Air v. Usepa ( 2015 )


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  •                  FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    ASSOCIATION    OF       IRRITATED       No. 13-73398
    RESIDENTS, a California non-profit
    corporation,
    Petitioner,      OPINION
    v.
    U.S. ENVIRONMENTAL PROTECTION
    AGENCY; GINA MCCARTHY, in her
    official capacity as Administrator of
    the U.S. Environmental Protection
    Agency; JARED BLUMENFELD, in his
    official capacity as Regional
    Administrator for region IX of the
    U.S.     Environmental    Protection
    Agency,
    Respondents,
    FOSTER POULTRY FARMS; FOSTER
    FARMS LLC; DAIRY CARES; SAN
    JOAQUIN VALLEY UNIFIED AIR
    POLLUTION CONTROL DISTRICT; AIR
    COALITION TEAM,
    Respondents-Intervenors.
    2           ASS’N OF IRRITATED RESIDENTS V. EPA
    On Petition for Review of an Order of the
    Environmental Protection Agency
    Argued and Submitted
    February 10, 2015—San Francisco, California
    Filed June 23, 2015
    Before: Mary M. Schroeder, Senior Circuit Judge, Barry
    G. Silverman, Circuit Judge, and Marvin J. Garbis, Senior
    District Judge. *
    Opinion by Judge Garbis
    SUMMARY **
    Environmental Law
    The panel denied a petition for review brought by the
    Association of Irritated Residents seeking review of the
    United States Environmental Protection Agency’s
    promulgation of 
    40 C.F.R. § 52.245
     under § 110(k)(6) of
    the Clean Air Act, an error-correcting provision, after the
    EPA determined that it had mistakenly approved certain
    *
    The Honorable Marvin J. Garbis, Senior United States District
    Judge for the District of Maryland, sitting by designation.
    **
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    ASS’N OF IRRITATED RESIDENTS V. EPA              3
    New Source Review rules in 2004 as part of California’s
    State Implementation Plan.
    The panel held that the EPA was not arbitrary, nor did it
    abuse its discretion, in correcting the prior approval of the
    New Source Review rules after it learned that California
    law, California Senate Bill 700, did not authorize the San
    Joaquin Air Control District to require new source permits
    or emissions for minor agricultural sources. The panel
    further held that because those rules conflicted with state
    law, they should not have been incorporated into the State
    Implementation Plan, and the EPA did not act improperly
    in correcting its prior approval.
    The panel held, as a matter of first impression, that the
    EPA reasonably interpreted § 110(k)(6) of the Clean Air
    Act to grant the EPA authority to amend retroactively its
    approval of the 2004 New Source Review rules.
    COUNSEL
    Brent Newell (argued), Center on Race, Poverty & the
    Environment, Oakland, California; Sofia Parino, Center on
    Race, Poverty & the Environment, San Francisco,
    California, for Petitioners.
    Robert Dreher, Acting Assistant Attorney General, and
    Simi Bhat (argued), Environmental Defense Section,
    Environmental & Natural Resources Division, United
    States Department of Justice, Washington, D.C.; Jefferson
    Wehling, United States Environmental Protection Agency,
    Region IX, Office of Regional Counsel, San Francisco,
    California; Scott Jordan, United States Environmental
    4         ASS’N OF IRRITATED RESIDENTS V. EPA
    Protection Headquarters, Office of General Counsel,
    Washington, D.C., for Respondents.
    Philip M. Jay (argued), Rissa A. Stuart, and Ann M.
    Grottveit, Kahn, Soares & Conway, LLP, Sacramento,
    California, for Respondent-Intervenor Air Coalition Team.
    David E. Cranston and Sedina L. Banks, Greenberg
    Glusker Fields Claman & Machtinger LLP, Los Angeles,
    California, for Respondent-Intervenor Dairy Cares.
    Timothy S. Bishop (argued), Mayer Brown LLP, Chicago,
    Illinois; Carmine R. Zarlenga, Michael B. Kimberly, and
    Matthew A. Waring, Mayer Brown LLP, Washington,
    D.C., for Respondents-Intervenors Foster Farms, LLC and
    Foster Poultry Farms, Inc.
    Catherine T. Redmond, Special Advisory Counsel, and
    Annette Ballatore-Williamson (argued), District Counsel,
    San Joaquin Valley Unified Air Pollution Control District,
    Fresno, California, for Respondent-Intervenor San Joaquin
    Valley Unified Air Pollution Control District.
    OPINION
    GARBIS, District Judge:
    Petitioner, Association of Irritated Residents (“AIR”),
    petitions this court for review of the United States
    Environmental Protection Agency’s (“EPA”) promulgation
    of 
    40 C.F.R. § 52.245
    , a regulation that revised the scope of
    a previous EPA decision. The EPA promulgated the
    regulation under § 110(k)(6) of the Clean Air Act (“CAA,”
    ASS’N OF IRRITATED RESIDENTS V. EPA                5
    “Act”), an error-correcting provision, after the Agency
    determined that it had mistakenly approved certain New
    Source Review rules in 2004 as part of California’s State
    Implementation Plan.
    This case requires the court to address two matters.
    First, this court must decide whether the EPA reasonably
    determined that it made the error. This court holds that the
    EPA was not arbitrary, nor did it abuse its discretion in
    correcting its prior approval of the New Source Review
    rules after it learned that California law, specifically Senate
    Bill 700, did not authorize the San Joaquin Air Control
    District to require new source permits or emissions offsets
    for minor agricultural sources. Because those rules
    conflicted with state law, they should not have been
    incorporated into the State Implementation Plan in 2004;
    thus, the EPA did not act improperly in correcting its prior
    approval.
    Second, as a matter of first impression, this court must
    decide whether § 110(k)(6) of the CAA grants the EPA
    authority to amend retroactively its approval of the 2004
    New Source Review rules. Petitioner argues that the other
    enumerated actions in § 110(k) strictly limit the EPA’s
    methods of revising an error. Using the standard set forth
    in Chevron, U.S.A., Inc. v. Natural Resources Defense
    Council, Inc., 
    467 U.S. 837
     (1984), we find that § 110(k)(6)
    does not clearly speak to the issue at hand. In light of this
    ambiguity, the EPA reasonably interpreted § 110(k)(6)’s
    requirement that the EPA “revise such [erroneous] action as
    appropriate” to encompass a retroactive limitation of its
    previous approval. Accordingly, we deny the petition for
    review.
    6         ASS’N OF IRRITATED RESIDENTS V. EPA
    I. Background
    A. The Clean Air Act
    Congress enacted the CAA amendments in 1970 “to
    protect and enhance the quality of the Nation’s air
    resources so as to promote the public health and welfare
    and the productive capacity of its population.” 
    42 U.S.C. § 7401
    (b)(1). At that time, Congress also created the EPA
    and charged it with setting National Ambient Air Quality
    Standards (“NAAQS”) for various harmful air pollutants at
    levels necessary to protect the public health and welfare.
    
