571 F.3d 1245 (2009)

NATURAL RESOURCES DEFENSE COUNCIL, Petitioner

v.

ENVIRONMENTAL PROTECTION AGENCY, Respondent

National Petrochemical & Refiners Association, et al., Intervenors.

Nos. 06-1045, 06-1046, 06-1047, 06-1214, 07-1311.

Argued November 20, 2008.

Decided July 10, 2009.

United States Court of Appeals, District of Columbia Circuit.

1249 *1249 David S. Baron argued the cause and filed the briefs for petitioner, Natural Resources Defense Council.

Anne Milgram, Attorney General, Attorney General's Office of the State of New Jersey, and Maurice A. Griffin, Deputy 

Attorney General, were on the briefs for petitioner, State of New Jersey.

Kevin P. Auerbacher, Assistant Attorney General, entered an appearance.

Frank S. Craig III, John B. King, Steven J. Levine, and Patrick O'Hara were on the briefs for petitioners, The Chamber 

of Greater Baton Rouge, et al. Geraldine E. Edens entered an appearance.

Andrew Cuomo, Attorney General, Attorney General's Office of the State of New York, Morgan A. Costello and 

Michael J. Myers, Assistant Attorneys General, Richard Blumenthal, Attorney General, Attorney General's Office of the 

State of Connecticut, and Kimberly P. Massicotte, Assistant Attorney General, were on the briefs for intervenors the 

States of New York and Connecticut in support of petitioner.

Charles H. Knauss and Sandra P. Franco were on the briefs for intervenor National Petrochemical & Refiners 

Association in support of petitioner Natural Resources Defense Council.

Brian H. Lynk, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the brief were 

John C. Cruden, Deputy Assistant Attorney General, and Diane E. McConkey, Counsel, U.S. Environmental Protection 

Agency.

Norman W. Fichthorn and Lucinda M. Langworthy were on the brief for intervenor, Utility Air Regulatory Group in 

support of respondents. Allison D. Wood entered an appearance.

*1250 Charles H. Knauss was on the brief for intervenors National Petrochemical & Refiners Association and 

American Petroleum Institute in support of respondents. Martha E. Cox and Stacy R. Linden entered appearances.

1250

Before: GINSBURG, HENDERSON and ROGERS, Circuit Judges.

Opinion for the Court filed PER CURIAM.

Opinion concurring in part and dissenting in part filed by Circuit Judge ROGERS.

PER CURIAM:

In 1997, the EPA revised the National Ambient Air Quality Standard (NAAQS) for ozone from a 1-hour standard to an 

8-hour standard. These consolidated petitions for review challenge aspects of the Final Rule To Implement the 8-Hour 

Ozone National Ambient Air Quality Standard — Phase 2, 70 Fed.Reg. 71,612 (2005) (Phase 2 Rule), and Phase 2 of 

the Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard — Notice of Reconsideration, 

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72 Fed.Reg. 31,727 (2007) (Reconsideration Notice). We hold the Phase 2 Rule is inconsistent with the Clean Air Act 

(CAA or Act) in allowing participation in a regional cap-and-trade program to satisfy an area-specific statutory 

mandate. We further hold the EPA arbitrarily eliminated one safeguard and violated the anti-backsliding provision of 

the Act insofar as it eliminated another from its regulations governing review of new sources of pollution. We therefore 

grant the petitions with respect to those aspects of the Phase 2 Rule. In view of our decision in North Carolina v. EPA,

531 F.3d 896 (2008), in which we granted a petition for review of the Clean Air Interstate Rule (CAIR), we defer 

consideration of the Phase 2 Rule and Reconsideration Notice insofar as they relate to the CAIR program. We deny 

the petitions in all other respects.

I. Background

The Act requires the EPA to designate areas as attainment, nonattainment, or unclassifiable for each NAAQS. CAA § 

107(d)(1)(B), 42 U.S.C. § 7407(d)(1)(B). States have primary responsibility for implementing those standards, and 

must submit a state implementation plan (SIP) that specifies how the state will achieve and maintain compliance with 

the NAAQS. Id. § 7407(a). Part D of the Act provides the SIP for a nonattainment area must include certain control 

measures. Id. § 7501 et seq. Subpart 1 applies to all nonattainment areas, id. §§ 7501-7509a, whereas Subpart 2 

specifies additional requirements for ozone nonattainment areas, id. § § 7511-7511 f. Section 181 of the Act classifies 

ozone nonattainment areas from "marginal" to "extreme" based upon the degree to which the ozone level in the area 

exceeds the NAAQS. Id. § 7511. An area that exceeds the NAAQS by a greater margin is given more time to meet the 

standard but is subjected to progressively more stringent emissions controls for ozone precursors, namely, volatile 

organic compounds (VOCs) and oxides of nitrogen (NOx). See CAA § 182, 42 U.S.C. § 7511a.

In 1997, the EPA determined the NAAQS for ozone, expressed as the amount of ozone in the ambient air averaged 

over one hour, was inadequate to protect public health. The EPA therefore promulgated a new NAAQS of .08 ppm of 

ozone averaged over eight hours. Under the 8-hour standard, some ozone nonattainment areas are subject only to the 

more flexible requirements of Subpart 1, while areas with higher levels of ozone are subject to the additional 

1251 requirements of Subpart 2. See S. Coast Air Quality Mgmt. *1251 Dist. v. EPA, 472 F.3d 882, 893-95 (D.C.Cir.2006).

The EPA implemented the 8-hour NAAQS in two phases; the Phase 2 Rule and Reconsideration Notice here under 

review implement the requirements of Subpart 1 and Subpart 2 for areas not attaining the 8-hour NAAQS. The 

consolidated petitions challenge those rules as follows. The Natural Resources Defense Council, the States of New 

Jersey, Connecticut, and New York, and the National Petrochemical and Refiners Association challenge provisions 

implementing the statutory requirement that each nonattainment area provide for such emissions reductions as may 

be obtained by the adoption of reasonably available control technology (RACT). The NRDC and New Jersey challenge 

provisions governing review of new sources of pollution. The NRDC also challenges two provisions implementing the 

statutory requirements that a SIP for a nonattainment area provide for specific percentage reductions in emissions and 

for contingency measures. Finally, the Chamber of Greater Baton Rouge and affiliated petitioners[1] challenge the 

imposition of reformulated gasoline requirements in the Baton Rouge area.

We review the EPA's interpretation of the Act pursuant to Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 

U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984): We ask first whether the Congress has "directly spoken to the 

precise question at issue." Id. at 842, 104 S.Ct. 2778. If so, then we must "give effect to the unambiguously expressed 

intent of Congress." Id. at 843, 104 S.Ct. 2778. If, however, the "statute is silent or ambiguous with respect to the 

specific issue," then we defer to the EPA's interpretation as long as it is "based on a permissible construction of the 

statute." Id. The Act requires us to review the Phase 2 Rule deferentially to determine only whether it is "arbitrary, 

capricious, an abuse of discretion, or otherwise not in accordance with law." CAA § 307(d)(9)(A), 42 U.S.C. § 7607(d)

(9)(A); see Bluewater Network v. EPA, 372 F.3d 404, 410 (D.C.Cir.2004) ("We give particular deference to the EPA

when it acts under unwieldy and science-driven statutory schemes like the Clean Air Act") (internal quotation marks 

omitted).

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II. Reasonably Available Control Technology

Section 172(c)(1) of the Act requires that the SIPs for nonattainment areas "provide for the implementation of all 

reasonably available control measures as expeditiously as practicable (including such reductions in emissions from 

existing sources in the area as may be obtained through the adoption, at a minimum, of reasonably available control 

technology)." 42 U.S.C. § 7502(c)(1) (emphasis added). Ozone nonattainment areas that are subject to Subpart 2 of 

Part D are subject to more specific reasonably available control technology requirements. E.g., id. § 7511a(b)(2)(C); id.

§ 7511a(f). Petitioners challenge three aspects of the implementation of the RACT requirement in the Phase 2 Rule. 

First, the NRDC challenges the rule providing that RACT is satisfied for Subpart 1 areas by SIPs "demonstrating that 

the area has adopted all control measures necessary to demonstrate attainment as expeditiously as possible," Phase 

2 Rule, 70 Fed.Reg. at 71,701 (codified at 40 C.F.R. § 51.912(c)(1)). Second, the State of New Jersey challenges the 

EPA's decision to allow states to meet the RACT *1252 requirement under the 8-hour NAAQS by certifying that RACT 

is met under the 1-hour NAAQS, see id. at 71,652-53. Third, the NRDC, New Jersey, the States of Connecticut and 

New York, and the National Petrochemical and Refiners Association challenge the EPA's conclusion that states may 

satisfy the RACT requirement by participating in two cap-and-trade programs, the NOx SIP Call and CAIR, see id. The 

court has stayed consideration of the CAIR-RACT determination.[2]

1252

A. RACT in Subpart 1 Nonattainment Areas

The NRDC challenges the Phase 2 Rule's treatment of the "reasonably available control technology" requirement of 

CAA § 172(c)(1), 42 U.S.C. § 7502(c)(1). Under the Phase 2 Rule, nonattainment areas governed by Subpart 1 that 

request an attainment deadline within five years of their designation "shall meet the RACT requirement by submitting 

an attainment demonstration SIP demonstrating that the area has adopted all control measures necessary to 

demonstrate attainment as expeditiously as practicable." Phase 2 Rule, 70 Fed.Reg. at 71,701/3 (codified at 40 C.F.R. 

§ 51.912(c)(1)). The NRDC contends that this provision is an unlawful waiver of the RACT requirement of § 172(c)(1) 

because, under the Phase 2 Rule, a state need not require RACT at all in such areas. It views the statutory phrase "at 

a minimum" as imposing an unambiguous requirement for all nonattainment areas. The NRDC thus contends the 

Phase 2 Rule violates the plain text of § 172(c)(1) by doing away with this requirement in some nonattainment areas. 

However, we conclude that the term "reasonably available control technology" is ambiguous in context and that the 

EPA's interpretation is reasonable.

The court has previously concluded that the term "reasonably available" in the analogous phrase "reasonably available 

control measure" (RACM) in § 172(c)(1) is ambiguous and "clearly bespeaks [the Congress's] intention that the EPA

exercise discretion in determining which control measures must be implemented...." Sierra Club v. EPA, 294 F.3d 155, 

162-63 (D.C.Cir.2002). The court explained that the statute did not specify which control measures would be deemed 

"reasonably available" and did not "compel[ ] a state to consider whether any measure is `reasonably available' without 

regard to whether it would expedite attainment in the relevant area." Id. at 162. Thus, the EPA had discretion to 

conclude that a measure was not "reasonably available" if it would not expedite attainment. Id. Because the same is 

true of the phrase "reasonably available control technology," the term "reasonably available" within RACT is also 

ambiguous. Moreover, even if the phrase "at a minimum" requires that at least RACT-level reductions be achieved in 

all nonattainment areas, the phrase does not specify the content of the RACT requirement. Given this ambiguity, the 

EPA has discretion reasonably to define the controls that will demonstrate compliance.

*1253 The EPA's interpretation, construing "reasonably available" as meaning only control technologies that advance 

attainment, is reasonable in light of the statute's accompanying text and structure. Section 172(c)(1) requires all 

nonattainment areas to achieve RACM "as expeditiously as practicable (including such reductions . . . as may be 

obtained through the adoption, at a minimum, of reasonably available control technology)...." 42 U.S.C. § 7502(c)(1). 

To the extent an area is already achieving attainment as expeditiously as possible, imposition of additional control 

technologies would not hasten achievement of the NAAQS. In such a situation, the EPA may reasonably conclude that 

no control technologies are reasonably available and the area need not implement further technologies to satisfy the 

1253

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RACT requirement. Sierra Club v. EPA, 294 F.3d 155 (D.C.Cir.2002), supports the reasonableness of the EPA's

interpretation. In Sierra Club, the court held reasonable the EPA's interpretation of RACM as requiring only those 

control measures that would contribute to timely and expeditious attainment. 294 F.3d at 162; see also Sierra Club v. 

EPA, 314 F.3d 735, 743-45 (5th Cir.2002). The court explained, in part, that the "Act `use[s] the same terminology in 

conjunction with the RACM requirement' as it does in requiring timely attainment." Sierra Club, 294 F.3d at 162. The § 

172(c)(1) RACM requirement, like the timely attainment requirement of CAA § 181(a)(1), 42 U.S.C. § 7511(a)(1), 

requires implementation of RACM "as expeditiously as practicable." Thus, the court concluded, the RACM requirement 

could reasonably be understood as a means of meeting the attainment deadline. 294 F.3d at 162. Because the RACT 

requirement is located in a parenthetical modifying RACM and because the RACM requirement is described as 

"including" the RACT requirement, the RACT requirement is likewise linked to the timely attainment terminology. Given 

this textual linkage, the EPA may reasonably extend to the RACT requirement its interpretation of RACM as requiring 

only those control measures that would facilitate expeditious attainment of the NAAQS.

Contrary to the NRDC's arguments, the RACT requirement does not lose all meaning under the EPA's definition. 

When control technology is necessary to advance attainment, it is "reasonably available" under the definition and 

would be required under the rule. The fact that the RACT requirement was previously located in a separate section 

and not in a parenthetical modifying the RACM requirement does not support the NRDC's position. Compare CAA § 

172(b)(2), 42 U.S.C. § 7502(b)(2), (3) (1977), with CAA § 172(c)(1), 42 U.S.C. § 7502(c)(1) (1990). Rather, the fact 

that the Congress moved the requirement to a parenthetical modifying the RACM requirement supports the EPA's

conclusion that the RACT requirement could be interpreted in the same manner as the RACM requirement. Although 

both the NRDC and the EPA point to legislative history purportedly supporting their positions, neither points to 

legislative history bearing on the meaning of "reasonably available." See H.R. REP. NO. 101-490, reprinted in 2 

LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 223. The term "reasonably available" 

is ambiguous, and the EPA's interpretation is a permissible construction of the statute.

