                             NOT FOR PUBLICATION

                   UNITED STATES COURT OF APPEALS                             FILED
                             FOR THE NINTH CIRCUIT                            MAR 16 2015

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

COMMUNITIES FOR A BETTER                         No. 13-70167
ENVIRONMENT; CALIFORNIA
COMMUNITIES AGAINST TOXICS,

              Petitioners,                       MEMORANDUM*

  v.

UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY; JARED
BLUMENFELD; GINA MCCARTHY,
Administrator, U.S. Environmental
Protection Agency,

              Respondents,

THE SOUTH COAST AIR QUALITY
MANAGEMENT DISTRICT; CPV
SENTINEL, LLC,

             Respondents - Intervenors.


                    On Petition for Review of an Order of the
                  United States Environmental Protection Agency

                     Argued and Submitted October 22, 2014
                              Pasadena, California


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                                              page 2
Before:       THOMAS, Chief Judge, KOZINSKI and GOULD, Circuit Judges.


      1. EPA reasonably determined that the District was not obligated to track

the credits transferred to the Sentinel project using Rule 1315 of Regulation XIII.

Rule 1315 is merely one way in which the District chooses to demonstrate

compliance with the Clean Air Act’s requirements that emission credits be

quantifiable and surplus. See 42 U.S.C. § 7503(c); 40 C.F.R.

§ 51.165(a)(3)(ii)(C)(1)(I). The District is free to use another method of showing

compliance with those requirements if that other method is written into an

amended State Implementation Plan (SIP), as was the case here. See Natural Res.

Def. Council, Inc. v. S. Coast Air Quality Mgmt. Dist., 651 F.3d 1066, 1073 (9th

Cir. 2011).


      2. EPA was neither arbitrary nor capricious in determining that the credits

transferred to Sentinel were quantifiable and surplus.

      First, contrary to petitioners’ assertion, EPA did not extrapolate emission

savings from shut down sources based on the emission limits those sources were

permitted to have, but instead relied on the amount they were actually emitting.

Nor was it arbitrary or capricious for EPA to accept credits from sources for which
                                                                                page 3
only one year of data was available. EPA’s conservative estimates provided an

adequate margin of error to ensure statutory requirements were met.

      Second, in determining whether the transferred credits were surplus, EPA

reasonably applied only the discounting effects of those regulations enacted

between the time of a source’s shutdown and the time of transfer, rather than

discounting by all the regulations that came into effect from the time of the

source’s initial permitting. Regulations that came into effect between the time of

permitting and the time of shutdown were already factored into each source’s

emission output at the time of shutdown, because a source is assumed to be in

compliance with applicable regulations when it closes. Requirements that

wouldn’t have affected a source had it not shut down do not need to be discounted.

See 42 U.S.C. § 7503(c)(2).

      Finally, it was reasonable for EPA to assess the surplusage and

quantifiability of only those credits actually used on the Sentinel project. There is

no mechanism in the SIP for credits to be transferred from the AB1318 Tracking

System to a project other than Sentinel. Hence, even if any excess credits were not

technically “retired,” they cannot be used to warrant new emissions until the SIP is

amended to allow for that possibility. EPA need not validate those excess credits

until such a transfer is contemplated.
                   page 4
PETITION DENIED.
