In the case of  Sierra Club, et. al., v. EPA, the U.S. Court of Appeals for the Ninth Circuit held that EPA cannot rely on Chevron deference to authorize its grant of a Prevention of Significant Deterioration (PSD) permit to Avenal Power Center based on superseded National Ambient Air Quality Standards (NAAQS) and Best Available Control Technology (BACT) requirements. Avenal was an Intervenor in this case which was argued in October and decided August 12.

This unusual case was triggered by EPA's failure to process Avenal's application on a timely basis, and an order from the U.S. District Court in the District of Columbia to EPA to come to a decision. Holding that the Clean Air Act unambiguously requires Avenal to comply with the regulations in effect at the time the permit was issued, EPA's action was vacated because it applied the superseded, less rigid and costly regulations. EPA argued that it had the authority to apply its inherent grandfathering authority to reach an equitable decision that was fair to the applicant, which was penalized by the slow pace of EPA permitting process despite the statutory mandate to process such applications in one year. The court disagreed with this argument, pointing to the clear language of the statute, although it expressed some sympathy for Avenal's dilemma.