Luminant Generation Co. v. United States Environmental Protection Agency , 757 F.3d 439 ( 2014 )

Case: 12-60694 Document: 00512686850 Page: 1 Date Filed: 07/03/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
July 3, 2014
No. 12-60694
Lyle W. Cayce
Clerk
LUMINANT GENERATION COMPANY, L.L.C.;
ENERGY FUTURE HOLDINGS CORPORATION,
Petitioners,
versus
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY;
GINA MCCARTHY, Administrator,
United States Environmental Protection Agency,
Respondents.
***************
Consolidated with
No. 13-60538
LUMINANT GENERATION COMPANY, L.L.C.;
BIG BROWN POWER COMPANY, L.L.C.,
Petitioners,
versus
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY;
GINA MCCARTHY, Administrator,
United States Environmental Protection Agency,
Respondents.
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No. 12-60694
No. 13-60538
Petitions for Review of Notices of
the Environmental Protection Agency
Before SMITH, WIENER, and PRADO, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
The operators of two power plants filed petitions challenging the legal
sufficiency of the notice of violation issued by the Environmental Protection
Agency (“EPA”) under Section 7413(a) of the Clean Air Act. The EPA filed a
second, amended notice of violation and moved to dismiss the petitions for want
of jurisdiction. The operators challenged the sufficiency of the second notice.
Because the notices were not “final actions” of the EPA, we dismiss the peti-
tions for lack of subject-matter jurisdiction.
I.
Luminant Generation Company, L.L.C. (“Luminant”), owns and oper-
ates the Martin Lake Power Plant and operates the Big Brown Power Plant
owned by Big Brown Power Company LLC (“Big Brown”). Energy Future Hold-
ings Company (“EFH”) is the ultimate corporate parent of Luminant and Big
Brown. Both plants have multiple coal-fired units, each connected to turbine
generators. Each plant operates pursuant to a Title V permit issued by the
State of Texas and approved by the EPA.
In June 2008, the EPA began sending Luminant requests under
42 U.S.C. § 7414(a) to determine compliance with the Clean Air Act and its
implementing regulations. In July 2012, the EPA issued a section 7413(a)
notice of violation (“2012 NOV”) to Luminant and EFH claiming that (a) during
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scheduled outages from 2005 to 2010, Luminant completed substantial capital
projects at the Martin Lake and Big Brown Power Plants; (b) the projects
involved physical or operational changes to certain emission units; and (c) the
changes increased emissions of sulfur dioxide and nitrogen dioxide. The EPA
asserted that, as a result of that activity, Luminant and EFH violated (1) the
Act’s Prevention of Significant Deterioration (“PSD”) provisions, (2) Texas’s
State Implementation Plan (“SIP”), (3) Texas’s PSD provisions, (4) Title V of
the Act, and (5) Texas’s Title V program.
Luminant petitions for review of the 2012 NOV, maintaining that it did
not sufficiently comply with 42 U.S.C. § 7413(a)(1) because it (1) contained only
boilerplate legal conclusions, (2) found violations of the Act’s Title V program,
and (3) was issued to EFH in spite of making no finding that EFH had directed
the emissions-related activities at the plants. The EPA has moved to dismiss
on the ground that a notice of violation is not “final action” as required by
42 U.S.C. § 7607(b)(1).
Luminant filed its opening brief in June 2013; instead of filing a brief,
the EPA, in July, issued a second notice of violation (the “2013 NOV”) to
Luminant and Big Brown. In August, the United States filed a federal com-
plaint against Luminant Generation and Big Brown in the Northern District
of Texas. 1 The 2013 NOV purports to “amend” the 2012 NOV 2 and alleges only
violations of the Act’s PSD provisions and Texas’s PSD provisions. Luminant
petitioned for review of the 2013 NOV, again challenging the legal sufficiency
1 The complaint alleges violations of (1) the PSD program and the Texas SIP,
(2) Title V, its implementing regulations, and Texas’s operating permit program, and
(3) 42 U.S.C. § 7414(a). The defendants moved to dismiss, arguing inter alia that the EPA
“fail[ed] to provide the required notice to the State.” The district court has stayed the case
awaiting resolution from this court. See United States v. Luminant Generation Co. LLC,
No. 3:13-CV-03236-K (N.D. Tex. Jan. 10, 2014).
