Court Opinion

ID: 2977646
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:11:35.604403+00
Date Added: 2024-06-11T11:44:07.572626
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RECOMMENDED FOR FULL-TEXT PUBLICATION
                          Pursuant to Sixth Circuit Rule 206
                                File Name: 09a0071p.06

              UNITED STATES COURT OF APPEALS
                            FOR THE SIXTH CIRCUIT
                              _________________

                                                 X
                                                  -
 SIERRA CLUB,
                                                  -
                                    Petitioner,
                                                  -
                                                  -
                                                       No. 07-4485
           v.
                                                  ,
                                                   >
                                                  -
                                                  -
 UNITED STATES ENVIRONMENTAL
                                                  -
 PROTECTION AGENCY; LISA JACKSON,
                                                  -
 Administrator,
                                   Respondents, -
                                                  -
 EAST KENTUCKY POWER COOPERATIVE, INC., -
                      Intervenor-Respondent. -
                                                  -
                                                 N
                     On Petition for Review of an Order of the
                Administrator of the Environmental Protection Agency.
                                    No. FRL-8481.
                            Argued: December 10, 2008
                       Decided and Filed: February 26, 2009
          Before: BATCHELDER, GILMAN and SUTTON, Circuit Judges.

                                _________________

                                    COUNSEL
ARGUED: David C. Bender, GARVEY, McNEIL & McGILLIVRAY, Madison,
Wisconsin, for Petitioner. Joshua M. Levin, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Respondent. Harry M. Johnson III, HUNTON &
WILLIAMS, Richmond, Virginia, for Intervenor. ON BRIEF: David C. Bender, Christa
O. Westerberg, GARVEY, McNEIL & McGILLIVRAY, Madison, Wisconsin, Stephanie
Tai, UNIVERSITY OF WISCONSIN LAW SCHOOL, Madison, Wisconsin, for Petitioner.
Joshua M. Levin, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Respondent. Harry M. Johnson III, John M. Holloway III, Penny A. Shamblin, Sean P.
Trende, HUNTON & WILLIAMS, Richmond, Virginia, for Intervenor.

                                          1
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                                     _________________

                                          OPINION
                                     _________________

          SUTTON, Circuit Judge. The Clean Air Act requires the Environmental Protection
Agency to object to an air-pollution permit if any person “demonstrates” to the EPA “that
the permit is not in compliance” with the Act’s requirements. 42 U.S.C. § 7661d(b)(2). In
August 2006, the Sierra Club petitioned the EPA Administrator to object to a permit issued
by the Kentucky Division of Air Quality to the East Kentucky Power Cooperative, claiming
it had “demonstrate[d]” non-compliance because the EPA previously had issued a notice of
violation to the same company (about the same plant) in January 2003 and had filed a
federal-court complaint against the same company (about the same plant) in January 2004.
The EPA declined to object. Because it reasonably interpreted § 7661d(b)(2) to mean that
the agency may alter its position about a power plant’s compliance with the Act based on
intervening events and because the Sierra Club does not challenge the impact of these
intervening events on the power plant’s compliance with the Act, we deny the petition for
review.

                                               I.

                                               A.

          Under Title V of the Clear Air Act, every “major source” of air pollution must obtain
an operating permit from a state agency that identifies each air-quality restriction that applies
to the source. See id. §§ 7661a(a), 7661c(a); 40 C.F.R. §§ 70.5, 70.6. The permit must
contain a “compliance schedule,” listing the Act’s requirements with which the source
(1) already complies, (2) will comply once the permit goes into effect and (3) does not
comply along with a “schedule of remedial measures” designed to bring the source into
compliance. 40 C.F.R. § 70.5(c)(8)(iii)(A)–(C); see also 401 Ky. Admin. Regs. 52:020-
5(8)(b). Several reporting, monitoring and other duties apply to each requirement. See
42 U.S.C. § 7661c(c).

