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Voigt v. Coyote Creek Mining Company, LLC

United States District Court, D. North Dakota

July 15, 2016

Casey Voigt and Julie Voigt, Plaintiffs,
v.
Coyote Creek Mining Company, LLC, a North Dakota Corporation, Defendant,

          ORDER GRANTING MOTION TO AMEND COMPLAINT AND DENYING MOTION TO DISMISS

          Charles S. Miller, Jr., Magistrate Judge

         Before the court are two motions. The first is by defendant Coyote Creek Mining Company, LLC to dismiss on grounds of lack of subject matter jurisdiction and failure to state a claim. The second is by plaintiffs Casey and Julie Voigt to amend their complaint that was filed after the motion to dismiss.

         I. BACKGROUND

         A. The parties

         Defendant is a coal mining company. At the time of the filing of this action, defendant had commenced construction of a new surface coal mine that would supply lignite coal to a nearby coal-fired electric generating plant (the “Coyote Station”) owned by third parties.

         Plaintiffs are ranchers. They own or lease some 5, 637 acres, a significant portion of which either underlies or is in close proximity to defendant’s mine as permitted by state authorities pursuant to North Dakota’s laws governing surface mining.

         B. The Clean Air Act and North Dakota’s implementation of the Act

         Under the Clean Air Act (“Act” or “CAA”) as amended, EPA has established national ambient air quality standards (NAAQS) for six pollutants: (1) particulate matter; (2) sulfur dioxide; (3) nitrogen oxides (with sulfur dioxide as the indicator); (4) carbon monoxide; (5) lead; and (6) ozone. E.g., Utility Air Regulatory Group. v. E.P.A., __ U.S. __, 134 S.Ct. 2427, 2435 (2014). Those areas of the country that meet the standards are classified as “attainment” areas and those that do not are “nonattainment” areas. Id. North Dakota is an attainment area for all of the regulated pollutants.

         An important part of the CAA’s scheme to achieve and maintain the NAAQS is its New Source Performance Standards (NSPS) program. The NSPS provisions require EPA to implement technology-based performance standards to limit emissions from new major sources of pollution, including newly constructed facilities and modifications of existing ones that increase emissions. E.g., Sierra Club v. Otter Tail Power Co., 615 F.3d 1008, 1011 (8th Cir. 2010) (“Otter Tail Power”).

         As discussed in more detail later, Congress concluded that its NSPS program and the NAAQS were not enough because they did not prevent against the degradation of air quality in those areas of the country, like North Dakota, where the pollutant levels are lower than the NAAQS. For this reason, Congress amended the CAA to include provisions for the prevention of significant deterioration of air quality (the “PSD” provisions) that are set forth in Part C of Subchapter I of the Act, codified at 42 U.S.C. §§ 7470-7492. Id. The PSD provisions are the primary focus of this action.

         Among the PSD provisions is a requirement that a “major emitting facility” may not be constructed until it obtains a permit to construct that complies with certain requirements of Part C, including the source’s use of best available control technology (BACT) for each regulated pollutant emitted from the facility. 42 U.S.C. §§ 7475(a) & 7479(1)-(3). The Act defines a major emitting facility as any stationary source with the potential to emit (“PTE”) 250 tons per year (“tpy”) of any air pollutant, except for certain listed sources for which the threshold limit is 100 tpy. 42 U.S.C. § 7479(1); see generally Alaska Dep’t of Environmental Conservation v. E.P.A., 540 U.S. 461, 470-73 (2004) (“ADEC”) (discussing the PSD program and the BACT requirement). For purposes of the discussion that follows: (1) a major emitting facility may be referred to simply as a “major source, ” which is the term the State of North Dakota uses; (2) the requisite threshold for qualifying as a major emitting facility may be referred to as the “major source threshold;” and (3) the construction permit required for a major emitting facility under the federal and state PSD provisions may be referred to as the “major source construction permit” or simply “major source permit.” The CAA places primary responsibility upon the states for formulating detailed air pollution control strategies and carrying out the Act’s provisions. To accomplish this, the CAA requires that each state adopt and submit to EPA for approval a “State Implementation Plan” (“SIP”) to implement and carry out the policies and goals of the Act. ADEC, 540 U.S. at 470.

         North Dakota has an approved SIP for much of the CAA’s requirements, including administration of its PSD provisions. See 40 C.F.R. §§ 52.1820 - 52.1837. Thus, it is the permitting authority for new facilities that require a major source construction permit. In addition, North Dakota has adopted regulations that impose its own requirements for new facilities that do not need a major source construction permit and for these it issues its own “minor source” construction permit. See generally N.D.A.C. Art. 33-15 (North Dakota’s air pollution control regulations).

