Nat'l Envtl. Dev. Association's Clean Air Project v. Envtl. Prot. Agency

• Decision Date: 30 May 2014
• Docket Number: No. 13–1035.,13–1035.
• Parties: NATIONAL ENVIRONMENTAL DEVELOPMENT ASSOCIATION'S CLEAN AIR PROJECT, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

752 F.3d 999

NATIONAL ENVIRONMENTAL DEVELOPMENT ASSOCIATION'S CLEAN AIR PROJECT, Petitioner

v.ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 13–1035.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 17, 2014.

Decided May 30, 2014.

On Petition for Review of Action of the United States Environmental Protection Agency.

Gregory G. Garre argued the cause for petitioner. On the briefs was Leslie Sue Ritts.

Kim Smaczniak, Attorney, Environmental Defense Section, U.S. Department of Justice, argued the cause for respondent. With her on the brief were Robert G. Dreher, Acting Assistant Attorney General, Environment and Natural Resources Division and Michael Horowitz, Attorney, U.S. Environmental Protection Agency.

Before: TATEL, Circuit Judge, and EDWARDS and WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

EDWARDS, Senior Circuit Judge:

Under Title V of the Clean Air Act (“CAA” or “the Act”), 42 U.S.C. §§ 7661–7700, every “major source” of pollution is required to obtain an operating permit for a fixed term. Id. § 7661a(a). Title V operating permits impose emission limitations, standards, monitoring requirements, compliance schedules, and other conditions on covered sources of pollution. See id. § 7661c. A source is considered “major” if it emits a certain amount of pollution. Id. § 7602(j). The Act also requires New Source Review (NSR) permits for a new or modified major source within an area not in attainment with National Ambient Air Quality Standards, if the source emits a certain amount of pollutants. Id. §§ 7502(c)(5), 7503. Under regulations promulgated by the Environmental Protection Agency (“EPA”), multiple pollutant-emitting activities are considered to be a single stationary source if they are, inter alia, “adjacent.” 40 C.F.R. § 71.2, § 52.21(b)(5)-(6).

In applying agency regulations, EPA has stated that determinations as to whether two or more facilities are “adjacent” should be based on the functional interrelationships of the facilities, and not simply the physical distance between the facilities. In Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Cir.2012), however, the Sixth Circuit reversed an EPA determination that a natural gas plant and associated wells were one “source” for the purpose of Title V permitting. The court held that “EPA's determination that the physical requirement of adjacency can be established through mere functional relatednessis unreasonable and contrary to the plain meaning of the term ‘adjacent.’ ” Id. at 735. It therefore found arbitrary and capricious EPA's decision to treat the company's operations as one source subject to Title V permitting. Id. at 740–41.

In December 2012, two months after EPA's petition for rehearing was denied in Summit Petroleum, the Director of EPA's Office of Air Quality and Standards wrote a directive to the Regional Air Directors of each of the ten EPA regions “to explain the applicability of the decision by the [Sixth] Circuit Court of Appeals.” Applicability of the Summit Decision to EPA Title V and NSR Source Determinations (Dec. 21, 2012), reprinted in Joint Appendix (“J.A.”) 1–2 (“ Summit Directive”). The Summit Directive states that “EPA may no longer consider interrelatedness in determining adjacency when making source determination decisions in its title V or NSR permitting decisions in areas under the jurisdiction of the [Sixth] Circuit.” Id. at 1, reprinted in J.A. 1. The Summit Directive further states that:

Outside the [Sixth] Circuit, at this time, the EPA does not intend to change its longstanding practice of considering interrelatedness in the EPA permitting actions in other jurisdictions. In permitting actions occurring outside of the [Sixth] Circuit, the EPA will continue to make source determinations on a case-by-case basis using the three factor test in the NSR and title V regulations at 40 CFR 52.21(b)(6)....

Id. This case involves a challenge to the Summit Directive.

Petitioner—an association of resource extraction and manufacturing companies subject to permitting requirements under the CAA—claims that the Summit Directive injures its members who are located outside the Sixth Circuit. According to Petitioner, facilities outside the Sixth Circuit are now at a competitive disadvantage. Petitioner contends that by establishing inconsistent permit criteria applicable to different parts of the country, the Summit Directive violates the CAA and EPA regulations.