          As a form of cooperative federalism, the Act gives both the States and the EPA a role
in administering the Title V program. After a State gives the public an opportunity to
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comment on a proposed permit, id. § 7661a(b)(6), but before it goes into effect, the State
must submit the permit to the EPA, which has 45 days to review it, id. § 7661d(b)(1). If the
EPA concludes that the permit does not comply with federal requirements, it “shall . . .
object to [the permit’s] issuance.” Id. But if the EPA takes no action within the exclusive-
review period, “any person” may petition the agency to object. Id. § 7661d(b)(2). And “if
the petitioner demonstrates to the Administrator that the permit is not in compliance with the
requirements of” the Act, “[t]he Administrator shall issue an objection,” requiring the State
to modify the permit. Id. (emphasis added).

        One obligation that often comes up during the permitting process is the Prevention
of Significant Deterioration (PSD) requirement, which applies to all “attainment areas” in
the country—those that already have met the Act’s baseline national air-quality standards.
See id. §§ 7470–7492. In an effort to prevent backsliding, the Act requires sources from
these parts of the country to satisfy additional anti-pollution standards. Every new “major
emitting facility” constructed in an attainment area, as well as every existing facility that
undergoes a “major modification,” must obtain a special permit identifying specific
emissions limitations, id. §§ 7475(a)(1), 7479(1), (2)(C), and must employ the “best
available control technology” for each regulated pollutant it emits, id. § 7475(a)(4); see
Alaska Dep’t of Envtl. Conservation v. EPA, 540 U.S. 461, 471–73 (2004). Instead of
establishing universal best-technology standards, the Act directs the States to determine the
best technology for each source “on a case-by-case basis, taking into account energy,
environmental, and economic impacts and other costs.” 42 U.S.C. § 7479(3).

        The Act creates several enforcement options. In addition to setting out subject-
specific enforcement procedures, see, e.g., id. § 7477, and authorizing citizen suits, see id.
§ 7604, the statute allows the EPA to address violations on its own, see id. § 7413.
“Whenever, on the basis of any information available to [it], [the agency] finds that any
person has violated or is in violation of any requirement or prohibition of an applicable
[state] implementation plan or permit,” the Act directs the EPA to issue a notice of violation
apprising the source and the State of its findings. Id. § 7413(a)(1); see also id. § 7413(a)(3).
After 30 days, the agency “may” pursue one of three options: (1) issue an order directing
the source to comply with its existing obligations, (2) impose an “administrative penalty” on
No. 07-4485         Sierra Club v. EPA et al.                                         Page 4

the source (after a formal administrative hearing) or (3) file a federal lawsuit against the
source. See id. § 7413(a)(1), (a)(4), (d).

                                             B.

        This case arises from the power company’s request for a renewal of its Title V permit
for one of the coal-powered steam generators, known (not so descriptively) as Unit 2, at the
Spurlock Station power plant in Maysville, Kentucky. The company first obtained a permit
for Unit 2 when it built the plant in the late 1970s. The company later made several changes
to the plant. In August 1992, it began supplying steam from Unit 2 to a nearby factory, even
though its original construction-permit application said that Unit 2 would use steam only to
generate electricity. And in January 1994 or so, the company increased the plant’s heat-
input rate, allegedly operating above the level specified in its original permits. When the
company applied for a Title V permit for Unit 2 in 1996, it did not identify the PSD
requirements stemming from these changes and did not propose a PSD compliance schedule.
The Kentucky agency granted the permit in 1999.

        In 2003, apparently after discovering these changes to the plant, the EPA issued a
notice of violation, informing the company that its Unit 2 permit failed to address the PSD
requirements stemming from these modifications.          A year later, the EPA filed an
enforcement lawsuit in federal court premised on the same allegations. In response, the
company denied that the changes amounted to modifications triggering new PSD (and best-
technology) obligations.

