Court Opinion

ID: 3066458
Source: CourtListenerOpinion
Date Created: 2015-10-15 00:50:25.499044+00
Date Added: 2024-06-11T09:16:54.312543
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 18, 2013          Decided January 17, 2014

                       No. 11-1307

  OKLAHOMA DEPARTMENT OF ENVIRONMENTAL QUALITY,
                  PETITIONER

                             v.

          ENVIRONMENTAL PROTECTION AGENCY,
                    RESPONDENT

                  NAVAJO NATION, ET AL.,
                      INTERVENORS

        On Petition for Review of a Final Rule of the
       United States Environmental Protection Agency

     Lynn H. Slade argued the cause for petitioner. With him
on the briefs were William C. Scott and Deana M. Bennett.

    John R. Jacus, Charles A. Breer, and Radcliffe Dann, IV
were on the brief for amicus curiae Oklahoma Independent
Petroleum Association in support of petitioner.

     David A. Carson, Attorney, United States Department of
Justice, argued the cause for respondent. With him on the
briefs were Robert G. Dreher, Acting Assistant Attorney
General, and Jon M. Lipshultz, Attorney.
                               2
    Philip Baker-Shenk, Kurt E. Blase, Richard A. Duncan,
and Jill Elise Grant were on the brief for Tribal Intervenors in
support of respondent.

     Beverly M. Conerton, Assistant Attorney General, Office
of the Attorney General for the State of Minnesota was on the
brief for amicus curiae State of Minnesota in support of
respondent.

     Michael C. Small and James E. Tysse were on the brief
for amicus curiae The Osage Nation in support of respondent.

    Before: HENDERSON and BROWN, Circuit Judges, and
GINSBURG, Senior Circuit Judge.

    Opinion for the Court filed by Senior Circuit Judge
GINSBURG.

     GINSBURG, Senior Circuit Judge:           The Oklahoma
Department of Environmental Quality petitions for review of
a final rule promulgated by the Environmental Protection
Agency establishing a federal implementation plan for the
attainment of national air quality standards in “Indian
country.” See Review of New Sources and Modifications in
Indian Country, 76 Fed. Reg. 38,748 (2011) (codified at 40
C.F.R. pts. 49 and 51) (hereinafter Indian Country NSR Rule).
Jurisdiction to implement the Clean Air Act lies initially in
either a state or an Indian tribe. The EPA may in certain
circumstances implement a federal program in Indian country,
see 42 U.S.C. § 7601(d), but when it does so, in our view, it is
subject to the same jurisdictional limitations as the tribe in
whose shoes it stands. Because the EPA requires a tribe to
show it has jurisdiction before regulating Indian country
outside a reservation, yet made no demonstration of tribal
jurisdiction before itself regulating those areas, we hold the
                                3
agency was without authority to displace Oklahoma’s state
implementation plan in non-reservation Indian country. We
therefore grant the petition for review and vacate the Indian
Country NSR Rule with respect to non-reservation lands.

                         I. Background

     The Clean Air Act (CAA or Act) places upon each state
“the primary responsibility for assuring air quality within the
entire geographic area comprising such State.” 42 U.S.C.
§ 7407(a).* In order to carry out that responsibility, each state
must submit for EPA approval a state implementation plan
(SIP) for the attainment of national air quality standards,
§ 7410(a)(1), and each SIP must contain a permitting or so-
called “new source review” (NSR) program.                    See
§ 7410(a)(2)(C) (requiring “regulation of the modification and
construction of any stationary source within the areas covered
by the plan ..., including a permit program”). The EPA first
approved Oklahoma’s SIP in 1972, see Approval and
Promulgation of Implementation Plans, 37 Fed. Reg. 10,842,
10,888/1, and in modified form that SIP remains in effect
today, see 40 C.F.R. § 52.1922.

