                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


NATURAL RESOURCES DEFENSE                No. 13-70544
COUNCIL and COMMUNITIES FOR A
BETTER ENVIRONMENT,
                    Petitioners,
                                          OPINION
                v.

U.S. ENVIRONMENTAL PROTECTION
AGENCY; LISA P. JACKSON,
Administrator, U.S. Environmental
Protection Agency; JARED
BLUMENFELD, Regional
Administrator, Region IX, U.S.
Environmental Protection Agency,
                       Respondents,

NATIONAL ENVIRONMENTAL
DEVELOPMENT ASSOCIATION’S
CLEAN AIR PROJECT; SOUTH COAST
AIR QUALITY MANAGEMENT
DISTRICT; SAN JOAQUIN VALLEY
UNIFIED AIR POLLUTION CONTROL
DISTRICT,
           Respondents-Intervenors.


       On Petition for Review of an Order of the
          Environmental Protection Agency
2                          NRDC V. EPA

                   Argued and Submitted
        February 12, 2015—San Francisco, California

                       Filed March 11, 2015

Before: Mary M. Schroeder, Senior Circuit Judge, Barry G.
 Silverman, Circuit Judge, and Marvin J. Garbis, Senior
                     District Judge.*

                   Opinion by Judge Silverman


                           SUMMARY**


                       Environmental Law

    The panel denied a petition for review of an order of the
United States Environmental Protection Agency approving
the South Coast Air Quality Management District’s Rule 317
as a revision to California’s State Implementation Plan for the
Clean Air Act.

    The EPA approved the rule pursuant to § 172(e) of the
Clean Air Act after finding that the pollution controls it
imposed were “not less stringent than” § 185 of the Clean Air
Act, which requires that major stationary sources of pollution
in severely polluted areas pay fees for their emissions.


    *
   The Honorable Marvin J. Garbis, Senior District Judge for the U.S.
District Court for the District of Maryland, sitting by designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                        NRDC V. EPA                           3

    Applying Chevron, U.S.A., Inc. v. Natural Resources
Defense Council, 467 U.S. 837 (1984), deference, the panel
held that the EPA reasonably found that § 172(e) contained
an ambiguous gap. The panel also held that the EPA’s
interpretation of that ambiguity was reasonable – i.e., that the
Clean Air Act’s anti-backsliding provisions, allowing for not
less stringent alternative controls, applied when air quality
standards have been strengthened as well as when they have
been relaxed.


                         COUNSEL

Paul Cort (argued) and Adriano Martinez, Earthjustice, San
Francisco, California, for Petitioners.

Heather Gange (argued) and Sam Hirsch, Acting Assistant
Attorney General, United States Environmental Protection
Agency, Environmental Defense Section, Environment &
Natural Resources Division; Kara Christenson and David
Coursen, United States Equal Protection Agency, Office of
General Counsel, Washington, D.C., for Respondents.

Kurt Weise, General Counsel, Barbara Baird (argued), Chief
Deputy Counsel, William Wong, Principal Deputy Counsel,
and Megan Lorenz Angarita, Senior Deputy Counsel, South
Coast Air Quality Management District, Diamond Bar,
California, for Respondent-Intervenor South Coast Air
Quality Management District.

Annette Ballatore-Williamson (argued), District Counsel, and
Jessica Hafer Fierro, Assistant District Counsel, San Joaquin
Valley Unified Air Pollution Control District, Fresno,
4                      NRDC V. EPA

California, for Respondent-Intervenor San Joaquin Valley
Unified Air Pollution Control District.

Leslie Sue Ritts, Ritts Law Group, PLLC, Alexandria,
Virginia, for Respondent-Intervenor National Environmental
Development Association’s Clean Air Project.

Curtis L. Coleman, Law Offices of Curtis L. Coleman, Los
Angeles, California, for Amicus Curiae Southern California
Alliance of Publicly Owned Treatment Works.

Robert Wyman, Jr. and John Heintz, Latham & Watkins LLP,
Los Angeles, California, for Amici Curiae Los Angeles
Chamber of Commerce, Los Angeles County Business
Federation, California Council for Environmental and
Economic Balance, the California Small Business Alliance,
and Regulatory Flexibility Group.


