Accounting for Pre-Production Emissions in State Implementation Plans: Limiting Unjustified Carve-Outs for Drilling and Fracking Activities

Introduction

The Clean Air Act requires states to adopt State Implementation Plans (SIPs) that ensure attainment and maintenance of the National Ambient Air Quality Standards (NAAQS). In 1997, Colorado’s Air Quality Control Commission first adopted a SIP and later revised it in 2019 to clarify permit requirements for new and modified stationary sources of air pollution. The Center for Biological Diversity (“the Center”) petitioned the Tenth Circuit to review EPA’s approval of two key revisions:

A change in the operative language of the permit requirement from “commence construction or modify” to “construct, operate, or modify.”
A new sentence in the definition of “commencement of operation” for oil and gas well production facilities that effectively delays scrutiny of emissions from drilling, hydraulic fracturing, flowback, and well completion stages.

The United States Environmental Protection Agency (“EPA”) approved Colorado’s 2019 revisions despite the Center’s objections. The State of Colorado intervened to defend its rulemaking. The Court of Appeals for the Tenth Circuit heard argument on April 28, 2025, and issued its published ruling that same day.

Summary of the Judgment

The panel (Judges Bacharach, Baldock and Carson) applied the Administrative Procedure Act’s “arbitrary and capricious” standard to EPA’s approval of Colorado’s SIP revisions. It reached two principal conclusions:

Colorado’s change in wording of the general permit requirement did not produce any substantive effect on when a permit must be obtained, and the Center failed to show prejudice. The court therefore upheld EPA’s approval of that provision.
The newly added sentence carving out pre-production emissions for oil and gas facilities (drilling, fracking, completion, flowback) was more than a “procedural clarification.” EPA had merely accepted Colorado’s characterization without independent analysis. The court held this to be arbitrary and capricious and remanded that portion of the approval for further explanation, but declined to vacate outright or impose a strict deadline.

Analysis

Precedents Cited

US Magnesium, LLC v. EPA, 690 F.3d 1157 (10th Cir. 2012) – Division of federal/state responsibilities under the Clean Air Act.
Espinosa v. Roswell Tower, Inc., 32 F.3d 491 (10th Cir. 1994) – SIP provisions approved by EPA attain the force of federal law.
United States v. Burson, 952 F.2d 1196 (10th Cir. 1991) – Invited error doctrine bars a party from attacking a ruling it induced.
Flechs, 98 F.4th 1235 (10th Cir. 2024) – Invited error requires a clear record showing prior support.
Arizona Public Service Co. v. EPA, 562 F.3d 1116 (10th Cir. 2009) – Scope of “arbitrary and capricious” review under 5 U.S.C. § 706(2)(A).
Allied-Signal, Inc. v. NRC, 988 F.2d 146 (D.C. Cir. 1993) – Factors for deciding whether to vacate or remand flawed agency action.

Legal Reasoning

Three key doctrines and statutes shaped the court’s reasoning:

Invited/Error Waiver – The court rejected Colorado’s argument that the Center had waived its objections by generally supporting Colorado’s SIP update, holding that the Center never clearly endorsed the disputed provisions (Burson; Flechs).
Arbitrary and Capricious Standard – Under 5 U.S.C. § 706(2)(A), an agency must consider all relevant aspects of an issue and provide a reasoned explanation when it changes course or adopts new language (Arizona Pub. Serv. Co.).
Remand vs. Vacatur – An appellate court weighs (1) the seriousness of the agency’s error and possible curability on remand and (2) the disruptive consequences of vacatur (Allied-Signal; Diné Citizens).

Applying these principles, the court found no arbitrariness in the first revision—merely semantic streamlining—and upheld EPA’s finding that it would not interfere with attainment of NAAQS. But the carve-out sentence in the definition of “commencement of operation” raised a new substantive question about whether pre-production emissions would escape review under Colorado’s SIP. EPA had relied solely on Colorado’s own characterization of the change as “clarifying,” without conducting its own analysis or addressing the Center’s argument about drilling- and fracking-phase emissions. That failure to engage constituted arbitrary and capricious agency action requiring remand for further explanation.

Impact on Future Cases and Environmental Law

This decision clarifies that:

States and EPA cannot hide substantive carve-outs for emissions within purportedly “clarifying” SIP revisions. Any change that may affect when emissions are reviewed must be independently examined and justified in the administrative record.
Challenges to SIP approvals remain viable when an affected third party reasonably preserves objections in rulemaking comments, even if it does not deploy technical terms or cite every regulation.
Courts may remand flawed SIP approvals without vacatur—and without strict deadlines—to allow EPA an opportunity to supply missing analysis, provided that the record supports the possibility of a cure.

Complex Concepts Simplified

State Implementation Plan (SIP): A state’s legally enforceable program to meet federal air‐quality standards.
National Ambient Air Quality Standards (NAAQS): Health‐based limits on pollutant levels in the outdoor air, set by EPA under the Clean Air Act.
Major vs. Minor Source: A “major source” can emit large quantities of pollutants and needs more stringent review; “minor sources” emit below certain thresholds.
Potential to Emit: The theoretical maximum quantity of a pollutant a source could release, assuming full use of all its equipment.
Commencement of Operation: The regulatory trigger date when an emission source becomes subject to permit requirements and emissions accounting.
Arbitrary and Capricious: A deferential standard of judicial review requiring agencies to (1) consider all relevant factors and (2) give rational explanations for their decisions.
Invited Error: A party cannot challenge a ruling it affirmatively induced or supported in the administrative or trial record.
Vacatur vs. Remand: Courts decide whether to nullify a faulty agency action (vacatur) or send it back for reconsideration (remand) based on the severity of the error and practical consequences.

Conclusion

Center for Biological Diversity v. EPA establishes an important check on SIP revisions. It affirms that any state rulemaking which might defer or exclude review of certain emission activities—particularly those occurring before commercial production of oil and gas—must be explicitly justified by EPA in its federal approval. The decision also confirms that third-party intervenors can preserve their objections without resort to technical jargon, and that courts may remand flawed EPA approvals without full vacatur so long as the agency remains capable of remedying the omission. Going forward, SIP revisions with potential carve-outs for upstream emissions will require careful scrutiny to ensure continued progress toward the nation’s air quality goals.