Merrick v. Diageo Americas Supply, Inc.

• Decision Date: 02 November 2015
• Docket Number: No. 14–6198.,14–6198.
• Citation: 805 F.3d 685
• Parties: Bruce MERRICK, et al., Plaintiffs–Appellees, v. DIAGEO AMERICAS SUPPLY, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

805 F.3d 685

Bruce MERRICK, et al., Plaintiffs–Appellees

v.DIAGEO AMERICAS SUPPLY, INC., Defendant–Appellant.

No. 14–6198.

United States Court of Appeals, Sixth Circuit.

Argued: Aug. 6, 2015.

Decided and Filed: Nov. 2, 2015.

Rehearing En Banc Denied Dec. 7, 2015.^*

ARGUED:Ryan A. Shores, Hunton & Williams LLP, Washington, D.C., for Appellant. William F. McMurry, William F. McMurry & Associates, Louisville, KY, for Appellees. ON BRIEF:Ryan A. Shores, William L. Wehrum, Andrew D. Knudsen, Hunton & Williams LLP, Washington, D.C., Walfrido J. Martinez, Hunton & Williams LLP, New York, N.Y., John S. Reed, Rebecca A. Naser, Brooks D. Kubik, Megan L. Renwick, Reed Weitkamp Schell & Vice PLLC, Louisville, KY, for Appellant. William F. McMurry, William F. McMurry & Associates, Louisville, KY, Douglas H. Morris, Lea A. Player, Morris & Player PLLC, Louisville, KY, for Appellees. Peter D. Keisler, Quin M. Sorenson, Sidley Austin LLP, Washington, D.C., J. Philip Calabrese, Porter Wright Morris & Arthur LLP, Cleveland, OH, Robert L. Brubaker, L. Bradfield Hughes, Eric B. Gallon, Porter Wright Morris & Arthur LLP, Columbus, OH, for Amici Curiae.

Before: SILER, ROGERS, and STRANCH, Circuit Judges.

OPINION

ROGERS, Circuit Judge.

This interlocutory appeal concerns whether the federal Clean Air Act preempts common law claims brought against an emitter based on the law of the state in which the emitter operates. The Clean Air Act's text makes clear that the Act does not preempt such claims. This conclusion is further supported by the Act's structure and history, together with relevant Supreme Court precedents.

Diageo Americas Supply, Inc. distills and ages whiskey at its Louisville facilities. The distillation and aging process results in tons of ethanol emissions. Ethanol vapor from the facilities wafts onto nearby real and personal property where the ethanol combines with condensation to propagate whiskey fungus. The whiskey fungus allegedly “creates an unsightly condition [on the property,] requiring abnormal and costly cleaning and maintenance, [and causes] early weathering of surfaces [and] unreasonable and substantial annoyance and unreasonable interference with the use and enjoyment of the property.”

Ethanol emissions are regulated under the Clean Air Act. As explained by the Third Circuit in a similar case, the Clean Air Act is:

a comprehensive federal law that regulates air emissions under the auspices of the United States Environmental Protection Agency (“EPA”). Congress enacted the law in response to evidence of the increasing amount of air pollution created by the industrialization and urbanization of the United States and its threat to public health and welfare. 42 U.S.C. § 7401(a)(2). The Clean Air Act states that air pollution prevention and control is the primary responsibility of individual states and local governments but that federal financial assistance and leadership is essential to accomplish these goals. Id. § 7401(a)(3)-(4). Thus, it employs a “cooperative federalism” structure under which the federal government develops baseline standards that the states individually implement and enforce. In so doing, states are expressly allowed to employ standards more stringent than those specified by the federal requirements. 42 U.S.C. § 7416.

The Clean Air Act makes the EPA responsible for developing acceptable national ambient air quality standards (“NAAQS”), which are meant to set a uniform level of air quality across the country in order to protect the populace and the environment. Id. § 7409(b)(1). Before such levels are adopted or modified by the EPA, “a reasonable time for interested persons to submit written comments” must be provided. Id. § 7409(a)(1)(B). The EPA itself does not typically regulate individual sources of emissions. Instead, decisions regarding how to meet NAAQS are left to individual states. Id. § 7410(a)(1). Pursuant to this goal, each state is required to create and submit to the EPA a State Implementation Plan (“SIP”) which provides for implementation, maintenance, and enforcement of NAAQS within the state. Id. All SIPs must be submitted to the EPA for approval before they become final, and once a SIP is approved, “its requirements become federal law and are fully enforceable in federal court.” Her Majesty the Queen in Right of the Province of Ontario v. Detroit, 874 F.2d 332, 335 (6th Cir.1989) (citing 42 U.S.C. § 7604(a) ).