                         OPINION

SILVERMAN, Circuit Judge:

    Petitioners Natural Resources Defense Council and
Communities for a Better Environment petition for review of
the United States Environmental Protection Agency’s
approval of the South Coast Air Quality Management
District’s Rule 317 as a revision to California’s State
Implementation Plan for the Clean Air Act. EPA approved
the rule pursuant to § 172(e) of the CAA after finding that the
pollution controls it imposes are “not less stringent than”
§ 185 of the CAA, which requires that major stationary
sources of pollution in severely polluted areas pay fees for
their emissions.
                       NRDC V. EPA                           5

    Everyone agrees that § 172(e) of the CAA (the so-called
“anti-backsliding” provision) allows EPA to approve alternate
pollution controls that are “not less stringent than the
controls” already in effect when a national primary ambient
air quality standard is relaxed. But what is EPA’s authority
when the standard is tightened? May EPA approve “not less
stringent” standards then, too? Section 172(e) doesn’t say
one way or the other.

    Petitioners do not argue that Rule 317 is weaker than the
controls that existed before. (The controls in Rule 317 are, in
fact, more stringent.) Rather, petitioners’ argument is
statutory, not factual. They argue that EPA lacked the
statutory authority to approve any alternative rule (even one
imposing more stringent controls) because, they assert,
§ 172(e) unambiguously applies only when air quality
standards are relaxed, not when they are tightened.

    Applying the deference called for by Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, 467 U.S. 837
(1984), we hold today that EPA reasonably found that
§ 172(e) contains an ambiguous gap. We also hold that
EPA’s interpretation of that ambiguity was reasonable – i.e.,
that the CAA’s anti-backsliding provision, allowing for not
less stringent alternative controls, applies when air quality
standards have been strengthened as well as when they have
been relaxed. We deny the petition for review.

I. Background

   A. Clean Air Act Background

   The Clean Air Act requires that EPA establish primary
and secondary national ambient air quality standards
6                               NRDC V. EPA

(“NAAQS”) for pollutants, including ozone, determining
what levels of these may safely be in the air. CAA
§§ 108–109, 42 U.S.C. §§ 7408–7409. Areas where the air
quality meets or exceeds the NAAQS (i.e., where pollutant
levels are low) have attained the NAAQS, and so are known
as “attainment areas,” while areas with pollutant levels
greater than prescribed in the NAAQS are “nonattainment
areas.” CAA § 107, 42 U.S.C. § 7407. States with
nonattainment areas must work to reach attainment by
developing State Implementation Plans (“SIPs”) that plot out
the path to better air; EPA in turn must ensure that each SIP
complies with the CAA. CAA § 110, 42 U.S.C. § 7410.

    When the CAA was amended in 1990, areas designated
as “severe” or “extreme” nonattainment areas under the
NAAQS that was then in place became subject to “penalties
to provide incentives for major polluters to reduce VOC
[volatile organic compound] emissions.” S. Coast Air Quality
Mgmt. Dist. v. EPA, 472 F.3d 882, 888 (D.C. Cir. 2006)
(“South Coast”). Section 185, the CAA provision that
effectuates these penalties, sets forth the general rule that
each “major stationary source” located in a severe or extreme
nonattainment area must pay this penalty, and also prescribes
specifically how penalties must be calculated and collected.
42 U.S.C. § 7511d.1


    1
        42 U.S.C. § 7511d reads in full:

             (a) General rule

             Each implementation plan revision required under
             section 7511a(d) and (e) of this title (relating to the
             attainment plan for Severe and Extreme ozone
             nonattainment areas) shall provide that, if the area to
             which such plan revision applies has failed to attain the
                         NRDC V. EPA                              7