     In 1990 the Congress amended the Act to authorize the
EPA “to treat Indian tribes as States,” § 7601(d)(1)(A),
subject to the condition that “the functions to be exercised by
the Indian tribe pertain to the management and protection of
air resources within the exterior boundaries of the reservation
or other areas within the tribe’s jurisdiction,” § 7601(d)(2)(B).
In 1998 the EPA interpreted the geographic reach of the tribal

*
  The Clean Air Act is codified at 42 U.S.C. § 7401 et seq. For
convenience, we refer to sections of 42 U.S.C. as though they were
sections of the Act.
                                     4
jurisdiction created in 1990 to track the definition of “Indian
country” in the federal criminal code.* Indian Tribes: Air
Quality Planning and Management, 63 Fed. Reg. 7254,
7259/1 (1998) (codified at 40 C.F.R. pts. 9, 35, 49, 50, and
81) (hereinafter Tribal Authority Rule). More specifically,
the EPA interpreted the term “reservation” in § 7601(d)(2)(B)
to include formal reservations, Pueblos, and tribal trust lands,
the latter two categories being essentially informal
reservations, id. at 7258/1; it interpreted the phrase “other
areas within the tribe’s jurisdiction” to include “all non-
reservation areas of Indian country,” id. at 7259/1, i.e., the
“dependent Indian communities” and “Indian allotments”
referenced in 18 U.S.C. § 1151(b)–(c).**

     Although the Tribal Authority Rule thus allowed Indian
tribes to implement the Act over both reservation and non-
reservation areas of Indian country, it differentiated between
the two in an important respect: The Rule authorized each
tribe to implement the Act “over its reservation without
requiring the tribe to demonstrate its own jurisdiction,”

*
    Section 1151 of Title 18 defines “Indian country” to include:

       (a) all land within the limits of any Indian reservation ...,
       (b) all dependent Indian communities ..., and
       (c) all Indian allotments.
**
   “Dependent Indian communities include ... ‘Indian communities
under federal protection that did not originate in either a federal or
tribal act of reserving, or were not specifically designated a
reservation,’” while allotments are “land[s] ‘owned by individual
Indians and either held in trust by the United States or subject to a
statutory restriction on alienation.’” Ariz. Pub. Serv. Co. v. EPA,
211 F.3d 1280, 1285–86 (D.C. Cir. 2000) (quoting FELIX S.
COHEN, HANDBOOK OF FEDERAL INDIAN LAW 38, 40 (1982)).
                              5
whereas before implementing the Act over a “non-reservation
area[],” the tribe would have to “demonstrate [its]
jurisdiction” under federal Indian law. Id. at 7255/2. We
upheld the Rule and this distinction in Arizona Public Service
Co. v. EPA, 211 F.3d 1280, 1294–95 (2000).

     In the 1990 amendments to the Act the Congress also
authorized the EPA to displace a tribe and directly regulate
areas of Indian country in “any case in which the
Administrator [of the EPA] determines that the treatment of
Indian tribes as identical to States is inappropriate or
administratively infeasible.” 42 U.S.C. § 7601(d)(4). In
2011, pursuant to this authority, the EPA issued the Indian
Country NSR Rule here under review. 76 Fed. Reg. at
38,778/2. This rule established a federal implementation plan
(FIP) including an NSR program covering all Indian country
nationwide except where the EPA had already approved a
tribal NSR program or expressly authorized a SIP to be
enforced. Id. at 38,752/2; 40 C.F.R. §§ 49.151(c), 49.166(c).

     The EPA explained it was promulgating the FIP in order
to fill a regulatory gap created by the general lack of state
authority to regulate air quality in Indian country and the
failure of many tribes to implement NSR programs of their
own:

    We believe ... states generally lack the authority to
    regulate air quality in Indian country .... We interpret
    past approvals and delegations of NSR programs [in
    SIPs] as not extending to Indian country unless the state
    has made an explicit demonstration of jurisdiction over
    Indian country and we have explicitly approved or
    delegated the state’s program for such area.
                               6
76 Fed. Reg. at 38,752/2 n.9; see also id. at 38,778/3 (“[O]nly
a few Tribes have yet sought eligibility to administer a minor
NSR program and no Tribe has yet sought eligibility for the
nonattainment major NSR program”). Because SIPs did not
ordinarily apply to Indian country and few tribes had sought
to administer the Act over their lands, the EPA concluded
much of Indian country was unregulated. The EPA therefore
issued the FIP in order to fill the regulatory gap until such
time as a tribe’s approved NSR program displaced the FIP.

     Oklahoma petitions for review of the Indian Country
NSR Rule “only as it pertains to non-reservation ‘Indian
country’ lands, including allotments and dependent Indian
communities.” Oklahoma does not challenge the rule as it
pertains to reservations, whether formal or informal. The
Navajo Nation, the Shakopee Mdewakanton Sioux
Community, the Red Lake Band of Chippewa, and the United
South and Eastern Tribes, Inc. intervene in support of the
EPA.

