Greater Detroit Resource Recovery Authority v. U.S. E.P.A.

• Decision Date: 30 August 1990
• Docket Number: No. 88-2269,88-2269
• Citation: 916 F.2d 317
• Parties: 21 Envtl. L. Rep. 20,506 GREATER DETROIT RESOURCE RECOVERY AUTHORITY and Combustion Engineering, Plaintiffs-Appellees, v. The UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 317

916 F.2d 317

21 Envtl. L. Rep. 20,506

GREATER DETROIT RESOURCE RECOVERY AUTHORITY and Combustion Engineering, Plaintiffs-Appellees, v. The UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al Defendants-Appellants.

No. 88-2269.

United States Court of Appeals Sixth Circuit.

Argued Sept. 22, 1989.

Decided Aug. 30, 1990.

John D. Pirich, Noah Eliezer Yanich, Steven D. Weyhing (argued), Miller, Canfield, Paddock & Stone, Lansing, Mich., for Greater Detroit Resource Recovery Authority.

Stanley M. Gorinson, Pillsbury, Madison & Sutro, Washington, D.C., C. Douglas Floyd (argued), Pillsbury, Madison & Sutro, San Francisco, Cal., for Combustion Engineering, Inc.

Michael M. Wenig, Thomas R. Lotterman, U.S. Dept. of Justice Land & Natural Resources Div., Washington, D.C., Gregory B. Foote, E.P.A. Air & Radiation Div., Washington, D.C., for Valdas V. Adamkus, Regional Administrator, Region V.

Michael M. Wenig, Thomas R. Lotterman, Peter R. Steenland (argued), J. Carol Williams, U.S. Dept. of Justice Land & Natural Resources Div., Gregory B. Foote, Washington, D.C., for U.S. E.P.A.

Before MERRITT, Chief Judge, KRUPANSKY, Circuit Judge, and GRAHAM, District Judge. ^*

GRAHAM, District Judge.

Defendant-appellant, the United States Environmental Protection Agency (EPA), appeals from the order of the United States District Court for the Eastern District of Michigan awarding attorney's fees under the Equal Access to Justice Act, 28 U.S.C. Sec. 2412. This litigation involves a municipal solid waste incinerator and steam generating plant owned by the Greater Detroit Resource Recovery Authority (GDRRA), a public body created by the cities of Detroit and Highland Park, Michigan. Plaintiffs-appellees are the GDRRA and Combustion Engineering, Inc., the contractor GDRRA retained to construct and operate the facility.

The Michigan Department of Natural Resources (MDNR), acting pursuant to authority delegated to it by EPA, granted Combustion Engineering a permit to construct the facility. GDRRA then issued bonds in the amount of $438,000,000 to finance the construction. Thereafter, EPA raised questions about the validity of the permit, specifically, whether MDNR had followed proper procedures in determining whether the facility's sulfur dioxide emissions were subject to the best available control technology (BACT). Construction of the facility began on May 9, 1986. On May 20, 1986, EPA notified MDNR by letter that it had made a provisional determination that the State of Michigan had not followed proper procedures with respect to the GDRRA permit and that it was revoking its delegation of authority to MDNR for the purpose of instituting proceedings to revoke the permit.

On July 7, 1986, appellees instituted this litigation seeking a declaration that the EPA had exceeded its authority in attempting to revoke the GDRRA permit, and further seeking to enjoin the EPA from any future attempt to do so. The district court established an expedited schedule for discovery and the case was submitted on cross motions for summary judgment. One week prior to the scheduled oral argument on the motions, the EPA withdrew its May 20, 1986 letter, stating that based on the facts then known to it, it had no grounds to proceed with efforts to revoke the GDRRA permit. EPA then requested that the court dismiss the lawsuit as moot. In an opinion dated October 21, 1986, the district court found that the relief sought by the appellees was not moot because EPA refused to acknowledge the validity of the permit. The court then enjoined the EPA from attempting to revoke the permit based on any evidence known or discovered as of that date. EPA did not appeal that order. Thereafter, appellees moved for costs and attorney's fees under Fed.R.Civ.P. 11 and the Equal Access to Justice Act, 28 U.S.C. Sec. 2412. The district court found that the EPA was liable for attorney's fees and expenses under the bad faith exception to the American Rule and granted appellees' motions for attorney's fees and expenses under 28 U.S.C. Sec. 2412(b). The district court awarded $161,365.62 to GDRRA and $269,193.01 to Combustion Engineering.

The EPA contends inter alia that the district court's award of attorney's fees and expenses must be reversed because the court did not have subject matter jurisdiction over this litigation.

