United States Court of Appeals
For the First Circuit
No. 05-2231
DOMINION ENERGY BRAYTON POINT, LLC,
Plaintiff, Appellant,
v.
STEPHEN L. JOHNSON, IN HIS CAPACITY AS ADMINISTRATOR OF THE
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Reginald C. Lindsay, U.S. District Judge]
Before
Selya, Lipez and Howard, Circuit Judges.
John M. Stevens, with whom Wendy B. Jacobs, Elisabeth M.
DeLisle, and Foley Hoag LLP were on brief, for appellant.
Kristen L. Gustafson, Attorney, Environment and Natural
Resources Division, United States Department of Justice, with whom
Matthew J. McKeown, Deputy Assistant Attorney General, Greer
Goldman and John Bryson, Attorneys, were on brief, for appellees.
March 30, 2006
SELYA, Circuit Judge. USGen New England, Inc., now
Dominion Energy Brayton Point, LLC (Dominion), filed suit against
the U.S. Environmental Protection Agency, its administrator, and
its regional office (collectively, the EPA), alleging that the EPA
failed to perform a non-discretionary duty when it refused to grant
Dominion's request for a formal evidentiary hearing after issuing
a proposed final National Pollution Discharge Elimination System
(NPDES) permit. The district court dismissed the case for want of
subject matter jurisdiction. On appeal, the central question
presented concerns the effect of this court's decision in Seacoast
Anti-Pollution League v. Costle, 572 F.2d 872 (1st Cir. 1978), in
light of the Supreme Court's subsequent decision in Chevron U.S.A.
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984). Concluding, as we do, that Seacoast does not control, we
affirm the judgment below.
I. BACKGROUND
Dominion owns an electrical generating facility in
Somerset, Massachusetts (the station). The station opened in the
1960s and, like most power plants of its era, utilizes an "open-
cycle" cooling system. Specifically, the station withdraws water
from the Lees and Taunton Rivers, circulates that water through the
plant's generating equipment as a coolant, and then discharges the
water (which, by then, has attained an elevated temperature) into
Mount Hope Bay.
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The withdrawals and discharges of water are regulated by
the Clean Water Act (CWA), 33 U.S.C. §§ 1251-1387. For the last
three decades, these actions have been authorized by a series of
NPDES permits issued by the EPA pursuant to section 402(a) of the
CWA. See id. § 1342(a). The standards incorporated into those
permits are determined under the thermal variance procedures laid
out in section 316(a). See id. § 1326(a).
In 1998, the station applied for renewal of its NPDES
permit and thermal variance authorization. The EPA issued a
proposed final permit on October 6, 2003, in which it rejected the
requested thermal variance. On November 4, Dominion sought review
before the Environmental Appeals Board (the Board), see 40 C.F.R.
§ 124.19(a) (authorizing Board review), and asked for an
evidentiary hearing. The Board accepted the petition for review
but declined to convene an evidentiary hearing. See In re USGen
New Eng., Inc. Brayton Point Station, 11 E.A.D. 525, 525 (EAB July
23, 2004).
On August 11, 2004, Dominion notified the EPA of its
intent to file a citizen's suit under section 505(a)(2) of the CWA,
33 U.S.C. § 1365(a)(2), to compel the Board to hold an evidentiary
hearing. Receiving no reply, Dominion proceeded to file its
complaint in the United States District Court for the District of
Massachusetts. The EPA moved to dismiss.
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The district court granted the motion on jurisdictional
grounds. See Fed. R. Civ. P. 12(b)(1). In a bench decision, it
concluded that it was without subject matter jurisdiction because
the suit, though billed as a citizen's suit, constituted a direct
challenge to the EPA's hearing rule and, thus, came within the
exclusive jurisdiction of the circuit court under 33 U.S.C. §
1369(b)(1)(E). This timely appeal followed.1
II. THE LEGAL LANDSCAPE
We set the stage for our substantive discussion by
undertaking a brief review of the legal rules that frame the
controversy at hand.