         The North Dakota Department of Health (“NDDOH”) is the agency charged with the administration and enforcement of the CAA and North Dakota’s air quality laws. N.D.C.C. §§ 23-25-02 & 23-12-03. This includes the responsibility for reviewing applications for permits to construct and determining whether a major or minor source permit is required. Id.

         C. NDDOH’s issuance of a minor source permit

         In this case, defendant applied for and received a minor source construction permit from the NDDOH for its new coal mine. Prior to issuing the permit, the NDDOH did not conduct a public hearing, nor did it give formal notice of the filing of defendant’s application and invite public participation in the permitting process, either by providing an opportunity for requesting a hearing or the submission of comments. Apparently, this was because the NDDOH’s rules allow for the processing of minor source permits informally and without public notice. (Doc. No. 1-3).

         Finally, so far as the court can tell, the only record of what occurred before the NDDOH is defendant’s permit application and the minor source permit issued by the NDDOH, both of which plaintiffs attached to the initial complaint as exhibits. (Doc. Nos. 1-1 & 1-2). And, while defendant’s application provides an explanation for why the coal mine would be a minor source and, for that reason, did not need to satisfy the CAA’s PSD requirements, including obtaining a major source construction permit, there is nothing in the permit that was issued that indicates why the NDDOH apparently agreed.

         The fact that the NDDOH processed defendant’s permit informally and without creating much, if any, contemporaneous record explaining its decision for why defendant’s mine will be a minor source and not a major one has consequences for what follows.

         D. This case

         Plaintiffs claim in this action that defendant needed to obtain a major source permit and comply with the CAA’s and North Dakota’s PSD requirements. This is because, according to plaintiffs, the coal mine as designed will have a PTE (potential to emit) for particulate matter (“PM”) of 250 tpy or more, which is the requisite major source threshold in this instance.

         Plaintiffs bring this action pursuant to the “citizen suit” provisions of 42 U.S.C. § 7604(a)(3) as well as 28 U.S.C. § 1331 (federal question jurisdiction). Plaintiffs seek: (1) a declaration that the coal mine is a major source; (2) injunctive relief enjoining construction and operation of the mine until a major source permit is obtained; and (3) civil penalties for defendant having proceeded with construction without obtaining a major source permit.

         Defendant has responded to plaintiffs’ complaint by filing a motion to dismiss claiming lack of subject matter jurisdiction and failure of the complaint to state a cause of action. More particularly, defendant contends the court lacks jurisdiction under the citizen suit provisions of 42 U.S.C. § 7604 because it has a permit in hand, albeit a minor source permit. Alternatively, defendant argues this court should abstain from exercising jurisdiction on the grounds that this action is nothing more than a collateral attack on the NDDOH’s determination that defendant’s coal mine is not a major source, hence only a minor source construction permit was required, and that plaintiffs have an adequate remedy under state law to challenge the legality of this determination. As for its alternative grounds, defendant contends that plaintiffs’ complaint fails to plead sufficient facts to state a claim and that, even if it does, there is no claim as a matter of law because the coal mine is not a major source based on what has been pled.

         Following the filing of defendant’s motion to dismiss, plaintiffs moved to amend their complaint. In their proposed amended complaint, plaintiffs have alleged more detail in an attempt to overcome defendant’s lack-of-specificity objections. Defendant opposes the motion to amend on the jurisdictional grounds previously alleged as well as contending that, even if amended, the complaint would fail to state a claim so the motion to amend should be denied on grounds of futility.

         II. PLAINTIFFS’ MOTION TO AMEND THE COMPLAINT

         Plaintiffs’ proposed amended complaint differs from the original in three ways. First, it alleges with more certainty that the PTE for fugitive emissions of PM from that portion of defendant’s coal mine that crushes the coal (defendant’s coal processing facility) will exceed the major source threshold and for that reason the entire mine required a major source construction permit. In fact, at various points, the amended complaint references an accompanying affidavit by an engineer for support. It appears these changes were made to address defendant’s contention that the allegations in the original complaint based upon information and belief were insufficient under the applicable pleading standards to state a claim for relief.

         The second principal change is the addition of an allegation that the impact of certain controls built into the design of defendant’s coal processing facility cannot be considered in making the determination of whether the mine is a major source because defendant’s minor source permit lacks a “federally enforceable” emissions limit. The third change is that, unlike the complaint, the amended complaint no longer has attached to it as exhibits defendant’s application for its minor source permit and the minor source permit issued by the NDDOH.

