In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 07-3197, 07-3198 & 07-3199
CITIZENS AGAINST RUINING THE ENVIRONMENT,
ENVIRONMENT ILLINOIS, PEOPLE OF THE STATE
OF ILLINOIS, et al.,
Petitioners,
v.
ENVIRONMENTAL PROTECTION AGENCY,
Respondent,
and
MIDWEST GENERATION, LLC,
Intervening-Respondent.
____________
Petitions for Review of Orders of
the Environmental Protection Agency.
Nos. V-2005-1, V-2005-3, V-2006-2
____________
ARGUED MAY 29, 2008—DECIDED JULY 28, 2008
____________
Before FLAUM, MANION, and EVANS, Circuit Judges.
EVANS, Circuit Judge. In this consolidated appeal of
three related administrative review proceedings, the
petitioners, several environmental protection groups and
the attorney general of the State of Illinois, challenge the
failure of the federal Environmental Protection Agency
2 Nos. 07-3197, 07-3198 & 07-3199
(EPA) to object to certain operating permits proposed by
the Illinois Environmental Protection Agency (IEPA)
pursuant to the Clean Air Act (CAA). The petitioners
contend that the Administrator was obligated to object
because they clearly “demonstrated” that the permits
were not in compliance with the CAA. See 42 U.S.C.
§ 7661d(b)(2). The EPA, on the other hand, maintains
that the Administrator reasonably exercised his discre-
tion in determining that the petitioners did not “demon-
strate” a violation because their petitions called for fur-
ther investigation and analysis, a task the Administrator
found to be more appropriately carried out through the
CAA’s enforcement process. The petitioners argue that
the CAA grants the Administrator no such discretion.
Title V of the CAA requires major stationary sources of
air pollution to obtain operating permits incorporating
the CAA’s requirements and establishes a procedure for
federal authorization of state-run Title V permitting
programs. See id. §§ 7661-7661f. Title V does not impose
additional requirements on sources but rather con-
solidates all applicable requirements in a single docu-
ment to facilitate compliance. See id. § 7661a(a). In Illinois,
a polluting source must apply to the IEPA for an operating
permit. After negotiations between the IEPA and the
source and an opportunity for public comment, the IEPA
submits a draft permit to the EPA for review. See id.
§ 7661d. The EPA has 45 days to object. If the EPA does
not object, within 60 days of the expiration of the 45-day
review period any person may petition the EPA to object
to the permit. The EPA then has 60 days to grant or deny
the petition. The EPA must object to the permit “if the
petitioner demonstrates to the Administrator that the
permit is not in compliance with the requirements” of the
Nos. 07-3197, 07-3198 & 07-3199 3
CAA. Id. § 7661d(b)(2). The denial of a petition is then
subject to judicial review. Id. §§ 7607(b)(1), 7661d(b)(2).
Permit applications must include a compliance plan
“describing how the source will comply with all applicable
requirements” of the CAA. Id. § 7661b(b)(1). If a source
is in compliance, it must provide a statement that it will
continue to comply with the requirements of the CAA
and will timely meet any additional applicable require-
ments that become effective during the permit term. 40
C.F.R. § 70.5(c)(8)(ii)(A), (B). If a source is not in compli-
ance, it must develop a “schedule of compliance,” outlining
how it plans to come into compliance with “all applicable
requirements” of the CAA. Id. § 70.5(c)(8)(iii)(C). The
schedule of compliance must be included in the permit
itself. 42 U.S.C. § 7661c(a). And the permittee must
promptly report any deviations from the permit’s re-
quirements. Id. § 7661b(b)(2).
In addition to permitting authority, the CAA provides
the EPA with enforcement powers. If the Administrator
finds that a source “has violated or is in violation of any
requirement or prohibition of an applicable implementa-
tion plan or permit,” he must notify the source and the
state by issuing a notice of violation (NOV). Id. § 7413(a)(1).
The Administrator then has several options: (1) issue an
order requiring compliance, (2) render an administrative
penalty, or (3) bring a civil action. Id. Under the latter
enforcement option, the United States, on behalf of the
EPA, may sue for a permanent or temporary injunction,
to assess and recover a civil penalty, or both. Id. § 7413(b).
