N.Y. Public Interest Research v. Whitman, 02-4033.

• Citation: 321 F.3d 316
• Decision Date: 27 February 2003
• Docket Number: No. 02-4073.,No. 02-4033.,No. 02-4077.,No. 02-4075.,02-4033.,02-4073.,02-4075.,02-4077.
• Parties: NEW YORK PUBLIC INTEREST RESEARCH GROUP, Petitioner-Appellant, v. Christine Todd WHITMAN, in her capacity as Administrator, U.S. Environmental Protection Agency, and Jane Kenny, in her capacity as Regional Administrator, Region 2, U.S. Environmental Protection Agency, Respondents-Appellees, State of New York and Erin Crotty, Commissioner of the New York Department of Environmental Conservation, Intervenors.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

321 F.3d 316

NEW YORK PUBLIC INTEREST RESEARCH GROUP, Petitioner-Appellant, v. Christine Todd WHITMAN, in her capacity as Administrator, U.S. Environmental Protection Agency, and Jane Kenny, in her capacity as Regional Administrator, Region 2, U.S. Environmental Protection Agency, Respondents-Appellees State of New York and Erin Crotty, Commissioner of the New York Department of Environmental Conservation, Intervenors.

No. 02-4033.

No. 02-4073.

No. 02-4075.

No. 02-4077.

United States Court of Appeals, Second Circuit.

Argued: November 20, 2002.

Decided: February 27, 2003.

COPYRIGHT MATERIAL OMITTED

James B. Kobak, Jr., Hughes, Hubbard & Reed, LLP, New York, NY (Adam Brodsky, of counsel, Keri Powell, Earthjustice, Washington, D.C., on the brief), for Petitioner-Appellant.

Joshua M. Levin, Environmental Defense Section, Environmental Resources Division (Apple Chapman, Office of General Counsel, U.S. Environmental Protection Agency, Eileen T. McDonough, Environmental Defense Section, on the brief for Thomas L. Sansonnetti, Assistant Attorney General, Environment and Natural Resources Division), Washington, D.C., for Respondents-Appellees (02-4033).

Eileen T. McDonough, Environmental Defense Section, Environmental Resources Division (Apple Chapman, Office of General Counsel, U.S. Environmental Protection Agency, Joshua M. Levin, Environmental Defense Section, on the brief for Thomas L. Sansonnetti, Assistant Attorney General, Environment and Natural Resources Division), Washington, D.C., for Respondents-Appellees (02-4077). Rachel Zaffrann, Assistant Attorney General, New York State Attorney General's Office, Environmental Protection Bureau, for Eliot Spitzer, Attorney General, State of New York, New York, NY, for Intervenors.

Before: F.I. PARKER, STRAUB, and B.D. PARKER, Circuit Judges.

B.D. PARKER, JR., Circuit Judge.

These challenges by the New York Public Interest Research Group ("NYPIRG") to final decisions by the United States Environmental Protection Agency ("EPA") call upon us to clarify certain aspects of federal oversight authority in the cooperative state/federal regulatory scheme established by the Clean Air Act ("CAA"), 42 U.S.C. §§ 7401-7671q. Generally speaking, we must determine whether the EPA responded appropriately after it was alerted to deficiencies in New York's program for issuing permits to major stationary sources of air pollution.

Title V of the CAA requires these sources to receive operating permits and authorizes the EPA to approve and monitor state-run permitting programs. NYPIRG seeks review of several final rulings by the EPA, approving the program administered by the State of New York and the New York Department of Environmental Conservation ("DEC").

Although the EPA was aware that New York's Title V program was deficient in certain respects, the EPA gave it final approval because the DEC had corrected all the deficiencies originally identified by the EPA when the program was granted interim approval. See 66 Fed.Reg. 63180 (Dec. 5, 2001); 67 Fed.Reg. 5216 (Feb. 5, 2002). NYPIRG contends that a state's permitting program may not be finally approved if it is defective, no matter when the deficiencies are identified. NYPIRG further contends that, even if full approval was proper, the EPA was required by the CAA to issue a Notice of Deficiency ("NOD") to the DEC based on the deficiencies. The EPA, on the other hand, claims that it was entitled to use its discretion under the CAA to forego the NOD procedure, particularly in light of the DEC's commitment to remedy the existing deficiencies. Finally, NYPIRG contends that the EPA violated its obligation under the CAA to object to defective permits issued by the DEC to three facilities-Albert Einstein College of Medicine at Yeshiva University, Action Packaging Corporation, and Kings Plaza Total Energy Plant-and instead erroneously fashioned a rule excusing objections to deficiencies determined by the EPA to be harmless.

We affirm the EPA's decision to approve New York's Title V permit program, as well as its decision not to issue a NOD. However, we vacate the EPA's decision not to object to the three draft permits and remand that issue to the EPA for further proceedings.

