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WildEarth Guardians v. United States Environmental Protection Agency

United States Court of Appeals, Tenth Circuit

October 21, 2014

WILDEARTH GUARDIANS; HEAL UTAH; NATIONAL PARKS CONSERVATION ASSOCIATION; POWDER RIVER BASIN RESOURCE COUNCIL; SIERRA CLUB; Petitioners,
v.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; GINA McCARTHY, Administrator, United States Environmental Protection Agency, Respondents. PUBLIC SERVICE COMPANY OF NEW MEXICO; PACIFICORP; NEW MEXICO ENVIRONMENT DEPARTMENT; BASIN ELECTRIC POWER COOPERATIVE; STATE OF WYOMING; UTAH ASSOCIATED MUNICIPAL POWER SYSTEM; UTAH DIVISION OF AIR QUALITY; CITY OF ALBUQUERQUE, Intervenors, and AMERICAN COALITION FOR CLEAN COAL ELECTRICITY, Amicus Curiae

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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PETITIONS FOR REVIEW OF FINAL DECISIONS ISSUED BY THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY. Nos. EPA-R06-OAR-2009-0050, EPA-R08-OAR-2011-0400, EPA-R08-OAR-2011-0114, EPA-RO6-OAR-2008-0702.

Jenny K. Harbine, Earthjustice, Bozeman, Montana (John Barth, Hygiene, Colorado, and Ashley D. Wilmes, WildEarth Guardians, Boulder, Colorado, with her on the briefs), for Petitioners.

Chloe H. Kolman, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C. (Stephanie J. Talbert, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C., Robert G. Dreher, Acting Assistant Attorney General, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C.; M. Lea Anderson, Of Counsel, United States Environmental Protection Agency, Washington, D.C.; Matthew C. Marks, Of Counsel, United States Environmental Protection Agency, Washington, D.C.; Brian Tomasovic, Of Counsel, United States Environmental Protection Agency, Dallas, Texas; Sara L. Laumann, Of Counsel, United States Environmental Protection Agency, Denver, Colorado, with her on the brief), for Respondent.

E. Blain Rawson, Ray Quinney & Nebeker, P.C., Salt Lake City, Utah (Emily Smith Loeffler, Quinney & Nebeker, P.C., Salt Lake City, Utah, Michael G. Jenkins, Assistant General Counsel, PacifiCorp Energy with him on the brief), for Intervenor PacifiCorp Energy.

Matthias L. Sayer, Assistant Attorney General, Wyoming Office of Attorney General, Cheyenne, Wyoming (Jay A. Jerde, Deputy Attorney General, Wyoming Office of Attorney General, Cheyenne, Wyoming, with him on the brief), for Intervenor State of Wyoming.

Christopher L. Colclasure, Holland & Hart LLP, Denver, Colorado, for Intervenor Basin Electric Power Cooperative.

Richard L. Alvidrez and Robert H. Clark, Miller Stratvert P.A., Albuquerque, New Mexico; Kallie H. Kuehl, Corporate Counsel, Albuquerque, New Mexico, on the brief for Intervenor Public Service Company of New Mexico.

Jeffrey M. Kendall, General Counsel and William G. Grantham, Assistant General Counsel, for New Mexico Environment Department, on the brief for Intervenor New Mexico Environment Department.

Carol Parker, Assistant City Attorney and Adelia W. Kearny, Deputy City Attorney, Albuquerque, New Mexico, on the brief for Intervenor City of Albuquerque.

H. Michael Keller and Mary Jane E. Galvin-Wagg, Van Cott, Salt Lake City, Utah; Mason Baker, General Counsel, Salt Lake City, Utah, on the brief for Intervenor Utah Associated Municipal Power Systems.

John E. Swallow, Utah Attorney General and Christian C. Stephens, Assistant Attorney General, Salt Lake City, Utah; Craig W. Anderson, Division Chief and Assistant Attorney General, Environment Division, Utah Attorney General's Office, Salt Lake City, Utah, on the brief for Intervenor Utah Division of Air Quality.

Paul M. Seby and Marian C. Larsen, Seby Larsen LLP, Denver, Colorado, on the brief for Amicus Curiae American Coalition for Clean Coal Electricity.