    42 U.S.C. §§ 7408
    , 7409. The EPA must designate areas
    for each NAAQS as attainment (it meets the EPA-set
    pollutant level), nonattainment (it does not meet the EPA-
    set pollutant level), or unclassifiable.        
    42 U.S.C. § 7407
    (d)(1).      The EPA is charged with assuring
    compliance with environmental laws and taking
    enforcement action against violations. See 
    42 U.S.C. § 7413
    (a), (b).
    Under the CAA, the EPA works with the states
    pursuant to a model of cooperative federalism to achieve
    the statute’s environmental goals. Vigil v. Leavitt, 
    381 F.3d 826
    , 830 (9th Cir. 2004). The Act delegates to the states
    “primary responsibility for assuring air quality” within their
    respective boundaries and requires each state to develop a
    State Implementation Plan (“SIP”), “which will specify the
    manner in which [the NAAQS] will be achieved and
    maintained.” 
    42 U.S.C. § 7407
    (a). In California’s San
    Joaquin Valley, the San Joaquin Valley Unified Air
    Pollution Control District (the “District”) promulgates and
    enforces regulations to meet the standards set by the EPA.
    A state submits its SIP to the EPA for review and approval
    whenever the NAAQS are updated. 
    42 U.S.C. § 7410
    (a).
    Once an adequate SIP (one that meets the Act’s
    ASS’N OF IRRITATED RESIDENTS V. EPA                         7
    requirements) is approved by the EPA, it has “the force and
    effect of federal law.” Safe Air for Everyone v. EPA, 
    488 F.3d 1088
    , 1091 (9th Cir. 2007). The CAA requires states
    to give the EPA “necessary assurances” that state law
    authorizes the air control districts to carry out any rules
    contained in the SIP. 
    42 U.S.C. § 7410
    (a)(2)(E).
    In 1977, Congress enacted the CAA’s New Source
    Review (“NSR”) program “to strengthen the safeguards
    that protect the nation’s air quality.” New York v. EPA,
    
    413 F.3d 3
    , 10 (D.C. Cir. 2005). The NSR program
    requires new and modified major sources, 1 in non-
    attainment areas, to acquire construction permits, install
    Best Available Control Technology (“BACT”), and
    purchase offsets from other sources (emission reductions).
    
    42 U.S.C. §§ 7502
    (c), 7503(a). A minor source is subject
    to the EPA regulations, although it is not required to have
    NSR permits for all construction activities. A minor source
    is not subject to offset requirements unless the state
    chooses to establish them as part of the SIP.
    B. California’s Implementation of the Clean Air
    Act
    California’s Central Valley, which includes the San
    Joaquin Valley, has, and at all times relevant hereto, had, a
    major air pollution problem. In 2004, the EPA designated
    1
    A major source is defined as a source that emits above a threshold
    level of any air pollutant. See, e.g., 42 U.S.C. § 7511a(e) (designating a
    source as major when it has the potential to emit at least ten tons of
    volatile organic compounds a year). A minor source is one that is not
    major.
    8        ASS’N OF IRRITATED RESIDENTS V. EPA
    the San Joaquin Valley as a non-attainment area for the 8-
    hour ozone standard. See 
    69 Fed. Reg. 23,858
    , 23,889
    (Apr. 30, 2004).
    Ground-level ozone (aka smog) forms when volatile
    organic compounds (“VOCs”) react with nitrogen oxides in
    the presence of heat and sunlight during the summer.
    Ozone pollution causes serious health problems, including
    damaging lung tissue and exacerbating asthma and other
    respiratory diseases. 69 Fed. Reg. at 23,859–60.
    The District estimated that, even with air pollution
    controls, confined animal facilities were among the largest
    sources of VOCs in the Valley. Nevertheless, California’s
    former California Health & Safety Code § 42310(e)
    exempted agricultural operations, including those that
    would be considered major sources under the CAA, from
    the NSR permit obligations until 2003. Due to this blanket
    exemption, the EPA would not accept the District’s
    proposed NSR Rules to the SIP because California could
    not “give necessary assurances” that it had authority under
    state law to carry out the SIP. See 
    68 Fed. Reg. 37,746
    ,
    37,747 (June 25, 2003).
    In order to avoid sanctions and loss of federal highway
    funding, the California legislature passed Senate Bill 700
    (“SB 700”) in September 2003, which removed the blanket
    exemption that had previously excused all agricultural
    sources from the CAA’s NSR requirements. California
    state law then required major agricultural sources to meet
    the pollution controls required by the CAA and the
    proposed NSR Rules. However, SB 700 retained narrow
    ASS’N OF IRRITATED RESIDENTS V. EPA                     9
    exemptions 2 that excused certain minor agricultural sources
    from NSR permitting and offset requirements.
    Around this same time, the EPA considered District
    Rules 2020 and 2201 (the “2004 NSR Rules”), which the
    District had submitted in 2002 to the EPA for approval.
    The 2004 NSR Rules required new source permits and
    offset requirements for all new and modified stationary
    sources of air pollution, whether major or minor. See
    
    68 Fed. Reg. 7,330
    , 7,331 (Feb. 13, 2003). In evaluating
    the 2004 NSR Rules, the EPA failed to realize that the
    Rules conflicted with SB 700, which continued to exempt
    certain minor agricultural sources. The EPA approved the
    2004 NSR Rules – sans exemptions for minor agricultural
    sources – which became effective on June 16, 2004. See
    
    69 Fed. Reg. 27,837
     (May 17, 2004).
    Beginning in 2005, AIR filed three citizen suits 3 in the
    Eastern District of California against dairy farms that were
    minor agricultural sources under the CAA. See Assoc. of
    Irritated Residents v. C & R Vanderham Dairy, No. 05-
    01593 (E.D. Cal. Dec. 15, 2005) (“Vanderham”); Assoc. of
    Irritated Residents v. Fred Schakel Dairy, No. 05-00707
    (E.D. Cal. June 1, 2005); Assoc. of Irritated Residents v.
    Foster Farms, LLC, No. 06-01648 (E.D. Cal. Nov. 15,
    2006). AIR alleged that the dairies violated the 2004 NSR
    Rules by not obtaining a permit, purchasing offsets, or
    2
    
    Cal. Health & Safety Code § 42301.18
    (c) (“Offset Provision”). See
    also 
    Cal. Health & Safety Code § 39011.5
    (b) ,(c) (“Savings Clauses”).
    3
    An approved SIP may be enforced by citizens in federal court as
    well as by the EPA. 
    42 U.S.C. § 7604
    (a).
    10        ASS’N OF IRRITATED RESIDENTS V. EPA
    installing BACT.       See, e.g., Vanderham, 
    2007 WL 2815038
    , at *1 (E.D. Cal. Sept. 25, 2007). In Vanderham,
    the district court granted summary judgment in favor of
    AIR and held that the defendants violated the 2004 NSR
    Rules. 
    Id. at *29
    .
    C. The EPA’s Error
    After the Vanderham decision, the EPA realized that it
    had made an error in approving the 2004 NSR Rules,
    because the District did not have authority under SB 700 to
    enforce the permit and offset provisions of those Rules
    against certain minor agricultural sources. Specifically, the
    EPA found that the District did not have authority under
    SB700 “to require permits for new or modified minor
    agricultural sources with actual emissions less than 50
    percent of the major source threshold or to require new
    minor agricultural sources or minor modifications to
    agricultural sources to obtain emission reduction offsets.”
    See 
    78 Fed. Reg. 46,504
    , 46,505-06 (Aug. 1, 2013); 
    Cal. Health & Safety Code §§ 42301.16
    , 42301.18(c).
    However, the CAA requires SIP revisions to be supported
    by necessary assurances from the State that the District will
    have adequate authority under State law to carry out the
    revised SIP. See 78 Fed. Reg. at 46, 511; 
    42 U.S.C. § 7410
    (a)(2)(E).
    In 2008 and 2009, California submitted SIP revisions to
    amend the 2004 NSR Rules to include the state law
    exemptions. In 2010, the EPA proposed a rule that would
    modify its 2004 approval and correct the mismatch between
    state law and the SIP. See 
    75 Fed. Reg. 4,745
     (Jan. 29,
    2010). The new 2010 NSR Rules, complete with the state
    exemptions, replaced the 2004 NSR Rules and were
    incorporated into the SIP. See 
    75 Fed. Reg. 26,102
     (May
    11, 2010). However, this fix was only prospective and did
    ASS’N OF IRRITATED RESIDENTS V. EPA               11
    not eliminate the mismatch between the SIP and state law
    that existed from 2004 to 2010.
    To correct this error retroactively, the EPA relied on
    § 110(k)(6) of the CAA which states:
    Whenever the Administrator determines that
    the Administrator’s action approving,
    disapproving, or promulgating any plan or
    plan revision (or part thereof), . . . was in
    error, the Administrator may in the same
    manner as the approval, disapproval, or
    promulgation revise such action as
    appropriate without requiring any further
    submission from the State.              Such
    determination and the basis thereof shall be
    provided to the State and public.
    
