NRDC, et al v. South Coast Air Quality Manage, et al
Filing
FILED OPINION (STEPHEN S. TROTT, PAMELA ANN RYMER and RALPH R. BEISTLINE) AFFIRMED. Judge: PAR Authoring, FILED AND ENTERED JUDGMENT. [7801480]
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATURAL RESOURCES DEFENSE
COUNCIL, INC., a non-profit
corporation; COMMUNITIES FOR A
BETTER ENVIRONMENT, a California
non-profit corporation;
COALITION FOR A SAFE
ENVIRONMENT, a California nonprofit corporation; DESERT CITIZENS
AGAINST POLLUTION, a California
non-profit corporation,
Plaintiffs-Appellants,
v.
SOUTH COAST AIR QUALITY
MANAGEMENT DISTRICT; GOVERNING
BOARD OF THE SOUTH COAST AIR
QUALITY MANAGEMENT DISTRICT;
BARRY WALLERSTEIN, Executive
Officer,
Defendants-Appellees,
and
8795
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NRDC v. SOUTH COAST AIR QUALITY MANAGEMENT
ORANGE COUNTY SANITATION
DISTRICT; SOUTHERN CALIFORNIA
EDISON CO.; WALNUT CREEK
ENERGY LLC; CPV SENTINEL LLC;
COUNTY SANITATION DISTRICT NO. 2
OF LOS ANGELES COUNTY; EL
SEGUNDO POWER LLC; LOS
ANGELES AREA CHAMBER OF
COMMERCE; LOS ANGELES COUNTY
BUSINESS FEDERATION,
Intervenor-Defendants-Appellees
No. 09-57064
D.C. No.
2:08-cv-05403-GWPLA
OPINION
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted
June 8, 2011—Pasadena, California
Filed June 29, 2011
Before: Stephen S. Trott and Pamela Ann Rymer, Circuit
Judges, and Ralph R. Beistline, Chief District Judge.*
Opinion by Judge Rymer
*The Honorable Ralph R. Beistline, Chief District Judge for the U.S.
District Court for Alaska, Anchorage, sitting by designation.
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COUNSEL
Angela J. Meszaros, Law Offices of Angela Johnson Meszaros, South Pasadena, California, (argued); Adriano Martinez, Natural Resources Defense Council, Santa Monica,
California; Shana Lazerow, Communities for a Better Environment, Oakland, California, for the plaintiffs-appellants.
Bradley R. Hogin, Woodruff, Spradlin & Smart, Costa Mesa,
California, for the defendants-appellees.
OPINION
RYMER, Circuit Judge:
The Natural Resources Defense Council and other groups
(collectively, the NRDC) appeal the dismissal of their claims
against the South Coast Air Quality Management District
(SCAQMD). We have jurisdiction under 28 U.S.C. § 1291,
and we affirm. The district court did not err in determining it
lacked jurisdiction over the alleged violations of Clean Air
Act § 173(c). Nor did it err in concluding that the NRDC otherwise failed to state a claim upon which relief can be
granted: Regulation XIII does not contain validity requirements for SCAQMD’s internal offsets, and Environmental
Protection Agency (EPA) rules do not require SCAQMD to
use a tracking system.
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I
The Clean Air Act (CAA) requires the EPA to establish
National Ambient Air Quality Standards (NAAQS). 42
U.S.C. § 7409(a). States are required to maintain and enforce
the NAAQS through State Implementation Plans (SIPs),
which must be approved by the EPA and become federal law
after such approval. Id. § 7410(a), (k). The EPA identifies air
quality control regions that do not meet the NAAQS as nonattainment regions. Id. § 7407(d). In nonattainment regions,
SIPs must include “new source review,” which means they
must require permits for the construction and operation of
new or modified major stationary sources of pollution. Id.
§ 7502(c)(5).
Section 173 of the CAA provides that SIP permit programs
must require new sources of pollution to obtain “offsetting
emissions reductions.” Id. § 7503(a)(1)(A). Section 173(c)
establishes requirements for the offsets in these programs. Id.
§ 7503(c). Section 173(c) also includes validity requirements
for offsetting emissions reductions, specifically that they be
“in effect and enforceable” when a new source comes online
and “offset by an equal or greater reduction” that was not
“otherwise required.” Id.