        In 2004, while this litigation was pending, the company sought to renew its Title V
permit, once again without mentioning the PSD requirements stemming from its 1990s
modifications. In January 2006, after reviewing the submission and requesting additional
information, the state agency invited public comment on whether to grant the permit. After
receiving comments from the Sierra Club, the EPA and others, the state agency proposed the
draft permit to the EPA for its review. The EPA did not object to it within the 45-day
exclusive-review window, and the state agency issued the permit on July 31, 2006.

        In August 2006, the Sierra Club petitioned the EPA to object to the permit, see id.
§ 7661d(b)(2), arguing (as it did in its comments to the state agency) that the proposed
No. 07-4485          Sierra Club v. EPA et al.                                          Page 5

permit was deficient because it failed to address the PSD requirements. In support, the Sierra
Club relied solely on the fact that the EPA previously had issued a notice of violation and
had filed a civil-enforcement action based on the same allegations.

        The EPA and the power company, meanwhile, reached a settlement in the
enforcement lawsuit in July 2007 and proposed a consent decree to the district court. Under
the proposed decree, the company preserved the position that it had not violated the Act, but
it agreed to pay a civil penalty and perform several remedial measures, including installing
pollution controls that carried a price tag of over $650 million (according to the
government).

        In August 2007, while the parties waited for the district court to approve the consent
decree, the EPA reached a decision on the Sierra Club’s petition. Although it granted the
petition in part (on an unrelated issue), it declined to object to the power company’s failure
to address the PSD requirements.        Acknowledging its prior notice of violation and
enforcement action, the EPA explained that they were “initial steps” in the enforcement
process and did not reflect the agency’s final position as to whether the Title V permit for
Unit 2 needed to include a PSD compliance schedule. JA 16. In September 2007, the
district court approved the consent decree. See United States v. E. Ky. Power Coop., Inc.,
No. 04-34-KSF (E.D. Ky. Sept. 24, 2007). And in December 2007, the Sierra Club
petitioned this court for review of the EPA’s refusal to object to the power company’s failure
to address the PSD requirements.

                                              II.

        The question is this: Does the Act require the EPA to object to a permit request
when the agency previously has filed a notice of violation and enforcement action regarding
the same allegations about the same plant? The answer turns on the meaning of a statute that
the EPA administers and thus turns on an application of the familiar Chevron framework.
Unless the statute’s terms “directly address[] the precise question at issue,” Chevron says that
we must defer to the EPA’s “reasonable” interpretation of the provision. Chevron, USA, Inc.
v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843–44 (1984). And if the EPA’s
construction of the statute is a reasonable one, we must accept its application of that
interpretation to the Sierra Club’s petition unless it is arbitrary or capricious. See 5 U.S.C.
No. 07-4485         Sierra Club v. EPA et al.                                            Page 6

§ 706(2)(A); Ohio Pub. Interest Research Group, Inc. v. Whitman, 386 F.3d 792, 795 (6th
Cir. 2004).

        The terms of § 7661d(b)(2) do not directly answer the statutory question. “The
Administrator,” it says, “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 chapter.” 42 U.S.C. § 7661d(b)(2) (emphases added). In one sense, yes, this
language is clear and supports the Sierra Club’s position: The provision imposes a
mandatory duty to object to a draft Title V permit if the petitioner demonstrates that the
permit falls short of federal requirements.              Once the petitioner makes that
showing—whatever that showing entails—the EPA has no leeway to withhold an objection.
See Sierra Club v. Johnson (Sierra Club II), 541 F.3d 1257, 1265–66 (11th Cir. 2008); see
also Sierra Club v. Johnson (Sierra Club I), 436 F.3d 1269, 1280 (11th Cir. 2006); N.Y. Pub.
Interest Research Group v. Whitman (NYPIRG I), 321 F.3d 316, 333–34 (2d Cir. 2003).

