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

• Decision Date: 26 February 2009
• Docket Number: No. 07-4485.,07-4485.
• Parties: SIERRA CLUB, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Lisa Jackson, Administrator, Respondents, East Kentucky Power Cooperative, Inc., Intervenor-Respondent.
• Court: U.S. Court of Appeals — Sixth Circuit

557 F.3d 401

SIERRA CLUB, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Lisa Jackson, Administrator, Respondents, East Kentucky Power Cooperative, Inc., Intervenor-Respondent.

No. 07-4485.

United States Court of Appeals, Sixth Circuit.

Argued: December 10, 2008.

Decided and Filed: February 26, 2009.

ARGUED: David C. Bender, Garvey, McNeil & McGillivray, Madison, Wisconsin, for Petitioner. Joshua M. Levin, United States Department of Justice, Washington, D.C., for Respondent. Harry M. Johnson, III, Hunton & Williams, Richmond, Virginia, for Intervenor. ON BRIEF: David C. Bender, Christa O. Westerberg, Garvey, McNeil & McGillivray, Madison, Wisconsin, Stephanie Tai, University of Wisconsin Law School, Madison, Wisconsin, for Petitioner. Joshua M. Levin, United States Department of Justice, Washington, D.C., for Respondent. Harry M. Johnson III, John M. Holloway, III, Penny A. Shamblin, Sean P. Trende,

Hunton & Williams, Richmond, Virginia, for Intervenor.

Before: BATCHELDER, GILMAN and SUTTON, Circuit Judges.

OPINION

SUTTON, Circuit Judge.

The Clean Air Act requires the Environmental Protection Agency to object to an air-pollution permit if any person "demonstrates" to the EPA "that the permit is not in compliance" with the Act's requirements. 42 U.S.C. § 7661d(b)(2). In August 2006, the Sierra Club petitioned the EPA Administrator to object to a permit issued by the Kentucky Division of Air Quality to the East Kentucky Power Cooperative, claiming it had "demonstrate[d]" non-compliance because the EPA previously had issued a notice of violation to the same company (about the same plant) in January 2003 and had filed a federal-court complaint against the same company (about the same plant) in January 2004. The EPA declined to object. Because it reasonably interpreted § 7661d(b)(2) to mean that the agency may alter its position about a power plant's compliance with the Act based on intervening events and because the Sierra Club does not challenge the impact of these intervening events on the power plant's compliance with the Act, we deny the petition for review.

I.

A.

Under Title V of the Clear Air Act, every "major source" of air pollution must obtain an operating permit from a state agency that identifies each air-quality restriction that applies to the source. See id. §§ 7661a(a), 7661c(a); 40 C.F.R. §§ 70.5, 70.6. The permit must contain a "compliance schedule," listing the Act's requirements with which the source (1) already complies, (2) will comply once the permit goes into effect and (3) does not comply along with a "schedule of remedial measures" designed to bring the source into compliance. 40 C.F.R. § 70.5(c)(8)(iii)(A)-(C); see also 401 Ky. Admin. Regs. 52:020-5(8)(b). Several reporting, monitoring and other duties apply to each requirement. See 42 U.S.C. § 7661c(c).

As a form of cooperative federalism, the Act gives both the States and the EPA a role in administering the Title V program. After a State gives the public an opportunity to comment on a proposed permit, id. § 7661a(b)(6), but before it goes into effect, the State must submit the permit to the EPA, which has 45 days to review it, id. § 7661 d(b)(1). If the EPA concludes that the permit does not comply with federal requirements, it "shall ... object to [the permit's] issuance." Id. But if the EPA takes no action within the exclusive-review period, "any person" may petition the agency to object. Id. § 7661d(b)(2). And "if the petitioner demonstrates to the Administrator that the permit is not in compliance with the requirements of" the Act, "[t]he Administrator shall issue an objection," requiring the State to modify the permit. Id. (emphasis added).

One obligation that often comes up during the permitting process is the Prevention of Significant Deterioration (PSD) requirement, which applies to all "attainment areas" in the country—those that already have met the Act's baseline national air-quality standards. See id. §§ 7470-7492. In an effort to prevent backsliding, the Act requires sources from these parts of the country to satisfy additional anti-pollution standards. Every new "major emitting facility" constructed in an attainment area, as well as every existing facility that undergoes a "major modification," must obtain a special permit identifying specific emissions limitations, id. §§ 7475(a)(1), 7479(1), (2)(C), and must employ the "best available control technology" for each regulated pollutant it emits, id. § 7475(a)(4); see Alaska Dep't of Envtl. Conservation v. EPA, 540 U.S. 461, 471-73, 124 S.Ct. 983, 157 L.Ed.2d 967 (2004). Instead of establishing universal best-technology standards, the Act directs the States to determine the best technology for each source "on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs." 42 U.S.C. § 7479(3).

