                                  PUBLISH

                       UNITED STATES COURT OF APPEALS
Filed 11/13/96
                               TENTH CIRCUIT



 SIERRA CLUB; WASATCH CLEAN AIR
 COALITION,

        Petitioners,
                                                        No. 95-9541
 v.

 UNITED STATES ENVIRONMENTAL
 PROTECTION AGENCY,

        Respondent,

 ----------------------

 STATE OF UTAH,

        Intervenor.


                            Appeal from an Order of
               The United States Environmental Protection Agency


Munir R. Meghjee (Robert B. Wiygul, Sierra Club Legal Defense Fund, Denver,
Colorado, and Robert W. Adler, Salt Lake City, Utah, with him on the briefs),
Sierra Club Legal Defense Fund, Denver, Colorado, for Petitioners.

David A. Carson, (Lois J. Schiffer, Assistant Attorney General, Environment &
Natural Resources Division; Kevin W. McLean and Kendra H. Sagoff, Office of
General Counsel, United States Environmental Protection Agency, Washington,
D.C.; Jonah M. Staller, Office of Regional Counsel, United States Environmental
Protection Agency, Denver, Colorado, with him on the brief), United States
Department of Justice, Environment & Natural Resources Division, Denver,
Colorado, for Respondent.
Fred G. Nelson (Jan Graham, Attorney General; Denise Chancellor, Assistant
Attorney General with him on the brief), Assistant Attorney General, Salt Lake
City, Utah, for Intervenor.


Before BRORBY, GODBOLD * and McWILLIAMS, Circuit Judges.


BRORBY, Circuit Judge.



      The Sierra Club and Wasatch Clean Air Coalition ("Petitioners") seek

judicial review of a final agency action in accordance with the Clean Air Act (the

"Act"), 42 U.S.C. § 7607(b)(1) (1994). Specifically, Petitioners challenge the

Environmental Protection Agency's decision to exempt Salt Lake and Davis

Counties, Utah (the "Counties") from selected Clean Air Act "nonattainment area"

requirements without first redesignating the Counties as an "attainment area"

pursuant to 42 U.S.C. § 7407(d)(3)(E)(i)-(v) (1994). Petitioners contend the

Environmental Protection Agency's decision is unreasonable and contrary to the

plain meaning of the Clean Air Act, and therefore must be set aside under both

the first and second steps of Chevron USA, Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984).




      *
         The Honorable John C. Godbold, Senior Circuit Judge for the Eleventh
Circuit, sitting by designation.


                                        -2-
      Having thoroughly reviewed the administrative record and considered the

parties' arguments, we uphold the Environmental Protection Agency's Clean Air

Act interpretation and deny the Petitioners' request to set aside the Environmental

Protection Agency's July 18, 1995 final decision entitled "Determination of

Attainment of Ozone Standard for Salt Lake and Davis Counties, Utah, and

Determination Regarding Applicability of Certain Reasonable Further Progress

and Attainment Demonstration Requirements."



                            NATURE OF THE CASE

      The Clean Air Act, 42 U.S.C. §§ 7401 - 7671q (1994) establishes a

program, jointly administered by the federal government and the states, to

"protect and enhance the quality of the Nation's air resources so as to promote the

public health and welfare and productive capacity of its population." 42 U.S.C.

§ 7401(b)(1). Toward that end, the Act requires the Environmental Protection

Agency to establish primary and secondary National Ambient Air Quality

Standards for certain pollutants such as ozone. 1 Pursuant to the Act, areas failing

to meet the National Ambient Air Quality Standard for ozone are designated as



      1
         The National Ambient Air Quality Standard for ozone is 0.12 ppm not to
be exceeded more than 3 times in a three year period at any one monitoring
station. 40 C.F.R. § 50.9 & App. H (1995).


                                         -3-
"nonattainment" areas, which must develop a State Implementation Plan with

sufficient control measures to attain and maintain the ozone standard. 42 U.S.C.

§ 7410.