In addition, a citizen’s suit provision generally authorizes
“any person [to] commence a civil action . . . against any
person . . . who is alleged to have violated . . . an emission
standard or limitation” of the CAA. Id. § 7604(a)(1).
4 Nos. 07-3197, 07-3198 & 07-3199
Midwest Generation is an operator of multiple, large,
coal-fired power plants in Illinois. Our case involves six
of those plants: the Fisk, Crawford, Will County, Powerton,
Joliet, and Waukegan stations.1 Midwest’s predecessor,
Commonwealth Edison, originally submitted applica-
tions to the IEPA for Title V operating permits back in
1995. The IEPA then proposed permits, which prompted
petitions requesting that the Administrator object. After
reviewing the proposed permits, the EPA concluded that
the IEPA had failed to respond to significant public
comments and directed it to respond to concerns about
the need for compliance schedules for alleged opacity2
and new source review (NSR)3 violations. The IEPA
1
The attorney general’s claims relate to all six power plants,
whereas the environmental groups’ claims relate only to the
Fisk and Crawford stations.
2
Opacity, a measurement usually stated as a percentage, is the
amount of light that is blocked by a medium such as smoke. See
generally Sierra Club v. E.P.A., 353 F.3d 976, 982 (D.C. Cir. 2004).
Illinois has a 30 percent opacity limit for facilities generally,
with an exception allowing emissions for greater than 30 per-
cent for 8 minutes in any 60-minute period, provided that this
occurs no more than three times in any 24-hour period. Ill.
Admin. Code tit. 35, § 212.123 (1996). A 20 percent opacity limit
applies to emissions from power plants where construction or
modification began after April 14, 1972. Id. § 212.122(a).
3
NSR consists of two programs: prevention of significant
deterioration (PSD) and nonattainment NSR. Under the PSD
program, no source that would emit substantial quantities of
pollutants may be constructed or “modified” unless a permit
prescribing emission limitations has been issued. See 42 U.S.C.
(continued...)
Nos. 07-3197, 07-3198 & 07-3199 5
responded and proposed revised permits, none of which
contained a compliance schedule.
The EPA did not object to the IEPA’s revised permits
within the 45-day period. The Illinois attorney general
and the environmental groups then filed petitions request-
ing that the Administrator object to the permits. The
petitions raised two grounds for objection: (1) Midwest’s
power plants regularly exceeded opacity limits, yet the
IEPA’s proposed operating permits did not include a
schedule of compliance; and (2) Midwest had “modified”
its power plants, thereby making NSR provisions “applica-
ble requirements,” but the IEPA’s proposed operating
permits failed to require compliance with NSR rules.
The Administrator denied the petitions in three orders,
the content of which is almost identical.4 Regarding
opacity requirements, the Administrator found that the
petitioners failed to demonstrate an ongoing violation
requiring a schedule of compliance. His finding was
3
(...continued)
§§ 7475(a)(1), 7479(1), (2). The preconstruction permit must
impose the “best available control technology” (BACT). Id.
§ 7479(3).
In nonattainment areas (that is, where air quality standards
have not been met), new and “modified” sources are required to
obtain preconstruction permits, to offset emissions increases
with emissions reductions from other sources in the area, and
to install the “lowest achievable emission rate” technology,
which is more stringent than BACT. See id. § 7503.
4
Although the CAA provides that the Administrator “shall
grant or deny such petition within 60 days after the petition is
filed,” id. § 7661d(b)(2), it took 19 months—and a consent
decree—before a decision was reached in this case.
6 Nos. 07-3197, 07-3198 & 07-3199
based on two facts: (1) the IEPA reviewed each source’s
opacity data and did not find a sufficient basis to include
a compliance schedule in the permits; and (2) each source
submitted a compliance certification. The Administrator
concluded that “the Title V petition process is not
the appropriate venue to drive discretionary enforce-
ment decisions of the permitting authority, particularly
when the petitioner fails to demonstrate that a violation
of the Act has occurred.”
