                                                                     FILED
                                                         United States Court of Appeals
                                                                 Tenth Circuit

                                                               August 6, 2012
                                   PUBLISH                  Elisabeth A. Shumaker
                                                                Clerk of Court
                     UNITED STATES COURT OF APPEALS

                               TENTH CIRCUIT




 US MAGNESIUM, LLC,

       Petitioner,
 v.                                                    No. 11-9533
 UNITED STATES
 ENVIRONMENTAL
 PROTECTION AGENCY,

        Respondent.


       ON PETITION FOR REVIEW OF A FINAL ACTION OF THE
      UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                    Ag. No. R08-OAR2010-0909)


Michael A. Zody (Michael J. Tomko and Jacob A. Santini, with him on the
briefs), of Parsons Behle & Latimer, Salt Lake City, Utah, for Petitioner.

David A. Carson (Ignacia S. Moreno, Assistant Attorney General, with him on the
brief), United States Department of Justice, Environment and Natural Resources
Division, Denver, Colorado, for Respondent.


Before BRISCOE, Chief Judge, McKAY and HARTZ, Circuit Judges.


BRISCOE, Chief Judge.


      US Magnesium seeks review of a recent final rule from the United States
Environmental Protection Agency (EPA). In its rule, the EPA has called for Utah

to revise its State Implementation Plan (SIP) for the federal Clean Air Act (CAA).

Under the CAA, the EPA may call for a state to revise its SIP (a SIP Call) if the

EPA finds the state’s current SIP substantially inadequate. Here, the EPA

determined that Utah’s SIP was substantially inadequate because it contains an

Unavoidable Breakdown Rule (UBR), which permits operators of CAA-regulated

facilities to avoid enforcement actions when they suffer an unexpected and

unavoidable equipment malfunction. In this SIP Call, published as a final rule in

April 2011, the EPA requested that Utah promulgate a new UBR—one that

conforms with the EPA’s interpretation of the CAA. US Magnesium maintains

that the SIP Call is arbitrary and capricious and asks this court to vacate it. We

have exclusive jurisdiction under CAA § 307(b)(1), 42 U.S.C. § 7607(b)(1), and

we deny the petition for review.

                                         I

                                A. CAA framework.

      The CAA uses a cooperative-federalism approach to regulate air quality.

The EPA promulgates National Ambient Air Quality Standards (NAAQS) for six

airborne pollutants, CAA § 109, 42 U.S.C. § 7409, with acceptable pollution

levels based on human health and welfare. Areas meeting the NAAQS are termed

attainment areas, and areas not meeting the NAAQS are termed nonattainment

areas. States create their own SIPs to bring nonattainment areas into compliance

                                         2
with the NAAQS and to prevent deterioration of air quality in attainment areas.

CAA §§ 107 & 110, 42 U.S.C. §§ 7407 & 7410. The EPA reviews each SIP and

then may approve a SIP through notice-and-comment rulemaking. CAA §§

110(c) & (k)(3), 42 U.S.C. §§ 7410(c) & (k)(3). Approved SIPs are enforceable

as federal law and may be enforced by the state, the EPA, or individuals under the

CAA citizen-suit provision. CAA §§ 110(a)(1), 113, 304; 42 U.S.C. §§

7410(a)(1), 7413, 7604. The EPA directly administers the CAA in states without

an approved SIP.

      The EPA directly regulates several kinds of air emissions. First, the EPA

regulates hazardous air pollutants by establishing National Emission Standards for

Hazardous Air Pollutants (NESHAPs), which apply directly to all sources of air

pollutants. The NESHAPs are technology-based standards, based on the

Maximum Achievable Control Technology (MACT) for each hazardous air

pollutant. The EPA also directly regulates new sources of air pollution through

technology-based New Source Performance Standards (NSPS). In attainment

areas—those areas where air quality meets the NAAQS—the NSPS requires

installation of the Best Available Control Technology (BACT). In nonattainment

areas, where the air quality does not meet NAAQS, the EPA requires that new

sources emit at the Lowest Achievable Emission Rate (LAER). Utah has

incorporated these rules into its air-quality standards by reference in order to

receive a general delegation of CAA implementation authority for its SIP. See

                                          3
Utah Admin. Code r. 307-210 & r. 307-214.

      The EPA may require a state to alter an approved SIP if it finds, through

notice-and-comment rulemaking, that the SIP “is substantially inadequate to

attain or maintain the relevant [NAAQS] . . . or to otherwise comply with any

requirement of [the CAA].” CAA § 110(k)(5), 42 U.S.C. § 7410(k)(5). If the

EPA determines that a SIP is substantially inadequate, it calls for revision of the

SIP through a SIP Call. CAA §§ 110(a)(2)(H) & (k)(5), 42 U.S.C. §§

7410(a)(2)(H) & (k)(5). A state’s failure to respond to the SIP Call can result in a

federal takeover of CAA implementation in the state and the loss of significant

federal funds.

                                   B. Utah SIP.

      The EPA approved Utah’s current SIP in 1980. 45 Fed. Reg. 10761, 10763

(Feb. 19, 1980). Utah contains attainment areas, nonattainment areas, and

nonattainment areas that have come into compliance with the NAAQS, which are

called maintenance areas. As relevant to this litigation, Utah’s SIP contains a

UBR exemption, Utah Admin. Code r. 307-107-1, which states that “emissions

resulting from an unavoidable breakdown will not be deemed a violation of these

regulations.” The Utah UBR applies to “all regulated pollutants,” id., which

includes NESHAPs and the pollutants governed by the NAAQS and NSPS.

      The UBR requires that

             [t]he owner or operator of an installation suffering an
             unavoidable breakdown shall assure that emission
                                          4
             limitations and visible emission limitations are exceeded
             for only as short a period of time as reasonable. The
             owner or operator shall take all reasonable measures which
             may include but are not limited to the immediate
             curtailment of production, operations, or activities at all
             installations of the source if necessary to limit the total
             aggregate emissions from the source to no greater than the
             aggregate allowable emissions averaged over the periods
             provided in the source’s approval orders or [Utah code].
             In the event that production, operations or activities cannot
             be curtailed so as to so limit the total aggregate emissions
             without jeopardizing equipment or safety or measures
             taken would result in even greater excess emissions, the
             owner or operator of the source shall use the most rapid,
             reasonable procedure to reduce emissions.