      In 1977, Salt Lake and Davis Counties, Utah, failed to meet the National

Ambient Air Quality Standards for ozone. Accordingly, the Counties were

designated as a nonattainment area and submitted a State Implementation Plan to

the Environmental Protection Agency. Amendments to the Clean Air Act in 1990,

which further classified ozone nonattainment areas according to the severity of air

pollution (e.g., marginal, moderate, serious, severe, and extreme), 42 U.S.C.

§ 7511, resulted in the Counties being reclassified as a "moderate nonattainment

area." 40 C.F.R. § 81.345 (1995). Moderate nonattainment areas are subject to

the requirement of 42 U.S.C. §§ 7511a(b)(1)(A)(i) and 7502(c)(9). Section

7511a(b)(1)(A)(i), 2 referred to as the "fifteen percent reasonable further progress


      2
          Section 7511a(b)(1)(A)(i) states in relevant part:

      § 7511a. Plan submissions and requirements
      (b) Moderate Areas
            (1) Plan provisions for reasonable further progress
                   (A) General rule
                          (i) By no later than 3 years after
                   November 15, 1990, the State shall submit a
                   revision to the applicable implementation
                   plan to provide for volatile organic
                   compound emission reductions, within 6

                                          -4-
plan" and the "attainment demonstration" provision, requires moderate

nonattainment areas to continue "reasonable further progress" toward attaining

National Ambient Air Quality Standards. This goal is achieved by requiring the

area to submit a plan providing for a fifteen percent reduction in volatile organic

compounds. Additionally, § 7511a(b)(1)(A)(i) requires the submitted plan

provide for such specific annual emission reductions sufficient to demonstrate the

area will attain the National Ambient Air Quality Standards by the statutory

deadline. Section 7502(c)(9) provides further future compliance assurance by

requiring moderate and other nonattainment areas to submit a plan with specific

"contingency measures" to be implemented if the area fails to attain, or fails to

make reasonable further progress toward attaining, the National Ambient Air

Quality standards by the statutory deadline.



      By the end of summer 1992 the Counties had collected the requisite three



                   years after November 15, 1990, of at least
                   15 percent from the baseline emissions,
                   accounting for any growth in emissions
                   after 1990. Such plan shall provide for
                   such specific annual reductions in emissions
                   of volatile organic compounds and oxides
                   of nitrogen as necessary to attain the
                   national primary ambient air quality
                   standard for ozone by the attainment date
                   ....


                                         -5-
years of ambient monitoring data to demonstrate attainment of the ozone standard.

In fact, the data demonstrates the Counties have attained the ozone standard since

1991. 3 Accordingly, in 1993, the State of Utah submitted an application to the

Environmental Protection Agency requesting that Salt Lake and Davis Counties

be redesignated as an "attainment" area pursuant to 42 U.S.C. § 7407(d)(3). The

Environmental Protection Agency and the State of Utah continue to work toward

the completion of the redesignation process.



      Pending completion of the redesignation process, and based on air quality

data collected from 1992 to 1994, the Environmental Protection Agency issued a

direct final rule and a final rule, 4 which is the basis of Petitioners' challenge. 60

      3
         This improvement largely is attributed to the implementation of state air
quality plans in the 1980's that reduced motor vehicle emissions and applied
reasonably available control technology to the point sources of ozone precursor
pollutants. Ozone is formed through the interaction of volatile organic
compounds, nitrogen oxides, carbon monoxide and sunlight. The sources of these
ozone precursor pollutants include facilities that handle petroleum products,
combustion sources, petroleum fuel powered engines and biogenic sources.

      4
         A direct final rule becomes effective without further administrative
action, unless adverse comments are received within the time limit specified in
the proposed rule. If adverse comments are received, the Environmental
Protection Agency withdraws its direct final rule and issues a final rule that
addresses those comments. In this case, the Environmental Protection Agency
received comments from the Sierra Club and one other commenter. The
Environmental Protection Agency therefore withdrew its direct final rule and,
after considering the comments, issued its final rule.


                                          -6-
Fed. Reg. 30,217 (1995) (proposed rule); 60 Fed. Reg. 30,189 (direct final rule).



