Sierra Club v. E.P.A.

• Decision Date: 19 August 2008
• Docket Number: No. 07-1039.,No. 04-1243.,04-1243.,07-1039.
• Parties: SIERRA CLUB, et al., Petitioners v. ENVIRONMENTAL PROTECTION AGENCY, Respondent American Petroleum Institute, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

536 F.3d 673

SIERRA CLUB, et al., Petitioners v. ENVIRONMENTAL PROTECTION AGENCY, Respondent American Petroleum Institute, et al., Intervenors.

No. 04-1243.

No. 07-1039.

United States Court of Appeals, District of Columbia Circuit.

Argued February 8, 2008.

Decided August 19, 2008.

Keri N. Powell argued the cause for petitioners. With her on the briefs was David S. Baron. John D. Walke entered an appearance.

Cynthia J. Morris, Attorney, U.S. Department of Justice, argued the cause for respondent. With her on the brief was John C. Cruden, Deputy Assistant Attorney General. Christopher S. Vaden, David J. Kaplan, Jon M. Lipshultz, Attorneys, U.S. Department of Justice, and Nancy A. Ketcham-Colwill and Kerry E. Rodgers, Counsel, U.S. Environmental Protection Agency, entered appearances.

Lauren E. Freeman argued the cause for intervenors. With her on the brief were Charles H. Knauss, Leslie S. Ritts, Susan Conti, Richard S. Wasserstrom, William H. Lewis, and M. Elizabeth Cox. Ralph J. Colleli, Jr. entered an appearance.

Before: SENTELLE, Chief Judge, and GRIFFITH and KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge GRIFFITH.

Dissenting opinion filed by Circuit Judge KAVANAUGH.

GRIFFITH, Circuit Judge:

The 1990 Amendments to the Clean Air Act compel certain stationary sources of air pollution to obtain permits from state and local authorities that identify all emission limits for the source and also include "monitoring . . . requirements to assure compliance with the permit terms and conditions." 42 U.S.C. § 7661c(c). Sometimes, existing monitoring requirements do not "assure compliance." The Environmental Protection Agency ("EPA") promulgated a rule preventing state and local authorities from supplementing these inadequate monitoring requirements. We vacate this rule because it is contrary to the statutory directive that each permit must include adequate monitoring requirements.

I.

A.

Under the regulatory regime established by the Clean Air Act ("Act"), emission limits for pollutants and monitoring requirements that measure compliance applicable to any given stationary source of air pollution are scattered throughout rules promulgated by states or EPA, such as state implementation plans, id. § 7410, new source performance standards, id. § 7411, and national emission standards for hazardous air pollutants, id. § 7412. Before 1990, regulators and industry were left to wander through this regulatory maze in search of the emission limits and monitoring requirements that might apply to a particular source. Congress addressed this confusion in the 1990 Amendments by adding Title V of the Act, which created a national permit program that requires many stationary sources of air pollution to obtain permits that include relevant emission limits and monitoring requirements. Id. §§ 7661-7661f. Congress intended that EPA and state and local permitting authorities administer the permit program together.¹ Title V gives EPA a supervisory role over the program, which includes the duty to identify its "minimum elements," id. § 7661a(b), the power to establish new compliance procedures, id. § 7661c(b), and the opportunity to object to permits that do not comply with the Act, id. § 7661d(b). State and local authorities are assigned the task of issuing permits in their jurisdictions but can do so only if EPA has approved their proposals for how to implement the permit program. Id. § 7661a(d)(1). If a permitting authority fails to propose an acceptable program, responsibility for issuing permits falls to EPA. Id. § 7661a(d)(3). To date, EPA has issued final approvals to permit programs proposed by more than 100 state and local authorities.

But Title V did more than require the compilation in a single document of existing applicable emission limits, id. § 7661c(a), and monitoring requirements, id. § 7661c(c). It also mandated that "[e]ach permit issued under [Title V] shall set forth . . . monitoring . . . requirements to assure compliance with the permit terms and conditions." Id. As we explain below, there has been much back and forth among EPA, industry, and environmental groups about how "[e]ach permit" must "assure compliance."

B.

In 1992, EPA identified the "minimum elements" of the national permit program as the 1990 Amendments required, see id. § 7661a(b), by issuing its "Part 70 Rules," see 40 C.F.R. pt. 70.² Three provisions of the Part 70 Rules are relevant to this matter. Subsection 70.6(a)(3)(i)(A) requires that "[e]ach permit" identify "[a]ll monitoring . . . required under applicable monitoring and testing requirements." But "[w]here the applicable requirement does not require periodic testing," subsection 70.6(a)(3)(i)(B) obliges the permitting authority to add to the permit "periodic monitoring sufficient to yield reliable data from the relevant time period that are representative of the source's compliance with the permit."³ Finally, subsection 70.6(c)(1) — which closely tracks the language of the statute, see 42 U.S.C. § 7661c(c) — provides that "[a]ll . . . permits shall contain . . . monitoring . . . requirements sufficient to assure compliance with the terms and conditions of the permit."

