Dominion Energy Brayton Point v. Johnson

• Decision Date: 30 March 2006
• Docket Number: No. 05-2231.,05-2231.
• Parties: DOMINION ENERGY BRAYTON POINT, LLC, Plaintiff, Appellant, v. Stephen L. JOHNSON, In His Capacity as Administrator of the United States Environmental Protection Agency, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 12

443 F.3d 12

DOMINION ENERGY BRAYTON POINT, LLC, Plaintiff, Appellant, v. Stephen L. JOHNSON, In His Capacity as Administrator of the United States Environmental Protection Agency, et al., Defendants, Appellees.

No. 05-2231.

United States Court of Appeals, First Circuit.

Heard January 13, 2006.

Decided March 30, 2006.

John M. Stevens, with whom Wendy B. Jacobs, Elisabeth M. DeLisle, and Foley Hoag LLP were on brief, for appellant.

Kristen L. Gustafson, Attorney, Environment and Natural Resources Division, United States Department of Justice, with whom Matthew J. McKeown, Deputy Assistant Attorney General, Greer Goldman and John Bryson, Attorneys, were on brief, for appellees.

Before SELYA, LIPEZ and HOWARD, Circuit Judges.

SELYA, Circuit Judge.

USGen New England, Inc., now Dominion Energy Brayton Point, LLC (Dominion), filed suit against the U.S. Environmental Protection Agency, its administrator, and its regional office (collectively, the EPA), alleging that the EPA failed to perform a non-discretionary duty when it refused to grant Dominion's request for a formal evidentiary hearing after issuing a proposed final National Pollution Discharge Elimination System (NPDES) permit. The district court dismissed the case for want of subject matter jurisdiction. On appeal, the central question presented concerns the effect of this court's decision in Seacoast Anti-Pollution League v. Costle, 572 F.2d 872 (1st Cir.1978), in light of the Supreme Court's subsequent decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Concluding, as we do, that Seacoast does not control, we affirm the judgment below.

I. BACKGROUND

Dominion owns an electrical generating facility in Somerset, Massachusetts (the station). The station opened in the 1960s and, like most power plants of its era, utilizes an "open-cycle" cooling system. Specifically, the station withdraws water from the Lees and Taunton Rivers, circulates that water through the plant's generating equipment as a coolant, and then discharges the water (which, by then, has attained an elevated temperature) into Mount Hope Bay.

The withdrawals and discharges of water are regulated by the Clean Water Act (CWA), 33 U.S.C. §§ 1251-1387. For the last three decades, these actions have been authorized by a series of NPDES permits issued by the EPA pursuant to section 402(a) of the CWA. See id. § 1342(a). The standards incorporated into those permits are determined under the thermal variance procedures laid out in section 316(a). See id. § 1326(a).

In 1998, the station applied for renewal of its NPDES permit and thermal variance authorization. The EPA issued a proposed final permit on October 6, 2003, in which it rejected the requested thermal variance. On November 4, Dominion sought review before the Environmental Appeals Board (the Board), see 40 C.F.R. § 124.19(a) (authorizing Board review), and asked for an evidentiary hearing. The Board accepted the petition for review but declined to convene an evidentiary hearing. See In re USGen New Eng., Inc. Brayton Point Station, 11 E.A.D. 525, 525 (EAB July 23, 2004).

On August 11, 2004, Dominion notified the EPA of its intent to file a citizen's suit under section 505(a)(2) of the CWA, 33 U.S.C. § 1365(a)(2), to compel the Board to hold an evidentiary hearing. Receiving no reply, Dominion proceeded to file its complaint in the United States District Court for the District of Massachusetts. The EPA moved to dismiss.

The district court granted the motion on jurisdictional grounds. See Fed.R.Civ.P. 12(b)(1). In a bench decision, it concluded that it was without subject matter jurisdiction because the suit, though billed as a citizen's suit, constituted a direct challenge to the EPA's hearing rule and, thus, came within the exclusive jurisdiction of the circuit court under 33 U.S.C. § 1369(b)(1)(E). This timely appeal followed.¹

II. THE LEGAL LANDSCAPE

We set the stage for our substantive discussion by undertaking a brief review of the legal rules that frame the controversy at hand.

Before the EPA either issues an NPDES permit or authorizes a thermal variance,² it must offer an "opportunity for public hearing." 33 U.S.C. §§ 1326(a), 1342(a). No definition of "public hearing" is contained within the four corners of the CWA.

The Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq., is also part of the relevant legal landscape. Most pertinent here are those sections that combine to describe the procedures for formal administrative adjudications. See id. §§ 554, 556, 557. These procedures apply "in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing." Id. § 554(a). The APA does not directly address whether these procedures apply when a statute simply calls for an "opportunity for public hearing" without any specific indication that the hearing should be "on the record."