    42 U.S.C. § 7410
    (k)(6). Specifically, the EPA proposed
    correcting its error by amending its previous approval of
    the 2004 NSR Rules so that the approval was limited to be
    consistent with state law. 78 Fed. Reg. at 46,506. The EPA
    considered a retroactive limited approval to be the most
    appropriate response because it was a “narrowly tailored”
    approach that retained most of the pollution control aspects
    of the 2004 NSR Rules but still remedied the mismatch
    between the SIP and state law. See 78 Fed. Reg. at 46,511.
    In light of this proposed action, the district court stayed the
    Vanderham and other citizen suits cases pending judicial
    review of the EPA’s final action. See Vanderham, 
    2008 WL 678590
    , at *2 (E.D. Cal. Mar. 11, 2008); Fred Schakel
    Dairy, 
    634 F. Supp. 2d 1081
    , 1096 (E.D. Cal. 2008); Foster
    Farms, 06-1648, Minute Order (E.D. Cal. Aug. 13, 2013)
    (No. 66).
    12        ASS’N OF IRRITATED RESIDENTS V. EPA
    Before the EPA finalized its error correction in 2013, it
    requested the California Attorney General to interpret SB
    700 and its bearing on the District’s authority to require
    permits and offsets from minor agricultural sources. In two
    letters, the Attorney General confirmed the EPA’s view
    that SB 700 did not give the District authority to apply the
    2004 NSR Rules to certain minor agricultural sources or
    require offsets.
    The EPA then revised the scope of its 2004 approval,
    78 Fed. Reg. at 46,511, and promulgated the final rule
    limiting its 2004 approval to cover only the air pollution
    controls allowed by state law. See 
    40 C.F.R. § 52.245
    . The
    new regulation states:
    (a) Approval of the [2004] New Source
    Review rules for the San Joaquin Valley
    Unified Air Pollution Control District Rules
    2020 and 2201 as approved on May 17,
    2004 in § 52.220(c)(311)(i)(B)(1), and in
    effect for Federal purposes from June 16,
    2004 through June 10, 2010, is limited, as it
    relates to agricultural sources, to the extent
    that the permit requirements apply:
    (1) To agricultural sources with potential
    emissions at or above a major source
    applicability threshold; and
    (2) To agricultural sources with actual
    emissions at or above 50 percent of a
    major source applicability threshold.
    (b) Approval of the [2004] New Source
    Review rules . . . is limited, as it relates to
    agricultural sources, to the extent that the
    ASS’N OF IRRITATED RESIDENTS V. EPA              13
    emission offset requirements apply to major
    agricultural sources and major modifications
    of such sources.
    
    40 C.F.R. § 52.245
    . The error correction was in the form
    of notice-and-comment rulemaking, the same procedure the
    EPA had used to approve the 2004 rules.
    D. The Instant Lawsuit
    AIR challenges the EPA’s promulgation of 
    40 C.F.R. § 52.245
    , the regulation that corrected the EPA’s approval
    of the 2004 NSR rules, on two grounds. First, AIR claims
    that § 110(k)(6) of the CAA authorizes the EPA to correct
    only its own erroneous approval or disapproval and does
    not give the EPA authority retroactively to limit or amend a
    SIP. Second, AIR asserts that even if the EPA has
    authority retroactively to revise its approval of the 2004
    SIP, it did not need to correct the approval because (a) the
    plain meaning of SB 700 does not exempt minor
    agricultural sources from obtaining permits and offsets
    under the District Rules and (b) the Savings Clauses grant
    the District with the authority to regulate minor agricultural
    sources regardless of the other provisions. AIR requests
    that this court vacate 
    40 C.F.R. § 52.245
    . The following
    Intervenors, representing various agricultural interests,
    organizations and an air pollution control district, appear on
    the EPA’s behalf: Air Coalition Team (“ACT”), Dairy
    Cares, Foster Farms, LLC, Foster Poultry Farms, and San
    Joaquin Valley Unified Air Pollution Control District.
    14          ASS’N OF IRRITATED RESIDENTS V. EPA
    Petitioner filed a petition for review of the EPA’s
    promulgation of 
    40 C.F.R. § 52.245
     in this court on
    September 27, 2013. This court has jurisdiction under the
    CAA § 307(b)(1), 
    42 U.S.C. § 7607
    (b)(1). 4
    II. Discussion
    A. Standard of Review
    The CAA does not specify a standard of review of the
    EPA actions. Therefore, this court reviews the EPA’s
    action under the standard set forth in the Administrative
    Procedure Act (“APA”). Sierra Club v. EPA, 
    671 F.3d 955
    , 961 (9th Cir. 2012).
    Section 706 of the APA provides that a court may
    reverse an agency action found to be “arbitrary, capricious,
    an abuse of discretion, or otherwise not in accordance with
    4
    Intervenors ACT and Foster Farms contend that AIR’s individual
    members do not have standing because (a) their injuries are not “fairly
    traceable” to the EPA’s action and (b) vacating the EPA’s finalized
    error correction will not redress their injuries. This court finds that
    both causation and redressability are established for purposes of this
    suit and thereby rejects the Intervenors’ challenge. In light of studies
    which show that dairy and poultry facilities greatly contribute to the
    amount of VOCs in the Valley, it stands that AIR’s members’ injuries
    are enhanced by the EPA’s rule, which retroactively lessens the
    controls on pollution-emitting agricultural sources. Also, were it not
    for the EPA’s proposed correction, AIR would have been able to
    continue with its citizen suits enforcing the 2004 NSR Rules.
    Therefore, this court concludes that the Petitioners have standing to
    challenge the EPA’s promulgation of 
    40 C.F.R. § 52.245
    . See, e.g.,
    WildEarth Guardians v. EPA, 
    759 F.3d 1064
    , 1072 (9th Cir. 2014);
    Sierra Club v. EPA, 
    762 F.3d 971
    , 977 (9th Cir. 2014).
    ASS’N OF IRRITATED RESIDENTS V. EPA              15
    law.” 
    5 U.S.C. § 706
    (2)(A). When applying this standard,
    the court does not “substitute its judgment for that of the
    agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
    Farm Mut. Auto. Ins. Co., 
    463 U.S. 29
    , 43 (1983); Nw.
    Ecosystem Alliance v. United States Fish & Wildlife Serv.,
    
