Ass’n of Irritated Residents v. EPA

It is not arbitrary for an agency to correct an error in officiating a rule after learning the rule was not legally acceptable.

The Association of Irritated Residents (AIR) petitioned the court for a review of the Environmental Protection Agency’s (EPA) promulgation of 40 C.F.R. §52.245, which had revised the scope of a previous EPA decision. The EPA endorsed the regulation under §110(k)(6) of the Clean Air Act (CAA), which was an error correction provision, created after the Agency had mistakenly approved some New Source Review Rules in 2004 as a part of California’s State Implementation Plan (SIP). AIR claims that the EPA does not have the authority to correct its own erroneous approval or disapproval under the CAA, and that the EPA does not have the retroactive authority to limit or amend SIP. On appeal, the Ninth Circuit held that the EPA reasonably interpreted the CAA, and its requirement that the EPA “revise their erroneous action as appropriate,” so as to have a retroactive limitation on the prior approval. The panel also held that the EPA did not act improperly by correcting its prior approval, because it did not abuse its discretion after it learned that California Senate Bill (SB) 700 did not authorize requirements of new source permits and emissions offsets. SB 700 was an ambiguous state regulation, and the panel held that the EPA reasonably determined that it was inconsistent with the New Source Review Rules. The panel said that the rules should not have been incorporated into SIP, because they conflicted with state law. Therefore, the EPA, having determined that it erred, was correct in revising their error. DENIED.