In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 07-3197, 07-3198 & 07-3199

CITIZENS AGAINST RUINING THE ENVIRONMENT,

ENVIRONMENT ILLINOIS, PEOPLE OF THE STATE

OF ILLINOIS, et al.,

Petitioners,

v.

ENVIRONMENTAL PROTECTION AGENCY,

Respondent,

and

MIDWEST GENERATION, LLC,

Intervening-Respondent.

____________

Petitions for Review of Orders of

the Environmental Protection Agency.

Nos. V-2005-1, V-2005-3, V-2006-2

____________

ARGUED MAY 29, 2008—DECIDED JULY 28, 2008

____________

Before FLAUM, MANION, and EVANS, Circuit Judges.

EVANS, Circuit Judge. In this consolidated appeal of

three related administrative review proceedings, the

petitioners, several environmental protection groups and

the attorney general of the State of Illinois, challenge the

failure of the federal Environmental Protection Agency
2 Nos. 07-3197, 07-3198 & 07-3199

(EPA) to object to certain operating permits proposed by

the Illinois Environmental Protection Agency (IEPA)

pursuant to the Clean Air Act (CAA). The petitioners

contend that the Administrator was obligated to object

because they clearly “demonstrated” that the permits

were not in compliance with the CAA. See 42 U.S.C.

§ 7661d(b)(2). The EPA, on the other hand, maintains

that the Administrator reasonably exercised his discretion in determining that the petitioners did not “demonstrate” a violation because their petitions called for further investigation and analysis, a task the Administrator

found to be more appropriately carried out through the

CAA’s enforcement process. The petitioners argue that

the CAA grants the Administrator no such discretion.

Title V of the CAA requires major stationary sources of

air pollution to obtain operating permits incorporating

the CAA’s requirements and establishes a procedure for

federal authorization of state-run Title V permitting

programs. See id. §§ 7661-7661f. Title V does not impose

additional requirements on sources but rather consolidates all applicable requirements in a single document to facilitate compliance. See id. § 7661a(a). In Illinois,

a polluting source must apply to the IEPA for an operating

permit. After negotiations between the IEPA and the

source and an opportunity for public comment, the IEPA

submits a draft permit to the EPA for review. See id.

§ 7661d. The EPA has 45 days to object. If the EPA does

not object, within 60 days of the expiration of the 45-day

review period any person may petition the EPA to object

to the permit. The EPA then has 60 days to grant or deny

the petition. The EPA must object to the permit “if the

petitioner demonstrates to the Administrator that the

permit is not in compliance with the requirements” of the
Nos. 07-3197, 07-3198 & 07-3199 3

CAA. Id. § 7661d(b)(2). The denial of a petition is then

subject to judicial review. Id. §§ 7607(b)(1), 7661d(b)(2).

Permit applications must include a compliance plan

“describing how the source will comply with all applicable

requirements” of the CAA. Id. § 7661b(b)(1). If a source

is in compliance, it must provide a statement that it will

continue to comply with the requirements of the CAA

and will timely meet any additional applicable requirements that become effective during the permit term. 40

C.F.R. § 70.5(c)(8)(ii)(A), (B). If a source is not in compliance, it must develop a “schedule of compliance,” outlining

how it plans to come into compliance with “all applicable

requirements” of the CAA. Id. § 70.5(c)(8)(iii)(C). The

schedule of compliance must be included in the permit

itself. 42 U.S.C. § 7661c(a). And the permittee must

promptly report any deviations from the permit’s requirements. Id. § 7661b(b)(2).

In addition to permitting authority, the CAA provides

the EPA with enforcement powers. If the Administrator

finds that a source “has violated or is in violation of any

requirement or prohibition of an applicable implementation plan or permit,” he must notify the source and the

state by issuing a notice of violation (NOV). Id. § 7413(a)(1).

The Administrator then has several options: (1) issue an

order requiring compliance, (2) render an administrative

penalty, or (3) bring a civil action. Id. Under the latter

enforcement option, the United States, on behalf of the

EPA, may sue for a permanent or temporary injunction,

to assess and recover a civil penalty, or both. Id. § 7413(b).

