Association of Irritated Residents (AIR), among other groups, sought review of the Environmental Protection Agency's (EPA) approval of the San Joaquin Valley's (the Valley) plan for attaining EPA-mandated levels[1] of PM-10 pollutants.[2] The Ninth Circuit held that EPA properly approved the plan despite AIR's claims that, under the Clean Air Act (CAA),[3] EPA could not (1) rely on the CAA's general deadline extension provision to approve the Valley's extended PM-10 attainment deadline because the CAA provides a provision specific to PM-10 attainment deadlines, (2) allow the Valley to count reductions of PM-10 emissions that it would achieve through statutorily mandated measures, in calculating whether the Valley achieved the annual five percent PM-10 emissions reductions that were required once the Valley missed its attainment deadline, (3) authorize the Valley to bank reductions in emissions that exceeded five percent in one year to count towards required reductions in future years, (4) permit the Valley not to regulate ammonia emissions as a PM-10 precursor, and (5) approve the Valley's plan without approving the mandatory contingency measures included in the plan.

In 1990, Congress amended the CAA to include provisions addressing PM-10 pollution.[4] Pursuant to these amendments EPA set mandatory PM-10 levels, and required states to implement plans to attain the mandatory levels by specific deadlines in any areas where PM-10 pollution was a problem. The deadlines varied with the severity of the pollution in an area. EPA initially indicated that the Valley had a "moderate" PM-10 problem and thus faced an attainment deadline of December 31, 1994.[5] However, once the Valley's authorities generated a plan to address PM-10 and submitted it to California state authorities who in turn sought approval of the plan from EPA, EPA determined that the Valley was incapable of attaining the mandated PM-10 level by the deadline. Consequently, in 1993, EPA reclassified the Valley as having a "serious" PM-10 problem,[6] meaning the Valley's attainment deadline became December 31, 2001.[7]

Once again the Valley developed an attainment plan, which California submitted to EPA in 1997.[8] In the plan, the Valley requested a five-year extension of the 2001 attainment date. In 2002, EPA indicated that it would disapprove the Valley's plan so California withdrew it. Then, in July of that year, EPA published a notice that the Valley had failed to attain the required PM-10 levels by 2001.[9] This notice triggered a provision of the CAA which required California to submit plan revisions to not only attain the mandated PM-10 levels, but also to achieve a five percent annual reduction of PM-10 or PM-10 precursor emissions in every year prior to attainment.[10] California submitted this plan in 2003, setting December 2010 as the Valley's attainment date, and EPA approved the plan in May 2004.

AIR challenged EPA's approval of the plan, alleging multiple flaws in the plan that EPA should not have approved. The Ninth Circuit applied an arbitrary and capricious standard[11] to determine whether EPA's approval of the plan should have been set aside. AIR first contended that, as a matter of law, EPA could not approve the 2010 deadline because it did so by relying upon the CAA's general deadline extension provision[12] rather than the deadline extension provision specific to PM-10 attainment.[13] AIR asserted that under this latter provision the latest possible deadline would have been 2006. The court noted that once EPA publishes notice of a state's failure to attain a mandated pollutant level in a particular area, the state has one year to submit a revised plan.[14] Under the general deadline extension provision, a state's revised plan must forecast attainment within five years from the date of EPA's notice, but EPA may extend this deadline by an additional five years.[15] The Ninth Circuit determined that EPA could approve the Valley's 2010 deadline because it fell only eight years after the EPA's 2002 notice, and thus complied with the deadline extension provision.

The Court next turned to the PM-10-specific provision, which AIR claimed precluded use of the more general provision to reset the Valley's PM-10 attainment deadline. This provision allows a state to request, only once, a five-year extension of a PM-10 attainment deadline.[16] AIR contended that permitting California to use the general provision to extend a PM-10 attainment deadline, invited states to request repeated ten-year extensions without penalty. The court disagreed with AIR's interpretation, however, insisting that a state that allowed its PM-10 attainment deadline to pass would suffer the consequence of having to reduce PM-10 or PM-10 precursor emissions by five percent annually until attaining the mandated PM-10 levels.[17] The court added that if a state's delay became too unreasonable it could ultimately face sanctions such as the loss of highway funding.[18] The court further indicated that under AIR's interpretation of the CAA, EPA would have no means of setting a new deadline for PM-10 attainment in an area if the state had already received the one time, five-year extension. The court concluded that the CAA unambiguously authorizes EPA to set PM-10 attainment deadlines according to the general deadline extension provision despite the existence of a PM-10 specific provision.

