               FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


ALASKA WILDERNESS LEAGUE;                No. 12-71506
CENTER FOR BIOLOGICAL
DIVERSITY; NATURAL RESOURCES
DEFENSE COUNCIL; NORTHERN
ALASKA ENVIRONMENTAL CENTER;              OPINION
PACIFIC ENVIRONMENT; RESISTING
ENVIRONMENTAL DESTRUCTION ON
INDIGENOUS LANDS; SIERRA CLUB;
THE WILDERNESS SOCIETY,
                      Petitioners,

                v.

UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
                     Respondent,

SHELL OFFSHORE INC.,
           Respondent-Intervenor.


       On Petition for Review of an Order of the
          Environmental Protection Agency
            Environmental Appeals Board

               Argued and Submitted
          May 21, 2013—Anchorage, Alaska

                Filed August 15, 2013
2           ALASKA WILDERNESS LEAGUE V. EPA

     Before: A. Wallace Tashima, Richard C. Tallman,
           and N. Randy Smith, Circuit Judges.

                  Opinion by Judge N.R. Smith


                           SUMMARY*


                       Environmental Law

    The panel denied a petition for review of a decision of the
United States Environmental Protection Agency denying a
challenge to a Clean Air Act permit that allowed Shell
Offshore Inc. to conduct “pollutant emitting activities”
associated with the drill vessel Kulluk in the Beaufort Sea off
Alaska’s North Slope, and granted Shell a requested
exemption of 500 meters surrounding the Kulluk from
“ambient air” regulations.

    As a threshold matter, the panel held that the EPA’s
decision, which included its interpretation of the Clean Air
Act’s 42 U.S.C. § 7661c(e), was entitled to Chevron
deference. The panel held that the EPA reasonably concluded
that Shell need not analyze the Kulluk’s potential impact on
the Clean Air Act’s “increment” requirements before
obtaining an oil exploration permit. The panel also upheld
the EPA’s exemption of a 500-meter radius surrounding the
Kulluk from “ambient air” quality standards because the
decision was a permissible application of the EPA’s
regulations.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          ALASKA WILDERNESS LEAGUE V. EPA                 3

                       COUNSEL

Colin C. O’Brien (briefed and argued), Earthjustice,
Anchorage, Alaska; Eric P. Jorgensen, Earthjustice, Juneau,
Alaska, for Petitioners.

Ignacia S. Moreno and Angeline Purdy (briefed and argued),
Assistant Attorneys General, United States Department of
Justice, Environment and Natural Resources Division;
Alexander Fidis, Office of Regional Counsel, Region 10,
United States Environmental Protection Agency; David
Coursen, Office of General Counsel, United States
Environmental Protection Agency, for Respondent.

Duane A. Siler, Sarah C. Bordelon, and Tony G. Mendoza,
Crowell & Moring LLP, Washington, D.C.; Kathleen M.
Sullivan (briefed and argued), William B. Adams, and David
S. Mader, Quinn Emanuel Urquhart & Sullivan, LLP, New
York, New York, for Respondent-Intervenor.

Samuel B. Boxerman, Jim Wedeking, and Lisa E. Jones,
Sidley Austin, LLP, Washington D.C.; Mara E. Zimmerman,
American Petroleum Institute, Washington, D.C., for Amicus
Curiae American Petroleum Institute.

Cameron M. Leonard, Senior Assistant Attorney General,
Office of the Attorney General of Alaska, Fairbanks, Alaska,
for Amicus Curiae State of Alaska.
4          ALASKA WILDERNESS LEAGUE V. EPA

                          OPINION

N.R. SMITH, Circuit Judge:

    42 U.S.C. § 7661c(e) is ambiguous as to whether
“increment” requirements are “applicable” to a temporary
source like Shell Offshore, Inc.’s (“Shell”) drill vessel Kulluk.
Accordingly, we defer to the EPA Environmental Appeals
Board’s (“EAB”) reasonable interpretation of § 7661c(e).
See Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837 (1984). The EAB reasonably concluded that
Shell need not analyze the Kulluk’s potential impact on
increment before obtaining an oil exploration permit. We
also deny the petition for review of the Environmental
Protection Agency’s (“EPA”) exemption of a 500-meter
radius surrounding the Kulluk from ambient air quality
standards, because the decision was “a permissible
application of the EPA’s regulations.” See Resisting Envtl.
Destruction on Indigenous Lands, REDOIL v. EPA, 716 F.3d
1155, 1158, 1160–61 (9th Cir. 2013).