I. Background

A. The Clean Air Act

What we first observed two decades ago remains true today: "Few statutes present more complex problems for the nation's courts than" the CAA, "designed to safeguard our precious air resources. And, fewer are more important." Connecticut v. EPA, 696 F.2d 147, 151 (2d Cir.1982). The CAA, signed into law by President Lyndon Johnson in 1963, was the nation's first modern environmental law. See S.Rep. No. 228, 101st Cong., 2d Sess. 13 (1989), at 1, reprinted in 1990 U.S.C.C.A.N. 3385, 3387. It is an intricate regulatory regime intended to "protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population." 42 U.S.C. § 7401(b)(1). As part of its "bold experiment in cooperative federalism," Connecticut, 696 F.2d at 151, the CAA places the primary responsibility for enforcement on state and local governments, but it also provides for "Federal financial assistance and leadership ... for the development of cooperative Federal, State, regional, and local programs to prevent and control air pollution." 42 U.S.C. § 7401(a)(3), (4).

In 1990, Congress added Title V to the Act, which requires major stationary sources of air pollution to receive operating permits incorporating CAA requirements and establishes a procedure for federal authorization of state-run Title V permitting programs. See 42 U.S.C. §§ 7661-7661f. Title V permits do not impose additional requirements on sources but, to facilitate compliance, consolidate all applicable requirements in a single document. See 42 U.S.C. § 7661a(a); Virginia v. Browner, 80 F.3d 869, 873 (4th Cir.1996) (Title V permit "is a source-specific bible for Clean Air Act compliance.").

B. New York's Title V Permit Program

Section 502(d)(1) of the CAA authorizes the EPA to approve permit programs meeting Title V's requirements. 42 U.S.C. § 7661a(d)(1). The CAA directs the EPA to promulgate regulations setting forth the minimum elements of a state permit program, which must include certain requirements identified in the Act. 42 U.S.C. § 7661a(b). Congress established a multi-step process leading to the EPA's approval of state programs. The process incorporates firm deadlines. See 42 U.S.C. § 7661a(d). Pursuant to this statutory schedule, programs were to begin operating no later than November 16, 1996, six years after Title V became law. In the event that a program was not approved by that date, the CAA contemplated stiff sanctions. The state would be exposed to financial penalties, including the loss of federal highway funds. See 42 U.S.C. §§ 7661a(d)(2)(B) and 7509(b). The EPA, moreover, would be required to implement a federal Title V permitting program in that state, pursuant to the EPA's regulations in 40 C.F.R. § 71. See 42 U.S.C. § 7661a(d)(3).

New York, through the DEC, submitted its Title V program to the EPA for approval in November 1993. On November 7, 1996, shortly before the statutory deadline for either the granting of full approval or the assumption of permitting responsibilities by the EPA, the EPA granted New York "interim approval"—a procedure provided for by the CAA—determining that "the State has demonstrated that the program substantially meets the minimum requirements for an interim State operating permits program." 61 Fed.Reg. 57589, 57592.

Under the CAA, interim approval "shall expire ... not later than 2 years after such approval, and may not be renewed." 42 U.S.C. § 7661a(g). When the EPA granted interim approval, it identified eight deficiencies that needed to be addressed so that a fully approved program could be in place by the expiration of interim approval.¹ Notwithstanding its awareness of the statutory deadlines, the EPA disregarded them and repeatedly extended interim approval of New York's program, as well as those of other states across the country. See 61 Fed.Reg. 56368 (Oct. 31 1996); 62 Fed.Reg. 45732 (Aug. 29, 1997); 65 Fed.Reg. 7333 (Feb 14, 2000). New York's last extension occurred on May 22, 2000, when it was extended until December 1, 2001. See 65 Fed.Reg. 32035. In response to this practice, NYPIRG and the Sierra Club filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit, challenging the legality of these extensions. See Sierra Club v. EPA, No. 00-1262 (D.C.Cir.). This lawsuit was settled in November 2000. In the settlement agreement, the EPA committed to start operating permitting programs under its own regulations by December 1, 2001, for each state not fully approved by that date.

Pursuant to the agreement, the EPA also published a Federal Register notice on December 11, 2000, inviting public comment on deficiencies in state Title V programs and committing to issue a NOD "for any claimed shortcoming in an operating permits program that [the EPA agreed] constitutes a `deficiency' within the meaning of [40 C.F.R.] part 70." 65 Fed.Reg. 77376, 77377 (Dec. 11, 2000). On March 11, 2001, NYPIRG, a nonprofit group consisting mainly of college students organized to advocate for issues concerning the environment and public health, responded to the EPA's invitation for public comment by submitting an extensive discussion of perceived shortcomings in New York's permit program, under which permits had been issued pursuant to the EPA's November 7, 1996 grant of interim approval. In its letter, NYPIRG identified nine alleged deficiencies-which, are with minor exceptions, the same perceived problems at issue in these appeals-and requested the issuance of a NOD to the DEC.² On October 25, 2001, however, the EPA published a proposed full approval of New York's program based on its determination that the eight deficiencies...