Id. at r. 307-107-4. The UBR further provides that

             [a] breakdown for any period longer than 2 hours must be
             reported to the [Utah] executive secretary . . . . Within 7
             calendar days of the beginning of any breakdown of longer
             than 2 hours, a written report shall be submitted to the
             executive secretary which shall include the cause and
             nature of the event, estimated quantity of pollutant (total
             and excess), time of emissions and steps taken to control
             the emissions and to prevent recurrence. The submittal of
             such information shall be used by the executive secretary
             in determining whether a violation has occurred and/or the
             need of further enforcement action.

Id. at r. 307-107-2.

                            C. Current EPA rulemaking.

      The EPA approved Utah’s UBR as part of the state’s SIP in 1980, albeit

with the caveat that exemptions under the UBR “may not be approved by the

EPA.” 45 Fed. Reg. 10761, 10763 (Feb. 19, 1980). When the EPA approved

Utah’s UBR, the EPA had not yet developed its own policy on emissions during

                                          5
equipment malfunctions; it released the first version of its policy in 1982. The

EPA updated its policy several times: first in 1983, then in 1999 (the Herman

Memorandum), and most recently in 2001 (the Schaeffer Memorandum). The

EPA’s equipment-malfunction policy sets out its interpretation of the CAA’s

requirements with respect to malfunctions, but it is only a policy statement, has

not undergone notice-and-comment rulemaking, and does not have the force of

law. Ariz. Pub. Serv. Co. v. U.S. E.P.A., 562 F.3d 1116, 1130 (10th Cir. 2009).

Nevertheless, we approved the EPA’s policy statement in Arizona Public Service

Co., noting that “[w]e defer to the EPA’s longstanding policy, for the policy is a

reasonable interpretation of the Clean Air Act.” Id.

      After the EPA updated its policy in 1999, it asked Utah to address several

concerns with the Utah UBR, and Utah’s Division of Air Quality (UDAQ) agreed

that the UBR would benefit from clarification. Utah proposed an amended rule in

2004, but the EPA notified Utah that the EPA could not approve a SIP that

included the proposed amendment. Ultimately, in 2008, the Utah Air Quality

Board decided to leave the UBR unchanged. In response, in 2010, the EPA

published a notice of proposed rulemaking proposing to find the Utah SIP

substantially inadequate due to its continued inclusion of the UBR. Although

UDAQ opposed the proposed rule, EPA nevertheless published the SIP Call as a

final rule in April 2011, and Utah has since agreed to revise the UBR.

      When it promulgated the final rule, the EPA provided three primary

                                          6
justifications for its finding that the Utah SIP was substantially inadequate. First,

the EPA found that the UBR “[d]oes not treat all exceedances of SIP and permit

limits as violations,” which could preclude injunctive relief. Joint Appendix (JA)

at 2. The EPA reasoned that

             [t]his generic exemption, applicable to all Utah SIP limits,
             precludes any enforcement when there is an unavoidable
             breakdown. Our interpretation of the CAA is that an
             exemption from injunctive relief is never appropriate, and
             that an exemption from penalties is only appropriate in
             limited circumstances. Contrary to CAA section 302(k)’s
             definition of emission limitation, the exemption in the
             UBR renders emission limitations in the Utah SIP less than
             continuous and, contrary to the requirements of CAA
             sections 110(a)(2)(A) and (C), undermines the ability to
             ensure compliance with SIP emissions limitations relied on
             to achieve the NAAQS and other relevant CAA
             requirements at all times. Therefore, the UBR renders the
             Utah SIP substantially inadequate to attain or maintain the
             NAAQS or to comply with other CAA requirements . . . .

Id. at 3.

       Second, the EPA determined that the UBR “could be interpreted to grant

the Utah executive secretary exclusive authority to decide whether excess

emissions constitute a violation.” Id. at 2. The EPA explained:

             This provision appears to give the [Utah UDAQ] executive
             secretary exclusive authority to determine whether excess
             emissions constitute a violation and thus to preclude
             independent enforcement action by EPA and citizens when
             the executive secretary makes a non-violation
             determination. This is inconsistent with the enforcement
             structure under the CAA, which provides enforcement
             authority not only to the States, but also to EPA and
             citizens.   Because a court could interpret section
             R307–107–2 as undermining the ability of EPA and
                                          7
             citizens to independently exercise enforcement discretion
             granted by the CAA, it is substantially inadequate to
             comply with CAA requirements related to enforcement.
             Because it undermines the envisioned enforcement
             structure, it also undermines the ability of the State to
             attain and maintain the NAAQS and to comply with other
             CAA requirements related to PSD, visibility, NSPS, and
             NESHAPS. Potential EPA and citizen enforcement
             provides an important safeguard in the event a State cannot
             or does not enforce CAA violations and also provides
             additional incentives for sources to design, operate, and
             maintain their facilities so as to meet their emission limits.
             Thus, R307–107–2 renders the SIP substantially
             inadequate to attain or maintain the NAAQS or otherwise
             comply with the CAA.

Id. at 3.

       Third, the EPA found that the UBR “improperly applies to Federal

technology-based standards such as [NSPS and NESHAPS].” Id. at 2. These

standards, developed by the EPA, already contain exemptions for breakdowns,

and the EPA believes that states should not be able to add additional exemptions.

The EPA found that

             [the UBR] also applies to Federal technology-based
             standards like the NSPS and NESHAPS that Utah has
             incorporated by reference to receive delegation of Federal
             authority. To the extent any exemptions from these
             technology-based standards are warranted for
             malfunctions, the Federal standards contained in EPA’s
             regulations already specify the appropriate exemptions.
             No additional exemptions (or criteria for deciding whether
             an applicable exemption applies) are warranted or
             appropriate.    Thus, the Utah SIP is substantially
             inadequate because [the UBR] improperly provides an
             exemption and criteria not contained in and not sanctioned
             by the delegated Federal standards.

                                           8
Id. at 3.

       In its rulemaking, the EPA also referred to its longstanding policy on

emissions during equipment malfunctions. Under the heading “Why is EPA

proposing a SIP Call?” in the proposed rule, the EPA states that the UBR

“contains various provisions that are inconsistent with EPA’s interpretations

[expressed in the longstanding policy] regarding the appropriate treatment of

malfunction events in SIPs and which render the Utah SIP substantially

inadequate. As a result, we are calling for a SIP revision.” Id. at 17. The final

rule also cited to the EPA’s longstanding policy to explain in more detail the

reasoning behind all three of the EPA’s primary arguments for the rule. Id. at 4,

5, 7. But despite the numerous citations to its longstanding policy, the EPA does

not appear to have relied directly on its longstanding policy to justify its SIP Call.

