Opinion ID: 676032
Heading Depth: 2
Heading Rank: 2

Heading: Offset Requirements

Text: 22 A key method for controlling air pollution without impeding new economic activity is through offsetting. Under this strategy, the relevant air pollution control authority, whether it be the EPA or a state or local agency, will permit the creation of a new source of emissions only if the new polluter is able to secure an offsetting reduction in emissions from preexisting polluters at least equal to the amount of pollution the new source could potentially generate. See 40 C.F.R. Sec. 55.5(d) (1993). These reductions are not always on a one-for-one ratio. Santa Barbara, for example, enforces a base ratio of 1.2:1, such that for every ton of emissions a new facility will emit, it must acquire an offset of 1.2 tons. Moreover, the County also imposes a distance discounting factor whereby the offset ratio is increased as the distance between the offset source and the new source increases. The purpose of distance discounting is simply to create an incentive for new sources to obtain offsets from close-by sources rather than sources in other areas of the County. 23 Subsection (a)(1) states that, in dealing with air pollution from OCS sources within 25 miles of the shore, the EPA must promulgate 24 such requirements ... as would be applicable if the source were located in the corresponding onshore area, and shall include, but not be limited to, State and local requirements for emission controls, emission limitations, offsets, permitting, monitoring, testing, and reporting. 25 42 U.S.C. Sec. 7627(a)(1) (emphasis added). The regulations challenged here are those implementing the offset provision of this subsection and are codified at 40 C.F.R. Sec. 55.5(d)(3)-(5). 26 The EPA's offset regulations create three zones for the purposes of applying distance penalties: (1) seaward of the OCS source (zone 1); (2) the area between the OCS source and the state seaward boundary (which is three miles from the coast in California) (zone 2); and (3) the area from the state seaward boundary extending inland (zone 3). Offsets obtained in zone 1 are subject to all the offset requirements, including any distance discounts, of the Corresponding Onshore Area (COA), id. Sec. 55.5(d)(5), which is defined as the onshore area that is geographically closest to the source or another onshore area that the Administrator designates as the COA, pursuant to Sec. 55.5 of this part. Id. Sec. 55.2. Offsets obtained in zone 2 are subject to the base ratio required in the COA, but not to its distance penalties. Id. Sec. 55.5(d)(3). Offsets obtained in zone 3 are also subject to all the offset requirements of the COA, including any distance penalties. Id. Sec. 55.5(d)(4). For purposes of calculating the distance between the OCS source and the source of offsets in zone 3, it is assumed that the OCS source is located at the state seaward boundary. Id. 27 The County makes a short but compelling argument that the EPA has departed from the Act's clear directive that the agency promulgate the same offset requirements ... as would be applicable if the source were located in the corresponding onshore area. 42 U.S.C. Sec. 7627(a)(1). The EPA takes a more flexible approach, contending that onshore distance discounting rules are not readily applicable to offshore sources. The agency concludes that implementing the COA offset standards would undercut the purposes of the legislation by discouraging OCS sources from obtaining offsets from onshore sources due to the substantial disincentive imposed by the distance penalty. Yet the statute does not speak of affording similar regulatory treatment; instead, it explicitly calls on the agency to promulgate the same offset requirements ... as would be applicable if the source were located in the corresponding onshore area. Id. While Congress's intent may have been misguided, we think it was clear, and thus the agency is bound to give it effect. Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82. Because the agency's three-tiered structure accords only those OCS sources obtaining offsets from sources in zone 1 the same treatment as the County applied to sources located in the COA, we vacate the regulation insofar as it applies to offsets obtained from zones 2 and 3.