SCAQMD prepares and implements the SIP for the South
Coast Air Basin, the air quality control region for much of
Los Angeles, Riverside, San Bernardino, and Orange counties. The South Coast Air Basin is a nonattainment region for
ozone and particulate matter. SCAQMD has set forth its new
source review permit program in Regulation XIII, most of
which the EPA has approved and incorporated into the SIP.
See generally Approval and Promulgation of Implementation
Plan for SCAQMD, 61 Fed. Reg. 64291 (Dec. 4, 1996).
One of the Regulation XIII rules, Rule 1303(b)(2), requires
that most emission increases be offset in one of two ways.
First, they may be offset by Emission Reduction Credits
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(ERCs) under Rule 1309. An applicant may obtain an ERC
from SCAQMD when it has reduced its own emissions, and
ERCs may also be traded on the market. Rule 1309(b), (d),
(e). Rule 1309(b)(4) imposes five validity requirements on
these reductions: they must be real, quantifiable, enforceable,
permanent, and surplus beyond existing requirements. Second, certain priority sources may offset their emissions with
allocations from the Priority Reserve under Rule 1309.1.
Some other emissions are exempt under Rule 1304.
SCAQMD maintains an internal bank of credits known as
“offset accounts” that it uses to provide allocations from the
Priority Reserve and to offset exemptions under Rule 1304.
SCAQMD allegedly deposited invalid credits into its offset
accounts and continues to distribute them.
The NRDC’s complaint contains four claims for relief.
First, it alleges that SCAQMD violates CAA § 173(c) by distributing invalid credits from its offset accounts under Rules
1304 and 1309.1. Second, the NRDC alleges SCAQMD violates Regulation XIII as well as § 173(c) by maintaining
invalid credits in its offset accounts. Third and fourth, the
NRDC alleges that SCAQMD violates the EPA rule approving Regulation XIII and § 173(c) by failing to track emission
reductions to show it maintains positive account balances in
its offset accounts.
In a published opinion, the district court granted
SCAQMD’s motion to dismiss under Fed. R. Civ. P. 12(b)(1),
(6). Natural Resources Defense Council v. South Coast Air
Quality Management District, 694 F. Supp. 2d 1092 (C.D.
Cal. 2010). First, the court determined that it lacked jurisdiction under CAA § 304 over the alleged violations of § 173(c).
That disposed of the first claim entirely and portions of the
other claims. As for the remainder of the second claim, the
court concluded that the NRDC failed to allege a violation of
Regulation XIII because the regulation does not contain validity requirements for internal offsets. As for the remainder of
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the third and fourth claims, the court concluded that the
NRDC failed to state a claim because neither the EPA rule
nor the EPA-approved portion of Regulation XIII requires a
tracking system.
II
We review de novo a district court’s grant of a motion to
dismiss for lack of subject matter jurisdiction or failure to
state a claim. Manzarek v. St. Paul Fire & Marine Ins. Co.,
519 F.3d 1025, 1030 (9th Cir. 2008); Nurse v. United States,
226 F.3d 996, 1000 (9th Cir. 2000).
III
[1] We begin with the question of the district court’s jurisdiction over the alleged violations of § 173(c). CAA § 307(b)
provides that:
A petition for review of the Administrator’s action in
approving or promulgating any implementation plan
under section 7410 of this title . . . or any other final
action of the Administrator under this chapter . . .
which is locally or regionally applicable may be filed
only in the United States Court of Appeals for the
appropriate circuit.
42 U.S.C. § 7607(b)(1). Further, “[a]ction of the Administrator with respect to which review could have been obtained
under paragraph (1) shall not be subject to judicial review in
civil or criminal proceedings for enforcement.” Id.
§ 7607(b)(2) (emphasis added). Whenever § 307 review could
have been obtained, “this form of judicial review is exclusive
. . . [and] foreclose[s] the alternative avenue of citizen suit
enforcement through 42 U.S.C. § 7604 [CAA § 304].” Romoland School Dist. v. Inland Empire Energy Ctr., 548 F.3d 738,
755 (9th Cir. 2008).