In addition, a citizen’s suit provision generally authorizes

“any person [to] commence a civil action . . . against any

person . . . who is alleged to have violated . . . an emission

standard or limitation” of the CAA. Id. § 7604(a)(1).
4 Nos. 07-3197, 07-3198 & 07-3199

1 The attorney general’s claims relate to all six power plants,

whereas the environmental groups’ claims relate only to the

Fisk and Crawford stations.

2 Opacity, a measurement usually stated as a percentage, is the

amount of light that is blocked by a medium such as smoke. See

generally Sierra Club v. E.P.A., 353 F.3d 976, 982 (D.C. Cir. 2004).

Illinois has a 30 percent opacity limit for facilities generally,

with an exception allowing emissions for greater than 30 percent for 8 minutes in any 60-minute period, provided that this

occurs no more than three times in any 24-hour period. Ill.

Admin. Code tit. 35, § 212.123 (1996). A 20 percent opacity limit

applies to emissions from power plants where construction or

modification began after April 14, 1972. Id. § 212.122(a).

3 NSR consists of two programs: prevention of significant

deterioration (PSD) and nonattainment NSR. Under the PSD

program, no source that would emit substantial quantities of

pollutants may be constructed or “modified” unless a permit

prescribing emission limitations has been issued. See 42 U.S.C.

(continued...)

Midwest Generation is an operator of multiple, large,

coal-fired power plants in Illinois. Our case involves six

of those plants: the Fisk, Crawford, Will County, Powerton,

Joliet, and Waukegan stations.1

 Midwest’s predecessor,

Commonwealth Edison, originally submitted applications to the IEPA for Title V operating permits back in

1995. The IEPA then proposed permits, which prompted

petitions requesting that the Administrator object. After

reviewing the proposed permits, the EPA concluded that

the IEPA had failed to respond to significant public

comments and directed it to respond to concerns about

the need for compliance schedules for alleged opacity2

and new source review (NSR)3 violations. The IEPA
Nos. 07-3197, 07-3198 & 07-3199 5

3 (...continued)

§§ 7475(a)(1), 7479(1), (2). The preconstruction permit must

impose the “best available control technology” (BACT). Id.

§ 7479(3).

In nonattainment areas (that is, where air quality standards

have not been met), new and “modified” sources are required to

obtain preconstruction permits, to offset emissions increases

with emissions reductions from other sources in the area, and

to install the “lowest achievable emission rate” technology,

which is more stringent than BACT. See id. § 7503.

4 Although the CAA provides that the Administrator “shall

grant or deny such petition within 60 days after the petition is

filed,” id. § 7661d(b)(2), it took 19 months—and a consent

decree—before a decision was reached in this case.

responded and proposed revised permits, none of which

contained a compliance schedule.

The EPA did not object to the IEPA’s revised permits

within the 45-day period. The Illinois attorney general

and the environmental groups then filed petitions requesting that the Administrator object to the permits. The

petitions raised two grounds for objection: (1) Midwest’s

power plants regularly exceeded opacity limits, yet the

IEPA’s proposed operating permits did not include a

schedule of compliance; and (2) Midwest had “modified”

its power plants, thereby making NSR provisions “applicable requirements,” but the IEPA’s proposed operating

permits failed to require compliance with NSR rules.

The Administrator denied the petitions in three orders,

the content of which is almost identical.4

 Regarding

opacity requirements, the Administrator found that the

petitioners failed to demonstrate an ongoing violation

requiring a schedule of compliance. His finding was
6 Nos. 07-3197, 07-3198 & 07-3199

based on two facts: (1) the IEPA reviewed each source’s

opacity data and did not find a sufficient basis to include

a compliance schedule in the permits; and (2) each source

submitted a compliance certification. The Administrator

concluded that “the Title V petition process is not

the appropriate venue to drive discretionary enforcement decisions of the permitting authority, particularly

when the petitioner fails to demonstrate that a violation

of the Act has occurred.”

