Sierra Club v. Administrator, U.S. E.P.A.

• Decision Date: 26 June 2007
• Docket Number: No. 06-10714.,06-10714.
• Citation: 496 F.3d 1182
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: SIERRA CLUB, Petitioner, v. ADMINISTRATOR, U.S. E.P.A. U.S. Environmental Protection Agency, Respondent, Oglethorpe Power Corporation, Georgia Environmental Protection Division, Georgia Power Company, Intervenor-Respondents.

496 F.3d 1182

SIERRA CLUB, Petitioner, v. ADMINISTRATOR, U.S. E.P.A. U.S. Environmental Protection Agency, Respondent Oglethorpe Power Corporation, Georgia Environmental Protection Division, Georgia Power Company, Intervenor-Respondents.

No. 06-10714.

United States Court of Appeals, Eleventh Circuit.

June 26, 2007.

Aubrey E. Baldwin, Law Office of Robert Ukeiley, Portland, OR, Robert Ukeiley, Law Office of Robert Ukeiley, Berea, KY, Ilan Levin, Envir. Integ. Proj., Austin, TX, for Petitioner.

Andrew J. Doyle, U.S. Dept. of Justice, ENRD, Washington, DC, for Respondent.

G. Graham Holden, Jones Day, Diane L. DeShazo, State of GA, Dept. of Law, Daniel S. Reinhardt, Margaret Claiborne Campbell, Amanda C. Baxter, Troutman Sanders, Melvin Scott Schulze, Hunton & Williams, Atlanta, GA, for Intervenor-Respondents.

Petition for Review of a Decision of the Environmental Protection Agency.

Before HULL and MARCUS, Circuit Judges, and BARZILAY,^* Judge.

PER CURIAM:

The Sierra Club petitions this Court for the second time to review an order of the Environmental Protection Agency ("EPA") in which the EPA declined to object to a permit granted to Oglethorpe Power Corporation by the Georgia Environmental Protection Division ("Georgia EPD") for the operation and construction of a major stationary source.¹ The question we face today is whether the EPA's interpretation of the term "owner ... of ... [a] major stationary source[]," Ga. Comp. R. & Regs. 391-3-1-.03(8)(c); 42 U.S.C. § 7503(a)(3), should be given deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), or whether the Clean Air Act ("CAA"), 42 U.S.C. §§ 7401-7671q, requires us to invalidate the EPA's order as being arbitrary, capricious, or manifestly contrary to law. After thorough review and oral argument, we accord Chevron deference to the EPA's decision and affirm its amended order.

I.

Under the Clean Air Act, power companies are required to obtain a permit for the construction of a new or modified major stationary source, 42 U.S.C. § 7502(c)(5) ("preconstruction permit") and for the operation of a major stationary source, 42 U.S.C. § 7661a ("Title V permit"). A major stationary source can be either a single power block or unit that emits the threshold level of pollutants, or it can be a group of power blocks or units, located within a contiguous area and under common control, that, in the aggregate, exceeds the statutory level of pollutants.² To obtain a permit, the Georgia Statewide Compliance Rule ("Georgia Rule") additionally requires that owners or operators of proposed new or modified "major stationary sources" demonstrate that any existing "major stationary sources" they own or operate are in compliance with the CAA. Ga. Comp. R. & Regs. 391-3-1-.03(8)(c); see also 42 U.S.C. § 7503(a)(3).

In July 2000, the Georgia Power Company received a combined preconstruction and Title V permit for the construction of new facilities at Blocks 6, 7, 8, and 9 at Plant Wansley, a power plant in Heard County, Georgia. At the time, Georgia Power owned and operated these four units. Georgia Power subsequently sold Block 8 to Oglethorpe Power. On November 30, 2000, Oglethorpe applied to the Georgia EPD for a preconstruction and Title V operating permit for Block 8, a major stationary source that later became known as the Wansley Combined Cycle Energy Facility ("Wansley Block 8").

The Sierra Club objected, in pertinent part, on the grounds that Oglethorpe is a part owner of another major stationary source, Plant Scherer, that is not compliant with the CAA and therefore in violation of the Georgia Rule. Plant Scherer consists of four steam electric generating units that are located on contiguous property, are operated by one company (Georgia Power Company), and share one Title V permit. Oglethorpe owns a sixty percent interest in Units 1 and 2 of Plant Scherer, which are CAA-compliant. The two units that are not CAA-compliant — Units 3 and 4 — are neither owned nor operated by Oglethorpe. Thus, the issue confronted by the Georgia EPD, and subsequently by the EPA, was whether to deem Oglethorpe an owner of a noncompliant major stationary source when it had part ownership of two CAA-compliant units in a major stationary source.

