Lafleur v. Whitman

Decision Date31 July 2002
Docket NumberDocket No. 01-4126.
Citation300 F.3d 256
PartiesRobert C. LaFLEUR, President, Spectra Environmental Group, Inc. on behalf of Kathleen and Campbell House, in their individual capacities and as trustees of Campbell Plaza Shopping Center and Susan Cohen, Petitioners, v. Christine Todd WHITMAN, in her capacity as Administrator of the United States Environmental Protection Agency and United States Environmental Protection Agency, Respondents, Pencor-Masada Oxynol, LLC, Intervenor.
CourtU.S. Court of Appeals — Second Circuit

Kevin C. Murphy, Devorsetz, Stinziano, Gilberti, Heintz & Smith, Syracuse, New York (Kevin J. Brown and Gregory M. Brown, on the brief), for Petitioners.

Thomas L. Sansonetti, Assistant Attorney General, Environment and Natural Resources Division, United States Department of Justice, Washington, D.C. (Daniel

M. Flores, Environmental Defense Section, United States Department of Justice, and Malcolm Woolf, Office of General Counsel, United States Environmental Protection Agency, on the brief), for Respondents.

Jonathan S. Martel, Arnold & Porter, New York, New York (Michael B. Gerrard, Monica Jahan Bose, Aruna K. Boppana, on the brief), for Intervenor.

Before OAKES and KATZMANN, Circuit Judges, and MURTHA, Chief District Judge.*

KATZMANN, Circuit Judge.

Intervenor Pencor-Masada Oxynol, L.L.C. ("Masada") seeks to construct and operate a facility in Middletown, New York, that promises to convert municipal waste and sewage sludge into fuel-grade ethanol and carbon dioxide ("the facility" or "the Masada facility."). Petitioners Robert C. LaFleur and Susan Cohen bring the instant petition under provisions of the Clean Air Act ("CAA"), see 42 U.S.C. § 7401 et seq., seeking review of the decision of respondent Christine Todd Whitman, as Administrator of the United States Environmental Protection Agency ("EPA"), not to object to the issuance of an operating permit to Masada by the New York State Department of Environmental Conservation ("NYSDEC"). At issue is whether the heightened permitting requirements of the CAA's Program for the Prevention of Significant Deterioration of Air Quality (the "PSD program") are applicable to the Masada facility. NYSDEC concluded that the PSD program was not applicable and the Administrator agreed. Petitioners contend that the Administrator's decision rests on (a) her improper classification of the facility's primary activity as "refuse processing" rather than "chemical processing," which has the effect of raising the threshold (in terms of the quantity of pollutant emitted per year) for the applicability of the PSD program; (b) her improper allocation of certain of the facility's emissions to the activity of refuse processing; and (c) her failure to consider important factors relevant to the facility's classification.

I. Background

In September 1994, the City of Middletown, New York sought proposals for a solid waste management facility to meet its waste disposal needs following the closure of local and county landfills, and to avoid the rising costs of disposal at private landfills. The planned facility was to be constructed on the site of the former Middletown landfill — a twenty-two acre parcel of land adjacent to the City's wastewater treatment plant. The City eventually accepted Masada's proposal to construct a first-of-its-kind facility that would convert the cellulose component of sewage sludge and municipal garbage into ethanol and carbon dioxide using concentrated sulfuric acid. Masada projected that the facility could process 230,000 tons per year ("tpy") of solid waste and 49,000 tpy of sewage sludge, producing approximately 7.1 million gallons of ethanol from these and other waste inputs.

A. Operation of the Facility

The parties do not dispute the basic outline of the planned facility's design and operation. The waste conversion process begins with the off-loading of solid waste from garbage trucks onto the facility's "tipping floor." (Only municipalities and private companies that enter into contracts with Middletown and pay so-called "tipping fees" will be allowed to off-load their garbage.) From the "tipping floor," the garbage is put through a series of mechanical and manual steps to separate out the bulk of the recyclable materials, such as metals, glass, plastics, and paper. Other "unacceptable materials" are also removed and sent for off-site disposal. The remaining garbage is shredded and passed through a magnet to remove additional metals. This "feedstock" is then shredded once more, dried, and transported to the "process building." There, the feedstock undergoes an "acid hydrolysis" process during which it is mixed with concentrated sulfuric acid, which breaks down the cellulose in the feedstock and transforms it into a "slurry" of liquid sugar and acid. Sewage sludge is added to the slurry and the mixture is "cooked" to further convert cellulose into simple sugars. Separators divide the liquid portion of the slurry from the solids. Masada terms the remaining solid residue "lignin," which consists mainly of cellulose that cannot be hydrolized and acidified biosolids from the sewage sludge.

