Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-01151/USCOURTS-caDC-99-01151-0/pdf.json

Parties Involved:
Environmental Protection Agency
Respondent
Navajo Nation
Intervenor
State of Michigan
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 4, 2001 Decided October 30, 2001

No. 99-1151

State of Michigan,

Michigan Department of Environmental Quality,

Petitioner

v.

Environmental Protection Agency,

Respondent

Navajo Nation,

Intervenor

Consolidated with

99-1152, 99-1153, 99-1154, 99-1155

On Petitions for Review of a Final Rule of the

Environmental Protection Agency

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Henry V. Nickel argued the cause for petitioners. With

him on the briefs were Lauren E. Freeman, David S. Harlow, Edmund H. Kendrick, Brian J. Renaud, Susan M.

McMichael, Jennifer M. Granholm, Attorney General, State

of Michigan, and John Fordell Leone, Assistant Attorney

General. Richard S. Wasserstrom entered an appearance.

Cynthia A. Drew, Attorney, U.S. Department of Justice,

argued the cause for respondent. With her on the brief were

John C. Cruden, Acting Assistant Attorney General, Andrew

J. Doyle, Attorney, Anthony F. Guadagno, Attorney, Environmental Protection Agency, and Michael W. Thrift, Attorney. Lois J. Schiffer, Assistant Attorney General, U.S. Department of Justice, and Christopher S. Vaden, Attorney,

entered appearances.

Jill E. Grant was on the brief for intervenor Navajo

Nation.

Before: Ginsburg, Chief Judge, Edwards and Sentelle,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: State of Michigan, et al. (hereinafter petitioners), petition this Court for review of the Environmental Protection Agency's ("EPA") 1999 revisions to the

Part 71 federal operating permit program rule, 64 Fed. Reg.

8247 (Feb. 19, 1999) (codified at 40 C.F.R. pt. 71).1 Petitioners argue that the EPA has exceeded its authority under the

Clean Air Act ("CAA" or "the Act"), 42 U.S.C. s 7401 et seq.

(2000), in proposing to promulgate and administer a federal

__________

1 The following petitions for review challenging the same EPA

rule were consolidated and are before us: State of Michigan,

Michigan Dep't of Envtl. Quality v. EPA, No. 99-1151, American

Forest and Paper Ass'n, Inc. v. EPA, No. 99-1152, New Mexico Oil

& Gas Ass'n v. EPA, No. 99-1153, New Mexico Env't Dep't v. EPA,

No. 99-1154, and Public Serv. Co. of New Mexico and Salt River

Project Agric. Improvement and Power Dist. v. EPA, No. 99-1155.

Arizona Public Serv. Co. v. EPA, No. 99-1146, challenging the

same rule, was voluntarily dismissed without prejudice on September 14, 2000.

operating permits program for areas where EPA believes the

Indian country status is in question, and in proposing to make

state/tribe jurisdictional determinations on a case-by-case basis rather than through notice and comment rulemaking.

Because we agree with petitioners that EPA has exceeded its

authority, we grant the petition for review.

I. Background

A. The Clean Air Act and Indian Tribes

The Clean Air Act establishes an intergovernmental partnership to regulate air quality in the United States. Described as an "experiment in federalism," Virginia v. EPA,

108 F.3d 1397, 1408 (D.C. Cir. 1997) (quoting Bethlehem Steel

Corp. v. Gorsuch, 742 F.2d 1028, 1036-37 (7th Cir. 1984)), the

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Act gives EPA responsibility for establishing National Ambient Air Quality Standards ("NAAQS"). 42 U.S.C. s 7409;

see also Whitman v. American Trucking Ass'ns, 531 U.S.

457, __, 121 S. Ct. 903, 907 (2001). Title V of the 1990 Clean

Air Act Amendments gives states responsibility for implementing these standards. See, e.g., 42 U.S.C. ss 7407, 7410.

As part of the 1990 Clean Air Act Amendments, Congress

also authorized EPA to "treat Indian tribes as States," thus

affording Indian tribes the same opportunity as states to

implement the NAAQS within tribal jurisdictions under a

Title V program. 42 U.S.C. s 7601(d). Title V requires that

states submit and obtain EPA approval of a state operating

permit program ("SOP") that meets the "minimum elements"

set forth under 42 U.S.C. s 7661a(d) and EPA regulations

promulgated pursuant to 42 U.S.C. s 7661a(b). Among the

requirements is that the state demonstrate that it has "adequate authority," including jurisdiction, to regulate the emission sources subject to the SOP. Id. at s 7661a(d). This

same requirement applies to Indian tribes seeking to enact

their own implementation plan. Id. at s 7601(d).