        But that is just half of the clarity that the Sierra Club needs to establish. Even though
§ 7661d(b)(2) compels the EPA to object whenever a petitioner demonstrates
noncompliance, it does not say what “demonstrates” means. How much and what kinds of
proof must the petitioner provide? Neither the statute nor the regulations define the term,
and dictionary definitions of “demonstrate” suggest a range of possibilities. Perhaps merely
“point[ing] out” a potential defect in a permit will do, Webster’s Third New International
Dictionary 600 (2002), suggesting a burden satisfied by allegations alone—not unlike civil-
pleading requirements.      Perhaps a petitioner must “manifest clearly, certainly, or
unmistakably” that the permit falls short in a material way, id., a threshold that comes closer
to a clear-and-convincing-evidence standard. Or perhaps the requisite showing falls
somewhere in between, such as “illustrat[ing] or explain[ing] in an orderly and detailed
way . . . with many examples, specimens, and particulars,” id. That the petitioners must
demonstrate these things to the EPA suggests a role for the agency’s expertise and judgment
to play. See Sierra Club II, 541 F.3d at 1266–67; NYPIRG I, 321 F.3d at 333 & n.11. But
how widely that discretion ranges and what role, if any, the EPA’s prior allegations play in
the equation are left unspecified. The terms of the provision do not directly answer this
question. See Sierra Club II, 541 F.3d at 1266; Citizens Against Ruining the Env’t v. EPA,
535 F.3d 670, 677–78 (7th Cir. 2008).
No. 07-4485          Sierra Club v. EPA et al.                                           Page 7

        Context does not clear things up. The rest of § 7661d(b)(2) tells us a bunch of
things: that the timeline for the EPA to issue an objection is short, that a petitioner generally
may seek an objection only on a ground it raised during the permit’s public-comment period,
that filing a petition does not affect a permit already issued until the EPA decides to object,
that the Administrator cannot delegate the decision whether a petitioner has made a
demonstration and that the EPA’s decision is subject to judicial review. See 42 U.S.C.
§ 7661d(b)(2). But none of these things clarifies the answer to this question. The
neighboring provisions give us little more to go on. Section 7661d(b)(1) says that, before
private persons and groups may force the agency’s hand, the EPA gets the first crack at the
petition and must object if it “determine[s]” that the petition does not comply with the Act.
Id. § 7661d(b)(1). And § 7661d(b)(3) explains the effect of the EPA’s objection: If the state
permitting agency has not yet issued the permit, it may not do so until it addresses the EPA’s
concern; if the state agency has issued the permit, the EPA must step in and “modify,
terminate, or revoke” it to bring it into compliance with federal law. Id. § 7661d(b)(3).
These provisions do not say (or even suggest) whether § 7661d(b)(2) is satisfied solely by
relying on a prior notice of violation and civil complaint issued by the EPA.

        That leaves us with an ambiguous provision, one that Chevron empowers the agency
to interpret definitively so long as it does so reasonably. In exercising that authority, the
EPA Administrator construes § 7661d(b)(2) to mean this: Although the agency’s prior
notice of violation and enforcement action are “relevant factor[s],” JA 16, in assessing a
petitioner’s subsequent efforts to “demonstrate” permit non-compliance, they do not
necessarily make the showing by themselves to the exclusion of other considerations, such
as (1) the kind and quality of information underlying the agency’s original finding that a
prior violation occurred, (2) the information the petitioner puts forward in addition to the
agency’s enforcement actions, (3) the types of factual and legal issues that remain in dispute,
(4) the amount of time that has lapsed between the original decision and the current one and
(5) the likelihood that a pending enforcement case could resolve some of those issues. That,
we think, is a reasonable interpretation of the statute. Just as these types of intervening
developments may prompt the agency to revisit a prior decision to issue a notice of violation,
so they may prompt the agency to revisit a prior decision not to issue a notice of violation.
No. 07-4485         Sierra Club v. EPA et al.                                            Page 8