         Generally speaking, leave to amend a complaint pursuant to Fed.R.Civ.P. 15(a)(2) should be freely granted “[u]nless there is a good reason for denial, ‘such as undue delay, bad faith, or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the non-moving party, or futility of the amendment[.]’” Becker v. Univ. of Neb. at Omaha, 191 F.3d 904, 907-08 (8th Cir. 1999) (quoting Brown v. Wallace, 957 F.2d 564, 566 (8th Cir. 1992)). In this case, the court will allow plaintiffs to amend the complaint given that the case is still in its infancy, the changes are by no means frivolous, and the interests of justice support making the determination of whether plaintiffs have pled a viable claim based on the allegations of the amended complaint.[1] Nevertheless, the court will consider defendant’s permit application and the minor source permit in ruling on the motion to dismiss since both are public records and the fact that they were attached as exhibits to their initial complaint.

         III. DEFENDANT’S JURISDICTIONAL CHALLENGES

         A. Defendant’s argument that the court lacks jurisdiction because it obtained a permit to construct, albeit a minor source one

         Plaintiffs rely upon the following language of the CAA’s citizen suit provisions of 42 U.S.C. § 7604 not only as a basis for the court’s jurisdiction but also for their cause of action that defendant failed to get a major source construction permit as required by Part C of subchapter I of the CAA (the PSD provisions):

(a) Authority to bring civil action; jurisdiction
Except as provided in subsection (b) of this section any person may commence a civil action on his own behalf -
* * * *
(3) against any person who proposes to construct or constructs any new or modified major emitting facility without a permit required under part C of subchapter I of this chapter (relating to significant deterioration of air quality) or part D of subchapter I of this chapter (relating to nonattainment) or who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of any condition of such permit.

42 U.S.C. § 7604(a)(3).

         Defendant contends that § 7604(a)(3) does not apply because defendant obtained a permit to construct from the NDDOH. The permit that defendant obtained, however, is not a major source construction permit required by the CAA’s PSD requirements as adopted by the NDDOH, but rather is only a minor source construction permit that was issued to satisfy other state regulatory requirements. In fact, defendant took the position in its permit application that it did not have to obtain a major source construction permit because it was not a major source and the NDDOH apparently agreed when it issued the minor source construction permit. Given that, defendant’s arguments for why jurisdiction is lacking are essentially policy arguments for why § 7604(a)(3) should not be construed to permit suits that, according to defendant, amount to nothing more than a collateral attack upon a determination that a major source permit is not required.

         The problem for defendant’s policy arguments, however, is the plain language of § 7604(a)(3); it clearly permits citizens to bring an action against a major source for beginning construction without having a major source construction permit and does not contain an exception for when a state has determined one is not required and issued a minor source permit to satisfy state requirements. As the Eighth Circuit has cautioned:

Still, as with any question of statutory interpretation, the court begins its analysis with the plain language of the statute, United States v. I.L., 614 F.3d 817, 820 (8th Cir.2010). As we recently noted, “[t]he Supreme Court has ‘stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.’ ” Id. (quoting in part Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992)). “When the words of a statute are unambiguous, then, this first canon is also the last: ‘judicial inquiry is complete.’ ” Id. (quoting in part Germain, 503 U.S. at 254, 112 S.Ct. 1146).

Owner-Operator Independent Drivers Ass'n, Inc. v. Supervalu, Inc., 651 F.3d 857, 862 (8th Cir. 2011).

         Given the plain language of § 7604(a)(3), it is not surprising that those courts that have squarely addressed the argument, that the issuance by a state permitting agency of minor source permit based upon a determination that a major source permit is not required precludes the exercise of federal jurisdiction pursuant to § 7604(a)(3), have rejected it. E.g., Weiler v. Chatham Forest Products, Inc., 392 F.3d 532, 537-39 (2d Cir. 2004) (Weiler) (state-issued minor source construction permit did not foreclose a suit pursuant to § 7604(a)(3) alleging that a major source permit was required); Ellis v. Gallatin Steel Co., 390 F.3d 461, 481 (6th Cir. 2004) (“Ellis”) (same); Northwest Environmental Defense Center v. Cascade Kelly Holdings, LLC, __ F.Supp.3d __, 2015 WL 958175, at **16-19 (D. Ore. Dec. 30, 2015) (“Cascade Kelly Holdings”) (same); Citizens for Pennsylvania's Future v. Ultra Resources, Inc., 898 F.Supp.2d 741, 746 (M.D. Pa. 2012) (“Citizens for Pennsylvania's Future”) (same); Natural Resources Defense Council, Inc. v. BP Products North America, Inc., No. 2:08-CV-204, 2009 WL 1854527, at *8 (N.D. Ind. June 26, 2009) (“BP Products”) (same).