B. Certifying 8-Hour RACT Based Upon 1-Hour RACT

The Phase 2 Rule provides that a control measure approved as RACT under the 1-hour standard will be approved as 

RACT under the 8-hour standard absent information indicating it should not be approved. Phase 2 Rule, 70 Fed.Reg. 

at *1254 71,652/3. Rather than reassessing what constitutes RACT, a state can certify that controls that previously 

satisfied the RACT requirement also satisfy the requirement under the 8-hour standard. New Jersey contends this 

provision is contrary to the Act and arbitrary and capricious. In New Jersey's view the EPA should require a re-analysis 

for all sources, not just those for which no controls had been considered RACT under the 1-hour standard, see id. at 

71,655, because what is "reasonably available" changes over time. Without a re-analysis, New Jersey maintains there 

is no basis for states to certify that the initial RACT analysis meets the RACT requirement under the 8-hour NAAQS 

and states may apply outdated RACT controls. New Jersey thus claims that the EPA should have either updated its 

RACT guidance documents or at least provided uniform criteria for states to use in making RACT certifications.

1254

The EPA promulgates two types of guidance that assist states in determining what control techniques meet the RACT 

requirement, control techniques guidelines (CTGs) and alternative control techniques (ACTs). Section 183 of the Act 

requires the EPA to issue CTGs for certain categories of sources that emit VOCs. See 42 U.S.C. § 7511b. Where 

CTGs exist, they establish the presumptive level of control meeting RACT. Phase 2 Rule, 70 Fed.Reg. at 71,654/3. 

Still, states can opt to require alternative controls rather than following the guidance in the CTGs. Notice of Final 

Determination and Availability of Final Control Techniques Guidelines, 71 Fed. Reg. 58,745, 58,747 (Oct. 5, 2006). 

Section 183(c) of the Act requires the EPA to issue ACTs for major sources of VOCs and NOx. 42 U.S.C. § 7511b(c). 

The ACTs "describe available control techniques and their cost effectiveness" but do not establish presumptive RACT. 

Phase 2 Rule, 70 Fed.Reg. at 71,654/3. Thus, neither the CTGs nor ACTs set firm RACT requirements.

Despite New Jersey's concerns, the EPA's certification provision does not conflict with the Act and is not arbitrary and 

capricious. Although the EPA did not revise the guidance documents, the EPA's case-by-case approach adequately 

ensures that RACT determinations will take into account advances in technology. First, the EPA has directed states to 

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consider available information in addition to the CTG and ACT documents when making RACT determinations. Id. at 

71,655/1. If a state is presented with information indicating that a previous RACT determination is inappropriate, the 

state must consider that information and modify its RACT determinations accordingly. Id. Second, when submitting 

RACT certifications to the EPA as part of their RACT SIP submissions, states must provide supporting information. Id.

at 71,655/2. Third, if additional information is presented during notice-and-comment rulemaking, both the state and the 

EPA are required to consider that information as part of the rulemaking; this includes information presented during 

notice-and-comment rulemaking for RACT SIP submissions for previously controlled sources. Id. Because the EPA

could reasonably conclude that these mechanisms will ensure the case-by-case determinations will take into account 

advances in technology, the EPA could also reasonably conclude "that the best way to address the possibility that 

CTGs or ACTs might not reflect all currently available technologies was by requiring each State to consider any new 

available information in making its certification, which will then be reviewed by the EPA as part of the SIP submission 

process," EPA Br. at 67; see also Phase 2 Rule, 70 Fed.Reg. at 71,655/1. See Nat'l Wildlife Fed'n v. EPA, 286 F.3d

554, 566-67 (D.C.Cir.2002). Likewise, given the assurances *1255 that RACT determinations will reflect advances in 

technology, the EPA's approach is consistent with the statutory goal of timely attainment of the NAAQS, see CAA §§ 

172, 182, 42 U.S.C. §§ 7502, 7511a.

1255

Additionally, even if the EPA had revised the national guidelines and provided uniform criteria as New Jersey 

preferred, such actions would not have eliminated case-by-case inquiries by the states and the EPA. Both the CTGs 

and ACTs are guidance documents, see Conn. Fund for the Env't v. EPA, 672 F.2d 998, 1003 (2d Cir.1982); United 

States v. Ford Motor Co., 736 F.Supp. 1539, 1543 (W.D.Mo. 1990), and neither sets firm RACT requirements. Thus, 

despite the existence of the CTGs, the EPA makes case-specific determinations as part of its SIP approval process. 

Notice of Final Determination and Availability of Final Control Techniques Guidelines, 71 Fed.Reg. at 58,747. ACTs 

are also merely guidelines and do not create presumptive RACT levels. Phase 2 Rule, 70 Fed.Reg. at 71,654/3. As 

case-by-case determinations would be necessary even if the EPA had revised the guidance documents, the EPA

could reasonably determine that the costs entailed in revising the guidance documents outweighed the benefits. The 

EPA has discretion to consider the costs of regulation unless the relevant statute precludes such a consideration. See, 

e.g., Sierra Club, 294 F.3d at 162-63.

The EPA's approach also addresses New Jersey's concern that allowing states to make RACT determinations by 

relying on 15-year-old CTGs plus new information, if any, provided by the public in comments is "an inadequate 

substitute" for requiring each state to undertake a new RACT determination for each source category. As noted, the 

EPA has directed states to submit supporting documentation along with RACT certifications. Phase 2 Rule, 70 

Fed.Reg. at 71,655/2. Thus, the EPA will have available the information needed to verify states' determinations that 

the previous controls are still appropriate under the 8-hour standard. Additionally, persons disagreeing with a particular 

RACT certification can seek judicial review of a particular SIP approval. A state may also complete an entirely new 

RACT analysis if it so chooses. Id. at 71,652/3.

In sum, we hold that the EPA's decision to forego a revision of the nationwide guidelines in favor of case-by-case 

RACT certifications was reasonable and not inconsistent with the statutory goal of expeditious attainment. Because 

the Phase 2 Rule requires each state to verify that previously-required RACT controls still satisfy the RACT 

requirement, we need not address the EPA's assertion that a new RACT determination will likely "result in the same or 

similar control technology as the initial RACT determination under the 1-hour standard because the fundamental 

control techniques ... are still applicable." Id. at 71,654/1. The EPA did not rest the rule upon this ground; each state 

must "consider new information" — information that may prove the EPA wrong — when the state determines whether 

previously-required controls "still represent[ ] an appropriate RACT level of control." Id. at 71,655/1.

C. Meeting RACT via NOx SIP Call

The NOx SIP Call is a cap-and-trade program that regulates NOx emissions. The program covers 22 states in the 

Northeast and the District of Columbia, and was intended to address the interstate transport of ozone. See generally

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Group Region for Purposes of Reducing Regional *1256 Transport of Ozone, 63 Fed.Reg. 57,356 (Oct. 27, 1998); 

Michigan v. EPA, 213 F.3d 663, 675, 685-86 (D.C.Cir.2000). The NOx SIP Call established for each state a "NOx 

emissions budget," which limits total emissions during the ozone season. Phase 2 Rule, 70 Fed.Reg. at 71,656/3. The 

EPA also adopted a rule allowing interstate trading of emissions allowances, and all states covered by the NOx SIP 

Call elected to participate in the interstate program. Thus, a source within a state could meet its emissions target either 

by installing controls or by purchasing allowances from other sources located anywhere in the region covered by the 

NOx SIP Call. See id.

1256

The Phase 2 Rule provides that to meet the NOx RACT requirement, "the State need not perform (or submit) a NOx 

RACT analysis for sources subject to the state's emission cap-and-trade program" where that program meets the NOx 

SIP Call requirements or, in states achieving CAIR reductions solely from Electricity Generating Units, CAIR 

requirements. Id. at 71,652/3. Petitioners and intervenors persuasively challenge this provision as being contrary to the 

express terms of the statute.

Section 172(c)(1) of the Act requires that nonattainment areas achieve "such reductions in emissions from existing 

sources in the area" as can be achieved by the adoption of RACT. 42 U.S.C. § 7502(c)(1). Thus, the RACT 

requirement calls for reductions in emissions from sources in the area; reductions from sources outside the 

nonattainment area do not satisfy the requirement. See id.; see also CAA § 182(b)(2), 42 U.S.C. § 7511a(b)(2) 

(requiring implementation of RACT with respect to certain VOC sources "in the area" for moderate and above 

nonattainment areas). Accordingly, participation in the NOx SIP Call could constitute RACT only if participation 

entailed at least RACT-level reductions in emissions from sources within the nonattainment area. In the preamble to 

the proposed rule the EPA stated that "the overall emission reductions from sources in the NOx SIP Call cap-andtrade program will achieve more emissions reductions in the nonattainment area than would application of RACT to 

each of those units," Proposed Rule to Implement the 8-Hour Ozone National Ambient Air Quality Standard, 68 Fed. 

Reg. 32,802, 32,839 (June 2, 2003) (Proposed Rule). The preamble to the final rule does not go as far. Rather, the 

final preamble states only that the "NOx SIP Call is estimated to achieve a beyond-RACT degree of control regionally," 

Phase 2 Rule, 70 Fed.Reg. at 71,657. Such regionwide RACT-level reductions in emissions do not meet the statutory 

requirement that the reductions be from sources in the nonattainment area. Because the EPA has not shown that NOx 

SIP Call compliance will result in at least RACT-level reductions in emissions from sources within each nonattainment 

area, the EPA's determination that compliance with the NOx SIP Call satisfies the RACT requirement is inconsistent 

with the "in the area" requirement and thus violates the plain text of § 172(c)(1).

In an analogous situation, the court invalidated the CAIR trading program because the EPA's regionwide approach 

made it impossible to tell whether the rule achieved a specific statutory objective. See North Carolina v. EPA, 531 F.3d

896, 906-08 (D.C.Cir.2008). In developing CAIR, the court explained, the EPA "did not purport to measure each 

state's significant contribution to specific downwind nonattainment areas and eliminate them in an isolated state-bystate manner." Id. at 907. Despite a statutory provision prohibiting sources "within the State" from contributing 

significantly to nonattainment in "any other State," CAA § 1 10(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D), the EPA adopted a 

*1257 regionwide approach to the problem. The court therefore held that the EPA was not exercising its statutory duty, 

reasoning that "[i]t is unclear how EPA can assure that the trading programs ... will achieve section 110(a)(2)(D)(i)(I)'s 

goals if we do not know what each upwind state's `significant contribution' is to another state." 531 F.3d at 908. Similar 

reasoning applies to the NOx SIP Call. The EPA has not provided assurance that the NOx SIP Call will achieve the 

Act's goal of "reductions from existing sources in the area," because it has not evaluated the effect of the program on 

each nonattainment area.

1257

The EPA responds that its approach "gives meaning to the statute's `in the area' language" because its technical 

analysis shows that the cap-and-trade programs achieve greater reductions than would the application of RACT-level 

controls at each source. EPA Br. at 73. However, the EPA's cited support for this proposition is the statement from the 

preamble to the proposed rule stating the EPA "believes" participation would "achieve more emissions reductions in 

the nonattainment area than would application of RACT" to all sources in the area. Proposed Rule, 68 Fed.Reg. at 

32,839/2. That statement is unsupported by any record evidence and it does not appear in the preamble to the final 

rule. The EPA's further response that its technical analysis supports the conclusion that NOx SIP Call participation 

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meets the RACT requirement is no more persuasive. The EPA explains that its analysis showed that sources subject 

to the NOx SIP Call "collectively" would achieve beyond-RACT reductions in emissions. EPA Br. at 83. But regionwide 

reductions do not satisfy the "in the area" requirement. The EPA explains further that it found that purchasing 

allowances was more costly than installing RACT-level control technology and thus "most" sources meeting the NOx 

SIP call, "assuming rational economic behavior," id., would opt to install controls rather than purchase allowances. 

This bare assertion is insufficient to demonstrate that NOx SIP Call compliance would lead to RACT-level reductions 

from sources in the area. Even if most sources in a nonattainment area installed controls rather than purchasing 

allowances, a small number of sources purchasing allowances and increasing emissions could mean that overall 

emissions from sources in the area remained unchanged or even increased.

The EPA's attempt to show ambiguity in the Act is likewise unavailing. The EPA maintains the statute is ambiguous as 

to whether RACT must be installed at each source in an area, noting that it has previously approved the concept of 

averaging emissions within a nonattainment area. The EPA reads the statutory phrase "as may be obtained" to 

indicate that the RACT requirement does not necessarily call for implementation of controls at each and every source, 

but rather requires an area to achieve at least RACT-level reductions in emissions. Even if the RACT requirement 

could be met through an emissions-averaging approach within a nonattainment area, averaging emissions across a 

region does not ensure that any reductions in emissions derive from reductions at sources within a particular area. 

Even if the EPA were correct that "nothing in the statute precludes consideration of the air quality impact that controls 

under a region-wide cap-and-trade program may have on NOx within the nonattainment area," EPA Br. at 72, the EPA

has not considered the impact of the NOx SIP Call on the air quality within specific nonattainment areas. Therefore the 

EPA has failed to demonstrate that NOx SIP Call compliance can be equated to RACT compliance.

The EPA's reliance on § 172(c)(6) is misplaced. That section provides that *1258 SIPs must include "enforceable 

emission limitations, and such other control measures... including economic incentives such as ... auctions of emission 

rights ... as may be necessary or appropriate to provide for attainment." 42 U.S.C. § 7502(c)(6). The EPA offers that its 

approach to RACT is consistent with this express authorization of auctions. However, § 172(c)(6) merely authorizes 

the EPA to approve market-based measures in addition to those controls that are required by CAA § 172(c), including 

the RACT requirement; it does not authorize the EPA to replace the RACT requirement with a cap-and-trade program 

as is promulgated in the Phase 2 Rule.

