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State v. United States

United States Court of Appeals, Ninth Circuit

April 3, 2017

State of Arizona, ex rel. Henry R. Darwin, Director, Arizona Department of Environmental Quality, Petitioner,
v.
U.S. Environmental Protection Agency; Scott Pruitt, Administrator, United States Environmental Protection Agency, Respondents. CalPortland Company, Petitioner,
v.
U.S. Environmental Protection Agency, Respondent. Phoenix Cement Company, an enterprise division of the Salt River Pima-Maricopa Indian Community, Petitioner,
v.
U.S. Environmental Protection Agency, Respondent. ASARCO LLC, Petitioner,
v.
U.S. Environmental Protection Agency, Respondent.

          Argued and Submitted June 21, 2016 San Francisco, California

         On Petition for Review of an Order of the Environmental Protection Agency

          Albert H. Acken (argued) and Fredric D. Bellamy, Ryley Carlock & Applewhite, Phoenix, Arizona, for Petitioner CalPortland Company.

          Mark W. DeLaquil (argued) and Andrew M. Grossman, Baker & Hostetler LLP, Washington, D.C.; George A. Tsiolis, Englewood, New Jersey; for Petitioner Phoenix Cement Company.

          Eric L. Hiser (argued) and Trevor J.L. Burggraff, Jorden Bischoff & Hiser PLC, Scottsdale, Arizona; George A. Tsiolis, Englewood, New Jersey; for Petitioner ASARCO LLC.

          Samara M. Spence (argued), Trial Attorney; John C. Cruden, Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; Matthew C. Marks and M. Lea Anderson, EPA Office of General Counsel, Washington, D.C.; Charlotte Withey, EPA Office of Regional Counsel, Region IX, San Francisco, California; for Respondents.

          Before: Marsha S. Berzon, Jay S. Bybee, and John B. Owens, Circuit Judges.

         SUMMARY[*]

         Environmental Law

         The panel dismissed in part and denied in part petitions for review brought by the State of Arizona and several private companies objecting to several sections of the United States Environmental Protection Agency's most recent Federal Implementation Plan ("FIP"), promulgated under the Clean Air Act, to replace certain rejected portions of Arizona's State Implementation Plan, concerning how the state intended to improve air quality in federal parks and forests by reducing emissions of various pollutants.

         The regulatory scheme codified in Section 169A of the Clean Air Act required each state with emissions impacting protected federal lands to create a State Implementation Plan. If the state submitted either a deficient plan or none at all, the Act required the EPA to promulgate its own plan - called a FIP - to force compliance with Congress's mandate.

         The panel held that several of petitioners' objections to the FIP were not properly before the court because they were not first presented to the EPA during the notice-and comment period in 42 U.S.C. § 7607(d)(7)(B). Specifically, the panel held that the issues petitioners raised for the first time on appeal were not so "key" that, assuming the D.C. Circuit's "key assumption" applied, Nat. Res. Def. Council v. EPA, 755 F.3d 1010, 1023 (D.C. 2014), they must have been anticipated by the EPA. The panel concluded that petitioners were barred from challenging in this appeal the numerical "reasonable progress goals" and the EPA's decision to jettison the affirmative defense for malfunction. The panel held that it was barred from reviewing those issues in this proceeding, and dismissed that portion of the petitions.

         The remaining objections that were ripe for consideration consisted of a series of technical challenges to the emission controls imposed on a cement kiln and copper smelters. According due deference, the panel held that the EPA's emission-control measures were not arbitrary or capricious and thus constituted valid agency rulemaking.

         Carroll McGuffey III (argued) and Justin Wong, Troutman Sanders LLP, Atlanta, Georgia; Paul L. Gale, Troutman Sanders LLP, Irvine, California; Peter S. Glaser, Troutman Sanders LLP, Washington, D.C.; James T. Skardon, Assistant Attorney General, Environmental Enforcement Section; Mark Brnovich, Attorney General; Office of the Attorney General, Phoenix, Arizona; for Petitioner State of Arizona.

          OPINION

          BYBEE, Circuit Judge:

         In the late 1970s, Congress declared it a "national goal" to improve air visibility in federal parks and forests. 42 U.S.C. § 7491(a)(1); see also 40 C.F.R. § 81.400 et seq. (listing all national parks, national monuments, and wilderness areas Congress sought to protect). To achieve that goal, Congress sought to reduce emissions of various pollutants through a new regulatory scheme codified in Section 169A of the Clean Air Act (CAA). 42 U.S.C. § 7491(b). That scheme required each state with emissions impacting protected federal lands to create a State Implementation Plan (SIP) describing how the state intended to make reasonable progress toward the national visibility goal. Id. §§ 7410(a), 7491(b)(2). If the state submitted either a deficient SIP or none at all, the CAA required the EPA to promulgate its own plan-called a Federal Implementation Plan (FIP)-to force compliance with Congress's mandate. Id. § 7410(c)(1).