In response to the comment that:

             EPA lacks the regulatory authority to make a SIP Call
             based on policy or guidance that has not become
             applicable law. The [Herman Memorandum] EPA cites as
             justification for the SIP Call has never been subjected to
             the legal requirements of notice and public rulemaking
             under the Administrative Procedures Act,

id. at 6, the EPA argued that

             [the Herman Memorandum] reflects our interpretation of
             the CAA. We have not treated it as binding on the States
             or asserted that it changed existing SIP provisions.
             Instead, we have done what commenters argue is
             necessary—we have engaged in notice and comment
             rulemaking to determine whether a SIP Call is appropriate
             in this case. Through this rulemaking action, we have
                                           9
              evaluated provisions of the Utah SIP to determine whether
              they are consistent with our interpretation of the CAA as
              reflected in our policies. We provided commenters with
              the opportunity to comment on the proposed SIP Call and
              our basis for it, and are only finalizing the SIP Call after
              carefully considering commenters’ comments. To the
              extent some commenters may be arguing that we must
              conduct national rulemaking on our policy before we can
              conduct SIP Call rulemaking with respect to a specific
              State malfunction provision, we find no basis for this
              assertion in the CAA. We have evaluated the UBR, found
              it substantially inadequate as specified in the CAA, and
              issued a SIP Call as required. The process we have
              followed and the substance of our action are reasonable.

Id. at 6-7.

       Finally, the EPA addressed the question of whether it was required to make

a specific factual finding to support the SIP Call:

              The thrust of several comments is that we have not
              presented facts or empirical evidence that the UBR is not
              working or that shows [sic] any measured or modeled
              impact on attainment or maintenance of a NAAQS due to
              excess emissions resulting from an unavoidable
              breakdown. As we indicated in our proposal (see 75 FR
              70892), we need not show a direct causal link between any
              specific unavoidable breakdown excess emissions and
              violations of the NAAQS to conclude that the SIP is
              substantially inadequate. It is our interpretation that the
              fundamental integrity of the CAA’s SIP process and
              structure is undermined if emission limits relied on to meet
              CAA requirements can be exceeded without potential
              recourse by any entity granted enforcement authority by
              the CAA. We are not restricted to issuing SIP Calls only
              after a violation of the NAAQS has occurred or only where
              a specific violation can be linked to a specific excess
              emissions event. It is sufficient that emissions limits to
              which the unavoidable breakdown exemption applies have
              been, are being, and will be relied on to attain and
              maintain the NAAQS and meet other CAA requirements.
                                          10
Id. at 5. Although it maintained that it need not make a factual showing the UBR

resulted in NAAQS violations, the EPA nevertheless provided some information

about the magnitude of emissions released during malfunctions, which

demonstrated that releases during malfunction can be significant, with one plant

releasing three times its daily limit of sulphur dioxide over a nine-hour period.

These examples show no NAAQS violations resulting from the UBR, but they do

not purport to do so; instead, they show the potential magnitude of releases

related to breakdowns.

                                          II

      After the EPA promulgated its final rule, US Magnesium timely filed this

petition. US Magnesium makes three primary arguments:

      1. “EPA’s SIP Call is arbitrary and capricious because EPA failed to

support its conclusion that the UBR rendered the Utah SIP substantially

inadequate with sufficient facts in the administrative record.” Pet. Br. at i.

      2. “EPA’s SIP Call is arbitrary and capricious because EPA relied

exclusively on policy statements that have not been adopted through rulemaking

procedures.” Id.

      3. “EPA’s SIP Call is arbitrary and capricious because it is inconsistent

with its own policy statements and regulations.” Id. at iii.

      In response, the EPA argues that US Magnesium lacks standing, that the

EPA’s interpretation of the CAA should be upheld under Chevron deference,

                                         11
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), and

generally that US Magnesium’s arguments lack merit.

                               A. Standard of review.

      The parties agree that our review of the SIP Call is governed by the

Administrative Procedure Act (APA), 5 U.S.C. § 706. Under the APA, “we will

not set aside agency action unless it is procedurally defective, arbitrary or

capricious in substance, or manifestly contrary to the statute.” Ariz. Pub. Serv.

Co., 562 F.3d at 1122 (internal quotation marks and citations omitted). Agency

action is arbitrary or capricious “if the agency has relied on factors which

Congress has not intended it to consider, entirely failed to consider an important

aspect of the problem, offered an explanation for its decision that runs counter to

the evidence before the agency, or is so implausible that it could not be ascribed

to a difference in view or the product of agency expertise.” Id. at 1122-23

(internal quotation marks and citations omitted). Our inquiry is “searching and

careful, [but] our review is ultimately a narrow one.” Maier v. EPA, 114 F.3d

1032, 1039 (10th Cir. 1997).

      “We review the EPA’s interpretation of the Clean Air Act, a statute it

administers, under the standard set forth in Chevron. If the statute is clear, we

apply its plain meaning and the inquiry ends. If the statute is silent or ambiguous

about the question at issue . . . , we defer to the authorized agency and apply the

agency’s construction so long as it is a reasonable interpretation of the statute.”

                                          12
Ariz. Pub. Serv. Co., 562 F.3d at 1122 (internal quotation marks and citations

omitted).

          B. US Magnesium has standing to pursue this petition for review.

      Before addressing whether US Magnesium has standing, we must first

determine whether we can consider the declaration of Bryce Bird, Director of

UDAQ (Bird Declaration), which US Magnesium attached to its reply brief. 1

Generally, parties petitioning for review of agency decisions may only rely on

evidence in the administrative record, but, as we have recognized, “[b]ecause

Article III’s standing requirement does not apply to agency proceedings, [US

Magnesium] had no reason to include facts sufficient to establish standing as a

part of the administrative record.” Qwest Commc’ns Int’l v. FCC, 240 F.3d 886,

892 (10th Cir. 2001) (citing Nw. Envtl. Def. Ctr. v. Bonneville Power Admin.,

117 F.3d 1520, 1527-28 (9th Cir. 1997)). We have not addressed this specific

issue, but the Supreme Court seems to anticipate that litigants in a similar

position could supplement the record:

             We strongly suggest that in future cases parties litigating
             in this Court under circumstances [in which the case
             originated in a court not subject to Article III’s
             requirements] take pains to supplement the record in any
             manner necessary to enable us to address with as much
             precision as possible any question of standing that may be
             raised.