         For its argument to the contrary, defendant relies primarily upon two cases, neither of which are on point here. The first is the Fifth Circuit’s decision in CleanCOAlition v. TXU Power, 536 F.3d 469 (5th Cir. 2008). In particular, defendant points to that portion of the decision where the court stated that “§ 7604(a)(3) does not authorize preconstruction citizen suits against facilities that have either obtained a permit or are in the process of doing so.” Id. at 478-79.

         The problem with defendant’s reliance upon that statement, however, is that the “permit” the Fifth Circuit likely was referring to was a major source permit. This is because what was at issue in CleanCOAlition was a challenge to the substance of a major source construction permit that had been issued and not the failure to have obtained one. And, in rejecting the argument that § 7603(a)(3) allows for a substantive challenge to a major source construction permit based on the contention that a permit that is substantively deficient is the equivalent of not having one, the Fifth Circuit gave no indication when it made the statement defendant relies upon that it meant also to say that possession of a minor source construction permit precludes suit under § 7603(a)(3).

         The second case that defendant relies upon is the Eighth Circuit’s decision in Otter Tail Power, supra. This case is also not on point. The claims that Otter Tail had not obtained major source construction permits for a series of modifications made to its power plant over the years were all dismissed as being time-barred. Otter Tail Power, 615 F.3d at 1013-19. The only other claim in the case was that an amendment to Otter Tail’s Title V operating permit violated an NSPS performance standard and what the Eighth Circuit had to say about that claim being an impermissible collateral attack on Otter Tail’s permit is not applicable here. The reason why requires some explanation.

         Congress amended the CAA in 1990 to require that each major source obtain a comprehensive operating permit (often referred to as “Title V permit”) that sets forth all of the CAA’s standards applicable to the source in one document. Generally speaking, however, Title V permits do not impose new emission limits. Id. at 1012 (describing the Title V permitting requirements).[2]

         For Title V permits, the CAA provides additional provisions for EPA oversight and federal court review in 42 U.S.C. §§ 7607(b) & 7661d(b). Among other things, these sections require EPA to review Title V operating permit applications and object to those that do not comply with the CAA’s requirements. If EPA fails to object, a private party can file a petition with EPA asking that it do so. Then, if EPA continues not to object, the private party can seek review of that decision in the appropriate federal court of appeals. This pathway for citizen-initiated review requires, however, that the subject of the federal challenge must have been first presented to the state permitting agency. 42 U.S.C. § 7661d(b)(2) (“The petition [to the EPA Administrator] shall be based solely on objections to the permit that were raised with reasonable specificity during the public comment period provided by the permitting agency . . . . ”).

         In Otter Tail Power, the Eighth Circuit concluded that the Sierra Club, which was the party claiming the Title V permit violation, could have raised its claim that Otter Tail’s operating permit violated the NSPS before the state permitting agency and that its failure to do so not only foreclosed the federal review pursuant to §§ 7607(b) & 7661d(b) but also to any relief under the citizen suit provisions of § 7604(a) for the same violation because, according to the Eighth Circuit, Congress intended that the former be the exclusive remedy in that situation. Otter Tail Power, 615 F.3d at 1019-23. It was in this context that the Eighth Circuit concluded that the Sierra Club’s NSPS claim was an impermissible collateral attack. The court did not address the question here of whether the state issuance of a minor source permit deprives the federal court of jurisdiction under § 7604(a)(3) for a claim that a major source permit was required instead, much less conclude that there must be an exhaustion of both state administrative and court remedies before such a claim could be brought even when no formal notice or invitation to participate in the underlying state administrative process has been given.[3]

         In summary, the court concludes that it has jurisdiction under 42 U.S.C. § 7604(a)(3) and that defendant’s arguments to the contrary are without merit.

         B. Defendant’s alternative argument for abstention

         1. Introduction

         In the alternative, defendant argues that this court should abstain from exercising jurisdiction. This presents a more difficult question for two reasons. First, the abstention doctrine that defendant relies upon is the one derived from the seminal case of Burford v. Sun Oil Co., 319 U.S. 315 (1943). And, unfortunately, this category of abstention cases defies easy description and there does not appear to be one formulaic test for determining when dismissal under Burford is appropriate. See Quackenbush, 517 U.S. at 727-78; see generally C. Wright, A Miller, E. Cooper, & V. Amar, Federal Practice and Procedure: Jurisdiction 3d § 4244 (2007).

