Natural Res. Def. Council v. Poet Biorefining-North Manchester, LLC
| Decision Date | 02 September 2014 |
| Docket Number | No. 49S02–1405–MI–313.,49S02–1405–MI–313. |
| Citation | 15 N.E.3d 555 |
| Parties | NATURAL RESOURCES DEFENSE COUNCIL, Appellant (Respondent below), v. POET BIOREFINING–NORTH MANCHESTER, LLC, Poet Biorefining–Cloverdale, LLC, Central Indiana Ethanol, Inc., and the Indiana Department of Environmental Management, Appellees (Petitioners below), Green Plains Bluffton, LLC, and Andersons Clymers Ethanol, LLC, Intervenors below. |
| Court | Indiana Supreme Court |
Kim E. Ferraro, Valparaiso, IN, Benjamin H. Longstreth, Washington, D.C., Attorneys for Appellant.
Therese A. Czajka, Indianapolis, IN, Attorney for Appellees, Poet Biorefining–North Manchester, LLC, and Poet Biorefining–Cloverdale, LLC.
Anthony C. Sullivan, E. Sean Griggs, Mark J. Crandley, Timothy A. Haley, Indianapolis, IN, Attorneys for Appellee, Central Indiana Ethanol, Inc.
Gregory F. Zoeller, Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Carol S. Comer, Andrew R. Falk, Deputy Attorneys General, Attorneys for Appellee, Indiana Department of Environmental Management.
Vicki J. Wright, Bryan S. Strawbridge, Indianapolis, IN, Attorneys for Intervenor, Green Plains Bluffton, LLC.
Joseph S. Simpson, Louis E. Tosi, Toledo, OH, John E. Haller, Columbus, OH, Attorneys for Intervenor, The Andersons Clymers Ethanol, LLC.
John S. Paniaguas, Chicago, IL, Charles H. Knauss, Shannon S. Broome, Robert T. Smith, Washington, D.C., Attorneys for Amicus Curiae, The Renewable Fuels Association.
, Justice.
Agencies at both the state and federal level are tasked with promulgating, interpreting, and enforcing specific regulations pertaining to their particular area of expertise. Because of the agencies' degree of expertise, courts exercise significant deference in reviewing those interpretations. Here, Indiana's environmental agency revised its interpretation of a regulatory term and that interpretation was challenged and subjected to judicial review. But in light of the deference we show to such an agency assessment of its own regulations, we find the new interpretation reasonable—and because no more formal revision process was required, we affirm the trial court.
The U.S. Clean Air Act is a federal framework through which states can develop pollution prevention and control programs, and it seeks to encourage “reasonable Federal, State, and local government actions” consistent with the standards contained within that framework. 42 U.S.C. § 7401(c)
. To this end, the federal government—through Congress and the Environmental Protection Agency—establishes National Ambient Air Quality Standards, and the individual states must submit to the EPA their plans to implement or enforce the NAAQS within their borders. 42 U.S.C. §§ 7409, 7410(a)(1). These State Implementation Plans do not have effect until they are approved by the EPA. See Envtl. Def. v.
EPA, 467 F.3d 1329, 1331 (D.C.Cir.2006). Any modification of a SIP must also be approved by the EPA before it has effect, see
Sierra Club v. Ind.–Ky. Elec. Corp., 716 F.2d 1145, 1152 (7th Cir.1983), thus an “existing SIP remains the ‘applicable implementation plan’ even after the State has submitted a proposed revision,” General Motors Corp. v. U.S., 496 U.S. 530, 540, 110 S.Ct. 2528, 110 L.Ed.2d 480 (1990).
The Clean Air Act also requires states to designate areas within their boundaries as either meeting the applicable NAAQS (“attainment” areas) or not meeting the applicable NAAQS (“nonattainment” areas). 42 U.S.C. § 7407(d)
. State SIPS are required to contain pollutant emission limitations and other regulatory measures in order “to prevent significant deterioration of air quality” within those designated attainment areas. 42 U.S.C. § 7471. And under the auspices of the Act's Prevention of Significant Deterioration program, no “major emitting facility” may be constructed or undergo major modifications without receiving a permit. 42 U.S.C. §§ 7475
, 7479(C).
The Clean Air Act defines “major emitting facility” as a stationary facility capable of emitting airborne pollutants, subject to one of two broad categorizations. It is either one of twenty-eight types of facilities specifically listed in the Clean Air Act “which emit, or have the potential to emit, one hundred tons per year or more of any air pollutant,” or it is “any other source with the potential to emit two hundred and fifty tons per year or more of any air pollutant.” 42 U.S.C. § 7479(1)
.