Before the EPA either issues an NPDES permit or
authorizes a thermal variance,2 it must offer an "opportunity for
public hearing." 33 U.S.C. §§ 1326(a), 1342(a). No definition of
"public hearing" is contained within the four corners of the CWA.
1
During the pendency of this appeal, the Board issued its
merits decision. For the most part, the Board found no clear error
in the permit proceedings. It did, however, order a limited
remand. See In re Dominion Energy Brayton Point, L.L.C. Brayton
Point Station, NPDES 03-12, slip op. at 5-7 (EAB Feb. 1, 2006).
That decision has no bearing on the issues before us.
2
Although it is unclear whether Dominion requested an
evidentiary hearing under section 402(a) or section 316(a) of the
CWA, that distinction has no bearing on our analysis. See
Seacoast, 572 F.2d at 875 n.3. The fact that Dominion is seeking
a permit renewal rather than a new permit is equally irrelevant; in
either event, the application procedure is the same. See 40 C.F.R.
§§ 122.21(d), 124.3.
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The Administrative Procedure Act (APA), 5 U.S.C. § 551 et
seq., is also part of the relevant legal landscape. Most pertinent
here are those sections that combine to describe the procedures for
formal administrative adjudications. See id. §§ 554, 556, 557.
These procedures apply "in every case of adjudication required by
statute to be determined on the record after opportunity for an
agency hearing." Id. § 554(a). The APA does not directly address
whether these procedures apply when a statute simply calls for an
"opportunity for public hearing" without any specific indication
that the hearing should be "on the record."
In Seacoast, this court interpreted "public hearing" (as
used in sections 402(a) and 316(a) of the CWA) to mean "evidentiary
hearing" — in other words, a hearing that comports with the APA's
requirements for a formal adjudication. 572 F.2d at 878.
Examining the legislative history of the APA, we adopted a
presumption that "unless a statute otherwise specifies, an
adjudicatory hearing subject to judicial review must be [an
evidentiary hearing] on the record." Id. at 877. Applying that
presumption to the CWA, we concluded that "the statute certainly
does not indicate that the determination need not be on the
record." Id. at 878 (emphasis in original).
So viewed, Seacoast established a rebuttable presumption
that, in the context of an adjudication, an organic statute that
calls for a "public hearing" should be read to require an
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evidentiary hearing in compliance with the formal adjudication
provisions of the APA. Two other circuit courts reached the same
conclusion, albeit through different reasoning. See Marathon Oil
Co. v. EPA, 564 F.2d 1253, 1264 (9th Cir. 1977); U.S. Steel Corp.
v. Train, 556 F.2d 822, 833-34 (7th Cir. 1977). Acquiescing in
this construction, the EPA promulgated regulations that
memorialized the use of formal evidentiary hearings in the NPDES
permit process. See NPDES; Revision of Regulations, 44 Fed. Reg.
32,854, 32,938 (June 7, 1979).
In 1984, a sea change occurred in administrative law and,
specifically, in the interpretation of organic statutes such as the
CWA. The Supreme Court held that "[w]hen a court reviews an
agency's construction of the statute which it administers," the
reviewing court first must ask "whether Congress has directly
spoken to the precise question at issue." Chevron, 467 U.S. at
842. If Congress's intent is clear, that intent governs — both the
court and the agency must give it full effect. Id. at 842-43. If,
however, Congress has not directly addressed the question and the
agency has stepped into the vacuum by promulgating an interpretive
regulation, a reviewing court may "not simply impose its own
construction on the statute," but, rather, ought to ask "whether
the agency's answer is based on a permissible construction of the
statute." Id. at 843.
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This paradigm, sometimes called the Chevron two-step,
increases the sphere of influence of agency action. If
congressional intent is unclear and an agency's interpretation of
a statute that it administers is reasonable, an inquiring court
must defer to that interpretation. See id. at 843-44. That is so
even if the agency's interpretation is not the one that the court
considers to be the best available interpretation. See id. at 843.
