California submitted a Clean Air Act State Implementation Plan to the EPA for approval. Pursuant to the "conformity rule" under 40 C.F.R. Section 93.118, the EPA conducted a review to determine whether the SIP's motor vehicle emissions budgets were adequate for transportation conformity purposes. The EPA found that one set of budgets was not adequate, but another set of "baseline" budgets for milestone years was adequate under the conformity rule, allowing transportation projects and plans to proceed in accordance with those budgets.
NRDC et al argued that the EPA failed to consider the ability of California to achieve attainment when it made its adequacy determination for the budgets concerning milestone years.
The Ninth Circuit held that it was not unreasonable for the EPA to have interpreted the conformity rule to provide that, for a milestone year, a budget need only demonstrate reasonable further progress toward the ultimate goal of attainment.
The Court also determined that EPA's decision did not violate 40 C.F.R. Sections 51.1007 through 51.1009 for implementation of standards for particulate matter since nothing in those rules required the EPA to consider attainment data when determining the adequacy of milestone-year budgets.