9th Cir. Approves EPA’s Retroactive Amendment of Earlier Approval of California SIP New Source Review Rules


In the case of Association of Irritated Residents v. EPA, decided June 23, 2015, the Court of Appeals for the Ninth Circuit denied a petition for review filed after EPA acknowledged that it had mistakenly approved certain New Source Review (NSR) rules affecting ozone emissions in California’s Central Valley (which includes the San Joaquin Valley) subject to California’s State Implementation Plan (SIP), and then corrected this error.

In 2003, legislation was enacted in California to amend the California Health & Safety Code, which, at that time, exempted major agricultural sources from the Clean Air Act’s (CAA) NSR requirements. The legislation retained regulatory exemptions for certain minor agricultural sources. However, the San Joaquin Valley Unified Air Pollution Control District issued NSR rules that affected all new and modified sources of air pollution, whether major or minor, and they were made a part of the California SIP.

The Association of Irritated Residents then filed citizen suits against dairy farms that were minor agricultural sources, alleging that they were violating the EPA-approved California SIP rules. California then submitted SIP revisions to EPA and, in 2013, EPA retroactively revised the scope of its 2004 approval, after receiving an interpretation from the California Attorney General that the 2003 state legislation did not give the air pollution control district the authority to apply the 2004 NSR rules to certain minor agricultural sources. EPA cited Section 110(k)(6) of the CAA as authority to make these changes.

The Association of Irritated Residents challenged this action and asked the court to vacate the amended rule (40 C.F.R. § 52.245). Representatives of several agricultural interests intervened in this case.

The Court of Appeals “held that the EPA was not arbitrary, nor did it abuse its discretion, in correcting the prior approval of the New Source Review rules after it learned that California law, California Senate Bill 700, did not authorize the San Joaquin Air Control District to require new source permits or emissions for minor agricultural sources. [It] further held that because those rules conflicted with state law, they should not have been incorporated into the State Implementation Plan, and the EPA did not act improperly in correcting its prior approval.” Applying Chevron deference, it further held that, as a matter of first impression, EPA reasonably interpreted Section 110(k)(6) of the CAA to grant the EPA authority to amend retroactively its approval of the 2004 New Source Review rules.