2 In its brief, the EPA repeats its view that the 2013 NOV supersedes the 2012 NOV.
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of the notice. The EPA again moved to dismiss, suggesting that this court lacks
subject-matter jurisdiction. In the alternative, the EPA maintains that the
notices satisfy 42 U.S.C. § 7413(a)(1). We consolidated the two cases for hear-
ing and determination.
II.
For this court to have subject-matter jurisdiction, the challenged agency
action must have been a “final action.” 3 That is, if the EPA did not undertake
final action when it issued the two section 7413(a) notices, we have no jurisdic-
tion over the petitions.
“Final action” under section 7607(b)(1) has the same meaning as “final
agency action” under the Administrative Procedure Act (“APA”). See Whitman
v. Am. Trucking Ass’ns, 531 U.S. 457, 478 (2001). Therefore, just as under the
APA, two conditions must be met: “First, the action must mark the ‘consum-
mation’ of the agency’s decisionmaking process—it must not be of a merely
tentative or interlocutory nature. And second, the action must be one by which
rights or obligations have been determined, or from which legal consequences
will flow.” 4
The EPA has consistently maintained that the notices lack finality under
either prong. 5 First, the EPA urges that “[t]he Notices here—which had to
3 See 42 U.S.C. § 7607(b)(1) (2012) (“A petition for review of . . . any other final action
of the Administrator under this chapter . . . may be filed only in the United States Court of
Appeals for the appropriate circuit.” (emphasis added)). If a party does not challenge final
action in a court of appeals, it cannot then challenge it in a subsequent enforcement proceed-
ing. See 42 U.S.C. § 7607(b)(2) (2012).
4Nat’l Pork Producers Council v. EPA, 635 F.3d 738, 755 (5th Cir. 2011) (quoting
Bennett v. Spear, 520 U.S. 154, 177–78 (1997)).
5 See Administrative Enforcement Actions: Notice of Violation and Administrative
Orders, in CLEAN AIR ACT COMPLIANCE/ENFORCEMENT GUIDANCE MANUAL 6-3 (1986),
available at http://envinfo.com/caain/enforcement/caad117.html (“EPA has consistently
4
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precede initiation of administrative or judicial enforcement action—similarly
reflect a threshold allegation that violations of the Texas SIP have occurred.”
Second, EPA asserts that “Luminant did not become any more or less compli-
ant with the [Act] or the Texas SIP simply because EPA served notice of its
violation findings in advance of an enforcement action. . . . [O]nly continued
prosecution of the enforcement action and the District Court’s final judgment
may have legal consequences for Luminant.” Accordingly, the EPA contends
that “like the Third, Sixth, Eighth, Ninth, Tenth, and Eleventh Circuits, this
Court should, in assessing finality, recognize that CAA notices of violation are
advisory, preliminary, and non-binding.”
As to the first prong, Luminant 6 highlights two facts: (1) The EPA issued
the notice only after investigating the claims for more than a decade; and
(2) the EPA does not offer “any avenue of further agency review” for Luminant
to challenge its decision. As to the second prong, to demonstrate that legal
consequences flow from the notice itself, Luminant asserts that “separate pen-
alties can and [according to the EPA] should be imposed as a result of a [NOV].”
Luminant concedes that its position would create a circuit split but believes
Harrison v. PPG Industries, Inc., 446 U.S. 578 (1980), and Sackett v. EPA,
132 S. Ct. 1367 (2012), require us to recognize jurisdiction.
We disagree and conclude that the EPA does not undertake final action
when it issues a section 7413(a) notice of violation. First, issuing a notice does
not commit the EPA to any particular course of action. The statute makes
clear the intermediate, inconclusive nature of issuing a notice. After giving
notice and waiting thirty days, the EPA may “issue an order,” “issue an
maintained that the NOV is not a final agency action.”).
6 We refer to the petitioners as Luminant.
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administrative penalty” after a formal administrative hearing, or “bring a civil
action.” 42 U.S.C. § 7413(a)(1) (2012). Alternatively, the EPA could choose to
withdraw or amend the notice or take no further action. Issuing notice, there-
fore, does not end the EPA’s decisionmaking: It still must make further signif-
icant decisions even if it does not confer on Luminant the ability to influence
those decisions. It similarly does not matter that it took the EPA twelve years
to file notice. “[The agency’s] initial ‘finding’ marks only the beginning of a
process designed to test the accuracy of the agency’s initial conclusions.” Sierra
Club v. EPA, 557 F.3d 401, 408 (6th Cir. 2009).