         This extensive litigation arose when Arizona-a state containing twelve wilderness areas subject to Section 169A, see 40 C.F.R. § 81.403-clashed with the EPA over its SIP submitted in 2011. Although the SIP listed proposals to manage and reduce emissions from various industrial sources operated within the state, the EPA determined that Arizona could do better in improving visibility. The EPA disapproved certain aspects of Arizona's SIP and issued its own FIP that imposed enhanced emission-control measures.

         The EPA's actions spawned a series of legal challenges from Arizona and several private companies subject to EPA regulation (collectively, Petitioners). We have rejected most of those challenges in two prior decisions, concluding that the EPA acted within its authority when it disapproved portions of Arizona's SIP that it deemed problematic. Arizona ex rel. Darwin v. EPA (Arizona I), 815 F.3d 519, 524 (9th Cir. 2016); Phoenix Cement Co. v. EPA, 647 Fed.App'x 702, 704-05 (9th Cir. Mar. 31, 2016). All that remains before us now are Petitioners' objections to several sections of the EPA's most recent FIP-those issued to replace certain rejected portions of Arizona's SIP-which Petitioners claim constitute invalid agency action.

         We hold that several of Petitioners' objections to the FIP are not properly before us because they were not first presented to the EPA during the notice-and-comment period. See 42 U.S.C. § 7607(d)(7)(B) ("Only an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review."). As to the remaining objections that are ripe for our consideration, we conclude that the EPA's emission-control measures are not arbitrary or capricious and thus constitute valid agency rulemaking. Accordingly, we dismiss in part and deny in part the consolidated petitions for review.[1]

         I. REGULATORY BACKGROUND

         In the twentieth century, our nation experienced a significant degradation of visibility in its most treasured wilderness areas. See Regional Haze Regulations, 64 Fed. Reg. 35, 714, 35, 715 (July 1, 1999). The air pollution, Congress found, was "primarily" due to the emission of "[sulfur dioxide], oxides of nitrogen, and particulate matter" from poorly regulated industrial sources. Id. (citing H.R. Rep. No. 95-294, at 204 (1977)). To tackle the problem, Congress adopted Section 169A of the CAA, and the EPA promulgated implementing regulations to require states to improve visibility by adopting certain emission controls. 42 U.S.C. § 7491(b)(2). Two categories of such emission controls are relevant to the issues before us: "best available retrofit technology" (BART) and what the EPA sometimes refers to as "reasonable progress" (RP) controls. 42 U.S.C. § 7491(b)(2)(A)-(B), (g)(1)-(2); 40 C.F.R. § 51.308(f)(3); Promulgation of Air Quality Implementation Plans; Arizona; Regional Haze and Interstate Visibility Transport Federal Implementation Plan, 79 Fed. Reg. 52, 420, 52, 447, 52, 463 (Sep. 3, 2014) [hereinafter Final FIP].

         A. Best Available Retrofit Technology

         BART is a term of art used to describe technology that can be installed on an industrial source to control its emissions or make those emissions cleaner. 42 U.S.C. § 7491(b)(2)(A), (g)(2). Congress directed BART to be implemented on older stationary sources that "emit[] any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility" in protected federal lands. Id. § 7491(b)(2)(A); see also 40 C.F.R. § 51.301 (defining a "BART-eligible source" as an "existing stationary facility" built between 1962 and 1977 that "has the potential to emit 250 tons per year or more of any air pollutant"). If there are such sources within a regulated state, the state must not only "submit an implementation plan containing emission limitations representing BART, " 40 C.F.R. § 51.308(e), but do so for each pollutant those sources emit, id. § 51.301.

         In determining the appropriate BART to install, states must engage in a cost-benefit analysis by balancing five factors: "[1] the costs of compliance, [2] the energy and nonair quality environmental impacts of compliance, [3] any existing pollution control technology in use at the source, [4] the remaining useful life of the source, and [5] the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology." 42 U.S.C. § 7491(g)(2). Because the balancing is source specific, it could lead a state to adopt stringent BART regulations, none at all, or something in between. See Final FIP, 79 Fed. Reg. at 52, 447 (recognizing that cost-benefit analyses could reasonably lead to various degrees of BART regulations). If the EPA is dissatisfied with a state's BART determination, it can issue a FIP containing its own cost- benefit analysis in accordance with Section 169A. 42 U.S.C. § 7410(c)(1).