Congress recognized the unique legal status and circumstances of Indian tribes by allowing tribes to be treated as

states, but not requiring them to apply to EPA to manage

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Clean Air Act programs. See id. at s 7601(d)(1)(A). Tribes

may be treated as states if: they have a governing body; the

functions they are to exercise pertain to the management and

protection of air resources within the tribe's jurisdiction; and

the tribe is capable of carrying out these functions. See 42

U.S.C. s 7601(d)(2). No tribe to date has sought to create an

implementation plan. In the Tribal Authority Rule ("TAR"),

EPA exercised authority under 42 U.S.C. ss 7601(d)(2), (4)

by specifying those portions of the Clean Air Act for which it

deemed it appropriate to treat Indian tribes as states, and the

requirements necessary for tribes to establish jurisdiction to

develop Title V permitting programs. See Indian Tribes: Air

Quality Planning and Management, 63 Fed. Reg. 7254 (Feb.

12, 1998) (to be codified at 40 C.F.R. pts. 9, 35, 49, 50, and 81).

EPA's interpretation was upheld by this Court in Arizona

Pub. Serv. Co. v. EPA, 211 F.3d 1280 (D.C. Cir. 2000), cert.

denied, 121 S. Ct. 1600 (2001). Under the TAR a tribe may

only develop a Title V permitting program for nonreservation areas if the tribe can demonstrate jurisdiction

under federal Indian law. Therefore the TAR provides a

procedure for resolving jurisdictional disputes. See 40 C.F.R.

s 49.9(e).

If a state fails to create an EPA-approved implementation

plan, or in cases where an approved program is not being

properly implemented, Congress requires EPA to "promulgate, administer, and enforce" a federal operating permit

program. 42 U.S.C. ss 7661a(d)(3), (i)(3). Further, in the

absence of an EPA-approved tribal implementation program,

EPA may adopt a federal implementation program. See 42

U.S.C. s 7601(d)(4). However, the parties before us disagree

as to the source of EPA's power to enact such a program for

Indian country. The EPA claims its "authority under the

CAA is based in part on the general purpose of the CAA,"

which was only supplemented in the Indian tribe context by

42 U.S.C. s 7601(d)(4). 64 Fed. Reg. at 8251; see also 62

Fed. Reg. 13748, 13749 (proposed rule and notice) ("Today's

notice makes it clear that EPA's implementation of part 71

programs in Indian country is based on EPA's overarching

authority to protect air quality within Indian country, not

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solely on its authority to act in the stead of an Indian Tribe.").

In contrast, petitioners essentially contend EPA is merely

authorized to act in the shoes of the tribes--providing a

federal implementation program for tribes as it would for a

state that failed to develop an approved program. In any

event, both sides agree that in the absence of a tribal

implementation plan, EPA may provide a federal operating

plan for lands under the tribe's jurisdiction.

B. Federal Indian Law

Determining tribal jurisdiction is far from straightforward

and involves delicate questions involving state and tribal

sovereignty. Indeed, state-tribal relations have been a concern since the time of the founding. See The Federalist No.

42 (Madison) ("What description of Indians are to be deemed

members of a State, is not yet settled, and has been a

question of frequent perplexity and contention in the federal

councils."). Under principles of federal Indian law, "Indian

country" denotes the geographic scope where "primary jurisdiction ... rests with the Federal Government and the Indian

tribe inhabiting it, and not with the States." Alaska v.

Native Village of Venetie Tribal Gov't, 522 U.S. 520, 527 n.1

(1998). "Indian country" is defined by statute as "all land

within the limits of any Indian reservation," "all dependent

Indian communities," and "all Indian allotments." 18 U.S.C.

s 1151 (2001). "Although this definition by its terms relates

only to federal criminal jurisdiction, [the Supreme Court has]

recognized that it also generally applies to questions of civil

jurisdiction such as the one at issue here." Venetie Tribal

Gov't, 522 U.S. at 527 (citing DeCoteau v. District County

Court for Tenth Judicial Dist., 420 U.S. 425, 427 n.2 (1975)).

Thus, unlike typical political boundaries, the jurisdictional

boundaries of Indian tribes are not always clearly delineated,

and often are determined through adjudication or other administrative proceedings. See, e.g., id. at 534; Tribal Authority Rule, 40 C.F.R. pt. 49, 63 Fed. Reg. 7254 (Feb. 12, 1998).

"[T]he test for determining whether land is Indian country

does not turn upon whether that land is denominated 'trust

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land' or 'reservation.' Rather, we ask whether the area has

been 'validly set apart for the use of the Indians as such,

under the superintendence of the Government.' " Oklahoma

Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of

Oklahoma, 498 U.S. 505, 511 (1991) (quoting United States v.

John, 437 U.S. 634, 648-49 (1978)). Difficult jurisdictional

questions can arise over lands that do not meet the prima

facie test for "Indian country." Claims of superintendence

can be controversial for lands that tribes claim to be "dependent Indian communities," where title is not held by the

federal government or Indians, e.g. Venetie Tribal Gov't, 522

U.S. at 525-27, or lands outside the exterior boundaries of

formally-established reservations such as lands taken into

trust for tribes pursuant to the Indian Reorganization Act (25

U.S.C. s 465 (2000)), for which no action was taken by treaty,

Executive Order, or act of Congress to set the lands aside for

the use and benefit of a tribe.

