Ctr. for Biological Diversity v. U.S. Envtl. Prot. Agency

82 F.4th 959

CENTER FOR BIOLOGICAL DIVERSITY, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Michael S. Regan,Administrator, United States Environmental Protection Agency, Respondents.American Petroleum Institute; Colorado Oil and Gas Association, Amici Curiae.

No. 22-9546

United States Court of Appeals, Tenth Circuit

Filed September 18, 2023

Petition for Review of an Order from the Environmental Protection Agency (EPA No. EPA-R08-OAR-2020-0644)

Robert Ukeiley (Ryan Maher, with him on the briefs) of the Center for Biological Diversity, Denver, Colorado, for Petitioner-Appellant.

Alan D. Greenberg, Attorney (Todd Kim, Assistant Attorney General, with him on the brief), Environment and Natural Resources Division, United States Department of Justice, Denver, Colorado, for Respondents-Appellees.

John H. Bernetich, Jennifer L. Biever, and Corey Y. Lim of Williams Weese Pepple & Ferguson PC, Denver, Colorado, for the American Petroleum Institute, Inc., and Christopher L. Colclasure of Beatty & Wozniak PC, Denver, Colorado, for the Colorado Oil and Gas Association filed an Amicus Curiae Brief.

Before TYMKOVICH, MORITZ, and ROSSMAN, Circuit Judges.

MORITZ, Circuit Judge.

In a May 2022 final rule, the U.S. Environmental Protection Agency (EPA) approved a revision to Colorado's State Implementation Plan (SIP). The revision certified that Colorado's existing, EPA-approved Nonattainment New Source Review (NNSR) permit program regulating new or modified major stationary sources of air pollution in the Denver Metro-North Front Range area meets the requirements for attaining the 2015 National Ambient Air Quality Standards (NAAQS) for ozone. The Center for Biological Diversity now challenges the EPA's final rule on procedural and substantive grounds. Procedurally, the Center argues that the EPA violated the Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706, by failing to include the state regulations that comprise Colorado's permit program in the rulemaking docket during the public-comment period. And substantively, the Center asserts that the EPA acted contrary to law when it approved Colorado's SIP revision because Colorado's permit program excludes all "temporary emissions" and "emissions from internal combustion engines on any vehicle" in determining whether a new or modified stationary source is "major" and therefore subject to the permit process. 5 Colo. Code Regs. § 1001-5:3D.II.A.23.f, 25.f (2021). According to the Center, the Clean Air Act (CAA) and its implementing federal regulations do not authorize these exclusions.

Because the EPA's notice of proposed rulemaking was adequate under the APA, we reject the Center's procedural challenge. We agree with the Center, however, that the EPA acted contrary to law in allowing Colorado to exclude all temporary emissions under its permit program; the federal regulation the EPA relied on in approving this exclusion plainly does not authorize such an exclusion. But the Center identifies no similar problem with the EPA allowing Colorado to exclude emissions from internal combustion engines on any vehicle. We therefore grant the Center's petition in part, vacate a portion of the EPA's final rule, and remand for further proceedings.

Background

The CAA provides "a cooperative-federalism approach to regulate air quality." U.S. Magnesium, LLC v. EPA, 690 F.3d 1157, 1159 (10th Cir. 2012). It tasks the EPA with establishing NAAQS, which "are standards that say the air can safely contain only so much of a particular pollutant." Sierra Club de P.R. v. EPA, 815 F.3d 22, 23 (D.C. Cir. 2016). And after setting or revising those NAAQS, the EPA must designate areas within states "as attainment (it meets the EPA-set pollutant level), nonattainment (it does not meet the EPA-set pollutant level), or unclassifiable." Ass'n of Irritated Residents v. EPA, 790 F.3d 934, 937 (9th Cir. 2015).

The CAA then delegates to the states "the primary responsibility for assuring air quality." 42 U.S.C. § 7407(a). Specifically, each state must adopt and submit for the EPA's approval a SIP that implements, maintains, and enforces the NAAQS within its areas. Id. § 7410(a)(1), (a)(2)(H). The CAA requires a state with a nonattainment area to include, among other things, an NNSR permit program in its SIP. See id. §§ 7502(c)(5), 7503, 7410(a)(2)(C). That program must "require permits for the construction and operation of new or modified major stationary sources anywhere in the nonattainment area." Id. § 7502(c)(5). A "stationary source," as relevant here, is "any source of an air pollutant except those emissions resulting directly from . . . a nonroad engine." Id. § 7602(z). And a stationary source is "major" if it "emit[s], or ha[s] the potential to emit," pollutants above preestablished thresholds. Id. § 7479(1). Federal regulations implementing the CAA's NNSR permitting requirements define "potential to emit" as "the maximum capacity of a stationary source to emit a pollutant under its physical and operational design." 40 C.F.R. § 51.165(a)(1)(iii). But both "secondary emissions" and certain "[f]ugitive emissions" are excluded "in determining the potential to emit of a stationary source." Id. § 51.165(a)(1)(iii), (iv)(C).