      1
        The parties have not addressed the issue of supplementing the
administrative record in their briefs, although both parties seek to supplement the
record.
                                          13
Pennell v. City of San Jose, 485 U.S. 1, 8 (1988); see also Qwest Commc’ns Int’l,

240 F.3d at 892-93. Further, the Ninth Circuit considered a similar issue in

Northwest Environmental Defense Center, and held that “[b]ecause standing was

not at issue in earlier proceedings, . . . petitioners in this case were entitled to

establish standing anytime during the briefing phase. We consider the affidavits

solely to determine whether petitioners have standing to bring this action.” 117

F.3d at 1528. Finally, the United States Code section giving us original

jurisdiction in this matter seems to anticipate that the reviewing court may allow

additional evidence in some circumstances, although it does not directly address

this situation. CAA § 307(c), 42 U.S.C. § 7607(c) (discussing when a court may

allow the EPA administrator to consider additional evidence already admitted by

the court). Based on the Supreme Court’s statement, as well as the persuasive

decision by the Ninth Circuit and the legislative suggestion that additional

evidence is admissible in these cases, we accept the Bird Declaration for the sole

purpose of determining whether US Magnesium has standing to bring this

challenge.

             A party has standing to pursue a claim in federal court
             only if: (1) it suffered an injury in fact—an invasion of a
             legally protected interest which is (a) concrete and
             particularized, and (b) actual or imminent, not conjectural
             or hypothetical; (2) that injury is fairly traceable to the
             challenged action of the defendant rather than some third
             party not before the court; and (3) that injury is likely to
             be redressed by a favorable decision.

                                           14
Hydro Res., Inc. v. U.S. E.P.A., 608 F.3d 1131, 1144 (10th Cir. 2010) (citing

Lujan v. Defenders of Wildlife, 504 U.S. 550, 560-61 (1992)) (internal quotations

marks omitted). 2 US Magnesium owns a facility regulated under the Utah SIP and

states that it has relied on the UBR to avoid regulatory liability in the past, such

that a revised SIP, as required by the SIP Call, would not provide it with the same

protection from liability that it currently enjoys. Thus, US Magnesium meets the

injury-in-fact and causation prongs of the standing inquiry. But the EPA

challenges the redressability prong, arguing that Utah is an independent actor, not

a party to this action, and that US Magnesium failed to show that “Utah will

abandon its revision of the [UBR] if US Magnesium were to prevail on the merits

here.” Res. Br. at 22.


      2
         We note that the EPA has issued the SIP Call as a final rule in this case,
rendering inapposite those cases holding that a SIP Call absent a final rule is not
ripe for challenge. Compare Greater Cincinnati Chamber of Commerce v. U.S.
E.P.A., 879 F.2d 1379, 1381 (6th Cir. 1989) (holding that the EPA’s SIP Call,
which consisted of informing the state’s Governor and publishing a notice in the
federal register, had no regulatory effect, making the issue unripe), Illinois v.
U.S. E.P.A., 621 F.2d 259, 261 (7th Cir. 1980) (holding that a “notice of
deficiency issued by [the EPA] to state of Illinois with respect to a state plan for
implementation, maintenance and enforcement of air quality standards . . . did not
have a sufficient impact on parties to give rise to a case in controversy with
respect to state’s challenge to the notice”), and Mont. Sulphur & Chem. Co. v.
U.S. E.P.A., 666 F.3d 1174, 1183 (9th Cir. 2012) (holding that a SIP call that is
not a final rule “is not a final agency action and [does] not impose any specific
obligations”), with Virginia v. E.P.A., 108 F.3d 1397, 1414 (D.C. Cir. 1997)
(reviewing a SIP Call where the call took the form of a final rule), and W. Va.
Chamber of Commerce v. Browner, No. 98-1013, 1998 WL 827315, at *4 (4th
Cir. Dec. 1, 1998) (unpublished) (holding that, because the EPA had issued a SIP
Call as a final rule, “[t]here has now been final agency action; the case is now
ripe for review”).
                                          15
      When, as in this APA action, “the plaintiff is not himself the object of the

government action or inaction he challenges, standing is not precluded, but it is

ordinarily substantially more difficult to establish.” Lujan, 504 U.S. at 562

(internal quotation marks omitted). “In a case like this, in which relief for the

petitioner depends on actions by a third party not before the court, the petitioner

must demonstrate that a favorable decision would create ‘a significant increase in

the likelihood that the plaintiff would obtain relief that directly redresses the

injury suffered.’” Klamath Water Users Ass’n v. F.E.R.C., 534 F.3d 735, 739

(D.C. Cir. 2009) (citing Utah v. Evans, 536 U.S. 452, 464 (2002)); Lujan, 504

U.S. at 561 (“it must be likely, as opposed to merely speculative, that the injury

will be redressed by a favorable decision”) (citations and internal quotations

omitted). When redressibility depends on a third party and there is no evidence

suggesting a likelihood that the third party will take the action necessary to afford

the plaintiff relief, the plaintiff lacks standing. For example, in US Ecology, Inc.

v. U.S. Dep’t of the Interior, 231 F.3d 20 (D.C. Cir. 2000), the plaintiff sued the

Interior Department for refusing to transfer federal land to the state of

California—land the plaintiff planned to use to build a waste facility. The D.C.

Circuit noted that even if Interior’s refusal were wrongful, the plaintiff’s “alleged

injury would not be redressable unless and until California accepted transfer of

the disputed land and elected to proceed with the . . . project.” Id. at 21. Because

“[o]n the record at hand, [the plaintiff had] no grounds upon which to claim that

                                          16
California [would] follow these courses,” the court dismissed the case for lack of

standing. Id.

      Conversely, “[t]here will, of course, be occasions on which an order

directed to a party before the court will significantly increase the chances of

favorable action by a non-party.” Klamath Water Users, 534 F.3d at 739. In

National Parks Conservation Ass’n v. Manson, 414 F.3d 1, 6 (D.C. Cir. 2005), the

D.C. Circuit held that “a district court order setting aside [an agency’s nonbinding

letter] would significantly affect [the state’s] ongoing proceedings,” in that the

state would consider and likely be influenced by the letter. “That is enough to

satisfy redressability.” Id. at 6-7. Thus, if a party can show that a favorable

decision is likely to redress their injury—that is, a favorable decision would

significantly increase the chances of favorable action by a non-party—the party

has standing to pursue its claim.