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[2] In 1996, the EPA promulgated a rule approving much
of the SIP for the South Coast Air Basin. Approval of Implementation Plan, 61 Fed. Reg. 64291. In 2006, the EPA issued
a rule approving a revision to SIP Rule 1309.1. See Revisions
to the Cal. SIP, SCAQMD, 71 Fed. Reg. 35157 (June 19,
2006). In the 2006 rule, the EPA observed that, “[i]n approving Rule 1309.1 in 1996,” it had determined that SCAQMD’s
internal credits complied with § 173(c). Id. Specifically, it
noted that SCAQMD had “demonstrated that the Priority
Reserve bank’s emission reduction credits complied with the
requirements of section 173(c).” Id.
[3] The issuance of an EPA rule indicating that the internal
offsets comply with § 173(c) constituted “final action of the
Administrator” that is “locally or regionally applicable” under
§ 307(b). The rule is “locally or regionally applicable,” as it
concerns only the SIP applicable to the Los Angeles area. The
action is “final” for purposes of appellate review because it is
the consummation of the agency’s decision-making process
such that legal consequences will flow from it. Bennett v.
Spear, 520 U.S. 154, 177-78 (1997). The EPA determination
additionally falls within § 307(b) because it was part of an
EPA rule that “approv[ed] . . . [an] implementation plan.” 42
U.S.C. § 7607(b)(1).
[4] The NRDC argues that it is not challenging the EPA’s
approval of the SIP, but rather SCAQMD’s implementation of
the SIP, specifically the validity of the credits in its offset
accounts. However, because the EPA issued rules that not
only approved the SIP but also indicated that the credits in the
Priority Reserve comply with § 173(c), the NRDC is effectively seeking review of the EPA’s decision.
[5] As a result, the NRDC seeks review of an “[a]ction of
the Administrator with respect to which review could have
been obtained under [§ 307(b)(1)].” Id. § 7607(b)(2). Because
the NRDC failed timely to bring this claim directly to the
Ninth Circuit following the promulgation of the EPA rules in
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1996 or 2006, it is foreclosed from now bringing the claim as
a citizen suit under § 304(b). Romoland, 548 F.3d at 755.
[6] Even if it were not foreclosed, a citizen suit to enforce
§ 173(c) is not authorized by § 304 because § 173(c) does not
contain an “emission standard or limitation.” Section 304 provides that “any person may commence a civil action on his
own behalf [ ] against any [governmental instrumentality or
agency] . . . who is alleged to have violated . . . an emission
standard or limitation under this chapter.” 42 U.S.C.
§ 7604(a)(1) (emphasis added). Section 304(f) offers several
definitions of “emission standard or limitation,” including a
“standard of performance,” “any condition or requirement of
a permit under . . . part D of subchapter I,” and “any other
standard, limitation, or schedule established under . . . any
requirement to obtain a permit as a condition of operations.”
Id. § 7604(f)(1), (3), (4).
None of these definitions of “emission standard or limitation” encompasses § 173(c). First, § 173(c) does not meet the
definition of a “standard of performance.” The statute defines
“standard of performance” as “a requirement of continuous
emission reduction, including any requirement relating to the
operation or maintenance of a source to assure continuous
emission reduction.” Id. § 7602(l). Section 173(c) does not
require emission reduction. Instead, it details requirements for
the functioning of offsets within SIP permit programs, such as
where the reductions can come from and what the validity
requirements are. Id. § 7503(c). Section 173 is titled “Permit
requirements,” and is within Part D of CAA Subchapter I,
which is titled, “Plan Requirements for Nonattainment
Areas.” Id. § 7501 et seq. Further, the CAA assigns responsibility to SIPs, not § 173(c), to “include enforceable emission
limitations.” Id. § 7410(a)(2)(A). In the SIP at issue here,
those reduction requirements are found in Rule 1303’s
requirement that “emission increases shall be offset by either
Emission Reduction Credits . . . or by allocations from the
Priority Reserve.” Rule 1303(b)(2). Cf. Del. Valley Citizens
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Council for Clean Air v. Davis, 932 F.2d 256, 266 (3d Cir.
1991) (holding that CAA Section 172 did not “deal with emission standards or limitations” but rather “outline[d] what an
implementation plan must contain to get EPA approval”);
Conservation Law Foundation v. Busey, 79 F.3d 1250, 125960 (1st Cir. 1996) (holding that “[n]othing in [CAA Section
176] imposes an emissions reduction requirement” and repudiating an earlier decision to the contrary).
[7] Nor does § 173(c) set forth a “condition or requirement
of a permit under . . . part D of subchapter I” or a “standard,
limitation, or schedule established under . . . any requirement
to obtain a permit as a condition of operations.” 42 U.S.C.