Regarding NSR requirements, the Administrator found
that the petitioners failed to demonstrate that the
permits violated the CAA. His finding was based on the
fact that Midwest had not applied for any NSR permits;
therefore, there was no determination that NSR require-
ments applied to the plants at issue. In addition, no
court had issued an order finding that Midwest vio-
lated the CAA by failing to apply for NSR permits. As a
result, the Administrator found that “the allegations
made by the Petitioners do not contain sufficient specific
information to demonstrate that the . . . permits are
deficient.” He concluded that the issue called for further
investigation, which the EPA prefers to do through its
enforcement arm. Relatedly, the Administrator noted
that the IEPA added a condition to the permits to ensure
that they would not be “shielded” from an enforcement
action.
A short time after the Administrator denied the petitions
to object, the EPA issued an NOV to Midwest and its
predecessor, finding opacity and NSR violations at the
six plants at issue here. The Illinois attorney general
subsequently appealed the decisions denying her peti-
tions to object (Nos. 07-3198 and 07-3199), seeking
review of both the opacity and NSR issues. The environ-
mental groups also appealed the decision denying their
Nos. 07-3197, 07-3198 & 07-3199 7
petition to object (No. 07-3197) but only sought review
of the opacity issue.
Because the CAA does not provide a standard of review,
we review the EPA’s decision under the Administrative
Procedure Act (APA), which contemplates setting aside
agency actions only if they are “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law[.]” 5 U.S.C. § 706(2)(A). Chevron deference also
guides our analysis. It first instructs us to determine
whether Congress has spoken directly to the issue—that is,
whether the statute in question is unambiguous. Chevron
U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842-43 (1984). If Congress’s intent is clear from the statu-
tory language, we must give effect to it. However, if the
statute is silent or ambiguous, we proceed to the
second step and defer to an agency’s interpretation unless
it fails the APA’s “arbitrary and capricious” test. Id. at 844.
The petitioners contend that because the CAA is unam-
biguous, we need not reach the second step of the Chevron
analysis. Even if we proceed to step two, however, they
argue that we cannot uphold the Administrator’s deci-
sion because his rationale does not purport to interpret
the CAA but rather to implement an agency policy
absent from and inconsistent with the CAA. The EPA, on
the other hand, cautions that we should be especially
mindful of the high level of deference an agency is owed
when it interprets its own regulations. See Barnhart
v. Walton, 535 U.S. 212, 217 (2002). It directs us to the
relevant statutory language in the permit-objection
process: “The Administrator 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 Act . . . .” 42 U.S.C. § 7661d(b)(2). The
EPA contends that “demonstrates” is an ambiguous term,
8 Nos. 07-3197, 07-3198 & 07-3199
which the Administrator reasonably interpreted in
denying the petitioners’ claims.
Before turning to the merits, however, we must address
the threshold jurisdictional question of whether the
Illinois attorney general possesses standing to pursue
this action.5 Standing consists of three elements:
(1) injury-in-fact, (2) causation, and (3) redressability. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Because
we are reviewing the decision of an administrative
agency, which is not subject to Article III, the petitioner’s
burden of production on standing is the same as that of
a plaintiff moving for summary judgment in the district
court: she must support each element of her claim by
affidavit or other evidence. Sierra Club v. E.P.A., 292
F.3d 895, 899 (D.C. Cir. 2002). While in many cases a
petitioner’s standing is self-evident, when it is not, the
petitioner must supplement the record to the extent
necessary to establish her entitlement to judicial review
at the first appropriate point in the proceeding. Id. at 899-
900.
Here, however, the petitioners’ opening brief devotes
only one sentence to the issue of the attorney general’s
standing, simply stating that “[t]he People of the State of
5
The EPA does not challenge the environmental groups’
standing, therefore Article III’s case-or-controversy require-
ment is satisfied. Rumsfeld v. Forum for Academic and Institutional
Rights, Inc., 547 U.S. 47, 52 n.2 (2006). However, as we prev-
iously noted, the environmental groups are only appealing the
opacity issue, and their petition to object only concerns two of
the six power plants. Thus, if we determine that the attorney
general does not have standing, our review of the merits will
be limited accordingly.
