Sierra Club, Inc. v. Sandy Creek Energy Associates, L.P.

• Decision Date: 23 November 2010
• Docket Number: No. 09-51079,09-51079
• Citation: 71 ERC 1993,627 F.3d 134
• Parties: SIERRA CLUB, INC.; Public Citizen, Inc., Plaintiffs-Appellants, v. SANDY CREEK ENERGY ASSOCIATES, L.P., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

627 F.3d 134

71 ERC 1993

SIERRA CLUB, INC.; Public Citizen, Inc., Plaintiffs-Appellants,

v.SANDY CREEK ENERGY ASSOCIATES, L.P., Defendant-Appellee.

No. 09-51079.

United States Court of Appeals,Fifth Circuit.

Nov. 23, 2010.

Sanjay Narayan (argued), San Francisco, CA, David O'Brien Frederick, Lowerre, Frederick, Perales, Allmon & Rockwell, Austin, TX, for Plaintiff-Appellant.

Eric Alan Groten (argued), Vinson & Elkins, L.L.P., Austin, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Western District of Texas.

Before GARZA and BENAVIDES, Circuit Judges, and LYNN ^*, District Judge.

BENAVIDES, Circuit Judge:

The present case requires the Court to determine whether Sandy Creek's current and ongoing construction of a coal-fired power plant, for which no MACT determination has ever been made, violates the Clean Air Act § 112(g). ¹ Because we conclude that § 112(g)(2)(B) prohibits the act of construction, and not merely the commencement thereof, we find that Sandy Creek's current and ongoing construction of a "major source" without a final MACT determination violates the plain language of the statute. Accordingly, we REVERSE the judgment, and remand to the district court for further proceedings not inconsistent with this opinion.

Facts and Regulatory/Procedural Background

Defendant Sandy Creek Energy Associates, L.P. ("Sandy Creek") is currently constructing a coal-fired power plant in Riesel, Texas. The Texas Commission on Environmental Quality ("TCEQ") would ordinarily perform a routine case-by-case "MACT determination" prior to the company's commencement of construction on a coal-fired power plant, in order to comply with federal Clean Air Act ("CAA") requirements. See 42 U.S.C. § 7412(g)(2)(B) ("No person may construct or reconstruct any major source of hazardous air pollutants, unless the Administrator (or the State) determines that the maximum achievable control technology emission limitation under this section for new sources will be met. Such determination shall be made on a case-by-case basis where no applicable emission limitations have been established by the Administrator."); see also 30 Tex. Admin. Code § 116.711(5) & (11) (implementing § 112(g)'s "case-by-case MACT determination" by incorporating it into the State's pre-construction permitting process). Because Sandy Creek's Riesel plant will emit more than ten tons per year of hydrogen chloride-a listed hazardous pollutant under the Act-the Riesel plant falls under § 112(g)'s MACT construction proscription. ²

"MACT" refers to "Maximum Achievable Control Technology"-an emission limitation standard for the listed "hazardous" pollutants Congress ordered the EPA to regulate in § 112. Section 112 requires major sources, like the Riesel plant, to "comply with technology-based emission standards requiring the maximum degree of reduction in emissions EPA deems achievable, often referred to as 'maximum achievable control technology' or MACT standards." Nat'l Min. Ass'n v. EPA, 59 F.3d 1351, 1353 (D.C.Cir.1995) (quoting 42 U.S.C. § 7412(d)(1)-(2)). Congress noted that § 112's MACT emissions standards would "be more stringent" than the standards imposed by other provisions of the Act-such as New Source Review or Prevention of Significant Deterioration ("PSD")-and explained this as necessary since the MACT "program is for the control of extremely harmful air pollutants." S.Rep. No. 101-228, at 140 (1989), U.S. Code Cong. & Admin.News 1990, pp. 3385, 3552.

Thus, in ordinary circumstances, we would not question whether § 112(g)(2)(B)' s requirement of a case-by-case MACT determination applied to Sandy Creek's Riesel Plant.³ The present case, however, presents us with an unusual circumstance. In March of 2005, the EPA issued a rule removing coal and oil-fired electric utility steam generating units ("EGUs") from the list of sources whose emissions are regulated under § 112.⁴ Thus, although Sandy Creek submitted an application for a MACT determination to TCEQ, TCEQ concluded that, as a result of EPA's Delisting Rule, no such determination was legally required. On May 25, 2006, TCEQ stated that "[n]o case-by-case MACT determination for the PC boiler is needed because the type of steam generating unit (PC boiler) that Sandy Creek is proposing is not subject to MACT regulation." Sandy Creek then commenced construction on its coal-fired power plant in Riesel, Texas, on January 7, 2008.

