GM 14-007

D. C. Circuit Court Vacates Clean Air Act Rule for New Source Review With Respect to Indian Country That Is Not Within an Indian Reservation

On January 17, 2014, the U.S. Court of Appeals for the D.C. Circuit issued its decision in Oklahoma Department of Environmental Quality v. Environmental Protection Agency. In this case, the Oklahoma Department of Environmental Quality (DEQ) challenged an aspect of a final rule that the Environmental Protection Agency (EPA) had issued in 2011 governing new source review (NSR) under the Clean Air Act (CAA) in Indian Country. The main issue in this case involves lands that are “Indian Country” as defined by federal statute, 18 U.S.C. § 1151, but which are not within the boundaries of an “Indian reservation” as defined by EPA. In the Indian Country NSR rule, EPA had taken the position that states lack authority to enforce State Implementation Plans on Indian Country lands and, where a tribe has not been approved by EPA to administer a CAA program over such lands, EPA has residual authority to adopt a Federal Implementation Plan. 76 Fed. Reg. 38748, 38752, 38778 (July 1, 2011).

The court rejected EPA’s reasoning on this point and vacated the Indian Country NSR rule with respect to non-reservation Indian Country. The court’s decision leaves the Indian Country NSR rule in force as it pertains to Indian reservations. Oklahoma did not challenge that aspect of the rule. Moreover, the court cited with approval EPA’s interpretation of the term “reservation” as used in the CAA to include “formal reservations, Pueblos, and tribal trust lands.” The court refers to the latter two categories as “informal reservations.” Slip Op. at 4. As such, the kinds of lands at issue in the case are two kinds of land areas included in the statutory definition of “Indian Country”: “dependent Indian communities” and “Indian allotments” (both individual Indian trust lands and restricted deeded lands) that are not within a reservation.

In its reasoning, the court drew on two earlier decisions involving EPA rules implementing the CAA in Indian Country: Arizona Public Service Co. v. EPA, 211 F.3d 1280 (2000), and Michigan v. EPA, 268 F.3d 1075 (2001). In Arizona Public Service, the court upheld EPA’s final rule implementing the provisions of the CAA authorizing EPA to treat tribes like states (often called the “Tribal Authority Rule”). As amended in 1990, the statutory language authorizes EPA to treat a tribe like a state provided that “the functions to be exercised by the Indian tribe pertain to the management and protection of air resources within the exterior boundaries of the reservation or other areas within the tribe’s jurisdiction.” 42 U.S.C. § 7601(d)(2)(B). In the Tribal Authority Rule, EPA had interpreted this statutory language as a delegation of federal authority to tribes for lands within the exterior boundaries of their reservations but not for “other areas.” This interpretation means that to become authorized for treatment like a state for “other areas,” EPA requires a tribe to make such a showing of its inherent authority over such areas. 63 Fed. Reg. 7254, 7258-59 (Feb. 12, 1998). The Tribal Authority Rule provides that where EPA has not approved a tribe’s CAA program, and EPA has not approved a state’s CAA program, EPA has authority to directly implement air quality programs. EPA relied on specific language in the CAA providing EPA the authority to directly implement air quality programs where EPA determines that “treatment of Indian tribes as identical to States is inappropriate or administratively infeasible.” 42 U.S.C. § 7601(d)(4).

In Michigan v. EPA, the court reviewed EPA’s final rule implementing a federal operating permits program for Indian Country. 64 Fed. Reg. 8247 (Feb. 19, 1999). As amended in 1990, the CAA directs EPA to establish standards for state operating permit programs and to establish and implement a federal operating permit program for any state that does not develop a state program that meets EPA’s requirements for approval. The CAA allows, but does not require, tribes to administer operating permit programs. In the Indian Country federal operating permit program final rule, EPA sought to fill the regulatory gap that resulted from the lack of state authority within Indian reservations and the lack of tribal programs. In that rule, EPA also asserted the authority to implement the federal program within areas for which EPA believed the status of the land as Indian Country was “in question.” EPA’s position was that, if there was an unresolved question regarding the Indian Country status of a particular area, EPA had residual federal authority to enforce the Act.

In Michigan, the D.C. Circuit rejected EPA’s assertion of federal authority over such “in question” lands. The court reasoned that Congress vested authority to implement the CAA in the states, 42 U.S.C. § 7661a(d), and in tribes that are treated like states, and that there is no “residual … EPA jurisdiction, authority, or power.” 268 F.3d at 1083. Either a state has authority or a tribe does. The court held that the CAA only grants authority to EPA to implement a federal operating permit program for a state or tribe if: “(1) the state or tribe fails to submit an operating program or (2) the operating program is disapproved by EPA or (3) EPA determines the state or tribe is not adequately administering and enforcing a program.” Id. at 1082.

The court found the principles that it had applied in Michigan to be controlling in Oklahoma DEQ and held that “a state therefore has regulatory jurisdiction within its geographic boundaries except where a tribe has a reservation or has demonstrated its jurisdiction.” It was undisputed that no tribe had demonstrated tribal jurisdiction over non-reservation Indian Country in Oklahoma, nor had EPA made such a demonstration, and so the court held that Oklahoma has jurisdiction over non-reservation Indian Country for implementing the CAA. Accordingly, the court vacated the Indian Country NSR rule with respect to non-reservation Indian Country.

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