      Under this standard, US Magnesium adequately demonstrated its standing

through the Bird Declaration, wherein the Director of UDAQ states that, “if this

Court were to invalidate EPA’s SIP Call, there would be no need for UDAQ to

revise the UBR and the existing UBR could be left in place.” Pet. Reply Br. at

31. The Bird Declaration does not explicitly say that UDAQ would necessarily

abandon its effort to revise the UBR if we were to invalidate the SIP Call. But

the Bird Declaration, coupled with Utah’s stated opposition to the SIP Call,

strongly suggests that the SIP Call will significantly affect Utah’s decision to

                                          17
revise the UBR. Moreover, US Magnesium need not show that Utah would not

proceed with the UBR reform absent the SIP Call. Even if Utah would proceed,

the evidence suggests that Utah would likely adopt a different UBR if the EPA

were not forcing its hand. Indeed, Utah already tried to adopt a new UBR, which

the EPA rejected. Because the SIP Call significantly affects Utah’s decision-

making process, and because we find that a decision overturning the SIP Call

would significantly increase the chances of action by Utah that is favorable to US

Magnesium, we hold that US Magnesium has standing in this case.



               C. The Administrative Record adequately supports the
               EPA’s conclusion that the UBR rendered the Utah SIP
                            substantially inadequate.

      US Magnesium argues that the EPA generally failed to support the SIP Call

with adequate facts in the record. To support this argument, US Magnesium

argues that the CAA’s language, requiring the EPA to find a SIP “is substantially

inadequate to attain or maintain the relevant [NAAQS] . . . or to otherwise

comply with any requirement of [the CAA]” before issuing a SIP Call, 42 U.S.C.

§ 7410(k)(5), requires the EPA to set out facts showing that the UBR has

prevented Utah from attaining or maintaining the NAAQS or otherwise complying

with the CAA. 3 US Magnesium goes on to argue that the EPA failed to set forth


      3
        US Magnesium also argues that the EPA failed to define the term
“substantially inadequate,” but it raises this argument for the first time in its
opening brief. Because US Magnesium did not raise this argument in its
                                          18
such facts, and thus the rulemaking was arbitrary and capricious.

      In response to US Magnesium’s core argument that the EPA was required

to set out specific facts supporting its finding of substantial inadequacy, the EPA

states that it need not identify particular facts, as long as it could make a general

showing that the SIP failed “to attain or maintain the NAAQS or otherwise

comply with all other CAA requirements.” Res. Br. at 24. This is in keeping

with the EPA’s reasoning in its SIP Call; in its proposed rule, the EPA stated that

it interpreted 42 U.S.C. § 7410(k)(5) to allow a SIP Call if the EPA determined

that aspects of the SIP undermined the fundamental integrity of the CAA’s SIP

process and structure, regardless of whether or not the EPA could point to

specific instances where the SIP allowed violations of the NAAQS.

      We analyze the EPA’s interpretation of 42 U.S.C. § 7410(k)(5), a statute it

is charged with administering, under the Chevron standard. 467 U.S. at 837.

Proceeding under the first prong of Chevron, the statute is ambiguous about the

question at issue. Ariz. Pub. Serv. Co., 562 F.3d at 1122 (internal quotation

marks and citations omitted). On it face, the statute says nothing about whether

the agency is required to make a specific factual finding about a state’s current

SIP before calling the SIP. Moreover, the legislative history does not clarify the


comments on the proposed rule, it cannot raise it now. Wilson v. Hodel, 758 F.2d
1369, 1373 (10th Cir. 1985) (“[A] reviewing court will not consider contentions
which were not pressed upon the administrative agency.”); see also Silverton
Snowmobile Club v. U.S. Forest Serv., 433 F.3d 772, 783 (10th Cir. 2006).

                                          19
statute. Although US Magnesium cites some legislative history purporting to

show that Congress expected the EPA to make specific factual findings, that

legislative history came from passage of the 1970 CAA, which did not have a

section equivalent to CAA § 110(k)(5), 42 U.S.C. § 7410(k)(5). That section was

added as part of the 1990 CAA amendments, so the 1970 legislative history is

inapposite.

      Because the statute is ambiguous, we turn to the second prong of Chevron,

where we defer to the authorized agency and apply the agency’s construction so

long as it is a reasonable interpretation of the statute. Ariz. Pub. Serv. Co., 562

F.3d at 1122. Certainly, a SIP could be deemed substantially inadequate because

air-quality records showed that actions permitted under the SIP resulted in

NAAQS violations, but the statute can likewise apply to a situation like this,

where the EPA determines that a SIP is no longer consistent with the EPA’s

understanding of the CAA. In such a case, the CAA permits the EPA to find that

a SIP is substantially inadequate to comply with the CAA, which would allow the

EPA to issue a SIP Call under CAA § 110(k)(5), 42 U.S.C. § 7410(k)(5). And if

the CAA does not require specific factual findings to support a SIP Call, then the

EPA was not derelict in failing to provide specific factual findings to support the

SIP Call in this case. Thus, we reject US Magnesium’s argument that the

administrative record does not adequately support the EPA’s conclusion that the

Utah SIP is substantially inadequate.

                                          20
               D. The EPA’s purported reliance on policy statements
               not adopted through rulemaking procedures does not
                   render the SIP Call arbitrary and capricious.

      Next, US Magnesium argues that

             EPA treated the [Herman Memorandum] as if it were a
             legislative rule, binding upon the states and enforceable
             against the regulated industry. Such treatment is arbitrary
             and capricious in that the [Herman Memorandum] has
             never been elevated to the status of a rule through notice-
             and-comment rulemaking.

Pet. Br. at 32. The EPA responded by agreeing that its Herman Memorandum

was a nonbinding policy statement, not a legislative rule, and then by arguing that

it treated the memorandum as a policy statement and did not rely on it in the

rulemaking other than as a statement of the EPA’s interpretation of the CAA.

This approach is consistent with the EPA’s statements in the final rule, where it

stated that “[w]e have not treated [the memorandum] as binding on the States or

asserted that it changed existing SIP provisions. Instead, we have done what

commenters argue is necessary—we have engaged in notice and comment

rulemaking to determine whether a SIP Call is appropriate in this case.” JA at 6-

7. As outlined in the discussion of the rulemaking above, the EPA referenced the

policy statements to explain its interpretation of the CAA, but did not attempt to

rely on the statements as a rule of law in their own right. This is in keeping with

our precedent. AMREP Corp. v. FTC, 768 F.2d 1171, 1179 (10th Cir. 1985)

(“General policy statements . . . are merely public pronouncements of the policy

that the agency plans to follow in rule-makings or adjudications. . . . It is only
                                          21
when a new standard set forth in a policy statement is adopted in a formal

rule-making or adjudication that it becomes a binding norm.”).