    For years, EPA set the NAAQS using a one-hour average
measurement standard. See Revisions to the National
Ambient Air Quality Standards for Photochemical Oxidants,
44 Fed. Reg. 8,202 (Feb. 8, 1979) (codifying one-hour
standard). In 1997, after much review, EPA determined that
it would start using a standard in which the NAAQS was set
by an average over eight hours. NAAQS for Ozone, 62 Fed.
Reg. 38,856 (July 18, 1997). The previous one-hour
NAAQS, translated arithmetically to the new eight-hour
NAAQS, would have been 0.09 parts per million (ppm), but
under the eight-hour standard going forward, the NAAQS
would allow only 0.08 ppm of ozone in the air. “The new
standard thus both changed the measuring scheme” – going
from a one-hour average to eight hours – “and was marginally
more stringent.” South Coast, 472 F.3d at 888. Originally,
EPA planned to just phase out the one-hour standard, but it
subsequently revoked that standard entirely.

    The 1990 revisions of the CAA relied on the one-hour
NAAQS in setting certain classifications, but the amendments
did “contemplate[] that EPA could change the NAAQS based
upon its review of ‘the latest scientific knowledge useful in
indicating the kind and extent of all identifiable effects on


       national primary ambient air quality standard for ozone
       by the applicable attainment date, each major stationary
       source of VOCs located in the area shall, except as
       otherwise provided under subsection (c) of this section,
       pay a fee to the State as a penalty for such failure,
       computed in accordance with subsection (b) of this
       section, for each calendar year beginning after the
       attainment date, until the area is redesignated as an
       attainment area for ozone. Each such plan revision
       should include procedures for assessment and
       collection of such fees.
8                      NRDC V. EPA

public health’ that the pollutant may cause.” Id., quoting
CAA §§ 108(a), 109(d), 42 U.S.C. §§ 7408(a), 7409(d). In
particular, § 172(e) of the CAA guards against backsliding in
air quality in the wake of changes to the NAAQS. Section
172(e) provides:

       (e) Future modification of standard

       If the Administrator relaxes a national
       primary ambient air quality standard after
       November 15, 1990, the Administrator shall,
       within 12 months after the relaxation,
       promulgate requirements applicable to all
       areas which have not attained that standard as
       of the date of such relaxation. Such
       requirements shall provide for controls which
       are not less stringent than the controls
       applicable to areas designated nonattainment
       before such relaxation.

CAA § 172(e), 42 U.S.C. § 7502(e) (emphasis added). Thus,
even if the NAAQS is “relaxed,” which would reflect a view
that more pollutants can be in the air than previously thought,
states are still not allowed to loosen their air pollution
controls.

    B. Previous Decisions Addressing the Impact of the
       Revised NAAQS

    Soon after EPA announced that it would adopt the more
stringent eight-hour NAAQS, various parties challenged
EPA’s plan for implementing it. First, in Whitman v.
American Trucking Assn’s, the Supreme Court ruled that EPA
could not implement the eight-hour standard under the pre-
                       NRDC V. EPA                           9

1990 sections of the CAA alone, because to do so amounted
to a rejection of the amendments’ detailed scheme and
limitations on EPA’s and states’ discretion in administering
the CAA. 531 U.S. 457 (2001). In light of this conclusion,
EPA promulgated a new rule that fully revoked the one-hour
NAAQS, created a classification table for air quality regions
based on the new settings, and made only regions that were
classified as “nonattainment” under both the old and new
NAAQS subject to the 1990 amendments’ strictures. See
Final Rule To Implement the 8-Hour Ozone National
Ambient Air Quality Standard – Phase 1, 69 Fed. Reg. 23,951
(Apr. 30, 2004) (codified at 40 C.F.R. parts 50, 51, 81)
(“2004 Rule”). EPA also interpreted § 172(e)’s anti-
backsliding rule to apply, even though the NAAQS was
strengthened instead of relaxed, so that any areas that were
classified as “severe” or “extreme” nonattainment areas under
the one-hour NAAQS, would remain subject to certain
controls, even though the NAAQS mandating those controls
(the one-hour standard) was revoked. Id. at 23,972.
However, EPA interpreted “controls” to exclude many of the
controls mandated by the 1990 amendments, including
§ 185’s fee for major stationary sources. Id. at 23,984.