         Second, the few cases that have addressed arguments for Burford abstention in § 7604(a)(3) cases have reached different results, albeit under different circumstances. Compare Ellis, 390 F.3d at 479-81(abstaining on Burford abstention grounds); BP Products, 2009 WL 1854527, at **8-18 (abstaining under both Burford and Colorado River abstention grounds) with Citizens for Pennsylvania's Future, 898 F.Supp.2d at 749-51 (Burford abstention not appropriate); cf. Cascade Kelly Holdings, 2015 WL 9581754, at **16- 19 (while not addressing Burford abstention per se, rejecting arguments (1) that the exercise of jurisdiction under § 7604(a)(3) is an impermissible collateral attack on a state issued minor source permit and (2) that state court remedies must first be exhausted).

         In what follows, the court will apply the principles underlying Burford abstention to the circumstances of this case. After that, the court will address the few § 7604(a)(3) cases where courts have decided to abstain on Burford abstention grounds and explain why they are distinguishable.

         2. Burford abstention

         Federal courts have a “strict duty to exercise jurisdiction that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996) (“Quackenbush”). While this duty is not absolute, the kinds of cases where the Supreme Court has found abstention to be appropriate are few and very narrowly applied. See id; In re Otter Tail Power Co., 116 F.3d 1207, 1215 (8th Cir. 1997) (“Abstention is an extraordinary and narrow exception to the virtually unflagging obligation of federal courts to exercise the jurisdiction given them.”) (internal quotation marks omitted).

         In New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989) (“NOPSI”), the Supreme Court discussed the primary precedent up to when that case was decided and then summarized the principles underlying Burford abstention. The Court stated:

In Burford v. Sun Oil Co., supra, a Federal District Court sitting in equity was confronted with a Fourteenth Amendment challenge to the reasonableness of the Texas Railroad Commission's grant of an oil drilling permit. The constitutional challenge was of minimal federal importance, involving solely the question whether the commission had properly applied Texas' complex oil and gas conservation regulations. Id., at 331, and n. 28, 63 S.Ct., at 1106, and n. 28. Because of the intricacy and importance of the regulatory scheme, Texas had created a centralized system of judicial review of commission orders, which “permit[ted] the state courts, like the Railroad Commission itself, to acquire a specialized knowledge” of the regulations and industry, id., at 327, 63 S.Ct., at 1104. We found the state courts' review of commission decisions “expeditious and adequate, ” id., at 334, 63 S.Ct., at 1107, and, because the exercise of equitable jurisdiction by comparatively unsophisticated Federal District Courts alongside state-court review had repeatedly led to “[d]elay, misunderstanding of local law, and needless federal conflict with the state policy, ” id., at 327, 63 S.Ct., at 1104, we concluded that “a sound respect for the independence of state action requir[ed] the federal equity court to stay its hand, ” id., at 334, 63 S.Ct., at 1107.
We applied these same principles in Alabama Pub. Serv. Comm'n v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951), where a railroad sought to enjoin enforcement of an order of the Alabama Public Service Commission refusing permission to discontinue unprofitable rail lines. According to the railroad, requiring continued operation of the lines amounted to confiscation of property in violation of federal due process rights. Under Alabama law, a party dissatisfied with a final order of the Public Service Commission had an absolute right of appeal to the Circuit Court of Montgomery County, which was “empowered to set aside any Commission order found to be contrary to the substantial weight of the evidence or erroneous as a matter of law.” Id., at 348, 71 S.Ct., at 767. This right of statutory appeal “concentrated in one circuit court” which exercised “supervisory” powers was, we found, “an integral part of the regulatory process under the Alabama Code.” Ibid. Taking account of the unified nature of the state regulatory process, and emphasizing that “adequate state court review of [the] administrative order [was] available, ” id., at 349, 71 S.Ct., at 768, and that the success of the railroad's constitutional challenge depended upon the “predominantly local factor of public need for the service rendered, ” id., at 347, 71 S.Ct., at 767, we held that the District Court ought to have abstained from exercising its jurisdiction, id., at 350, 71 S.Ct., at 768.
From these cases, and others on which they relied, we have distilled the principle now commonly referred to as the “Burford doctrine.” Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar”; or (2) where the “exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.” Colorado River Water Conservation Dist. v. United States, supra, 424 U.S., at 814, 96 S.Ct., at 1245.

