Club v. Partners

• Decision Date: 31 May 2011
• Docket Number: No. 10–8032.,10–8032.
• Citation: 646 F.3d 1258,72 ERC 1961
• Parties: SIERRA CLUB, Plaintiff–Appellant,v.TWO ELK GENERATION PARTNERS, LIMITED PARTNERSHIP, Defendant–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

646 F.3d 1258

72 ERC 1961

SIERRA CLUB, Plaintiff–Appellant,

v.TWO ELK GENERATION PARTNERS, LIMITED PARTNERSHIP, Defendant–Appellee.

No. 10–8032.

United States Court of Appeals, Tenth Circuit.

May 31, 2011.

Elena Saxonhouse (and Sanjay Narayan of Sierra Club Environmental Law Program, on the briefs), San Francisco, CA, for Plaintiff–Appellant.Michael C. Theis (and Andrew C. Lillie of Hogan, Lovells, US, L.L.P., Denver, CO, Mary A. Throne of Throne Law Office, P.C., Cheyenne, WY, on the brief), for Defendant–Appellee.Before KELLY, TACHA, and LUCERO, Circuit Judges.PAUL KELLY, JR., Circuit Judge.

Plaintiff–Appellant Sierra Club filed this action on January 29, 2009 under the citizen suit provision of the Clean Air Act (“CAA”), 42 U.S.C. § 7604(a)(3), alleging that Defendant–Appellee Two Elk Generation Partners (“Two Elk”) is attempting to build a coal-fired power plant (“Power Plant”) with an invalid Prevention of Significant Deterioration (“PSD”) permit in violation of the CAA.¹ The district court granted Two Elk's motion to dismiss, holding that Sierra Club's suit was barred by the doctrine of issue preclusion. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

Background

Two Elk first proposed building the Power Plant in 1996, and the Wyoming Department of Environmental Quality (“DEQ”) issued a construction permit, CT–1352, in February 1998. Aplt.App. at 14. The DEQ administers and enforces the Wyoming Environmental Quality Act and is the primary regulatory authority for air quality in Wyoming. See Powder River Basin Res. Council v. Wyo. Dep't of Envtl. Quality, 226 P.3d 809, 813 (Wyo.2010). In February 2000, DEQ issued a revised permit, CT–1352A, which required Two Elk to begin construction no later than February 2002. Aplt.App. at 14. Two Elk received an extension until August 2002, but in September 2002, DEQ advised Two Elk via letter that CT–1352A was no longer valid because Two Elk had not commenced construction on the Power Plant. Id. at 14–15, 100. Two Elk appealed the DEQ's determination to the Wyoming Environmental Quality Council (“Council”), a separate and independent board of seven members that hears and determines cases arising under the laws, rules, regulations, standards or orders issued or administered by the DEQ. Id. at 15; Wyo. Outdoor Council v. Wyo. Dep't of Envtl. Quality, 225 P.3d 1054, 1056–57 (Wyo.2010) (describing Council); Wyo. Stat. Ann. § 35–11–112. On May 29, 2003, the Council approved a joint stipulation between the parties, which resulted in a modified permit, CT–1352B (the “Permit”). Aplt.App. at 15. In accordance with the PSD provisions of the Wyoming Air Quality Standards and Regulations (“WAQSR”)—which the EPA has determined comply with the CAA, 40 C.F.R. § 52.2630—the Permit provided that if (1) construction or modification did not commence by May 29, 2005 or (2) construction was discontinued for a period of twenty-four months or more, the Permit would become invalid. Aplt.App. at 78; 6 WAQSR § 2(h). Specifically, the Permit states that before May 29, 2005, Two Elk was required to (1) complete construction on any one of the following foundations: main boiler, main stack, stream turbine, or air-cooled condenser, and (2) enter into a binding contract to purchase a site-specific main boiler or steam turbine. Aplt.App. at 78. The Council retained jurisdiction over the matter to determine Two Elk's compliance with the joint stipulation. Id. at 87.

At some point, DEQ determined that Two Elk commenced construction prior to May 29, 2005, as required by the Permit. Id. at 88. Two Elk then filed an unopposed motion to dismiss the matter before the Council. Id. at 87. On July 18, 2005, after a hearing at which the parties were given an opportunity to be heard concerning the motion, the Council issued an order (“2005 Order”) finding that Two Elk had commenced construction on the Power Plant by pouring a foundation for the Power Plant's exhaust stack and entering into a contract to purchase a main boiler. Id. at 87–88. The Council concluded that the Permit was valid, dismissed the matter, and terminated jurisdiction. Id.

