Who Gets To Decide What is a Major Source That Requires a Permit? That’s a Fine Question

Posted on December 7, 2020 by Seth Jaffe

The recent decision by the 8th Circuit that the Coyote Creek Mining Company did not require a major source permit under the Clean Air Act is both fascinating and important.  The question on the merits was whether CCMC had to include its fugitive emissions in determining its potential to emit.  Such emissions are normally excluded, but are included if they are part of a “coal processing plant.”

The Court concluded that the regulations are ambiguous and that EPA guidance did not resolve the issue.  It went on to review the decision by the North Dakota Department of Health, which concluded that the emissions should be excluded and CCMC did not require a permit.  The Court held that the NDDOH decision was entitled to deference, stating that:

"The process for NSPS enforcement would be significantly impaired if the state authority did not have the ability to make determinations based on application of given facts to the SIP and EPA framework."

There was a vigorous dissent by Judge Stras, who found it incomprehensible that a federal court would defer to a state agency interpretation of federal law.  In his pithy introduction, Judge Stras asserted that:

"Most Americans would be surprised to learn that state bureaucrats can play an even larger role than federal judges do in interpreting federal law."

I’m inclined to put a pox on the houses of both the majority and the dissent.  The problem with the majority is that it is too cavalier in asserting that, under the CAA’s cooperative federalism regime, states have the responsibility to implement the permitting regime.  That’s true, but it’s not obvious that the states get to make major interpretive decisions, such as what EPA’s own regulations actually mean.  I think that the majority also wrongly gives short shrift to the problem of inconsistent decisions being made by different delegated states.

On the other hand, Judge Stras relies on a mode of constitutional interpretation that is void of any basis in the Constitution or our political history.  He also seems far too quick to reach a constitutional question that should not even be at issue.  First, I think Judge Stras is correct that the regulation is not in fact ambiguous in these circumstances.  I would have found that, even if NHDOH was entitled to some deference, its decision that the emissions did not come from a coal processing plant was plainly wrong.

Second, the real solution, not discussed by the majority or the dissent, should have been that this case should not be a dispute between the authority of a federal court and a state agency, but a dispute between EPA and a state agency.  SCOTUS already ruled, in Alaska Dep’t of Envtl. Conservation v. EPA, that EPA has authority under the CAA to override state agency permitting decisions.  The plaintiffs should have asked EPA to override the NHDOH decision.  I don’t know why that did not happen here – perhaps it was because the plaintiffs assumed (probably correctly) that EPA would not rule against CCMC, since EPA had embarked on a mission to save coal.  Even if that were the case, however, the plaintiffs could then have appealed EPA’s decision to federal court and the case would have been presented in the proper way.

Finally, I’ll reiterate that this case really may be important.  Judge Stras is a Trump appointee and I wouldn’t be shocked if some of the recent appointments to SCOTUS were sympathetic to his arguments.  What makes the case really interesting is that those same judges are also those most sympathetic to the state side of cooperative federalism issues.

If this issue were to make it to SCOTUS, it would be fascinating to see if Justice Gorsuch rules for the coal company, because federalism gives decisional authority to the states, or for the plaintiffs, because the Constitution precludes state agencies from interpreting federal law.

As a lawyer I once dealt with was fond of saying, “that’s what makes a horse race!”