Before BACHARACH, SEYMOUR, and MURPHY, Circuit Judges.

OPINION

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BACHARACH, Circuit Judge.

This appeal grows out of the Clean Air Act. In an effort to comply with the statute, three states (New Mexico, Utah, and Wyoming), one city (City of Albuquerque), and one county (Bernalillo County) adopted a regional cap-and-trade program regulating sulfur-dioxide emissions over the Colorado Plateau.[1] Under this program, each participant obtained a ceiling on sulfur-dioxide emissions. If the ceiling was met, polluters would get allocations of sulfur dioxide that could be emitted. With these allocations, polluters had a choice. They could use the allocations or cut emissions and trade the unused portions of the allocations.

The program required approval of the Environmental Protection Agency. In determining whether to approve the program, the EPA had to apply its regulations. Under these regulations, states could satisfy the Clean Air Act by ensuring installation of the best available retrofit technology in all eligible major sources that contributed to visibility impairment. This mode of compliance is referred to as " BART." States affecting visibility over the Colorado Plateau were allowed to use an alternative program in lieu of BART. But this alternative program had to be better than BART in improving air visibility.

New Mexico, Utah, Wyoming, the City of Albuquerque, and Bernalillo County persuaded the EPA that the trading program would yield better results than BART because:

o the program covered polluters that would not have been subject to BART,
o the program encompassed emissions from new sources, which would not have been subject to BART, and
o the program encouraged polluters to expedite equipment upgrades and to operate below full capacity.

Five environmental groups filed petitions for review,[2] arguing that the EPA should not have approved the trading program. To decide these petitions, we must determine whether the EPA acted arbitrarily and capriciously in finding that the trading program was better than BART. We conclude that the EPA's decision was neither arbitrary nor capricious. Thus, we deny the petitions for review.

I. The Clean Air Act and the EPA's Regulatory Framework

The petitions require an understanding of the statutory and regulatory requirements for alleviation of air pollution.

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A. Statutory Requirement for EPA Guidelines

The Clean Air Act requires the EPA to establish regulations to ensure " reasonable progress" toward the improvement in visibility and " compliance with the requirements of [42 U.S.C. § 7491]." [3] 42 U.S.C. § 7491(a)(4). In light of this requirement, the EPA had to establish regulations requiring states to develop implementation plans to improve visibility and adopt, maintain, and enforce air quality standards. Id. § § 7410(a)(1), 7491.

Under the statutory scheme, the EPA would then review the state implementation plans to ensure compliance with the Clean Air Act and implementing regulations. Id. § § 7410(a)(3)(B), 7492(e)(2); see Oklahoma v. EPA, 723 F.3d 1201, 1204 (10th Cir. 2013). Once approved, state implementation plans would be enforceable as federal law. 42 U.S.C. § § 7413, 7604.

States implementing the BART requirement do so in two steps: (1) identify the sources subject to BART, and (2) determine the particular technologies required for individual sources. 40 C.F.R. § 51.308(e)(1); see Util. Air Regulatory Grp. v. EPA, 471 F.3d 1333, 1335-36, 374 U.S.App.D.C. 85 (D.C. Cir. 2006). In considering the required technologies, states must consider five factors for each BART-eligible source:

(1) the costs of compliance;
(2) the energy and nonair quality environmental impacts of compliance;
(3) the existing pollution control technologies already in place;
(4) the remaining useful life of the source; and
(5) the improvement in visibility anticipated from the use of given technologies.

42 U.S.C. § 7491(g)(2).

B. Regulations Governing the Colorado Plateau

Congress also enacted legislation requiring the EPA to establish a visibility transport commission to study regional haze in the Grand Canyon and to recommend curative action. 42 U.S.C. § 7492(f).

To comply, the EPA established the Grand Canyon Visibility Transport Commission, which would " assess scientific, technical, and other information related to adverse visual air quality impacts from potential or projected emissions growth from sources located in the Transport Region." Joint App. at 71. Upon completion of this assessment, the Transport Commission would report to the EPA on appropriate measures to improve visual air quality on the Colorado Plateau. Id.[4]

1. The Grand Canyon Visibility Transport Commission

The Transport Commission analyzed the effects of regional haze in sixteen Class I areas[5] affected by pollution in nine states

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(Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, and Wyoming).[6] 42 U.S.C. § 7492(c)(1); Final Rule, Regional Haze Regulations, 64 Fed. Reg. 35,714, 35,770 (July 1, 1999).