1258

The EPA also offers that to the extent individual sources emitting high levels of NOx are in compliance with the NOx 

SIP Call through the purchase of allowances, the states can define RACT to require greater reductions than are 

required by the EPA, and they must require beyond-RACT reductions as necessary to achieve timely attainment. The 

EPA's determination that NOx SIP Call compliance satisfies the RACT requirement is not based on a state choosing 

to so exercise its discretion. A state's decision to require stricter controls cannot eliminate the defect in the EPA's

approach — failing to implement the requirement of at least RACT-level reductions in emissions from sources in the 

nonattainment area. This part of the Phase 2 Rule must therefore be remanded without vacatur because the EPA may 

be able to reinstate the provision for most nonattainment areas if, upon conducting a technical analysis, it finds the 

NOx SIP Call results in greater emissions reductions in a nonattainment area than would be achieved if RACT-level 

controls were installed in that area.

III. Clean Data Policy

Under the Act, each nonattainment area must attain the NAAQS by a deadline, known as the "attainment date," which 

is established by the statute itself for areas subject to Subparts 1 and 2, see CAA § 181, 42 U.S.C. § 7511, and by the 

EPA for areas subject only to Subpart 1, see CAA § 172, 42 U.S.C. § 7502(a)(2). The Act also provides that the SIP 

for a nonattainment area subject only to Subpart 1 must "require reasonable further progress" (RFP), id. § 7502(c)(2); 

the SIP for an area in moderate or a greater degree of nonattainment must provide for fixed percentage reductions of 

VOCs on a specified schedule. CAA §§ 182(b)(1)(A), (c)(2)(B), 42 U.S.C. §§ 7511a(b)(1)(A), (c)(2)(B).[3]

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In order to ensure these requirements are met, the SIP for any nonattainment area must include "contingency 

measures" to be implemented "if the area fails to make reasonable further progress, or to attain the [NAAQS] by the 

attainment date," CAA § 172(c)(9), 42 U.S.C. § 7502(c)(9), and the SIP for a serious, severe, or extreme 

nonattainment area must also include "contingency measures" that will take effect automatically "if the area fails to 

meet any applicable milestone," CAA § 182(c)(9), 42 U.S.C. § 7511a(c)(9).

In the Phase 2 Rule, the EPA suspended the planning requirements for specified percentage reductions and 

contingency *1259 measures for each nonattainment area that has attained the 8-hour NAAQS but has not yet been 

designated an attainment area. 40 C.F.R. § 51.918. The suspension lasts "until ... the area is redesignated to 

attainment, at which time the requirements no longer apply; or [until the] EPA determines that the area has violated the 

8-hour ozone NAAQS." Id. The EPA terms this suspension the "Clean Data Policy," 70 Fed.Reg. at 71,644, because it 

applies when a nonattainment area produces "clean" air quality data. See Memorandum from John S. Seitz, Dir., 

Office of Air Quality Planning & Standards, RFP, Attainment Demonstration, and Related Requirements for Ozone 

Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard, at 5 (May 10, 1995), 

www.epa.gov/ttn/oarpg/t1/ memoranda/clean15.pdf. It adopted the current version of the policy in 1995 and applied it 

in rulemakings specific to individual areas under the 1-hour NAAQS; it will similarly determine whether individual areas 

qualify for the suspension in area-specific rulemakings. 70 Fed.Reg. at 71,-644-45.

1259

The NRDC contends the Clean Data Policy conflicts with both the letter and the purpose of the Act. More specifically, 

the NRDC argues the statutory provisions requiring a SIP to include contingency measures and percentage reductions 

allow no waivers for an area that has achieved the NAAQS; the only way for an area to be absolved of those 

requirements is to be redesignated an attainment area. See CAA § 175A(c), 42 U.S.C. § 7505a(c) ("Until [a 

maintenance] plan revision is approved and an area is redesignated as attainment ... the requirements of [Part D] shall 

continue in force and effect"). Further, the NRDC argues only its reading of the text is consistent with the intent of the 

Congress that, in order to ensure the air stays clean, no mandatory control requirement be lifted until a maintenance 

plan is in place.

The EPA responds first that the NRDC did not raise before the agency and therefore forfeited its objection to the 

suspension of the planning requirement for contingency measures. See CAA § 307(d)(7)(B), 42 U.S.C. § 7607(d)(7)(B) 

("Only an objection to a rule or procedure which was raised with reasonable specificity during the period for public 

comment... may be raised during judicial review"). We agree. We "enforce[ ] this provision strictly," Motor & Equip. 

Mfrs. Ass'n v. Nichols, 142 F.3d 449, 462 (D.C.Cir.1998) (internal quotation marks omitted), and although we allow 

commenters "some leeway in developing their argument before this court," the comment must have provided 

"adequate notification of the general substance of the complaint," S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d

882, 891 (D.C.Cir.2006).

The NRDC's comments did not provide the EPA adequate notice that it objected to the suspension of the contingency 

measures. The NRDC did object to the Clean Data Policy, but only to the suspension of the requirements for an 

attainment demonstration and percentage reductions. The NRDC now contends it objected to the suspension of all 

Subpart 2 requirements, pointing to its comment that the "EPA cannot authorize states to simply drop subpart 2 

measures when the area is meeting either standard. The Act allows states to move mandated controls to a 

maintenance contingency plan, but only after the area has been redesignated to attainment." Comments of Clean Air 

Task Force et al., at 48 (Aug. 1, 2003). That comment, however, was made in the context of an objection to a different 

provision of the proposed rule, namely the EPA's determination that an area not attaining the 1-hour standard but 

meeting the 8-hour *1260 standard need not submit a maintenance plan meeting the requirements of CAA § 175A. 

The EPA cannot be expected to take the NRDC's argument, raised in support of one specific objection, and apply it 

sua sponte to another provision. Because the NRDC did not raise its objection with "reasonable specificity," the Act 

bars us from considering it. CAA § 307(d)(7)(B), 42 U.S.C. § 7607(d)(7)(B).

1260

On the merits, the EPA maintains the Clean Data Policy does not waive the planning requirements for percentage 

reductions; instead, it contends, those requirements are by their terms inapplicable when an area meets the applicable 

NAAQS. See Phase 2 Rule, 70 Fed.Reg. at 71,645/1-2, 71,646/1-2.

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The two planning requirements for percentage reductions are CAA § 182(b)(1), which requires an initial reduction of 

15% of VOC emissions in the first six years for an area in moderate or greater nonattainment, and § 182(c)(2)(B), 

which requires subsequent reductions in VOC emissions averaging 3% per year for an area in serious or greater 

nonattainment unless an exception applies. See 42 U.S.C. § 7511a(b)(1), (c)(2)(B). As the EPA interprets these 

provisions, specific percentage reductions are required only as necessary to achieve attainment.

We think the statute unclear as to whether those sections apply to an area that is already attaining the NAAQS. For 

the reasons below, we join the Tenth Circuit in holding the EPA's interpretation is reasonable. See Sierra Club v. EPA,

99 F.3d 1551 (10th Cir.1996).

Section 182(b)(1)(A)(i) initially requires the SIP for an area in moderate or greater nonattainment to plan a total 

reduction in VOC emissions of 15% over six years. 42 U.S.C. § 7511a(b)(1)(A)(i). In the very next sentence, however, 

it elaborates that a plan should mandate "such specific annual reductions ... as necessary to attain the [NAAQS] for 

ozone by the attainment date." Id. Moreover, each percentage reduction is linked to the requirement that an area make 

"reasonable further progress" toward attainment. See id. § 7511a(b)(1) (entitled "Plan provisions for reasonable further 

progress"); id. § 7511a(c)(2)(B) (entitled "Reasonable further progress demonstration"). "Reasonable further progress," 

in turn, means "such annual incremental reductions in emissions ... as are required ... for the purpose of ensuring 

attainment." CAA § 171(1), 42 U.S.C. § 7501(1). The Act is therefore ambiguous as to what reductions are required 

when no further progress toward attainment is necessary — or, for that matter, possible. The EPA reasonably resolved 

this ambiguity by concluding the specific percentage reductions are simply inapplicable in that circumstance. As the 

Tenth Circuit put the matter, "If a moderate ozone nonattainment area has in fact already attained the ozone standard, 

it would make little sense to require a state to demonstrate the area will make reasonable progress toward attainment." 

Sierra Club, 99 F.3d at 1557.

The EPA's reasoning disposes as well of the NRDC's contentions that the Clean Data Policy unlawfully circumvents 

the redesignation requirements, CAA § 107(d)(3)(E), 42 U.S.C. § 7407(d)(3)(E), violates the mandate that all Part D 

requirements remain in force until an area has an approved maintenance plan in place, CAA § 175A(c), 42 U.S.C. § 

7505a(c), and disregards the Supreme Court's admonition that the EPA cannot "render Subpart 2's carefully designed 

restrictions on EPA discretion utterly nugatory," Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 484, 121 S.Ct. 903, 

149 L.Ed.2d 1 (2001). The Clean Data Policy does not effect a redesignation; an area must still comply with the 

statutory requirements before it can be redesignated to attainment. Furthermore, Part D — including *1261 Subpart 2 

— remains in force insofar as it applies but, as we have just seen, the EPA has reasonably concluded the provisions 

of the Act requiring percentage reductions do not apply to an area that has attained the NAAQS.

1261

IV. 15% VOC Reduction

CAA section 182(b)(1) requires that, for a moderate nonattainment area, "no later than 3 years after November 15, 

1990, the State shall submit a revision to the applicable implementation plan to provide for volatile organic compound 

emission reductions, within 6 years after November 15, 1990, of at least 15 percent from baseline emissions, 

accounting for any growth in emissions after 1990." 42 U.S.C. § 7511 a(b)(1)(A)(i). CAA section 182(c), (d) and (e) 

incorporate the 15% VOC reduction requirement for, respectively, "serious," "severe" and "extreme" nonattainment 

areas. Id. § 7511 a(c)-(e). After the initial six-year period, CAA section 182(c), (d) and (e) impose on the same areas 

an additional RFP requirement that the SIP be revised so that it "will result in VOC emissions reductions from the 

baseline emissions ... [of] at least 3 percent of baseline emissions each year," "averaged over each consecutive 3-year 

period beginning 6 years after November 15, 1990, until the attainment date." Id. § 7511 a(c)(2)(B)(i) (imposing 

requirement on "serious" areas); see id. § 7511a(d), (e) (incorporating 3% reduction requirement for "severe" and 

"extreme" areas).[4] As used in the cited provisions, "the term `baseline emissions' means the total amount of actual 

VOC or NOx emissions from all anthropogenic sources in the area during the calendar year 1990." CAA § 182(b)(1)

(B), 42 U.S.C. § 7511a(b)(1)(B); see also CAA § 182(c)(2)(B), 42 U.S.C. § 7511a(c)(2)(B).[5]

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In the Phase 2 Rule, the EPA determined that for all moderate and above areas "that had not met the 15 percent VOC 

emission reduction requirement for the 1-hour standard," the RFP 15% reduction requirement "would apply" under the 

8-hour standard. 70 Fed.Reg. at 71,632-33. Conversely, the EPA determined, 8-hour moderate and above areas that 

had already satisfied the 15% VOC emission reduction for the 1-hour standard will not be subjected a second time to 

the 15% requirement under the 8-hour standard. Id. at 71,633. Thus, "[a]reas classified under subpart 2 as moderate 

that had met the 15 percent VOC emission reduction requirement for the 1-hour standard are treated in the final rule 

like areas covered under subpart 1," while "[a]reas classified under subpart 2 as serious and above that had met the 

15 percent VOC emission reduction requirement for the 1-hour standard would be subject to the RFP requirement in 

section 172(e) [sic[6]] and the final rule would require them to obtain an average of 3 percent annual reductions of VOC 

and/or NOx emissions reductions for the first 6 years after the baseline year and every subsequent 3 years out to their 

attainment *1262 date." Id. For both the 15% and the 3% reductions RFP requirements, the Phase 2 Rule provides 

that the RFP periods "would be equivalent to the periods Congress established in subpart 2," id. at 71,633, running 

from a new baseline year, i.e., 2002 "for areas designated nonattainment for the 8-hour ozone NAAQS with an 

effective date of June 15, 2004," id. at 71,637.

1262

First, the NRDC argues that the EPA "illegally waived" Subpart 2's RFP requirement that each SIP be revised three 

years after the statute's effective date to provide for a 15% VOC reduction within 6 years after enactment for all areas 

classified as "moderate" and above for ozone.[7]

As an initial matter, the EPA did not "waive" the 15% requirement but simply determined that, if a State had made the 

required revision for an area classified as moderate or greater when the one-hour NAAQS took effect, the State did not 

have to do so a second time after the 8-hour standard took effect. In so doing, the EPA reasonably resolved a 

statutory ambiguity under step 2 of the framework set out in Chevron U.S.A. Inc. v. Natural Resources Defense 

Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See Natural Res. Def. Council v. EPA, 489 

F.3d 1250, 1257 (D.C.Cir.2007) ("Under Chevron: We first ask `whether Congress has directly spoken to the precise 

question at issue,' in which case we `must give effect to the unambiguously expressed intent of Congress.' If the 

`statute is silent or ambiguous with respect to the specific issue,' however, we move to the second step and defer to 

the agency's interpretation as long as it is `based on a permissible construction of the statute.'" (quoting Chevron, 467 

U.S. at 842-43, 104 S.Ct. 2778) (internal quotation marks omitted)). Accordingly, we reject the NRDC's challenge to 

the VOC reduction provision.