Regarding NSR requirements, the Administrator found

that the petitioners failed to demonstrate that the

permits violated the CAA. His finding was based on the

fact that Midwest had not applied for any NSR permits;

therefore, there was no determination that NSR requirements applied to the plants at issue. In addition, no

court had issued an order finding that Midwest violated the CAA by failing to apply for NSR permits. As a

result, the Administrator found that “the allegations

made by the Petitioners do not contain sufficient specific

information to demonstrate that the . . . permits are

deficient.” He concluded that the issue called for further

investigation, which the EPA prefers to do through its

enforcement arm. Relatedly, the Administrator noted

that the IEPA added a condition to the permits to ensure

that they would not be “shielded” from an enforcement

action.

A short time after the Administrator denied the petitions

to object, the EPA issued an NOV to Midwest and its

predecessor, finding opacity and NSR violations at the

six plants at issue here. The Illinois attorney general

subsequently appealed the decisions denying her petitions to object (Nos. 07-3198 and 07-3199), seeking

review of both the opacity and NSR issues. The environmental groups also appealed the decision denying their
Nos. 07-3197, 07-3198 & 07-3199 7

petition to object (No. 07-3197) but only sought review

of the opacity issue.

Because the CAA does not provide a standard of review,

we review the EPA’s decision under the Administrative

Procedure Act (APA), which contemplates setting aside

agency actions only if they are “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with

law[.]” 5 U.S.C. § 706(2)(A). Chevron deference also

guides our analysis. It first instructs us to determine

whether Congress has spoken directly to the issue—that is,

whether the statute in question is unambiguous. Chevron

U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,

842-43 (1984). If Congress’s intent is clear from the statutory language, we must give effect to it. However, if the

statute is silent or ambiguous, we proceed to the

second step and defer to an agency’s interpretation unless

it fails the APA’s “arbitrary and capricious” test. Id. at 844.

The petitioners contend that because the CAA is unambiguous, we need not reach the second step of the Chevron

analysis. Even if we proceed to step two, however, they

argue that we cannot uphold the Administrator’s decision because his rationale does not purport to interpret

the CAA but rather to implement an agency policy

absent from and inconsistent with the CAA. The EPA, on

the other hand, cautions that we should be especially

mindful of the high level of deference an agency is owed

when it interprets its own regulations. See Barnhart

v. Walton, 535 U.S. 212, 217 (2002). It directs us to the

relevant statutory language in the permit-objection

process: “The Administrator shall issue an objection

within such period if the petitioner demonstrates to the

Administrator that the permit is not in compliance with the

requirements of this Act . . . .” 42 U.S.C. § 7661d(b)(2). The

EPA contends that “demonstrates” is an ambiguous term,
8 Nos. 07-3197, 07-3198 & 07-3199

5 The EPA does not challenge the environmental groups’

standing, therefore Article III’s case-or-controversy requirement is satisfied. Rumsfeld v. Forum for Academic and Institutional

Rights, Inc., 547 U.S. 47, 52 n.2 (2006). However, as we previously noted, the environmental groups are only appealing the

opacity issue, and their petition to object only concerns two of

the six power plants. Thus, if we determine that the attorney

general does not have standing, our review of the merits will

be limited accordingly.

which the Administrator reasonably interpreted in

denying the petitioners’ claims.

Before turning to the merits, however, we must address

the threshold jurisdictional question of whether the

Illinois attorney general possesses standing to pursue

this action.5

 Standing consists of three elements:

(1) injury-in-fact, (2) causation, and (3) redressability. Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Because

we are reviewing the decision of an administrative

agency, which is not subject to Article III, the petitioner’s

burden of production on standing is the same as that of

a plaintiff moving for summary judgment in the district

court: she must support each element of her claim by

affidavit or other evidence. Sierra Club v. E.P.A., 292

F.3d 895, 899 (D.C. Cir. 2002). While in many cases a

petitioner’s standing is self-evident, when it is not, the

petitioner must supplement the record to the extent

necessary to establish her entitlement to judicial review

at the first appropriate point in the proceeding. Id. at 899-

900.