      In its final rule, without redesignating the area as an attainment area, the

Environmental Protection Agency determined that because the Counties had

attained the National Ambient Air Quality Standards the "fifteen percent

reasonable further progress plan" and the "attainment demonstration"

requirements of § 7511a(b)(1)(A)(i) and the "contingency measures" requirement

of § 7502(c)(9) were inapplicable. 60 Fed. Reg. at 36, 723. In addition, the State

of Utah would not be subject to Clean Air Act sanctions for failure to submit plan

revisions addressing these requirements. 5 Petitioners challenge this final rule,

asserting that the fifteen percent reasonable further progress plan, attainment

demonstration, and contingency measures requirements are mandatory absent

formal redesignation to attainment area status.



                                    ANALYSIS


      5
         Any state failing to satisfy Clean Air Act requirements is subject to
federal sanctions in the form of stricter requirements for siting new or modified
pollution sources, or a prohibition on the approval of federal highway funds. 42
U.S.C. § 7509. The Environmental Protection Agency is authorized to impose
sanctions eighteen months after finding a state has failed to submit required State
Implementation Plan elements. This eighteen-month "sanctions clock" is turned
off if and when the deficiency is corrected, or when an area is redesignated to
attainment. See 42 U.S.C. §§ 7509(a), 7505a(c).


                                         -7-
      The issue for our determination is whether the Environmental Protection

Agency correctly determined that 42 U.S.C. §§ 7502(c)(9) and 7511a(b)(1)(A)(i),

do not apply to areas which are attaining the ozone standard, but which have not

yet been redesignated as attainment areas. This Court will set aside the

Environmental Protection Agency's determination only if it is arbitrary,

capricious, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A)

(1994). Where, as here, the issue turns on the Environmental Protection Agency's

interpretation of a statute it administers, our analysis is dictated by Chevron USA,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Applying

Chevron, we first determine whether the statute is unambiguous -- i.e., whether

Congress directly has spoken to the precise question at issue. Chevron, 467 U.S.

at 842-43; Marshall v. Chater, 75 F.3d 1421, 1428 (10th Cir. 1996). If

congressional intent is clear, we must give effect to that intent. If, however, the

statute is ambiguous or silent on the issue in question, we must proceed to the

second step of the Chevron analysis and determine whether the agency's

determination is based on a permissible construction of the statute. If the

agency's construction is reasonable, we will defer to the agency's interpretation.

Chevron, 467 U.S. at 842-44; Marshall, 75 F.3d at 1428.



      A.     Plain Language


                                         -8-
      Petitioners first contend the Environmental Protection Agency's final rule

exempting the Counties from the fifteen percent volatile organic compound

reduction, attainment demonstration and contingency measures requirements is

contrary to the plain meaning of the Clean Air Act and must be set aside under the

first step of the Chevron analysis. We disagree.



      Petitioners' plain language argument is circuitous and difficult to

summarize. However, Petitioners appear to build from the premise that each of

the provisions at issue must be read individually and literally to give full effect to

any mandatory language included in those provisions. It is true a literal reading

of the first sentence of 42 U.S.C. § 7511a(b)(1)(A)(i), in isolation, does mandate

that a state with a moderate nonattainment area "shall submit a revision to the

applicable implementation plan to provide for volatile organic compound

emission reductions ... of at least 15 percent from baseline emissions." That

provision goes on, however, to state that "[s]uch plan shall provide for such

specific annual reductions in emissions of volatile organic compounds and oxides

of nitrogen as necessary to attain the national primary ambient air quality

standard for ozone." Id. (emphasis added). Moreover, the provision is captioned

"Plan provisions for reasonable further progress." The phrase "reasonable further

progress" is defined as "such annual incremental reductions in emissions of the


                                          -9-
relevant air pollutant as are required by this part or may reasonably be required by

the Administrator for the purpose of ensuring attainment of the applicable

national ambient air quality standard." 6 42 U.S.C. § 7501(1) (emphasis added).

