As states continue to revise state implementation plans (SIP) to meet the requirements of the Clean Air Act (CAA), two recent decisions out of the Ninth Circuit Court of Appeals are likely to affect how contingency measures must be accounted for in non-attainment area SIPs. These decisions illustrate how courts have recently construed CAA contingency measure requirements and exceptional events exclusions and will be persuasive in guiding states and the EPA as they continue to address non-attainment areas. Along with a District of Columbia Circuit Court of Appeals decision in Sierra Club v. E.P.A, 985 F.2d 1055 (D.C. Cir. 2021) we discussed earlier this year, the regulated community should be aware of these recent developments as they may affect future projects.

Background

Under the CAA, the EPA promulgates National Ambient Air Quality Standards (NAAQS) for criteria pollutants, such as ozone precursors. NAAQS are designed to protect public health with an adequate margin of safety. If areas cannot meet or are not meeting a particular standard, the areas are considered to be in “non-attainment” and the states must submit SIPs to the EPA for approval. Non-attainment SIPs must demonstrate how the state will bring an area back into attainment through emission controls and other measures. Specifically, non-attainment SIPs must include enforceable emission limitations, ensure reasonable further progress toward meeting applicable standards and contingency measures that automatically take effect in the event the area fails to either attain the standards or make reasonable further progress in attaining those standards. Although states generally have broad leeway in how to draft SIP provisions, EPA will only approve an SIP if it meets the minimum requirements of the CAA.

When making an attainment determination, the CAA requires the EPA to exclude pollutant measurements above the NAAQS if the exceedance was influenced by exceptional events such as wildfires. Under the EPA’s most recent 2016 Exceptional Events Rule, states must demonstrate to the agency’s satisfaction a clear causal relationship between the exceptional events and the measured exceedance(s); however, they need not show the event was in excess of normal historical fluctuations or “but for” the event, there would not have been an exceedance.

Association of Irritated Residents v. EPA, Case No. 19-71223

On Aug. 26, 2021, the Ninth Circuit issued its decision in Association of Irritated Residents v. EPA reversing the EPA’s approval of California’s non-attainment ozone SIP in the San Joaquin Valley. In the past, the EPA’s position was contingency measures should be approximately equal to the emissions reductions necessary to demonstrate reasonable further progress for one year, which for ozone, amounts to reductions of 3% of the baseline emissions inventory for the non-attainment area. Nevertheless, the EPA approved California’s SIP, which contained a single contingency measure that would reduce ozone emissions by one ton per day when one year’s worth of reasonable further progress emissions was approximately 11.4 tons per day. The EPA argued the CAA does not specify the quantity of emission reductions a contingency measure must achieve, and therefore, does not guide nor bind the EPA in approving contingency measures. The court concluded “EPA still must give a reasoned explanation for departing from agency practice or policy” and “[b]ecause the agency did not provide a reasoned explanation for approving the state plan, the rule is arbitrary and capricious.” As a result, California will need to include additional contingency measures in its SIP.

Bahr v. Regan, 6 F.4th 1059 (9th Cir. 2021)

Before the Ninth Circuit in Bahr v. Regan was a related, but separate question from Irritated Residents—whether the EPA properly applied its 2016 Exceptional Events Rule in determining the Phoenix-Mesa area was in attainment with the applicable ozone NAAQS. In submitting its ozone SIP, the Arizona Department of Environmental Quality (ADEQ) sought to exclude exceedances caused by the 2015 Lake Fire in southeastern California through an exceptional events demonstration. The EPA agreed with ADEQ’s request. Petitioners challenged the EPA’s decision, arguing ADEQ had not established a clear causal connection between the 2015 Lake Fire and the subsequent ozone exceedances.

ADEQ submitted to the EPA trajectory analyses, satellite photos of the area revealing visible smoke plumes, National Oceanic and Atmospheric Administration (NOAA) smoke contour maps and other evidence to demonstrate a clear causal connection between the wildfires and the NAAQS exceedances. The court concluded the petitioners failed to produce evidence sufficient to demonstrate a lack of causal connection, deferring to the EPA’s technical determinations.

Implications

Both cases carry important implications for any state confronting a NAAQS non-attainment area. Following Irritated Residents, the EPA will likely scrutinize contingency measures more carefully, which could result in states looking for additional contingency measure reductions from regulated industries. Meanwhile, the Bahr decision is an important marker for judicial deference to the EPA in making exceptional events demonstrations, which is likely to be an important consideration in non-attainment demonstrations across the West given recent wildfire activity.

Here in Colorado, the EPA reclassified the Denver Metropolitan/North Front Range (DM/NFR) 8-hour ozone non-attainment area to serious in December 2019. Colorado’s Air Quality Control Commission approved a serious SIP in December of 2020 and submitted it to the EPA in March 2021. In contrast to Irritated Residents, Colorado’s SIP purports to contain contingency measures representing one year’s worth of progress, amounting to 3% of the baseline emission inventory for the non-attainment area.

The attainment deadline for the DM/NFR serious ozone non-attainment area is July 20, 2021, based on 2018‒2020 ozone season data. There is no doubt widespread wildfires throughout the West have significantly affected Colorado’s air quality during this time. If Colorado wishes to make an exceptional events determination in this SIP, Bahr v. Regan provides a roadmap of the types of evidence the EPA has accepted elsewhere.

Stakeholders participating in state rulemakings concerning SIP revisions should be cognizant that these rulings may affect state decision making on the scope of contingency measures to be included in a SIP, whether the EPA will approve a proposed SIP and what information is necessary to support an exceptional events exemption to NAAQS exceedances. Our attorneys and policy advisors have substantial expertise relating to the SIP approval process and would be happy to answer any questions your company may have.