Armed with the Chevron decision and a presidential
directive to streamline regulatory programs, see Remarks on
Regulatory Reform, 31 Weekly Comp. Pres. Doc. 278 (Feb. 21, 1995),
the EPA advanced a proposal to eliminate formal evidentiary
hearings from the NPDES permitting process. See Amendments to
Streamline the NPDES Program Regulations: Round Two, 61 Fed. Reg.
65,268, 65,276 (Dec. 11, 1996). In due course, the EPA adopted
that proposal as a final rule. See Amendments to Streamline the
NPDES Program Regulations: Round Two, 65 Fed. Reg. 30,886, 30,900
(May 15, 2000).
This revision depended heavily on a Chevron analysis.
The agency began by "finding no evidence that Congress intended to
require formal evidentiary hearings or that the text [of section
402(a)] precludes informal adjudication of permit review
petitions." Id. at 30,896. Then, it weighed the risks and
benefits of employing informal hearing procedures for NPDES permit
review, "determining that these procedures would not violate the
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Due Process Clause." Id. Finally, it "concluded that informal
hearing procedures satisfy the hearing requirement of section
402(a)." Id.
It was under this new regulatory scheme that the EPA
considered Dominion's request to renew its NPDES permit and to
authorize a thermal variance. Thus, it was under this scheme that
the EPA denied Dominion's request for an evidentiary hearing.
III. ANALYSIS
The court of appeals reviews a dismissal for want of
subject matter jurisdiction de novo. Gabriel v. Preble, 396 F.3d
10, 12 (1st Cir. 2005). In doing so, the court accepts the well-
pleaded factual allegations of the plaintiff's complaint and
indulges all reasonable inferences in the plaintiff's favor.
Muniz-Rivera v. United States, 326 F.3d 8, 11 (1st Cir. 2003). The
appellate court is not wedded to the lower court's reasoning, but
may affirm the order of dismissal on any ground fairly presented by
the record. See InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st
Cir. 2003).
Here, Dominion's claim on appeal rests on the premise
that it has satisfied the jurisdictional requirements for a
citizen's suit under section 505(a)(2) of the CWA. Subject to a
notice requirement — suit may not be commenced "prior to sixty days
after the plaintiff has given notice of such [proposed] action," 33
U.S.C. § 1365(b)(2) — the statute invoked by Dominion grants
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federal district courts jurisdiction over any citizen's suit
brought "against the Administrator [of the EPA] where there is
alleged a failure of the Administrator to perform any act or duty
under [the CWA] which is not discretionary," id. § 1365(a)(2).
There is no question but that Dominion satisfied the applicable
notice requirement. The crux of the case, therefore, is whether
Dominion has pleaded the flouting of a non-discretionary duty.
One thing is crystal clear: on their face, the current
EPA regulations do not establish a non-discretionary duty to
provide the evidentiary hearing that Dominion seeks. Prior to the
date of Dominion's request, the EPA vitiated the preexisting rule
introducing evidentiary hearings into the NPDES permitting process.
See 40 C.F.R. § 124.21(b) (explaining that the "EPA eliminated the
previous requirement for NPDES permits to undergo an evidentiary
hearing after permit issuance . . . on June 14, 2000"). Dominion
concedes this fact, but nonetheless relies on Seacoast as the
source of a non-discretionary duty to convene an evidentiary
hearing.
This reliance is misplaced. Even if Seacoast established
a non-discretionary duty for section 505(a)(2) purposes when it was
decided — a matter upon which we need not opine — Dominion's
position ignores two important post-Seacoast changes in the legal
landscape: the Supreme Court's decision in Chevron and the agency's
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subsequent promulgation of the current "no evidentiary hearing"
rule.
We anticipated this situation in Citizens Awareness
Network, Inc. v. United States, 391 F.3d 338 (1st Cir. 2004), in
which we noted that "while the type of hearing required by a
statute turns on congressional intent, Chevron adds a new
dimension, requiring that the agency's reasonable interpretation be
accorded deference if there is any ambiguity as to that intent."