         B. Reasonable Progress Controls

         Similar to BART, RP controls serve to limit emissions of harmful pollutants that degrade visibility in protected wilderness areas. Although RP controls, as such, are not mentioned in Section 169A, they are an outgrowth of Congress's mandate to make "reasonable progress toward meeting the national [visibility] goal." 42 U.S.C. § 7491(b)(2). The EPA has construed that mandate as requiring each regulated state to establish reasonable progress goals (RPGs) that depend on how much of that state's current haze would have to be eliminated each year to achieve natural, pristine conditions by the year 2064. 40 C.F.R. § 51.308(d)(1)(i)(B). If a state believes that it is unable to conform with the year-to-year reduction rate-or the "glidepath, " as it is known in regulatory nomenclature-its SIP must explain why achieving the rate is not reasonable, while its proposed RPGs are. Id. § 51.308(d)(1)(ii).[2]

         After a state calculates its RPGs, it must determine whether to implement RP controls to reach those RPGs. See id. § 51.308(d). In making that determination, the state may take into account existing control measures-including BART-as well as the visibility impact of controls established through other programs under the CAA. See id. § 51.308(d)(1). If the existing control measures do not cut it, the state must consider four factors to determine whether additional measures are warranted: "[1] the costs of compliance, [2] the time necessary for compliance, and [3] the energy and non-air quality environmental impacts of compliance, and [4] the remaining useful life of any existing source subject to such requirements." 42 U.S.C. § 7491(g)(1); see also 40 C.F.R. § 51.308(d)(1)(i)(A). Should a state fail to conduct an accurate balancing, the EPA can correct the state's errors in a FIP. 40 C.F.R. § 51.308(d)(1)(v); see also 42 U.S.C. § 7410(c)(1).

         One characteristic of RP controls is worth emphasizing: they apply not just to some but to all pollutant-emitting stationary sources that impede reasonable progress. Take, for instance, a cement kiln emitting sulfur dioxide built in 1983. Although the kiln would not be subject to BART regulation because it was not in existence as of 1977, see 42 U.S.C. § 7491(b)(2)(A), it might nonetheless be required to adopt additional measures because limiting its pollution would help its home state achieve RPGs. In essence, then, RP controls fill a regulatory gap that would have existed if the EPA were not able to regulate BART-ineligible cement kilns, smelters, and other emission sources threatening to deteriorate visibility.

         II. PROCEDURAL BACKGROUND

         In 2011, Arizona submitted a SIP to the EPA outlining its RPGs and describing the steps it intended to take to limit air pollution within its state. See Arizona I, 815 F.3d at 528. The EPA deemed several portions of Arizona's SIP inadequate and issued a FIP to correct what it perceived to be Arizona's noncompliance with Section 169A and related regulations. Id. at 529; Phoenix Cement, 647 Fed.App'x. at 705-06. Because the validity of that FIP is the primary issue in this action, we first outline the steps the EPA took in preparing that document.

         A. The Proposed FIP

         The portions of Arizona's SIP that the EPA rejected consisted of "BART control analyses and determinations" for multiple stationary sources, RPG "analyses and determinations, " and long-term strategies for "making reasonable progress." See Promulgation of Air Quality Implementation Plans; Arizona; Regional Haze and Interstate Visibility Transport Federal Implementation Plan; Proposed Rules, 79 Fed. Reg. 9318, 9320 (Feb. 18, 2014) [hereinafter Proposed FIP]. Here is what the EPA proposed, in relevant part, to replace those rejected sections:

         1. Reasonable Progress Goals

         In a short, narrative section, the EPA proposed a set of RPGs "consistent with a combination of control measures that include those in the approved [portions of Arizona's] SIP as well as [the Proposed] FIP." Id. at 9321. The EPA did not express those RPGs numerically, explaining that although it "would prefer to quantify these proposed RPGs, " it lacked "sufficient time and resources" to do so. Id. at 9363. Instead, the EPA simply noted that "[i]n total, these final and proposed controls to meet the BART and RP requirements will result in higher emissions reductions and commensurate visibility improvements beyond what was in [Arizona]'s plan." Id.

         2. CalPortland's Cement Kiln

         The EPA next considered whether CalPortland's cement kiln should be subject to additional RP controls. Id. at 9351. Although Arizona had identified that kiln as a source that might contribute to visibility impairment, it failed to conduct the requisite four-factor analysis in its SIP. See Approval and Disapproval of Air Quality State Implementation Plans; Arizona; Regional Haze and Interstate Transport Requirements, 78 Fed. Reg. 46, 142, 46, 168-69, 46, 171 (July 30, 2013). The EPA therefore balanced the four factors itself and proposed that CalPortland install an emissions-control technology called "selective non-catalytic reduction" (SNCR) with a "50 percent SNCR ...


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