Nos. 07-3197, 07-3198 & 07-3199 9
Illinois also have standing in this matter concerning all
six Illinois coal plants.” While the petitioners include a
lengthier discussion in their reply brief, the EPA con-
tends that this attempt to secure standing comes too
late. We agree. It is improper for a party to raise new
arguments in a reply because it does not give an ad-
versary adequate opportunity to respond. Moreover, the
attorney general’s standing is far from self-evident be-
cause she is challenging permitting decisions made by
the IEPA. Thus, we have a rather unusual antagonistic
relationship between an office and an agency that are
both part of the executive branch of the state of Illinois.
Because standing was clearly going to be an uphill battle,
the attorney general needed to substantiate her entitle-
ment to judicial review at the earliest possible point. She
failed to do so and accordingly has not met her burden of
production.
Even if we take the petitioners’ untimely arguments into
consideration, we find an insufficient basis for standing.
The petitioners assert that Illinois has standing as both a
sovereign state and in a parens patriae capacity. They rely
on Davis v. United States E.P.A., 348 F.3d 772 (9th Cir. 2003),
to support their argument for standing as a sovereign
state. There, California Governor Gray Davis and the
California Air Resources Board petitioned for review of
an EPA order denying their request for a waiver of the
oxygen level requirement under the federal reformulated
gasoline program. The court found that California had
standing because it “faces remedial and proprietary
consequences that depend upon the outcome of this
litigation.” Id. at 778. In other words, California had an
interest in the litigation because it was the direct recipient
of the EPA’s denial. Here, by contrast, the IEPA issued
permits to Midwest, which were reviewed (but not objected
10 Nos. 07-3197, 07-3198 & 07-3199
to) by the EPA. Thus, the EPA’s actions were entirely
consistent with Illinois’ position, as advanced by the IEPA.
The petitioners also argue that Illinois has standing in a
parens patriae capacity. A state may not bring a parens patriae
suit against the federal government, however, because
there the United States, and not the state, represents the
people’s interests. Massachusetts v. Mellon, 262 U.S. 447,
485-86 (1923); Illinois Dep’t of Transp. v. Hinson, 122 F.3d
370, 373 (7th Cir. 1997). The petitioners respond by citing to
Massachusetts v. E.P.A., 127 S. Ct. 1438 (2007), a decision in
which the Supreme Court allowed a challenge by Massa-
chusetts to the EPA’s decision not to regulate greenhouse
gas emissions from motor vehicles. There, the Court drew
a distinction “between allowing a State to protect her
citizens from the operation of federal statutes (which is
what Mellon prohibits) and allowing a State to assert its
rights under federal law (which it has standing to do).” Id.
at 1455 n.17 (internal quotation marks omitted). But the
Court also found that, according to the petitioner’s uncon-
tested affidavits, the rise in sea levels associated with
global warming already harmed and would continue to
harm Massachusetts “as a landowner.” Id. at 1456. In other
words, the alleged “injury” was to the state itself. Here, the
alleged injury is unclear, as there are no supporting
declarations in the record. And any general interests of the
people of the State of Illinois would seem to be represented
(at least informally)6 by the IEPA.
6
We say “informally” to distinguish this kind of representa-
tion from the authority to represent the State in litigation, which
is possessed exclusively by the Illinois attorney general when
the State is the only real party in interest. See Scachitti v. UBS
(continued...)
Nos. 07-3197, 07-3198 & 07-3199 11
In sum, the attorney general has failed to explain why
we have jurisdiction over an internal conflict between an
office and an agency under the executive branch of the
same state government. Under these circumstances, it
seems appropriate for the governor, rather than the fed-
eral courts, to resolve the controversy; yet, there is no
evidence that the state has taken any steps internally to
change the IEPA’s decision. The IEPA has the duty to
make Title V permit decisions, so it appears to be the
agency responsible for making Illinois policy in that arena.
See 415 Ill. Comp. Stat. 5/4. And while the attorney gen-
eral may have broad authority to protect public rights,
which indicates that she has capacity to sue, standing must
be independently established in every case. See Bd. of Educ.
of City of Peoria, Sch. Dist. No. 150 v. Ill. State Bd. of Educ.,
810 F.2d 707, 709-10 (7th Cir. 1987). The attorney general
has not met her burden of establishing standing in this
case. Accordingly, we dismiss her petition for review
and turn to the merits, examining only the environmental
groups’ challenge to the Administrator’s decision not
to object to the Fisk and Crawford permits.