Id. at 348 n.4. We also recognized Chevron's possible
ramifications for Seacoast, but did not have the occasion to
confront the issue squarely. See id. (reserving the question "[t]o
what extent (if at all) [Chevron] erodes Seacoast's rationale").
Now, with guidance from the Supreme Court's last term lighting our
path, we address the matter and conclude that, as to the CWA's
public hearing language, the Chevron doctrine trumps the potential
application of stare decisis principles.
For present purposes, the critical precedent is National
Cable & Telecommunications Ass'n v. Brand X Internet Services, 125
S. Ct. 2688 (2005). There, the Court examined the relationship
between the stare decisis effect of an appellate court's statutory
interpretation and the Chevron deference due to an administrative
agency's subsequent, but contrary, interpretation. Echoing
Chevron, the Court reiterated that "[f]illing [statutory] gaps . .
. involves difficult policy choices that agencies are better
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equipped to make than courts." Id. at 2699. Then, concluding that
Chevron's application should not turn on the order in which
judicial and agency interpretations issue, the Justices held
squarely that "[a] court's prior judicial construction of a statute
trumps an agency construction otherwise entitled to Chevron
deference only if the prior court decision holds that its
construction follows from the unambiguous terms of the statute and
thus leaves no room for agency discretion." Id. at 2700. This
approach "hold[s] judicial interpretations contained in precedents
to the same demanding Chevron . . . standard that applies if the
court is reviewing the agency's construction on a blank slate."
Id.
Brand X demands that we reexamine pre-Chevron precedents
through a Chevron lens. The Chevron two-step applies. At the
first step, a court "must look primarily to the plain meaning of
the statute, drawing its essence from the particular statutory
language at issue, as well as the language and design of the
statute as a whole." Strickland v. Comm'r, Me. Dep't of Human
Servs., 48 F.3d 12, 16 (1st Cir. 1995) (citation and internal
quotation marks omitted). At this step, the court may "examine the
legislative history, albeit skeptically, in search of an
unmistakable expression of congressional intent." Id. at 17. If
the precedent at issue finds clarity at step one — that is, if the
holding of the case rests on a perception of clear and unambiguous
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congressional intent — that precedent will govern. See Brand X,
125 S. Ct. at 2700. If, however, the precedent operates at Chevron
step two — that is, if the case holds, in effect, that
congressional intent is less than pellucid and proceeds to choose
a "best reading" rather than "the only permissible reading," id. at
2701 (emphasis in original) — its stare decisis effect will,
through Chevron deference, yield to a contrary but plausible agency
interpretation, see id. at 2700.
Once this mode of analysis is understood and applied,
Dominion's argument collapses. Seacoast simply does not hold that
Congress clearly intended the term "public hearing" in sections
402(a) and 316(a) of the CWA to mean "evidentiary hearing." To the
contrary, the Seacoast court based its interpretation of the CWA on
a presumption derived from the legislative history of the APA — a
presumption that would hold sway only in the absence of a showing
of a contrary congressional intent. Seacoast, 572 F.2d at 877-78.
In other words, the court resorted to the presumption only because
it could find no sign of a plainly discernible congressional
intent. Id. at 878. A statutory interpretation constructed on
such a negative finding is antithetic to a conclusion that
Congress's intent was clear and unambiguous.
The short of it is that the Seacoast court, faced with an
opaque statute, settled upon what it sensibly thought was the best
construction of the CWA's "public hearing" language. Such a
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holding is appropriate at step two of the Chevron pavane, not at
step one. Consequently, under Brand X, Seacoast must yield to a
reasonable agency interpretation of the CWA's "public hearing"
requirement. See Brand X, 125 S. Ct. at 2700.
The only piece left to this puzzle is to confirm that the
EPA's new regulations are, in fact, entitled to Chevron deference.
This inquiry is a straightforward one. As our earlier discussion
suggests (and as the Seacoast court correctly deduced), Congress
has not spoken directly to the precise question at issue here.