Here, however, the petitioners’ opening brief devotes

only one sentence to the issue of the attorney general’s

standing, simply stating that “[t]he People of the State of
Nos. 07-3197, 07-3198 & 07-3199 9

Illinois also have standing in this matter concerning all

six Illinois coal plants.” While the petitioners include a

lengthier discussion in their reply brief, the EPA contends that this attempt to secure standing comes too

late. We agree. It is improper for a party to raise new

arguments in a reply because it does not give an adversary adequate opportunity to respond. Moreover, the

attorney general’s standing is far from self-evident because she is challenging permitting decisions made by

the IEPA. Thus, we have a rather unusual antagonistic

relationship between an office and an agency that are

both part of the executive branch of the state of Illinois.

Because standing was clearly going to be an uphill battle,

the attorney general needed to substantiate her entitlement to judicial review at the earliest possible point. She

failed to do so and accordingly has not met her burden of

production.

Even if we take the petitioners’ untimely arguments into

consideration, we find an insufficient basis for standing.

The petitioners assert that Illinois has standing as both a

sovereign state and in a parens patriae capacity. They rely

on Davis v. United States E.P.A., 348 F.3d 772 (9th Cir. 2003),

to support their argument for standing as a sovereign

state. There, California Governor Gray Davis and the

California Air Resources Board petitioned for review of

an EPA order denying their request for a waiver of the

oxygen level requirement under the federal reformulated

gasoline program. The court found that California had

standing because it “faces remedial and proprietary

consequences that depend upon the outcome of this

litigation.” Id. at 778. In other words, California had an

interest in the litigation because it was the direct recipient

of the EPA’s denial. Here, by contrast, the IEPA issued

permits to Midwest, which were reviewed (but not objected
10 Nos. 07-3197, 07-3198 & 07-3199

6 We say “informally” to distinguish this kind of representation from the authority to represent the State in litigation, which

is possessed exclusively by the Illinois attorney general when

the State is the only real party in interest. See Scachitti v. UBS

(continued...)

to) by the EPA. Thus, the EPA’s actions were entirely

consistent with Illinois’ position, as advanced by the IEPA.

The petitioners also argue that Illinois has standing in a

parens patriae capacity. A state may not bring a parens patriae

suit against the federal government, however, because

there the United States, and not the state, represents the

people’s interests. Massachusetts v. Mellon, 262 U.S. 447,

485-86 (1923); Illinois Dep’t of Transp. v. Hinson, 122 F.3d

370, 373 (7th Cir. 1997). The petitioners respond by citing to

Massachusetts v. E.P.A., 127 S. Ct. 1438 (2007), a decision in

which the Supreme Court allowed a challenge by Massachusetts to the EPA’s decision not to regulate greenhouse

gas emissions from motor vehicles. There, the Court drew

a distinction “between allowing a State to protect her

citizens from the operation of federal statutes (which is

what Mellon prohibits) and allowing a State to assert its

rights under federal law (which it has standing to do).” Id.

at 1455 n.17 (internal quotation marks omitted). But the

Court also found that, according to the petitioner’s uncontested affidavits, the rise in sea levels associated with

global warming already harmed and would continue to

harm Massachusetts “as a landowner.” Id. at 1456. In other

words, the alleged “injury” was to the state itself. Here, the

alleged injury is unclear, as there are no supporting

declarations in the record. And any general interests of the

people of the State of Illinois would seem to be represented

(at least informally)6

 by the IEPA.
Nos. 07-3197, 07-3198 & 07-3199 11

6 (...continued)

Fin. Servs., 831 N.E.2d 544, 556 (Ill. 2005).

In sum, the attorney general has failed to explain why

we have jurisdiction over an internal conflict between an

office and an agency under the executive branch of the

same state government. Under these circumstances, it

seems appropriate for the governor, rather than the federal courts, to resolve the controversy; yet, there is no

evidence that the state has taken any steps internally to

change the IEPA’s decision. The IEPA has the duty to

make Title V permit decisions, so it appears to be the

agency responsible for making Illinois policy in that arena.

See 415 Ill. Comp. Stat. 5/4. And while the attorney general may have broad authority to protect public rights,

which indicates that she has capacity to sue, standing must

be independently established in every case. See Bd. of Educ.

of City of Peoria, Sch. Dist. No. 150 v. Ill. State Bd. of Educ.,

810 F.2d 707, 709-10 (7th Cir. 1987). The attorney general

has not met her burden of establishing standing in this

case. Accordingly, we dismiss her petition for review

and turn to the merits, examining only the environmental

groups’ challenge to the Administrator’s decision not

to object to the Fisk and Crawford permits.