The NRDC contends that the EPA's reading of the statute is "untenable" because the statute requires that the SIP 

provide for a 15% reduction from "baseline emissions" — which the "EPA itself defines ... for purposes of the 8-hour 

ozone standard as emissions in 2002, not 1990" — and that the reduction be effected "`within 6 years after' the 

baseline year — that is, between 2002 and 2008 for the 8-hour standard." NRDC Br. at 29. This argument, however, 

sidesteps the EPA's rationale for its interpretation. The EPA identified a "gap in the statutory scheme" because "[t]he 

CAA is silent regarding whether a nonattainment area that implements the 15-percent VOC emission reduction of 42 

U.S.C. § 7511a(b)(1)(A) must implement that provision a second time if the NAAQS is revised, or instead must 

implement other RFP provisions that expressly would have applied had there been no revision of the NAAQS." EPA

Br. at 29. The EPA filled this gap by selecting the latter resolution. As the EPA explained in the Phase 2 Rule, while it 

"believes that the CAA is quite clear that the SIP must provide for a 15 percent reduction in baseline VOC emissions 

for some period after 1990 in an area subject to section 182(b)(1)(A)," it "disagrees that the CAA plainly requires that 

the SIP for an area must require a second 15 percent reduction in VOC baseline emissions under a revised ozone 

standard." 70 Fed. Reg. at 71,635-36 (first emphasis added); see also id. at 71,634 ("For those areas that have an 

approved 15 percent plan for their 1-hour ozone SIPs, an additional 15 percent VOC reduction is not necessary."). 

*1263 Because the EPA ended its statutory analysis with the threshold inquiry whether section 182(b)(1)(A)(i) must be 

applied a second time under its revised standards (concluding it need not), the Agency did not need to decide how to 

interpret the term "baseline emissions" or to identify a baseline year for the purpose of so applying the provision. 

Further, because it had no need to reach these issues, it did not resolve them arbitrarily or capriciously, as the NRDC

asserts, by "allowing a select group of nonattainment areas to rely on a different baseline from the distant past." NRDC

Br. at 30-31. Had the EPA required a nonattainment area to undertake a second 15% VOC reduction, it might have 

1263

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1265

been arbitrary to use a different baseline or baseline year from that applicable to areas undertaking the first 15% VOC 

reduction under the 8-hour standard. But the Agency did not do so and we will not speculate whether it could lawfully 

have done so.

The NRDC also argues that the EPA's 15% approach is inconsistent with its treatment of section 182(c)(2)(B)(i)'s 3% 

reduction requirement for serious and above areas in that the "EPA does not read the Act as excusing such 3% 

continuing emission cuts for serious and above 8-hour nonattainment areas merely because they may have had plans 

under the 1-hour standard to achieve continuing (i.e. post-1996) cuts of 3%/yr from a 1990 baseline." NRDC Br. at 30 

n. 8. The 3% provision, however, is fundamentally different from the 15% provision in that the former does not (as 

does the latter) establish a one-time reduction requirement but instead imposes a continuing obligation that applies to 

"each consecutive 3-year period beginning 6 years after November 15, 1990, until the attainment date." CAA § 182(c)

(2)(B), 42 U.S.C. § 7511a(c)(2)(B).

Finally, the NRDC asserts that the "EPA cannot override an express statutory command `simply by asserting that its 

preferred approach would be better policy,'" NRDC Br. at 30 (quoting Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1089 

(D.C.Cir.1996)), referring to the EPA's observation that its approach "provides flexibility to States to use a mix of NOx 

and VOC reductions" under CAA section 172, 42 U.S.C. § 7502, rather than the required VOC-only reductions 

mandated by CAA section 182(b)(1)(A)(1), 42 U.S.C. § 7511a(b)(1)(A)(1). 70 Fed.Reg. at 71,634. As already 

explained, however, the EPA's interpretation does not override an express command but rather resolves an ambiguity. 

Id. at 71,635-36. In commending the flexibility afforded, the EPA merely offered one more reason why its interpretation 

of the ambiguous statutory language is reasonable.

V. New Source "Offset" Credit for Past Emission Reductions

CAA section 172(b) requires that each State containing a nonattainment area submit a nonattainment SIP meeting the 

requirements of section 172(c) pursuant to a schedule set by the EPA but not later than three years after a 

nonattainment area is so designated. 42 U.S.C. § 7502(b), (c). Section 172(c)(5) of the Act requires that each 

nonattainment area SIP "shall require permits for the construction and operation of new or modified major stationary 

sources anywhere in the nonattainment area, in accordance with section 7503 of [Title 42]." Id. § 7502(c)(5). Section 

173 sets out the permitting process, known as "New Source Review" (NSR), in greater detail, providing that a permit 

may be issued only if, inter alia, (1) the permitting agency has determined that by the time the source begins operation, 

sufficient offsetting emissions reductions are obtained that the emission levels from the offsets and the plan provisions 

represent RFP from the pre-permit levels, id. *1264 § 7503(a)(1)(A),[8] and (2) the proposed source will "comply with 

the lowest achievable emission rate" (LAER), id. § 7503(a)(2).[9] Section 173 further requires that "[s]uch emission 

reductions shall be, by the time a new or modified source commences operation, in effect and enforceable and shall 

assure that the total tonnage of increased emissions of the air pollutant from the new or modified source shall be offset 

by an equal or greater reduction, as applicable, in the actual emissions of such air pollutant from the same or other 

sources in the area." Id. § 7503(c)(1). Subpart 2 specifically applies the NSR requirement to ozone nonattainment 

areas, CAA § 182(a)(2)(C)(i), 42 U.S.C. § 7511a(a)(2)(C)(i), and mandates increasingly stringent offset ratios as the 

ozone classification increases, CAA § 182(a)(4), (b)(5), (d)(2), 42 U.S.C. § 7511a(a)(4), (b)(5), (d)(2).[10]

1264

The Phase 2 Rule allows proposed new and modified sources to meet this offset requirement using credits from 

sources that shut down or curtailed operations as long ago as 1977. 70 Fed.Reg. at 71,699 (to be codified at 40 C.F.R. 

§ 51.165). The EPA has long allowed emissions reductions occurring before a permit application to qualify as offset 

credits under specified circumstances. Before 1989, such pre-application emissions reductions could be offset only if 

the proposed source was "a replacement for the productive capacity represented by the proposed offset credit." 

Requirements for Implementation Plans; Air Quality New Source Review, 54 Fed. Reg. 27,286, 27,290 (June 28, 

1989).[11] The *1265 1989 Rule eliminated this restriction for an area with an approved attainment demonstration. Id. at 

27,292. In the Phase 2 Rule, the EPA "lift[ed] the requirement to have an approved attainment plan before using 

preapplication credits from shutdowns or curtailments as offsets." 70 Fed. Reg. at 71,676. The NRDC challenges both 

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the EPA's longstanding policy allowing pre-application reductions as NSR offsets and the EPA's elimination in the 

Phase 2 Rulemaking of the approved attainment demonstration requirement. We reject as untimely the NRDC's

challenge to the general policy of allowing pre-application offset credits but we agree that eliminating the attainment 

demonstration requirement was arbitrary and capricious and therefore in violation of the APA.

CAA section 307(b), which governs judicial review of a rulemaking under the Act, requires that "[a]ny petition for 

review ... shall be filed within sixty days from the date notice of such promulgation ... appears in the Federal Register." 

42 U.S.C. § 7607(b)(1). As already noted, the EPA has allowed emission reductions from pre-application source 

shutdowns and curtailments to qualify as NSR offset credits since at least 1989. See 54 Fed.Reg. at 27,292. Thus, the 

deadline for filing a petition for review of section 51.165(a)(3)(ii)(C) insofar as it authorizes offset credits for pre-permit

emission reductions is long since past and the court lacks jurisdiction to review it. See Motor & Equip. Mfrs. Ass'n v. 

Nichols, 142 F.3d 449, 460 (D.C.Cir.1998) (section 7607(b)(1) "filing period is jurisdictional in nature, and may not be 

enlarged or altered by the courts" (internal quotation marks omitted)). Nonetheless, the NRDC contends that the EPA

"reopened" the 1989 offset policy so as to make its challenge timely. We disagree.

"The reopening doctrine allows an otherwise stale challenge to proceed because `the agency opened the issue up 

anew,' and then `reexamined ... and reaffirmed its [prior] decision.'" P & V Enters. v. U.S. Army Corps of Eng'rs, 516 

F.3d 1021, 1023-24 (D.C.Cir.2008) (quoting Pub. Citizen v. Nuclear Reg. Comm'n, 901 F.2d 147, 150-51 

(D.C.Cir.1990)) (internal quotation marks omitted). In this case, the EPA did not expressly reopen the issue of offsets 

for pre-application emission reductions. In its proposed rule, the EPA offered two alternative amendments to section 

51.165(a)(3)(ii)(C), each of which eliminated the attainment demonstration requirement under certain circumstances. 

See Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR), 61 Fed.Reg. 

38,250, 38,311-14 (July 23, 1996) (Proposed Rules). In the Phase 2 Rule, the EPA selected the less restrictive of the 

two alternatives.[12] Neither alternative proposed changing the regulation insofar as it permits offset of pre-application 

emission reductions generally or even mentioned the matter. Further, other than eliminating the approved attainment 

demonstration requirement, the language of amended section 51.165(a)(3)(C) remains substantively identical to the 

1989 regulation. Compare 54 Fed.Reg. at 27,299 (§ 51.165(a)(3)(C) as effective June 29, 1989), with 70 Fed.Reg. at 

71,699 (§ 51.165(a)(3)(C) as effective Jan. 30, 2006). Accordingly, the subject of allowing offsets in general was not 

expressly reopened. See Nat'l Ass'n of Reversionary Prop. Owners v. Surface Transp. Bd., 158 F.3d 135, 142 

(D.C.Cir. *1266 1998) ("When an agency invites debate on some aspects of a broad subject, ... it does not 

automatically reopen all related aspects including those already decided.")

1266

Nor did the EPA constructively reopen the issue, as the NRDC contends. Under some circumstances an issue may be 

"deemed to have been constructively reopened even though it was not actually reopened" in a literal sense. Kennecott 

Utah Copper Corp. v. U.S. Dep't of Interior, 88 F.3d 1191, 1214 (D.C.Cir.1996). "A constructive reopening occurs if the 

revision of accompanying regulations `significantly alters the stakes of judicial review' as the result of a change that 

`could have not been reasonably anticipated.'" Sierra Club v. EPA, 551 F.3d 1019, 1025 (D.C.Cir. 2008) (quoting 

Kennecott, 88 F.3d at 1227; Envtl. Def. v. EPA 467 F.3d 1329, 1334 (D.C.Cir.2006)). The EPA's elimination of the 

attainment determination requirement did not work such a sea change. The basic regulatory scheme remains 

unchanged: pre-application offsets are permitted if certain requirements are met. The only change is the elimination of 

the attainment demonstration requirement — which was itself added in 1989 to replace the more stringent requirement 

that "the proposed new source [be] a replacement for the shutdown or curtailment." 40 C.F.R. § 51.165(a)(3)(ii)(C) 

(1988) (alteration added); see supra note 11. That the NRDC's challenge to the change may have merit, as indeed we 

conclude infra, does not provide a ground to conclude that the broader issue of allowing any pre-application offsets at 

all has been reopened. It simply means the particular change it challenges is unlawful. The "stakes" here are not 

quantitatively different from what they were in 1989 when a coalition of environmental groups argued to the EPA that 

the attainment demonstration requirement itself was inadequate to ensure RFP. See 54 Fed.Reg. at 27,291-92. Yet no 

one then challenged the general policy allowing pre-application offsets. Further, it could have been "reasonably 

anticipated" at that time that the EPA might subsequently eliminate the attainment demonstration requirement itself in 

favor of an alternative safeguard which would likewise allow more liberal use of pre-application offset credits, as in fact 

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happened here. In sum, the EPA has done nothing since 1989 to reopen the general issue of allowing pre-application 

offsets either expressly or constructively.

We next address the NRDC's objection to the specific NSR revision that is subject to review in this proceeding — that 

the EPA erred in eliminating the attainment demonstration requirement. We agree with the NRDC that the EPA acted 

arbitrarily and capriciously when it did so.

In the 1989 rulemaking, the EPA imposed the approved attainment demonstration requirement in order to comply with 

CAA section 173(a)(1), which allows an NSR permit to issue only if

the permitting agency determines that —

(A) by the time the source is to commence operation, sufficient offsetting emissions reductions have 

been obtained, such that total allowable emissions from existing sources in the region, from new or 

modified sources which are not major emitting facilities, and from the proposed source will be 

sufficiently less than total emissions from existing sources allowed under the applicable implementation 

plan prior to the application for such permit to construct or modify so as to represent (when considered 

together with the plan provisions required under section 7502 of this title) reasonable further progress 

(as defined in section 7501 of this title);....