    475 F.3d 1136
    , 1140 (9th Cir. 2007). Instead, this court
    “consider[s] whether the decision was based on a
    consideration of the relevant factors,” Citizens to Preserve
    Overton Park, Inc. v. Volpe, 
    401 U.S. 402
    , 416 (1971), and
    whether the agency articulated a “rational connection
    between the facts found and the choice made,” Burlington
    Truck Lines v. United States, 
    371 U.S. 156
    , 168 (1962).
    When reviewing the EPA’s interpretation of
    § 110(k)(6) of the CAA, this court applies the two-step
    analysis provided in Chevron U.S.A., Inc. v. Natural Res.
    Def. Council, Inc., 
    467 U.S. 837
    , 842–43 (1984). First, the
    court must decide whether Congress has unambiguously
    and “directly spoken to the precise question at issue.” 
    Id. at 842
    . If so, this court will give effect to the congressional
    intent expressed in the statute. 
    Id.
     at 842–43. To discover
    “the plain meaning of the statute, the court must look to the
    particular statutory language at issue, as well as the
    language and design of the statute as a whole.” K Mart
    Corp. v. Cartier, Inc., 
    486 U.S. 281
    , 291 (1988). If,
    however, “the statute is silent or ambiguous with respect to
    the specific issue, the question for the court is whether the
    agency’s answer is based on a permissible construction of
    the statute.” Chevron, 
    467 U.S. at 843
    .              “EPA’s
    interpretation of its own regulations is given considerable
    deference and ‘must be given controlling weight unless it is
    plainly erroneous or inconsistent with the regulation.’”
    Comm. for a Better Arvin v. EPA, — F.3d —, No. 11-
    73924, 
    2015 WL 2384556
    , at *3 (9th Cir. May 20, 2015)
    16         ASS’N OF IRRITATED RESIDENTS V. EPA
    (quoting Thomas Jefferson Univ. v. Shalala, 
    512 U.S. 504
    ,
    512 (1994)).
    B. The EPA’s Error Determination
    We begin our inquiry by determining whether the EPA
    made an error that needed to be corrected. We ask whether
    the EPA acted arbitrarily or capriciously, abused its
    discretion, or contradicted the CAA when it decided there
    was a mismatch between state law and the SIP. See
    
    5 U.S.C. § 706
    (2)(A). According to AIR, the District did
    have authority under state law to carry out the 2004 SIP,
    thus there was no mistake. The parties’ disagreement arises
    out of conflicting interpretations of SB 700’s Offset
    Provision and Savings Clauses.
    In reviewing agency action pursuant to § 706:
    Although we presume regulations to be
    valid, our inquiry into their validity is a
    “thorough, probing, in-depth review.”
    ...
    To determine whether the agency action was
    arbitrary and capricious, we must decide
    whether the agency “considered the relevant
    factors and articulated a rational connection
    between the facts found and the choice
    made.” An agency action must be reversed
    when 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
    ASS’N OF IRRITATED RESIDENTS V. EPA                     17
    implausible that it could not be ascribed to a
    difference in view or the product of agency
    expertise.” Our review of an agency
    decision is based on the administrative
    record and the basis for the agency’s
    decision must come from the record. We
    cannot substitute our judgment for that of
    the agency.
    Nat’l Ass’n of Home Builders v. Norton, 
    340 F.3d 835
    , 841
    (9th Cir. 2003) (internal citations omitted). Thus, the court
    will uphold the EPA’s action as long as the EPA employed
    a rational, non-arbitrary process to determine if it had made
    an error.
    At the outset, we note that while our court is not
    required to defer to the Attorney General, it need not
    interpret SB 700 for itself as long as it determines that the
    EPA did not clearly go against the plain meaning of the
    statute. 5  The pertinent provisions of SB 700 are
    5
    ACT and the San Joaquin Valley District challenge this court’s
    jurisdiction under 
    42 U.S.C. § 7607
    (b)(1) to hear AIR’s claims
    involving the District’s, CARB’s, and the Attorney General’s
    interpretation of SB 700. They claim that these types of challenges are
    suited for a state forum and go beyond the scope of jurisdiction granted
    in the CAA § 307. To the contrary, Congress granted this court broad
    jurisdiction to hear challenges to “any other final action of the
    Administrator,” 
    42 U.S.C. § 7607
    (b)(1), which encompasses issues of
    state law involved in the EPA’s action. AIR is not required to exhaust
    state law remedies before it can petition this court for review of the
    EPA action.
    18         ASS’N OF IRRITATED RESIDENTS V. EPA
    ambiguous, and both the EPA and AIR provide permissible
    interpretations.    In light of this ambiguity, it was
    appropriate and reasonable for the EPA to rely on the
    interpretations of the Attorney General and the California
    Air Resources Board (“CARB”) in its determination that
    SB 700 provided certain exemptions that were not
    accounted for in the 2004 NSR Rules. The EPA made a
    “rational connection” between the state officials’
    interpretations, the purposes of the CAA, and the choice it
    made. See Burlington Truck Lines, 
    371 U.S. at 168
    .
    The EPA insists that it made an error in its 2004
    approval because there was a substantive mismatch
    between the 2004 NSR Rules and state law, meaning that
    the EPA had failed to get the “necessary assurances” that
    the District had adequate “authority under State . . . law to
    carry out” the SIP. See 
    42 U.S.C. § 7410
    (a)(2)(E); see
    generally 
    78 Fed. Reg. 46,504
     (Aug. 1, 2013). Both the
    EPA and AIR offer logical readings of the SB 700
    provisions at issue: the so-called Offset Provision and
    Savings Clauses. Because there is more than one plausible
    explanation, the wording of the statute is ambiguous. The
    EPA gave adequate consideration to the relevant factors,
    including the Attorney General’s interpretation, and arrived
    at a rational conclusion on SB 700’s meaning; therefore,
    the EPA’s error determination was not arbitrary or
    capricious.
    Even so, because we conclude that the EPA considered the
    relevant factors and had a reasoned basis for concluding that SB 700
    conflicted with the 2004 NSR Rules, there is no need for us to go
    further and substantively interpret SB 700 for ourselves.
    ASS’N OF IRRITATED RESIDENTS V. EPA               19
    1. Interpretation of the Offset Provision
    SB 700’s Offset Provision states:
    A district may not require an agricultural
    source to obtain emissions offsets for criteria
    pollutants for that source if emissions
    reductions from that source would not meet
    the criteria for real, permanent, quantifiable,
    and enforceable emission reductions.
    
