Home » Case Summaries » 2011 » Natural Resources Defense Council, Inc. v. South Coast Air Quality Management District, 651 F.3d 1066 (9th Cir. 2011)


Natural Resources Defense Council, Inc. v. South Coast Air Quality Management District, 651 F.3d 1066 (9th Cir. 2011)




Plaintiffs, the Natural Resources Defense Council and other groups (collectively, NRDC),[1] appealed the United States District Court for the Central District of California’s dismissal of their claims against the South Coast Air Quality Management District (SCAQMD)[2] for lack of subject matter jurisdiction and failure to state a claim for which relief can be granted.[3] NRDC alleged that SCAQMD violated section 173(c) of the Clean Air Act (CAA),[4] but the United States Court of Appeals for the Ninth Circuit affirmed the ruling of the district court.

The CAA requires the United States Environmental Protection Agency (EPA) to establish National Ambient Air Quality Standards (NAAQS),[5] and requires states to enforce NAAQS through EPA-approved state implementation plans (SIPs).[6] Regions that fail to meet NAAQS are designated non-attainment regions,[7] and new pollution sources in these regions are required to obtain “offsetting emissions reductions.”[8] SCAQMD implements a SIP in the South Coast Basin, a non-attainment region, and allows pollution sources to either offset their emissions with emission reduction credits (ERCs) or credits from an “offset account.”

NRDC claimed SCAQMD violated both its own Regulation XIII[9] and CAA section 173(c) by: 1) distributing invalid ERCs, 2) maintaining invalid credit offset accounts, and 3) failing to track emission reductions. The district court dismissed NRDC’s claim. The Ninth Circuit reviewed the district court’s dismissal de novo.[10]

First, the Ninth Circuit determined that the district court lacked jurisdiction over the alleged section 173 violation. Section 307(b) of CAA only permits review of final action in a federal appellate court.[11] If such review could have been obtained but was not pursued, the agency action is not later subject to judicial review.[12] Thus, section 307 review is exclusive. Because EPA had approved SCAQMD’s implementation of California’s SIP,[13] NRDC was effectively seeking review of an EPA decision—a final action that required section 307 review. Since section 307 review was not timely sought, the Ninth Circuit concluded that it lacked jurisdiction over the section 173 claim.

Second, the Ninth Circuit determined that SCAQMD’s SIP implementation through Regulation XIII lacked validity requirements[14] for internal offsets. The Ninth Circuit analyzed the plain meaning of Regulation XIII, which distinguished between ERCs (to which the validity requirement applies) and internal offsets. Accordingly, applying the ERC validity requirement to the internal offsets would collapse the distinction between ERCs and the internal offsets. This, the Ninth Circuit concluded, would be inconsistent with the “either/or” language of the plan.[15] Thus, the validity requirement only applied to ERCs, not internal offsets, and NRDC failed to state a claim based on SCAQMD’s alleged violation of the SIP.

Finally, the court dismissed NRDC’s third and fourth claims because NRDC failed to allege a violation of EPA’s approval of the SIP. NRDC alleged that EPA’s rule required SCAQMD to use a “tracking system”[16] for offset accounts. The only mention of a “tracking system,” however, was in the preamble of EPA’s SIP approval.[17] The court reasoned that a preamble to an EPA rule approving a SIP has “little legal traction” and that it would not consider the preamble “unless the regulation itself is ambiguous.”[18] Because the regulation made no reference to a tracking system, the court deemed it unambiguous and, consequently, refused to interpret the preamble to require what the rule did not clearly state. As a result, the court also dismissed NRDC’s claims alleging that SCAQMD failed to use a tracking system for its offsets in violation of EPA’s SIP approval, concluding that NRDC failed to state a claim upon which relief could be granted.

[1] NRDC was joined as a Plaintiff-Appellant by Communities for a Better Environment, the Coalition for a Safe Environment, and Desert Citizens Against Pollution.

[2] SCAQMD was joined by the Governing Board of the South Coast Air Quality Management District, Barry Wallerstein (Defendants-Appellees), and Orange County Sanitation District, Southern California Edison Co., County Sanitation District No. 2 of Los Angeles County, El Segundo Power LLC, Los Angeles Area Chamber of Commerce, and the Los Angeles County Business Federation (Intervenor-Defendants-Appellees).

[3] Fed. R. Civ. P. 12(b)(1) , (6).

[4] Clean Air Act, 42 U.S.C. §§ 7401–7671q (2006).

[5] Id. § 7409(a).

[6] Id. § 7410(a), (k).

[7] Id. § 7407(d)(1)(A)(i).

[8] Id. § 7503(a)(1)(A).

[9] See XIII SCAQMD §§ 1301–1325 (2011), available at http://www.aqmd.gov/rules/reg/
reg13_tofc.html (governing New Source Review—i.e. pre-construction review requirements for new and modified facilities under CAA).

[10] Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008).

[11] 42 U.S.C. § 7607(b)(1) (2006).

[12] Id. § 7607(b)(2).

[13] See Revisions to the California State Implementation Plan, South Coast Air Quality Management District, 71 Fed. Reg. 35,157 (June 19, 2006) (to be codified at 40 C.F.R. pt. 52).

[14] Validity requirements for Regulation XIII are a part of Rule 1309, which is titled “Emission Reduction Credits.” Rule 1309 details the requirements an applicant must provide in order to convert its own emission reductions into tradable ERCs. See XIII SCAQMD § 1309(b) (2011), available at http://www.aqmd.gov/rules/reg/reg13/r1309.pdf.

[15] Natural Res. Def. Council, Inc. v. S. Coast Air Quality Mgmt. Dist., 651 F.3d 1066, 1072 (9th Cir. 2011); see also XIII SCAQMD § 1303(b)(2)(A) (2011), available at http://www.aqmd.gov/

[16] The “tracking system” would require SCAQMD to provide for “necessary offsets required to meet the appropriate statutory offset ratio,” and to “mitigate emissions from those sources exempted from offsets under Rule 1304 which are not exempt from federal regulation.” Approval and Promulgation of Implementation Plan for South Coast Air Quality Management District, 61 Fed. Reg. 64,291, 64,292 (Dec. 4, 1996) (to be codified at 40 C.F.R. pt. 52).

[17] Natural Res. Def. Council, Inc., 651 F.3d at 1073; see 61 Fed. Reg. at 64,292.

[18] El Comité para el Bienestar de Earlimart v. Warmerdam, 539 F.3d 1062, 1070 (9th Cir. 2008) (noting that the court will not consider a preamble unless the regulation itself is ambiguous (citing Christensen v. Harris Cnty., 529 U.S. 576, 588 (2000))). Generally, an agency’s non-binding interpretation of its own regulation is entitled to deference only when it is persuasive, Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), or when the regulation’s language is ambiguous under Auer v. Robbins, 519 U.S. 452, 461 (1997). Christensen, 529 U.S. at 587–88.

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