42 U.S.C. § 7503(a)(1)(A) (1989). The EPA concluded that the "essence of [this] provision is that a new source may 

be *1267 allowed in a nonattainment area only where its presence would be consistent with RFP toward attainment of 

the NAAQS" and that this policy is satisfied if there is in place for the area a "fully approved SIP" since, "[b]y definition, 

any fully approved SIP has independently assured RFP and attainment." 54 Fed.Reg. at 27,292. "[W]here an 

attainment demonstration is lacking," however, the EPA concluded that "retention of the current shutdown credit 

restriction on offset transactions" — that is, for a pre-permit shutdown, "the proposed source is a replacement for the 

productive capacity represented by the proposed offset," id. at 27,290 — "is necessary both to assure RFP and to 

guarantee that a new source does not cause or contribute to a violation of the NAAQS." Id. at 27,292. Nonetheless, 

when the EPA amended section 51.165(a)(3)(C) in the Phase 2 Rule, it eliminated the fully-approved SIP requirement 

without adding any other safeguard to ensure that issuing a particular permit is consistent with CAA section 173's 

mandate that total reductions "represent ... reasonable further progress." 42 U.S.C. § 7503(a)(1)(A). The EPA justified 

eliminating the requirement on the ground that the 1990 amendments to the Act "changed the considerations involved" 

in that they "emphasized the emission inventory requirement in section 172(c)(3) as a fundamental tool in air quality 

planning" and "added new provisions keyed to the inventory requirement, including specific reduction strategies and 

[milestones] that measure progress toward attainment from the base year emissions inventory or subsequent revised 

inventories" along with "several adverse consequences where States fail to meet the planning or emissions reductions 

requirements." 70 Fed. Reg. at 71,677; see also Reconsideration Notice, 72 Fed.Reg. at 31,739. But imposing post 

hoc sanctions for failing to achieve RFP milestones does not accomplish what CAA section 173 requires, namely, that 

the EPA ensure that "by the time the source is to commence operation, sufficient offsetting emissions reductions have 

been obtained" to produce RFP, 42 U.S.C. § 7503(a)(1)(A) (emphasis added). Because the EPA has not explained 

how the amended rule, stripped of the approved attainment demonstration requirement, ensures that emission 

reductions are achieved "by the time" the new source begins operation rather than sometime down the road after 

milestones have been missed, we conclude that eliminating the requirement is arbitrary and capricious. See N. Baja 

Pipeline, LLC v. FERC, 483 F.3d 819, 821 (D.C.Cir.2007) (under arbitrary and capricious standard, agency 

conclusions "must be reasonable and reasonably explained" (citing Nat'l Fuel Gas Supply Corp. v. FERC, 468 F.3d

831, 839 (D.C.Cir.2006))); Transactive Corp. v. United States, 91 F.3d 232, 236 (D.C.Cir. 1996) ("In order to ensure 

that an agency's decision has not been arbitrary, we require the agency to have identified and explained the reasoned 

basis for its decision." (citing F.J. Vollmer Co. v. Higgins, 23 F.3d 448, 451 (D.C.Cir.1994); Nat'l Treasury Employees 

Union v. Horner, 854 F.2d 490, 498-99 (D.C.Cir.1988))).[13]

1267

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VI. NSR Limits on Pollution from New and Modified Major Sources

Pursuant to the SIP NSR requirements of CAA Part D, supra pp. 1263-64, the Phase 2 Rule accords a State three 

years to develop and submit an approvable nonattainment major NSR program for the 8-hour NAAQS. 70 Fed.Reg. at 

71,672. In *1268 addition to the Part D requirements for nonattainment areas, however, CAA section 110(a)(2)(c) 

imposes on States a "general duty" to implement a NSR program in their SIPs for all areas, see supra note 10, which 

"exists during all periods, including before a State has an approved part D NSR permit program." Id. at 71,677-78. 

Although section 110(a)(2)(c) requires that the SIP contain NSR provisions, it does not specify what NSR requirements 

apply during the period after an area is designated nonattainment but before the NSR SIP is effective. To fill this gap, 

the EPA decided in the Phase 2 Rule to retain an interim NSR regime it has used for this purpose since 1979, namely, 

Appendix S to 40 C.F.R. Part 51, which both establishes interim NSR permitting requirements paralleling the Act's (in 

section IV.A) and provides for an exemption from the same requirements under certain circumstances (in section VI). 

The EPA further decided in the Phase 2 Rule, however, to eliminate an existing 18-month time limit on the applicability 

of Appendix S (including section VI's exemption provision) to a given nonattaiment area. Petitioners NRDC and New 

Jersey challenge both the EPA's general authority to exempt new sources from permitting requirements under section 

VI and, more specifically, its decision to eliminate the 18-month limit on such exemptions. We reject the petitioners' 

objection to the EPA's general exemption authority as untimely but agree that eliminating the 18-month limit violates 

the "anti-backsliding" provision in CAA section 172(e), 42 U.S.C. § 7502(e).

1268

In 1979, the EPA codified in its regulations a three year-old "Emission Offset Interpretative Ruling" as Appendix S to 

40 C.F.R. Part 51 and directed that Appendix S was to "govern[] permits to construct and operate applied for before 

the deadline for having a revised SIP in effect that satisfies Part D." Approval and Promulgation of Implementation 

Plans; Statutory Restriction on New Sources Under Certain Circumstances for Nonattainment Areas, 44 Fed.Reg. 

38,471, 38,473 (July 2, 1979) (codified at 40 C.F.R. § 52.24(c) (1979) (now § 52.24(k))); see Emission Offset 

Interpretative Ruling, 44 Fed.Reg. 3274 (Jan. 16, 1979) (codifying interpretive ruling in regulations). In so applying the 

interpretive rule, the EPA allowed a nonattainment area to avoid, during the period before the SIP was due, the 

statutory ban on all major source construction or modification in any nonattainment area not subject to a SIP that "me

[t] the requirements of Part D (relating to nonattainment areas)." See Clean Air Act Amendments of 1977, Pub.L. No. 

95-95, § 108(b), 91 Stat. 685, 694 (Aug. 7, 1977) (establishing construction ban) (1977 CAA Amendments). The EPA

noted at the time that the Congress had similarly adopted the rule ("as may be modified by rule of the Administrator") 

to govern NSR during the interim period from enactment of the 1977 CAA amendments until July 1, 1979, when the 

statutory ban was to take effect. 44 Fed. Reg. at 38,472; 1977 CAA Amendments § 129(a)(1), 91 Stat. at 745 

(adopting interpretive rule for interim before ban) (Aug. 7, 1977). The Congress eliminated the construction ban in 

1990. Clean Air Act, Amendments, Pub.L. No. 101-549, § 101(c), 104 Stat. 2399, 2408 (1990).

In 1980, the EPA "clarif[ied]" Appendix S to limit to eighteen months the period during which it governed NSR in a 

qualifying nonattainment area. Approval and Promulgation of Implementation Plans; Statutory Restriction on New 

Sources Under Certain Circumstances for Nonattainment Areas, 45 Fed.Reg. 65,209 (Oct. 2, 1980). Since that time 

the EPA has continued to apply Appendix S's NSR requirements in the interim after an area's nonattainment 

designation and before implementation of a revised SIP. Thus, after the Congress amended the Act in 1990 — *1269

adding, inter alia, Subpart 2's ozone-specific requirements — the EPA again affirmed its policy that Appendix S govern 

during the period between nonattainment designation and SIP approval and implementation. See State 

Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; 

Supplemental, 57 Fed.Reg. 18,070, 18,076 (Apr. 28, 1992).

1269

Since Appendix S was formally codified in 1979, section VI thereof has contained — unchanged — an exemption from 

section IV. A's permitting requirements for an area whose attainment date had not passed if the source satisfied two 

conditions:

In such cases, a new source which would cause or contribute to an NAAQS violation may be exempt 

from the Conditions of Section IV.A. so long as the new source [1.] meets the applicable SIP emission 

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limitations and [2.] will not interfere with the attainment date specified in the SIP under Section 110 of 

the Act.

44 Fed.Reg. at 3285 (codified at Appendix S, § VI); cf. 40 C.F.R. pt 51, app. S., § VI (2006) (same). In the Phase 2 

Rule, the EPA added a third condition so that the reformulated provision now exempts new sources from the 

permitting requirements in section IV.A "if the conditions in paragraphs VI.A through C are met," namely:

A. The new source meets the applicable SIP emission limitations.

B. The new source will not interfere with the attainment date specified in the SIP under section 110 of 

the Act.

C. The Administrator has determined that conditions A and B of this section are satisfied and such 

determination is published in the Federal Register.

70 Fed.Reg. at 71,704 (codified at 40 C.F.R. pt 51, app. S., § VI (2009)). The EPA further eliminated the 18-month 

limit on the applicability of Appendix S (including section VI) to a pre-SIP nonattainment area. 70 Fed.Reg. at 71,677; 

see 40 C.F.R. § 52.24(k) (2009).

As noted above, petitioners NRDC and New Jersey challenge the EPA's authority generally to exempt an area from 

Appendix S's permitting requirements and specifically the EPA's removal of the 18-month limit. We address each in 

turn.

First, we consider the general challenge to the EPA's exemption authority and conclude that it is time-barred. Under 

CAA section 307(b), any objection to the exemption policy was required to be raised in a petition for review "filed within 

sixty days from the date notice of [its] promulgation ... appears in the Federal Register," 42 U.S.C. § 7607(b)(1). In this 

case the triggering date was July 2, 1979, when the EPA published its final rule promulgating 40 C.F.R. § 52.24(c) 

(1979) (now 52.24(k)), which directed that "[t]he Emission Offset Interpretative Ruling, 40 CFR Part 51, Appendix S" — 

which, as then codified, contained the exemption provision in section VI, 44 Fed.Reg. at 3285 — "governs permits to 

construct and operate applied for before the deadline for having a revised SIP in effect that satisfies Part D." 44 

Fed.Reg. at 38,473 (codified at 40 C.F.R. § 52.24(c) (1979) (now 52.24(k))). It was on that date that the EPA

unequivocally asserted its authority to exempt new sources from permitting requirements under section VI. Thus, the 

petitioners' challenge to such authority in this case comes almost thirty years late and we are precluded from 

considering it. See Motor & Equip. Mfrs. Ass'n, 142 F.3d at 460. Nonetheless, the petitioners again (as with the 

emission offset authority issue treated supra) seek to circumvent the statutory time limit by invoking the reopening 

doctrine. Once again their attempt is unavailing.

The petitioners contend the EPA implicitly reopened the question of its exemption authority because during the 

rulemaking, *1270 the Agency sought comment on an alternative exemption proposal which it subsequently declined 

to adopt. See Edison Elec. Inst. v. EPA, 996 F.2d 326, 332 (D.C.Cir.1993) ("By soliciting comments on the existing ... 

regulations and advancing a possible `alternative approach' ..., the EPA clearly provided the type of `opportunity for 

renewed comment and objection' that suffices to restart the statutory period for seeking review.") (quoting Ohio v. 

EPA, 838 F.2d 1325, 1328 (D.C.Cir.1988)). Specifically, the petitioners argue that the EPA reopened the question of 

its exemption authority when it "proposed to remove the general waiver language from Appendix S entirely, and 

replace it with a `transitional' program that would only allow relief from NSR in a limited group of areas that, among 

other things, submitted plans by 2004 adequate to attain standards by 2007" — a proposal the EPA subsequently 

declined to adopt. NRDC Br. at 41 (citing 68 Fed.Reg. at 32,846-48) (emphases in brief). As the petitioners' 

characterization demonstrates, however, the EPA reopened only the question of how broadly it should exercise its 

exemption authority and not whether it had such authority in the first place. The abandoned proposal would have 

replaced section VI's exemption provisions with a "transitional" program, which would, like section VI, provide 

exemptions from section IV.A's NSR requirements but would allow the exemptions for a narrower class of "eligible" 

areas. See Proposed Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard, 68 Fed. Reg. 

32,802, 32,846-47 (June 2, 2003) (setting out eligibility requirements for transitional program). Thus, the EPA's

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alternative proposal did not implicitly reopen the question of its statutory authority vel non to grant any NSR 

exemptions but only whether section VI as previously applied might violate the Act by making exemptions too broadly 

available. Because the EPA did not seek comment on its general authority to exempt areas from the permitting 

requirements, this case is plainly distinguishable from Edison Electric Institute, in which the EPA "explicitly invited 

comments on the precise question for which petitioners [there sought] review." Edison Elec. Inst., 996 F.2d at 332. 

Accordingly, we conclude that the issue of the EPA's general exemption authority is foreclosed under CAA section 307

(b)(1), 42 U.S.C. § 7607(b)(1).

The petitioners also argue that the EPA constructively reopened the entire exemption provision "by dramatically 

expanding its scope and effect" when it eliminated the 18-month limit on Section VI exemptions. NRDC Br. at 41(citing 

Kennecott, 88 F.3d at 1226-27); see also NRDC Reply Br. at 18. The extension of the exemption term, however, did 

not " `significantly alter[ ] the stakes of judicial review' as the result of a change that `could have not been reasonably 

anticipated.'" Sierra Club v. EPA, 551 F.3d at 1025 (quoting Kennecott, 88 F.3d at 1227; Envtl. Def., 467 F.3d at 

1334). In fact, when first codified in 1979, the interpretive ruling lacked such a limit — yet its general exemption 

authority went unchallenged. Further, an exemption from NSR for even 18 months, if unlawful, seems worth 

challenging in its own right — as it could have been when the 18-month limit was added in 1980. To the extent that the 

EPA's removal of the limit extends the exemption period, the extension is subject to direct challenge in this proceeding 

and we next address the petitioners' challenge thereto.

The petitioners contend that the EPA's elimination of the 18-month limit on NSR exemptions violates CAA section 172

(e), the Act's "anti-backsliding" provision. Section 172(e) provides that if the EPA "relaxes a national primary ambient 

air quality standard," it must "promulgate requirements applicable to all areas which *1271 have not attained that 

standard as of the date of such relaxation" which "shall provide for controls which are not less stringent than the 

controls applicable to areas designated nonattainment before such relaxation." 42 U.S.C. § 7502(e). Although section 

172(e) expressly applies only when the EPA "relaxes" a NAAQS, the EPA has interpreted the language to also apply 

when it strengthens a NAAQS — as it did when it adopted the 8-hour ozone standard — reasoning that "if Congress 

intended areas to remain subject to the same level of control where a NAAQS was relaxed, they also intended that 

such controls not be weakened where the NAAQS is made more stringent." Final Rule To Implement the 8-Hour 

Ozone National Ambient Air Quality Standard — Phase 1, 69 Fed.Reg. 23,951, 23,972 (Apr. 30, 2004) (Phase 1 Rule). 

In South Coast Air Quality Management District v. EPA, 472 F.3d 882 (D.C.Cir.2006), we upheld this interpretation, id.

at 900, and also concluded that NSR is a "control" subject to section 172(e)'s backsliding prohibition, id. at 902. 

Accordingly, the EPA's elimination of the 18-month exemption limit violates section 172(e) if the resulting NSR 

requirement is "less stringent" than the existing requirement. Insofar as Appendix S now provides for waiver of NSR for 

an unlimited time pending SIP approval, it is plainly "less stringent" than the previous version which limited an NSR 

waiver to an 18-month term. As the petitioners argue, the EPA's revision could delay implementing NSR controls in 

eligible nonattainment areas for years beyond the previous 18-month limit. Accordingly, we conclude that the revision 

constitutes backsliding in violation of section 172(e).

