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Sierra Club v. United States Environmental Protection Agency

No. 18-9507. Final Administrative Action of the US EPA. Judge Bacharach. Clean Air Act—Statutory and Regulatory Construction—State Implementation Plans—New Source Review—Standing.

June 29, 2020

In 1997, PacifiCorp sought preconstruction permits to modify an industrial plant (the plant) in Utah through the “new source review” (NSR) process of Title I of the Clean Air Act (Act). In considering PacifiCorp’s permit request, Utah determined that the modifications triggered only minor NSR requirements. This determination went unchallenged. During the same time period, PacifiCorp was obtaining its initial operating permit for the plant under Title V of the Act. Utah ultimately issued the Title V permit in 1998, incorporating the determination that the modifications required only minor NSR.

The Title V permit was required to be periodically renewed. In 2001 PacifiCorp applied to renew the Title V permit, but Utah waited roughly 14 years to act on the application. When Utah finally acted in 2015, it renewed PacifiCorp’s Title V permit, incorporating the requirements from the minor NSR permit. Under the Act’s framework, Utah sent its proposed permit to the US Environmental Protection Agency (EPA), and the EPA did not object.

The Sierra Club filed a petition to compel the EPA to object, arguing in part that the 1997–99 modifications should have triggered major NSR requirements. Relying on Utah’s earlier refusal to apply major NSR requirements, the EPA denied the Sierra Club’s petition by focusing on a narrow meaning of the regulatory term “applicable requirements,” interpreting it as a general reference to the requirements stated in the prior Title I permit.

The Sierra Club appealed, and as a threshold matter, intervenor PacifiCorp contended that the Sierra Club lacked standing. The Tenth Circuit held that the Sierra Club had standing because (1) its members experience health risks and diminished visibility of nearby national parks and wilderness areas, and therefore suffered an injury in fact; (2) the injury was fairly traceable to the challenged action; and (3) it is likely that the injury will be redressed by a favorable decision.

On the merits, the petition for review turned on the meaning of the term “applicable requirements” in the regulation. Under Title I of the Act, the EPA sets national air quality standards and provides oversight and enforcement. To achieve compliance with these standards, states must develop implementation plans and submit them to the EPA for approval. These plans require many industrial sources of pollution to obtain preconstruction permits through the NSR process. The required NSR differs for “major” or “minor” sources of pollution. Major NSR is required if a new or modified source would emit pollutants above certain thresholds. Only minor NSR is required if emissions would fall below the applicable thresholds, and minor NSR entails “only the barest of requirements.” The states conduct NSR under their implementation plans.

Title V of the Act and the accompanying regulation allow renewal of these permits only if they ensure “compliance with” all of the “applicable requirements.” The regulatory definition of “applicable requirements” includes all requirements in the state’s implementation plan. Here, Utah’s implementation plan broadly requires compliance with the Act. Thus, all of the Act’s requirements constitute applicable requirements under the regulation, and the regulatory definition unambiguously required that each Title V permit include all requirements in a state’s implementation plan, including Utah’s requirement for major NSR. Accordingly, the EPA’s interpretation of “applicable requirements” in the order conflicted with the unambiguous regulatory definition.

PacificCorp also argued that the Sierra Club waived its challenges by failing to prove the applicability of major NSR requirements. However, the EPA didn’t reach the merits of the Sierra Club’s petition. Instead, it relied on the meaning of the regulatory term “applicable requirements.” Given this reliance, the Sierra Club focused on the EPA’s reasoning and had no reason to argue the merits of the underlying petition, so it did not waive its challenge.

PacifiCorp and Utah also argued that the Sierra Club failed to demonstrate that emissions would have exceeded the threshold for major NSR. Again, the EPA rejected the petition based on the meaning of “applicable requirements,” not a failure to demonstrate emissions triggering major NSR requirements, and the Tenth Circuit’s review was confined to the EPA’s reasons for its decision.

PacifiCorp and Utah further argued that the Sierra Club’s petition was untimely because the relevant time period expired in 1998 when Utah issued the original Title V permit. However, the EPA did not deny the petition based on timeliness, and the Sierra Club timely objected to the 2016 Title V Permit.

PacificCorp also argued that the Sierra Club’s petition was barred by laches. The Act requires the EPA to object to a Title V permit if a petitioner demonstrates that the permit doesn’t comply with the Act, and this requirement cannot be displaced through laches.

Utah also argued that its state implementation plan requires use of state permitting procedures, preventing the Sierra Club from invoking the Title V proceedings to collaterally attack the minor NSR permit issued in 1997. But Congress has prescribed the administrative procedure for objections to Title V permits, under which the EPA must object when the Title V permit omits an applicable requirement, which includes the appropriate form of NSR. Thus, if the Sierra Club demonstrates the applicability of major NSR requirements, the EPA must object to the Title V permit even if the Sierra Club’s petition could be viewed as a collateral attack on Utah’s permitting decision in 1997.

The order was vacated and the case was remanded to the EPA for further consideration of the petition.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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