     This approach, too, was challenged, resulting in the South
Coast case. In that case, as relevant here, the D.C. Circuit
upheld the revocation of the one-hour NAAQS as long as
adequate anti-backsliding controls relating to the old standard
were kept, but ruled that EPA’s definition of “controls” to
exclude § 185 was an abuse of discretion. South Coast,
472 F.3d at 899–900. The D.C. Circuit explained that the
anti-backsliding requirements for regions designated
nonattainment under the one-hour NAAQS was all that was
left of that NAAQS, and those requirements must be kept in
order to effectuate the EPA’s purpose of continuous
10                     NRDC V. EPA

improvement of air quality with no retreat. See id. at 900.
Therefore, EPA could not define “controls” to exclude § 185.
Id. at 902–903. But in agreeing that §172(e)’s anti-
backsliding principle must be respected, the D.C. Circuit
agreed with EPA that § 172(e) applied as EPA had
determined, even though the new NAAQS was stricter, rather
than relaxed as provided for in the statute’s text. Id. at 900.
Thus § 172(e) applied when standards were strengthened as
well as when they were relaxed.

    After this approval of its application of § 172(e) in the
context of a stronger NAAQS, EPA issued a guidance
document providing an overview of controls that could be
implemented in lieu of § 185 if they were“not less stringent,”
as required by § 172(e). The D.C. Circuit vacated the
guidance document on the basis that it should have been
issued via notice and comment procedures. Natural Res. Def.
Council v. EPA, 643 F.3d 311, 321 (D.C. Cir. 2011) (“NRDC
I”). The court also disagreed with EPA’s view “that § 172(e)
expressly authorizes alternatives in this specific context,”
since the statute does not provide for the context of the
NAAQS being strengthened, and while noting that “neither
the statute nor our case law obviously precludes” EPA from
approving alternatives to § 185, the court rejected one
proposed alternative as being “a clear violation” of the CAA.
Id. at 319, 321–22. But the court reaffirmed South Coast’s
holding that while § 172(e) does not expressly apply when the
NAAQS has been strengthened, EPA could permissibly
interpret it to apply here. Id. at 319. The D.C. Circuit
declined to rule on whether alternatives to § 185 might be
acceptable if EPA found them to be “not less stringent,”
leaving that determination instead for a court that was
presented with a specific alternative approved by EPA. The
rule challenged here – EPA’s approval of Rule 317 into
                         NRDC V. EPA                            11

California’s SIP – is such an alternative, which EPA has
approved as being “not less stringent than” § 185.

    C. The South Coast Region and Rule 317

        1. Background of Rule 317

    The South Coast Air Quality Management District
(“SCAQMD”) has responsibility for air quality in the parts of
California’s Los Angeles, Orange, Riverside, and San
Bernardino Counties that lie within the South Coast Air
Basin. Cal. Health & Safety Code § 40410; Cal. Admin.
Code § 60104 (describing the ambit of the South Coast Air
Basin). According to rankings by the American Lung
Association, this region is “the most ozone-polluted area in
the country.” State of the Air 2014, at 15 (2014).2 As a result,
parts of SCAQMD have been designated “severe” or
“extreme” nonattainment areas ever since the 1990 CAA
amendments first categorized air quality regions. See
Designation of Areas for Air Quality Planning Purposes,
56 Fed. Reg. 56,694, 56,722 (Nov. 6, 1991).

    SCAQMD adopted Rule 317, “Clean Air Act Non-
Attainment Fee,” on February 4, 2011. Rule 317 is intended
to provide alternative “not less stringent” controls to what is
required in § 185’s anti-backsliding measures, as discussed
above. Under Rule 317, SCAQMD must (1) calculate the
fees that would have been assessed under § 185; (2) conduct
an annual equivalency demonstration to prove that Rule 317
is generating at least the same amount of funds into the
equivalency account as § 185 fees would have done;