1271

The EPA offers three defenses of its revision. First, because the EPA established the time limit to allow a newlydesignated nonattainment area a reasonable time to develop a SIP before the statutory construction ban applied, see

45 Fed.Reg. at 65,209, the EPA contends that it reasonably removed the 18-month limitation after the Congress 

repealed the new source construction ban in 1990. The EPA might have done so but for section 172(e)'s unequivocal 

backsliding constraint, which plainly prohibits a "less stringent" NSR control — precisely what the revision produced. 

Second, the EPA asserts "there is no basis to speculate" that it will grant waivers for the entire period before SIP 

approval because "it `would be highly disinclined to grant a waiver where the SIP submission deadline has passed and 

EPA had not received the required submission.'" EPA Br. at 102-03 (quoting 72 Fed.Reg. at 31,745-46). We do not 

speculate, however, in concluding that, notwithstanding the EPA's promised discretionary restraint, the revised section 

VI will produce some waivers lasting beyond the previously prescribed 18-month period and thus impose a control less 

stringent than before. This result contravenes section 172(e). Nor are we persuaded by the EPA's third argument, that 

the revision's new, third "pre-condition" — that the EPA determine that the existing two pre-conditions (satisfaction of 

applicable SIP emission limitations and non-interference with SIP's attainment date) have been met and publish the 

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1273

determination in the Federal Register — "tightened" Part VI's requirements. EPA Br. at 103. The new pre-condition 

simply formalized and made explicit what was already implicitly required — that the EPA find the existing two preconditions satisfied. Thus, the additional pre-condition produced no "tightening" effect; on the contrary, it did nothing to 

counteract the indisputably relaxing effect of removing the 18-month limit.

VII. Baton Rouge's Reformulated Gasoline Requirement

The Chamber of Greater Baton Rouge and affiliated petitioners (Chamber) contend the EPA arbitrarily and 

capriciously *1272 concluded that the Baton Rouge, Louisiana area (Baton Rouge) is a "covered area" under CAA 

section 211(k), 42 U.S.C. § 7545(k), and therefore subject to a statutory ban on the sale to consumers of conventional 

gasoline.[14] We conclude that the EPA correctly determined the statutory definition of "covered area" is ambiguous as 

to Baton Rouge under Chevron step 1 and that it reasonably resolved the ambiguity under Chevron step 2.

1272

CAA section 211(k)(1) authorizes the EPA to "promulgate regulations ... establishing requirements for reformulated 

gasoline to be used in gasoline-fueled vehicles in specified nonattainment areas." 42 U.S.C. § 7545(k)(1). Section 211

(k)(5) makes unlawful "[t]he sale or dispensing by any person of conventional gasoline to ultimate consumers in any 

covered area" — necessitating the use of reformulated gasoline instead. Id. § 7545(k)(5)(A). Section 211(k)(10), in 

turn, designates as a "covered area" each of nine specific, high ozone areas and further provides: "Effective one year 

after the reclassification of any ozone nonattainment area as a Severe ozone nonattainment area under section 7511

(b) of this title, such Severe area shall also be a `covered area' for purposes of this subsection." Id. § 7545(k)(10)(D).

In 1991, the EPA classified Baton Rouge as a "serious" ozone nonattainment area under the 1-hour standard. On April 

24, 2003, the EPA reclassified Baton Rouge as "severe," effective June 23, 2003, pursuant to the bump-up provision, 

CAA § 181(b)(2), 42 U.S.C. § 7511(b)(2), because Baton Rouge failed to reach attainment by its November 15, 1999 

attainment date. Notice of Withdrawal of October 2, 2002, Attainment Date Extension, Determination of Nonattainment 

as of November 15, 1999, and Reclassification of the Baton Rouge Ozone Nonattainment Area, 68 Fed.Reg. 20,077 

(Apr. 24, 2003) (effective June 23, 2003). At that time, the EPA advised that "under Section 211(k) of the Act the use 

of reformulated gasoline (RFG) will be required in the Baton Rouge area beginning one year from the effective date of 

this rule," that is, as of June 23, 2004. Id. at 20,080. On April 30, 2004, the EPA designated Baton Rouge as 

nonattainment under the 8-hour standard and classified it as "marginal," effective June 15, 2004. Air Quality 

Designations and Classifications for the 8-Hour Ozone National Ambient Air Quality Standards; Early Action Compact 

Areas With Deferred Effective Dates, 69 Fed.Reg. 23,858, 23,907 (Apr. 30, 2004).

The Chamber filed a request for extension of the deadline to commence using RFG or waiver of the RFG requirement, 

which the EPA denied in a letter dated May 5, 2004. The Chamber then petitioned the United States Court of Appeals 

for the Fifth Circuit for review of the denial and the Fifth Circuit stayed the RFG deadline on June 18, 2004. On August 

2, 2004 the Fifth Circuit granted a joint motion to stay its proceedings "pending the outcome of the administrative 

decision making process," with the RFG deadline stay to remain in effect during remand. City of Baton Rouge v. EPA,

No. 04-60408 (5th Cir. Aug. 2, 2004).

In the Phase 2 Rule, the EPA concluded that an area such as Baton Rouge, which automatically became a "covered 

area" (subject to the RFG requirement) on the one-year anniversary of its bump-up to "severe," should remain subject 

to the RFG requirement notwithstanding its classification to a less-than-severe status under the 8-hour standard and 

the subsequent revocation of the 1-hour standard: *1273 "EPA has determined that bump-up areas that lose their 

severe classification based solely on revocation of the 1-hour NAAQS should remain RFG covered areas at least until 

they are redesignated to attainment for the 8-hour NAAQS." 70 Fed.Reg. at 71,686.[15] The EPA concluded that 

"section 211(k)(10)(D) is ambiguous on the issue of whether a bump-up area continues to be a covered area when it is 

no longer classified as severe" and that therefore "EPA has discretion to determine whether section 211(k)(10)(D) 

authorizes removal of a bump-up area from the RFG program when it is no longer classified as severe, and to set 

appropriate criteria for such removal." Id. The EPA explained that it "d[id] not believe that Congress would have 

intended that removal of the severe classification based solely on revocation of the less protective 1-hour NAAQS 

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should result in backsliding of the RFG requirement." Id. The Agency further found it "instructive" that "if EPA had 

never revised the 1-hour NAAQS[,] ... the area would continue to be a covered area at least until it was redesignated 

to attainment for the 1-hour NAAQS." Id. Accordingly, because "[h]ere, the removal of the severe classification is 

through revocation of the 1-hour NAAQS, not through redesignation to 1-hour attainment," the EPA determined that 

"the removal of the severe classification for these areas as a result of revocation of the 1-hour standard should not 

lead to removal of the RFG requirement." Id. The Chamber offers three arguments against the EPA's interpretation. 

We address and reject each argument in turn.

First, the Chamber contends that at Chevron step 1 Baton Rouge never became a "covered area" because the plain 

and unambiguous language of the statutory definition requires that a "covered area" be "a `Severe area' that remains 

severe `one year after the reclassification,'" Chamber Br. at 15 (quoting CAA § 211(k)(10)(D), 42 U.S.C. § 7545(k)(10)

(D)), that is, on June 23, 2004, on which date Baton Rouge was no longer a severe area as it had become a marginal 

area on June 15, 2004. The EPA does not quibble with the Chamber's interpretation of the statutory language to 

require that the area remain classified as "severe" on the one-year anniversary of the reclassification. See EPA Br. at 

111 ("[O]nce an area is reclassified as `severe,' the only other precondition to becoming `covered' is that the area 

remain in severe nonattainment status for one year.") (emphasis in original). The EPA points out, however, that as of 

the one-year anniversary of the bump-up — June 23, 20004 — Baton Rouge was not only a marginal area under the 

8-hour standard but was also a severe area under the 1-hour standard, which was not revoked until June 15, 2005, 

almost a year later. See Phase 1 Rule, 69 Fed.Reg. at 23,954 ("We will revoke the 1-hour standard in full, including 

the associated designations and classifications, 1 year following the effective date of the designations for the 8-hour 

NAAQS."). Thus, the EPA reasonably determined that under the plain language of the statute, Baton Rouge was a 

severe area as of June 23, 2004 and became a "covered area" on that date.[16]

*1274 Second, the Chamber asserts at Chevron step 2 that even if the definition of "covered area" is ambiguous, the 

EPA resolved the ambiguity unreasonably in two respects. The Chamber first argues the EPA improperly relied on the 

Supreme Court's decision in Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 121 S.Ct. 903, 149 L.Ed.2d 1 (2001). In 

support of its interpretation, the EPA cited Whitman's "caution[ ] ... against EPA making subpart 2 `abruptly obsolete,'" 

70 Fed. Reg. at 71,686 (quoting Whitman, 531 U.S. at 485, 121 S.Ct. 903), observing that, "[a]lthough the RFG 

requirement itself is not set forth in subpart 2, the requirement to use it in severe bump-up areas is tied directly to the 

classifications that arise by operation of subpart 2" and therefore "it would appear that the Supreme Court's caution 

should be as relevant for RFG bump-up areas as it is for the subpart 2 control obligations." Id. Notwithstanding the 

Chamber's contrary assertions, the EPA reasonably determined that "the inclusion of a bump-up area in the RFG 

program is integrally tied to the subpart 2 provisions that establish the original classification and attainment date for an 

area and its later reclassification," id., which provisions cause an area to become a "covered" RFG area by operation 

of law. Accordingly, the EPA reasonably relied on Whitman's general admonition to preserve Subpart 2 to support the 

Agency's particular determination that the effects of the integrally connected provisions should remain intact following 

conversion to the 8-hour standard.

1274

The Chamber also asserts the EPA's interpretation falters at Chevron step 2 because the Agency unreasonably relied 

on "the very same provisions it referred to in the Phase 1 Rule at 69 Fed.Reg. 23972," which provisions, the Chamber 

maintains, "did not support the Phase 1 Rule, nor do they support the imposition of RFG." Chamber Br. at 22-23 (citing 

70 Fed.Reg. at 71,686). The Chamber examines each of the statutes cited in the Phase 1 Rule and asserts, correctly, 

that none of them directly relates to the RFG requirement. See id. at 23-24. The Chamber makes too much, however, 

of the EPA's citation to the Phase 1 Rule. The EPA was simply referring readers "[f]or further discussion of the 

reasoning behind anti-backsliding provisions in the Phase 1 Rule" because the Agency also relied on the antibacksliding rationale for its interpretation of the "covered area" definition in the Phase 2 Rule.[17] See 70 Fed.Reg. at 

71,686.

*1275 Having rejected the Chamber's contrary arguments, we conclude that the EPA's statutory interpretation readily 

satisfies Chevron step 2. In upholding the EPA's interpretation as reasonable, we, like the Agency, find it "instructive" 

that but for the happenstance of the EPA's adoption of 8-hour standards, the Chamber would have no statutory basis 

1275

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to dispute that Baton Rouge is a covered RFG area under the mandatory bump-up and RFG provisions because 

Baton Rouge remained a severe one-hour area for one year following its classification as such. See 70 Fed. Reg. at 

71,686 (quoted supra pp. 1272-73).

Finally, the Chamber contends the EPA was arbitrary and capricious in not making a specific determination that RFG 

would "protect the public health" in Baton Rouge and asserts that in fact RFG will interfere with the area's progress 

toward attainment, thereby harming the public health. The Chamber first asserts that the EPA was required by CAA 

section 109(b)(1) to make a specific finding that requiring RFG "protects the public health" of Baton Rouge, citing 42 

U.S.C. § 7409(b)(1) ("National primary ambient air quality standards, prescribed under subsection (a) of this section 

shall be ambient air quality standards the attainment and maintenance of which in the judgment of the Administrator, 

based on such criteria and allowing an adequate margin of safety, are requisite to protect the public health."). The 

Chamber further argues that requiring RFG in Baton Rouge will interfere with the area's attainment because studies 

have shown RFG increases NOx levels and Baton Rouge's SIP strategy for reducing ozone relies largely on reducing 

NOx (and not VOCs). By interfering with attainment, the Chamber contends, RFG in fact endangers the public health. 

As an initial matter, the Chamber's objections based on harm to public health and interference with RFP and 

attainment are forfeited because they were not raised before the Agency. See CAA § 307(d)(7)(B), 42 U.S.C. § 7607

(d)(7)(B) ("Only an objection to a rule or procedure which was raised with reasonable specificity during the period for 

public comment (including any public hearing) may be raised during judicial review."). To the extent Baton Rouge 

argues that RFG will not improve the public health, the EPA adequately addressed these objections and reasonably 

determined they may best be resolved through individual waiver requests.[18]

In the Phase 2 Rulemaking, the Baton Rouge Clean Air Coalition asserted that RFG use in Baton Rouge would 

"provide no measurable benefits for NOx," less than 2 tons per day of VOC reductions, and "an ozone benefit ... of 

around 0.26 ppb," and asked whether these data "qualify as an `absurd result' and [would] be subject to consideration 

for waiver." Letter from Mike D. McDaniel, Executor Director, Baton Rouge Clean Air Coalition to U.S. EPA at 4 (July 

30, 2003); see Phase 2 Rule, 70 Fed.Reg. at 71,687-88. In response, the EPA noted that Baton Rouge had "submitted 

requests for an RFG waiver and for a waiver of the RFG oxygen content requirement, which are currently before the 

Agency." 70 Fed.Reg. at 71,688. Based on its determination that "the transition to the more protective 8-hour standard 

should [not] result in less restrictive requirements for RFG than would apply if the EPA had never revised the 1-hour 

standard," the EPA advised that "[t]he appropriate mechanism to address Baton Rouge's concerns is ... in the context 

of Baton Rouge's petitions for relief *1276 under the RFG program, and not by establishing different, less restrictive 

RFG requirements as part of the transition to the 8-hour standard." Id. Baton Rouge's waiver request is ongoing before 

the Agency with judicial review available in the Fifth Circuit. The EPA's decision to address site-specific data and 

concerns in an individual waiver proceeding, rather than in the general rulemaking, is reasonable. Cf. Nat'l Wildlife 

Fed'n v. EPA, 286 F.3d 554, 566 (D.C.Cir.2002) (upholding as reasonable EPA's decision to address "color pollution" 

"on a case-by-case basis through individual [National Pollutant Discharge Elimination System] permits or, when 

appropriate, through local limits" rather than "to establish nationwide standards for discharge of `color'").