                         II. Analysis

     Oklahoma contends the Indian Country NSR Rule is
arbitrary and capricious, in violation of the Administrative
Procedure Act (APA), 5 U.S.C. § 706(2)(A), for two reasons:
First, the regulatory gap upon which the EPA premised the
Rule simply does not exist; each state’s SIP applies to all non-
reservation Indian country within its geographic borders
except where a tribe has demonstrated its inherent
jurisdiction. Because non-reservation Indian country is
always covered by a SIP unless it has been displaced by a
tribal implementation plan (TIP), there is no regulatory gap to
be filled by a FIP. Second, the EPA was without authority to
implement a nationwide FIP; the EPA, Oklahoma contends,
may establish a FIP only upon finding that a specific
                               7
jurisdiction’s plan is inadequate.       Because we grant
Oklahoma’s petition based upon its first argument, we do not
reach its second point.

A. Threshold Objections

      Before we may consider the merits of the parties’
arguments, we must address a series of threshold issues, the
first two of which are jurisdictional. First, the EPA questions
whether Oklahoma has standing to bring the challenge at
hand. Second, the EPA contends Oklahoma’s claim that its
SIP presumptively applies over non-reservation Indian
country is time-barred because the issue was decided by the
Tribal Authority Rule issued in 1998. Third, the EPA argues
that the same claim is forfeit because Oklahoma failed to raise
it in the rulemaking proceeding for the Indian Country NSR
Rule now under review. Although there is something to each
of these objections, none is ultimately a bar to our reaching
the merits of this case.

    1. Standing

     The “irreducible constitutional minimum of standing
contains three elements”: (1) injury in fact, (2) causation, and
(3) redressability. Lujan v. Defenders of Wildlife, 504 U.S.
555, 560–61 (1992). Oklahoma alleges it is injured by the
Indian Country NSR Rule because the Rule “divests
[Oklahoma] of regulatory authority over areas otherwise
within [its] purview,” to wit, non-reservation Indian country,
and that injury would be redressed if the court were to vacate
the Rule in relevant part.

    In supplemental briefs ordered by the court after oral
argument, the EPA challenged this straightforward account of
standing on the ground that Oklahoma’s injury is self-inflicted
                               8
and could be redressed by the state itself pursuant to the Safe,
Accountable, Flexible, Efficient Transportation Equity Act
(SAFETEA) of 2005, Pub. L. No. 109–59, 119 Stat. 1144,
section 10211(a) of which provides:

    [I]f the Administrator of the [EPA] determines that a
    regulatory program submitted by the State of Oklahoma
    for approval by the Administrator under a law
    administered by the Administrator meets applicable
    requirements of the law, and the Administrator approves
    the State to administer the State program under the law
    with respect to areas in the State that are not Indian
    country, on request of the State, the Administrator shall
    approve the State to administer the State program in the
    areas of the State that are in Indian country, without any
    further demonstration of authority by the State.

     Because the EPA has already approved Oklahoma to
administer its SIP “with respect to areas in the State that are
not Indian country,” the EPA suggests Oklahoma can obtain
regulatory authority over Indian country merely by seeking
the EPA’s approval of an application pursuant to the
SAFETEA; therefore Oklahoma’s alleged injury is caused not
by the Rule but by the State’s own failure to seek relief under
the SAFETEA. See Petro-Chem Processing, Inc. v. EPA, 866
F.2d 433, 438 (D.C. Cir. 1989) (“[T]o the extent that this
injury is self-inflicted, it is so completely due to the
complainant’s own fault as to break the causal chain”
(internal quotation marks and brackets omitted)).

     We do not think relief under the SAFETEA is so certain
or complete as to render Oklahoma’s injury self-inflicted. As
the State points out, the EPA might attach a condition to its
approval of Oklahoma’s SIP as applied to Indian country that
is “inconsistent with Oklahoma’s current SIP authority.” And
                                9
if the EPA does interpret the SAFETEA as authorizing it to
attach conditions, then the agency might well be entitled to
judicial deference under Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842–43
(1984). Lest one think this concern merely speculative, we
note that although the EPA argues the “SAFETEA provides a
remedy to the State’s alleged injury,” it has stopped short,
both in its brief and at oral argument, of stating that
Oklahoma would be entitled to approval without conditions of
an application under the SAFETEA.

