Envtl. Integrity Project v. U.S. Envtl. Prot. Agency

• Decision Date: 13 August 2020
• Docket Number: No. 18-60384,18-60384
• Citation: 969 F.3d 529
• Parties: ENVIRONMENTAL INTEGRITY PROJECT; Sierra Club, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Andrew Wheeler, in his official capacity as Administrator of the United States Environmental Protection Agency, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

969 F.3d 529

ENVIRONMENTAL INTEGRITY PROJECT; Sierra Club, Petitioners,

v.UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Andrew Wheeler, in his official capacity as Administrator of the United States Environmental Protection Agency, Respondents.

No. 18-60384

United States Court of Appeals, Fifth Circuit.

FILED August 13, 2020

Gabriel Paul Clark-Leach, Environmental Integrity Project, Austin, TX, for Petitioners.

David Jay Kaplan, Senior Attorney, U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, Simi Bhat, U.S. Department of Justice, Environment & Natural Resources Division, San Francisco, CA, for Respondents.

Shannon Suzanne Broome, Esq., Hunton Andrews Kurth, L.L.P., San Francisco, CA, for Intervanor Exxon Mobil Corporation.

John Richard Hulme, Esq., Assistant Attorney General, Lisa Mitchell, Assistant Attorney General, Office of the Attorney General, Environmental Protection & Administrative Law Division, Austin, TX, for Intervenors State of Texas, Texas Commission on Environmental Quality.

Before Haynes, Graves, and Duncan, Circuit Judges.

ON PETITION FOR REHEARING

Stuart Kyle Duncan, Circuit Judge:

The petition for rehearing is DENIED. We withdraw our prior opinion, reported at 960 F.3d 236, and substitute the following:

We consider EPA's administration of the Title V permitting program under the Clean Air Act (the "Act"), 42 U.S.C. § 7401 et seq. Added to the Act in 1990, Title V is designed to consolidate in a single operating permit all substantive requirements a pollution source must comply with, including preconstruction permits previously issued under Title I of the Act. In this case, ExxonMobil sought a revised Title V permit concerning an expansion of a plant in Baytown, Texas. Petitioners Environmental Integrity Project and Sierra Club asked EPA to object on the grounds that, in their view, the underlying Title I preconstruction permit allowing the expansion was invalid. EPA rejected Petitioners’ arguments and declined to object. In so doing, EPA explained it has recently returned to its original view of Title V, under which the Title V permitting process is not the appropriate vehicle for re-examining the substantive validity of underlying Title I preconstruction permits. Petitioners ask us to review EPA's decision. Concluding EPA's interpretation of the Title V program is independently persuasive and therefore entitled to the mild form of deference recognized by Skidmore v. Swift & Co. , 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944), we deny the petition.

I.

A.

The Act "establishes a comprehensive program for controlling and improving the nation's air quality through state and federal regulation." BCCA Appeal Grp. v. EPA , 355 F.3d 817, 821–22 (5th Cir. 2003). It does so through "[a]n experiment in cooperative federalism" that divides responsibilities between EPA and the states. Luminant Generation Co. v. EPA , 675 F.3d 917, 921 (5th Cir. 2012) (quoting Michigan v. EPA , 268 F.3d 1075, 1083 (D.C. Cir. 2001) ). EPA "formulat[es] national ambient air quality standards," Util. Air Regulatory Grp. v. EPA , 573 U.S. 302, 308, 134 S.Ct. 2427, 189 L.Ed.2d 372 (2014), whereas the states bear the "primary responsibility" for implementing those standards, id. ; accord Michigan , 268 F.3d at 1083 (EPA's "overarching role is in setting standards, not in implementation").

This case involves permits issued under Title I's New Source Review ("NSR") program, which Congress added to the Act in 1977. See New York v. EPA , 413 F.3d 3 (D.C. Cir. 2005). The NSR program requires operators to obtain a preconstruction permit before building a new facility or modifying an old one. These permits are issued by the states, through mechanisms called state implementation plans ("SIPs"). Once a state has designed its SIP, the state must submit it to EPA. See generally 42 U.S.C. § 7410. EPA must review the SIP to ensure its compliance with Title I and provide notice and an opportunity to comment regarding the SIP. Id. § 7410(a)(2). Only if the SIP complies with the Act must EPA approve it. Id. § 7410(k)(3). States periodically revise their SIPs to keep up with EPA's new substantive regulations. As with their original SIPs, states have to submit revisions to EPA, which again subjects them to notice and comment and then approves them unless they "interfere" with attainment of Title I standards. Id. § 7410(l).