For each permit issued, a permitting authority must gather the various emission limits and determine which monitoring requirements accompany them. The Part 70 Rules guide the way. Where an emission standard already specifies a monitoring requirement that is both "periodic" and sufficient to assure compliance, the permitting authority simply includes that requirement in the permit. 40 C.F.R. § 70.6(a)(3)(i)(A). Where the emission standard lacks a periodic monitoring requirement altogether, the permitting authority must create one that assures compliance and include it in the permit. Id. § 70.6(a)(3)(i)(B). There is no controversy over what the permitting authority should do in either of these scenarios.

But how should a permitting authority respond to an emission standard that has a periodic monitoring requirement inadequate to the task of assuring compliance? For example, suppose there is a standard that limits emission from a given stationary source to X units of pollutant per day. Suppose also that the standard requires annual monitoring. Where annual testing cannot assure compliance with a daily emission limit, may the permitting authority supplement the monitoring requirement "to assure compliance with the permit terms and conditions," as the Act commands? 42 U.S.C. § 7661c(c). EPA's answer to this question, what we shall call the "third scenario," has shifted over time.

EPA first engaged with this issue in 1997, when the agency took the position that state and local permitting authorities could supplement periodic monitoring requirements that failed to assure compliance. See Letter from Winston A. Smith, Director, Air, Pesticides & Toxics Mgmt Div., EPA, to Howard L. Rhodes, Director, Air Res. Mgmt. Div., Fla. Dep't of Envtl. Prot. (Dec. 11, 1997) (rejecting permits interpreting Part 70 Rules to forbid supplementation). EPA memorialized this interpretation in a 1998 Guidance that construed 40 C.F.R. § 70.6(a)(3)(i)(B) to allow supplementation by state and local permitting authorities. See PERIODIC MONITORING GUIDANCE. Subsection 70.6(a)(3)(i)(B), which on its face appeared only to cover the circumstance where no periodic monitoring had been required, was now read to include the third scenario where periodic monitoring was required but was inadequate. Industry groups petitioned this court for review of the Guidance. Their principal argument was that the Guidance unlawfully expanded § 70.6(a)(3)(i)(B) without following notice-and-comment procedures. In the alternative, they argued that § 70.6(a)(3)(i)(B) conflicted with the Act. We vacated the Guidance because it unlawfully broadened § 70.6(a)(3)(i)(B) without following proper procedures. Appalachian Power v. EPA, 208 F.3d 1015, 1028 (D.C.Cir.2000). We did not, however, speak to whether § 70.6(a)(3)(i)(B) or any other provisions in the Part 70 Rules violate the Act.

Undeterred, the agency turned from 40 C.F.R. § 70.6(a)(3)(i)(B) to § 70.6(c)(1). In two decisions objecting to permits, EPA found in § 70.6(c)(1) authority for state and local permitting authorities to supplement inadequate monitoring requirements. See Order Denying in Part and Granting in Part Petition for Objection to Permit, In re Fort James Camas Mill, Petition No. X-1999-1 (Dec. 22, 2000); Order Partially Granting and Partially Denying Petition for Objection to Permits, In re PacifiCorp's Jim Bridger and Naughton Electric Utility Steam Generating Plants, Petition No. VIII-00-1 (Nov. 16, 2000). An industry group petitioned for review of EPA's interpretation of § 70.6(c)(1), but we dismissed the challenge on jurisdictional grounds. Util. Air Regulatory Group v. EPA, 320 F.3d 272 (D.C.Cir.2003) (dismissing petition for review on standing and ripeness grounds).

In 2002, EPA proposed a regulation codifying this view of § 70.6(c)(1). The agency issued an advance notice of the rule, 67 Fed.Reg. 58,561, 58,564 (Sept. 17, 2002), and a sixty-day interim rule during the notice-and-comment period, 67 Fed. Reg. 58,529 (Sept. 17, 2002). But after an industry group challenged the sixty-day rule, see Util. Air Regulatory Group v. EPA, No. 02-1290 (D.C.Cir. filed Sept. 18, 2002), EPA had a change of view. Rather than defend the proposed rule, the agency settled the litigation by agreeing to adopt a final rule that would interpret § 70.6(c)(1) to prohibit state and local permitting authorities from supplementing inadequate monitoring requirements. See 68 Fed.Reg. 65,700, 65,701 (Nov. 21, 2003). This new rule would revise EPA's answer for the problem of the third scenario.

In 2004, EPA issued a rule to this effect, which provided that nothing in the Part 70 Rules authorized permitting authorities to supplement inadequate monitoring requirements. See 69 Fed.Reg. 3202 (Jan. 22, 2004)....