    Cal. Health & Safety Code § 42301.18
    (c).
    According to the EPA, the Offset Provision exempts
    minor agricultural sources from the emission offsets
    requirement because minor agricultural sources did not
    meet the statutory criteria during the time period that the
    2004 NSR Rules were in effect. See 
    75 Fed. Reg. 4,745
    ,
    4,748 (Jan. 29, 2010). The minor sources did not meet the
    criteria because, according to the EPA, the Attorney
    General, and CARB, the words “real, permanent,
    quantifiable, and enforceable emission reductions” referred
    to the criteria for offset credit under the CAA. See
    
    40 C.F.R. § 51.165
    (a)(3)(ii)(C)(1)(i) (to qualify for offset
    credit, emissions reductions must be “surplus, permanent,
    quantifiable, and federally enforceable”). Since minor
    agricultural sources were not determined to meet these
    criteria and were not eligible to receive offset credit for, or
    bank, their emission reductions, they were not required to
    purchase emissions offsets as an equitable matter. 78 Fed.
    Reg. at 46,510. This led the EPA to conclude that the
    Offset Provision did not grant the same authority to the
    District as the exemption-free 2004 NSR Rules did.
    According to AIR, the plain meaning of the Offset
    Provision’s criteria requires agricultural sources to obtain
    20        ASS’N OF IRRITATED RESIDENTS V. EPA
    offsets when their emission reductions are SIP creditable,
    not offset creditable. To support this contention, AIR
    compares the words of the Offset Provision to the CAA’s
    criteria for SIP credibility in the General Preamble for the
    Implementation of Title I of the CAA. See 
    57 Fed. Reg. 13,498
    , 13,567–68 (Apr. 16, 1992) (suggesting principles
    for a SIP strategy that includes “quantifiable” emissions,
    “enforceable” measures, “replicable” measures, and an
    “accountable” control strategy). AIR then argues that since
    the EPA has approved SIP credit for emissions reductions
    by several types of minor agricultural sources, those minor
    agricultural sources meet the criteria of SB 700’s Offset
    Provision and are thus compatible with the 2004 District
    NSR Rules.
    Because the listed criteria in the Offset Provision do not
    correspond precisely with either the requirements of SIP
    credibility or offset credibility, it is reasonable to interpret
    the provision as requiring either one or even both. Since
    the statute is ambiguous, as long as the EPA provides a
    plausible and rational explanation for why it chose
    interpretation X over interpretation Y, then the court must
    uphold the EPA’s decision. See Bowman Transp., Inc. v.
    Arkansas-Best Freight Sys., Inc., 
    419 U.S. 281
    , 286 (1974)
    (“[W]e will uphold a decision of less than ideal clarity if
    the agency’s path may reasonably be discerned.”).
    In reaching its final rule, the EPA spent several years
    considering the issue of the interpretation of SB 700, issued
    multiple notices, and accepted and responded to several
    comments, but the EPA’s main source of support for its
    decision was the Attorney General’s and CARB’s letters
    interpreting the pertinent provisions of SB 700 in regard to
    minor agricultural sources. 78 Fed. Reg. at 46,506,
    46,509–10. Since the statute is ambiguous and technical, it
    ASS’N OF IRRITATED RESIDENTS V. EPA               21
    was rational for the EPA to request and accept the Attorney
    General’s interpretation, especially since commenters,
    including AIR, had requested that the EPA obtain the
    Attorney General’s input. See 78 Fed. Reg. at 46,506. The
    Attorney General’s second letter in March 2013, which
    specifically addressed the application of the Offset
    Provision to minor agricultural sources, stated that these
    minor sources did not currently meet the criteria for “real,
    permanent, quantifiable and enforceable emission
    reductions,” so the statute “suspend[s] the duty of a minor
    agricultural source to offset emissions from that source.”
    Letter from Robert W. Byrne, Cal. Acting Sr. Asst. Attny.
    Gen. to Jared Blumenfeld, EPA Regional Administrator, 1
    (March 18, 2013). The letter stated that this position was
    consistent with a CARB letter written in 2008. Id. at 2.
    The 2008 CARB letter is the source of the EPA’s
    argument that the Offset Provision’s “criteria” refer to
    offset credit, not just SIP credit, as AIR argues.
    Specifically the letter stated:
    This limited exemption from the offset
    requirement means that agricultural sources
    that are not amenable to District prohibitory
    rules or control measures that would qualify
    for SIP credit—or that are unable to
    generate emission reductions that would
    qualify as offsets—because they fail to meet
    one or more of the basic criteria for a
    creditable rule or for offset credit cannot be
    required to provide offsets.
    Letter from James Goldstene, Exec. Officer, CARB to Air
    Pollution Control Officers, 4 (Sept. 3, 2008) (emphasis
    added).    This interpretation reveals that the Offset
    Provision’s criteria refer to both SIP creditability and offset
    22        ASS’N OF IRRITATED RESIDENTS V. EPA
    creditability. The EPA addressed this reading in its final
    rule:
    [T]he use of the conjunction “or” by CARB
    in its discussion of [the Offset Provision] . . .
    means that, under CARB’s interpretation,
    even if SIP credit were approved for
    prohibitory rules or control measures, new
    or modified minor agricultural sources could
    not be required to provide emission offsets if
    they are unable to generate emission
    reductions that would qualify as offsets.
    78 Fed. Reg. at 46,510.
    AIR argues that since the EPA had already approved
    SIP credit for emissions reductions by agricultural sources,
    it was arbitrary and capricious for the EPA to say those
    sources do not meet the criteria under the Offset Provision.
    AIR’s argument misses the point. Because the EPA
    understands that the Offset Provision refers to both SIP-
    credit and offset-credit requirements, it does not matter that
    the EPA approved some minor agricultural sources for SIP
    credit because those sources still do not meet the
    requirements for offset credit. According to the EPA, none
    of the sources mentioned by AIR receive offset credit for
    the emission reductions required by the SIP. Therefore, the
    EPA was not arbitrary or capricious in determining that the
    District lacked the power under state law to require offsets
    from minor agricultural sources from 2004–2010.
    AIR argues that this court should not defer to the
    California Attorney General’s interpretation of SB 700, nor
    to CARB’s interpretation of the Offset Provision. If it were
    clear from the plain meaning of the statute that the EPA’s
    interpretation was erroneous or unreasonable, then it may
    ASS’N OF IRRITATED RESIDENTS V. EPA               23
    well have been erroneous for the EPA to defer to a clearly
    wrong interpretation by the Attorney General. However,
    that is not the situation presented by the instant case.
    AIR seeks to rely on two decisions of this court, which
    AIR states hold that this court does not have to defer to an
    Attorney General’s opinion on state law. See Maldonado v.
    Harris, 
    370 F.3d 945
    , 954 n. 5 (9th Cir. 2004); Virginia v.
    Am. Booksellers Ass’n, Inc., 
    484 U.S. 383
    , 395, certified
    question answered sub nom. Com. v. Am. Booksellers
    Ass’n, Inc., 
    372 S.E. 2d 618
     (Va. 1988). However, both
    decisions concerned facial constitutional challenges to state
    statutes that necessitated direct judicial review of the
    statute, whereas the present case involves judicial review of
    an agency’s use of the California Attorney General’s and
    CARB’s informal interpretation of a state statute. See
    Maldonado, 
    370 F.3d at 948
     (involving First Amendment
    challenge to California Outdoor Advertising Act); Am.
    Booksellers Ass’n, Inc., 484 U.S. at 386 (interpreting the
    scope of a Virginia statute prohibiting display of explicit
    material in certain situations). Moreover, although the
    court is not bound by the California Attorney General’s
    opinion, the EPA may properly find an Attorney General’s
    interpretation reasonable and persuasive.
    Other circuits have applied the arbitrary and capricious
    standard to the EPA’s reliance on an Attorney General’s or
    agency’s interpretation of an ambiguous state law. In Ohio
    Envtl. Council v. EPA, the Sixth Circuit held that the EPA’s
    reliance on the Ohio Attorney General’s interpretation of
    Ohio law was not arbitrary and capricious, particularly
    because the petitioner did not take its challenge to the Ohio
    state courts prior to the action. See 
    593 F.2d 24
    , 29 (6th Cir.
    1979). The Sixth Circuit also held that the EPA’s
    determination based on the Attorney General’s opinion was
    24        ASS’N OF IRRITATED RESIDENTS V. EPA
    “clearly consistent with its secondary role” in forming SIPs
    under the CAA. 
    Id.
    Similarly, in Defenders of Wildlife v. EPA, the Tenth
    Circuit addressed the EPA’s reliance on a letter from New
    Mexico’s Water Quality Control Commission (“WQCC”)
    when interpreting an ambiguous New Mexico state
    regulation. 
    415 F.3d 1121
    , 1127–28 (10th Cir. 2005). The
    EPA based its approval of the regulation on WQCC’s
    interpretation. The Tenth Circuit held that the EPA was not
    arbitrary or capricious in doing so. See 
    id. at 1128
     (“[T]he
    EPA did not act arbitrarily and capriciously in approving
    the regulation, particularly since the agency reserved the
    right to revoke approval if New Mexico interpreted the
    regulation in the future in a way that would not comply
    with the [Clean Water Act].”).
    In the instant case, the EPA’s reliance on the Attorney
    General’s and CARB’s letters to interpret the ambiguous
    provisions of SB 700 was not arbitrary, capricious, or
    unlawful.
    2. Interpretation of the Savings Clauses
    The EPA and AIR interpret the Savings Clauses in SB
    700 differently and disagree on whether there was an error
    or mismatch that the EPA needed to correct. The Savings
    Clauses provisions state:
    Any district rule or regulation affecting
    stationary sources on agricultural operations
    adopted on or before January 1, 2004, is
    applicable to an agricultural source.
    
