Opinion ID: 371077
Heading Depth: 2
Heading Rank: 2

Heading: Necessary Preconstruction Approvals or Permits.

Text: 110 After prevailing in the district court, Montana Power began land clearing at the Colstrip site in June 1977. It asserts these operations began a 'program of physical on-site construction' that would have been continuous but for the EPA's order to halt construction in September. 32 It also argues that its unavoidable loss as of August 7, 1977, had grown to $78.5 million and that this sum was clearly substantial, even using the EPA's ratio approach. 111 Establishing only that on-site construction had begun or that its unavoidable loss would be substantial is insufficient to meet the definition of 'commence' in the 1977 Amendments. It is also necessary to demonstrate a source has all necessary preconstruction approvals or permits prior to the cut-off date. 112 Montana Power obtained a permit in June 1976 under the Montana Major Facility Siting Act, Mont.Rev.Codes Ann. Sec. 70-801 et seq. It did not receive a permit from the state's Department of Health and Environmental Sciences, under the Montana Clean Air Act, Mont.Rev.Codes Ann. Sec. 69-3911 (Supp. 1977), until January 1978. 113 The company argues that it needed neither permit to satisfy the definition of 'commence' in the 1977 Amendments. Alternatively, if any permits were required, it asserts the only one necessary was the one received under the Siting Act, issued before the effective date of the 1977 Amendments. 114 Because of the way we decide the approvals or permits issue, we do not reach Montana Power's representations about on-site construction begun or substantial loss incurred before August 7, 1977.
115 Montana Power argues that Sec. 169(2)(B) makes clear it needed no preconstruction permits to satisfy the definition of 'commence' in the 1977 Amendments. 116 Referring to the immediately preceding subsection, Sec. 169(2)(A), which defines 'commence' as having 'all necessary preconstruction approvals or permits' and either (i) having begun on-site construction or (ii) having entered into sufficient contractual obligations, Sec. 169(2)(B) provides: 117 The term 'necessary preconstruction approvals or permits' means those permits or approvals, required by the permitting authority as a precondition to undertaking any activity under clauses (i) or (ii) of subparagraph (A) of this paragraph. 118 The use of the disjunctive 'or' in connection with the plural 'clauses' creates a significant problem of interpretation. 119 Montana Power emphasizes the disjunctive 'or' and argues that the phrase 'any activity under clauses (i) or (ii)' is the grammatical equivalent of 'any activity under clause (i) or any activity under clause (ii).' It says that a source must have preconstruction permits necessary for either on-site construction or entering into contractual obligations, but not both. Since the contractual obligations on which it relies for its PSD exemption claim required no approval from any permitting authority before their execution, the company argues it satisfied the definition of 'commence' in Sec. 169(2)(A). 120 The EPA emphasizes the plural 'clauses' and contends the phrase 'any activity under clauses (i) or (ii)' means 'any activity mentioned in either clause.' It argues that the company needed all permits necessary for contracting and for on-site construction. Since it had no permit under the Montana Clean Air Act 33 before August 7, 1977, it could not have commenced construction under Sec. 169(2)(A). 121 The disputed phrase is ambiguous and could be given either interpretation, another example of poor drafting requiring judicial deciphering. Unfortunately, the legislative history is equally confused. 122 The definition of 'commence' in the 1977 Amendments, as reported out of committee, did not define 'necessary preconstruction approvals or permits.' During Senate debate on the measure, Senator Henry M. Jackson proposed an amendment: 123 [T]he term 'necessary preconstruction approvals or permits' means those permits or approvals, if any, required as a precondition to undertaking any activity relied upon by an owner or operator to satisfy the requirements in clauses (i) or (ii) . . .. 124 123 Cong.Rec. at S9455 (daily ed., June 10, 1977) (emphasis added). The emphasized words were deleted later by a House and Senate Conference Committee. 125 Montana Power argues that Senator Jackson's explanation of the amendment on the Senate floor confirms its interpretation. 34 It contends a contrary interpretation, as that offered by the EPA, might moot the appeal from the district court, something that Congress seemingly tried to avoid. 35 Since the Conference Committee, in reporting out the altered version of Senator Jackson's amendment, declared there had been only 'a slight modification of the 'commenced construction' definition,' 36 H.R.Rep. No. 95-564, 95th Cong., 1st Sess. 153 (1977), U.S.Code Cong. & Admin.News 1977, p. 1533, the company says the original intent of Jackson's amendment was preserved. That intent allegedly was to permit a source that had relied only on its contractual commitments for its PSD exemption claim to satisfy the permit requirement automatically because it needed no permits just to execute contracts. 