## F I L E D United States Court of Appeals Tenth Circuit 

### AUG 29 2000 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

PUBLIC SERVICE COMPANY OF COLORADO,

Petitioner,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent,

------------------------------- COLORADO INDEPENDENT ENERGY, Amicus Curiae. No. 99-9542

Appeal from Administrative Determination of the United States Environmental Protection Agency

(EPA No. 8P-AR)

James A. Holtkamp, LeBoeuf, Lamb, Greene & MacRae, L.L.P., Salt Lake City, Utah, (Gary E. Parish, LeBoeuf, Lamb, Greene & MacR ae, L.L.P., Denver, Colorado and Frank Prager, Associate General Counse l, New Century Energies, Denver, Colorado, with him on the briefs), for Peti tioner. Daniel W. Pinkston, Senior Trial Attorney, (Lois J. Schiffer, Assistant Attorney General, Denver, Colorado, Teresa Lukas, Of Counsel , Office of Regional1 The Colorado Association of Commerce and Industry and the Edison

Electric Institute filed motions to become amici cu riae in this appeal. Because their briefs only address the merits of PSCo’s appe al and this court does not reach the merits, we deny both motions. -2- Counsel, U.S. Environmental Protection Agency, Denv er, Colorado and M. Lea Anderson, Of Counsel, Office of General Counsel, U. S. Environmental Protection Agency, Washington, D.C., with him on the briefs), Environment and Natural Resources Division, U.S. Department of Justice, Den ver, Colorado, for Respondent. Jeffrey G. Pearson, Kelly, Haglund, Garnsey & Kahn, LLC, Denver, Colorado, filed an amicus curiae brief for Colorado Independe nt Energy Association.

Before BRORBY , McKAY , and MURPHY , Circuit Judges.

MURPHY , Circuit Judge.

I. INTRODUCTION The Environmental Protection Agency (“EPA”) issued two letters opining that a proposed new power plant and an existing pla nt owned by Public Service Company of Colorado (“PSCo”) will constitute a “sin gle source” of air emissions for purposes of air emissions permitting. Pursuantto 42 U.S.C. § 7607(b), PSCo brought this appeal to challenge the EPA’s determin ation. The EPA then moved this court to dismiss PSCo’s appeal for lack of sub ject matter jurisdiction, arguing the opinion letters do not constitute “final action ” as required by § 7607(b). This court grants the EPA’s motion and dismisses the appeal. 1-3-

II. BACKGROUND Under the federal Clean Air Act, any major emitting facility, which includes stationary sources of air pollutants, located in an area of the country which has already achieved the national ambient airquality standards must obtain a prevention of serious deterioration (“PSD”) permi t prior to beginning initial construction or making certain modifications to an existing facility. See 42 U.S.C. §§ 7471; 7407(d)(1)(A)(ii); 7475(a)(1); 7410 (a)(2)(C), (D); 7479(1), (2)(C); 7411(a)(2), (3), (4). Pursuant to rules an d regulations promulgated by the EPA, the state of Colorado, rather than the EPA its elf, is the permitting authority for almost all stationary sources within Colorado. See 40 C.F.R. §§ 52.02, 52.320; 51 Fed. Reg. 31,125 (1986). The Colorado D epartment of Public Health and Environment (“CDPHE”) has thus promulgated its own regulations governing the applicability and requirements for a PSD permit

. See Colorado Air Quality Control Commission (“CAQCC”) Regulation No. 3, Part s A & B. In November of 1998, KN Power Company (“KN Power”) applied to the CDPHE for a PSD permit for the construction of a ne w power-generating plant (the “Front Range facility”) in Fort Lupton, Colora do. The Front Range facility was to be constructed by Front Range Energy Associates, LLC (“Front Range”), a joint venture formed by two companies, Quixx Mounta in Holdings, LLC (“Quixx”) and FR Holdings, LLC. Quixx is a subsidi ary of Quixx Corporation,-4-

which is a subsidiary of New Century Energies, Inc. (“New Century”) and FR Holdings is a subsidiary of KN Power. In April of 1999, PSCo, which owns and operates an existing power generating facility also in Fort Lupton (the “PSCo facility”), entered into a powersupply agreement (the “Agreement”) with Front Range