On August 22, 2007, DEQ sent a letter to Two Elk stating that the Permit was no longer valid because construction had been discontinued for more than twenty-four months since first commenced. Id. at 208. On October 19, 2007, Two Elk filed a Petition for Review and Request for Immediate Stay with the Council, asking the Council to review the revocation of the Permit. Id. at 145. On November 21, 2007, after Two Elk disclosed confidential business information to DEQ, the two parties entered a Joint Stipulated Settlement Agreement. Id. at 145–46. The Settlement stated that “[b]ased on its review of confidential business information and other documentation provided by [Two Elk], the [DEQ] has determined that [Two Elk] has not discontinued construction for a period of 24 months or more and is in compliance with [the Permit].” Id. at 72. On the same day, Two Elk and DEQ filed a Joint Motion for Dismissal of Appeal, Approval of Settlement Stipulation, and Request for Setting of Hearing. Id. at 91–93, 146.

The Council conducted a hearing on November 28, 2007 where Council members expressed concern that the delay in construction meant that the Permit was outmoded and did not require the implementation of newer and more efficient emissions technologies, and also that Two Elk was tying up a portion of Wyoming's allotted pollution. Id. at 104–06. Two Elk assured the Council that it was taking steps to complete construction, and a DEQ representative stated that the Settlement Agreement required Two Elk to apply newer technology, as required by DEQ-issued permits for other power plants. Id. at 97. On December 3, 2007, the Council issued an order approving the Settlement Agreement, approving the withdrawal of the DEQ's August 22 letter, and dismissing Two Elk's appeal (“2007 Order”). Id. at 114–15. The 2007 Order specifies that all the terms of the Settlement Agreement are adopted. Id. at 114.

At no point prior to the 2007 Order did Sierra Club attempt to intervene in the proceedings before the Council. Id. at 147. On December 20, 2007, however, Sierra Club filed a Motion to Intervene and for Reconsideration and Vacation of the Council's 2007 Order. Id. The Council determined that it lacked jurisdiction over the dispute and dismissed the motion. Id.

On December 20, 2007, Sierra Club also filed a Petition for Review of Administrative Action in state district court pursuant to the Wyoming Administrative Procedures Act, Wyo. Stat. Ann. § 16–3–114. Aplt.App. at 144. Sierra Club argued, among other things, that none of the facts in the Joint Stipulated Settlement Agreement supported the Council's 2007 Order approving DEQ's determination that Two Elk had engaged in continuous, on-site construction during the relevant twenty-four month period. Id. at 147–48. The state court rejected this argument and affirmed the Council's 2007 Order on March 12, 2009. Id. at 160. On April 9, 2009, Sierra Club appealed to the Wyoming Supreme Court, but voluntarily dismissed that appeal. Id. at 313, 320.

On January 29, 2009, as the state court decision was pending, Sierra Club filed its citizen suit under the CAA in federal court, seeking a declaration that Two Elk lacked a valid permit to construct the Power Plant in violation of 42 U.S.C. § 7475(a), and penalties under 42 U.S.C. § 7604(g). Id. at 22. Specifically, Sierra Club asserted that the Permit is invalid because Two Elk failed to commence construction prior to May 29, 2005, and, even if it did commence construction, the Permit is still invalid because Two Elk discontinued construction for a period of twenty-four months after that time. Id. at 21–22. Two Elk filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6), arguing that these issues were already decided by the Council and thus were barred by the doctrine of claim preclusion. Id. at 61–66. In addition, Two Elk argued that the court should abstain from exercising federal jurisdiction over the matter pursuant to the Burford abstention doctrine. Id. at 51–61.

The district court declined to abstain under Burford, but granted Two Elk's motion to dismiss because Sierra Club's citizen suit was barred by the Council's 2005 and 2007 Orders under the doctrine of issue preclusion. Id. at 330–32, 336–45. Sierra Club moved for reconsideration, or, in the alternative, clarification pursuant to Fed.R.Civ.P. 59(e) based on the court's misunderstanding of the facts and new evidence. Id. at 382–385. The court denied the motion on March 23, 2010. Id. at 525.

On appeal, Sierra Club argues that the district court erred because the statutory language of the CAA establishes the circumstances in which a citizen suit may be precluded by a state action and those circumstances were not met here. In addition, Sierra Club contends that its citizen suit cannot be barred under the doctrine of issue preclusion because Sierra Club was not a party to the administrative proceedings and was not in privity with the DEQ, and the Council did not resolve disputed issues of fact in an adversarial proceeding. Aplt. Br. at ii-iii, 1–2. This court reviews a dismissal under Fed.R.Civ.P. 12(b)(6) de novo. Moss v. Kopp, 559 F.3d 1155, 1161 (10th Cir.2009).

Discussion

A. Preclusion Under the CAA

Sierra Club first argues that the statutory language of the CAA establishes the only way in which a citizen suit may be precluded by a state action, and that those circumstances were not present here. Aplt. Br. at 31–32. Under the CAA, a citizen suit may not be commenced “if the Administrator or State has commenced and is diligently prosecuting a civil action in a court of the United States or a State to require compliance with the standard, limitation, or order, but in any such action in a court of the United States any person may intervene as a matter of right.” 42 U.S.C. § 7604(b)(1)(B).

Sierra Club's argument...