The court then moved on to address AIR's other allegations of flaws in the Valley's plan. AIR argued that in order to calculate whether the Valley achieved the annual five percent reductions that became mandatory once the Valley missed its 2001 deadline,[19] the Valley could not plan to count reductions that it would achieve as a result of compulsory control mechanisms that were required prior to 2001. After EPA designated the Valley a "serious" area for PM-10 pollutants in 1993, the Valley had four years to implement the "best available control measures" (BACM).[20] Emitters in the Valley were thus statutorily required to be operating under BACM by the time the Valley missed its attainment deadline in 2001. AIR argued that since the Valley should already have imposed BACM on emitters in the area, the five percent annual PM-10 emissions reductions required as consequence of missing the 2001 deadline, had to be above and beyond the emissions reductions achievable by BACM in a given year. The court however, disagreed stating that the five percent reduction provision does not specify a required means of reduction and further that "late implementation [of BACM] is better than none."[21] The court thus concluded that EPA could approve the Valley's plan to include reductions achieved by BACM in calculating whether the Valley achieved its required annual five percent emissions reduction in a given year.

The court moved next to AIR's claim that EPA should not have approved the Valley's plan to bank emissions reductions in excess of five percent from one year to apply in another year when the Valley would not otherwise reach its five percent reduction requirement. The court however, agreed with EPA's interpretation that Congress intended to encourage the use of the most effective emissions reductions measures as early as possible. The court indicated that prohibiting banking would discourage early reductions and therefore be contrary to the goals of the CAA. The court thus agreed with EPA's approval of the banking provision in the Valley's plan.

Next, the court addressed AIR's claim that the EPA should have rejected the Valley's plan not to control ammonia emissions as a PM-10 precursor. The court explained that ammonia gas and oxides of nitrogen react to form ammonium nitrate, which is the "largest component of PM-10 during the Valley's worst PM-10 episodes."[22] The court conceded that ammonia is a precursor to PM-10 and added that the CAA requires controls upon major stationary sources of PM-10 precursors, but indicated that there is an exception to this requirement when "such sources do not contribute significantly to PM-10 levels which exceed the standard in the area."[23] The court accepted EPA's conclusion that ammonia emitters in the Valley fit into this exception because concentrations of ammonia in the Valley were so high relative to oxides of nitrogen that regulating ammonia would not
accelerate the attainment date. The court deferred to EPA's judgment regarding ammonia in the Valley because of the scientific nature of the determination.[24]

Finally, the court rejected AIR's claim that EPA could not approve the Valley's plan without approving or disapproving the mandatory contingency measures portion of the plan. The court recognized that the CAA requires states to include contingency measures in all attainment plans in case the plan fails,[25] but concluded that EPA could nonetheless, approve the Valley's plan without making a decision regarding the plan's contingency measures. The court stated that allowing such piecemeal approvals would ultimately expedite attainment.

In summary, the Ninth Circuit held that the EPA's approval of the San Joaquin Valley's plan for attaining mandated levels of PM-10 pollutants was not arbitrary and capricious and therefore, did not require review. The court determined that the CAA allowed EPA to (1) approve the PM-10 attainment deadline that was set according to the general CAA provision concerning deadline extensions, rather than the provision specific to deadline extensions for PM-10 attainment; (2) permit the Valley to count emissions reductions achieved by the best available control technologies in calculating whether PM-10 emissions dropped by five percent annually; (3) approve banking PM-10 emissions reductions; (4) authorize the Valley not to regulate ammonia emissions as a PM-10 precursor; and (5) accept the Valley's plan without approving the mandatory contingency measures.