Both parties think that the Court of Appeals for the
Second Circuit’s opinion in New York Public Interest
Research Group, Inc. v. Johnson, 427 F.3d 172 (2d Cir. 2005)
(NYPIRG v. Johnson), should inform our decision. There,
New York’s permitting authority issued an NOV to two
power plants indicating that they had been modified
without obtaining the required PSD permits. When the
EPA did not object to the draft operating permits, NYPIRG
petitioned it to do so. The EPA denied NYPIRG’s peti-
6
(...continued)
Fin. Servs., 831 N.E.2d 544, 556 (Ill. 2005).
12 Nos. 07-3197, 07-3198 & 07-3199
tion because (1) the source had not conceded that
particular PSD limits applied; and (2) the permitting
authority had discretion under Title V not to include in the
permits PSD limits not yet determined to be applicable. The
court of appeals, however, vacated the EPA’s decision and
held that the permitting authority’s issuance of an NOV
and commencement of a CAA citizen’s suit “is a sufficient
demonstration to the Administrator of non-compliance
for purposes of the Title V permit review process.” Id.
at 180.
Not surprisingly, the petitioners encourage us to
follow NYPIRG v. Johnson and find that the issuance of a
subsequent NOV indicates that their petitions demon-
strated noncompliance. The EPA, on the other hand,
argues that we should not follow NYPIRG v. Johnson
because its reasoning is flawed. As we see it, however,
our case differs significantly from NYPIRG v. Johnson
because the NOV here came after the Administrator’s
decision and therefore was not part of the record he
reviewed.7 Thus, even if we were prepared to embrace the
rule in NYPIRG v. Johnson, it would not resolve the matter.
For that reason, we reserve judgment on the question of
whether a permitting authority’s prior issuance of an
NOV and the commencement of a citizen’s suit obligates
the Administrator to object to an operating permit.
7
Our case also differs from NYPIRG v. Johnson because there the
permitting authority issued the NOV, whereas here the NOV
came from the EPA. See id. at 181 (“[W]e are not called on to
determine whether it is reasonable for the EPA to exclude
contested PSD limits from permits when the permitting author-
ity has not yet determined those limits applicable—this
case does not present that problem.”).
Nos. 07-3197, 07-3198 & 07-3199 13
To repeat, Title V states that “[t]he Administrator
shall issue an objection . . . if the petitioner demonstrates
to the Administrator that the permit is not in compliance
with the requirements” of the CAA. 42 U.S.C. § 7661d(b)(2).
This language clearly obligates the Administrator to
(1) determine whether the petition demonstrates non-
compliance and (2) object if such a demonstration is made.
N.Y. Pub. Interest Research Group v. Whitman, 321 F.3d
316, 332-33 (2d Cir. 2003). As we mentioned, however,
neither the CAA nor its regulations define the term
“demonstrates.” Thus, the EPA has discretion under the
statute to determine what a petition must show in order
to make an adequate “demonstration.” See id. at 333
(discussing the distinction between “the discretionary
part of the statute (whether the petition demonstrates
noncompliance) with the nondiscretionary part (if such
a demonstration is made, objection must follow)”).
The petitioners, however, contend that the Admin-
istrator never really determined whether the petition
demonstrated noncompliance but instead just deferred
to the enforcement process. We disagree. While he noted
several times that the EPA’s policy was to give informa-
tion that may indicate noncompliance to its enforcement
arm, he also explicitly stated that “Petitioner has not
demonstrated noncompliance at the time of permit issu-
ance as required by the CAA . . . .” Thus, it is a bit of a
stretch to argue that the Administrator failed to make the
requisite threshold determination.
What the petitioners are really complaining about are the
reasons the Administrator gave for his decision. On the
opacity issue, the Administrator determined that a
“demonstration” is not made when, among other things,
alleged violations are contested by both the permitting
authority and the source. The petitioners disagree. The
14 Nos. 07-3197, 07-3198 & 07-3199
outcome therefore hinges on what is meant by the term
“demonstrate.” But because “demonstrate” is undefined,
we need only determine whether the Administrator’s
interpretation is “based on a permissible construction
of the statute.” Chevron, 467 U.S. at 843.