The lignin is sent to the facility's "gasifier," where it is burned as a fuel to produce steam energy. Most, if not all, the steam energy generated by the gasifier is used to power the steps necessary for the production of ethanol and carbon dioxide at the facility. A separate "package-boiler," fired by natural gas, is also employed to further meet the facility's energy demands.

While the lignin is separated and burned off in the gasifier, the remaining slurry is fed into an "ion exclusion unit," which separates out the liquid sugar from the sulfuric acid. After separation, the acid is reconcentrated by evaporation and reused for hydrolysis of the feedstock. The remaining sugar solution is treated with lime (calcium carbonate). This neutralizes any remaining acids and causes heavy metals in the solution to precipitate as gypsum, which can be processed and sold. The sugar solution is then fermented into ethanol and carbon dioxide. The latter is collected, processed, and sold, while the ethanol (contained in the form of a "mash") is distilled to achieve market-grade purity. Finally, gasoline is added to the ethanol, ensuring that it is unfit for human consumption.

B. Regulatory Context

The CAA mandates that EPA promulgate National Ambient Air Quality Standards ("NAAQS") for certain pollutants. See 42 U.S.C. § 7409. State governments, in turn, have the opportunity to establish and administer permitting programs, subject to EPA oversight, that will ensure that the NAAQs are achieved and maintained. See 42 U.S.C. § 7410(a)(2)(C). The CAA and its implementing regulations provide a number of avenues for public participation in this regulatory process. See, e.g., 42 U.S.C. § 7409(a)(1)(B) (allowing for public comment on NAAQS); 42 U.S.C. § 7410(a)(1) (providing for "reasonable notice and public hearings" on state implementation plans); 40 C.F.R. § 70.8(d) (allowing for petitions to EPA to object to issuance of permits by states).

1. The PSD Program

In 1977, Congress amended the CAA and its implementing regulations to establish the PSD program, which seeks to prevent the significant deterioration of air quality in areas of the country that have achieved the NAAQS. See Richard L. Revesz, Federalism and Environmental Externalities, 144 U. Pa. L.Rev. 2341, 2347-49 (1996) (explaining the specific components of the PSD program). In such areas, the PSD program imposes stringent controls on the construction or modification of "major" stationary sources of pollution. See 42 U.S.C. § 7475; 40 C.F.R. § 52.21. Before a permit for construction or modification of a new "major" stationary source can issue, the applicant must conduct detailed analyses of the potential impact of the source on air quality and the surrounding environment, see 40 C.F.R. § 52.21(k)-(o), and apply the best available control technology ("BACT") for each regulated pollutant that the source "would have the potential to emit in significant amounts." 40 C.F.R. § 52.21(j)(2). The PSD program also provides for public participation. See 40 C.F.R. § 52.21(q).

A source of air pollution may be classified as "major" for purposes of the PSD program in one of two ways. First, the CAA and its implementing regulations specifically identify 28 categories of stationary sources as "major" if they have the potential to emit 100 tpy or more of a regulated pollutant. 42 U.S.C. § 7479(1); 40 C.F.R. § 52.21(b)(1)(i)(a). This set of categories includes "chemical process plants." Id. Second, even if a stationary pollution source does not fall under one of the aforementioned categories, it will nevertheless be deemed "major" if it emits, or has the potential to emit, 250 tpy or more of any air pollutant regulated under the CAA. See 42 U.S.C. § 7479(1); 40 C.F.R. § 52.21(b)(1)(i)(b).

2. The Primary Activity Test & Embedded Sources

A facility that produces air pollution may often be engaged in multiple activities that, if considered separately, would fall under different categories for purposes of the PSD program. In order to categorize such complex sources of air pollution, EPA looks to the "primary activity" of the facility in question. See 45 Fed.Reg. 52,676, 52,695 (Aug. 7, 1980). If the primary activity is one that falls under one of the twenty-eight kinds of "major source" specifically identified by the CAA, the lower 100 tpy threshold will apply; otherwise the "default" 250 tpy threshold obtains. See 40 C.F.R. § 52.21(b)(1)(i)(a), (b). In determining the primary activity of a facility, EPA's stated policy is to follow the guidelines set forth in the Office of Management and Budget's Standard Industrial Classification Manual ("SIC Manual"). See 45 Fed.Reg. 52,676, 52,695 (Aug. 7, 1980). ("EPA has chosen the classification code in the Standard...

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