Once approved by the EPA, a SIP has "the force and effect of federal law." Utah Physicians for a Healthy Env't v. Diesel Power Gear, LLC, 21 F.4th 1229, 1237 (10th Cir. 2021) (quoting Espinosa v. Roswell Tower, Inc., 32 F.3d 491, 492 (10th Cir. 1994)). The CAA prohibits the EPA from approving any revision to a SIP that "would interfere with any applicable requirement concerning attainment . . . or any other applicable [CAA] requirement." 42 U.S.C. § 7410(l).

In 2018, the EPA designated the Denver Metro-North Front Range area in Colorado as a nonattainment area for the 2015 ozone NAAQS.¹ 83 Fed. Reg. 25776, 25792 (June 4, 2018). Two years later, Colorado submitted to the EPA for approval the SIP revision at issue here, which certified that Colorado's existing, EPA-approved NNSR permit program meets the requirements for attaining the 2015 ozone NAAQS.² See 83 Fed. Reg. 62998, 63002 (Dec. 6, 2018) (permitting states to submit "written statement certifying that . . . existing regulation is adequate to meet applicable nonattainment[-]area planning requirements of CAA . . . for a revised ozone NAAQS . . . in lieu of submitting new revised regulations"). Notably, Colorado's NNSR permit program provides for the exclusion of "emissions resulting from temporary activities, such as construction or exploration," and "emissions from internal combustion engines on any vehicle" in determining whether a new or modified stationary source is "major" and therefore subject to the permit process. 5 Colo. Code Regs. § 1001-5:3D.II.A.23.f, 25.f (2021).

In November 2021, the EPA proposed to approve Colorado's SIP revision, without including the state regulations that constitute Colorado's permit program in the rulemaking docket. See 86 Fed. Reg. 60434 (proposed Nov. 2, 2021). The Center objected, asserting that the EPA's failure to include the relevant state regulations in the rulemaking docket during the public-comment period was "a fundamental violation of administrative law." App. vol. 2, 1560. The Center also asked the EPA to reject Colorado's SIP revision because in the Center's view, the CAA and its implementing federal regulations do not authorize the exclusion of all temporary emissions and emissions from internal combustion engines on any vehicle in determining whether a new or modified stationary source is major. The EPA disagreed and issued a final rule approving Colorado's SIP revision. See 87 Fed. Reg. 29232, 29235 (May 13, 2022). That final rule took effect in June 2022. See id. at 29232. The Center now petitions for review.

Analysis

The APA provides the relevant legal standards for "reviewing the EPA's actions under the CAA." Oklahoma v. EPA, 723 F.3d 1201, 1211 (10th Cir. 2013). Under those standards, we may set aside the EPA's actions if, as relevant here, "it acted . . . not in accordance with the law . . . or 'without observance of procedure required by law.' " WildEarth Guardians v. U.S. Fish & Wildlife Serv., 784 F.3d 677, 682 (10th Cir. 2015) (quoting 5 U.S.C. § 706(2)(D)). With the APA's deferential standards in mind, we first consider the Center's procedural argument that the EPA's notice was inadequate. We then address the Center's substantive challenges to the EPA's approval of Colorado's NNSR permit program and its emissions exclusions.

I. Adequate Notice

The Center first argues that the EPA provided inadequate notice of its proposed rulemaking. The APA requires agencies to "issue a '[g]eneral notice of proposed rule[ ]making,' ordinarily by publication in the Federal Register." Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 96, 135 S.Ct. 1199, 191 L.Ed.2d 186 (2015) (first alteration in original) (quoting 5 U.S.C. § 553(b)). The notice need only include "(1) a statement of the time, place, and nature of public rule[ ]making proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved." § 553(b). And after providing such notice, "the agency shall give interested persons an opportunity to participate in the rule[ ]making." § 553(c).

Here, the Center does not dispute the first element, so we do not consider it. Turning to the second, the EPA's notice of proposed rulemaking stated that the EPA was "taking this action pursuant to [§§] 110, 172, and 173 of the [CAA]." 86 Fed. Reg. at 60434. And third, it informed the public that the EPA was proposing to approve Colorado's SIP revision after determining that Colorado's permit program meets the requirements for attaining the 2015 ozone NAAQS. The notice also included a list of relevant subjects, including "[e]nvironmental protection" and "[a]ir[-]pollution control," and the EPA published the notice in the...