It is against this background that EPA adopted its new

Part 71 rules providing for federal administration of an

operating permits program in Indian country.

C. The 1999 Part 71 Rule

In 1999, EPA finalized its 1997 proposal, 62 Fed. Reg.

13748 (March 21, 1997), establishing the Part 71 federal

operating permits plan throughout "Indian country unless a

Tribal or State Part 70 program has been explicitly approved

for the area." 64 Fed. Reg. at 8247, 8249 (codified at 40

C.F.R. s 71.4(b)). The major area of contention between

petitioners and EPA, and thus the issue before this Court is

EPA's authority to promulgate "Part 71 programs for Indian

country." Section 71.4(b) provides:

The Administrator will administer and enforce an operating permits program in Indian country as defined in

s 71.2, when an operating permits program which meets

the requirements of part 70 of this chapter has not been

explicitly granted full or interim approval by the Administrator for Indian country. For purposes of administering the part 71 program, EPA will treat areas for which

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EPA believes the Indian country status is in question as

Indian country.

40 C.F.R. s 71.4(b) (emphasis added). Specifically, this

Court must evaluate whether EPA's decision to "treat areas

for which EPA believes the Indian country status is in

question as Indian country" has exceeded the agency's authority under the Clean Air Act.

In its 1995 proposal for Part 71, EPA stated that the "Act

authorizes EPA to protect air quality on lands over which

Indian Tribes have jurisdiction." 60 Fed. Reg. at 20809

(emphasis added). The purpose was to provide a "mechanism

by which EPA [could] assume responsibility to issue permits

in situations where the State, local, or Tribal agency has not

developed, administered, or enforced an acceptable permits

program...." Id. at 20805. Thus, under the 1995 proposal,

EPA would issue permits for "Tribal areas" that "EPA

determines to be within a Tribe's inherent authority." Id. at

20830 (emphasis added). As a prerequisite the 1995 proposal

would have "required Tribes to establish their jurisdiction

over certain areas of Indian country before EPA could implement a Federal program for those areas." 64 Fed. Reg. at

8249 (emphasis added); see 60 Fed. Reg. at 20809. The 1999

rules adopted in Part 71 and the agency's approach to determining jurisdiction differ sharply from the original 1995 proposal. Unlike the present rule, a final jurisdictional determination would have been required regardless of whether the

tribe sought its own program. Moreover, EPA proposed to

follow the same "approach to resolving jurisdictional issues

taken in the Tribal air rule." 60 Fed. Reg. at 20810. "EPA

would notify appropriate governmental entities of the boundary of the Tribal area for a part 71 program at least 90 days

prior to the effective date of the program," and where a

dispute arose provide notice in the Federal Register and seek

comments. Id. Finally, the 1995 proposal anticipated that

EPA would "implement a part 71 program that covers all

undisputed areas, while withholding action on the portion

that addresses areas where a jurisdiction issue has not been

satisfactorily resolved." Id. (emphasis added). In contrast,

under the adopted rule, EPA assumes jurisdiction if "EPA

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believes" the status of the area is "in question." 40 C.F.R.

s 71.4(b); 64 Fed. Reg. at 8262.

EPA contends that under its new Part 71 rule it need only

conclude there is a "bona fide" question before it will treat an

area's Indian country status as "in question." See 64 Fed.

Reg. at 8248 n.1. EPA claimed its authority with respect to

"in question" lands is based on the agency's "overarching

authority to protect air quality within Indian country, not

solely on its authority to act in the stead of an Indian Tribe."

62 Fed. Reg. at 13749. Further, rather than determine

whether an area's status is Indian country or at least "in

question" through notice and comment rulemaking, the agency proposes to use adjudications over individual emitting

sources to determine an area's status. See 64 Fed. Reg. at

8255 ("EPA would not conduct area-specific rulemaking procedures to assess the boundaries of programs in Indian

country.... Specific 'boundary' questions relating to applicability of the program to particular sources would be addressed through a less formal consultation process [and] EPA

would make case-specific determinations on whether particular sources are in Indian country."); id. at 8257. Petitioners

sought review in this Court of the portion of EPA's 1999 Part

71 Rule authorizing EPA to treat as "Indian country" lands

for which EPA has deemed "Indian country" status to be "in

question" and of EPA's determination to make jurisdictional

inquiries through case-by-case adjudications rather than notice and comment rulemakings.

II. Analysis

A. EPA's Authority

It is elementary that our federal government is one of

limited and enumerated powers. "The powers of the legislature are defined and limited; and that those limits may not be

mistaken or forgotten, the constitution is written." Marbury

v. Madison, 5 U.S. (1 Cranch) 137, 176 (1803) (Marshall, C.J.).