      More broadly, the EPA did not, as US Magnesium alleges, merely rely on

its own policy statements in determining that the UBR rendered the SIP

substantially inadequate to comply with the CAA. As noted in the rule

discussion, the EPA clearly explained its reasoning in determining that the UBR

did not comport with the EPA’s understanding of the CAA requirements. The

EPA’s references to its policy statements do not vitiate this explanation.

      Finally, we approved of similarly limited reliance on the policies at issue

here in Arizona Public Service Co. 562 F.3d at 1129 (deferring to the Herman

Memorandum, which the EPA relied on to justify, in part, the rejection of a

proposed malfunction exemption plan from the Arizona Public Service Co.).

Likewise, in the present case the EPA did not inappropriately rely on its policy

statements.

              E. The EPA’s SIP Call is not inconsistent with its own
                       policy statements and regulations.

      US Magnesium’s final argument is that the EPA’s SIP Call is arbitrary and

capricious because the EPA: (1) failed to follow the Schaeffer Memorandum’s

limits on the Herman Memorandum; (2) failed to acknowledge that the UBR is

actually consistent with the Herman Memorandum; and (3) failed to acknowledge

that the UBR is consistent with the EPA’s own breakdown regulations. These

arguments also fail.
                                         22
      The Schaeffer Memorandum states that the Herman Memorandum “was not

intended to alter the status of any existing malfunction, startup or shutdown

provision in a SIP that has been approved by the EPA. . . . Rather, it is in the

context of future rulemaking actions, such as the SIP approval process, that the

EPA will consider the Guidance and the statutory principles on which the

Guidance is based.” JA at 131. From this language, US Magnesium surmises that

the Schaeffer Memorandum forbids the UBR’s alleged inconsistency with the

CAA interpretation expressed in the Herman Memorandum from justifying a SIP

Call. As the EPA suggests, this argument is specious. The EPA is not suggesting

that the Herman Memorandum altered the law. Instead, the EPA has promulgated

a new SIP Call, through notice-and-comment rulemaking, that applies the

statutory interpretation first embodied in the Herman Memorandum to the Utah

UBR. This appears to be the kind of use of the Herman Memorandum that the

Schaeffer Memorandum envisioned when it stated that “it is in the context of

future rulemaking actions, such as the SIP approval process, that the EPA will

consider the Guidance and the statutory principles on which the Guidance is

based.” Id. at 131; see Sierra Club v. Ga. Power Co., 443 F.3d 1346, 1353-55

(11th Cir. 2006) (noting that, “[i]f the EPA believes that its current interpretation

of the Clean Air Act requires Georgia to modify its [Breakdown] Rule, the EPA

should require the state to revise its SIP to conform to EPA policy”). The EPA’s

actions here were not inconsistent with the Schaeffer Memorandum.

                                          23
       US Magnesium next argues that the EPA failed to acknowledge that the

UBR is actually consistent with the Herman Memorandum. US Magnesium

makes three specific arguments about the EPA’s conclusions: (1) the EPA’s

reasoning in the final rule that the UBR may not exclude from exemption

recurring breakdowns due to inadequate design, operation, or maintenance of air-

quality controls is merely speculative; (2) the EPA incorrectly argues that the

UBR does not indicate who bears the burden of proof regarding claims that a

breakdown was unavoidable; and (3) the EPA incorrectly concludes that the UBR

may be read to give the UDAQ secretary the exclusive authority to determine

whether a violation has occurred. All three arguments turn on whether the EPA

should have the power to call a SIP in order to clarify language in the SIP that

could be read to violate the CAA, when a court has not yet interpreted the

language in that way.

      In its final rule, the EPA cites several cases where a court has interpreted

provisions in a SIP to limit the EPA’s CAA enforcement authority in the face of

more generous state standards. JA at 10 n.20 (citing United States v. Ford Motor

Co., 736 F. Supp. 1539 (W.D. Mo. 1990); United States v. General Motors Corp.,

702 F. Supp. 133 (N.D. Tex. 1988) (EPA could not pursue direct enforcement of

SIP emission limits where states had approved alternative limits under procedures

EPA had approved in the SIP); Fla. Power & Light Co. v. Costle, 650 F.2d 579,

588 (5th Cir. 1981) (EPA to be accorded no discretion in interpreting state law)).

                                         24
The EPA stated, “[w]hile we do not agree with the holdings of these cases, we

think the reasonable course is to eliminate any uncertainty about reserved

enforcement authority by requiring the State to revise or remove the unavoidable

breakdown rule from the SIP.” JA at 10 n.20. In light of the potential conflicts

between Utah’s SIP and the EPA’s reasonable interpretation of the CAA

requirements, seeking revision of the SIP was prudent, not arbitrary or capricious.

      Finally, US Magnesium argues that the EPA failed to acknowledge that the

UBR is consistent with the EPA’s own breakdown regulations in the NSPS and

that the EPA’s position with respect to Sierra Club v. EPA, 551 F.3d 1019 (D.C.

Cir. 2008), precludes the EPA’s efforts to use that case to support the SIP Call.

Neither argument is credible.

      First, as the EPA notes in its response, the NSPS standards are technology-

based, while the NAAQS standards addressed in the SIP are health-based. In the

past, the EPA had a policy allowing exemptions for technology-based standards,

but not for health-based standards. However, the EPA has now begun

promulgation of new rules to eliminate the technology-based breakdown

exemptions, in light of the D.C. Circuit’s ruling that the CAA requires continuous

compliance with some NSPS emission standards, such that the breakdown

exemption was illegal under the CAA. Id. Because the EPA has abandoned its

former interpretation, any inconsistency between EPA’s former breakdown

exemptions and this SIP Call does not render the call arbitrary and capricious.

                                         25
      Second, US Magnesium argues that the EPA’s use of Sierra Club to support

the SIP Call is inconsistent with the EPA’s views on Sierra Club. This may have

been true with respect to the EPA’s initial views on Sierra Club, but it no longer

appears to be the case. In Sierra Club, the D.C. Circuit held that the CAA

requires continuous compliance with MACT emission standards, striking down an

EPA rule that created a breakdown exemption to the MACT standards. US

Magnesium cites to a letter from an EPA official narrowly construing Sierra Club

as only applying to the regulations at issue in that case, arguing that this narrow

construction suggests that the EPA did not believe that Sierra Club had any

impact on rules like the UBR at issue here. US Magnesium suggests that this

conflicts with the EPA’s arguments in the SIP Call, where the EPA maintained

that Sierra Club requires all emissions limitations to be continuous. However, the

EPA’s promulgation of new NSPS rules based on the Sierra Club decision

suggests it now accepts Sierra Club’s broader implication—that all emission

limitations must be continuous. Indeed, the letter from the EPA official quoted

by US Magnesium went on to discuss the EPA’s intention to evaluate other

standards in light of Sierra Club. Thus the EPA’s present position on Sierra Club

is consistent with its SIP Call.