1276

VIII. Conclusion

In sum, we hold (1) the Phase 2 Rule violates the Act by allowing participation in the NOx SIP Call to satisfy the 

requirement that a nonattainment area mandate such reductions as can be achieved by the application of RACT, (2) 

the EPA acted arbitrarily when it eliminated the requirement that an attainment demonstration be approved for an area 

before a new source would be allowed to use a past emission reduction to offset new emissions, and (3) the 

elimination of the 18-month time limit for NSR waivers under Appendix S violates the anti-backsliding provision of the 

Act. In light of the likelihood the EPA will be unable to cure the backsliding inherent in the removal of the 18-month 

time limit, we vacate that provision of the Phase 2 Rule and remand it to the EPA. See Ill. Pub. Telecomms. Ass'n v. 

FCC, 123 F.3d 693, 693 (D.C.Cir.1997) ("When this court remands a rule ... with little or no prospect of the rule's 

being readopted upon the basis of a more adequate explanation of the agency's reasoning, the practice of the court is 

ordinarily to vacate the rule"). We remand to the EPA without vacatur the other two provisions of the Phase 2 Rule we 

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hold invalid. We defer consideration of the Phase 2 Rule and Reconsideration Notice insofar as they relate to the CAIR 

program, and we deny the petitions in all other respects.

So ordered.

ROGERS, Circuit Judge, concurring in part and dissenting in part.

I join the court's opinion regarding challenges to the Phase 2 Rule[1] except in three respects. The petitioners met their 

burden to show reopening of both the general policies allowing new and modified sources to use offset credits from 

past emission reductions to meet the requirements of section 173 of the Clean Air Act ("CAA"), 42 U.S.C. § 7503, and 

EPA's authority to waive interim new source review ("NSR") Appendix S permitting requirements, 40 C.F.R. pt. 51, 

app. S, § VI. Additionally, the challenge to the contingency measure element of the Clean Data Policy was not forfeited 

because comments submitted by the NRDC and other environmental groups put EPA on notice of the challenge, 

which EPA, in fact, addressed.

I.

The principles underlying the reopening doctrine are well-established. It is only their application that may obfuscate the 

reality of what an agency regulatory action entails. This is the situation here.

*1277 Under the reopening doctrine, which is an exception to the statutory limits on the period for seeking judicial 

review of agency action, see Env. Defense v. EPA, 467 F.3d 1329, 1333 (D.C.Cir.2006), an issue is reopened when 

an agency implicitly or explicitly, see West Virginia v. EPA, 362 F.3d 861, 872 (D.C.Cir.2004), solicits comment on a 

preexisting regulation or "otherwise indicates its willingness to reconsider such a regulation by inviting and responding 

to comments," Kennecott Utah Copper Corp. v. Dep't of Interior, 88 F.3d 1191, 1213 (D.C.Cir.1996). The "entire 

context" must "demonstrate[ ] that the agency has undertaken a serious, substantive reconsideration of the [existing] 

rule." P & V Enters. v. U.S. Army Corps of Eng'rs, 516 F.3d 1021, 1024 (D.C.Cir.2008) (internal quotation marks 

omitted) (alteration in original). Also, when a new rule "increase[s] the significance" of preexisting regulations, 

Kennecott, 88 F.3d at 1216, and thus "significantly alters the stakes of judicial review," the new rule "constructively 

reopens" the previously settled issue, id. at 1227. Applying these principles demonstrates EPA reopened consideration 

of two subjects.

1277

A.

Offset credits. The Phase 2 Rule allows new and modified sources to meet emissions offset requirements under CAA 

§ 173(c), 42 U.S.C. § 7503(c), by using credits from sources that shut down or curtailed operations as long ago as 

August 7, 1977. See 40 C.F.R. § 51.165(a)(3)(ii)(C)(1)(ii); Op. at 1264-65. Contrary to the court's suggestion, this 

court's opinion in Kennecott makes clear that the fact that the "basic regulatory scheme remains unchanged," Op. at 

1266, is not dispositive of whether an issue has been constructively reopened. See Kennecott, 88 F.3d at 1219. 

Analyzing the reopening doctrine at that level of generality begs the question. If "adding new terms to [an] old rule" can 

result in reopening, see id., then so can removing old terms from an old rule, at least where those old terms were an 

important part of the underlying regulatory scheme. Furthermore, Kennecott also makes clear that the question 

whether the stakes are "quantitatively different," Op. at 1266-67, does not turn on whether the petitioner or another 

failed to object to a different change earlier. See Kennecott, 88 F.3d at 1226-27. Although a 1989 Rule made it easier 

to use pre-application offset credits, see Requirements for Implementation Plans, Air Quality New Source Review, 

Final Rule, 54 Fed.Reg. 27,286, 27,292 (June 28, 1989) ("1989 Rule"), the concomitant addition of the attainment 

demonstration requirement mitigated the impact of the change and may well have meant it was not "worth 

challenging," Kennecott, 88 F.3d at 1227, the regime as a whole. However, once EPA eliminated the attainment 

demonstration requirement and failed to replace it with a comparable substitute, the need for a challenge by 

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application offset] credits," NRDC Br. at 44. This change meant that "a major new pollution source [may] add 

substantial new emissions to a nonattainment area without any contemporaneous offsets, even when the state has no 

plan for meeting standards and no idea of what total reductions are needed to attain standards." Id. at 45.

Both EPA's and the court's analysis show that a constructive reopening occurred. See Op. at 1266-67. In announcing 

the 1989 Rule, EPA stated that to comply with the reasonable further progress ("RFP") requirement of CAA § 173(a)

(1)(A), 42 U.S.C. § 7503(a)(1)(A), the restriction on pre-application offset credit was "necessary both to assure RFP 

and to guarantee that a new source does *1278 not cause or contribute to a violation of the NAAQS," 1989 Rule, 54 

Fed.Reg. at 27,292. This evaluation by EPA supports the conclusion that environmental groups would have 

determined in 1989 that it was not worth challenging the regulatory scheme as significant limits remained in place. 

Once EPA removed this "necessary," id., limitation "without adding any other safeguard to ensure that issuing a 

particular permit is consistent with section 173's mandate that total reductions `represent... reasonable further 

progress,'" Op. at 1267 (quoting CAA § 173(a)(1)(A), 42 U.S.C. § 7503(a)(1)(A)), the stakes of judicial review were 

significantly altered. The court's speculation today — that it "could have been `reasonably anticipated' in 1989 that 

EPA might eliminate the attainment demonstration requirement," Op. at 1266 — proves too much. Given EPA's

evaluation in the 1989 Rule of the importance of restricting the availability of pre-application offset credits, 

environmental groups had no reason then to lodge a challenge based on the possibility that EPA might, perhaps, at 

some point in the future reverse course. Cf. S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882, 898 

(D.C.Cir.2006). Although the reopening doctrine may not apply if the change could have been "reasonably 

anticipated," see Env. Defense, 467 F.3d at 1333, such a limit on the doctrine does not go so far as preventing review 

because a petitioner might have guessed EPA could later change its evaluation of what was necessary. Such an 

approach would render the constructive reopening precedents nugatory.

1278

On the merits, the NRDC persuasively contends that "EPA's final rule ... unlawfully permits total allowable emissions 

after the new source starts operating to be higher than emissions from existing sources before the new source applied 

for its permit." NRDC Br. at 42-43. The Phase 2 Rule's allowance of offset credit for pre-application shutdowns and 

curtailments is contrary to the plain text of the CAA and fails under Chevron step one. Chevron U.S.A. Inc. v. Natural 

Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Section 173(a)(1)(A) requires 

that "sufficient offsetting reductions" shall be obtained "such that total allowable emissions from existing sources in the 

region, from new or modified sources which are not major emitting facilities, and from the proposed source will be 

sufficiently less than total emissions from existing sources ... prior to the application for such permit to construct or 

modify so as to represent ... reasonable further progress." 42 U.S.C. § 7503(a)(1)(A). Section 173(c)(1) requires that 

offsets come from "an equal or greater reduction, as applicable, in actual emissions of such air pollutant from the same 

or other sources in the area." Id. § 7503(c)(1) (emphasis added); see also H.R.Rep. No. 101-490, pt. 1 (1990) 

(referring to reductions in "actual emissions"). Under the Phase 2 Rule, new and modified major sources may claim 

offset credit from reductions in emissions resulting from the shutdown or curtailment of operations from more than 

three decades ago. The absence of any meaningful time limit means the Rule is inconsistent with CAA § 173(c)(1)'s 

requirement that new sources' emissions "shall be offset" by an equal or greater reduction in "actual emissions," 42 

U.S.C. § 7503(c)(1). Congress is presumed, absent any indication to the contrary, to have intended the ordinary 

meaning of the word "actual," as "existing or occurring at the time," MERRIAM WEBSTER'S COLLEGIATE 

DICTIONARY (10th ed.1993) (emphasis added); accord WEBSTER'S THIRD NEW INT'L DICTIONARY (1993). See 

Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252, 124 S.Ct. 1756, 158 L.Ed.2d 529 (2004). 

Congress has given no indication in the *1279 surrounding text, or elsewhere, that it intended to depart from the 

common meaning of "actual." Hence, allowing an offset for no-longer-existing emissions from sources closed decades 

ago is inconsistent with the statutory text.

1279

EPA offers that because the Phase 2 Rule requires the old offsets to be included in the area's emissions inventory, 

allowance of pre-application offset credits is consistent with the requirement in CAA § 173(a)(1)(A), 42 U.S.C. § 7503

(a)(1)(A), that offsets ensure reasonable further progress toward attainment. See Phase 2 of the Final Rule to 

Implement the 8-Hour Ozone National Ambient Air Quality Standard, Final Notice of Reconsideration, 72 Fed.Reg. 

31,727, 31,742/3 (June 8, 2007) ("Final Notice of Reconsideration"). But using decades-old emissions in an 

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accounting exercise cannot render those emissions "actual" as that word is commonly understood. Likewise, EPA

offers that because "[f]rom an air quality planning perspective" emissions from the previously shutdown or curtailed 

sources had impacted the area's designations as nonattainment, they are "actual emissions reductions." Phase 2 

Rule, 70 Fed.Reg. at 71,677; see also Final Notice of Reconsideration, 72 Fed.Reg. at 31,742/3. But that emissions 

were "actual" as long ago as the 1970s does not mean they continue to meet the common understanding of "actual" 

years later when a source applies for a construction or modification permit.

Because the flaws in this part of the Phase 2 Rule, see 40 C.F.R. § 51.165(a)(3)(ii)(C)(1)(ii), cannot be remedied by 

further explanation by EPA, it must be vacated. See Allied-Signal, Inc. v. U.S. Nuclear Reg. Comm'n, 988 F.2d 146, 

150-51 (D.C.Cir.1993). To what extent the court's holding that elimination of the requirement of an approved 

attainment demonstration is arbitrary and capricious under CAA § 307(d)(9)(A), 42 U.S.C. § 7607(d)(9)(A), Op. at 

1266-67, will result in a different outcome than vacatur remains to be seen upon remand.

B.

NSR waiver authority. Section 110(a)(2)(C), 42 U.S.C. § 7410(a)(2)(C), does not specify what NSR requirements apply 

in the period between an area's designation as nonattainment and approval of its NSR state implementation plan 

("SIP"). Prior to promulgating the Phase 2 Rule, EPA had filled this statutory gap by retaining Appendix S's interim 

NSR regime, which by its terms could apply for only 18 months. Given the limited duration of its effect, the previous 

regulation "may not have been worth challenging," Kennecott, 88 F.3d at 1227. However, EPA's decision to eliminate 

the 18-month limitation "alter[ed] the stakes of judicial review," id. By parity of reasoning, if there was a reopening in 

Kennecott where industry petitioners faced a new requirement creating the possibility of the imposition of additional 

penalties, then there was a constructive reopening where EPA's change meant NSR controls could be postponed 

indefinitely, thereby dramatically changing the scope and effect of the waiver provision.

Additionally, EPA constructively reopened the issue of its NSR waiver authority when it proposed to remove the 

general waiver provision in Appendix S and replace it with a "transitional" program in which waivers would be available 

in only a limited set of nonattainment areas. See Proposed Rule to Implement the 8-Hour Ozone National Ambient Air 

Quality Standard, 68 Fed.Reg. 32,802, 32,846-48 (June 2, 2003) ("NPRM"). EPA has described the proposal as a 

"major rewrite of [A]ppendix S." Phase 2 Rule, 70 Fed.Reg. at 71,674. In explaining the 2003 proposal, EPA stated 

"we do not believe that areas *1280 not meeting the transitional approach would be able to ensure that they were 

implementing an NSR program `as necessary' to ensure the attainment of NAAQS...." NPRM, 68 Fed.Reg. at 32,848 

(quoting CAA § 110(a)(2)(C), 42 U.S.C. § 7410(a)(2)(C)). In other words, EPA expressed doubt about a broad waiver's 

consistency with statutory mandates in certain circumstances. Although it ultimately rejected the proposed alternative, 

EPA reopened the issue of its authority to waive interim NSR requirements by raising the question whether a broad 

waiver would be inconsistent with the CAA. See Edison Elec. Inst. v. EPA, 996 F.2d 326, 332 (D.C.Cir.1993).