     Clearly, Oklahoma has alleged an injury caused by the
rule it challenges and redressable by our vacatur of that rule.
The possibility of an alternative remedy, of uncertain
availability and effect, does not render its injury self-inflicted.
Cf. Cmty. Nutrition Inst. v. Block, 698 F.2d 1239, 1247 (D.C.
Cir. 1983) (“Consumers have been injured economically,
even if they could ameliorate this injury by purchasing some
alternative product”), rev’d on other grounds, 467 U.S. 340
(1984). Oklahoma therefore has standing to bring this
petition for review.*

    2. Timeliness

     The EPA argues Oklahoma comes to this court more than
a decade too late to argue its SIP presumptively applies in
non-reservation Indian country because the EPA “made
crystal clear in the Tribal Authority Rule” it issued in 1998
“that it interpreted past SIP approvals as not applying in
*
  Because the SAFETEA does not provide certain and complete
relief to Oklahoma’s injury, we need not decide whether any
prudential or Article III rule of standing would prevent Oklahoma
from pursuing this action if the SAFETEA did provide an adequate
alternative avenue for relief.
                              10
Indian country.” A petition for review of a final rule issued
pursuant to the Clean Air Act must be filed within 60 days of
the publication of that rule in the Federal Register, 42 U.S.C.
§ 7607(b)(1), a requirement that “is jurisdictional in nature,”
Med. Waste Inst. & Energy Recovery Council v. EPA, 645
F.3d 420, 427 (D.C. Cir. 2011) (internal quotation marks
omitted). If the EPA decided in the Tribal Authority Rule that
Oklahoma’s SIP does not apply in non-reservation Indian
country, then we would be powerless to review that decision
now. As we read the Tribal Authority Rule, however, the
EPA did not decide that issue in 1998.

    The EPA points to this passage in the preamble of the
Tribal Authority Rule:

       It is EPA’s position that, unless a state has explicitly
       demonstrated its authority and been expressly
       approved by EPA to implement CAA programs in
       Indian country, EPA is the appropriate entity to be
       implementing CAA programs prior to tribal
       primacy.... EPA will not and cannot “grandfather”
       any state authority over Indian country where no
       explicit demonstration and approval of such authority
       has been made.

63 Fed. Reg. at 7258/3. Although this passage refers to
“Indian country” writ large, it was issued in response to a
commenter’s asserting that the “states have historically
regulated non-[Indian] CAA-related activities on fee lands
within reservation boundaries.” Id. A reasonable reader
might therefore understand the EPA was refusing to
grandfather state authority over reservations, leaving state
authority over non-reservation Indian country intact. This
impression would be reinforced on the very next page:
“[W]hile Congress delegated CAA authority to eligible tribes
                             11
for reservation areas, the CAA authorizes a tribe to implement
a program in non-reservation areas only if it can demonstrate
authority over such areas under federal Indian law.” Id. at
7259/2. This statement can fairly be read to imply, as
Oklahoma argues, state authority would be withdrawn from
non-reservation areas only upon a proper showing of tribal
authority.

     The EPA’s contrary reading of these preambular
statements is not implausible, and if Oklahoma were prescient
perhaps it would have “challenged the agency’s authority
from the beginning.” Motor & Equip. Mfrs. Ass’n v. Nichols,
142 F.3d 449, 461 (D.C. Cir. 1998). Be that as it may,
however, we have before us a “different rule than the one
promulgated” in 1998, id. at 460, because it says expressly
what the 1998 Rule at most left uncertain: The EPA deems a
SIP presumptively inapplicable in both reservation and non-
reservation areas of Indian country because “states generally
lack the authority to regulate air quality in Indian country.”
Indian Country NSR Rule, 76 Fed. Reg. at 38,779/1.
Oklahoma’s challenge to this express determination in the
Indian Country NSR Rule is therefore timely.