Both parties think that the Court of Appeals for the

Second Circuit’s opinion in New York Public Interest

Research Group, Inc. v. Johnson, 427 F.3d 172 (2d Cir. 2005)

(NYPIRG v. Johnson), should inform our decision. There,

New York’s permitting authority issued an NOV to two

power plants indicating that they had been modified

without obtaining the required PSD permits. When the

EPA did not object to the draft operating permits, NYPIRG

petitioned it to do so. The EPA denied NYPIRG’s peti-
12 Nos. 07-3197, 07-3198 & 07-3199

7 Our case also differs from NYPIRG v. Johnson because there the

permitting authority issued the NOV, whereas here the NOV

came from the EPA. See id. at 181 (“[W]e are not called on to

determine whether it is reasonable for the EPA to exclude

contested PSD limits from permits when the permitting authority has not yet determined those limits applicable—this

case does not present that problem.”).

tion because (1) the source had not conceded that

particular PSD limits applied; and (2) the permitting

authority had discretion under Title V not to include in the

permits PSD limits not yet determined to be applicable. The

court of appeals, however, vacated the EPA’s decision and

held that the permitting authority’s issuance of an NOV

and commencement of a CAA citizen’s suit “is a sufficient

demonstration to the Administrator of non-compliance

for purposes of the Title V permit review process.” Id.

at 180.

Not surprisingly, the petitioners encourage us to

follow NYPIRG v. Johnson and find that the issuance of a

subsequent NOV indicates that their petitions demonstrated noncompliance. The EPA, on the other hand,

argues that we should not follow NYPIRG v. Johnson

because its reasoning is flawed. As we see it, however,

our case differs significantly from NYPIRG v. Johnson

because the NOV here came after the Administrator’s

decision and therefore was not part of the record he

reviewed.7

 Thus, even if we were prepared to embrace the

rule in NYPIRG v. Johnson, it would not resolve the matter.

For that reason, we reserve judgment on the question of

whether a permitting authority’s prior issuance of an

NOV and the commencement of a citizen’s suit obligates

the Administrator to object to an operating permit.
Nos. 07-3197, 07-3198 & 07-3199 13

To repeat, Title V states that “[t]he Administrator

shall issue an objection . . . if the petitioner demonstrates

to the Administrator that the permit is not in compliance

with the requirements” of the CAA. 42 U.S.C. § 7661d(b)(2).

This language clearly obligates the Administrator to

(1) determine whether the petition demonstrates noncompliance and (2) object if such a demonstration is made.

N.Y. Pub. Interest Research Group v. Whitman, 321 F.3d

316, 332-33 (2d Cir. 2003). As we mentioned, however,

neither the CAA nor its regulations define the term

“demonstrates.” Thus, the EPA has discretion under the

statute to determine what a petition must show in order

to make an adequate “demonstration.” See id. at 333

(discussing the distinction between “the discretionary

part of the statute (whether the petition demonstrates

noncompliance) with the nondiscretionary part (if such

a demonstration is made, objection must follow)”).

The petitioners, however, contend that the Administrator never really determined whether the petition

demonstrated noncompliance but instead just deferred

to the enforcement process. We disagree. While he noted

several times that the EPA’s policy was to give information that may indicate noncompliance to its enforcement

arm, he also explicitly stated that “Petitioner has not

demonstrated noncompliance at the time of permit issuance as required by the CAA . . . .” Thus, it is a bit of a

stretch to argue that the Administrator failed to make the

requisite threshold determination.

What the petitioners are really complaining about are the

reasons the Administrator gave for his decision. On the

opacity issue, the Administrator determined that a

“demonstration” is not made when, among other things,

alleged violations are contested by both the permitting

authority and the source. The petitioners disagree. The
14 Nos. 07-3197, 07-3198 & 07-3199

outcome therefore hinges on what is meant by the term

“demonstrate.” But because “demonstrate” is undefined,

we need only determine whether the Administrator’s

interpretation is “based on a permissible construction

of the statute.” Chevron, 467 U.S. at 843.