The plain language of 42 U.S.C. § 7502(c)(9) similarly refers to contingency

measures to be taken if an area "fails to make reasonable further progress, or to

attain the national primary ambient air quality standard." When read as a whole

to properly understand the statutory context, see Urban v. King, 43 F.3d 523, 526

(10th Cir. 1994), these two provisions fail to clearly require areas that have

attained the ozone standard but have not yet been redesignated to attainment

status to make further emission reductions. The language instead suggests

Congress intended the fifteen percent volatile organic compound reduction

requirement and the contingency measures requirement to apply only when

necessary to attain the relevant ozone standard.



      At best, Petitioners' complex plain language argument establishes that some

ambiguity may exist as to Congress' intent . We therefore move on to consider

whether the Environmental Protection Agency's construction of the two provisions

at issue is a permissible one.


      6
       This definition applies for "the purposes of ... part" D of Title I of the
Clean Air Act, which includes 42 U.S.C. § 7511a(b)(1)(A)(i). Id.


                                        -10-
      B.     The Environmental Protection Agency's Interpretation

      Petitioners contend that even if the Environmental Protection Agency's

statutory interpretation does not violate the plain statutory language, the agency's

interpretation is unreasonable as it creates internal inconsistencies in the

Environmental Protection Agency's application of the Act and circumvents the

Clean Air Act 's preventive approach. The Environmental Protection Agency's

rationale for its determination is set forth fully in the final rule being challenged,

60 Fed. Reg. 36,723 (1995), and in the May 10, 1995 memorandum from John

Seitz, Director, Office of Air Quality Planning and Standards to the various

regional air quality directors. In essence, the Environmental Protection Agency

reasons that the purpose of the fifrteen percent volatile organic compound

reduction requirement, the attainment demonstration requirement and the

contingency measures requirement is to ensure reasonable further progress toward

and timely attainment of the National Ambient Air Quality Standard for ozone. If

an area can demonstrate via three years of monitoring data that it has in fact

attained the ozone standard, the purpose of those requirements has been fulfilled

and plan provisions outlining additional measures to achieve attainment would

have little meaning. Moreover, air quality controls designed to surpass the

applicable ozone standard would be both costly and unnecessary.




                                          -11-
             1.    Programmatic Consistency.

      Petitioners argue it is inconsistent for the Environmental Protection Agency

to apply some ozone nonattainment area requirements (e.g., the application of

reasonable available control technology to stationary sources and the

implementation of a motor vehicle inspection and maintenance plan), but not

others (e.g., the fifteen percent volatile organic compound reduction and

contingency measures). Instead, they would have the Environmental Protection

Agency rigidly apply all ozone nonattainment area requirements unless and until

an area is formally redesignated to attainment status. Petitioners contend there is

no basis for distinguishing the provisions since each requirement "has the same

substantive effect -- to reduce emissions of pollutants so that the [National

Ambient Air Quality Standard] is attained both now and in the future."



      The Environmental Protection Agency consistently has rejected this all or

nothing approach. Shortly after the Clean Air Act Amendments of 1990, the

Environmental Protection Agency published a General Preamble for the

Implementation of Title I of the Clean Air Act Amendments of 1990. 57 Fed.

Reg. 13,498 (1992). In that preamble, the Environmental Protection Agency

determined certain general nonattainment plan requirements do not apply in

evaluating a request for redesignation to attainment under circumstances where


                                         -12-
(1) an area has in fact monitored attainment of the standard, and (2) those

requirements are expressly linked by statutory language with the notion of

reasonable further progress. See 57 Fed. Reg. at 13,564. The Environmental

Protection Agency reasoned that when an area requests redesignation to

attainment status,

      at a minimum, the air quality data for the area must show that the
      area has already attained [the National Ambient Air Quality
      Standards]. Showing that the State will make [reasonable further
      progress] towards attainment will, therefore, have no meaning at that
      point.

57 Fed. Reg. at 13,564. In other words, once the standards are obtained,

requirements related to the demonstration of reasonable further progress toward

attainment serve no purpose. Any additional or future air quality protection is left

to the operation of other Clean Air Act provisions.