        FACTS AND PROCEDURAL HISTORY

A. Statutory and Regulatory Background

    The Clean Air Act (the “Act”) imposes responsibility on
both federal and state regulators to control and improve the
nation’s air quality. Alaska, Dep’t of Envtl. Conservation v.
EPA, 298 F.3d 814, 816 (9th Cir. 2002) (citing 42 U.S.C.
§§ 7401–7671q). “The Act requires states to submit for the
EPA’s approval a state implementation plan [‘SIP’] that
provides for attainment and maintenance of the national
ambient air quality standards (‘NAAQS’) promulgated by the
EPA.” Id. Title V of the Act, 42 U.S.C. §§ 7661–7661f,
           ALASKA WILDERNESS LEAGUE V. EPA                  5

requires certain sources, including sources operating only
temporarily in a given location, to obtain permits to assure
compliance with the Act. See 42 U.S.C. § 7661c.

    In “clean air areas,” the Act imposes additional
preconstruction permitting requirements under the Prevention
of Significant Deterioration program (the “PSD”). Alaska
Dep’t, 298 F.3d at 816 (citing 42 U.S.C. §§ 7470–7492). The
PSD imposes increment standards to maintain air quality in
clean air areas by preventing the total pollution from
exceeding a certain level over an established baseline for the
given region. See Great Basin Mine Watch v. EPA, 401 F.3d
1094, 1096 (9th Cir. 2005). Temporary sources may be
subject to increment standards under 42 U.S.C. § 7661c(e),
which reads, in pertinent part:

       The permitting authority may issue a single
       permit authorizing emissions from similar
       operations at multiple temporary locations.
       No such permit shall be issued unless it
       includes conditions that will assure
       compliance with all the requirements of this
       chapter at all authorized locations, including,
       but not limited to, ambient standards and
       compliance with any applicable increment or
       visibility requirements under part C of
       subchapter I of this chapter.

At issue here is whether there are increment requirements
“applicable” to the Kulluk under § 7661c(e) and the PSD.

   Also relevant to this appeal, the Act requires the EPA to
regulate, through national quality standards, “ambient air,”
“which is the statute’s term for the outdoor air used by the
6          ALASKA WILDERNESS LEAGUE V. EPA

general public.” Train v. Natural Res. Def. Council, Inc.,
421 U.S. 60, 65 (1975). EPA-promulgated regulations define
“ambient air” as “that portion of the atmosphere, external to
buildings, to which the general public has access.” 40 C.F.R.
§ 50.1(e). Interpreting these statutes and regulations, the EPA
has long exempted from the definition of ambient air “the
atmosphere over land owned or controlled by the source and
to which public access is precluded by a fence or other
physical barriers.” Letter from Douglass M. Costle, EPA
Administrator, to Senator Jennings Randolph, Chairman of
the Environment and Public Works Committee (Dec. 19,
1980) (the “Costle Letter”).