1280

On the merits, the challenge by the NRDC and the State of New Jersey to EPA's authority to exempt new sources 

from the interim NSR permitting requirements is unpersuasive. They contend that "[w]here Congress has intended to 

allow exceptions to NSR requirements, it has expressly said so," NRDC Br. at 38 (citing, inter alia, CAA § 173(a)(1)(B), 

42 U.S.C. § 7503(a)(1)(B), excepting economic development zones). However, EPA persuasively responds that the 

waivers are the product of EPA's gap-filling authority. See Chevron, 467 U.S. at 843-45, 104 S.Ct. 2778. In exercising 

that authority, EPA established requirements "substantially similar to the requirements of part D," CAA § 171 et seq., 

42 U.S.C. § 7501 et seq., although not identical to the "major NSR" program under Part D. See Phase 2 Rule, 70 

Fed.Reg. at 71,678/1. The "minor NSR" program under CAA § 110(a)(2)(C) calls for "regulation of the modification and 

construction of any stationary source within the areas covered by the plan as necessary to assure that [NAAQS] are 

achieved." 42 U.S.C. § 7410(a)(2)(C) (emphasis added). EPA thus could reasonably conclude that the interim NSR 

requirements are inapplicable when the exemption conditions are met. In those instances, a waiver would be available 

only if the new source's emissions would not interfere with timely attainment, see 40 C.F.R. pt. 51, app. S, § VI, 

making additional NSR requirements unnecessary.

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Although EPA had authority to provide waivers on a case-by-case basis where a waiver would not interfere with timely 

attainment, I concur in holding that EPA's elimination of the 18-month limitation violates the anti-backsliding provision 

in CAA § 172(e), 42 U.S.C. § 7502(e), see Op. at 1270-71.

II.

The Clean Data Policy, originally published in 1992 and revised in 1995, excuses state planning requirements relating 

to RFP, attainment demonstrations, and contingency measures for areas attaining the NAAQS but not yet 

redesignated as attainment areas. In commenting in 2003 on the proposed codification of this statutory interpretation, 

environmental groups, including the NRDC, stated that the "EPA cannot authorize states to simply drop subpart 2 

measures when the area is meeting either [the 1-hour or 8-hour] standard." Clean Air Task Force, et al., Comments at 

48. By arguing that "[t]he [CAA] allows states to move mandated controls to a maintenance contingency plan, [CAA § 

175A, 42 U.S.C. § 7505a], but only after the area has been redesignated to attainment," id. (emphasis added), 

environmental groups put EPA on notice of its view that until an area is designated as being in attainment, a state plan 

must continue to contain the antecedent requirements, such as contingency measures, applicable in nonattainment 

areas.

Contrary to the court's holding that the NRDC's challenge to the contingency plan aspect of EPA's Clean Data Policy 

is forfeited, Op. at 1272-73, the rulemaking record *1281 evidences that comments put EPA on notice of that 

objection. First, these comments raised the objection to the Clean Data Policy with respect to the contingency 

measures requirement of Subpart 2 "with reasonable specificity during the period for public comment," CAA § 307(d)

(7)(B), 42 U.S.C. § 7607(d)(7)(B), and sufficiently put EPA on notice of the objection. Second, the comment did not 

make a mere "general [challenge] to EPA's approach," Mossville Envt'l Action Now v. EPA, 370 F.3d 1232, 1238 

(D.C.Cir. 2004) (internal quotation marks omitted) (alteration in original), but instead challenged application of a 

specific EPA policy — the Clean Data Policy — to a specific set of statutory requirements — those in Subpart 2 of the 

CAA, CAA § 181 et seq., 42 U.S.C. § 7511 et seq. The comment therefore constituted "adequate notification of the 

general substance of the complaint," S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882, 891 (D.C.Cir.2006), 

including an objection regarding antecedent contingency measures in particular. Third, that other objections to the 

Clean Data Policy addressed only the requirements for RFP and attainment demonstrations does not render the 

broader objection insufficient to preserve for judicial review the objection to elimination of the antecedent contingency 

measures. Fourth, the comment that the "EPA's `clean data policy,' 68 Fed.Reg. at 32,835/3, is unlawful with respect 

to both the 1-hour and 8-hour NAAQS for the reasons set forth ... above [regarding RFP and the attainment 

demonstration]," Clean Air Task Force, et al., Comments at 100, shows that the objection was not limited to any 

particular aspect of the Clean Data Policy. Fifth, EPA's response to the comments addressed contingency measures, 

among other requirements, further indicating the comments were sufficient to put EPA on notice of the objection. See

Phase 2 Rule, 70 Fed.Reg. at 71,645/1, 71,646/1; cf. Appalachian Power Co. v. EPA, 135 F.3d 791, 817-18 

(D.C.Cir.1998).

1281

Nonetheless, although the NRDC's challenge is properly before the court, it fails on the merits. Section 172(c)(9) 

provides that SIPs in nonattainment areas "shall provide for implementation of specific measures to be undertaken if 

the area fails to make reasonable further progress, or to attain the [NAAQS] by the attainment date applicable under 

this part." 42 U.S.C. § 7502(c)(9) (emphasis added). The NRDC contends that "[t]he [Clean Data] [P]olicy waives 

mandatory pollution control requirements based solely on an area's current air quality, without requiring the area to 

also show — as mandated by Congress — that it has met all of the [CAA]'s applicable requirements...." NRDC Br. at 

34. However, EPA's view that CAA §§ 172(c)(9) and 182(c)(9), 42 U.S.C. §§ 7502(c)(9), 7511a(c)(9), are written in a 

manner that ties the antecedent contingency measures to the requirements for RFP and an attainment demonstration, 

such that all are inapplicable upon attainment, see Phase 2 Rule, 70 Fed.Reg. at 71,645, is consistent with the plain 

text and to the extent there may be ambiguity, it is a reasonable interpretation. The Clean Data Policy requires that 

areas have "three consecutive years of clean air quality monitoring data demonstrating attainment of the ozone 

standard" before EPA can determine areas have attained. Memorandum from John S. Seitz, Director, Office of Air 

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Quality Planning and Standards, EPA, to Various EPA Directors 5 (May 10, 1995). Also, if EPA determines an area 

covered by the Clean Data Policy has violated the NAAQS prior to formal designation of attainment, the Clean Data 

Policy no longer applies to that area. See 40 C.F.R. § 51.918.

[1] The affiliated petitioners are the West Baton Rouge Chamber of Commerce, the Iberville Parish Chamber of Commerce, and the 

Louisiana Oil Marketers and Convenience Store Association.

[2] The second and third challenges are to the EPA's statements in the preamble to the final rule. The statements constitute 

reviewable final agency action, see CAA § 307(b)(1), 42 U.S.C. § 7607(b)(1), as they represent "the consummation of the agency's 

decisionmaking process and ... establish[ ] rights and obligations or create[ ] binding legal consequences." National Res. Def. Council 

v. EPA, 559 F.3d 561, 564 (D.C.Cir.2009). The EPA's statements as to how it will implement the RACT requirement are not 

conjectural and their terms are clear, so it is fair to infer that the EPA intended the statements to create binding legal consequences. 

See Kennecott Utah Copper Corp. v. Dep't of Interior, 88 F.3d 1191, 1222-23 (D.C.Cir.1996).

[3] An area may in some circumstances substitute a combined reduction in emissions of VOCs and NOx for the fixed percentage 

reduction of VOCs required by CAA § 182(c)(2)(B). See 42 U.S.C. § 7511a(c)(2)(C). Although CAA § 182(b)(1)(A) applies by its 

terms only to an area in moderate nonattainment, and § 182(c)(2)(B) only to an area classified in serious nonattainment, § 182(c), (d), 

and (e) apply those requirements to areas in a greater degree of nonattainment. See id. § 7511 a(c)-(e).

[4] The statute permits a reduction in "an amount less than 3 percent of such baseline emissions each year, if the State demonstrates 

to the satisfaction of the Administrator that the plan reflecting such lesser amount includes all measures that can feasibly be

implemented in the area, in light of technological achievability." CAA § 182(c)(2)(B)(ii), 42 U.S.C. § 7511 a(c)(2)(B)(ii).

[5] Section 182 does not provide for a specific VOC reduction for a moderate area following the initial six-year 15% reduction period. 

Accordingly, thereafter a moderate area is subject to the general requirement in CAA section 172(c)(2) that "plan provisions shall 

require reasonable further progress," 42 U.S.C. § 7502(c)(2).

[6] The EPA apparently meant section 172(c), see supra note 5; section 172(e) is the anti-backsliding provision, see infra pp. 1270-

71.

[7] "Ozone, an essential presence in the atmosphere's stratospheric layer, is dangerous at ground level" and "is formed by the 

chemical reaction of nitrogen oxides (`NOx') with any of a number of volatile organic compounds (`VOCs'), in the presence of 

sunlight." S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882, 887 (D.C.Cir.2006).

[8] Section 173(a)(1)(A) requires that 

the permitting agency determine[ ] that —

(A) by the time the source is to commence operation, sufficient offsetting emissions reductions have been obtained, such that total 

allowable emissions from existing sources in the region, from new or modified sources which are not major emitting facilities, and 

from the proposed source will be sufficiently less than total emissions from existing sources (as determined in accordance with the 

regulations under this paragraph) prior to the application for such permit to construct or modify so as to represent (when considered 

together with the plan provisions required under section 7502 of this title) reasonable further progress (as defined in section 7501 of 

this title);....

42 U.S.C. § 7503(a)(1)(A).

[9] Section 173(a) also requires that (1) the new source owner or operator has demonstrated that all of its other major stationary 

sources in the State are subject to and in (or scheduled for) compliance with applicable emission limitations and standards; (2) the 

Administrator has not determined the implementation plan applicable to the attainment area site of the new source is not being 

adequately implemented; and (3) an analysis of alternatives demonstrates that "benefits of the proposed source significantly outweigh 

the environmental and social costs imposed as a result of its location, construction, or modification." 42 U.S.C. § 7503(a)(3)-(5).

[10] More generally, the Act requires that all SIPs, even those for attainment areas, include regulation of new and modified sources 

"as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in parts C 

and D of this subchapter." CAA § 110(a)(2)(C), 42 U.S.C. § 7410(a)(2)(C).

[11] The pre-1989 regulation provided: 

Emissions reductions achieved by shutting down an existing source or permanently curtailing production or operating hours below

baseline levels may be credited, provided that the work force to be affected has been notified of the proposed shutdown or 

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curtailment. Source shutdowns and curtailments in production or operating hours occurring prior to the date the new source 

application is filed generally may not be used for emissions offset credit. However, where an applicant can establish that it shut down 

or curtailed production after August 7, 1977, or less than one year prior to the date of permit application whichever is earlier, and the 

proposed new source is a replacement for the shutdown or curtailment credit for such shutdown or curtailment may be applied to 

offset emissions from the new source.

40 C.F.R. § 51.165(a)(3)(ii)(C) (1988).

[12] Alternative 1 conditioned using offset credits upon an area being "current with part D ozone nonattainment planning 

requirements"; Alternative 2, which the EPA selected, did not. Phase 2 Rule, 70 Fed.Reg. at 71,673.

[13] In light of this conclusion, we need not consider the NRDC's alternative contention that elimination of the requirement violates 

section 172(e) of the Act, 42 U.S.C. § 7502(e).

[14] Section 211(k) defines "conventional gasoline" as "any gasoline which does not meet specifications set by a certification under 

[section 211(k)]" as "reformulated gasoline." 42 U.S.C. § 7545(k)(10)(E)-(F).

[15] The EPA stated it was "reserving for future consideration what RFG requirements, if any, should apply to the nine mandatory 

areas and the bump-up areas covered by this final rule when they are redesignated to attainment for the 8-hour NAAQS." 70 

Fed.Reg. at 71,687. The EPA further noted its determination did "not change or affect any discretion EPA may otherwise have under 

the RFG provisions to modify or remove RFG requirements." Id. at 71,686.

[16] The Chamber argues that this reasoning is foreclosed because the EPA itself "stated that the 8-hour NAAQS is the `relevant' 

standard." Chamber Br. at 18 (quoting Phase 1 Rule, 69 Fed.Reg. at 23,983). The EPA used the term "relevant," however, in 

explaining why it had decided that "control obligations an area is required to retain in the approved SIP for an area's 1-hour 

classification must continue to be implemented under the SIP until the area attains and is redesignated to attainment for the 8-hour 

NAAQS." 69 Fed.Reg. at 23,983; see id. ("Since the relevant NAAQS is now the 8-hour NAAQS, we believe it is appropriate to 

require these mandated controls to remain as part of the implemented SIP until an area attains the 8-hour NAAQS and is 

redesignated to attainment."). Thus, the cited language in fact supports retaining the RFG control based on the one-hour standard 

bump-up until Baton Rouge reaches 8-hour attainment.

[17] The Chamber also objects in particular to the EPA's reliance on CAA section 172(e), the anti-backsliding provision. See

Chamber Br. at 23-24; Chamber Reply Br. at 2-3. The Chamber argues section 172(e) applies only when the EPA "relaxes" a 

standard and that, in promulgating the 8-hour standard, the EPA in fact strengthened, rather than relaxed, the standard. The EPA's

reliance on section 172(e) in the Phase 1 Rule, however, supported its specific policy against backsliding in converting to the 8-hour 

standard notwithstanding the 8-hour standard is stricter (not more relaxed) than the one-hour standard. We have already upheld this 

policy as reasonable. See S. Coast, 472 F.3d at 900.

[18] As the EPA notes, the Chamber submitted material originating in the Fifth Circuit proceeding to support these objections but the 

material was not submitted during the proceeding before the Agency. See EPA Br. at 116.

[1] Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard — Phase 2; Final Rule to Implement Certain 

Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as They Apply in 

Carbon Monoxide, Particulate Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline, 70 Fed.Reg. 71,612, 71,677 (Nov. 

29, 2005) ("Phase 2 Rule").

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