37 126 The EPA responds that, even if Montana Power correctly read Senator Jackson's intent in offering the amendment, Congress did not agree. It cites the Senate Report describing the purpose of the definition of 'commence,' a comment by Senator Jackson as an introduction to his amendment, and remarks of Senator Muskie, to show a congressional intent that a source needed all preconstruction permits, notably those necessary for on-site construction, to satisfy the definition of 'commence' in Sec. 169(2)(A). 38 It reminds us that the version that emerged from the Conference Committee removed any possibility of a different interpretation. 39 127 Although conceding that Congress wanted to preserve the issues in the district court case, the EPA also quotes remarks by the chief sponsor of the 1977 Amendments in the House that the Conference Committee intended to create no special exception for Colstrip Units 3 & 4= 40 which the EPA contends would result by using Montana Power's interpretation of the Jackson amendment. 128 The EPA finally argues Senator Jackson held the mistaken idea that, when he proposed his amendment, Montana Power had all necessary permits for on-site construction. This is consistent, the agency contends, with his comment that Montana Power 'ha[d] completedly complied with the law' and that his amendment would 'not prejudice the litigation that is pending' in the district court. 129 The legislative history is rife with inconsistencies, and the explanations of the parties attempting to rationalize it to correspond with their different interpretations are often strained. When conflicting, inconclusive views form the greater part of the legislative history, we are left with divining the 'intent' of Congress from the overall purpose of the statute in question. 130 One of the declared purposes of the Clean Air Act is 'to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population.' Clean Air Act Sec. 101(b)(1). PSD review and permitting is the only method of enforcing the allowable pollution increments applicable to sources such as Colstrip Units 3 & 4. Exemptions claimed from PSD review and permitting therefore must be so examined as not to contravene the basic policy of the Act. 131 Section 169(2)(A) requires a source seeking to satisfy the definition of commence to obtain 'all necessary preconstruction approvals or permits required by Federal, State, or local air pollution emissions and air quality laws or regulations' (emphasis added). On its face, this language admits of no exceptions. 132 The kind of permits specified is also important. By requiring 'preconstruction approvals or permits,' the language of the statute implies that the kinds of permits required are those necessary to begin construction. This does not coincide with Montana Power's understanding that it did not need any construction permits to satisfy the definition of 'commence' because it relied only upon its contractual obligations to claim a PSD exemption, and no permits are necessary to enter contract. 133 All parties agree that the Sec. 169(2) definition of 'commence' is stricter than the pre-amendment regulatory definition. Yet, when the regulatory definition is viewed in light of the Strelow Memoranda, there is but one important distinction that could make the statutory definition stricter. As interpreted by the Memoranda, the regulatory definition made possession of necessary preconstruction permits only a 'relevant factor' in determining if a source was irrevocably committed to a specific site. In Sec. 169(2)(A)-(B), possession of required permits is mandatory to satisfy the definition of commence. This casts doubt on any interpretation of the statute that would weaken the definition of 'commence' and allow a source to satisfy it easily. 134 Montana Power suggests a definition of Sec. 169(2)(A)-(B) that would allow a source to 'commence construction' merely by entering into contractual commitments. Under this interpretation a source could begin construction illegally, lacking the necessary permits, but satisfy the definition of 'commence' as long as it relied solely on its contractual obligations in claiming PSD exemption. This is hardly a 'stricter definition' than that in the regulations, and we doubt Congress intended such a result. 135 Senator Jackson may have intended in his proposed amendment to allow Colstrip Units 3 & 4 to satisfy the permit requirement under Sec. 169(2)(A) merely on the basis of its contractual commitments. But so interpreted, the amendment appears to be special ligislation the primary purpose of which is to benefit Montana Power. Absent a clearer showing, we are unwilling to ascribe this intent to Congress. If Congress had wanted the Jackson amendment to protect the Colstrip Units against the possible adverse effects of the 1977 Amendments, it could easily have so stated. It did not. 136