B. EPA’s Grant of Shell’s             Permit and       Alaska
   Wilderness’s Challenge

    To comply with Title V, Shell sought and obtained three
related permits in 2011. At Shell’s request, the EPA
subsequently consolidated the permits into one permitting
document (the “Permit”). The Permit allows Shell to
construct, operate, and conduct “pollutant emitting activities”
associated with the Kulluk in the Beaufort Sea off Alaska’s
North Slope. Before issuing the Permit, the EPA released a
Statement of Basis. The Statement of Basis provided that the
EPA would not require Shell to analyze the effect its
emissions would have on the increment for the Kulluk’s area
of operation. During the public comment period on the
Permit, commenters took issue with this decision and the
EPA’s rationale in the Statement of Basis. The EPA’s
Response to Comments, issued contemporaneously with the
Permit, addressed these concerns. The EPA concluded that
increment analysis was unnecessary, because, under
§ 7661c(e) and the other relevant statutes, no increment
requirements were “applicable” to the Kulluk.
           ALASKA WILDERNESS LEAGUE V. EPA                   7

    The Permit and Response to Comments also announced
the EPA’s decision to grant Shell’s requested exemption of
500 meters surrounding the Kulluk from “ambient air”
regulations. The Permit conditioned the exemption on the
establishment of a U.S. Coast Guard “safety zone” and a
“public access control program” to restrict public access to
the waters within 500 meters of the Kulluk.

    Alaska Wilderness raised the increment and ambient air
issues, among others, in its challenge of the Permit before the
EAB.      Alaska Wilderness contended that the EPA
misinterpreted “applicable increment” under § 7661c(e).
Alaska Wilderness argued that EPA’s “source-based”
interpretation erred by applying increment standards to
temporary sources only if the PSD would impose increment
standards on a similar stationary source. Alaska Wilderness
maintained a “geography based” interpretation—that
increment requirements are “applicable” to all sources any
time they are established for the geographic area. Alaska
Wilderness also argued that the “ambient air” exemption was
inconsistent with the Costle Letter, because Shell did not own
and could not, by physical barrier, exclude the public from
accessing the space. In a 100-page decision (the “EAB
Decision”), the EAB rejected both challenges. With respect
to the increment issue, the EAB held:

       Increments . . . are not directly imposed by
       [§ 7661c(e)].       Instead, they must be
       implemented (i.e., applied to a source)
       through either of two means: (1) a state
       implementation plan, per [§ 7471] and
       40 C.F.R. § 51.166(a)(1); or (2) the PSD
       major source permitting program, per
       [§ 7475(a)(3)(A)] and 40 C.F.R. § 52.21.
8          ALASKA WILDERNESS LEAGUE V. EPA

       Thus, while [§ 7661c(e)] can serve as the
       direct source of NAAQS compliance
       requirements and other [Clean Air Act]
       requirements for temporary sources, it only
       imposes PSD increment requirements to the
       extent such requirements are “applicable” to
       the source.

Alaska Wilderness’s timely petition (the “Petition”) for
review of the EAB Decision followed.

                STANDARD OF REVIEW

    As a threshold matter, we reject Alaska Wilderness’s
argument that the EAB Decision is not entitled to Chevron
deference. “[Chevron] generally sets forth the framework by
which we review an agency’s interpretation of a statute.”
Sierra Club v. EPA, 671 F.3d 955, 961 (9th Cir. 2012).
“Chevron deference is appropriate where the agency can
demonstrate that it has the general power to make rules
carrying the force of law and that the challenged action was
taken in exercise of that authority.” Id. at 962 (internal
quotation marks omitted).

    Here, “Congress explicitly granted to the EPA the
authority to promulgate regulations and grant air permits” for
the Kulluk’s operating region. REDOIL, 716 F.3d at 1161.
The EPA exercised its “authority through a formal process
that included . . . public notice and comment . . . and [a]
reasoned EAB decision[ ] upholding the air permits at issue.”
Id. As we have already held in REDOIL, the EAB proceeding
was “a formal adjudication that warrants Chevron deference.”
Id.
           ALASKA WILDERNESS LEAGUE V. EPA                  9

    “Under [Chevron’s two-step] framework at the first step
we determine ‘whether Congress has directly spoken to the
precise question at issue. If the intent of Congress is clear,
that is the end of the matter; for the court as well as the
agency, must give effect to the unambiguously expressed
intent of Congress.’” Sierra Club, 671 F.3d at 961–62
(quoting Chevron, 467 U.S. at 842–43). “‘[I]f the statute is
silent or ambiguous with respect to the specific issue, the
question for the court is whether the agency’s answer is based
on a permissible construction of the statute.” Id. at 962.