  2
    Available at http://www.stateoftheair.org/2014/assets/ALA-SOTA-
2014-Full.pdf
12                     NRDC V. EPA

(3) collect additional fees if there is any shortfall in the
equivalency account. Rule 317 does not assess fees on
“major stationary sources,” unlike § 185. Rather, the rule
collects fees from “qualified programs” that are “surplus to
the [SIP for the one-hour NAAQS]” and are “designed to
result in direct VOC or NOx reductions” or future reductions.
These programs are generally aimed at reducing emissions
from mobile sources, which account for over 80% of the
emissions polluting the South Coast’s air. SCAQMD Final
Staff Report, Proposed Amended Rule 317 - Clean Air Act
Non-Attainment Fees, at 1. The fees collected by Rule 317
are also required to be used to improve air quality, a
requirement that § 185 lacks, and that is among the reasons
Respondents say Rule 317 will be even more effective in
achieving the Clean Air Act’s aim of reducing pollution than
would be a regular § 185 program of fees on major stationary
sources.

       2. EPA’s Approval of Rule 317

    EPA published a proposal to approve the rule as part of
California’s SIP on January 12, 2012. Revisions to the
California State Implementation Plan, South Coast Air
Quality Management District, 77 Fed. Reg. 1895. After
notice and comment, on December 14, 2012, EPA issued a
final rule approving Rule 317’s incorporation into
California’s SIP.      Revisions to the California State
Implementation Plan, South Coast Air Quality Management
District, 77 Fed. Reg. 74,372.

    In the final rule, EPA responded to several comments
from Earthjustice, the law firm representing Petitioners. In
particular, Earthjustice objected “that nothing in the plain
language of the [CAA], the ‘principles’ behind that language,
                       NRDC V. EPA                        13

or [South Coast] gives EPA the power to rewrite the terms of
section 185” or approve any alternatives to that control, and
that § 172(e) is inapplicable because EPA had strengthened,
not relaxed, the NAAQS. Id. at 74,375. EPA explained in
response that § 185 was no longer directly applicable, since
the one-hour NAAQS had been revoked, but that EPA was
implementing § 185 and other controls via application of the
principles of § 172(e) in order to prevent backsliding, even
though § 172(e) did not directly apply to the context of a
strengthened, rather than relaxed, NAAQS. EPA’s final rule
clearly articulated its reasoning:

       EPA’s 8-hour ozone standard is recognized as
       a strengthening of the NAAQS, rather than a
       relaxation; however, EPA is applying the
       “principles” of section 172(e) to prevent
       backsliding of air quality in the transition
       from regulation of ozone pollution using a
       1-hour metric to an 8-hour metric. Our
       application of the principles of section 172(e)
       in this context was upheld by the D.C. Circuit
       in the South Coast decision: “EPA retains the
       authority to revoke the one-hour standard so
       long as adequate anti-backsliding provisions
       are introduced.” South Coast, 472 F.3d at
       899. Further, the court stated, that in light of
       the revocation, “[t]he only remaining
       requirements as to the one-hour NAAQS are
       the anti-backsliding limitations.” Id.

       . . . [S]ection 172(e) requires State
       Implementation Plans to contain “controls”
       that are “not less stringent” than the controls
       that applied to the area before the NAAQS
14                    NRDC V. EPA

       revision. EPA’s 2004 Rule defined the term
       “controls” in section 172(e) to exclude section
       185. See 2004 Rule. The D.C. Circuit ruled
       that EPA’s exclusion of section 185 from the
       list of “controls” for Severe and Extreme
       non-attainment areas was improper [but did
       not] address the specific issue of whether the
       principles of section 172(e) required section
       185 itself or any other controls not less
       stringent, and section 172(e) clearly on its
       face allows such equivalent programs.
       Further, the court in [NRDC I] specifically
       noted with respect to equivalent alternative
       programs that, “neither the statute nor our
       case law obviously precludes [the equivalent
       program alternative.]” 643 F.3d at 321. In
       this rulemaking approving SCAQMD Rule
       317, EPA is fully recognizing section 185 as
       a “control” that must be implemented through
       the application of the principles of section
       172(e). As explained above, the D.C. Circuit
       stated that EPA must apply the principles of
       section 172(e) to non-attainment requirements
       such as section 185. Thus, we are following
       the D.C. Circuit’s holding that the principles
       of section 172(e) apply in full to implement
       [section] 185 obligations.