The Act creates several enforcement options. In addition to setting out subject-specific enforcement procedures, see, e.g., id. § 7477, and authorizing citizen suits, see id. § 7604, the statute allows the EPA to address violations on its own, see id. § 7413. "Whenever, on the basis of any information available to [it], [the agency] finds that any person has violated or is in violation of any requirement or prohibition of an applicable [state] implementation plan or permit," the Act directs the EPA to issue a notice of violation apprising the source and the State of its findings. Id. § 7413(a)(1); see also id. § 7413(a)(3). After 30 days, the agency "may" pursue one of three options: (1) issue an order directing the source to comply with its existing obligations, (2) impose an "administrative penalty" on the source (after a formal administrative hearing) or (3) file a federal lawsuit against the source. See id. § 7413(a)(1), (a)(4), (d).

B.

This case arises from the power company's request for a renewal of its Title V permit for one of the coal-powered steam generators, known (not so descriptively) as Unit 2, at the Spurlock Station power plant in Maysville, Kentucky. The company first obtained a permit for Unit 2 when it built the plant in the late 1970s. The company later made several changes to the plant. In August 1992, it began supplying steam from Unit 2 to a nearby factory, even though its original construction-permit application said that Unit 2 would use steam only to generate electricity. And in January 1994 or so, the company increased the plant's heat-input rate, allegedly operating above the level specified in its original permits. When the company applied for a Title V permit for Unit 2 in 1996, it did not identify the PSD requirements. stemming from these changes and did not propose a PSD compliance schedule. The Kentucky agency granted the permit in 1999.

In 2003, apparently after discovering these changes to the plant, the EPA issued a notice of violation, informing the company that its Unit 2 permit failed to address the PSD requirements stemming from these modifications. A year later, the EPA filed an enforcement lawsuit in federal court premised on the same allegations. In response, the company denied that the changes amounted to modifications triggering new PSD (and best-technology) obligations.

In 2004, while this litigation was pending, the company sought to renew its Title V permit, once again without mentioning the PSD requirements stemming from its 1990s modifications. In January 2006, after reviewing the submission and requesting additional information, the state agency invited public comment on whether to grant the permit. After receiving comments from the Sierra Club, the EPA and others, the state agency proposed the draft permit to the EPA for its review. The EPA did not object to it within the 45-day exclusive-review window, and the state agency issued the permit on July 31, 2006.

In August 2006, the Sierra Club petitioned the EPA to object to the permit, see id. § 7661d(b)(2), arguing (as it did in its comments to the state agency) that the proposed permit was deficient because it failed to address the PSD requirements. In support, the Sierra Club relied solely on the fact that the EPA previously had issued a notice of violation and had filed a civil-enforcement action based on the same allegations.

The EPA and the power company, meanwhile, reached a settlement in the enforcement lawsuit in July 2007 and proposed a consent decree to the district court. Under the proposed decree, the company preserved the position that it had not violated the Act, but it agreed to pay a civil penalty and perform several remedial measures, including installing pollution controls that carried a price tag of over $650 million (according to the government).

In August 2007, while the parties waited for the district court to approve the consent decree, the EPA reached a decision on the Sierra Club's petition. Although it granted the petition in part (on an unrelated issue), it declined to object to the power company's failure to address the PSD requirements. Acknowledging its prior notice of violation and enforcement action, the EPA explained that they were "initial steps" in the enforcement process and did not reflect the agency's final position as to whether the Title V permit for Unit 2 needed to include a PSD compliance schedule. JA 16. In September 2007, the district court approved the consent decree. See United States v. E. Ky. Power Coop., Inc., No. 04-34-KSF (E.D.Ky. Sept. 24, 2007). And in December 2007, the Sierra Club petitioned this court for review of the EPA's refusal to object to the power company's failure to address the PSD requirements.

II.

The question is this: Does the Act require the EPA to object to a permit request when the agency previously has filed a notice of violation and enforcement action regarding the same allegations about the same plant? The answer turns on the meaning of a statute that the EPA administers and thus turns on an application of the familiar Chevron framewo...