491 U.S. at 360. Then, in Quackenbush, supra, the Court addressed the same cases as well as NOPSI, stating:

These cases do not provide a formulaic test for determining when dismissal under Burford is appropriate, but they do demonstrate that the power to dismiss under the Burford doctrine, as with other abstention doctrines, . . . derives from the discretion historically enjoyed by courts of equity. They further demonstrate that exercise of this discretion must reflect “principles of federalism and comity.” Growe v. Emison, 507 U.S. 25, 32, 113 S.Ct. 1075, 1080, 122 L.Ed.2d 388 (1993). Ultimately, what is at stake is a federal court's decision, based on a careful consideration of the federal interests in retaining jurisdiction over the dispute and the competing concern for the “independence of state action, ” Burford, 319 U.S., at 334, 63 S.Ct., at 1107, that the State's interests are paramount and that a dispute would best be adjudicated in a state forum. See NOPSI, supra, 491 U.S., at 363, 109 S.Ct., at 2515 (question under Burford is whether adjudication in federal court would “unduly intrude into the processes of state government or undermine the State's ability to maintain desired uniformity”). This equitable decision balances the strong federal interest in having certain classes of cases, and certain federal rights, adjudicated in federal court, against the State's interests in maintaining “uniformity in the treatment of an ‘essentially local problem, ’ ” 491 U.S., at 362, 109 S.Ct., at 2515 (quoting Alabama Pub. Serv. Comm'n, supra, at 347, 71 S.Ct., at 767), and retaining local control over “difficult questions of state law bearing on policy problems of substantial public import, ” Colorado River, 424 U.S., at 814, 96 S.Ct., at 1244. This balance only rarely favors abstention, and the power to dismiss recognized in Burford represents an “ ‘extraordinary and narrow exception to the duty of the District Court to adjudicate a controversy properly before it.’ ” Colorado River, supra, at 813, 96 S.Ct., at 1244 (quoting County of Allegheny, 360 U.S., at 188, 79 S.Ct., at 1063).

517 at 727-28.

         3. Inapplicability of Burford abstention in this case

         a. Additional background

         Before addressing the principles enunciated in NOPSI and Quackenbush, some additional discussion of the CAA’s PSD program is helpful, even at the expense of being repetitive of what was outlined earlier.

         In the years immediately following the establishment of the NSPS program in 1970 and the development of the NAAQS, Congress concluded that merely setting emissions limits had not done enough to improve air quality in those areas of the country that met the minimum standards of the NAAQS. Consequently, Congress amended the CAA again in 1977 to adopt the PSD program in order to prevent the significant deterioration of air quality in those areas of the country that are attainment areas. See, e.g., ADEC, 540 U.S. at 470-71.

         The cornerstone of the PSD program is the imposition of certain requirements on major sources, particularly the BACT standard. And with respect to these requirements, the CAA provides the definitions of what is a major source (i.e., major emitting facility) and what BACT is. 42 U.S.C. §§ 7479(1)&(3). Then, in addition to what the CAA itself requires, EPA has promulgated detailed regulations for the administration of the PSD program and has required that the states include these provisions as part of their state SIPS as a condition of being able to administer the PSD requirements. See 42 U.S.C. § 7471 (requiring each SIP to implement the PSD program); 40 C.F.R. §§ 51.166 & 52.21; see generally ADEC, 540 U.S. at 471; Otter Tail Power, 615 F.3d at 1011-12 (“States have broad discretion in designing their SIPs, but the plans must include certain federal standards and are subject to EPA review and approval.”). The net result of all of this is that not only are the general parameters of the PSD program federally created, so also are most of the implementing regulations, including those adopted by the states with federally approved PSD programs, like North Dakota. See 40 C.F.R. §§ 51.1820 - 51.1837 (North Dakota’s SIP); N.D.A.C. ch. 33-15-15 (setting forth North Dakota’s PSD requirements and incorporating by reference substantial portions of 40 C.F.R. § 52.21).

         Also, while Congress has made the states the front line regulators of the CAA and encouraged them to adopt their own programs for air pollution control (including imposing controls not required by the the CAA as well as requiring that certain non-major sources obtain state-created minor source permits), Congress was not content to leave the enforcement of the PSD provisions entirely up to the state environmental agencies and then to the state courts if there were questions as to whether the state agencies were doing their job properly. Rather, Congress enacted several provisions imposing federal supervision, including: (1) the ability of the EPA Administrator to issue a stop construction order and, if necessary, to bring a civil action in federal district court for injunctive relief if a major source has not complied with the CAA’s PSD provisions, 42 U.S.C. § 7413(a)(5) & 7477; (2) providing for citizen suits in federal courts to ensure compliance with the key PSD requirements, including that a major source obtain a major source construction permit prior to commencing construction, 42 U.S.C. § 7604(a)(3); (3) requiring the EPA Administrator to review Title V operating permit applications and, when necessary, object to the issuance of permits that fail to comply with PSD requirements, 42 U.S.C. § 7661d(a)-(b); and (4) provisions requiring that the public be allowed to participate in the Title V permitting process and allowing persons who do participate the right to petition the EPA Administrator to object to the issuance of permits and seek judicial review in the appropriate federal courts of appeals if the EPA administrator fails to take action, 42 U.S.C. §§ 7607 & 7661d(b)(2).