One month later, on February, 8, 2008, the D.C. Circuit vacated EPA's March 2005 Delisting Rule, declaring that EPA's decision to remove EGUs from the list of § 112's regulated sources violated "the plain text and structure of section 112."⁵New Jersey v. EPA, 517 F.3d 574, 583 (D.C.Cir.2008). Consequently, the D.C.Circuit held that EGUs "remain listed under section 112." On March 14, 2008, the mandate issued and the Delisting Rule was officially vacated. As a result of the D.C. Circuit's decision in New Jersey, § 112(g)'s construction prohibition on "major sources" with no MACT determination once again became applicable to all coal-fired power plants.⁶

Soon thereafter, on August 8, 2008, Plaintiffs Public Citizen, Inc. and Sierra Club, Inc. (collectively, "Sierra Club") filed their complaint in federal district court. In the complaint, the Plaintiffs alleged that Sandy Creek's construction of its coal-fired plant in Riesel was in violation of CAA § 112(g)(2)(B) because Sandy Creek had never obtained a MACT determination for the plant.

Sierra Club filed a motion for summary judgment on March 4, 2009, and then on April 2, 2009, Sandy Creek filed its cross-motion for summary judgment, arguing that the district court should abstain from deciding Sierra Club's § 112(g)(2)(B) challenge pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). On September 28, 2009, the district court issued its Order. Although the district court declined to abstain pursuant to Burford, the district court determined that § 112(g)'s requirement for a MACT determination no longer applied to Sandy Creek, and consequently, the district court granted summary judgment in Sandy Creek's favor and denied Sierra Club's motion for summary judgment. Sierra Club timely appealed, asserting that the district court erred when it found that § 112(g)(2)(B)'s requirement for a final MACT determination no longer applies to Sandy Creek. On appeal, Sandy Creek asserts that the district court abused its discretion when it declined to abstain under Burford.

We will consider both claims in turn.

Standard of Review

"We review a grant of summary judgment de novo, applying the same legal standard as the district court." Croft v. Governor of Tex., 562 F.3d 735, 742 (5th Cir.2009) (internal quotations omitted). Summary judgment should be rendered if the record demonstrates that "there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "An issue is material if its resolution could affect the outcome of the action." Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir.2001). "In deciding whether a fact issue has been created, the court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Id. Although both parties moved for summary judgment before the district court, "[t]he mere fact that both appellants and appellee moved for summary judgment does not warrant the grant of either motion if the record reflects a genuine issue of fact."Hindes v. United States, 326 F.2d 150, 152 (5th Cir.1964).

Analysis

The question before this Court is how to interpret and apply § 112(g) to a coal-fired power plant still under construction, when the construction on that plant commenced before the D.C. Circuit's decision in New Jersey-that is, where the construction of the plant began during a time period in which a MACT determination was not required under the EPA's unlawful Delisting Rule-and TCEQ declined to make one. Sandy Creek makes two arguments in support of its position that it should not be required to obtain a MACT determination now. First, Sandy Creek argues that when TCEQ issued Sandy Creek its pre-construction permit on May 25, 2006, it actually made a MACT determination. In the alternative, Sandy Creek also argues that because § 112(g) did not apply to it when it commenced construction, § 112(g)'s requirement for a MACT determination does not apply to its ongoing construction. Neither the record, nor the plain language of the statute, support these two positions.

I. TCEQ Has Not Made a MACT Determination

Sandy Creek asserts that its ongoing construction of a coal-fired plant is not in violation of § 112(g)(2)(B) because TCEQ did make a MACT determination. In this regard, Sandy Creek conflates a decision not to make a MACT determination with an actual final MACT determination that the Act requires. Because TCEQ declared in its May 2006 Final Order that no MACT determination was required, and Sandy Creek's application for a MACT determination and TCEQ's preliminary determination were deficient as they did not contain substantive evaluations of MACT limits or MACT floors for any hazardous air pollutant, this Court finds that TCEQ did not make a proper MACT determination in its May 2006 Final Order.

The district court's factual findings are ambiguous as to whether or not TCEQ made a final MACT determination for Sandy Creek's Riesel plant. The evidence in the record, however, shows that TCEQ did not make a MACT determination for Sandy Creek's Riesel plant. First, the May 2006 Final Order's provision that the MACT determination requirement is inapplicable strongly indicates that TCEQ did not make a MACT determination. The TCEQ provided, "[n]o case-by-case MACT determination for the PC boiler is needed because the type of steam generating unit (PC boiler) that Sandy Creek is proposing is not subject to MACT regulation."⁷ This May 2006 Final Order thus did...