77 Fed. Reg. at 74,375.

    With respect to Rule 317 specifically, EPA acknowledged
that the rule does not collect fees from major stationary
sources as § 185 would, but concluded that SCAQMD was
reasonable to focus on mobile source emissions, and that Rule
                            NRDC V. EPA                                15

317’s “fee equivalency account” would ensure that the fees
collected by Rule 317 would be “at least equal to the amount
collected under section 185,” which EPA believed to be a
reasonable measurement of equivalent stringency. Id. at
74,376. EPA also stated that “SCAQMD has demonstrated
that Rule 317 will result in a federally enforceable
requirement to obtain funding for and make expenditures on
air pollution reduction projects in amounts at least equal to
the amounts that would otherwise be collected under section
185.” Id. Finally, EPA noted that since fees collected by
Rule 317 are required to be used for pollution reduction
programs, unlike fees collected by § 185, “it is reasonable to
expect that in one respect SCAQMD’s alternative program
will achieve more emission reductions than direct
implementation of section 185.” Id.

    Petitioners filed a petition for review of EPA’s approval
of Rule 317 in this court on February 12, 2013, and we have
jurisdiction under CAA § 307(b)(1).3




 3
   Intervenor National Environmental Development Association’s Clean
Air Act Project contends that Petitioners lack standing to bring this claim
because they cannot make the requisite showing of causality between
EPA’s action and their alleged injury, since Petitioners do not argue that
Rule 317 is “less stringent” and therefore bad for their members’ health.
However, even though Petitioners do not specifically challenge Rule 317,
the declarations they submitted in support of standing demonstrate that
their members may be harmed if EPA lacked authority to approve
alternatives to § 185 fee programs. Because that question of authority is
the central issue in this case, we conclude that Petitioners have standing
to challenge EPA’s authority to approve Rule 317.
16                      NRDC V. EPA

II. Discussion

     A. Standard of Review

    As the CAA itself does not specify a standard of review,
this court reviews any regulations promulgated in connection
with it under the standard prescribed by the Administrative
Procedure Act. Sierra Club v. EPA, 671 F.3d 955, 961 (9th
Cir. 2012). Accordingly, we will “hold unlawful and set
aside agency action, findings, and conclusions found to be . . .
arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A). “[We]
review the record to ensure that agency decisions are founded
on a reasoned evaluation of the relevant factors, and may not
rubberstamp . . . administrative decisions that [are]
inconsistent with a statutory mandate or that frustrate the
congressional policy underlying a statute . . . .” Latino Issues
Forum v. EPA, 558 F.3d 936, 941 (9th Cir. 2009) (quoting
Friends of Yosemite Valley v. Norton, 348 F.3d 789, 793 (9th
Cir. 2003)).

     Further, we use the Chevron framework to review an
agency’s interpretation of a statute that it administers. The
first of Chevron’s two steps investigates “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.” 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 843.
                        NRDC V. EPA                          17

   B. Chevron Step One

    Chevron’s first step is a textual inquiry in which the court
must determine whether, in a given statute, “Congress has
directly spoken to the precise question at issue.” Chevron,
467 U.S. at 842–43. In this case, the question is whether
Congress clearly indicated in the text of the CAA whether, if
the NAAQS is strengthened rather than relaxed, EPA may
approve alternative programs that are “not less stringent than”
§ 185 fee programs.

    Petitioners argue that under step one of Chevron,
§ 172(e)’s language requiring EPA to promulgate alternative
“not less stringent” programs clearly only applies when a
NAAQS is relaxed, not strengthened, so with this textual
clarity the court should end its analysis there and grant the
petition. Petitioners make this argument notwithstanding the
D.C. Circuit’s South Coast decision upholding EPA’s
extension of the § 172(e) requirement of anti-backsliding
controls (i.e., § 185 fee programs) to apply when the NAAQS
has been strengthened: in Petitioners’ view, the permissibility
of extending anti-backsliding controls when the NAAQS has
been strengthened does not mean that § 172(e)’s provision for
EPA approving other controls that “are not less stringent
than” § 185, should also be extended in the same context.