    3. Forfeiture

     The EPA’s next and last hope of avoiding a resolution on
the merits of Oklahoma’s petition for review is its argument
the State forfeited its claim that a SIP presumptively applies
in non-reservation Indian country; here the agency focuses
particularly upon Oklahoma’s invocation of 42 U.S.C.
§ 7407(a) (“Each State shall have the primary responsibility
for assuring air quality within the entire geographic area
comprising such State”) because Oklahoma “failed to raise ...
[that] argument to EPA during the public comment period on
the Indian country NSR rule.”
                              12
     We have “long required a party seeking review of agency
action to exhaust its administrative remedies before seeking
judicial review.” Natural Res. Def. Council, Inc. v. EPA, 824
F.2d 1146, 1150 (1987). An argument not presented to the
agency is forfeit before the court. See Vt. Dep’t of Pub. Serv.
v. United States, 684 F.3d 149, 158 (D.C. Cir. 2012) (“By
failing to exhaust their ... argument, they [forfeited] judicial
consideration thereof”).

     Although the argument might have been raised more
clearly before the EPA, we do not think we must for that
reason disregard Oklahoma’s argument concerning the reach
of its SIP. The reason for the forfeiture rule is to ensure an
agency has had “an opportunity to consider the matter, make
its ruling, and state the reasons for its action,” Unemployment
Comp. Comm’n of Alaska v. Aragon, 329 U.S. 143, 155
(1946); “litigants must not be encouraged to ‘sandbag’
agencies by withholding legal arguments for tactical reasons
until they reach the courts of appeal,” USAir, Inc. v. Dep’t of
Transp., 969 F.2d 1256, 1260 (D.C. Cir. 1992). Unfair
surprise, however, is not a concern here because the EPA has
a preexisting “‘duty to examine key assumptions as part of its
affirmative burden of promulgating and explaining a non-
arbitrary, non-capricious rule’ and therefore ... ‘must justify
that assumption even if no one objects to it during the
comment period.’” Appalachian Power Co. v. EPA, 135 F.3d
791, 818 (D.C. Cir. 1998) (quoting Small Refiner Lead Phase-
Down Task Force v. EPA, 705 F.2d 506, 534–35 (D.C. Cir.
1983)). The agency’s determination that a SIP presumptively
does not apply in Indian country was the source of the
“regulatory gap” upon which the EPA premised the need for
the Indian Country NSR Rule. See 76 Fed. Reg. at 38,778/2.
It was therefore a “key assumption” that required justification
by the agency. That the EPA did not discharge its duty to
examine that assumption is most evident because it did not
                               13
even consider whether the assumption was consistent with our
opinion in Michigan v. EPA, 268 F.3d 1075 (2001), of which
more below. Because the EPA did not examine the key
assumption concerning the applicability of a SIP in Indian
country, the issue was not forfeited and will be considered
here.

B. Merits

     Oklahoma argues its SIP applies to non-reservation
Indian country within the state because (1) regulatory
jurisdiction under the Act must lie initially with either a tribe
or a state; (2) a tribe may exercise jurisdiction over non-
reservation Indian country only if it demonstrates its authority
to so do; (3) the EPA, when instituting a FIP pursuant to
§ 7601(d)(4) for want of a TIP, may exercise no more
jurisdiction than could the tribe in whose stead it acts; and (4)
neither a tribe nor the EPA has made a demonstration of tribal
authority over any, much less all, non-reservation Indian
country. We agree.

    The EPA issued the Indian Country NSR Rule under
authority of 42 U.S.C. § 7601(d)(4). See 76 Fed. Reg. at
38,778/2. The Act there provides:

    In any case in which the Administrator determines that
    the treatment of Indian tribes as identical to States is
    inappropriate or administratively infeasible, the
    Administrator may provide, by regulation, other means
    by which the Administrator will directly administer such
    provisions so as to achieve the appropriate purpose.

    Because state implementation plans generally did not
extend to Indian country and few tribes had sought to
implement NSR programs of their own, the EPA perceived “a
                               14
gap for implementation of these programs ... in Indian
country.” 76 Fed. Reg. at 38,778/3. The EPA therefore
exercised its authority under § 7601(d)(4) to administer a
federal program over Indian country in the stead of the tribes.
Id.

     We last considered the EPA’s authority under
§ 7601(d)(4) when we reviewed the Federal Operating
Permits Program, 64 Fed. Reg. 8247 (1999) (codified at 40
C.F.R. pt. 71), in Michigan v. EPA. In that regulation the
EPA had established a federal CAA program throughout
“Indian country” but declared it would “treat areas for which
EPA believes the Indian country status is in question as Indian
country.” 64 Fed. Reg. at 8262/2–3. Two states and some
private parties challenged the rule on the ground that
§ 7601(d)(4) permits the EPA to act only in the shoes of a
tribe, and a tribe may regulate an area only if it in fact has
jurisdiction — not if its jurisdiction is merely “in question.”
See Michigan, 268 F.3d at 1084.