Title V’s time line indicates that the Administrator
acted reasonably. To repeat again, permitting authorities
must provide “streamlined” procedures for issuing per-
mits. 40 C.F.R. § 70.4(d)(3)(ix). Within 45 days after re-
ceiving a copy of the proposed permit from the permitting
authority, the Administrator must object if he determines
that the permit is not in compliance with the CAA. 42
U.S.C. § 7661d(b)(1). If the Administrator does not object,
any other person may petition him within 60 days after
the expiration of the 45-day review period, and the
agency is required to respond within 60 days. Id.
§ 7661d(b)(2). Thus, Congress deliberately gave the EPA
a rather short time period to review proposed permits,
resolve questions related to those permits, and decide
whether to object. Because this limited time frame may
not allow the EPA to fully investigate and analyze con-
tested allegations, it is reasonable in this context for the
EPA to refrain from extensive fact-finding.
The existence of the EPA’s broad enforcement authority
reinforces our belief that Congress did not intend the
EPA to fully investigate and resolve all allegations in the
permitting context. Section 113 states that, “on the basis
of any information available,” the EPA may find that any
person has violated its requirements. Id. § 7413(a)(1). After
contacting the source and the state, the EPA may issue
an order, render an administrative penalty, or bring a
civil action. Id. Section 114 allows the EPA to issue ad-
ministrative information requests and to seek appropriate
Nos. 07-3197, 07-3198 & 07-3199 15
relief, including civil penalties, if they are not answered.
Id. §§ 7414(a)(1), 7413.
Moreover, Title V itself reserves the EPA’s ability to
bring an enforcement action for violations of the CAA
unless an express “shield” on the face of the permit bars
that action. Id. § 7661c(f). This provision would hardly be
necessary if the EPA was supposed to resolve all alleged
violations of the CAA in the permitting process. See
United States v. East Ky. Power Co-op., Inc., 498 F. Supp. 2d
1010, 1018 (E.D. Ky. 2007) (rejecting a defendant’s argu-
ment that the Title V permitting process was “the only
remedy available to the EPA for an alleged deficient
permit application” because of the EPA’s broad enforce-
ment authority and the lack of a permit shield). In addition,
unlike the permitting process, the enforcement process
allows for discovery, hearings, cross-examination of
witnesses, and expert testimony—mechanisms designed
to resolve disputed claims. It is reasonable to interpret
Title V to complement, not to limit, the EPA’s enforce-
ment authority.
Here, the Administrator’s finding that the petitioners
failed to demonstrate noncompliance regarding opacity
was based on the fact that (1) the IEPA reviewed each
source’s opacity data and did not find a sufficient basis
to include a compliance schedule in the permits; and
(2) each source submitted a compliance certification.8
Thus, he relied on representations made by the source
and on the permitting authority’s review when he deter-
8
Certificates of compliance are not taken lightly. Filing a false
compliance certification exposes the responsible corporate
official and/or the source itself to potential criminal sanc-
tions, among other things. 42 U.S.C. § 7413(c).
16 Nos. 07-3197, 07-3198 & 07-3199
mined that the allegations were contested. This was not
“arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A). Allowing
the Administrator to place some reliance on these factors
is consistent with Title V’s time lines and the complemen-
tary enforcement and permitting authorities established
by Congress. Accordingly, we conclude that where, as
here, there is contested evidence of a potential violation
requiring further investigation and analysis, the CAA
allows the EPA reasonable discretion to determine that
the petition failed to demonstrate noncompliance and
to refer the matter to the enforcement process.9
For the foregoing reasons, the attorney general’s petitions
for review (Nos. 07-3198 and 07-3199) are DISMISSED,
and the environmental groups’ petition for review (No. 07-
3197) is DENIED.
9
Contrary to the petitioners’ assertions, this does not mean that
a petition can never make an adequate demonstration of non-
compliance. The EPA, in its brief, provided several examples
of contexts in which petitioners will be able to make the re-
quired demonstration. And, to repeat, we have not decided
whether a prior NOV issued by either the EPA or the permitting
authority constitutes an adequate demonstration of noncom-
pliance.
USCA-02-C-0072—7-28-08