         There are several reasons why Congress wanted to ensure that the states are properly implementing the key PSD requirements. One is that Congress was concerned not only about the impact of emissions from new and modified major sources on air quality within the states where the sources are located, but also on neighboring states, national parks, wilderness areas, and other recreational and historical areas of importance, given that air pollution is not a respecter of jurisdictional boundaries. See 42 U.S.C. § 7470; see also ADEC, 540 U.S. at 486. Another reason, as suggested by the legislative history, is that Congress believed that, without some uniform standards and enforcement, the prospects were very real for those states imposing stringent controls to lose industry to those states that did not as well as industries holding states hostage for more favorable treatment, including pitting one against another, when making decisions on where new plants would be located or which old ones would be abandoned. ADEC, 540 U.S. at 486 (reciting the legislative history).

         b. The absence in this case of any questions of purely state law

         The first type of case that may be appropriate for Burford abstention according to NOPSI is when there are difficult issues of state law of substantial public import that would have to be untangled in order to decide the federal case. While nominally some of the law that applies in this case are state regulations governing air pollution control, these regulations, for the most part, simply restate the substance of provisions of the CAA or EPA’s regulations.

         This is true for North Dakota’s definition of “major source.” It is the same as that set forth in the CAA and in EPA’s PSD regulations for “major emitting facility.” Compare, e.g., 42 U.S.C. § 7479(1); 40 C.F.R. §§ 51.166(b)(1)(i)(a) & 52.21(b)(1)(i)(a) with N.D.A.C. §§ 33-15-14-06(q)(2) (defining major source for purposes of North Dakota’s Title V permitting program) & 33-15-15-01.2 (incorporating by reference EPA’s definition of major source in 40 C.F.R. § 52.21(b)(1)(i)).

         Likewise, the same is true for other key provisions in this case. North Dakota’s list of sources for which fugitive emissions must be counted toward determining whether the threshold for being a major source has been met is the same as EPA’s and, relevant here, does not include coal mines but does include stationary sources regulated under section 111 of the CAA. Compare 40 C.F.R. §§ 51.166(b)(1)(iii) & 52.21(b)(1)(iii) with N.D.A.C. § 33-15-14-06(q)(2). As detailed later, the significance of this is that one of the stationary source categories for which performance standards have been adopted by EPA pursuant to the authority granted by Section 111 is “coal preparation and processing plants.” And, Subpart Y of 40 C.F.R. Part 60, which governs coal preparation and processing plants and is of particular importance later, has been adopted in whole by N.D.A.C. §§ 33-15-12-01.1 & 33-15-12-02. Finally, as noted earlier, North Dakota has adopted all of EPA’s PSD regulations that are relevant to the issues in dispute in this case.

         Further, if there was any remaining doubt about the fact that the fighting issues in this case involve primarily questions of federal law, one need look no further than to defendant’s application for its minor source permit. The explanation contained in the application for why a major source permit was not required references almost exclusively the relevant provisions of the CAA and EPA’s PSD and NSPS Subpart Y regulations. (Doc. No. 1-1, pp. 9-12).

         Morever, the same is true for defendant’s two arguments for why plaintiffs’ lawsuit fails on its face. As detailed later, one of the points that defendant claims plaintiffs have gotten wrong is their contention that the potential fugitive emissions from defendant’s coal pile and the unloading of coal to the pile need to be counted in determining whether defendant’s mine is a major source. And, what defendant relies upon for why this is wrong are EPA’s NSPS Subpart Y regulations and what defendant claims is the relevant EPA guidance with respect to how those regulations should be applied.

         The second point that defendant claims plaintiffs have gotten wrong is their contention that the fugitive emissions from defendant’s coal processing equipment that must be counted for the major source determination are what the fugitive emissions would be if defendant was not using its passive containment system that surrounds the equipment. The authority that defendant relies upon for its argument for why that is not correct (including the subsidiary question of what is meant by “federally enforceable”) is limited to EPA’s PSD regulations that North Dakota has adopted, EPA guidance, and federal case law construing EPA’s regulations.

         In short, the situation here does not even come close to what was involved in cases like Burford and Alabama Pub. Serv. Comm'n, supra, where the federal constitutional challenges cases required construction of difficult questions of purely state law.

         c. Balancing the federal interest for a federal forum against North Dakota’s interests

         The second type of case in which Burford abstention may be appropriate is when federal review would be disruptive of efforts to establish a coherent state policy with respect to matters of primarily local concern. According to NOPSI and Quackenbush, this requires examining (1) the strength of the federal interests that are furthered by providing a federal forum, (2) the degree to which the problem is truly local, and (3) whether there are substantial benefits accruing to the states by having their courts be the principal adjudicators, and then balancing the relative interests.