    We disagree. Section 172(e) does not directly apply,
either to impose § 185 fees or do anything else, because it
does not provide for what happens in any context except
when the NAAQS has been “relaxe[d].” In other words,
Congress has not “directly spoken to the precise question at
issue,” which is what happens when the NAAQS has been
strengthened. And as EPA points out, this Chevron step one
question was effectively answered in the 2004 rule revoking
18                      NRDC V. EPA

the one-hour NAAQS, where EPA explained its view that
Congress had not spoken to what happens to the CAA’s anti-
backsliding rules if the NAAQS is strengthened, but reasoned
that “if Congress intended areas to remain subject to the same
level of control where a NAAQS was relaxed, they also
intended that such controls not be weakened where the
NAAQS is made more stringent.” 69 Fed. Reg. 23,951,
23,972. As related in and approved by the South Coast
decision, EPA previously interpreted part of the gap left by
Congress to say which Subpart 2 “controls” are applicable to
nonattainment areas when the NAAQS has been
strengthened. At issue now is the remainder of the gap,
addressing EPA’s authority to promulgate controls that may
be different, but that are “not less stringent than” § 185 fee
programs and other Subpart 2 controls.

     C. Chevron Step Two

    Since “the statute is silent or ambiguous with respect to
the specific issue,” we proceed to Chevron’s second step, and
determine “whether the agency’s answer is based on a
permissible construction of the statute.” 467 U.S. at 843.
EPA’s answer in this case was to say, as it has since 2004,
that § 172(e)’s language applies equally to the context of the
NAAQS being strengthened as to the context of it being
relaxed. Further, EPA concluded, since § 172(e) allows
“controls which are not less stringent than the controls”
applicable before the NAAQS was strengthened, a “not less
stringent” control could be some program other than a strict
application of § 185’s fees from major stationary sources.
We find this interpretation, and EPA’s approval of Rule 317
based on it, to be reasonable, both textually and as a matter of
policy and Congressional intent.
                        NRDC V. EPA                          19

    Textually, EPA’s interpretation is reasonable because it
is in keeping with the interpretation it previously gave to
another part of the same sentence in the same statute. That is,
in the 2004 Rule revoking the one-hour NAAQS, EPA
concluded that the “controls” mentioned in § 172(e) will
apply even though the NAAQS was strengthened rather than
relaxed; now, EPA is giving the second part of the same
clause in § 172(e) – “not less stringent than” – the same
treatment. This makes intuitive linguistic sense: if one part
of a sentence in a statute is being applied by analogy to a new
context that was not provided for, it is difficult to see why
another part of the same sentence should not also be applied
by analogy, especially when it has the same effect: to impose
controls requiring a certain level of stringency, even after
conditions are changed.

    This textual conclusion is also supported by the fact that,
as EPA points out, there is no language in the CAA limiting
the scope of § 172(e) to prevent it from applying to controls
such as § 185, or otherwise restricting its application, but
Congress did so limit other subsections of § 172. See, e.g.,
CAA § 172(d), 42 U.S.C. § 7502(d) (requiring that SIP
revisions comply with CAA § 110); CAA § 182(a), 42 U.S.C.
§ 7511a(a) (restricting application of § 172(c)(9)). Since it is
clear that Congress knew how to limit § 172, and limited
some subsections of the statute but not § 172(e), we can
reasonably presume that Congress did not mean to limit the
application of § 172(e) to provide for alternatives to § 185.
See United Transp. Union v. BNSF Ry. Co., 710 F.3d 915,
928 (9th Cir. 2013) (“[W]here Congress includes particular
language in one section of a statute but omits it in another
section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate
20                      NRDC V. EPA

inclusion or exclusion.” (quoting Russello v. United States,
464 U.S. 16, 23 (1983)).