States are tasked with enforcing the limitations they adopt in their SIPs. They must regulate all stationary sources located within the areas covered by the SIPs, 42 U.S.C. § 7410(a)(2)(C), and implement a mandatory permit program that limits the amounts and types of emissions that each stationary source is allowed to discharge, id. §§ 7661a(d)(1), 7661c(a). “[E]ach permit is intended to be a source-specific bible for Clean Air Act compliance containing in a single, comprehensive set of documents, all [Clean Air Act] requirements relevant to the particular polluting source.” North Carolina, ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d 291, 300 (4th Cir.2010) (internal quotation marks omitted). Furthermore, pursuant to the federal Prevention of Significant Deterioration of Air Quality program in areas attaining NAAQS, “a covered source must, among other things, install the ‘best available control technology [ ] for each pollutant subject to regulation....’ ” Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 133 (D.C.Cir.2012) (quoting 42 U.S.C. § 7475(a)(4) ).

....The Clean Air Act contains a “citizen suit” provision, ... [that in turn contains] a “savings clause” which provides, in pertinent part:

Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any emission standard or limitation or to seek any other relief (including relief against the Administrator or a State agency).

42 U.S.C. § 7604(e). This is the Clean Air Act's “citizen suit savings clause.”

The Clean Air Act also contains a separate savings clause entitled “Retention of State authority,” codified at 42 U.S.C. § 7416. This provision focuses on states' rights, and reads as follows:

Except as otherwise provided ... nothing in this chapter shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution....

Id. § 7416. This is the Clean Air Act's “states' rights savings clause.”

Bell v. Cheswick Generating Station, 734 F.3d 188, 190–91 (3d Cir.2013), cert. denied sub nom. GenOn Power Midwest, L.P. v. Bell, ––– U.S. ––––, 134 S.Ct. 2696, 189 L.Ed.2d 739 (2014) (some internal citations omitted).

Diageo's Clean Air Act obligations with respect to the Louisville facilities are set out in the terms of a Federally Enforceable District Origin Operating Permit issued and overseen by the Louisville Metro Air Pollution Control District. The permit prescribes detailed requirements for data collection, recordkeeping, and reporting. It also expressly incorporates most of the regulations of the air pollution control district, including Regulation 1.09, which provides:

No person shall permit or cause the emission of air pollutants which exceed the requirements of the District regulations or which cause injury, detriment, nuisance, or annoyance to any considerable number of persons or to the public or which endanger the comfort, repose, health, or safety of any such persons or the public or which cause or have a natural tendency to cause injury or damage to business or property.

Finally, the permit sets limits for emissions of various pollutants from the facilities. For purposes of these limits, the permit distinguishes between fugitive and non-fugitive emissions. Fugitive emissions are those emissions that “could not reasonably pass through a stack, chimney, vent, or other functionally equivalent opening,” i.e. , emissions that cannot reasonably be channeled through some kind of screening mechanism. 40 C.F.R. § 52.21(b)(20). Non-fugitive emissions, by contrast, are those emissions that can reasonably be channeled through a screening mechanism. For volatile organic compounds, including ethanol, the permit caps non-fugitive emissions at 100 tons per year. The permit does not cap fugitive ethanol emissions, i.e. , those from Diageo's storage warehouses.

The plaintiffs in this case—owners, lessors, and renters of nearby properties affected by whiskey fungus—complained to the air pollution control district about the proliferation of whiskey fungus on their properties. In response, the district undertook an investigation that resulted in the issuance of a Notice of Violation letter to Diageo on September 7, 2012. In the letter, the district stated that, between June 2011 and May 2012, it received 27 complaints from residents living near the facilities of a “black, sooty substance covering ... everything exposed to the outdoors.” The district found that Diageo had violated District Regulation 1.09 because:

Diageo caused and allowed the emission of an air pollutant which crossed its property line causing an injury and nuisance to nearby neighborhoods and the public. Diageo's warehouse emissions present a current and continuing threat to [the] public, endangering the comfort and repose of its neighbors. Diageo's warehouse emissions cause damage to nearby property and have the natural tendency to continue causing damage.

The Notice of Violation letter instructed Diageo to “submit to the District for approval a compliance plan for the abatement and control of emissions from its warehouses that are contributing to a nuisance, in accordance with District Regulation 1.12 by October 5, 2012.” Diageo disputed that its operations at the facilities violated any district regulation, but nevertheless committed to vacating two of its whiskey aging warehouses to eliminate the...