Seventh Circuit Chills Enforcement By Permit

August 4, 2008

The Seventh Circuit Court of Appeals this week undercut a key strategy of environmental groups by ruling that they could not challenge Clean Air Act Title V permits on the basis of unproven allegations of non-compliance. The Court also ruled that state attorneys general were required to prove standing, especially to challenge decisions made by their own state environmental agencies.

In Citizens Against Ruining the Environment v. EPA, issued on July 28, 2008, the court denied and dismissed challenges filed by local environmental groups and the Illinois Attorney General (AG) against the Environmental Protection Agency’s (EPA) determination not to object to Title V permits issued by the Illinois Environmental Protection Agency (IEPA) to six coal fired power plants owned by Midwest Generation. The environmental groups argued that state records documented ongoing opacity violations at two of the plants and claimed that this required the EPA to object to the permits because they did not contain compliance plans for curing those violations. The AG included these claims but also argued that all six plants potentially violated New Source Review requirements to obtain permits for expansions of the plants and that EPA could not agree to the issuance of the permits unless these issues were fully investigated.

The Court denied the environmental group’s claims, ruling that the EPA’s decision was not arbitrary in the absence of proof of violations or enforcement actions regarding the violations. The court held that EPA had extensive enforcement powers which, when compared to the short time frame allowed for review of state permits, indicated that Congress did not intend EPA to investigate potential enforcement issues in the context of evaluating state issued Title V permits. The court noted that EPA had already sent the permit back to IEPA once, requiring IEPA to explain its basis for not including an opacity compliance plan. The court held that it was reasonable for EPA to accept IEPA’s subsequent explanation even though the EPA initiated enforcement actions regarding these same claimed violations not long after it chose not to object to the permits. In short, the court ruled that EPA should defer to the state’s permitting decisions, including its decision as to compliance plans, unless the permit record documented an obvious factual basis (i.e. one not needing further investigation) which would support an objection to the permit.

The Court did not even consider the AG’s claims and instead dismissed her complaint for lack of standing. The court noted that the AG appeared to assume that her state constitutional status was standing enough and never alleged any of the standing requirements in her complaint. The Court held that even state AGs must document some specific injury to the state as a result of the challenged decision. Further, the court held that it would be difficult for the AG to allege any particularized injury, even if she had tried, since the state of Illinois, through the IEPA, had already determined to issue the permit and the United States, through the EPA, had decided not to object. In essence, the court held that the AG could not overrule her own state’s permitting decisions.

The court’s decision will further roil the already shaky landscape of Title V permits. Environmental groups have launched a major campaign to challenge all Title V permits for coal fired power plants and one of their key claims had been the failure of the state issuing authority to address or even consider allegations of violations. NSR claims were a particular target both because of the dearth of EPA enforcement and the complex nature of the claims themselves. While the environmental groups are now emphasizing claims that EPA should object to permits unless they address greenhouse gas emissions, these NSR enforcement claims were a key part of their strategy. The enforcement approach is now unavailable, especially if based on issues which the environmental groups claim EPA must investigate as part of the permit process.

The standing decision may also have an impact on the ability of state attorneys general to assert claims which are contrary to the actions of their own environmental agencies. While the court clearly sought to announce its utter impatience with the weird and toxic relationship between the Illinois AG and the IEPA, the contention that attorneys general have a high standing burden when challenging the actions of their own state may be effective in limiting other claims. Many major environmental cases are now being brought by state attorneys general either on their own or in concert with environmental groups. When those cases challenge the actions of the attorney general’s own state, this decision provides a strong basis to challenge the AG’s involvement.