PSD review for a major emitting facility's permit requires a demonstration that “emissions from construction or operation of such facility will not cause, or contribute to, air pollution” in excess of set standards and that “the proposed facility is subject to the best available control technology for each pollutant.” 42 U.S.C. § 7475(a)(3), (4)
. Those major emitting facilities contained within the list of twenty-eight industrial source categories are also subject to stricter monitoring of their emission levels: their emission levels include not only the actual emissions directly produced by the facility (such as smoke from a smoke stack), but also “fugitive emissions” (such as pollutants that might leak from pipes or particles that might blow off the facility). 42 U.S.C. § 7602(j) ; 40 C.F.R. §§ 51.166(b)(1)(iii), 52.21(b)(1)(iii).
One of the twenty-eight specifically identified categories of industrial facility constituting a major emitting facility if it exceeds the 100 tons of pollutants per year threshold is “chemical process plants.” 42 U.S.C. § 7479
.1 The term “chemical process plant” is not defined by the Clean Air Act, but up until 2007 the EPA consistently interpreted the term to include fuel ethanol plants. Thus, if a fuel ethanol plant was capable of exceeding the one hundred ton per year threshold it was classified as a major source facility; and if it was located in an attainment area then it was subject to PSD review and permitting.
On May 1, 2007, the EPA issued a final rule modifying the definition of major emitting facilities (the “Ethanol Rule”). 72 Fed.Reg. 24060
. The rule, effective July 2, 2007, amended the portions of the Clean Air Act and its supporting regulations to expressly exclude fuel ethanol plants from the term “chemical process plant.” 72 Fed.Reg. at 24061 ; see 40 C.F.R. §§ 51.166(b)(1)(iii)(t), 52.21(b)(1)(iii)(t) ().
Indiana first submitted its SIP in 1972. See 40 C.F.R. § 52.770(a) (1998)
. In 2003, Indiana submitted an amendment to its SIP for EPA approval on February 1, 2002, incorporating PSD regulations; the EPA approved the amendments effective April 2, 2003. 68 Fed.Reg. 9892 ; see generally 326 Ind. Admin. Code 2–2. Since that time, Indiana has not formally modified or amended its SIP through the complete EPA approval process in any way relevant to this case.
The PSD provisions of Indiana's SIP largely parallel the Clean Air Act, in that the construction or modification of a “major stationary source” triggers PSD review and requirements. 326 Ind. Admin. Code 2–2–2(a)
. And a “major stationary source” in Indiana's SIP, like the “major emitting facility” from the Clean Air Act, includes sources that are either listed as one of the same twenty-eight industrial facility categories and capable of emitting more than 100 tons per year of a regulated pollutant, 326 Ind. Admin.Code 2–2–1(ff)(l ), or are a stationary source capable of emitting 250 tons per year of a regulated pollutant, 326 Ind. Admin. Code 2–2–1(ff)(2). Like the Clean Air Act, chemical process plants are listed as one of the twenty-eight specific industrial categories, 326 Ind. Admin. Code 2–2–1(ff)(1)(U), and like the Clean Air Act the phrase “chemical process plant” is undefined in Indiana's SIP.
Up until the EPA issued its Ethanol Rule in 2007, Indiana consistently tracked the EPA's prior stance and interpreted “chemical process plant” to include fuel ethanol plants for the purposes of the Indiana PSD SIP. But after the Ethanol Rule was issued, IDEM began following the new EPA interpretation.
In 2011, the Indiana General Assembly passed a law providing that for purposes of Indiana's SIP, “chemical process plants” did not include fuel ethanol plants. Act of May 10, 2011, Public Law 159–2011, § 21(e), 2011 Ind. Acts 1614–15; Ind.Code § 13–17–3–4(e)
(Supp.2011).2 IDEM then published a nonrule policy document, citing the EPA's Ethanol Rule and affirming its intention to interpret the phrase “chemical process plants” in Indiana's SIP in accordance with the Ethanol Rule—in other words, to exclude ethanol plants from being classified as chemical process plants. 20110525 Ind. Reg. 318110311NRA (May 25, 2011). This change was then incorporated into the Indiana Administrative Code, see 326 Ind. Admin. Code 2–2–1(ff)(1)(U), but again, Indiana's SIP has not yet been amended through the EPA approval process to codify this new interpretation.
The facilities at issue in this case have the potential to emit more than 100 tons per year of pollutants, but less than 250 tons per year. But they produce fuel-grade ethanol, and whether such facilities are treated as chemical process plants therefore determines whether they are major stationary sources—and subject to the more rigorous PSD requirements—or not.
On March 26, 2010, IDEM issued an operating permit to Putnam County Ethanol, LLC (“Putnam County”) for an ethanol facility. The permit identified the Putnam County facility as not being one of the twenty-eight source categories, and classified it as a “minor source.” The permit therefore allowed the facility to emit pollutants up to 250 tons per year before PSD review would be triggered. And on May 5, 2010, IDEM issued a similar permit to POET Biorefining–North Manchester (“POET Biorefining”) for an ethanol...
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