. Pursuant to the Agreement, Front Range would construct and operate the Front Range facility near the PSCo facility and PSCo would purchase the entire electric power and energy output from the Front Range facility. Moreo ver, the Front Range facility would be interconnected with the PSCo electric syst em. PSCo, like Quixx, is a subsidiary of New Century. Also in April, KN Power withdrew its PSD permit app lication and instead applied for a “minor source permit,” ostensibly bec ause the Front Range facility would operate only during peak electricity demand p eriods and thus emit less than 250 tons of nitrogen dioxide and carbon monoxide pe r year. See 42 U.S.C. § 7479(1) (providing that certain types of stationarysources lacking the potential to emit 250 tons or more per year of an air pollutant do not qualify as “major emitting facilities”). After reviewing the minor s ource permit application and the attendant files, the CDPHE became concerned that th e Front Range facility and the PSCo facility were, in part, under common owner ship and that the two facilities would be co-managed. The CDPHE, therefo re, questioned whether the-5-

Front Range facility would merely be a modification to the existing PSCo facility such that together they would actually constitute asingle stationary source or major emitting facility, thus requiring a PSD permi t prior to construction. See id. §§ 7479(2)(C), 7411(a)(2), (4); 40 C.F.R. § 51.166( b)(2)(i), (23)(i); 51.166(i)-(r). Under both federal and Colorado law, if the new Fro nt Range facility and the existing PSCo facility (1) belong to the same i ndustrial grouping, (2) are located on contiguous or adjacent property, and (3) are under common control, they constitute a single stationary source. See 42 U.S.C. § 7411(a)(3); 40 C.F.R. § 51.166(b)(6); CAQCC Regulation No. 3 Part A § I.B .59. If the two facilities constitute a single stationary source, construction of the Front Range facility would therefore be deemed a major modification to a n existing major emitting facility, triggering the PSD permit requirement. See 40 C.F.R. § 51.166(b)(2)(i), (23)(i); id. § 51.166(i)-(r). The CDPHE indicated that the two facilities “clearly” met the first two elements of the definition of a s ingle stationary source and it was unsure as to whether the third element of commo n control was also present. The CDPHE thus solicited the EPA’s opinion about wh ether the two facilities would constitute a single source. On October 1, 1999, in response to the CDPHE’s inqu iry, the EPA sent a letter to the CDPHE “outlin[ing] [its] views” on wh ether the proposed Front Range facility and the existing PSCo facility would constitute a single source.-6-

The letter stated, “it is our interpretation of the PSD regulations that the [Front Range facility] and existing PSCo generating facili ty constitute a single source” and that the Front Range facility, “if constructed as proposed, would be a major modification of this major source and therefore, is subject to the requirement to obtain a PSD permit . . . .” In the letter, the EP A reasoned that both the control vested in PSCo over the Front Range facility by the power supply agreement and New Century’s common ownership interests in both fa cilities demonstrated common control over the two facilities. After PSCo requested the EPA to reconsider its determination, the EPA sent a second letter on November 12, 1999 to the Associate General Counsel for New Century br iefly reconfirming its earlier opinion. To this date, the CDPHE has neither grant ed nor denied the minor source permit.

III. DISCUSSION In appealing the opinion rendered in the two EPA le tters, PSCo contends this court has jurisdiction over that appeal pursua nt to 42 U.S.C. § 7607(b). The parties agree that the relevant portion of § 7607(b ) provides, A petition for review of the [EPA] Administrator’s action in approving or promulgating any implementation plan u nder section 7410 of this title or section 7411(d) of this title , any order under section 7411(j) of this title, under section 7412 o f this title,[] under section 7419 of this title, or under section 7420 o f this title, or his action under section 1857c-10(c)(2)(A), (B), or (C) of this title . . . or-7-