     With respect to Congressional policy and intent, as EPA,
intervenors, and amici stress, this interpretation is reasonable
because it promotes air quality, in keeping with the purpose
of the CAA. EPA’s interpretation allows EPA and states, in
the wake of new scientific results leading to a new NAAQS,
to take into account such changes in scientific knowledge and
better tailor their SIPs. That way, in keeping with the
cooperative federalist nature of the CAA, nonattainment areas
with different air quality problems can address those
problems with different solutions that may be more
appropriate to their particular geographies, as long as those
solutions are “not less stringent than” a § 185 fee program or
other Subpart 2 controls. In the SCAQMD region, for
example, major stationary sources are already strictly
regulated and contribute a relatively small amount to ozone
pollution, with other sources, such as cars and trucks,
contributing much more. The SCAQMD staff determined
that Rule 317, by collecting fees from other sources and then
directing all assessed fees at reducing pollution, would tackle
the problem of these other pollution sources, and thus move
the region toward attainment, more quickly than (or at least
as quickly as) § 185’s strict fees on major stationary sources;
EPA in approving Rule 317 concluded likewise.

    This interpretation leads clearly from the D.C. Circuit’s
opinion in South Coast. To reiterate, the court there held that
§ 172(e)’s requirement for “not less stringent” controls to
prevent backsliding applies not only when the NAAQS is
relaxed but also when it is strengthened. 472 F.3d at 900.
The court further held that there was no ambiguity in the
word “control” and that it encompassed everything in the
                       NRDC V. EPA                          21

CAA designed to limit ozone levels, including § 185. Id. at
902. The EPA had contended that § 185’s penalty provision
was not one of the controls “applicable” to nonattainment
areas before the NAAQS was relaxed. The EPA’s theory was
that the control was not applicable, because the provision had
not yet been enforced since the deadlines for compliance had
not yet been reached. Id. at 902–903. The D.C. Circuit
rejected that argument, holding that to be “applicable” within
the meaning of § 172(e) the control need not be currently
enforced. Because § 185 was designed to constrain pollution,
it was an applicable “control.” Id. at 903. That holding
means that, pursuant to § 172(e), when the standard was
relaxed, or strengthened, the EPA was required to promulgate
controls “not less stringent” than the penalty provisions of
§ 185. Rule 317, EPA concluded here, is such a “not less
stringent” control.

    Moreover, contrary to Petitioners’ claims, this
interpretation of § 172(e) does not give EPA anything like the
unfettered discretion that Congress sought to cut back when
it enacted the 1990 amendments to the CAA. Rather, every
program that EPA approves must be tied to § 185 and other
relevant Subpart 2 controls by being “not less stringent than”
them. This means EPA must assess each proposed alternative
program for its stringency and compare – whether on the
basis of fees or some other metric – the alternative program’s
claimed outcomes to the outcomes projected for Subpart 2
controls. EPA’s interpretation of § 172(e) to give it authority
to make this assessment and approve proper “not less
stringent” alternatives is therefore reasonable.

    We come then to Rule 317 itself. Petitioners do not
challenge either EPA’s way of measuring what makes an
alternative program “not less stringent than” a § 185 fee
22                      NRDC V. EPA

program, nor do they challenge EPA’s ultimate conclusion
that Rule 317 is “not less stringent,” and may even be more
stringent, than § 185. Their argument in this petition is
purely statutory: it rises or falls with this court’s conclusion
about whether EPA can interpret the CAA’s text to give it the
authority to approve “not less stringent” alternatives, and
does not address the actual merits of EPA’s application of
that authority to approve Rule 317. We have already
concluded that EPA can so interpret the CAA, so that it does
have the authority to approve alternatives to § 185 fee
programs that are “not less stringent.” Now, noting that the
rulemaking record shows that SCAQMD constructed Rule
317 to collect an equivalent amount of fees to what it would
collect with § 185 program, so that Rule 317 is “not less
stringent than” a § 185 fee program, we conclude that EPA’s
approval of Rule 317 into California’s SIP was a proper
exercise of its authority under § 172(e) to approve such
alternative, not less stringent, programs.

III.   Conclusion

    Because EPA reasonably interpreted CAA § 172(e) to
give it authority to approve programs that are alternative to,
but not less stringent than, § 185 fee programs, EPA’s
approval of Rule 317 as such an alternative program, after
reasoned consideration and notice and comment procedure
regarding Rule 317’s stringency and approach to fee
collecting, was proper. Therefore, the petition for review is
DENIED.
