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Ninth Circuit Finds EPA Properly Approved Montana’s 2015 State Implementation Plan

The Ninth Circuit denied the Montana Environmental Information Center’s (MEIC) petition for review of the U.S. Environmental Protection Agency’s (EPA or agency) approval of a 1994 revision to Montana’s Clean Air Act, State Implementation Plan (SIP). The court held EPA’s approval was not arbitrary or capricious as EPA’s interpretation of ambiguous language in Montana’s revised SIP was reasonable and permissible. Because the agency’s interpretation is controlling, and the revised SIP otherwise conformed to the Clean Air Act (CAA), EPA’s actions were affirmed. [Montana Environmental Information Center v. Thomas,902 F.3d 971 (9th Cir. 2018).]



The Clean Air Act requires that states submit detailed documents, in the form of State Implementation Plans, that demonstrate how the state will attain air quality standards, as set by the EPA. Once received by the EPA, the agency reviews the SIP to determine whether it complies with all applicable requirements, and then either approves the SIP or sends it back to the state for revision. In addition, when the EPA updates air quality standards, states are required to revise their SIPs to comply with the new standards, within three years.

SIPs also must comply with the CAA’s prevention of significant deterioration program, which requires developers to acquire permits before constructing new emissions sources or modifying existing sources that will result in a “significant emissions increase.” The CAA’s method for calculating whether there will be a “significant emissions increase” is by comparing the “actual emissions” of a source to the projected emissions, post-modification.

The question of how to determine a source’s “actual emissions” is the central issue presented in MEIC’s petition. In 1980, EPA stated that actual emissions are calculated based on emissions:

•. . .during a two-year period which precedes the particular date and which is representative of normal source operation. (40 C.F.R. § 51.24(b)(21) (1980).)

In 2002, the agency clarified that the “two-year period” would equal the average rate of a pollutant actually emitted during any consecutive 24-month period selected by the owner or operator within: the five-year period immediately preceding the actual construction of the project, for steam power plants; and the ten-year period immediately preceding the actual construction of the project, for non-steam sources. (40 C.F.R. § 51.166(b)(47).) However, EPA also allows for use of a different time period that may be more representative of normal source operations.

In 1994, Montana submitted a revised SIP, which defined “actual emissions” similarly to the EPA’s 1980 definition, as:

•. . .the average rate. . .at which the unit actually emitted the pollutant during a two-year period which precedes the particular date and which is representative of normal source operation. Following an EPA air quality standards update between 2008 and 2012, Montana submitted a revised SIP in 2015, which included the same 1994 definition of “actual emissions.” In response, MEIC commented that Montana’s definition of “actual emissions” was less stringent than EPA’s updated definition from 2002, and the SIP could not be approved as such.

As the Ninth Circuit panel pointed out:

•. . .the entirety of Information Center’s appeal rests on the [Department of Environmental Quality’s (DEQ)] statements in the Talenlitigation.

MEIC based its comment on an unrelated 2015 case it litigated against the Montana Department of Environmental Quality (DEQ) (Sierra Club and Montana Environmental Information Center v. Talen Montana, LLC). There, DEQ stated that EPA’s definition of “actual emissions” should not be afforded any deference, as:

•. . .the interpretation that [it is] ‘the’ two-year period immediately preceding [a modification] is inconsistent with the rule language which says ‘a’ two-year period.

MEIC argued that by asserting that any two-year period could be used as a baseline, the DEQ was using a formula that was less stringent that EPA’s baseline of the two years prior to construction. However, after reviewing MEIC’s and others’ comments on the SIP, EPA approved it, noting the SIP “[m]et the relevant structural requirements.”

EPA further stated it would take into consideration MEIC’s comments in the implementation phase of the program, as opposed to the approval stage.

MEIC petitioned the court to review the agency’s approval.


The Ninth Circuit’s Decision

The Ninth Circuit reviewed EPA’s decision to determine whether it was arbitrary, capricious, an abuse of discretion, or contrary to law. In making this determination, the court looked to whether the agency articulated a rational connection between the facts found and the choice made. The court prefaced its analysis by referring to Chevron, and the general deference given to a rulemaking authority to interpret its own rules.

The court disagreed with MEIC’s position that DEQ’s interpretation of “actual emissions” as stated in the Talencase, carried the force of law, and because that interpretation was contained in the 1994 SIP, the 2015 SIP revision was deficient and should not have been approved. The court explained that “once the agency approves either an Implementation Plan or a Revised Implementation Plan, that plan becomes federal law” and, therefore:

•. . .DEQ’s interpretation of ‘actual emissions’ [during the Talenlitigation] could not invalidate Montana’s Revised Implementation Plan.

Further, the court stated that the SIP’s language was ambiguous, as MEIC and DEQ reasonably interpreted “a two-year period” differently. However, as stated above, when the plain language of a SIP cannot be readily discerned from the text, the agency’s reasonable interpretation receives deference. Here, the agency’s interpretation of “a 2-year period” to mean “the 2-year period” was permissible and that interpretation controlled despite DEQ’s reasonable interpretation that “a 2-year period” meant “any 2-year period.” Further, the revised SIP generally conformed to CAA standards. The court also agreed with EPA that MEIC’s comment about the revised SIP related to the implementation of the program as opposed to the approval of the SIP. Therefore, the Ninth Circuit concluded EPA acted reasonably and did not act arbitrarily in approving the revised SIP. Accordingly, the court denied MEIC’s petition for review.


Conclusion and Implications

MEIC based its case entirely on statements made during separate, unrelated litigation. Without additional, more conclusive statements or facts, courts tend to defer to agency interpretations and decisions regarding their own rules, regulations and policies. This case also illustrates the importance of timing and honing in on the true basis of a claim or issue. As EPA pointed out in its response to MEIC’s comment, MEIC took issue with language related to implementation of Montana’s revised SIP, not with its approval. Had MEIC waited to file a claim based on a source’s chosen baseline, and not challenged the overall approval of the SIP, the outcome may have been different. In the meantime, the court reaffirmed its reliance on agency interpretation and decisions when reviewing agency action.

(Danielle E. Leben, David D. Boyer)