     The EPA defended the rule on two principal grounds.
First, it argued its authority to regulate lands “in question”
was based upon its “overarching authority to protect air
quality within Indian country, not solely on its authority to act
in the stead of an Indian Tribe” under § 7601(d)(4). Proposed
Rule, Federal Operating Permits Program, 62 Fed. Reg.
13,748, 13,749/2 (1997). The EPA, in other words, could
regulate in Indian country even where a tribe could not. We
rejected this assertion because “the plain meaning of 42
U.S.C. § 7601(d) and § 7661a grants EPA the authority to
‘promulgate, administer and enforce a [federal operating
permit] program’ for a state or tribe if, and only if, (1) the
state or tribe fails to submit an operating program or (2) the
operating program is disapproved by EPA or (3) EPA
determines the state or tribe is not adequately administering
                                15
and enforcing a program.” Michigan, 268 F.3d at 1082.
Because the EPA may administer a federal program only “in
the shoes of a tribe or the shoes of [a] state,” id. at 1085, it can
exercise no more jurisdiction than could the tribe or state
whose shoes it fills. It follows that “[i]f a state has an
approved implementation plan, then EPA’s only grounds for
jurisdiction under the Act is the fact that an area is Indian
country, not that its status is ‘in question.’” Id.

     The EPA’s second argument was that it wished to avoid
deciding jurisdictional disputes between states and tribes yet
needed to provide for regulation over the lands “in question.”
Id. at 1084. We rejected that argument because the Congress
had vested jurisdiction to implement the Act in the states, see
42 U.S.C. § 7661a(d), and then authorized tribes to be treated
as states, see § 7601(d)(1)(A); the Congress left no “residual
... EPA jurisdiction, authority, or power,” 268 F.3d at 1083.
In sum, under the Act “[j]urisdiction as between states and
tribes is binary,” id. at 1086; “if [a] state has jurisdiction, then
[a] tribe does not, and vice versa,” id. at 1088. By refusing to
decide the status of “in question” lands, the EPA was
arrogating jurisdiction to itself and thereby “depriving both
tribes and states of the opportunity afforded them ... to operate
a permitting program.” Id. at 1085. Jurisdiction, we
concluded, “must either lie with the state or with the tribe —
one or the other — and EPA does not have a third option of
not deciding.” Id. at 1086.

     The principles we identified in Michigan control this
case. Jurisdiction under the Act must lie either with a state or
with a tribe, and the Act unambiguously delineates the two:
A state has “primary responsibility,” i.e., jurisdiction, “within
the entire geographic area comprising such State,” § 7407(a),
except insofar as the EPA has authorized the treatment of
“Indian tribes as States” pursuant to § 7601(d)(1)(A). In its
                              16
rule specifying when it would treat Indian tribes as states, the
EPA interpreted the Act “to grant to an eligible tribe
jurisdiction over its reservation without requiring the tribe to
demonstrate its own jurisdiction, but to require a tribe to
demonstrate jurisdiction over any ... non-reservation areas,
over which it seeks to implement a CAA program.” Tribal
Authority Rule, 63 Fed. Reg. at 7255/2; accord Ariz. Pub.
Serv. Co., 211 F.3d at 1285–86, 1294–95. A state therefore
has regulatory jurisdiction within its geographic boundaries
except where a tribe has a reservation or has demonstrated its
jurisdiction. It is undisputed that neither a tribe nor the EPA
has demonstrated tribal jurisdiction over all non-reservation
Indian country in Oklahoma. Accordingly, the State retains
jurisdiction over non-reservation Indian country and its
implementation plan is effective therein.

     The EPA objects first on the ground that § 7407(a) does
not establish a presumption of state jurisdiction over Indian
country because that provision, properly interpreted, and
federal Indian common law both show the Congress intended
“either EPA or a Tribe would exercise CAA regulatory
jurisdiction in Indian country.” This objection begs the
question at issue. All agree the states have no CAA
jurisdiction, presumptive or otherwise, over areas of Indian
country that a tribe — and thus, potentially the EPA on behalf
of a tribe — may regulate. The question in dispute is whether
the states have CAA jurisdiction over areas of Indian country
that, by the EPA’s own account, no tribe may regulate
because no tribe has demonstrated its jurisdiction. Because
jurisdiction under the Act “must either lie with the state or
with the tribe,” Michigan, 268 F.3d at 1086, the answer to that
question is plainly yes.