under regulations thereunder, or revising regulatio ns for enhanced monitoring and compliance certification programs un der section 7414(a)(3) of this title, or any other final action of the Administrator under this chapter(including any denial or disapproval by the Administrator under subchapter I of this chapter) w hich is locally or regionally applicable may be filed only in the Unit ed States Court of Appeals for the appropriate circuit. Id. § 7607(b)(1) (emphasis added). On EPA’s motion to dismiss, the question before this court is whether the two EPA letters co nstitute “final action” within the meaning of § 7607(b)(1).
In Harrison v. PPG Industries, Inc. , the United States Supreme Court considered the meaning of the words “any other fina l action” within § 7607(b)(1).
See 446 U.S. 578, 586 (1980). The parties in Harrison , however, agreed that the challenged EPA action constituted “‘final action’ a s that term is understood in the context of the Administrative Procedure Act [(“APA” )] and other provisions of federal law.” Id. The Court, therefore, was left to construe only t he words “any other.” See id. at 586-94. The holding in Harrison that § 7607(b)(1) conferred jurisdiction on the court of appeals over the chall enged EPA action is thus inapposite to the instant case. Nonetheless, the C ourt’s acceptance of the parties’ agreement that the challenged action was a “final a ction” within the meaning of the APA counsels this court to look to interpretati ons of the term “final action”2 Consistent with this approach, both the EPA and PSC o rely on decisions

construing the words “final action” within the APA. -8- under the APA when construing that same term under § 7607(b)(1). 2 See id. at 586. In resolving whether a particular agency action is final under the APA, this court recently stated, “we look to whether [the act ion’s] impact is direct and immediate, whether the action marks the consummatio n of the agency’s decisionmaking process, and whether the action is o ne by which rights or obligations have been determined, or from which leg al consequences will flow.” Colorado Farm Bureau Fed’n v. United States Forest Serv. , No. 99-1125, 2000 WL 992234, at *1 (10th Cir., July 18, 2000) (citati ons and quotations omitted). Application of these three factors in the instant c ase leads to the conclusion that the two EPA opinion letters do not constitute final action by the EPA. The impact of the letters is neither direct nor imm ediate, particularly as it
concerns PSCo. In Franklin v. Massachusetts , the Court indicated that the direct and immediate impact factor addresses “whether [the agency action] is one that will directly affect the parties .” 505 U.S. 788, 797 (1992) (emphasis added). Because PSCo is not even the company seeking a perm it to build the Front Range facility, the EPA’s opinion concerning the type of permit required for the construction of that facility does not directly imp act PSCo. At most, the EPA’s3 Because this court dismisses PSCo’s appeal for lackof subject matter

jurisdiction under 42 U.S.C. § 7607(b), we need notresolve the separate question whether PSCo has standing to pursue its challenge t o the EPA’s determination. -9- opinion letters could potentially cause an indirectimpact upon PSCo, if the letters create delay in the construction of the Front Range facility which in turn inhibits Front Range from meeting its obligations to PSCo un der the Agreement. 3 The EPA letters do not even cause a direct and immediat e impact upon KN Power, the company actually seeking a permit to build the Fron t Range Facility, because it is the CDPHE as the permitting agency, and not the EPA , which will initially determine whether a minor source permit or a PSD pe rmit is required. Although the EPA ultimately could overturn any decision rendered by the CDPHE, the opinion expressed in the two letters “serves more l ike a tentative recommendation than a final and binding determination. Id. at 798; see 42 U.S.C. §§ 7413(a)(5), 7661d(b)(1). Moreover, the two EPA opinion letters in no way mark the consummation of its decision-making process, which cannot occur before the CDPHE has acted on the permit application. As mentioned above, it is the CDPHE which first ascertains whether the Front Range facility may be constructed with merely a minor source permit or whether the PSD permit is re quired. See 40 C.F.R. §§ 52.02, 52.320; 51 Fed. Reg. 31,125 (1986). If the CDPHE issues a minor source permit, the EPA could then step in and take some en forcement action against the-10-

