. pt. 50.

Id. at 386–87. At issue in this case is the 2008 ozone standard, which is set to 0.075 parts per million (“ppm”) measured over an eight-hour period. 40 C.F.R. § 50.15.

The purpose of SIPs is to “provide[ ] for implementation, maintenance, and enforcement of [the NAAQS] in each air quality control region (or portion thereof) within” a state. 42 U.S.C. § 7410(a)(1). The SIP must include “enforceable emission limitations and other control measures, means, or techniques” that will be implemented so that each area in the state can maintain or achieve attainment for a given pollutant by the area's statutory attainment deadline. Id. § 7410(a)(2)(A). States have primary responsibility in formulating and revising the rules in their SIPs, but it is the EPA that must review and approve SIP modifications. Id. § 7410(a), (k). If EPA determines that a SIP is complete and meets all applicable requirements, “the Administrator shall approve” the SIP. Id. § 7410(k)(2)-(3) (emphasis added). However, Section 110(l ) of the CAA—the “antibacksliding” provision—states that EPA “shall not approve a revision of a [SIP] if the revision would interfere with any applicable requirement concerning attainment ... or any other applicable requirement” under the Act. 42 U.S.C. § 7410(I). Once it is approved by EPA, a state rule embodied in a SIP becomes enforceable federal law. See Gen. Motors Corp. v. United States, 496 U.S. 530, 540, 110 S.Ct. 2528, 110 L.Ed.2d 480 (1990). EPA can enforce existing SIP provisions through a variety of sanctions, 42 U.S.C. §§ 7413, 7509 ; citizen suits to enforce certain SIP requirements, including vehicle emissions inspection programs, are also authorized. Id. § 7604(a)(1).

EPA has interpreted Section 110(l ) to allow states to demonstrate that a SIP revision will not “interfere” with attainment in one of two ways: a state may either submit an air quality analysis, or a state may identify “substitute equivalent emissions reductions to compensate for any change to a SIP approved program, as long as actual emissions in the air are not increased.” 78 Fed.Reg. 68,378, 68,382 (Nov. 14, 2013). The second option allows a state seeking approval of a SIP revision to provide EPA with (1) an estimate of how much excess pollution will result from the revision and (2) a list of contemporaneous pollution-control measures—such as factory closures—along with estimates of the extent to which each of these measures is expected to decrease pollution. If the pollution reductions listed in (2) are equal to or greater than the pollution increase described in (1), EPA will conclude that the SIP revision does not “interfere with” NAAQS attainment. See id. (defining “equivalent emissions reductions”). The purpose behind this interpretation, according to EPA, is to allow states to pick and choose the manner in which they seek to achieve attainment, as long as they can show that net emissions are decreasing. In order to be considered in this calculus, however, substitute emissions reductions must be permanent, enforceable, and quantifiable. Id. They must also be “contemporaneous” with the proposed SIP revision. Id. Finally, they must be “surplus,” meaning that they have not been “otherwise relied on to meet air quality attainment requirements in air quality programs related to” the SIP. EPA, Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans (2012), available at http://www.epa.gov/airquality/eere/pdfs/appendixC.pdf. In other words, a given emissions reduction can only be credited once; that ensures that the same factory closure, for example, cannot be used over and over again by the state as a compensatory offset for multiple emissions increases.

The CAA requires that a state with areas designated as nonattainment for ozone include motor vehicle inspection and maintenance programs (“I/M programs”) in its SIP. 42 U.S.C. § 7511a. I/M programs help to reduce emissions from automobiles, thereby improving air quality. Depending on the severity of an area's nonattainment (which can be “marginal,” “moderate,” “serious,” “severe,” or “extreme,”), the state must implement either a “Basic” or a more stringent “Enhanced” I/M program. Id. EPA has established recommended I/M programs, but states are free to design and implement alternate programs that meet or exceed minimum performance standards. See 40 C.F.R. § 51.350 –.372.

The “Alternate Low Enhanced” I/M performance standard is available to areas that meet certain emissions requirements. See id. § 51.351(g)(7). The model program elements for that standard...