    Cal. Health & Safety Code § 39011.5
    (b).
    ASS’N OF IRRITATED RESIDENTS V. EPA                      25
    Nothing in this section limits the authority
    of a district to regulate a source, including,
    but not limited to, a stationary source that is
    an agricultural source, over which it
    otherwise has jurisdiction pursuant to this
    division, or pursuant to the federal Clean Air
    Act . . . or any rules or regulations adopted
    pursuant to that act that were in effect on or
    before January 1, 2003 . . . .
    
    Cal. Health & Safety Code § 39011.5
    (c).
    According to AIR, the Savings Clauses provisions
    preserve the District’s authority to apply the 2004 District
    NSR Rules (adopted prior to January 1, 2004) to certain
    minor agricultural sources regardless of the meaning of the
    Offset Provision. AIR refers to the broad language of the
    Clauses and asks that the court adhere to their plain
    meaning.
    The EPA proposes a more limited interpretation,
    contending that the provisions in the Savings Clauses do
    not override the provisions of SB 700 that exempt minor
    agricultural sources from air pollution controls. Nor,
    according to the EPA, do the Savings Clauses authorize the
    District’s 2004 NSR Rules. Instead they only serve to
    preserve the District’s authority to regulate sources that
    hadn’t previously been, but were now considered
    “agricultural” because of SB 700’s new definition 6 for
    6
    The prior definition of agricultural source was “equipment used in
    agricultural operations in the growing of crops or the raising of fowl or
    animals.” 
    Cal. Health & Safety Code § 42310
    (e) (1989) (emphasis
    26          ASS’N OF IRRITATED RESIDENTS V. EPA
    agricultural sources. 7 Moreover, section 39011.5(c) does
    not grant authority to enforce the 2004 NSR Rules. Even
    though the definitional section of SB 700 did not limit the
    District’s authority, other sections, such as the Offset
    Provision, might.
    As was the case with the Offset Provision, the EPA’s
    determination that the Savings Clauses did not give the
    District overriding authority to enforce the 2004 NSR Rules
    was based on the California Attorney General’s
    interpretation in the 2012 letter. 78 Fed. Reg. at 46,508.
    The Attorney General stated that the Savings Clauses “do
    not authorize the Rules’ permit and offset requirements”
    because they were meant to be read in light of the
    definitional context of section 39011.5. Letter from Robert
    W. Byrne, Cal. Acting Sr. Asst. Attny. Gen. to Jared
    Blumenfeld, EPA Regional Administrator, 4 (November
    14, 2012).
    Before the legislature passed SB 700, California law
    had provided an exemption to agricultural sources from all
    added). The definition included in SB 700 is a source “used in the
    production of crops, or the raising of fowl or animals located on
    contiguous property under common ownership or control” that is a
    “confined animal facility” or an “internal combustion engine” or a
    CAA Title V source. 
    Cal. Health & Safety Code § 39011.5
    (a)
    (emphasis added).
    7
    The Attorney General gives the example of production equipment,
    such as a stationary diesel engine, that would not have been considered
    an agricultural source before SB 700, but were regulated by the
    District. See Letter from Robert W. Byrne, Cal. Acting Sr. Asst. Attny.
    Gen. to Jared Blumenfeld, EPA Regional Administrator, 4 (November
    14, 2012).
    ASS’N OF IRRITATED RESIDENTS V. EPA              27
    New Source Review permitting requirements, but districts
    were allowed to adopt non-New Source Review emission
    rules of general application that applied to agricultural
    stationary sources. 
    Id.
     Section 39011.5(b) was meant to
    preserve those rules only—not NSR rules. 
    Id.
     The purpose
    was to “preserve[] and validate[] those existing equipment-
    governing regulations of general application that, without
    such a savings clause, might be construed as invalid
    because the regulated equipment was included as part of
    SB 700’s ‘agricultural sources’ [definition].” 
    Id.
     This
    explanation is reasonable.       If not limited to rule
    preservation, section 39011.5(b) would be granting districts
    new authority to apply NSR rules — authority that had
    previously not existed under California’s blanket
    exemption.
    The Attorney General also interpreted section
    39011.5(c). 
    Id.
     “[S]ubdivision (c) clarifies that section
    39011.5 itself does not limit a district’s existing authority,
    but subdivision (c) does not concern whether some other
    provision of SB 700 might limit a district’s authority.” 
    Id.
    This explanation accounts for the statute as a whole. If the
    legislature intended for the Savings Clauses to allow the
    District to ignore the exemptions located elsewhere in SB
    700, then it would have said that a district’s prior authority
    was not limited by any section in the statute. For the same
    reasons set forth above regarding the Offset Provision, the
    court finds that the EPA reasonably relied on this
    interpretation from the Attorney General and was not
    arbitrary or capricious in deciding that it had made an error
    because it fully considered the effect of the Savings
    Clauses on the District’s authority under state law.
    28        ASS’N OF IRRITATED RESIDENTS V. EPA
    3. The EPA Reasonably Respected State Law
    The EPA’s desire to correct its 2004 approval to make
    it align with state law is not an arbitrary one, considering
    the aims and structure of the CAA’s model of cooperative
    federalism. The CAA grants primary authority to the states
    to develop emission limits. Train v. Natural Res. Def.
    Council, 
    421 U.S. 60
    , 79 (1975). The EPA’s role under the
    CAA’s scheme is secondary. 
    Id.
     Therefore, by trying to
    respect California’s statutory limits on air pollution
    controls, the EPA is properly considering the purpose and
    structure of the Act it is entrusted to enforce.
    Before SB 700 was enacted, California’s law included a
    blanket exemption for all agricultural sources, both major
    and minor, from the NSR air pollution controls. See
    