This principle applies with equal force to the so-called modern

administrative state. EPA is a federal agency--a creature of

statute. It has no constitutional or common law existence or

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authority, but only those authorities conferred upon it by

Congress. "It is axiomatic that an administrative agency's

power to promulgate legislative regulations is limited to the

authority delegated by Congress." Bowen v. Georgetown

Univ. Hosp., 488 U.S. 204, 208 (1988). Thus, if there is no

statute conferring authority, a federal agency has none. We

must reverse EPA's decision to administer a federal operating permit program in lands whose Indian country status is

considered to be "in question" if it is arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.

See Motor Vehicle Mfrs. Ass'n of the United States, Inc. v.

EPA, 768 F.2d 385, 389 n.6 (D.C. Cir. 1985), cert. denied, 474

U.S. 1082 (1986). If EPA lacks authority under the Clean Air

Act, then its action is plainly contrary to law and cannot

stand. See American Petroleum Inst. v. EPA, 52 F.3d 1113,

1119-20 (D.C. Cir. 1995) ("API"); Ethyl Corp. v. EPA, 51

F.3d 1053, 1060 (D.C. Cir. 1995). To determine whether the

agency's action is contrary to law, we look first to determine

whether Congress has delegated to the agency the legal

authority to take the action that is under dispute. United

States v. Mead Corp., 121 S. Ct. 2164, 2171 (2000) ("We hold

that administrative implementation of a particular statutory

provision qualifies for Chevron deference when it appears

that Congress delegated authority to the agency generally to

make rules carrying the force of law...."); Chevron U.S.A.

Inc. v. Natural Resources Defense Council, Inc., 467 U.S.

837, 843-44. Mere ambiguity in a statute is not evidence of

congressional delegation of authority. See Sea-Land Servs.,

Inc. v. Dep't of Transp., 137 F.3d 640, 645 (D.C. Cir. 1998)

("[Chevron] deference comes into play of course, only as a

consequence of statutory ambiguity, and then only if the

reviewing court finds an implicit delegation of authority to the

agency.") (emphasis added); City of Kansas City, Mo. v.

Dep't of Housing & Urban Dev., 923 F.2d 188, 192-93 (D.C.

Cir. 1991) ("implicit delegation of interpretive authority," as

well as ambiguity, are required before Chevron-step-two deference is appropriate); cf. Railway Labor Exec. Ass'n v.

Nat'l Mediation Bd., 29 F.3d 655 (D.C. Cir. 1994) (en banc).

However, when Congress has explicitly or impliedly left a gap

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for an agency to fill, there is a delegation of authority to the

agency to give meaning to a specific provision of the statute

by regulation, "and any ensuing regulation is binding in the

courts unless procedurally defective, arbitrary and capricious

in substance, or manifestly contrary to the statute." Mead,

121 S. Ct. at 2171.

Agency authority may not be lightly presumed. "Were

courts to presume a delegation of power absent an express

withholding of such power, agencies would enjoy virtually

limitless hegemony, a result plainly out of keeping with

Chevron and quite likely with the Constitution as well."

Ethyl Corp. 51 F.3d at 1060 (D.C. Cir. 1995).2 "Thus, we will

not presume a delegation of power based solely on the fact

that there is not an express withholding of such power."

API, 52 F.3d at 1120.

We conclude that the plain meaning of 42 U.S.C. s 7601(d)

and s 7661a grants EPA the authority to "promulgate, administer and enforce a [federal operating permit] program"

for a state or tribe if, and only if, (1) the state or tribe fails to

submit an operating program or (2) the operating program is

disapproved by EPA or (3) EPA determines the state or tribe

is not adequately administering and enforcing a program.

See 42 U.S.C. ss 7661a(d), (i). Since Congress has not

delegated authority to the agency to act beyond these statutory parameters, we will not defer to EPA's interpretation of

the Act as giving it the broader power to indefinitely run a

federal operating permit program in the absence of the

conditions set out by sections 7661a(d), (i), and 7601(d). See

Mead, 121 S. Ct. at 2177 (Chevron deference not applicable

"where statutory circumstances indicate no intent to delegate

general authority to make rules with force of law"); Chevron,

467 U.S. at 842-43.

B. EPA's Treatment of "In Question" Lands

Petitioners and EPA agree that under the regime Congress

has created in the Clean Air Act, the states have primary

responsibility for ensuring that ambient air meets federally-

__________

2 Such a result would be out of keeping with Mead as well.

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established standards. Section 502 of the Act, 42 U.S.C.

s 7661a, addresses EPA approval of state programs. EPA

must establish minimum elements of a permit program and

each state must develop such a program. Id. at ss 7661a(b)

and (d). Section 502(d)(3) specifies that "[i]f a program

meeting the requirements of this subchapter has not been

approved in whole for any State, the Administrator shall, 2

years after the date required for submission of such a program ... promulgate, administer, and enforce a program

under this subchapter for that State." 42 U.S.C.

s 7661a(d)(3) (emphasis added). Similarly, if EPA determines that a state (or tribe) is "not adequately administering

and enforcing a program, or portion thereof" then "unless the

State has corrected such deficiency within 18 months after

the date of such finding, the Administrator shall, 2 years after

the date of such finding, promulgate, administer, and enforce

a program under this subchapter for that State." 42 U.S.C.

ss 7661a(i)(1), (4) (emphasis added).