In Seacoast, this court interpreted "public hearing" (as used in sections 402(a) and 316(a) of the CWA) to mean "evidentiary hearing"—in other words, a hearing that comports with the APA's requirements for a formal adjudication. 572 F.2d at 878. Examining the legislative history of the APA, we adopted a presumption that "unless a statute otherwise specifies, an adjudicatory hearing subject to judicial review must be [an evidentiary hearing] on the record." Id. at 877. Applying that presumption to the CWA, we concluded that "the statute certainly does not indicate that the determination need not be on the record." Id. at 878 (emphasis in original).

So viewed, Seacoast established a rebuttable presumption that, in the context of an adjudication, an organic statute that calls for a "public hearing" should be read to require an evidentiary hearing in compliance with the formal adjudication provisions of the APA. Two other circuit courts reached the same conclusion, albeit through different reasoning. See Marathon Oil Co. v. EPA, 564 F.2d 1253, 1264 (9th Cir.1977); U.S. Steel Corp. v. Train, 556 F.2d 822, 833-34 (7th Cir.1977). Acquiescing in this construction, the EPA promulgated regulations that memorialized the use of formal evidentiary hearings in the NPDES permit process. See NPDES; Revision of Regulations, 44 Fed.Reg. 32,854, 32,938 (June 7, 1979).

In 1984, a sea change occurred in administrative law and, specifically, in the interpretation of organic statutes such as the CWA. The Supreme Court held that "[w]hen a court reviews an agency's construction of the statute which it administers," the reviewing court first must ask "whether Congress has directly spoken to the precise question at issue." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. If Congress's intent is clear, that intent governs—both the court and the agency must give it full effect. Id. at 842-43, 104 S.Ct. 2778. If, however, Congress has not directly addressed the question and the agency has stepped into the vacuum by promulgating an interpretive regulation, a reviewing court may "not simply impose its own construction on the statute," but, rather, ought to ask "whether the agency's answer is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778.

This paradigm, sometimes called the Chevron two-step, increases the sphere of influence of agency action. If congressional intent is unclear and an agency's interpretation of a statute that it administers is reasonable, an inquiring court must defer to that interpretation. See id. at 843-44, 104 S.Ct. 2778. That is so even if the agency's interpretation is not the one that the court considers to be the best available interpretation. See id. at 843, 104 S.Ct. 2778.

Armed with the Chevron decision and a presidential directive to streamline regulatory programs, see Remarks on Regulatory Reform, 31 Weekly Comp. Pres. Doc. 278 (Feb. 21, 1995), the EPA advanced a proposal to eliminate formal evidentiary hearings from the NPDES permitting process. See Amendments to Streamline the NPDES Program Regulations: Round Two, 61 Fed.Reg. 65,268, 65,276 (Dec. 11, 1996). In due course, the EPA adopted that proposal as a final rule. See Amendments to Streamline the NPDES Program Regulations: Round Two, 65 Fed.Reg. 30,886, 30,900 (May 15, 2000).

This revision depended heavily on a Chevron analysis. The agency began by "finding no evidence that Congress intended to require formal evidentiary hearings or that the text [of section 402(a)] precludes informal adjudication of permit review petitions." Id. at 30,896. Then, it weighed the risks and benefits of employing informal hearing procedures for NPDES permit review, "determining that these procedures would not violate the Due Process Clause." Id. Finally, it "concluded that informal hearing procedures satisfy the hearing requirement of section 402(a)." Id.

It was under this new regulatory scheme that the EPA considered Dominion's request to renew its NPDES permit and to authorize a thermal variance. Thus, it was under this scheme that the EPA denied Dominion's request for an evidentiary hearing.

III. ANALYSIS

The court of appeals reviews a dismissal for want of subject matter jurisdiction de novo. Gabriel v. Preble, 396 F.3d 10, 12 (1st Cir.2005). In doing so, the court accepts the well-pleaded factual allegations of the plaintiff's complaint and indulges all reasonable inferences in the plaintiff's favor. Muniz-Rivera v. United States, 326 F.3d 8, 11 (1st Cir.2003). The appellate court is not wedded to the lower court's reasoning, but may affirm the order of dismissal on any ground fairly presented by the record. See InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir.2003).

Here, Dominion's claim on appeal rests on the premise that it has satisfied the jurisdictional requirements for a citizen's suit under section 505(a)(2) of the CWA. Subject to a notice requirement—suit may not be commenced "prior to sixty days after the plaintiff has...