                                         III

      Accordingly, we DENY US Magnesium’s petition for review of the Utah

SIP Call.

                                          26
11-9533 - US Magnesium, LLC v. United States Environmental Protection Agency

HARTZ, Circuit Judge, concurring:



      I agree that US Magnesium must be denied relief, but my reasons differ

from those of the majority. In my view, US Magnesium lacks standing because it

has failed to make the necessary showing that its alleged injury would be

redressed by a favorable decision.

      My disagreement with the majority is not regarding the legal standard for

redressability. As the majority opinion accurately states, when, as here, “‘the

plaintiff is not himself the object of the government action or inaction he

challenges, standing is not precluded, but is ordinarily substantially more difficult

to establish.’” Op. at 15 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,

562 (1992)). Lujan explains that in this circumstance,

      [t]he existence of . . . standing depends on the unfettered choices
      made by independent actors not before the courts and whose exercise
      of broad and legitimate discretion the courts cannot presume either to
      control or to predict, and it becomes the burden of the plaintiff to
      adduce facts showing that those choices . . . will be made in such
      manner as to . . . permit redressability of injury.

Lujan, 504 U.S. at 562 (citations and internal quotation marks omitted). Thus, the

majority opinion is correct when it states that to establish redressability, the

plaintiff must show that “‘it [is] likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision,’” Op. at 15 (quoting Lujan, 504

U.S. at 561), and that “[w]hen redressibility depends on a third party and there is
no evidence suggesting a likelihood that the third party will take the action

necessary to afford the plaintiff relief, the plaintiff lacks standing.” Id.

      Where I differ from the majority is in the application of these principles to

the present case. US Magnesium’s purpose in this litigation is to prevent Utah

from modifying its regulations regarding unavoidable breakdowns (the UBR

regulations). US Magnesium hopes that a ruling by this court freeing Utah from

the EPA requirement that it revise its regulations will cause Utah to halt its

ongoing rule-revision proceedings and keep its present regulations. On the record

before us, however, that possibility is merely speculation.

      US Magnesium has failed “to adduce facts showing” that a favorable

decision in this case will lead Utah to abandon its proceedings to revise its UBR

regulations. It fails to show Utah’s intent in that regard or any reason for Utah to

halt the revision process. For intent, it relies on an affidavit it obtained from

Bryce Byrd, director of the Utah Division of Air Quality. His predictions of how

the state would respond to a favorable decision in this case would certainly be

worthy of substantial weight. If the affidavit stated that Utah would likely

abandon its revision proceedings, redressability would be established. But it does

no such thing. It states: “[I]f this Court were to invalidate EPA’s SIP Call, there

would be no need for UDAQ to revise the UBR and the existing UBR could be

left in place.” Decl. of Bryce C. Bird, ¶ 20 (Aplt./Pet’r’s Reply Br. at 38). This

is not a statement of intent. All this sentence of the affidavit does is note the

                                          -2-
obvious legal effect of a ruling favorable to US Magnesium. To say that “there

would be no need” to revise the regulation does not tell us whether the state

would halt its revision efforts. Indeed, the very fact that the affidavit does not

assert the state’s intentions, when it would have substantially benefitted US

Magnesium to have such an assertion, implies that the state is, at the very least,

undecided on whether it would proceed with its revision proceedings. At most, as

expressed by US Magnesium at our oral argument, “We just don’t know for

sure”—because “just like courts don’t issue advisory opinions, the agency’s not

going to go as far as to completely play its hand about what it might do depending

on how the remand will come down.” Oral Arg. at 9:35-9:47. I note, however,

that I can see no reason why the state would not want to play its hand publicly if

it wished to abandon the revision process, especially when a definitive statement

would assist US Magnesium in its efforts to overturn the SIP Call.

      Nor does the Byrd affidavit otherwise suggest that the state would halt its

revision proceedings. True, the affidavit says that “UDAQ maintains its belief

that EPA mandated that Utah revise or remove the UBR from the Utah SIP

without adequate legal foundation and pursuant to a misinterpretation of the

UBR.” Id. Significantly, however, the affidavit does not say that the state

disagrees with the EPA regarding the substantive requirements of federal law (as

opposed to the requirements for issuing an SIP Call). Rather, its position is that

the EPA has misinterpreted the state’s regulations as contrary to federal law when

                                          -3-
they in fact are not. Although the state may have wished to make a point about

the EPA’s power to issue a SIP Call, it is not clear why Utah would not now want

to continue with the process of removing ambiguity from its regulations. In this

regard, I find it significant that Utah did not itself pursue an appeal from the EPA

decision. Of course, the decision may have been based in part on an assessment

of how best to use limited legal resources; but an e-mail of Mr. Byrd attached to

the EPA brief states that the decision not to appeal “was generally supported

through information gained through the stakeholder process,” Aplee./Resp’t Br.,

add. at 150, and stakeholders would be unlikely to concern themselves with

allocation of agency legal resources.

      Finally, US Magnesium itself does not argue that the EPA is forcing Utah

to make revisions to its rules that would be contrary to what is required by federal

law. US Magnesium’s real complaint about the EPA is that no SIP Call was

necessary, a complaint with which one could sympathize. But in supporting that

complaint, US Magnesium, particularly in its reply brief, repeatedly argues that

the Utah regulations, if properly construed, are fully consistent with the EPA’s

view of the requirements of federal law. See Aplt./Pet’r’s Br. at 36–40;

Aplt./Pet’r’s Reply Br. at 10–11, 16–22. That position was further echoed by US

Magnesium at oral argument (the most relevant portion of which is transcribed in

a footnote at the end of this dissent). The only criticism of the EPA’s

interpretation of federal law raised at oral argument was that the EPA’s

                                         -4-
interpretation of one aspect of federal law—an interpretation that concededly is

entitled to Chevron deference—would not justify a SIP Call. See Oral Arg. at

12:49-13:31 (“Counsel: Within the context of the EPA interpreting the Clean Air

Act you would give them Chevron deference in interpreting that. But that

deference being applied in the instance of developing or approving a SIP is not

the same as EPA saying it’s substantially inadequate. That’s a completely

different standard. There’s room for inadequacy. But it’s got to be substantial

before we’re going to go down this path, and spend our time, and force the state

to change its rules that have existed for this many years. We’re going to pick real

issues that have a real impact. “) See also Aplt./Pet’r’s Br. at 20 n.5 (making

similar point). It seems to me unlikely that Utah would halt its revision process if

it agrees that the process will eliminate ambiguities and conform to undisputed

federal law. In any event, US Magnesium has not met its burden of showing that

Utah would do so.