Section 502, 42 U.S.C. s 7661a, does not speak of underlying, residual, or even default EPA jurisdiction, authority, or

power. It only speaks of the EPA running an implementation program for a state that fails to develop an approved

program. EPA has no authority or jurisdiction under section

502 to operate a federal program unless or until the state fails

to have a SOP approved within a specified time frame.

Further, if EPA does implement a program, the Administrator is instructed only "to administer and enforce federally

issued permits under this subchapter until they are replaced

by a permit issued by a permitting program," and EPA must

"suspend the issuance of permits promptly upon publication

of notice of approval of a permit program under this section...." 42 U.S.C. s 7661a(e). Thus, once a state program

is approved, EPA's authority to operate a federal program

under section 502(d)(3) lapses.

Nothing in CAA section 301(d), 42 U.S.C. s 7601(d), adds

to EPA's jurisdiction to implement a federal program in place

of the states. Section 301(d) permits the EPA to "treat

Indian tribes as States" if certain prerequisites are met,

including that the "functions to be exercised by the Indian

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tribe pertain to the management and protection of air resources within the exterior boundaries of the reservation or

other areas within the tribe's jurisdiction." 42 U.S.C.

s 7601(d)(2)(B) (emphasis added). If the EPA determines

that treatment of Indian tribes as identical to states is

inappropriate or administratively infeasible, then the EPA

"will directly administer such provisions so as to achieve the

appropriate purpose." 42 U.S.C. s 7601(d)(4). Thus, under

section 301, EPA may treat qualifying tribes as states, and if

the tribe fails to meet the requirements set out under section

502, then EPA must implement a federal program. Alternatively, if the tribe fails to qualify, then EPA must likewise

implement a federal program. Again, there is no suggestion

of inherent or underlying EPA authority, but rather a role for

the EPA if the tribe, for whatever reason, does not promulgate a tribal implementation program.

It is significant that neither the EPA nor the Intervenor,

Navajo Nation, can cite a single reference in the Clean Air

Act that suggests that the agency has some overarching

jurisdiction to implement federal programs. If anything, the

"structure" and "history" of the Act, to which they appeal,

suggest otherwise, for it is an experiment in cooperative

federalism, as Intervenor notes. Certainly the Act intended

to create an overarching federal role in air pollution control

policy, as Intervenor argues, but that overarching role is in

setting standards, not in implementation. EPA's role for

implementation is limited to the conditions set out in 42

U.S.C. ss 7601(d), 7661a.

The Intervenor's brief is telling. To support its contention

of default federal jurisdiction it cites vague statements that

the Act is "national in scope," that it is to "protect and

enhance the quality of the Nation's air resources" or that

EPA has the authority to issue regulations necessary to

implement the Act. But none of these implies that EPA has

some default authority to operate an implementation plan

except as specified in sections 301(d) and 502 of the Clean Air

Act, 42 U.S.C. ss 7601(d), 7661a. In its brief, EPA claims

that it "always has nationwide enforcement authority under

the Act" because "Congress charged EPA not only with

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generally administering the Act, but also with nationally

overseeing and enforcing its requirements." Similarly, in

adopting the new Part 71 rules, EPA claimed its "authority

under the CAA is based in part on the general purpose of the

CAA." 64 Fed. Reg. at 8251. However, "EPA cannot rely on

its general authority to make rules necessary to carry out its

functions when a specific statutory directive defines the relevant functions of EPA in a particular area." API, 52 F.3d at

1119. Rather, we have before had occasion to remind EPA

that its mission is not a roving commission to achieve pure air

or any other laudable goal. See, e.g., API, 52 F.3d at 1119;

Ethyl Corp., 51 F.3d at 1058. Commendable though these

goals may be, they are not within EPA's portfolio unless the

states and tribes fail to implement a program, and the

conditions in 42 U.S.C. ss 7601(d) and 7661a are therefore

met.

Having determined that EPA's only authority to administer

a federal operating permit program is found in 42 U.S.C.

ss 7601(d) and 7661a, we must next determine whether EPA

is acting within that authority in the challenged procedure.

The answer is plainly no. EPA asserts that where a state has

applied to operate a SOP under 42 U.S.C. s 7661a, EPA need

not actually determine whether the state has jurisdiction.

Rather, EPA claims it may administer a federal operating

permit program for sources in Indian country, including

areas where EPA believes a bona fide question of Indian

country status exists. Much of EPA's brief is dedicated to

arguing that it has authority to administer a federal operating

permit program in Indian country. However, these words

are wasted as petitioners do not claim otherwise. At issue in

this case is EPA's authority to administer a federal program

where the Indian country status is merely in question. The

petitioner states do not contend, as EPA and Intervenor

suggest, that the states should have jurisdiction over Indian

country lands. Petitioners happily concede that tribes, and

thus, potentially the EPA--acting for the tribe--have jurisdiction over Indian country. Similarly, petitioners not only

concede that EPA may undertake initial jurisdictional linedrawing, subject to judicial review, they insist, correctly, that

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EPA must make jurisdictional determinations. That is, EPA

cannot acquire jurisdiction for itself merely by determining

that an area's status is in question. Were we to hold otherwise, EPA would effectively have a blank check to expand its

own jurisdiction by not deciding jurisdictional questions. The

Clean Air Act does not confer such authority.