    75 Fed. Reg. 4745
    , 4747 (Jan. 29, 2010). This legislative
    background indicates that California may have wished to
    preserve some form of agricultural exemption in its laws
    and intended for that exemption to carry into the SIP.
    Therefore, the EPA’s interpretation of SB 700 and its
    decision to correct its 2004 approval were reasonable and
    pass arbitrary and capricious review.
    In sum, this court holds that the EPA reasonably
    determined that California’s SB700 was inconsistent with
    the 2004 NSR rules. It was appropriate and reasonable for
    the EPA to rely on the interpretations of the Attorney
    General and CARB when determining that the ambiguous
    California law provided certain exemptions that were not
    ASS’N OF IRRITATED RESIDENTS V. EPA                        29
    accounted for in the 2004 NSR Rules. 8 The EPA made a
    “rational connection” between the Attorney General’s and
    CARB’s interpretations, the purposes of the CAA, and the
    choice it made. Burlington Truck Lines, 
    371 U.S. at 168
    .
    C. The EPA’s Authority Under § 110(k)(6) of the
    Clean Air Act
    Concluding that the EPA reasonably decided it made an
    error that needed revising, we now address whether the
    EPA had the statutory authority to correct the error in the
    way that it did. Whether § 110(k)(6) of the CAA gives the
    EPA authority to retroactively revise the scope of an earlier
    approval of a state’s NSR Rules presents a question of first
    impression.
    The Eleventh Circuit has previously considered the
    EPA action taken under § 110(k)(6), but it did not interpret
    the meaning of the provisions in question. Alabama Envtl.
    Council v. Adm’r, EPA, 
    711 F.3d 1277
    , 1289–90 (11th Cir.
    2013) (determining that the EPA had not made an error
    determination as required by the Act).
    8
    AIR argues that even if the 2004 NSR Rules conflict with SB700,
    that conflict does not matter because once the 2004 NSR Rules were
    approved by the EPA in 2004, they became federal law trumping any
    inconsistent state law. It is true that when the EPA approves a SIP, it
    becomes federal law. See Safe Air for Everyone, 
    488 F.3d at 1097
    .
    But, AIR’s argument fails to address the relevant time period. The
    error at issue in this case is the EPA’s apparent failure to recognize that
    the 2004 NSR Rules conflicted with SB700 prior to the EPA’s issuing
    its May 2004 final approval of the Rules. See 78 Fed. Reg. at 46,505-
    06. At that point in time, the 2004 NSR Rules had not yet been
    approved, and, thus, were not yet federal law.
    30         ASS’N OF IRRITATED RESIDENTS V. EPA
    Section 110(k)(6) reads:
    Whenever the [EPA] determines that [its]
    action     approving,     disapproving,    or
    promulgating any plan . . . was in error, the
    [EPA] may in the same manner as the
    approval, disapproval, or promulgation
    revise such action as appropriate without
    requiring further submissions from the State.
    Such determination and the basis thereof
    shall be provided to the State and public.
    
    42 U.S.C. § 7410
    (k)(6) (emphasis added).
    This broad provision was enacted to provide the EPA
    with an avenue to correct its own erroneous actions and
    grant the EPA the discretion to decide when to act pursuant
    to the provision. See Alabama Envtl. Council, 711 F.3d at
    1287 (“Through the use of the terms ‘whenever’ and ‘may,’
    Section 110(k)(6) confers discretion on the EPA to decide
    if and when it will invoke the statute to revise a prior
    action.”); see also 
    75 Fed. Reg. 82,536
    , 82,543 (Dec. 30,
    2010) (discussing Congress’ implementation of § 110(k)(6)
    to overturn a Third Circuit decision that held that the EPA’s
    inherent authority to correct errors was narrow and could
    be used only to correct typographical errors, suggesting that
    Congress intended to grant the EPA broad authority to
    revise an error).
    Pursuant to the statute, to correct an error, the EPA
    must first determine that it, in fact, made an error.
    
    42 U.S.C. § 7410
    (k)(6). The EPA clearly articulated its
    alleged error and the basis thereof in the Federal Register
    and even received and replied to comments on the matter.
    See, e.g., 78 Fed. Reg. at 46511. The EPA determined that
    it erred because it approved the 2004 NSR Rules even
    ASS’N OF IRRITATED RESIDENTS V. EPA             31
    though it did not receive “necessary assurances” that
    California had authority to carry out the Rules as mandated
    by the CAA. See 
    42 U.S.C. § 7410
    (a)(2)(E). Therefore,
    this court concludes that the error determination
    requirement was met.
    Having determined that it erred, the EPA is required by
    § 110(k)(6) to “revise such action” (1) “in the same
    manner as the approval, disapproval, or promulgation,” and
    (2) “as appropriate without requiring further submissions
    from the State.” 
    42 U.S.C. § 7410
    (k)(6).
    1. Interpretation of “in the same manner”
    a. Chevron Step One
    Under Chevron, the court must first look at the statutory
    language of § 110(k)(6) to determine whether Congress
    clearly designated “in the same manner” to be a procedural
    requirement. That is, whether the EPA must revise its
    action by employing the same APA or CAA procedures
    used in the original rulemaking. See 78 Fed. Reg. at
    46,511. AIR contends that the words “in the same manner”
    limits the EPA’s actions to either an approval or a
    disapproval of a state-submitted plan since those were the
    only actions originally available to the EPA when presented
    with the SIP.
    The words “in the same manner” refer to the EPA’s
    original action of “approving, disapproving, or
    promulgating any plan” that was taken in error. 
    42 U.S.C. § 7410
    (k)(6). The statute itself does not clearly state
    whether “in the same manner” is a procedural or
    substantive requirement.      Because Congress has not
    directly spoken to the issue at hand, the court will proceed
    to the second Chevron step.
    32        ASS’N OF IRRITATED RESIDENTS V. EPA
    b. Chevron Step Two
    The EPA reasons that “in the same manner” refers to
    procedural processes when read in the context of the
    provision as a whole. See Gustafson v. Alloyd Co., Inc.,
    
    513 U.S. 561
    , 575 (1995) (applying the principle that “a
    word is known by the company it keeps”). Specifically, the
    section authorizes the EPA to act “without requiring any
    further submission from the State” and requires it to
    provide the “determination and the basis thereof” of its
    error. 
    42 U.S.C. § 7410
    (k)(6). Both state submissions and
    “determination and the basis” are procedural requirements,
    lending support to the EPA’s procedural reading of “in the
    same manner.” The Supreme Court has also interpreted the
    phrase “in the same manner,” as it existed in the Affordable
    Care Act, as a procedural one. See Nat’l Federation of
    Indep. Bus. v. Sebelius, 
    132 S. Ct. 2566
    , 2583–84 (2012)
    (holding that the statute’s directive to assess a penalty “in
    the same manner” as taxes meant the Secretary of the
    Treasury should apply the “same ‘methodology and
    procedures’” used to collect taxes). The EPA has held to
    this interpretation of “in the same manner” for as long as it
    has applied § 110(k)(6). See 
    58 Fed. Reg. 49,254
    , 49,257
    (Sept. 22, 1993); see also Barnhart v. Walton, 
    535 U.S. 212
    , 220 (2002) (declaring that the court “normally
    accord[s] particular deference to an agency interpretation of
    ‘longstanding’ duration”).
    This court determines that the EPA reasonably
    interpreted “in the same manner” as a procedural
    requirement. In this instance, the EPA acted through a
    notice-and-comment rulemaking, the same process used to
    approve the 2004 NSR Rules into the SIP. Therefore, the
    EPA did not exceed its authority under the CAA and its
    ASS’N OF IRRITATED RESIDENTS V. EPA            33
    promulgation of 
    40 C.F.R. § 52.245
     comported with the
    procedural requirements of § 110(k)(6).
    2. Interpretation of “appropriate”
    a. Chevron Step One
    The court must determine next whether § 110(k)(6)
    enables the EPA to revise an error by retroactively limiting
    the scope of its approval to cover only certain parts of the
    NSR Rules. In other words, was the EPA’s correction
    “appropriate” under the plain meaning of § 110(k)(6)?
    The word “appropriate” “means only ‘specially
    suitable: fit, proper.’”     Ruckleshaus v. Sierra Club,
    