§ 7604(f)(3), (4). Section 173(c) places requirements on SIPs,
and SIPs then set requirements for obtaining permits, which
in turn may have their own conditions or requirements. It is
those requirements established under the SIP that are the subject of these provisions of § 7604(f)(3), (4), not § 173(c)
itself. See Romoland, 548 F.3d at 754 (Section 304(f)(4) does
not permit citizen suits alleging “violation of the CAA” and
instead applies to “a term or condition of the permit . . .
issued.”). The district court was therefore correct that it
lacked jurisdiction under § 304 over the alleged violations of
§ 173(c).
IV
We turn now to the question of whether Regulation XIII
contains validity requirements for internal offsets. “In interpreting a SIP, we begin with a look toward the plain meaning
of the plan and stop there if the language is clear.” Safe Air
For Everyone v. EPA, 488 F.3d 1088, 1095 (9th Cir. 2007).
This is so unless “ ‘clearly expressed administrative intent is
to the contrary or if such plain meaning would lead to absurd
results.’ ” Id. at 1097 (quoting Dyer v. United States, 832 F.2d
1062, 1066 (9th Cir. 1987)) (internal brackets omitted).
[8] The validity requirements in Regulation XIII are part of
Rule 1309, which is titled “Emission Reduction Credits.” Part
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(b) of that rule is titled “Application for an ERC for a New
Emission Reduction” and describes what an applicant must
provide in order to convert its own emission reductions into
ERCs that can be traded. The relevant subpart, part (b)(4),
provides:
The applicant must demonstrate to the Executive
Officer or designee that all stationary and mobile
source reductions are: (A) real; (B) quantifiable; (C)
permanent; (D) federally enforceable, and (E) not
greater than the equipment would have achieved if
operating with current Best Available Control Technology (BACT).
Rule 1309(b)(4).
[9] Regulation XIII distinguishes between ERCs, to which
these validity requirements apply, and internal offsets such as
those in the Priority Reserve. Most clearly, Rule 1303 provides:
Unless exempt from offsets requirements pursuant to
Rule 1304, emission increases shall be offset by
either Emission Reduction Credits approved pursuant to Rule 1309, or by allocations from the Priority
Reserve in accordance with the provisions of Rule
1309.1.
Rule 1303(b)(2)(A) (emphasis added). Applying the ERC
validity requirements to the internal offsets would require collapsing this distinction between ERCs and the Priority
Reserve. Doing so would be inconsistent with the disjunctive
“either/or” language of Rule 1303(b)(2).
[10] We therefore conclude that Regulation XIII is clear
that the validity requirements of Rule 1309(b)(4) apply to
ERCs, not to the internal offsets at issue here. Accordingly,
we agree with the district court that the NRDC’s second claim
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must be dismissed for failure to state a violation of Regulation
XIII.
V
Finally, we consider whether EPA rules require SCAQMD
to use a tracking system. We have explained that the preamble
of an EPA rule approving a SIP has “little legal traction” and
“should not be considered unless the regulation itself is
ambiguous.” El Comite Para El Bienestar de Earlimart v.
Warmerdam, 539 F.3d 1062, 1070 (9th Cir. 2008). In explaining what constitutes “preamble,” we have observed that “the
operative language in the Federal Register, whereby the EPA
exercises its delegated legislative rulemaking authority, is the
language that amends the Code of Federal Regulations . . .
and that all text prior to this reference is preamble.” Id. at
1070 n.4.
[11] The EPA rule approving the SIP does contain a reference to a tracking system in its preamble. Approval of Implementation Plan, 61 Fed. Reg. at 64292. Yet we are not to
consider such references unless the regulation itself is ambiguous. El Comite, 539 F.3d at 1070. There is no ambiguity
here. Nothing in the EPA-approved SIP even suggests a tracking system must be applied. The district court thus properly
dismissed the NRDC’s third and fourth claims for failure to
allege a violation of the EPA rule or the SIP.
VI
As a result, we affirm dismissal of the NRDC’s complaint.
The district court lacked jurisdiction under CAA § 304 over
the alleged violations of § 173(c). The NRDC otherwise failed
to state a claim, for Regulation XIII does not impose validity
requirements on SCAQMD’s internal offsets and EPA rules
do not require the use of a tracking system.
AFFIRMED.
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