        The Eleventh Circuit reached the same conclusion in Sierra Club II. The Sierra Club
asked the EPA to object to a Title V permit, relying solely on allegations that the EPA had
made in a notice of violation and civil complaint that the same source was subject to PSD
obligations. See 541 F.3d at 1262–63. The EPA declined to grant the objection for the same
reason it gave here, and the Eleventh Circuit upheld the decision, accepting the agency’s
interpretation of § 7661d(b)(2) as a reasonable construction of the statute. See id. at
1266–69. The notice of violation and the complaint, the court reasoned, were merely initial
steps in the enforcement process that did not prove the facts alleged, id. at 1267–68, and the
ensuing enforcement suit had done nothing to bolster the agency’s allegations: The source
had contested them, and the district court had administratively closed the case without
reaching a decision on the merits, id. at 1262, 1268. The EPA thus reasonably interpreted
the statute, the court concluded, to require the petitioners to point to something more than
the agency’s own prior allegations.

        In resisting this conclusion, the Sierra Club raises several arguments. First, it
invokes § 7413(a)(1), which explains when the EPA may file a notice of violation or a
related enforcement action:

        Whenever, on the basis of any information available to the Administrator,
        the Administrator finds that any person has violated or is in violation of any
        requirement or prohibition of an applicable implementation plan or permit,
        the Administrator shall notify the person and the State in which the plan
        applies of such finding. At any time after the expiration of 30 days
        following the date on which such notice of a violation is issued, the
        Administrator may . . . bring a civil action . . . .
42 U.S.C. § 7413(a)(1) (emphases added). No matter how one construes the demonstrates-a-
violation requirement, the Sierra Club argues, a prior “finding” of a violation by the same
federal agency about the same plant concerning the same requirements of the Act necessarily
satisfies it. A prior “finding” of a violation by the EPA, true enough, will bear on, and
customarily provide support for, a subsequent effort to “demonstrate” the same kind of
violation by the same plant. But what is often true is not necessarily always true. That the
EPA must premise an enforcement action on a “finding” of a violation at a given point in
time does not bind the agency for all time. “[F]inds” in this setting refers to an initial
determination—sometimes tentative, sometimes certain, but always subject to revision based
on new information. The term simply does not suggest a definitive, once-and-for-all
No. 07-4485         Sierra Club v. EPA et al.                                         Page 9

determination by the agency that estops it from arriving at a different conclusion in a
different factual or legal setting. The EPA is no more bound by a prior violation finding than
by a prior no-violation finding.

        The statute says what it takes to make this initial “finding,” moreover, and it is not
much. The statute authorizes the agency to make a finding based on “any information
available,” id., which suggests a low evidentiary standard, see Sierra Club II, 541 F.3d at
1267, one perhaps satisfied by no more than “a staff report, newspaper clipping, anonymous
phone tip, or anything else that would constitute ‘any information,’” TVA v. Whitman, 336
F.3d 1236, 1241 & n.6 (11th Cir. 2003). When additional information materializes, as for
example through discovery during an enforcement action, the EPA’s initial factual and legal
premises of the finding may be thwarted, which surely permits a modification of its
enforcement stance when a later § 7661d(b)(2) petition is filed. Congress no doubt could
have required the agency to go through a formal factual adjudication before making an initial
finding, and it has done so in a similar context. See 42 U.S.C. § 7413(d)(2)(A) (requiring
a formal APA-style hearing when the EPA tries to impose civil penalties without filing an
enforcement suit). But it did not do so here. The absence of such a requirement, it bears
adding, generally will further vigorous enforcement of the Act: The more that is required
of the EPA before it can make such a “finding,” the less often the agency will be able to pull
the initial enforcement trigger.

        The setting of this “finding” requirement also confirms that it reflects the agency’s
first, not its last, word on the subject. Such a “finding” allows the agency to issue a notice
of violation, which serves to give the source advance notice that the agency may pursue
enforcement measures. See id. § 7413(a)(1); see also Sierra Club II, 541 F.3d at 1267–68.
Once the EPA issues this notice, it may: (1) direct the source to comply with its obligations
after giving the source “an opportunity to confer” with the agency; (2) conduct a formal
administrative adjudication (after discovery) to decide whether to impose a civil penalty; or
(3) file a federal-court lawsuit, asking the court to decide whether the source violated some
applicable requirement. See 42 U.S.C. § 7413(a)(1), (a)(4), (b), (d).