Second, a notice does not itself determine Luminant’s rights or obliga-
tions, and no legal consequences flow from the issuance of the notice. The
Clean Air Act and the Texas SIP, not the notices, set forth Luminant’s rights
and obligations. 7 As to this litigation, adverse legal consequences will flow
only if the district court determines that Luminant violated the Act or the SIP.
In other words, if the EPA issued notice and then took no further action,
Luminant would have no new legal obligation imposed on it and would have
lost no right it otherwise enjoyed.
Third, although Luminant contends notices should be treated the same
as orders, section 7413 treats these as distinct types of agency action. One, an
agency must give notice before issuing an order, demonstrating the interlocu-
tory nature of notices. Even if an agency gives a notice, however, it need not
7 See Peoples Nat. Bank v. Office of Comptroller of Currency of U.S., 362 F.3d 333, 337
(5th Cir. 2004) (“[A] non-final agency order is one that does not of itself adversely affect com-
plainant but only affects his rights adversely on the contingency of future administrative
action.” (citation and internal quotation marks omitted)); AT&T Co. v. EEOC, 270 F.3d 973,
975 (D.C. Cir. 2001) (“[The agency’s] decision must have inflicted an actual, concrete injury
upon the party seeking judicial review. Such an injury typically is not caused when an agency
merely expresses its view of what the law requires of a party, even if that view is adverse to
the party.” (citation and internal quotation marks omitted)).
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seek an order. Two, although the agency must allow the subject of the order
“an opportunity to confer with the Administrator concerning the alleged viola-
tion,” § 7413(a)(4), the EPA does not need to confer with the party before issu-
ing notice. Three, although orders must be “compl[ied] with . . . as expedi-
tiously as practicable,” id., nothing in the Clean Air Act requires a regulated
entity to “comply” with a notice. In fact, it makes no sense to say that an entity
must comply with a notice or that it has violated a notice. Finally, though
violating a compliance order may result in double penalties (for violating the
Act and for violating the order), no authority suggests that a court may assess
double penalties for “violating” a notice. 8 Therefore, despite the fact that
orders may be final action, notices of violations do not share the finality of
orders.
Fourth, contrary to Luminant’s suggestion, neither PPG Industries nor
Sackett compels a contrary result. In PPG Industries, a chemical manufactur-
ing company wished to construct a new power generating facility that would
be equipped with “two gas turbine generators, two ‘waste-heat’ boilers, and a
turbogenerator.” PPG Indus., 446 U.S. at 582. The EPA requested the com-
pany submit information on whether the waste-heat boilers should be consider
“new sources.” Once it did, the EPA responded with a letter “conclud[ing] that
the waste-heat boilers were, indeed, subject to the ‘new source’ standards.”
The parties agreed that the decision was final action but disagreed as to
8 Luminant supports its contrary position only by claiming the EPA took that stance
in another case, United States v. Louisiana Generating, No. 3:09cv100 (M.D. La.). The EPA
does not in fact appear to have taken that stance in that case. And Luminant has not pointed
to any statutory provision or caselaw that indicates the EPA can impose penalties for “violat-
ing” a notice. The relevant statutory provision, section 7413(b), does not provide for civil
penalties for violating a notice.
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whether it was “any other” final action. 9 The Court addressed only the scope
of “any other,” construing those terms broadly. 10 PPG Industries, therefore,
does not provide any guidance as to whether a notice of violation constitutes
“final action.” 11
Sackett similarly does not help Luminant. There, the EPA issued a com-
pliance order under § 309 of the Clean Water Act. See Sackett, 132 S. Ct. at1371–72. Applying Bennett, the Court determined the order to be final action:
(1) “By reason of the order, the Sacketts have the legal obligation to restore
their property . . . . Also, legal consequences . . . flow from issuance of the order.
