Natural Resources Defense Council, Inc. v. SCAQMD

Decision Date07 January 2010
Docket NumberCase No. CV-08-05403-GW.
Citation694 F. Supp.2d 1092
PartiesNATURAL RESOURCES DEFENSE COUNCIL, INC.; Communities for a Better Environment; Coalition for a Safe Environment; and Desert Citizens Against Pollution, Plaintiff, v. SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT; Governing Board of the South Coast Air Quality Manage-Ment District; and Barry Wallerstein, Executive Office, Defendants.
CourtU.S. District Court — Central District of California

Adriano Martinez, David R. Pettit, Natural Resources Defense Council, Santa Monica, CA, Adrienne Bloch, Shana D.G. Lazerow, Communities for a Better Environment, Oakland, CA, Angela Johnson Meszaros, Angela Johnson Meszaros Law Offices, South Pasadena, CA, for Plaintiffs.

Bradley R. Hogin, Woodruff Spradlin and Smart, Orange, CA, Ricia R. Hager, Woodruff Spradlin and Smart, Costa Mesa, CA, for Defendants.


GEORGE H. WU, District Judge.


This case is a citizen suit under Section 304 of the Clean Air Act (sometimes referenced herein as the "Act"), 42 U.S.C. § 7604, brought by the Natural Resources Defense Council, Communities for a Better Environment, Coalition for a Safe Environment, and Desert Citizens Against Pollution (collectively "Plaintiffs") against the South Coast Air Quality Management District, its Governing Board and Executive Officer (collectively "Defendants"). The case involves the "offset" requirements of Defendants' "new source review" program required by Section 174 of the Act (42 U.S.C. § 7503(c)) for "nonattainment" regions. Under that program, before Defendants may allow construction of certain types of new and/or modified sources of air pollution, they must ensure that any emissions increases are offset by corresponding emissions reductions. Plaintiffs have challenged the validity of certain "internal" offsets (such as "priority reserve allocations") which Defendant South Coast Air Quality Management District ("SCAQMD") periodically utilizes and holds in an "internal bank."

On August 18, 2008, Plaintiffs filed this action seeking declaratory and injunctive relief after giving more than 60 days notice to the Defendants and the United States Environmental Protection Agency ("EPA"). On October 8, 2008, Defendants filed a motion to dismiss under Federal Rules of Civil Procedure ("F.R.C.P.") 12(b)(1) and 12(b)(6) on the grounds that this court lacks jurisdiction to hear the claims set forth in the Complaint, and/or the Complaint fails to state a claim for which relief can be granted. Hearings on that motion were held on December 11, 2008 and on February 2, March 19, May 5, July 6,1 and August 31, 2009. After considering the moving, opposition, reply and supplemental briefs, the concomitant exhibits, the documents in the case file, materials subject to judicial notice, and the oral arguments at the hearings, the court grants Defendants' motion to dismiss for the reasons stated by this court at the hearings and as further memorialized herein.


The Clean Air Act sets forth a comprehensive regulatory scheme for the reduction and prevention of air pollution by the States and the Federal Government. General Motors Corp. v. United States, 496 U.S. 530, 532, 110 S.Ct. 2528, 110 L.Ed.2d 480 (1990); Latino Issues Forum v. United States EPA, 558 F.3d 936, 938 (9th Cir.2009). The scheme is designed to achieve and maintain compliance with the "National Ambient Air Quality Standards" ("NAAQS") established by the EPA.2 For planning purposes, EPA has divided each state into separate "air quality control regions." 42 U.S.C. § 7407; 40 C.F.R. Part 81. EPA classifies each region based on whether the region meets the NAAQS. 42 U.S.C. § 7407(d); 40 C.F.R. Part 81, Subpart C. If a region has not achieved the NAAQS for a particular pollutant,3 EPA designates that region as "nonattainment" for that pollutant. 42 U.S.C. § 7501(2).

The NAAQS are maintained in part through "State Implementation Plans" or "SIPs." 42 U.S.C. § 7410(a)(1). SIPs contain specific control measures that are designed to achieve compliance with the NAAQS within the designated air quality control regions. The Act sets forth a number of general requirements for the content of SIPs. 42 U.S.C. § 7410(a)(2). SIPs must contain certain types of control measures including, inter alia, emissions limitations, compliance schedules, monitoring requirements, and enforcement mechanisms. Id. Within these general parameters, however, the states have substantial discretion to determine the specific air pollution control strategies set forth in their SIPs. See Alaska Dept. of Environmental Conservation v. EPA, 540 U.S. 461, 470, 124 S.Ct. 983, 157 L.Ed.2d 967 (2004); Union Electric Co. v. EPA, 427 U.S. 246, 250, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976). Each state is free to determine the particular, "mix of emissions limitations" set forth in a SIP, as long as the SIP will achieve and maintain compliance with the NAAQS. Train v. Natural Res. Defense Council, 421 U.S. 60, 79, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975); see also Union Electric Co., 427 U.S. at 250, 96 S.Ct. 2518.