EPA argues that it is the state's burden under 42 U.S.C.

s 7661a(d)(1) to make a showing of "adequate authority" (and

thus state jurisdiction) to carry out a SOP, and that unless a

state can demonstrate authority to regulate an area, then

EPA must provide for effective implementation of Title V

programs. EPA contends it need not determine whether the

disputed area is within the jurisdiction of a state or a tribe,

and that by operating a federal program over "in question"

areas it avoids jurisdictional disputes. See 64 Fed. Reg. at

8254. Because Congress has given EPA discretion to determine how to preserve tribes' statutorily-granted options to

seek to run a Title V program for sources within Indian

country, EPA argues that this Court should defer to its

decision under Chevron step two, as a rule reasonably filling

the gap left by Congress.

What EPA fails to appreciate is that its actions create a

jurisdictional dispute. If a state has an approved implementation plan, then EPA's only grounds for jurisdiction under

the Act is the fact that an area is Indian country, not that its

status is "in question." If the state does not have an approved plan, then EPA is acting for the state. There are no

intermediate grounds on which EPA may indefinitely exercise

jurisdiction--it is either acting in the shoes of a tribe or the

shoes of the state. There is no residual authority granted by

the CAA for the EPA to refuse to make a jurisdictional

determination and operate a federal program under some

general authority of its own. EPA comes close to arguing

that because Congress has not expressly forbidden this assertion of federal jurisdiction, the agency may assert it. However, as we reminded the EPA in Ethyl Corp. and American

Petroleum Institute, to suggest "that Chevron step two is

implicated any time a statute does not expressly negate the

existence of a claimed administrative power ..., is both flatly

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unfaithful to the principles of administrative law ... and

refuted by precedent." 51 F.3d at 1060; 52 F.3d at 1120.

EPA and Intervenor Navajo Nation also argue that EPA's

obligation to protect Indian interests in land, including jurisdiction and other facets of self-government, and the strong

federal interest in preserving the sovereign rights of tribal

governments to regulate activities and enforce laws on Indian

lands, support the 1999 Part 71 rule allowing EPA to operate

a federal program for lands in question. See Exec. Order No.

13175, s 3(a), 65 Fed. Reg. 67249 (Nov. 9, 2000) ("Agencies

shall respect Indian tribal self-government and sovereignty,

honor tribal treaty and other rights, and strive to meet the

responsibilities that arise from the unique legal relationship

between the Federal Government and Indian tribal governments."). Intervenor argues that to allow states to implement Title V programs where the Indian country status is "in

question" would infringe on rights that belong to the tribes

under both the CAA and "general principles" of federal

Indian law. EPA similarly asserts that by operating a federal program for "in question" areas, it "protect[s] tribal sovereignty interests." EPA essentially argues that its interpretation of the CAA is correct because it favors Indian interests.

Yet, the bedrock canon of statutory interpretation in American Indian jurisprudence that " 'statutes are to be construed

liberally in favor of the Indians, with ambiguous provisions

interpreted to their benefit' " is simply not implicated here.

Cobell v. Norton, 240 F.3d 1081, 1101 (D.C. Cir. 2001) (quoting Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766

(1985)). EPA is not interpreting 42 U.S.C. ss 7601(d) and

7661a for the benefit of Indian tribes. It does not, for

example, propose to give Indian tribes jurisdiction over "in

question" lands. Rather it is refusing to make a jurisdictional

determination, thereby depriving both tribes and states of the

opportunity afforded them by Title V to operate a permitting

program. If anything, by claiming independent federal jurisdiction over "in question" areas, EPA is construing these

statutes for its own benefit.

EPA notes in its brief that "disputes" over whether a

particular parcel of land is Indian country "typically are

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resolved by tribunals other than EPA." However, EPA

offers no reason why it should refrain from deciding such

jurisdictional questions when they arise under the CAA.

Quite to the contrary, EPA has willingly accepted that it

must make jurisdictional decisions before approving a tribal

implementation plan. That very issue was the topic of litigation before this Court just last year in Arizona Public Service

Co. v. EPA, 211 F.3d 1280 (D.C. Cir. 2000). EPA is not

seriously contending that it cannot or should not make jurisdictional decisions. Rather it is suggesting it would prefer

just to run the program itself. Ironically in the Tribal

Authority Rule at issue in Arizona Public Service Co., EPA

stated that a "territorial approach to air quality regulation

best advances rational, sound air quality management," 59

Fed. Reg. 43956, 43959 (Aug. 25, 1994), yet here EPA does

not want to decide who controls the territory, instead leaving

pockets of "in question" lands under federal, not Indian,

jurisdiction.