   The EPA next maintains this court did not decide in
Michigan that “a State must necessarily have authority over
                              17
any non-reservation area of Indian country if a Tribe fails to
make a sufficient showing of inherent tribal authority over the
area.” The court’s binary understanding of jurisdiction,
according to the EPA, “was limited to the consideration of in-
question areas, which might not be Indian country ...; EPA’s
authority over areas that unquestionably are Indian country
was not questioned.” True, true; irrelevant. The EPA’s
treatment of non-reservation Indian country in the Indian
Country NSR Rule today is identical to its treatment of “in
question” lands in the Federal Operating Permits Program of
1999: Here, the EPA insists no tribe may exercise jurisdiction
because no tribe has demonstrated authority; it simultaneously
maintains no state may exercise jurisdiction because the land
is “unquestionably” Indian country. Michigan does not
permit such a status; either a state has jurisdiction or a tribe
has jurisdiction.

     The EPA also contends the Tribal Authority Rule does
not require it to “make the same showing as [a Tribe would
have to make] before it may” exercise regulatory authority on
a tribe’s behalf. Although the EPA’s interpretation of its own
regulation is ordinarily entitled to controlling weight, see
Auer v. Robbins, 519 U.S. 452, 461–62 (1997), we cannot
defer where, as here, the interpretation “violate[s] the very
statute the agency administers,” City of Idaho Falls, Idaho v.
FERC, 629 F.3d 222, 230 (D.C. Cir. 2011); see also Stinson v.
United States, 508 U.S. 36, 45 (1993) (no deference to an
agency’s interpretation of its own regulation where the
interpretation “violate[s] the Constitution or a federal
statute”). As we explained in Michigan, § 7601(d)(4)
unambiguously confers no “inherent or underlying EPA
authority, but rather a role for the EPA if the tribe, for
whatever reason, does not promulgate a tribal implementation
program.” 268 F.3d at 1083. When regulating in the shoes of
a tribe, id. at 1085, therefore, the EPA is subject to the same
                                 18
limitations as the tribe itself.* Because a tribe must
demonstrate tribal jurisdiction before it may exercise CAA
jurisdiction over non-reservation Indian country, so too must
the EPA.

     Finally, the EPA argues it “reasonably interpreted its past
SIP approvals as not applying in Indian country” and that
again we should defer to its interpretation. The rationale for
that interpretation, however, was the EPA’s assumption that
“states generally lack the authority to regulate air quality in
Indian country,” Indian Country NSR Rule, 76 Fed. Reg. at
38,752/2 n.9, including, as relevant here, non-reservation
areas of Indian country over which no tribe has demonstrated
jurisdiction. Because it is based upon an assumption that is
incorrect as a matter of law, the EPA’s interpretation of its
past SIP approvals is “plainly erroneous” and warrants no
deference from the court. Auer, 519 U.S. at 461.

*
  For this reason we also reject the intervenors’ contention that
federal Indian common law and § 7601(d)(4) of the Act provide the
EPA with “CAA jurisdiction throughout Indian country, whereas
states must demonstrate their jurisdiction for non-reservation Indian
country and tribes must do so as well.” This is but a variant of the
EPA’s unsuccessful argument in Michigan that the agency had a
residual jurisdiction exceeding that of the tribes or states in whose
shoes it stood. See 268 F.3d at 1083. Nor are we persuaded by the
intervenors’ attempt to distinguish Michigan on the ground that
here the FIP can be displaced by “a tribal or state program upon a
showing of adequate jurisdiction and approval.” The EPA is not
justified in exercising jurisdiction it does not have merely by
making the arrogation more easily undone.
                              19
                       III. Conclusion

     We hold a state has regulatory jurisdiction under the
Clean Air Act over all land within its territory and outside the
boundaries of an Indian reservation except insofar as an
Indian tribe or the EPA has demonstrated a tribe has
jurisdiction. Until such a demonstration has been made,
neither a tribe nor the EPA standing in the shoes of a tribe
may displace a state’s implementation plan with respect to a
non-reservation area of the state. We therefore grant
Oklahoma’s petition for review and vacate the Indian Country
NSR Rule with respect to non-reservation Indian country.

                                                    So ordered.