                       DISCUSSION

A. Increment

    The parties do not dispute that the Kulluk is a “major
source” under Title V and, thus, subject to that title’s
permitting requirements. Further, the parties agree that our
analysis of § 7661c(e) must focus on the EPA’s interpretation
of “applicable increment . . . requirements.” It is also
undisputed that the Kulluk is not a “major emitting facility”
under the PSD. See 42 U.S.C. § 7479(1). If it were, then the
parties agree that 42 U.S.C. § 7475(a)(3)(A) would require a
preconstruction increment analysis under the EPA’s
interpretation set forth in the EAB Decision.

    Although the Kulluk is not a “major emitting facility,”
Alaska Wilderness argues that § 7661c(e) (and the other
relevant statutes) unambiguously support its position. Alaska
Wilderness argues that § 7661c(e) mandated a
preconstruction increment analysis for the Kulluk, because
increments have been established for the Kulluk’s operating
region. The EPA maintains that § 7661c(e) did not require an
increment analysis for the Kulluk. The EPA argues that
10         ALASKA WILDERNESS LEAGUE V. EPA

whether increment requirements are “applicable” under
§ 7661c(e) (which incorporates the PSD by reference) is a
function not only of geography, but also a function of
whether the PSD would require an increment analysis for the
specific source if it were stationary. Thus, EPA argues, the
Kulluk does not trigger the analysis requirement, which the
PSD imposes only if required by the state SIP or if the source
is a “major emitting facility” under 42 U.S.C. § 7475.

     1. Chevron Step One

    A statute is ambiguous if it is susceptible to more than
one reasonable interpretation. See Ariz. Health Care Cost
Containment Sys. v. McClellan, 508 F.3d 1243, 1253 (9th Cir.
2007); A-Z Int’l v. Phillips, 179 F.3d 1187, 1192 (9th Cir.
1999); see also Putnam Family P’ship v. City of Yucaipa,
673 F.3d 920, 928 (9th Cir. 2012) (“A statute is ambiguous if
Congress has not directly spoken to the precise question at
issue.” (internal quotation marks omitted)). “The plainness
or ambiguity of statutory language is determined by reference
to the language itself, the specific context in which that
language is used, and the broader context of the statute as a
whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
Accordingly, we “begin with the plain language of the
statute.” Ariz. Health, 508 F.3d at 1249.

    Section 7661c(e) is ambiguous in its use of the term
“applicable.” To give content to this term, Section 7661c(e)
expressly incorporates and relies on “Part C of subchapter I
of [Chapter 85].” 42 U.S.C. § 7661c(e). One Part C
provision, 42 U.S.C. § 7473, sets forth increment standards
generally and makes clear that permissible increment levels
are established by geographic area. However, § 7473 does
not specify how increments apply to minor, temporary
             ALASKA WILDERNESS LEAGUE V. EPA                           11

sources like the Kulluk. Section 7473 is also silent as to
preconstruction increment analysis and imposes no
preconstruction requirements on any source. As such, Alaska
Wilderness cannot rely on § 7473 to support its argument that
§ 7661c(e) unambiguously compels a geography-based
reading of the term “applicable.”

     Two other Part C provisions impose increment
requirements based on source rather than geography. First,
42 U.S.C. § 7471 incorporates any increment requirements
set forth in the governing SIP, making clear that they apply to
the sources covered under those state plans. Second,
42 U.S.C. § 7475(a)(3)(A) imposes increment analysis
requirements on “major emitting facilities.” Under these
sections, and Alaska’s SIP, no increment requirement would
apply to a minor PSD source like the Kulluk if it were
stationary. Accordingly, because Part C provisions support
a source-based reading of “applicable,” but allowable
increment levels are determined by geographic area,
§ 7661c(e) is ambiguous.1