EPA claims in its brief that it will only assert authority if

there is a "bona fide" question of an area's status. However,

in the Federal Register, EPA concluded that for the "purposes of this rule, there may be, but need not be, a formal

dispute, such as active litigation or other form of public

disagreement, for EPA to consider the Indian country status

of the area to be in question." 64 Fed. Reg. at 8254. Thus,

at least in the Federal Register, EPA has set a low, indeed

virtually undefined, threshold for deciding there is a dispute.

In any event, the Clean Air Act does not provide for EPA to

administer a federal program even if there is a bona fide

question of the area's status. Instead, under 42 U.S.C.

s 7661a(d), EPA must determine whether the state has adequate authority to carry out the SOP. And EPA must tell

the state if the SOP is disapproved because of a lack of

jurisdiction. Section 7661a(d)(1) requires that if the SOP is

disapproved, "in whole or in part, the Administrator shall

notify the Governor of any revisions or modifications necessary to obtain approval." As petitioners point out, there

either is jurisdiction or there isn't, but either way EPA must

decide and not simply grab jurisdiction for itself on the

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ground that an area is "in question." Jurisdiction as between

states and tribes is binary, it must either lie with the state or

with the tribe--one or the other--and EPA does not have a

third option of not deciding.

Petitioners correctly fear that EPA is creating a situation

in which it may assume jurisdiction for itself and perpetually

keep it from the states (or the tribes) because of a lack of

showing of jurisdiction, without ever deciding who has jurisdiction. EPA even anticipates such an eventuality. It notes:

Where a State and Tribe assert jurisdiction over an area

whose Indian country status EPA believes is in question

(and EPA has not resolved the question and has not

explicitly approved a part 70 program as applying in the

area), EPA would not view either the State or the Tribe

as having satisfied the CAA section 502(b)(5) requirements to have adequate authority.... Only when the

State or Tribe prevails on the Indian country question

would EPA then be able to conclude that the section

502(b)(5) requirements have been met for the area. Until that time, the absence of an approved part 70 program in the area necessitates implementation of part 71.

By federally implementing the title V program in areas

for which EPA believes the Indian country status is in

question, EPA can help avoid jurisdictional disputes that

might hinder effective implementation of the CAA.

64 Fed. Reg. at 8254 (emphasis added). Instead, EPA declines to resolve the dispute and imposes its own program.

This situation arises in part because "EPA believes there is

no reason to impose on Tribes the burden of making a

jurisdictional showing prior to EPA administering a Federal

program." 62 Fed. Reg. at 13750. The source of EPA's

belief is not entirely clear. EPA purports to rely on HRI,

Inc. v. EPA, 198 F.3d 1224 (10th Cir. 2000). However, the

issues in that case were quite different from those confronting us today. In HRI, Inc., the court was called upon to

determine whether (1) the EPA had properly determined that

a parcel of land was Indian country and (2) whether the EPA

had determined that another parcel of land was in dispute.

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The Tenth Circuit affirmed the EPA decisions before it, but

remanded for the EPA to make the jurisdictional determination concerning the disputed land. That court certainly did

not determine that the EPA had acquired potentially permanent jurisdiction over a parcel of land simply by reason of its

status being in dispute. Here we need not decide whether

EPA could temporarily operate a Part 71 federal program

while determining whether a state or a tribe has jurisdiction,

as that is not before us. EPA does not propose to impose

federal jurisdiction over "in question" lands only until it can

resolve the dispute, but in perpetuity, or at least until a tribe

or state makes an adequate showing through some other

regulatory or adjudicatory mechanism. EPA did announce it

would work with states, tribes, the Department of the Interior and other stakeholders "to assess whether sources are

located in Indian country," which EPA defines as including

areas for which EPA believes the Indian country is in question. 64 Fed. Reg. at 8256. But that means only EPA will

take questions and comments on whether something is "in

question." EPA does not promise--or even suggest--it will

determine jurisdiction. It proposes to run a federal program

so long as the area is "in question" without resolving that

question--and EPA lacks that statutory authority to do so.

Even if Congress intended for EPA to fill jurisdictional gaps,

it did not empower EPA to create permanent, or even semipermanent, ones.

Because EPA's only authority under the Clean Air Act to

operate a federal permitting program arises from 42 U.S.C.

ss 7601(d) and 7661a, and because these provisions require

that EPA make a determination as to whether a state or a

tribe has jurisdiction, we vacate the portion of EPA's 1999

Part 71 rule authorizing EPA to treat lands for which EPA

has deemed "Indian country" status to be "in question" as

"Indian country" for purposes of implementing a federal

program in those areas.