        Whichever path the agency chooses, its initial “finding” marks only the beginning
of a process designed to test the accuracy of the agency’s initial conclusions. And that
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process may prove the opposite: The statute contemplates that litigation may disprove the
agency’s allegations, may disprove the reasonableness of the agency’s allegations, see id.
§ 7413(b)(3) (allowing attorney’s and expert’s fees if the EPA files an unreasonable
enforcement suit), or may result in a stalemate or settlement, see id. § 7413(g). These
provisions suggest that the agency will not invariably stand by its initial allegations.
Whatever it takes for the EPA to “find[]” a violation at the outset, it could reasonably
construe “demonstrates” in § 7661d(b)(2) to require something more in some settings.

        The Sierra Club’s reading also ties the agency’s hands in an odd way. After
initiating an enforcement suit, the EPA may learn that its initial allegations do not hold
water. Perhaps evidence gathered in discovery will prove that certain acts never took place,
or perhaps a court will conclude that the source was not subject to certain legal requirements.
Yet, if the Sierra Club is right, even when this happens, the agency would have to cling to
an initial conclusion reached months or years earlier—three and a half years earlier in this
instance—based on “any information available” to it at the time, id. § 7413(a)(1). Besides
giving short shrift to the truth-seeking function of litigation, this interpretation could
discourage the EPA from engaging in discretionary enforcement actions in the first place.
If the agency knows that every notice of violation will tie its hands indefinitely, it may think
twice before taking a first step into the enforcement waters. The agency’s reading, by
contrast, avoids this problem by leaving the EPA free to take account of new developments
and discoveries. That flexibility, moreover, comes at little cost: If the agency declines to
object but later concludes that a violation does exist and the permit is indeed defective, the
EPA can revise (or revoke) the permit as needed. See id. § 7661d(e) (allowing the EPA to
“terminate, modify, or revoke and reissue” a permit for cause); 40 C.F.R. § 70.7(f)(iii)
(allowing the EPA to “reopen” a permit for cause); cf. In re Lovett Generating Station, Pet.
No. II-2001-07, Order at 19–20 (EPA Feb. 19, 2003).

        Second, and perhaps most significantly, the Sierra Club points out that a sister court
of appeals reached a different conclusion in a (roughly) comparable setting. In New York
Public Interest Research Group, Inc. v. Johnson (NYPIRG II), 427 F.3d 172 (2d Cir. 2005),
the Second Circuit held that a claimant “demonstrate[d]” to the EPA that a state-issued
permit failed to comply with the Act by pointing only to a prior notice of violation and
enforcement lawsuit filed by the state permit-issuing agency. See id. at 179–83. Because
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state law allowed the permitting agency to take such measures only if the source violated the
Act, see 6 N.Y. Comp. Codes R. & Regs. § 201-6.5(a)(2), because the state agency’s
expertise and “privileged position” provided greater access to key information and because
the court was “confident that the [agency] does not issue [notices of violation] lightly,” the
court concluded that the State’s prior actions by themselves sufficed to demonstrate
noncompliance. See NYPIRG II, 427 F.3d at 181–82. Requiring the petitioner to “duplicate
[the agency’s] complicated and expensive effort by conducting its own fact-finding,” the
court concluded, would be pointless. Id. at 182.