. . . [T]he order exposes the Sacketts to double penalties in a future enforce-
ment proceeding.” Id. (citations and internal quotation marks omitted); and
(2) “The issuance of the compliance order also marks the consummation of the
agency’s decisionmaking process. As the Sacketts learned when they unsuc-
cessfully sought a hearing, the Findings and Conclusions that the compliance
order contained were not subject to further agency review.” Id. at 1372 (cita-
tions and internal quotation marks omitted). A notice of violation does not
have the finality of the order in Sackett. Issuing a notice of violation does not
create any legal obligation, alter any rights, or result in any legal consequences
9 PPG Indus., 446 U.S. at 586 (“The controversy thus is not about whether the Admin-
istrator’s decision was ‘final,’ but rather about whether it was ‘any other final action’ within
the meaning of § 307(b)(1), as amended in 1977.”).
10 Id. at 588–89 (“[W]e discern no uncertainty in the meaning of the phrase, ‘any other
final action.’ When Congress amended the provision in 1977, it expanded its ambit to include
not simply ‘other final action,’ but rather ‘any other final action.’ This expansive language
offers no indication whatever that Congress intended the limiting construction of § 307(b)(1)
that the respondents now urge. . . . [T]he phrase, ‘any other final action,’ in the absence of
legislative history to the contrary, must be construed to mean exactly what it says, namely,
any other final action.”).
11Cf. Tenn. Valley Auth. v. Whitman, 336 F.3d 1236, 1247 n.23 (11th Cir. 2003) (“The
[PPG Industries] Court had no occasion to address whether the EPA action at issue in that
case was truly final agency action. Both parties agreed that the agency decision was final.”).
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and does not mark the end of the EPA’s decisionmaking process.
Fifth, if we were to accept Luminant’s position, we would be the first
circuit to treat such notices as final actions. The Third and Ninth Circuits
expressly do not consider a notice of violation to be a “final action.” 12 Several
other courts of appeals have also recognized the advisory, preliminary, and
non-binding nature of such notices. 13 Luminant has not offered any convincing
reason for us to create a circuit split.
Finally, Luminant may challenge the adequacy of the notices before the
district court as a defense to the enforcement action. Regulated entities have
a full opportunity to challenge the adequacy or sufficiency of such notices once
the EPA takes final action. 14 In fact, Luminant has already raised, in the dis-
trict court, the same arguments it presses here.
The petitions are DISMISSED for want of subject-matter jurisdiction.
12 See Pacificorp v. Thomas, 883 F.2d 661, 661 (9th Cir. 1988) (“Respondents’ motion
to dismiss is granted. An EPA notice of violation is not reviewable because it is not a final
agency action.”); W. Penn Power Co. v. Train, 522 F.2d 302, 310–11 (3d Cir. 1975) (“West
Penn cites, and we have found, no statute which makes reviewable Train’s issuance of a
notice of violation. Under the statutory plan, the notice of violation is not ‘final agency action’
since it may be followed by either (1) an order which ‘may’ be issued 30 days after the notice,
42 U.S.C. § 1857c-8(a)(1) . . . or (2) a civil suit under 42 U.S.C. § 1857c-8(b), referred to above.
The statutory scheme contemplates that the violation notice itself has neither an indepen-
dent coercive effect nor ‘the force of law.’”).
13 See, e.g., WildEarth Guardians v. EPA, 728 F.3d 1075, 1082 (10th Cir. 2013); Sierra
Club, 557 F.3d at 407; Union Elec. Co. v. EPA, 593 F.2d 299, 307 (8th Cir. 1979); see also
Royster-Clark Agribusiness, Inc. v. Johnson, 391 F. Supp. 2d 21, 28 (D.D.C. 2005) (“Although
the question of whether an NOV under the CAA is a final agency action is one of first impres-
sion in this circuit, all of the circuits that have addressed the issue have concluded that it is
not.”).
14 See, e.g., United States v. Chevron U.S.A., Inc., 380 F. Supp. 2d 1104, 1108 (N.D.
Cal. 2005) (“Amici argue that the issuance of a formal written Notice of Violation [ ] to the
violator and the State is a jurisdictional prerequisite to the filing of an enforcement action”);
United States v. Pan Am. Grain Mfg. Co., 29 F. Supp. 2d 53, 56 (D.P.R. 1998) (“[The parties’
disagreement hinges on an issue of law: whether the NOVs gave sufficient notice to Defen-
dants as to the claims at issue pursuant to 42 U.S.C. § 7413(b).”).
9