The standard of review on the issue of subject matter jurisdiction is de novo review. See Hilliard v. United States Postal Service, 814 F.2d 325 (6th Cir.1987). Furthermore, "every federal appellate court has a special obligation to 'satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review'." Bender v. Williamsport Area School District, 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89 L.Ed.2d 501 (1986), quoting Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 165, 79 L.Ed. 338 (1934).

Unless the statute under which a party seeks attorney's fees contains an independent grant of jurisdiction, an appellate court must vacate an award of attorney's fees if the district court did not have subject matter jurisdiction over the litigation. Latch v. United States, 842 F.2d 1031, 1033 (9th Cir.1988). The Equal Access to Justice Act, 28 U.S.C. Sec. 2412, does not contain an independent grant of jurisdiction, but instead specifically requires subject matter jurisdiction as one of the predicates of an award of attorney's fees. Under 28 U.S.C. Sec. 2412(b) a court may award reasonable fees and expenses to the prevailing party in any civil action brought by or against the United States "in any court having jurisdiction of such action." The phrase "jurisdiction of such action" refers to subject matter jurisdiction, and the language of the statute requires an independent examination of that issue when a court undertakes consideration of an award of attorney's fees even though the parties may not have contested that issue in the original proceedings or, as here, declined to appeal an earlier finding on that issue. See Lane v. United States, 727 F.2d 18 (1st Cir.1984); Antosh v. Federal Election Commission, 664 F.Supp. 5 (D.D.C.1987).

Two months after this litigation was commenced, the regional administrator of Region V, EPA issued a second letter dated September 19, 1986 rescinding the letter of May 20, 1986, in which he stated, "Despite my very grave concerns regarding the sulfur dioxide best available control technology decision made by the State of Michigan for the Detroit facility, there is an insufficient basis for U.S. EPA to go forward with any action to revoke the ... permit." Thereafter, the government offered to settle the litigation by stipulating that EPA considered the permit and the Michigan BACT determination to be valid based on the known facts, but the EPA would not agree to a consent decree. The judgment rendered by the district court enjoined the EPA from any

action or attempt to revoke this permit on the basis solely of any evidence now discovered and facts known as of this date. This order does not preclude the EPA, based on additional evidence previously not available, new information, and/or new legislation, from doing what is appropriate or required at that time.

Since the court's order granted no more relief than the EPA had offered to stipulate, it logically decided not to appeal the district court's judgment.

In light of the procedural history of this case and the express language of 28 U.S.C. Sec. 2412(b), we reject appellees' argument that principles of res judicata or collateral estoppel preclude appellant from raising the issue of subject matter jurisdiction. Thus, our review of the district court's award of attorney's fees under 28 U.S.C. Sec. 2412(b) begins with the question of whether or not the district court had subject matter jurisdiction over the underlying action.

This litigation had its genesis in the EPA's performance of its functions under the Clean Air Act, 42 U.S.C. Sec. 7401 et seq. which establishes a combined federal and state program to control air pollution. Under this Act, the EPA promulgates national air quality standards and each state is required to develop and submit to EPA for approval a state implementation plan that provides for the attainment and maintenance of those standards. 42 U.S.C. Secs. 7410(a)(1) and (2). In 1977, Congress added provisions to the Act which included a program for the prevention of significant deterioration (PSD) of air quality. 42 U.S.C. Secs. 7470-7479. The PSD program is implemented through a preconstruction review and permitting procedure applicable to major emitting facilities. The permit, in turn, requires the application of the best available control technology. 42 U.S.C. Secs. 7475(a)(3) and (4). A state is required to include a PSD permit program in its state implementation plan. 42 U.S.C. Sec. 7410(a)(2)(D). If a state has failed to submit an approved PSD program, the EPA may nevertheless delegate its permit issuing authority to the state. 42 U.S.C. Sec. 7410(c)(3); 40 C.F.R. Sec. 52.21(u). Permits issued under such a delegation are considered to be EPA issued permits. See 45 Fed.Reg. 33,413 (1980).

The EPA has not approved a PSD program for inclusion in Michigan's state implementation plan. In 1979, however, the EPA executed a written agreement delegating its PSD permitting authority to MDNR. That agreement provided for whole or partial revocation of the delegation if Michigan failed to properly implement the PSD program. It is within this regulatory framework that the MDNR issued a permit to the GDRRA, and it was the EPA's revocation of its delegation of PSD authority with respect to that permit which generated this litigation.

In 1977, Congress amended Sec. 307(b)(1) of the Clean Air Act, 42 U.S.C. Sec. 7607(b)(1), so as to vest jurisdiction in the United States courts of appeals to review certain specified actions of the Administrator of the EPA and "any other final action of the Administrator under [the Act]...