Based on this analysis, the Transport Commission recommended a regional cap-and-trade program for sulfur dioxide that would go into effect when participating states exceed an emissions target. Joint App. at 56. Details of the program would be worked out later.

The functions of the Transport Commission were passed on to the Western Regional Air Partnership, which continued the study and recommended a plan. Id. at 190. The plan included:

(1) milestones to measure reductions in regional emissions of sulfur dioxide, and
(2) a trading program for the nine states.

The trading program acted as a " backstop," which would be triggered only if the milestones were reached.

2. The Regional Haze Rule

In 1999, the EPA adopted the Transport Commission's recommendations in its Regional Haze Rule, 40 C.F.R. § § 51.308, 51.309. This rule requires states to develop programs that assure reasonable progress toward meeting the national goal of addressing visibility impairment in Class I areas. 40 C.F.R. § 51.300(a). Sections 51.308 and 51.309 create two methods of compliance.

Under the first method, states can submit an implementation plan containing emission limitations applying BART for each BART-eligible source impairing visibility in a Class I area. 40 C.F.R. § 51.308(e).

The second method is authorized in 40 C.F.R. § 51.309. Through this method, states could use the Transport Commission's cap-and-trade program if participants would expect better results than they would have had under BART regulations. The cap-and-trade program is known as the " 309 program." [7]

The 309 program establishes voluntary measures to reduce sulfur-dioxide emissions through milestones providing " steady and continuing emissions reductions through 2018." 40 C.F.R. § 51.309(d)(4)(i). After 2018, the milestone remains constant until the states submit revised implementation plans. Id. § 51.309(d)(4)(vi)(A). These milestones must provide a " 50 to 70 percent reduction in [sulfur dioxide] emissions from 1990 actual emission levels by 2040." Id. § 51.309(d)(4)(i).

If sulfur-dioxide emissions surpass the milestone, a backstop regional emission trading program would be triggered. Under the program, sources are given a set volume of emissions. Any source exceeding its allowance must pay a penalty and suffer a loss in its allotted emissions. Joint App. at 226-27. To encourage early reductions in emissions, the trading program provided additional allocations to

Page 926

sources that reduce emissions ahead of schedule.

Upon approval of an implementation plan, the EPA would regard the state to be in compliance through 2018 with the reasonable-progress requirement for the sixteen Class I areas encompassed in the 309 program. 40 C.F.R. § 51.309(a). For additional Class I areas not covered in the 309 program, the state had to show long-term strategies under § 51.308. Id. § 51.309(g).

3. The D.C. Circuit Court's Rulings

After the Western Regional Air Partnership submitted its report, Arizona, New Mexico, Oregon, Utah, Wyoming, the City of Albuquerque, and Bernalillo County chose to participate in the 309 program. Before the EPA acted on these participants' submissions, the D.C. Circuit Court of Appeals invalidated part of the § 51.308(e) methodology (requiring evaluation of progress by considering emission reductions in the aggregate). Am. Corn Growers Ass'n v. EPA, 291 F.3d 1, 8-9, 351 U.S.App.D.C. 351 (D.C. Cir. 2002).

The EPA continued to apply the invalidated methodology in the context of determining whether the 309 program was better than BART, but the D.C. Circuit Court of Appeals again struck down the EPA's action in Center for Energy & Economic Development v. EPA, 398 F.3d 653, 660, 365 U.S.App.D.C. 65 (D.C. Cir. 2005). There the court upheld the EPA's view that an alternative program could satisfy the reasonable progress goals. But, the court held that the EPA should not have used the invalidated methodology. Ctr. for Energy & Econ. Dev., 398 F.3d at 654.