Title V’s time line indicates that the Administrator

acted reasonably. To repeat again, permitting authorities

must provide “streamlined” procedures for issuing permits. 40 C.F.R. § 70.4(d)(3)(ix). Within 45 days after receiving a copy of the proposed permit from the permitting

authority, the Administrator must object if he determines

that the permit is not in compliance with the CAA. 42

U.S.C. § 7661d(b)(1). If the Administrator does not object,

any other person may petition him within 60 days after

the expiration of the 45-day review period, and the

agency is required to respond within 60 days. Id.

§ 7661d(b)(2). Thus, Congress deliberately gave the EPA

a rather short time period to review proposed permits,

resolve questions related to those permits, and decide

whether to object. Because this limited time frame may

not allow the EPA to fully investigate and analyze contested allegations, it is reasonable in this context for the

EPA to refrain from extensive fact-finding.

The existence of the EPA’s broad enforcement authority

reinforces our belief that Congress did not intend the

EPA to fully investigate and resolve all allegations in the

permitting context. Section 113 states that, “on the basis

of any information available,” the EPA may find that any

person has violated its requirements. Id. § 7413(a)(1). After

contacting the source and the state, the EPA may issue

an order, render an administrative penalty, or bring a

civil action. Id. Section 114 allows the EPA to issue administrative information requests and to seek appropriate
Nos. 07-3197, 07-3198 & 07-3199 15

8 Certificates of compliance are not taken lightly. Filing a false

compliance certification exposes the responsible corporate

official and/or the source itself to potential criminal sanctions, among other things. 42 U.S.C. § 7413(c).

relief, including civil penalties, if they are not answered.

Id. §§ 7414(a)(1), 7413.

Moreover, Title V itself reserves the EPA’s ability to

bring an enforcement action for violations of the CAA

unless an express “shield” on the face of the permit bars

that action. Id. § 7661c(f). This provision would hardly be

necessary if the EPA was supposed to resolve all alleged

violations of the CAA in the permitting process. See

United States v. East Ky. Power Co-op., Inc., 498 F. Supp. 2d

1010, 1018 (E.D. Ky. 2007) (rejecting a defendant’s argument that the Title V permitting process was “the only

remedy available to the EPA for an alleged deficient

permit application” because of the EPA’s broad enforcement authority and the lack of a permit shield). In addition,

unlike the permitting process, the enforcement process

allows for discovery, hearings, cross-examination of

witnesses, and expert testimony—mechanisms designed

to resolve disputed claims. It is reasonable to interpret

Title V to complement, not to limit, the EPA’s enforcement authority.

Here, the Administrator’s finding that the petitioners

failed to demonstrate noncompliance regarding opacity

was based on the fact that (1) the IEPA reviewed each

source’s opacity data and did not find a sufficient basis

to include a compliance schedule in the permits; and

(2) each source submitted a compliance certification.8

Thus, he relied on representations made by the source

and on the permitting authority’s review when he deter-
16 Nos. 07-3197, 07-3198 & 07-3199

9 Contrary to the petitioners’ assertions, this does not mean that

a petition can never make an adequate demonstration of noncompliance. The EPA, in its brief, provided several examples

of contexts in which petitioners will be able to make the required demonstration. And, to repeat, we have not decided

whether a prior NOV issued by either the EPA or the permitting

authority constitutes an adequate demonstration of noncompliance.

USCA-02-C-0072—7-28-08

mined that the allegations were contested. This was not

“arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.” 5 U.S.C. § 706(2)(A). Allowing

the Administrator to place some reliance on these factors

is consistent with Title V’s time lines and the complementary enforcement and permitting authorities established

by Congress. Accordingly, we conclude that where, as

here, there is contested evidence of a potential violation

requiring further investigation and analysis, the CAA

allows the EPA reasonable discretion to determine that

the petition failed to demonstrate noncompliance and

to refer the matter to the enforcement process.9

For the foregoing reasons, the attorney general’s petitions

for review (Nos. 07-3198 and 07-3199) are DISMISSED,

and the environmental groups’ petition for review (No. 07-

3197) is DENIED.