The Act sets forth a detailed process for the preparation, adoption, and revision of SIPs. 42 U.S.C. § 7410. Each state must prepare a proposed SIP and submit it to EPA for review and approval. Id. at § 7410(a). EPA must consider whether the SIP meets all applicable requirements under the Act. Id. at § 7410(k)(3). Once EPA approves a SIP, the SIP "has the force and effect of federal law". Safe Air for Everyone v. U.S. EPA, 488 F.3d 1088, 1096-97 (9th Cir.2007); Oregon Envtl. Council v. Oregon Dep't of Envtl. Quality, 775 F.Supp. 353, 355 (D.Or.1991). After approval, EPA can require revisions to an existing SIP if EPA determines that the SIP is substantially inadequate to achieve or maintain the NAAQS, or otherwise fails to comply with the Clean Air Act. 42 U.S.C. § 7410(k)(5). EPA requests for SIP revisions are commonly referred to as "SIP calls." See e.g. Sierra Club v. Georgia Power Co., 443 F.3d 1346, 1348 (11th Cir.2006).

A. The Clean Air Act's Offsets Requirement for SIPs

The Act sets forth certain requirements for nonattainment area SIPs. See Clean Air Act, Subchapter I, Part D, 42 U.S.C. §§ 7501-09a. Among other control measures, each nonattainment area SIP must contain a permitting program governing the construction and operation of "new and modified major stationary sources." 42 U.S.C. § 7502(c)(5). Such permit programs are often referred to as "new source review" or "NSR" programs. Each new source review program must set forth "pre-construction review" requirements that applicants must meet before the permitting agencies may issue permits to construct or operate any equipment that will increase nonattainment emissions. 40 C.F.R. § 51.165(a)(2).

This case involves the Act's "offset" provision, set forth in Section 173 of the Act (42 U.S.C. § 7503). Section 173(a)(1) provides that each new source review permit program set forth in a nonattainment area SIP must require that emission increases from new and modified major sources be offset by corresponding emissions reductions. Section 173(a)(1) states in relevant part as follows:

The permit program required by section 7502(b)(6)4 of this title shall provide that permits to construct and operate may be issued if—
(1) ... the permitting agency determines that—
(A) by the time the source is to commence operation, sufficient offsetting emissions reductions have been obtained, such that total allowable emissions from existing sources in the region, from new or modified sources which are not major emitting facilities, and from the proposed source will be sufficiently less than total emissions from existing sources (as determined in accordance with the regulations under this paragraph) prior to the application for such permit to construct or modify so as to represent (when considered together with the plan provisions required under section 7502 of this title) reasonable further progress (as defined in section 7501 of this title)....

An "offset" is a reduction of nonattainment pollutant emissions in an amount equal to, or somewhat greater than, the emissions increase of the same pollutant from the proposed new or modified stationary source or equipment. 42 U.S.C. § 7503(c)(1). A company might be allowed to create offsets, for example, by permanently shutting down a permitted piece of equipment, or curtailing production or operating hours. 40 C.F.R. § 51.165(a)(3)(i)(C)(1). Once created, companies may also be able to "bank" offsets, use them at a later time, and/or sell them to other companies.5

Each specific SIP offset requirement adopted pursuant to Section 173(a)(1) must meet the general criteria set forth in Section 173(c). Section 173(c) generally states that permit programs in the SIP must provide, inter alia, that: 1) the offsets come from the same geographic area as the new source (Section 7503(c)(1)), 2) the offsets be "in effect and enforceable" by the time that the new source commences operation (id.), and 3) the offsets be "surplus" in the sense that they are not otherwise required by the Clean Air Act. 42 U.S.C, § 7503(c)(2). In adopted regulations, EPA has provided further guidance on the required content of new source review programs, and offset requirements in particular. See generally, 40 C.F.R. § 51.165.

If the EPA determines that a State is not adequately implementing the provisions of its SIP for the nonattainment region in which a proposed new source of air pollutant emissions is to be constructed or modified, the EPA can order that no permits be issued by the State or its designee within the area until the problem is remedied. 42 U.S.C. § 7503(a)(4).6

B. Regulation XIII's Offset Requirements for Sources

EPA has designated the "South Coast Air Basin" ("South Coast Basin" or "Basin") as an air quality region under the Act. It consists of the urban portions of Los Angeles,...

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