4. Regional Haze Rule Revisions

In 2006, the EPA responded to these decisions by revising the Regional Haze Rule, making the evaluation of the final BART factor a source-by-source determination rather than one based on an evaluation of emission reductions in the aggregate. Final Rule, Regional Haze Regulations; Revisions to Provisions Governing Alternative to Source-Specific BART Determinations, 71 Fed. Reg. 60,612, 60,612-13 (Oct. 13, 2006). Thus, the participating states had to resubmit implementation plans.

5. Subsequent Implementation Plans Adopting 309 Program

Arizona and Oregon decided not to participate in the 309 program. But New Mexico, Utah, Wyoming, the City of Albuquerque, and Bernalillo County resubmitted plans for a 309 program. In the new plans, the participants adjusted the emission milestones to account for withdrawal of Arizona and Oregon and reductions already achieved under the 2003 milestones. Joint App. at 426, 430-38.

The new implementation plans set the following regional milestones:

o 269,083 tons of sulfur dioxide in 2008,
o 234,903 tons of sulfur dioxide in 2009,
o 200,722 tons of sulfur dioxide in 2010-2012,
o 185,795 tons of sulfur dioxide in 2013,
o 170,868 tons of sulfur dioxide in 2014,
o 155,940 tons of sulfur dioxide in 2015-17, and
o 141,849 tons of sulfur dioxide in 2018 and beyond.

Id. at 461.

When determining whether the 309 program would outperform BART, the participants considered BART-eligible sources and other sources. Because presumptive rates were not established for the other sources, the states analyzed individual sources to determine the emission-rate

Page 927

benchmark for sources that were ineligible under BART. Id.

The 309 program set the 2018 milestone to the BART benchmark based on the presumptive BART in Appendix Y. But New Mexico, Utah, Wyoming, the City of Albuquerque, and Bernalillo County determined that the 309 program would outperform BART by:

o encouraging early cuts in emissions,
o including non-BART stationary sources, covering 63 more sources that produce emissions,
o capping growth in new sources,
o addressing not only stationary sources but also mobile sources, fire, and clean air corridors (which are not covered by BART), and
o establishing a " mass-based cap," which created an absolute limit on allowable emissions (unaffected by demand fluctuations or operational malfunctions that could increase emissions).

In 2011, New Mexico, Utah, Wyoming, the City of Albuquerque, and Bernalillo County revised their implementation plans adopting the 309 program. In late 2012, the EPA approved the plans, finding that the 309 program would achieve greater reasonable progress than BART. Id. at 1-53. The Petitioners challenge the EPA's approval of the 309 program.

II. Standard of Review

The Clean Air Act authorizes judicial review of the EPA's approval of state implementation plans, but does not designate the applicable standard of review. 42 U.S.C. § 7607(b)(1). In conducting this review, we are bound by the Administrative Procedure Act. See Oklahoma v. EPA, 723 F.3d 1201, 1211 (10th Cir. 2013) (" We follow the standards of the Administrative Procedure Act . . . in reviewing the EPA's actions under the [Clean Air Act]." ).

Under the Administrative Procedure Act, we can reverse agency action only if it is " arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). This standard requires us to determine whether the agency considered the relevant data and rationally explained its decision. See In re FCC, 753 F.3d 1015, 1041 (10th Cir. 2014). Under this standard, we will not disturb an agency action unless the agency

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 implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983).

If the agency's " 'path may reasonably be discerned'" from its explanation, we will not disturb the action even when the explanation is not entirely clear. Alaska Dep't of Envtl. Conservation v. EPA, 540 U.S. 461, 497, 124 S.Ct. 983, 157 L.Ed.2d 967 (2004) (quoting Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974)). When an agency acts under an " 'unwieldy and science-driven statutory scheme[] like the Clean Air Act,'" we afford the agency " 'particular deference.'" Nat'l Ass'n of Clean Air Agencies v. EPA, 489 F.3d 1221, 1229, 376 U.S.App.D.C. 385 (D.C. Cir. 2007) (quoting Bluewater Network v. EPA, 372 F.3d 404, 410, 362 U.S.App.D.C. 37 (D.C. Cir. 2004)).

III. The EPA's Approval of the Implementation Plans

The environmental groups argue that:

o

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the 309 program does not achieve greater reasonable progress than ...

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