C. Procedure for Determining "Indian country" Status

In evaluating EPA's decision to use adjudication to resolve

jurisdictional questions on a case by case basis, we are guided

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by SEC v. Chenery, 332 U.S. 194 (1947). When Congress has

not specified an approach for the agency to follow, the form of

rulemaking or adjudicative procedure "lies primarily in the

informed discretion of the administrative agency." 332 U.S. at

203; see Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, Inc., 435 U.S. 519, 543 (1978)

("Absent constitutional constraints or extremely compelling

circumstances the administrative agencies should be free to

fashion their own rules of procedure and to pursue methods

of inquiry capable of permitting them to discharge their

multitudinous duties.") (quotations omitted). Thus, EPA's

procedures for determining whether a particular emitting

source (and thus a particular area) falls within Indian country

(or is "in question") would typically be entitled to deference,

as the agency has broad discretion to choose between rulemaking and adjudication. See Chenery, 332 U.S. at 203;

Vermont Yankee, 435 U.S. at 543. However, when Congress

has spoken, we are bound by that pronouncement. Chevron,

467 U.S. at 842-43 (Chevron's step one). Further, regardless

of the reasonableness of EPA's decision under Chenery or

Chevron step two, under the Administrative Procedure Act

("APA") this Court must determine whether the EPA's decisionmaking process was arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law. See 5

U.S.C. s 706(2)(A). Here, Congress has clearly spoken, and

under Chevron step one, the inquiry ends there.

Section 502(d) of the Act, 42 U.S.C. s 7661a(d), requires

each state to develop a state program to submit to the EPA.

Each state must submit a legal opinion from the attorney

general (or environmental agency's chief legal officer) "that

the laws of the State, locality, or the interstate compact

provide adequate authority to carry out the program." 42

U.S.C. s 7661a(d)(1) (emphasis added). It is this provision

which has been interpreted to require a showing of jurisdiction. Then, "[n]ot later than 1 year after receiving a program, and after notice and opportunity for public comment,

the Administrator shall approve or disapprove such program,

in whole or in part." Id. (emphasis added). The Act clearly

requires notice and comment in approving or disapproving

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any part of a state program. That includes the showing of

adequate authority and thus jurisdiction. EPA must determine, as part of that proceeding, which must include notice

and comment, whether the state has jurisdiction. It follows

that if the state has jurisdiction, then the tribe does not, and

vice versa. Such proceedings are open to public comment,

and judicial review, thus protecting the interests of the tribes

as well as the states. Congress has explicitly required use of

notice and comment in determining adequate authority (and

jurisdiction) when the agency is evaluating the SOPs, and

therefore EPA's decision to use separate adjudicatory proceedings that do not include notice and comment is contrary

to law and does not survive either Chevron step one or APA

review.

Section 502(i), 42 U.S.C. s 7661a(i), further confirms Congress's clear pronouncement. Under that provision, "[w]henever the Administrator makes a determination that a permitting authority is not adequately administering and enforcing a

program, or portion thereof, in accordance with the requirements of this subchapter, the Administrator shall provide

notice to the State...." 42 U.S.C. s 7661a(i)(1). If the

agency believes the state lacks jurisdiction, it must provide

notice to the state and give the state 18 months to correct the

"deficiency." See id. at s 7661a(i)(4).

Thus, it is clear under 42 U.S.C. s 7661a that jurisdictional

determinations are to be made as part of approving or

disapproving a state's (or tribe's) operating permit program,

and with procedures that include "notice and opportunity for

public comment." 42 U.S.C. s 7661a(d)(1). The statute here

is neither silent nor ambiguous; it requires the use of notice

and comment proceedings in the context where questions of

jurisdiction are to be resolved. As petitioners concede, such

proceedings will likely be complex and difficult. Nonetheless,

they are mandated by Congress. That ends our inquiry.

III. Conclusion

EPA must make jurisdictional determinations under the

Clean Air Act. It cannot simply declare a jurisdictional

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conflict and then implement a federal program in the absence

of clear state or tribal authority. Congress specifically delineated a role for EPA and a role for states and tribes in the

Clean Air Act. Under the Act's plain language, EPA's authority to implement a federal operating permits program is

premised on the failure of a state or tribe to implement its

own program, not some overarching national authority. See

42 U.S.C. ss 7601(d), 7661a. Where a valid state program

exists, EPA may implement a federal program only for

Indian country itself, not for lands the status of which EPA

deems "in question." Thus, prior to implementing any federal operating permits program EPA must determine the scope

of state and tribal jurisdiction.

In making such determinations EPA must use notice and

comment proceedings. The Act specifically provides for "notice and opportunity for public comment" in approving or

disapproving a state plan, in whole or in part, and it requires

"notice to the State" whenever the "Administrator makes a

determination that a permitting authority is not adequately

administering and enforcing a program, or portion thereof."

42 U.S.C. ss 7661a(d)(1), (i)(1). This includes determinations

of "adequate authority," and thus determinations of jurisdiction under the Act. Id. at s 7661a(d)(1). Because Congress's intent is clear, EPA's proposed approach is simply

contrary to law.

We grant the petition for review, vacate the portion of the

1999 Part 71 rules authorizing EPA to treat lands for which

EPA has deemed "Indian country" status to be "in question"

as "Indian country," and remand to the agency for proceedings consistent with this opinion.

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