         For these reasons, I cannot join the majority opinion. 1

         1
             Magnesium v. EPA, oral argument transcript, starting at 5:28:

Court:           Let me approach this case from a different perspective. It’s not at all
                 clear to me what this case is supposed to accomplish except maybe
                 make a point. As I understand your briefing, your complaint is that
                 the EPA wants to change the language in the SIP to make things
                 perhaps more precise. And you’re saying those changes are
                 unnecessary because the state regulations would be interpreted that
                 way anyway—that the changes that EPA wants to impose really
                 won’t accomplish anything. Am I correct?


                                            -5-
Counsel:   That’s correct, your honor. I think we’re really talking about—

Court:     Why litigate that? What purpose is served when you’re complaining
           that they’re trying to remove ambiguity from state rules and to
           remove the ambiguity and make it clear that it means something
           which you say it already means? So you’re upset at EPA: they
           wasted everybody’s time requiring clarification of something that
           didn’t need clarifying. But then you’re wasting everybody’s time
           saying it shouldn’t be clarified, why are they doing this. It’s a pox
           on both your houses. Why bother the courts about this?

Counsel:   Well, I wouldn’t go quite so far. From my client’s perspective, it
           understands the state rule, it uses the state rule, and it does give it
           some protections. And including—

Court:     So there are some changes you’re saying? So these changes do make
           a difference?

Counsel:   I don’t think they’re going to—

Court:     The EPA requirements for the rule language changes will effect a
           substantive change in the rule? I thought you were arguing to the
           contrary.

Counsel:   I think there are some changes, but I don’t think they’re that material
           in terms of—and here’s the key point—what the actual emissions
           will be on the ground. We’re talking about EPA’s burden. And
           there’s a principle at stake here, there’s no doubt about it. It’s not
           just this case. Because there are very few courts that have defined
           what it means to be substantially inadequate.

Court:     Here’s one reason this is important: your standing. Because if all
           this does is clarify what the Utah regulators thought it meant anyway,
           what makes you think that if you prevail here, Utah won’t change its
           regulations anyway, or maybe it already has (I’m not sure what the
           status is). Are you going to get any relief except a declaration of
           some legal principle?

Counsel:   I think we get specific relief. EPA’s SIP call has forced Utah to go
           through a rulemaking to try to meet EPA’s demands.
                                        -6-
           ...

Counsel:   If this court vacates the rule, that has an immediate impact. And we
           have a declaration from Bryce Bird, the director of the Air Quality
           Division of Utah, that if this court says EPA has not met the
           threshold—and again we’re talking about a statutory threshold—then
           Utah does not have to continue this process.

Court:     What he says is Utah doesn’t have to continue the process. It doesn’t
           say that we won’t decide to clarify the language, because they may
           think it’s good to clarify the language.

Counsel:   I think in fairness to him and his declaration, you’re right. Because
           just like courts don’t issue advisory opinions, the agency’s not going
           to go so far as to completely play its hand as to what it might do
           depending upon how the remand comes down. We just don’t know
           for sure. But we know that the state no longer has the pressure to do
           this; we know the state didn’t want to do this and go through this
           effort. We know, frankly, EPA didn’t have it as a high priority—it
           was only forced to do so by a citizens’ group. So from that
           perspective EPA did not see this as a big issue that it had to solve on
           the ground in Utah. And that’s the point. You’ve got to have a
           significant issue that’s going to have some real effect on the ground.

Court:     I agree. And that could be a problem with EPA taking the action.
           But now the ball’s in your court and you’re also asking us to do
           something that’s not going to have much of an effect. Somebody’s
           got to put a stop to this nonsense, all this wasted effort. Seems to me
           one way to do that is to say that there’s no reason to see that you
           have standing here.

Counsel:   I think there is standing, because but for EPA issuing this order and
           it told Utah what it has to do, and it’s got to change this rule—and
           that rule will change the way my client interacts with the rule and
           interacts with the agency and it has potential enforcement
           implications. I don’t think those are going to change, though, the
           actual emissions. In fact, it’s EPA’s burden to prove that and that’s
           what this case is about. If EPA can rely upon generic policy
           statements that could be ever-changing, then it could be messing with
           these SIPs and be forced to mess with these SIPs by NGOs, through
                                        -7-
           this very action.

Court:     But to make clear—I don’t want to belabor this too much—you don’t
           really disagree with that policy statement, do you?

Counsel:   EPA’s policy statement?

Court:     The policy statement saying that even though you’re excused because
           it’s an unavoidable mishap that still there should be some discretion
           to enforce if it’s one of the few sources of a pollutant that may
           exceed federal requirements, and that even if you do comply there
           still may be a right to bring an injunctive action either by EPA or by
           private citizens.

Counsel:   I think there’s room within the Clean Air Act to have a reasonable
           interpretation on the other side of that. And if we’re talking about
           what is a reasonable interpretation, and there’s room to have both
           sides of that, that’s different than saying this plan is substantially
           inadequate. This ambiguity—of what the interpretation is and what
           the policy is—exists. It’s been discussed. It’s been litigated. But
           that ambiguity does not cross the threshold of substantial inadequacy,
           your honor. That’s our position. That word has to mean something
           and it has to be significant before we’re going to start down this
           path. We didn’t have to go down this path but here we are.

Court:     They use their policy statements to determine the inadequacy,
           correct?

Counsel:   Yes.

Court:     And don’t we give their policy statements Chevron deference, or not?

Counsel:   Within the context of EPA interpreting the Clean Air Act you would
           give them Chevron deference in interpreting that. However, that
           deference being applied in the instance of developing a SIP or
           approving a SIP is not the same as EPA saying it’s substantially
           inadequate on the [unintelligible]. That’s a completely different
           standard. There’s room for inadequacy. It’s got to be substantial
           before we’re going to go down this path, and spend our time, and
           force the state to change its rules that have existed for this many
                                        -8-
           years. We’re going to pick real issues that are going to have a real
           impact.

(emphasis added)




                                      -9-