    463 U.S. 680
    , 682 (1983) (quoting Webster’s Third
    International Dictionary). Section 110(k)(6) itself does not
    clearly define what is an “appropriate” action. Thus, this
    court concludes that the language does not directly speak to
    the matter at hand and will proceed to Chevron step two.
    b. Chevron Step Two
    As long as the EPA’s interpretation of “appropriate” is
    “based on a permissible construction of” § 110(k)(6), then
    the court must accept it. Chevron, 
    467 U.S. at 843
    .
    AIR argues that § 110(k)(6) does not allow the EPA to
    “sua sponte promulgate a regulation that substantively
    amends or limits a SIP.” This reading, however, ignores
    the direction of § 110(k)(6) that the EPA revise its actions
    when an error has been made “without requiring any
    further submission from the State.”               
    42 U.S.C. § 7410
    (k)(6). The plain meaning of these words indicates
    unilateral action by the EPA. While it is true that agencies
    do not have plenary authority in absence of congressional
    34        ASS’N OF IRRITATED RESIDENTS V. EPA
    limitation, Louisiana Pub. Serv. Comm’n v. F.C.C., 
    476 U.S. 355
    , 374 (1986) (“an agency literally has no power to
    act . . . unless and until Congress confers power upon it”),
    the Supreme Court has interpreted Congress’s command
    elsewhere to take “appropriate action” as giving an agency
    “a substantial amount of latitude in choosing the programs
    and techniques they would use to meet their obligations
    under the [statute].” Horne v. Flores, 
    557 U.S. 433
    , 440–41
    (2009) (quoting Castaneda v. Pickard, 
    648 F.2d 989
    , 1009
    (5th Cir. 1981)).
    Under the circumstances of this case, the court finds
    that the EPA’s understanding of “appropriate” was
    permissible.      First, the EPA’s interpretation of
    “appropriate” contemplated the goals and purposes of the
    CAA as a whole. See Richards v. United States, 
    369 U.S. 1
    , 11 (1962) (affirming that “in fulfilling our responsibility
    in interpreting legislation, ‘we . . . (should) look to the
    provisions of the whole law, and to its object and policy’”).
    The EPA’s action preserves the “strengthening aspects” of
    the 2004 NSR Rules, which removed the total exemption
    for agricultural sources, while still ensuring that the SIP
    matches state law. See 
    78 Fed. Reg. 46,504
    , 46,511 (Aug.
    1, 2013). The EPA considered a complete retroactive
    disapproval of the 2004 NSR Rules, but determined it
    would have had a “deleterious effect” on the SIP by
    loosening the air pollution controls even further. 
    Id.
     When
    faced with a choice between a narrower revision that serves
    to improve air quality and a broader one that undoes the
    progress made in the SIP, the EPA permissibly reasoned it
    was more appropriate to choose the former.
    Second, the EPA’s method of correction is
    “appropriate” because it is the only method that would fix
    the unusual problem at issue here. See 78 Fed. Reg. at
    ASS’N OF IRRITATED RESIDENTS V. EPA                      35
    46,510. AIR argues that the only “appropriate” responses
    the EPA could take to correct its error are the ones
    provided in § 110(k), namely a partial approval/partial
    disapproval, a limited approval/limited disapproval, a
    conditional approval, a SIP Call, or a complete disapproval.
    See U.S.C. § 7410(k). The EPA demonstrates, however,
    why each of those options fails to correct the error in this
    specific instance.
    Section 110(k)(3) authorizes the EPA to make a partial
    approval/partial disapproval if portions of the SIP do not
    comply with the CAA and are separable, but NSR Rules
    are not separable. 78 Fed. Reg. at 46,511. A limited
    approval/limited disapproval is similarly unsuitable
    because it would “incorporate the entire rule into the
    California SIP, and thus would not remedy the problem of
    the mismatch.” Id. at 46,510. A conditional approval under
    § 110(k)(4) requires the state to correct deficiencies within
    a year, but as the EPA explains, even though California had
    corrected its deficiencies by submitting the new 2010 NSR
    Rules, this did nothing to correct its mistake retroactively.
    Likewise, a SIP Call requiring a state to submit a revision
    provides only a prospective, not a retroactive solution. See
    Alabama Envtl. Council, 711 F.3d at 1290 (distinguishing
    § 110(k)(6) from a § 110(k)(5) SIP Call as an alternative
    way to revise a SIP). 9
    9
    AIR argues that just because a SIP Call does not facilitate the EPA’s
    desired retroactive outcome, does not mean it is inappropriate. But if
    an option is not “suitable” or “fit” to revise an erroneous action, then
    that option is not “appropriate” by the definition of the word. See
    Ruckleshaus, 463 U.S. at 682.
    36        ASS’N OF IRRITATED RESIDENTS V. EPA
    Perhaps most significantly, the EPA’s revision was
    “appropriate” because it respected state law. The CAA
    imposes a duty on the states to meet the standards for air
    quality through state control programs.           
    42 U.S.C. § 7407
    (a). AIR argues that the EPA’s action violates the
    “Clean Air Act’s state-federal partnership” because it is
    stepping out of its role of a “regulatory backstop” to amend
    the SIP. However, California did not intend the 2004 NSR
    Rules to omit SB 700’s limited exemptions for minor
    agricultural sources. After AIR brought the citizen suits,
    California submitted amended District NSR Rules with the
    explicit limitations taken from SB 700. See 
    75 Fed. Reg. 4745
     (January 29, 2010). By revising its past approval to
    align with the intent of the state, the EPA did not impose its
    own policy choices on the state. Instead, the EPA
    appropriately respected California’s role as envisioned in
    the CAA.
    This court determines that the EPA’s interpretation of
    § 110(k)(6) prevails under the second step of Chevron
    because it is reasonable that Congress, by amending the
    CAA to add § 110(k)(6), was providing the EPA with the
    authority to act in ways other than those enumerated in
    § 110(k). The EPA has shown that its chosen method was
    a method – albeit not the only one – that enabled it to fix its
    mistake in light of the particular circumstances and goals of
    the CAA. Therefore, this court defers to its interpretation
    under the circumstances of the instant case.
    III. Conclusion
    As discussed herein, this court holds that the EPA did
    not abuse its discretion in correcting its prior approval of
    the 2004 NSR Rules. Its action was permissible in light of
    the fact that California law (SB 700) did not authorize the
    San Joaquin Air Control District to require permits for the
    ASS’N OF IRRITATED RESIDENTS V. EPA         37
    agricultural sources involved here. Because those rules
    conflicted with state law, they should not have been
    incorporated into the State Implementation Plan in 2004.
    Moreover, the EPA properly acted to revise retroactively
    the scope of its approval of the 2004 NSR Rules.
    The Petition for Review is DENIED.
    

Document Info

Docket Number: 13-73398

Filed Date: 6/23/2015

Precedential Status: Precedential

Modified Date: 6/23/2015

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