        We have no doubt that state agencies, like the EPA, do not issue violation notices
or file enforcement lawsuits “lightly.” Id. at 181. Nor do we doubt that state and federal
environmental agencies have a greater ability than the average private citizen, or even an
experienced interest group like the Sierra Club, to detect and assess clean-air violations. Id.
But that does not explain why we should give less weight to the agency’s later conclusion
that the polluting source did not violate federal law. If the agency was in a “privileged
position” when it found a violation in the first place, id., why did it not “maintain[]” that
“privileged position” in “assessing the current strength of its case and evaluating whether the
PSD issue has been definitively resolved,” Sierra Club II, 541 F.3d at 1268? That is even
more true when the prior findings were made by a different agency (and a different
sovereign), which was the case in NYPIRG II. Even though the EPA has delegated certain
enforcement responsibilities to each state agency, see NYPIRG II, 427 F.3d at 180, that does
not mean that the EPA must blindly defer to a state agency’s conclusions.

        In one sense, the Second Circuit’s decision seems to conflict squarely with ours. If
that court takes the view that a prior state agency notice of violation and enforcement lawsuit
by themselves suffice to demonstrate to the EPA that a permit is noncompliant, then surely
prior enforcement actions by the same federal agency ought to bind it down the road. But
there are two features of NYPIRG II that may explain why the Second Circuit took the path
it did. One turns on the underlying state regulations. A provision of the state regulations
appeared to parallel § 7413(a)(1), because both provisions allowed the agency to take
enforcement measures only if a violation took place. See id. at 180–81. Absent from the
state regulation, however, is the language in the federal statute authorizing enforcement
actions if the agency merely “finds” a violation “on the basis of any information available.”
No. 07-4485         Sierra Club v. EPA et al.                                         Page 12

42 U.S.C. § 7413(a)(1); see 6 N.Y. Comp. Codes R. & Regs. § 201-6.5(a)(2) (providing that
“[a]ny permit non-compliance constitutes a violation of the Act and is grounds for
enforcement action; for permit termination, revocation and reissuance, or modification; or
for denial of a permit renewal application”). The state regulation at issue thus may have
required a more robust determination than the EPA must make before it issues a notice of
violation or files a complaint, prompting the court to lean more heavily on the existence of
that prior agency action.

        The other possibility turns on timing. In the Second Circuit case, the petition was
filed in the same month (and close to the same day) as the state agency filed the enforcement
action. See NYPIRG II, 427 F.3d at 177, 178 n.2; New York v. Niagara Mohawk Power
Corp., 263 F. Supp. 2d 650, 660 n.17 (W.D.N.Y. 2003). By contrast, in the Eleventh Circuit
case, the petition was filed six years after the EPA had initiated its enforcement action and
notice of violation, see Sierra Club II, 541 F.3d at 1262; In re Ga. Power Co., Permit No.
4911-015-0011-V-02-0, Order at 1 (EPA Jan. 8, 2007), and in our case the petition was filed
two and a half years after the EPA initiated its enforcement action (and three and a half years
after its notice of violation). It may be unfair, in other words, to read the Second Circuit’s
decision as establishing a bright-line rule that, once a regulatory agency initiates an
enforcement action, it must stand by that position in addressing all future petitions regarding
the same plant and the same regulatory requirements. Better, it seems to us, to treat the
decision as one that turns at least in part on the overlap in timing between the enforcement
action and the petition seeking an objection—which in most cases will suggest that the EPA
had acted arbitrarily or capriciously.

        Third, the Sierra Club contends that the EPA’s construction of § 7661d(b)(2)
deserves no deference because it reflects an unexplained reversal of policy. The agency, we
are told, “gave a definitive meaning” to § 7661d(b)(2)’s “demonstrates” requirement in a
previous permit proceeding, see Gallatin Steel Co., Permit No. V-99-003, EPA Title V
Permit Objection Letter (Aug. 7, 2000) (Gallatin Steel), when an EPA regional office issued
an objection based on a prior notice of violation and complaint issued by the EPA. In the
Sierra Club’s view, the EPA’s position thus “represents a 180 turn” not entitled to judicial
deference. Reply Br. at 15; see also Pet’r Br. at 35–36.
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        Although an unexplained about-face in agency policy may amount to “an arbitrary
and capricious change from agency practice,” Nat’l Cable Telecomms. Ass’n v. Brand X
Internet Servs., 545 U.S. 967, 981 (2005), no such reversal occurred here. There is some
reason, as an initial matter, to doubt whether Gallatin Steel “gave a definitive meaning” to
this statutory term. The objection letter in that case says nothing about the “demonstrates”
requirement of § 7662d(b)(2), an understandable omission since by all appearances that
provision was not at issue and the agency instead appeared to be acting in connection with
§ 7661d(b)(1). See Gallatin Steel, Objection Letter at 1 & Ex. 1 at 3.