See, e.g., United States v. Fla. E. Coast Ry. Co., 410 U.S. 224,
239 (1973) ("The term 'hearing' in its legal context undoubtedly
has a host of meanings."); Chem. Waste Mgmt., Inc. v. U.S. EPA, 873
F.2d 1477, 1480-82 (D.C. Cir. 1989) (concluding that Congress's
intent behind the words "public hearing" in section 3008 of the
RCRA was ambiguous for Chevron purposes). Accordingly, we must
defer to the EPA's interpretation of the CWA as long as that
interpretation is reasonable. See Chevron, 467 U.S. at 843-44.
In this instance, the administrative interpretation took
into account the relevant universe of factors. See 65 Fed. Reg. at
30,898-30,900 (considering "(1) [t]he private interests at stake,
(2) the risk of erroneous decision-making, and (3) the nature of
the government interest," and concluding that its new regulation
was a reasonable interpretation of the CWA); see also Chem. Waste
Mgmt., 873 F.2d at 1483 (concluding that the EPA's choice of
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informal adjudicatory procedures under RCRA was reasonable). The
agency's conclusion that evidentiary hearings are unnecessary and
that Congress, in using the phrase "opportunity for public
hearing," did not mean to mandate evidentiary hearings seems
reasonable — and Dominion, to its credit, has conceded the point.
Dominion makes two final attempts to resuscitate
Seacoast. First, it asseverates that a refusal to follow Seacoast
offends the "law of the circuit" rule. That rule (a branch of the
stare decisis doctrine) holds that, "[o]rdinarily, newly
constituted panels in a multi-panel circuit should consider
themselves bound by prior panel decisions" closely on point.
Eulitt v. Me., Dep't of Educ., 386 F.3d 344, 349 (1st Cir. 2004).
However, the "law of the circuit" rule, like most rules of general
application, is subject to exceptions. One such exception "comes
into play when a preexisting panel opinion is undermined by
subsequently announced controlling authority, such as a decision of
the Supreme Court." Id. In this instance, the Supreme Court's
decisions in Chevron and Brand X counsel against a mechanical
application of Seacoast.
Second, Dominion exhorts us to find that Seacoast's
holding is actually an interpretation of the APA, not the CWA (and,
therefore, the EPA's regulation is also an interpretation of the
APA, not entitled to Chevron deference). See, e.g., Metro.
Stevedore Co. v. Rambo, 521 U.S. 121, 137 n.9 (1997) (noting that
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Chevron deference is inappropriate vis-à-vis an agency
interpretation of the APA's burden-of-proof provision). Such a
reading of Seacoast is plainly incorrect. While the Seacoast court
relied on a presumption borrowed from the APA, the court's holding
is an interpretation of the CWA and, specifically, of the term
"public hearing" contained in sections 402(a) and 316(a). The
EPA's regulations are also derived from the CWA. See 40 C.F.R. §
122.1(a) (explaining that 40 C.F.R. § 124 implements sections of
the CWA). Because those changes implicate the statute that the EPA
administers (i.e., the CWA), Chevron deference is appropriate. See
Chevron, 467 U.S. at 842-43.
IV. CONCLUSION
We summarize succinctly. Although we in no way disparage
the soundness of Seacoast's reasoning, the Chevron and Brand X
opinions and the interposition of a new and reasonable agency
interpretation of the disputed statutory language have changed the
picture. Because we, like the Seacoast court, cannot discern a
clear and unambiguous congressional intent behind the words "public
hearing" in the CWA and because the EPA's interpretation of that
term constitutes a reasonable construction of the statute,
deference is due. It follows inexorably that no non-discretionary
duty to grant Dominion an evidentiary hearing on its permit
application exists. Consequently, the jurisdictional requirements
of section 505(a)(2) have not been satisfied.
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We need go no further.3 For the reasons elucidated
above, we conclude that the district court did not err in
dismissing Dominion's action.
Affirmed.
3
Given this outcome, we need not address whether this suit is
properly characterized as a direct challenge to the EPA's rule
(and, thus, barred by 33 U.S.C. § 1369(b)(1)(E)).
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