      The determination to exempt Salt Lake and Davis Counties from analogous

ozone-specific nonattainment plan requirements is a logical extension of the

Environmental Protection Agency's original, general interpretation of the 1990

Clean Air Act Amendments. We afford deference to the Agency's interpretation

under these circumstances. New Mexico Envtl. Improvement Div. v. Thomas, 789

F.2d 825, 831-32 (10th Cir. 1986) (the court will defer to an agency's statutory

interpretation when such an interpretation is contemporaneous with the


                                        -13-
legislation's enactment and has been consistently adhered to by the agency over

time).



         Consistent with its interpretation of the general reasonable further progress

provisions, the Environmental Protection Agency exempted the Counties from the

§§ 7511a(b)(1)(A)(i) and 7502(c)(9) requirements because the statutory language

imposing those requirements is directly linked to the notion of reasonable further

progress toward attainment. Here again, the stated purpose of "reasonable further

progress" is to ensure attainment by the applicable attainment date. If a moderate

ozone nonattainment area has in fact already attained the ozone standard, it would

make little sense to require a state to demonstrate the area will make reasonable

progress toward attainment.



         Not all ozone nonattainment area provisions are semantically connected to

reasonable further progress requirements. For obvious reasons, the application of

those provisions (i.e., the application of reasonable available control technology

to stationary sources and the implementation of a motor vehicle inspection and

maintenance plan, 42 U.S.C. §§ 7511a(b)(2), 7511a(b)(4)) continues to fulfill

important Clean Air Act objectives whether or not an area has attained the ozone

standard. Accordingly, the Environmental Protection Agency affords no relief


                                           -14-
from those requirements based on actual attainment.



      We do not find the Environmental Protection Agency's interpretation to

create programmatic inconsistency. Nor do we find anything in the structure or

language of the nonattainment area provisions at issue that contradicts the

Environmental Protection Agency's longstanding interpretation. In sum, the

Petitioners' uncompromising reading of the ozone nonattainment area

requirements lacks the textual support necessary to overcome the Environmental

Protection Agency's pragmatic construction.



             2.    The Redesignation Process.

      Petitioners assert that the redesignation process outlined at 42 U.S.C.

§ 7407d(3)(E) represents the exclusive means by which an area may be

redesignated from nonattainment to attainment status. Thus, Petitioners argue,

the Environmental Protection Agency is not authorized to make any factual

determination of attainment outside the formal redesignation process.



      The Environmental Protection Agency may redesignate an area from

nonattainment to attainment in accordance with the provisions of 42 U.S.C.

§ 7407(d)(3)(E). Notably, this process involves more than a simple determination


                                        -15-
the area has attained the relevant National Ambient Air Quality Standards. In

addition to that factual determination, the Environmental Protection Agency must

(1) fully approve the State Implementation Plan; (2) determine that the

improvement in air quality is due to permanent and enforceable reductions in

emissions resulting from implementation of the State Implementation Plan and

other required reductions; (3) fully approve a maintenance plan under 42 U.S.C.

§ 7505a; and (4) determine that the State has met all applicable requirements

under 42 U.S.C. § 7410 with respect to State Implementation Plans generally, and

under part D with respect to State Implementation Plan provisions for

nonattainment areas. 42 U.S.C. § 7407(d)(3)(E). Before an area may be

redesignated to attainment, the State also must adopt and submit maintenance

plans that (1) provide for maintenance of the National Ambient Air Quality

Standards for at least ten years after redesignation, and (2) include additional

measures as necessary to ensure the area remains in attainment. 42 U.S.C.

§ 7505a. The State further is required to revise its maintenance plan eight years

after redesignation to cover a second ten-year period after the first ten-year

maintenance plan expires. 7 42 U.S.C. § 7505a(b).


      7
         Accordingly, the Environmental Protection Agency intends that the
maintenance plans will ensure that population growth and other changes in a
redesignated area over a twenty-year period do not lead to a violation of the
relevant National Ambient Air Quality Standards.