state or against Front Range or it could veto the p ermit issued. See 42 U.S.C. §§ 7413(a)(5), 7661d(b)(1). The EPA could also alter its opinion after the CDPHE has issued the minor source permit and allow construction of the Front Range facility to proceed under that permit. The EPA, ho wever, cannot act until the CDPHE does, and the CDPHE has yet to act on the min or source permit application. Even if the CDPHE accedes to the EPA’s opinion as s tated in the two letters and denies the minor source permit, the opi nion letters still would not constitute the consummation of the EPA’s decision-m aking process. Under Colorado law, KN Power would be entitled to a revie w by the Air Quality Control Commission of the CDPHE’s denial of the minor sourc e permit. See Colo. Rev. Stat. § 25-7-114.5(8), -103(7). If the Air QualityControl Commission upheld the CDPHE’s determination, KN Power could still seek ju dicial review in state court. See id. § 25-7-120. The EPA might well be convinced by a decision rendered in state court or by the Air Quality Control Commissio n that construction of the Front Range facility does not trigger PSD permit re quirements. The two letters issued well before this state process has even begu n, therefore, do not mark the consummation of the EPA’s decision-making process. Finally, the two opinion letters do not determine a ny rights or obligations of PSCo or any other entity; nor do legal consequen ces flow from these letters.4 PSCo’s failure to ask this court for any specific r elief, other than a reversal

of the EPA’s determination in its opinion letters, perhaps reveals a tacit admission that the EPA has yet to impose any affirmative obli gations upon or declare any -11- See Christensen v. Harris County , 120 S. Ct. 1655, 1662 (2000) (“[Statutory] interpretations such as those in [agency] opinion l etters . . . lack the force of law . . . .”). In arguing to the contrary, PSCo contends that a draft of the October 1 letter which was earlier sent to the CDPHE did dete rmine Colorado’s obligation to deny the minor source permit and require a PSD p ermit when it stated the following: “If Colorado issues the signed [minor so urce] permit to the applicant, the State will not be acting in compliance with req uirements of the Act relating to the construction and modification of new sources. EPA Region VIII is considering what action to take to prevent such non -compliance . . . .” PSCo contends that in this statement, the EPA overtly th reatened enforcement action against Colorado, thus placing upon the CDPHE a leg al obligation to deny the minor source permit. The nature of this letter as a mere draft and the deletion of this purported threat from the finalized version of the letter sent on October 1, however, suggest that the EPA had not definitively determined the obligations of the state of Colorado when it sent the October 1 le tter. The October 1 letter itself began with far more temperate language, stating “th is letter outlines the [EPA’s] views,” and it never ordered the state or any otherparty to take any particular action. 4rights of PSCo or other involved entities. This co urt would violate Article III’s

prohibition against advisory opinions were it to do that which PSCo requests, i.e., issue a mere statement that the EPA’s interpretatio n and application of the law was incorrect without ordering some related relief. See generally United States v. Burlington No. R.R. Co. , 200 F.3d 679, 699 (10th Cir. 1999). -12- In arguing further that legal consequences flow fro m the EPA letters, PSCo relies on the Ninth Circuit decision in Hawaiian Electric Co. v. United States Environmental Protection Agency

. See 723 F.2d 1440, 1442 (9th Cir. 1984). In Hawaiian Electric , the Ninth Circuit concluded an EPA determination that a PSD permit was required before a power plant could swit ch to a higher sulfur fuel constituted final agency action under § 7607(b)(1). See id . at 1441-42. The Ninth Circuit reasoned, “although the [EPA’s] application of the major modification definition is an interim step in the PSD permitting process, it has immediate legal consequences, i.e., the requirement of PSD review.” Id. at 1442. Admittedly, the major modification determination in Hawaiian Electric is very similar to the opinion expressed in the two EPA letters in the ins tant case. The legal consequence of the EPA’s determination in Hawaiian Electric that PSD review was required, however, does not similarly flow fromthe EPA opinion letters here. Unlike in Hawaiian Electric , the EPA is not the permitting authority in the st ate of Colorado. See id. at 1441. As discussed above, the two EPA opinion letters do not obligate the CDPHE to subject the Front Range f acility construction project to PSD review; the CDPHE can instead choose to issue aminor source permit, and-13-

only then can the EPA take action to require PSD re view. Hawaiian Electric , therefore, is distinguishable. In sum, the nature of both the permitting process i n Colorado and the EPA letters themselves defies characterization of those letters as “final action” from which an appeal may be taken under 42 U.S.C. § 7607 (b)(1).

IV. CONCLUSION Because PSCo’s appeal pursuant to 42 U.S.C. § 7607( b) fails to challenge a “final action” by the EPA, this court DISMISSES the appeal for want of subject matter jurisdiction.