Title I contains provisions that apply to all SIPs. Under these provisions, before breaking ground on a new facility, an operator applies to the state for a new-source permit. The state must provide notice and an opportunity to comment before it approves individual preconstruction permits. See 40 C.F.R. § 51.161(a). The substantive requirements for preconstruction permits differ markedly depending on whether the new source is deemed "major" or "minor." A source is major if it has "the potential to emit 100 tons per year of any air pollutant." Util. Air Regulatory Grp. , 573 U.S. at 310, 134 S.Ct. 2427 (citing 42 U.S.C. §§ 7661(2)(B), 7602(j) (cleaned up)). The Act specifies "in considerable detail" the requirements states must meet to grant preconstruction permits to major sources. Luminant Generation Co. , 675 F.3d at 922 (citing 42 U.S.C. §§ 7470 – 7503 ). In contrast, the Act's requirements for minor new-source review are "sparse," allowing for "wide[ ]" variation "from State to State." Id. (citing inter alia 40 C.F.R. §§ 51.160 –64).

Ordinarily, states must evaluate and permit every new source and every new expansion of an existing source. But in 2002, EPA promulgated a rule that allows existing sources to expand without undergoing new-source review. New York , 413 F.3d at 36. Under the rule, an operator can obtain a ten-year Plantwide Applicability Limitation ("PAL") permit. Id. (citation omitted). The whole facility can avoid major new-source review for alterations if, as altered, the whole facility's emissions do not exceed levels specified in the PAL permit. Id. Here, again, states’ PAL programs must be approved by EPA, following notice and comment. See generally 42 U.S.C. § 7410.

In 1990, Congress added Title V to the Act. Title V's purpose is to provide each source a single permit that contains and consolidates all the information it needs to comply with the Act.¹ Accordingly, "Title V does not generally impose new substantive air quality control requirements." Sierra Club v. Johnson , 541 F.3d 1257, 1260 (11th Cir. 2008) (citations omitted; cleaned up). Instead, it provides for individual operating permits that "contain monitoring, record keeping, reporting, and other conditions" in one place. Id. (citations omitted). "In a sense," then, a Title V permit "is a source-specific bible for Clean Air Act compliance." Virginia v. Browner , 80 F.3d 869, 873 (4th Cir. 1996). Like Title I, Title V is administered mostly by the states. La. Dep't of Envtl. Quality v. EPA [LDEQ ], 730 F.3d 446, 447 (5th Cir. 2013) (citations omitted). Accordingly, as with Title I, states develop their own Title V permitting programs and submit them to EPA for approval. Id. (citing 42 U.S.C. § 7661a(d) ). A Title V permit usually contains all of the source's Title I preconstruction permits. Title V permits sometimes contain other state-approved preconstruction permits, issued pursuant to state-specific standards. Any such state permits must be designated as "state-only" or as not "federally enforceable" in the Title V operating permit. See 40 C.F.R. § 70.6(b)(2).

Once a state approves a Title V permit, it submits the permit to EPA for review. 42 U.S.C. § 7661d(a)(1). If the permit does not comply with Title V, EPA must object to it within forty-five days. Id. § 7661d(b)(1). If EPA does not object, "any person may petition" within sixty days of the end of the objection period for EPA to object. Id. § 7661d(b)(2). EPA then has sixty more days to decide whether to grant the petition. EPA must object to the permit "if the petitioner demonstrates to [EPA] that the permit is not in compliance with [Title V], including the requirements of the applicable implementation plan." Id.

A denial of a petition constitutes a final agency action subject to judicial review. Id. Title V permits must be renewed every five years. Id. § 7661a(b)(5). Each renewal carries with it the petition process described above.

Title V requires each permit to include four kinds of contents: (1) "enforceable emission limitations and standards," (2) a compliance schedule, (3) a monitoring and recordkeeping requirement, and (4) "such other conditions as are necessary to assure compliance with applicable requirements of this chapter, including the requirements of the applicable implementation plan." Id. § 7661c(a).² The Act does not define "applicable requirements," but EPA has defined the term in implementing regulations to mean

all of the following as they apply to emissions units in a [Title V] source ... :

(1) Any standard or other requirement provided for in the applicable implementation plan approved or promulgated by EPA through rulemaking under title I of the Act that implements the relevant requirements of the Act, including any revisions to that plan ... ; [and]

(2) Any term or condition of any preconstruction permits issued pursuant to regulations approved or promulgated through rulemaking under title I ....

40 C.F.R. § 70.2.

EPA has twice changed its interpretation of Title V and § 70.2. Immediately following Title V's passage, EPA expressed the view that a Title V permit should incorporate the source's Title I preconstruction permit limits "without further review." In the Matter of PacifiCorp Energy, Hunter Power Plant, Order on Petition No. VIII-2016-4 [Hunter Order], at 11 (Oct. 16, 2017) (quoting Proposed Operating Permit Program , 56 Fed. Reg. 21,712, 21,738 –39 (May 10, 1991)). Accordingly, a source's Title I permit "define[d]" the "applicable requirements" that must appear in a Title V operating permit pursuant to § 7661c(a) and §...