EPA argues that the petition for review should be dismissed for three threshold reasons: (1) Petitioner lacks Article III standing because the alleged injury is entirely speculative. (2) The Summit Directive is not subject to judicial review because it is not a final agency action. (3) Petitioner's claim is not ripe for review because it does not raise a concrete issue that is fit for judicial review. And on the merits, EPA maintains that neither the CAA nor EPA regulations require it to ensure national uniformity in response to a judicial decision.

We hereby grant the petition for review and vacate the Summit Directive. We find no merit in EPA's arguments in opposition to Petitioner's claims. The Summit Directive creates a standard that gives facilities located in the Sixth Circuit a competitive advantage. It therefore causes competitive injury to Petitioner's members located outside of the Sixth Circuit. The Directive is a final agency action because it sets forth EPA's binding and enforceable policy regarding permit determinations. And Petitioner's claim is ripe for review because it presents a purely legal issue that will not benefit from further factual development.

On the merits, we hold that the Summit Directive is plainly contrary to EPA's own regulations, which require EPA to maintain national uniformity in measures implementing the CAA, and to “identify[ ] and correct[ ]” regional inconsistencies by “standardizing criteria, procedures, and policies.” 40 C.F.R. § 56.3(a), (b). We need not decide whether the Summit Directive also contravenes the requirements of the CAA.

I. Background

Pursuant to the agency's authority under the CAA, 42 U.S.C. § 7601, EPA regulations entitled “Regional Consistency” provide that:

It is EPA's policy to:

(a) Assure fair and uniform application by all Regional Offices of the criteria, procedures, and policies employed in implementing and enforcing the act; [and]

(b) Provide mechanisms for identifying and correcting inconsistencies by standardizing criteria, procedures, and policies being employed by Regional Office employees in implementing and enforcing the act....

40 C.F.R. § 56.3(a), (b). The agency's “Regional Consistency” regulations specifically apply to “EPA employees in Headquarters to the extent that they are responsible for developing the procedures to be employed or policies to be followed by Regional Offices in implementing and enforcing the act.” Id. § 56.2(b). In addition, “[a] responsible official in a Regional Office shall seek concurrence from the appropriate EPA Headquarters office on any interpretation of the Act, or rule, regulation, or program directive when such interpretation may result in inconsistent application among the Regional Offices of the act or rule, regulation, or program directive.” Id. § 56.5(b).

As noted above, the CAA requires any “major source” of air pollution to obtain an operating permit. A “major” source is “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant.” 42 U.S.C. § 7602(j). In determining whether a facility emits pollutants at a level to qualify as a “major” source, EPA aggregates emissions from multiple facilities that are (1) under common control, (2) belong to the same major industrial grouping, and (3) “are located on one or more contiguous or adjacent properties.” 40 C.F.R. § 71.2, 52.21(b)(5)-(6). Under the third requirement, EPA has long followed a general policy of “determin[ing] whether two facilities are ‘adjacent’ based on a ‘common sense’ notion of a source and the functional interrelationship of the facilities, rather than simply on the physical distance between the facilities.” Summit Petroleum, 690 F.3d at 739 (quotations omitted).

In Summit Petroleum, petitioners challenged the aggregation of emissions from multiple facilities that EPA deemed “truly interrelated,” even though the facilities were not located on contiguous, bordering properties. Id. at 741. The Sixth Circuit held that EPA's policy of considering functionally interrelated facilities “adjacent” when the facilities do not share a physical border violates the plain meaning of the word “adjacent.” Id. at 744. In response to the Summit Petroleum decision, the Director of EPA's Office of Air Quality Control Standards issued the Summit Directive explaining that EPA would no longer apply the functionally interrelated standard to facilities located in areas within the jurisdiction of the Sixth Circuit. Summit Directive, reprinted in J.A. 1. However, “[i]n permitting actions occurring outside of the [Sixth] Circuit, the EPA will continue to make source determinations on a case-by-case basis using the three factor test in the NSR and title V regulations at 40 CFR 52.21(b)(6).” Id. Petitioner claims that the Summit Directive violates EPA's “Regional Consistency” regulations, which say that “[i]t is EPA's policy to ... [a]ssure fair and uniform application by all Regional Offices of the criteria, procedures, and policies employed in implementing and enforcing the act.” 40 C.F.R. § 56.3(a).

II. Analysis

A. Threshold Issues

1. Standing

The first issue before the court is Petitioner's standing. If Petitioner lacks standing, as EPA contends, then this court lacks jurisdiction to address the petition for review.

As the Supreme Court explained in Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992):

[T]he...