                                         -16-
      The Environmental Protection Agency has made it abundantly clear its

determination to exempt the Counties from certain reasonable further progress

and attainment demonstration requirements is not a de facto redesignation to

attainment status. 60 Fed. Reg. at 36,723. As discussed above, the redesignation

process involves more than a factual determination that monitoring data

establishes attainment with the applicable standard. All redesignation criteria at

42 U.S.C. § 7407(d)(3)(E) remain in full force and effect and must be satisfied

before the Environmental Protection Agency will approve the Counties' pending

redesignation request. Moreover, if the Counties violate the ozone National

Ambient Air Quality Standards prior to their redesignation to attainment status,

the exemption from certain attainment demonstration and reasonable further

progress requirements will no longer apply, and the Counties will have to submit

plan revisions pursuant to 42 U.S.C. §§ 7502(c)(9) and 7511a(b)(1)(A)(i). In

addition, if the Counties violate the ozone standards prior to redesignation, they

would be "bumped-up" from moderate nonattainment status to serious

nonattainment status pursuant to 42 U.S.C. § 7511(b)(2), and would then have to

satisfy the more stringent requirements imposed on serious ozone nonattainment

areas. See 42 U.S.C. § 7511a(c)(2)(b). Under these circumstances, the

Petitioners' argument that the Environmental Protection Agency is somehow

circumventing the formal redesignation process is unavailing. The Environmental


                                         -17-
Protection Agency has convincingly demonstrated it is not circumventing the

redesignation process and the State of Utah is not without incentive to complete

this process.



                3.   Statutory Purpose.

      Finally, Petitioners argue the Environmental Protection Agency's Clean Air

Act interpretation is unreasonable as it fails to satisfy the Clean Air Act's purpose

to protect public health. In this context, the Petitioners emphasize their concern

that the Environmental Protection Agency is failing to ensure the Counties will

continue to attain the applicable ozone standards in the future by creating a

"limbo" between attainment and nonattainment status "that deprives citizens of

the contingent protections against future declines in air quality."



      We remain unpersuaded by this argument. As discussed above, the

provisions at issue are directly linked to reasonable further progress toward

attainment of the ozone National Ambient Air Quality Standards, not beyond. To

date, the Utah State Implementation Plan's existing air quality control measures

and other applicable federal requirements (e.g., the motor vehicle control

program) have resulted in enforceable emission reductions within the Counties --

reductions which in turn have resulted in attainment of the ozone standard for


                                          -18-
over five years. Should those existing control measures and requirements prove

inadequate to prevent future violations, the Environmental Protection Agency will

require the Counties to implement additional control measures within a reasonable

time. Recall that the Environmental Protection Agency's determination to exempt

the Counties from limited ozone nonattainment area requirements is really no

more than a suspension of those requirements for so long as the area continues to

attain the standard or until the area is formally redesignated to attainment status.



      The Environmental Protection Agency summarized the flaw in Petitioners'

argument best:

      The [Counties have] attained the primary ozone standard, a standard
      designed to protect public health with an adequate margin of safety
      (see section 109(b)(1)). [The Environmental Protection Agency 's]
      action does not relax any of the requirements that have led to the
      attainment of the standard. Rather, its action has the effect of
      suspending requirements, for additional pollution reductions, above
      and beyond those that have resulted in the attainment of the health-
      based standard.

60 Fed. Reg. at 36,727. Under these circumstances, Petitioners' presumption that

the Counties will violate ozone standards in the future and that "Utahns will be

required to breathe for a protracted period unhealthy air while Utah develops

controls that should have been in place earlier" seems disingenuous.



                                  CONCLUSION

                                         -19-
      We conclude the Environmental Protection Agency has reasonably

interpreted and applied the Clean Air Act to preserve the Act's objective of

achieving the health-based ozone standard while at the same time avoiding the

imposition of costly emission control requirements that are unnecessary to meet

that objective. Accordingly, we uphold the Environmental Protection Agency's

"Determination of Attainment of Ozone Standard for Salt Lake and Davis

Counties, Utah, and Determination Regarding Applicability of Certain Reasonable

Further Progress and Attainment Demonstration Requirements" and deny the

Petition for Review.




                                        -20-