    We reject Alaska Wilderness’s argument that the EPA’s
interpretation renders the different permitting provision of


  1
    Section 7661c(e)’s express reliance on Part C demonstrates that we
cannot, as Alaska Wilderness urges, read § 7661c(e) to unambiguously
impose increment requirements over and above those created by Part C.
By contrast, the parties do not dispute that § 7661c(e) imposes substantive
NAAQS requirements on temporary sources. However, this does not
support Alaska Wilderness’s increment argument; it only demonstrates the
section’s ambiguity. The NAAQS that § 7661c(e) references do not
incorporate another provision like Part C to determine which requirements
are “applicable.” Thus, Part C’s failure to clarify the interplay between
geography and source brings ambiguity to § 7661c(e)’s reference to
increment, but has no bearing on the NAAQS.
12           ALASKA WILDERNESS LEAGUE V. EPA

§ 7661c(a) absurd or superfluous by redundantly applying
state SIP requirements. Section 7661c(a), with a broad brush,
states that any permit must include conditions to assure
compliance with the requirements of the chapter, including
SIP requirements. Section 7661c(e) performs a more specific
function—setting forth which requirements apply to
temporary sources. As such, § 7661c(e) does not duplicate
§ 7661c(a), even under the EPA’s reading. In fact, using
Alaska Wilderness’s logic, § 7661c(e)’s incorporation of any
portion of Part C would be redundant, because Part C is
already part of the “chapter” covered by § 7661c(a). Clearly
this is not the case. Thus, § 7661c(a)’s reference to SIPs does
not foreclose the EPA’s interpretation, and Alaska Wilderness
cannot resort to § 7661c(a) to clarify § 7661c(e)’s ambiguity.

      2. Chevron Step Two

    If an agency interprets an ambiguous statute and “fills a
gap or defines a term in a way that is reasonable in light of
the legislature’s revealed design, we give [that] judgment
controlling weight.” Ariz. Health, 508 F.3d at 1249
(alteration in original) (internal quotation marks omitted).
Here, the EPA’s interpretation is consistent with Congress’s
“revealed design” as evidenced by § 7661c(e)’s plain
language.2 In fact, the EPA arguably proffers the more
reasonable reading of § 7661c(e) and Part C, given § 7471’s

  2
    Alaska Wilderness cannot rely on § 7661c(e)’s legislative history to
support its argument that § 7661c(e) unambiguously compels its
geography-based interpretation. Any attempt to invoke § 7661c(e)’s
legislative history is inconsistent with Alaska Wilderness’s claim that the
statute is unambiguous. If the statutory language were truly as clear as
Alaska Wilderness argues, “reference to the legislative history would be
both unnecessary and inappropriate to illuminate unambiguous text.”
REDOIL, 716 F.3d at 1162–63.
           ALASKA WILDERNESS LEAGUE V. EPA                  13

and § 7475(a)(3)(A)’s imposition of increment analysis
requirements by source, and given the absence of any such
requirement imposed by area under § 7473. Thus, we defer
to the EPA’s reasonable interpretation.

B. Ambient Air

    Since briefing was completed in this case, we decided
REDOIL. We then invited the parties to submit supplemental
briefs as to the effect of REDOIL on the ambient air issue in
this case. After briefing, we agree with the parties that
REDOIL directly controls this issue. Thus, as in REDOIL, we
conclude that the EPA’s exemption of a 500-meter radius
surrounding the Kulluk from ambient air quality standards
was “a permissible interpretation of its ambient air regulation
and earlier letter ruling.” REDOIL, 716 F.3d at 1165.

                      CONCLUSION

    Section 7661c(e) is ambiguous, and the EPA’s
interpretation is reasonable under the applicable statutes’
plain language. Thus, we owe Chevron deference to the EAB
Decision not to require a preconstruction increment analysis
for the Kulluk. Similarly, as we held in REDOIL, the EPA
permissibly granted a 500-meter exemption to the Kulluk
from “ambient air” standards.

   PETITION DENIED.