        Be that as it may, the EPA later recognized the practical problems of the approach
its regional office took in Gallatin Steel. In Lovett, the EPA took the view that it would not
grant a petitioner’s request to object to a permit—in which the ground for objection was
solely that the agency previously had issued a notice of violation—where settlement
negotiations in the enforcement action had not yet produced a final, court-approved
settlement. See Lovett, Order at 19–20. There, the EPA explained, the solution is to let the
permit go forward and, if and when a final consent decree is issued, to modify the permit to
include a compliance schedule. See id. Here, in addition to citing Lovett, the EPA provided
a fuller defense of its approach, parsing the statutory provisions and highlighting the costs
of the Sierra Club’s construction. The EPA’s explanation of its policy, particularly as
compared to its conclusory comment in Gallatin Steel, does not amount to a capricious
change of course.

        Fourth, even if § 7661d(b)(2) allows the EPA to depart from earlier findings, as
when litigation calls them into question, the Sierra Club argues that nothing of the sort
happened here. The district court, it points out, never rejected the federal agency’s claim
concerning Unit 2 on the merits, and the agency never recanted its earlier contentions or
amended (or withdrew) its complaint. But, as we read the record, the EPA did alter its
position in the enforcement action—and did so after several years of litigation, after evidence
gathering by both sides and after a series of inconclusive rulings by the district court. Keep
in mind that the EPA acted on the Sierra Club’s permit-objection petition at roughly the same
time that it settled its enforcement action regarding the same plant and the same permit. In
July 2007, the parties to the enforcement action agreed to settle the lawsuit and to submit a
No. 07-4485          Sierra Club v. EPA et al.                                         Page 14

consent decree to the district court for approval. In August 2007, the EPA denied the Sierra
Club’s petition. And in September 2007, the district court approved the consent decree.

        By its terms, the consent decree resolved all claims that the EPA had raised in its
enforcement action, which necessarily includes the claim related to the Sierra Club’s permit
objection. “Entry of this Decree,” it says, “shall resolve all civil claims of the United States
under [specified provisions of the Clean Air Act] that arose from any modifications that
commenced at any System Unit [of the power company] prior to the date of lodging of this
Decree, including but not limited to those modifications alleged in the Complaint in this civil
action.” JA 477–78. A quid pro quo of the settlement thus was that the EPA would drop the
very charge that is the basis for the Sierra Club’s permit objection—meaning that whatever
charge had been “demonstrate[d]” when the EPA filed the notice of violation four years
earlier was no longer necessarily true once the EPA had dismissed this aspect of its
enforcement action. Otherwise, any third party would have veto power of any proposed
settlement between the agency and a charged party. Once the agency filed a charge, it either
would have to litigate the charge to completion or could settle the claim only with the
blessing of any potential third party, whether that party was a participant in the litigation or
not. There is nothing in the statute that requires the agency to take such an unyielding and
unusual approach to its enforcement duties.

        Under these circumstances, the EPA acted within its authority in addressing the
Sierra Club’s objection.      Consistent with Chevron, the EPA reasonably construed
§ 7661d(b)(2) to mean that a prior notice of violation and enforcement action did not by
themselves require it to object to a permit request. And consistent with the APA, the EPA
did not arbitrarily or capriciously deny the Sierra Club’s request, after accounting not only
for the agency’s prior actions but also for developments in that litigation.

                                              III.

        For these reasons, we deny the petition for review.