California air district prevails in emissions-rule case against EPA

(CN) — A Ninth Circuit panel on Thursday remanded an air management district’s case to the U.S. Environmental Protection Agency after finding the agency was “arbitrary and capricious” when it denied a rule change about offsetting emissions.

The dispute is over which rule is pertinent to using simultaneous emissions reductions. Those reductions at one facility can “fund” a change at another facility. They must occur at the same time, with the reduction offsetting an increase.

The EPA in a hearing last month argued the Mojave Desert Air Quality Management District was using reductions “on paper,” not actual emissions. The agency determined that calculating an emission decrease by using potential emissions as a baseline led to paper-only reductions and didn’t truly represent a change.

The air district said the EPA had misinterpreted a 2002 regulation and that its decision to partially disapprove a proposed state implementation plan from the district was arbitrary and capricious.  

Mojave argued the EPA’s rejection was a change from its own previous approval of similar rules the air district had proposed. The panel, quoting case law, noted that in those cases it must determine whether the EPA did actually depart from policy and, if it did, properly explain the reason.  

“We agree with Mojave that the EPA did not sufficiently articulate its change of position, and therefore its reasons for why [the rule] is allegedly improper,” the panel wrote in an unpublished opinion.

The EPA in 1996 worked with the air district over a proposed emissions-reduction rule that the agency ultimately approved.

While the EPA conceded that it approved that rule in 1996, it noted that a regulation added in 2002 led to a different result in the decision-making process. But the panel found the EPA didn’t sufficiently explain why that regulation led it to change course about Mojave’s emission-reduction program.

“Indeed, and although the reason for this is unclear, the briefing in this court contains far greater discussion of these issues than the more limited reasoning offered by the agency during the administrative process,” the panel wrote. “To the extent the EPA ‘display(ed) awareness that it is changing position,’ it did not sufficiently ‘show that there are good reasons for the new policy.’”

The EPA has argued the air district didn’t preserve its specific challenge — that the EPA was arbitrary and capricious — because it didn’t specify it during a public comment period. The panel disagreed, writing that under the Clean Air Act any objections must have “reasonable specificity.” That means someone needs to show that the government knew about the challenge during a public comment period and have the chance to consider that same objection raised in court.

While the air district could have offered more arguments, it still met its burden to the EPA according to the panel. The district in its comments had a part that criticized the rulemaking, pointing to the 1996 rule that was approved and the lack of an explanation from the EPA why it’s now inappropriate.

“That section identifies the 1996 approval as the prior relevant action, notes that ‘the (act) has not been amended since 1990,’ identifies an ‘apparent change,’ and requests a more detailed explanation for that change,” the panel wrote. “These comments present ‘in substance, if not in form, the same objection now raised’ before this court.”

The case, now remanded to the EPA, will undergo proceedings at the agency consistent with the panel’s ruling. A motion for stay pending review was denied as moot.

"EPA is evaluating the decision and will take appropriate steps," said Mike Alpern, director of public affairs for the agency's Pacific Southwest region, in an email.

An attorney for the air district couldn't be reached for comment.

U.S. Circuit Court Judges Daniel Bress and Lawrence VanDyke, both Donald Trump appointees, and U.S. District Court Judge Robert Lasnik, a Bill Clinton appointee sitting by designation from the Western District of Washington, made up the panel.

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