On January 15, 2002, the Georgia EPD granted the permit to Oglethorpe, over Sierra Club's objection, for construction at Wansley Block 8. Sierra Club then petitioned the EPA to object to the Georgia EPD's decision. See 42 U.S.C. § 7661d(b)(2) ("If the Administrator does not object in writing to the issuance of a permit ... any person may petition the Administrator ... to take such action."). In a final order in November 2002, the EPA declined to object. The Sierra Club subsequently appealed directly to this Court in Sierra Club v. Leavitt, 368 F.3d 1300 (11th Cir.2004) (hereinafter "Sierra Club I"), as provided by 42 U.S.C. §§ 7607(b) and 7661d(b)(2).

In Sierra Club I, a panel of this Court vacated and remanded the EPA's Order for further consideration after determining that the EPA acted arbitrarily and capriciously by failing to provide an adequate explanation for its decision. See Sierra Club I, 368 F.3d at 1304. Upon remand, the EPA issued an amended order, again denying Sierra Club's petition to object. The Sierra Club's second appeal in this case then followed.³

II.

In Sierra Club I, we did not ultimately determine whether Chevron deference should be given to the EPA Order. Sierra Club I, 368 F.3d at 1304 n. 9 ("We note that it is unclear whether Chevron deference applies to EPA's interpretation of the Georgia Rule because the Rule is a state regulation which EPA is not specifically charged with administering and enforcing."). Today we answer that question in the affirmative. The fact that the Georgia Rule is a state regulation is not an obstacle to according Chevron deference in this case because the Georgia Rule is part of a state implementation plan ("SIP") made pursuant to the CAA, and therefore "ha[s] the force and effect of federal law and may be enforced by the [EPA] in federal courts." Union Elec. Co. v. EPA, 515 F.2d 206, 211 (8th Cir.1975), aff'd, 427 U.S. 246, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976); see also Safe Air for Everyone v. EPA, 475 F.3d 1096, 1099 (9th Cir.2007). Indeed, since the Georgia Rule tracks the language of the CAA so closely, the CAA provides the EPA with the authority to object to state decisions to grant permits, 42 U.S.C. § 7661d(b), and there is no indication here that the Georgia EPD interprets its own Statewide Compliance Rule differently than the EPA, see Am. Cyanamid Co. v. EPA, 810 F.2d 493, 498 (5th Cir.1987) (granting Chevron deference to the EPA's interpretation of a Louisiana SIP even though it conflicted with the state's interpretation of its own regulation), it is altogether appropriate to grant Chevron deference to the EPA's amended order.

Under Chevron deference, we must accept an agency's reasonable interpretation of an ambiguous statute, "even if the agency's reading differs from what the court believes is the best statutory interpretation." Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 980, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) (citing Chevron, 467 U.S. at 843-44 & n. 11, 104 S.Ct. 2778). Chevron analysis of an agency's decision proceeds in two steps. In the first step, we ask whether the statute's plain terms "directly address[] the precise question at issue." Chevron, 467 U.S. at 843, 104 S.Ct. 2778. In the second step, we are obliged to assess "whether the agency's answer is based on a permissible construction of the statute." Id.

The Georgia Rule, which the EPA interpreted in its amended order, provides:

[N]o permit to construct a new or modified major stationary source ... shall be issued unless ... [t]he owner or operator of the proposed new or modified source has demonstrated that all major stationary sources owned or operated by such person (or by an entity controlling, controlled by, or under common control with such person) in this State, are subject to emission limitations and are in compliance, or on a schedule for compliance, with all applicable emission limitations and standards under the Act[.]

Ga. Comp. R. & Regs. 391-3-1-.03(8)(c).

Beginning with Chevron's first step, nothing in the statutory language of the CAA or the Georgia Rule answers the question of how the EPA should define the phrase "owner ... of ... [a] major stationary source[]" for purposes of evaluating whether Oglethorpe should be denied a preconstruction and operating permit. The CAA does provide definitions of both an "owner or operator"⁴ and a "major stationary source,"⁵ but reading the two phrases together plainly creates the ambiguity that underlies the central issue of this case. The CAA and the Georgia Rule do not speak in terms of ownership or operation of individual sources in a major stationary source. Instead, the language of these regulations refers, in a monolithic sense, to owning or operating a major stationary source. Indeed, in Sierra Club I, we found that the Georgia Rule was ambiguous regarding that term. Sierra Club I, 368 F.3d at 1304. "The problem in this case is that Oglethorpe owns part of a noncompliant major stationary source, i.e., Plant Sherer [sic], and the Rule is unclear regarding such situations." Id. (emphasis in original). Our best reading of the CAA and the Georgia Rule in pari materia yields the conclusion that neither Congress nor the Georgia legislature has spoken directly to the question of whether a partial owner of a unit within a major stationary source should be considered an owner of the major stationary source as a whole for permitting purposes.

Having concluded that the statutory language is unclear, we necessarily proceed to the second step to determine whether the agency's interpretation is a reasonable one. Chevron, 467 U.S. at 844, 104 S.Ct. 2778 (a ...