137 Even if the phrase 'necessary preconstruction approvals or permits' in Sec. 169(2)(A)-(B) is interpreted to mean those permits necessary for actual on-site construction, Montana Power argues it obtained the only permit required before the effective date of the 1977 Amendments. 138 The company received approval under the Montana Major Facility Siting Act, Mont.Rev.Codes Ann. Secs. 70-801 et seq., in July 1976. It received no permit under the state Clean Air Act, Mont.Rev.Codes Ann. Secs. 69-3906 et seq., until January 1978. It asserts that the state Clean Air Act permit is not required under Sec. 169(2)(A)-(B), and that it sought one only to avoid protracted litigation as to its necessity. The EPA contends that permits under both the Siting Act and the state Clean Air Act are 'necessary preconstruction approvals or permits.' 139 The state Clean Air Act was enacted in 1967. With its regulations, it is part of the state's implementation plan under the federal Clean Air Act. While a parent organization administers the plan generally, the Board of Health and Environmental Sciences controls the permitting of all new sources of air pollution: 140 The board may by rule prohibit the construction, installation, alteration, or use of a machine, equipment, device, or facility which it finds may directly or indirectly cause or contribute to air pollution . . ., unless a permit therefor has been obtained. 141 Mont.Rev.Codes Ann. Sec. 69-3911. The regulations require two permits, one for construction and one for operation or use. Mont.Admin.Code Secs. 16-2.14(1)-S1400(1)-(9), (11). 142 The Major Facility Siting Act, enacted in 1973, specifically governs 'the construction of additional power or energy conversion facilities' and is meant 'to ensure that the location, construction and operation of power and energy conversion facilities will produce minimal adverse effects on the environment.' Mont.Rev.Codes Ann. Sec. 70-802. Before a facility may be constructed or operated, it must obtain a 'certificate of environmental compatibility and public need,' the equivalent of a permit. Id. at Sec. 70-804. 143 The Board of Natural Resources and Conservation controls the issuance of permits under the Siting Act. It may not grant one unless it determines 144 that duly authorized state air and water quality agencies have certified that the proposed facility will not violate state and federally established standards and implementation plans . . .. 145 Id. at Sec. 70-810(1)(h). The relevant agency is the Board of Health, which is responsible for issuing a permit under the state Clean Air Act. 146 Section 70-817 of the Siting Act provides that, once a permit under the act has been granted, 147 [n]otwithstanding any other law, no state or regional agency, or municipality or other local government, may require any approval, consent permit, certificate, or other condition for the construction, operation, or maintenance of a facility authorized by a certificate issued pursuant to this chapter; except that the state air and water quality agency or agencies shall retain authority which they have or may be granted to determine compliance of the proposed facility with state and federal standards and implementation plans for air and water quality and to enforce those standards . . .. (Emphasis added.) 148 Montana Power argues that findings of the Board of Health in certifying a source to the Board of Natural Resources under the Siting Act duplicate those it must make under the state Clean Air Act. Since the Siting Act deals specifically with new energy sources and is, comprehensive to the exclusion of other state statutes, 41 the company argues that the certification by the Board of Health that was necessary to obtain its Siting Act permit constitutes permission to construct under the state Clean Air Act as well. 149 The company reads narrowly the exception to Sec. 70-817, which protects the authority of state air quality agencies like the Board of Health 'to determine compliance of the proposed facility with state and federal standards.' Instead of interpreting the exception as ensuring the Board of Health's power to issue construction permits, which might detract from the comprehensive scheme of the Siting Act, Montana Power argues that the exception only preserves the Board's power to grant use permits, for which there is no analogue in the Siting Act. Since a use permit is issued only after a source is constructed, it cannot be a preconstruction approval or permit required by the definition of 'commence' in Sec. 169(2)(A). 150 This understanding of the relationship between the state Clean Air Act and the Siting Act is strained, at best. The language of Sec. 70-817 preserving the authority of the Board of Health is not limited to issuing use permits. 42 It allows the Board 'to determine compliance of the proposed facility' with applicable standards. Use permits granted after a facility is built cannot be for a 'proposed' facility. 151 Whether construction permits required under the state Clean Air Act and Siting Act are duplicative is not our concern. That is a matter for the Montanalegislature. Section 169(2)(A)-(B) requires a source to obtain 'those permits or approvals . . . required by the permitting authority,' in this case the State of Montana and its agencies. 43 Since Montana Power did not have both a state Clean Air Act permit and a Siting Act permit before August 7, 1977, it did not commence construction under the definition in the 1977 Amendments. 44