         Arguably, Congress has already decided how this balance should be struck. The CAA allocates what are federal responsibilities and what are state responsibilities and then, against that backdrop, provides a federal cause of action in § 7604(a)(3) for when a major source begins construction without having first obtained a major source permit along with a specific grant of federal court jurisdiction. Also, when enacting these provisions, Congress did not impose conditions precedent to being able to seek relief under § 7604(a)(3) like those found elsewhere in the CAA before citizens can seek relief in federal court for noncompliance with its requirements. See Citizens for Pennsylvania's Future, 898 F.Supp.2d at 750 (“it would be improper to abstain from exercising jurisdiction when Congress has clearly established a cause of action for citizens suits”).

         But, even if Congress’s creation of the federal remedy in § 7604(a)(3) does not foreclose Burford abstention - a point that need not be decided in this case, it surely limits it to truly exceptional cases. In Colorado River Construction Water Conservation District v. United States, 424 U.S. 800 (1975 (“Colorado River”), the Supreme Court noted that the mere presence of federal question jurisdiction over diversity jurisdiction “may raise the level of justification needed for [Buford] abstention.” Id. at 815 n.21. The same reasoning applies in spades here with respect to the specific grant of federal jurisdiction and creation of a federal cause of action in § 7604(a)(3) over the exercise of general federal question jurisdiction.

         But, even assuming there being no difference, the federal interest in insuring that major sources are properly identified and classified as such is strong since it is the cornerstone of the PSD program. Further, the problems the PSD provisions are attempting to address are at least as much national as they are local for the reasons discussed earlier, i.e., the interstate nature of air pollution and Congress’s concern about the lack of national uniformity creating economic pressures upon the individual states to not be as tough as they should be.

         On the other hand, in examining North Dakota’s interests, the particular question here of whether defendant’s coal mine is a major source is obviously not purely a matter of state law. Further, while North Dakota as the front line regulator does have an interest in seeing that persons and entities within its borders are treated the same, it does not appear that any perceived need for local uniformity outweighs the federal interests in this instance, particularly since uniformity of treatment can also be achieved by federal courts helping to insure that there is uniformity of treatment nationally with respect to what are major sources.[4] Finally, North Dakota’s interest in preserving the integrity of its administrative processes and not having the NDDOH’s time wasted by federal second guessing is not particularly strong in this case (or at least not strong enough to outweigh the federal interests) given: (1) the degree to which the CAA already allows for EPA Administrator and federal court second guessing; (2) the fact that the NDDOH did not in this instance build an extensive administrative record; and (3) the intrusion upon North Dakota’s interests is mitigated to a degree by the allocation of the burden of proof on the plaintiffs to prove that a major source permit was required as well as this court giving appropriate consideration to what the NDDOH decided - a subject that will be addressed in more detail later, cf. ADEC, 540 U.S. at 488-95.

         Particularly instructive here are two Supreme Court cases. The first is the Supreme Court’s decision in ADEC. While not an abstention case per se, it addressed the same balancing of federal versus state interests with respect to enforcement of CAA’s PSD provisions by the EPA Administrator.

         What was at issue in ADEC was not the overarching (and presumably more important) issue of whether the source in that case was a major one; the state agency had concluded that it was and had issued a major source permit that imposed emission limitations based on its determination of what BACT required in that particular instance. Rather, the issue in ADEC was whether the state permitting agency had made the correct BACT determination. EPA concluded it had not and had issued a stop construction order pursuant to the authority discussed earlier. 540 U.S. at 474- 80. ADEC, the petitioner on appeal, contended that, because it had been delegated the authority to make the BACT determination (since it had an approved SIP incorporating the PSD requirements), the CAA should be construed as requiring that EPA must first challenge its decision in the state courts if EPA was dissatisfied with the decision. In so urging, ADEC made many of the same arguments that defendant makes in this case for why the principles of cooperative federalism built into the CAA should not permit EPA’s collateral attack. Id. at 488-95. The Supreme Court, however, rejected those arguments, concluding that EPA’s construction of the CAA, which was that the EPA Administrator could second guess the state agency’s determination of BACT and issue a stop construction order without first having to go state court, was not an unreasonable one given the federal interests at stake. Id. at 496-502.

         Granted, ADEC is a different case in that the party making the challenge there was EPA and the collateral attack was made pursuant to different statutes. However, when one reads the Court’s extended discussion about why the CAA could reasonably be construed to grant EPA the authority that it determined it had under the Act, including the provisions that were included in the CAA to insure that the PSD program would be applied nationally with some uniformity, it is difficult to conclude here that the local interests are so great that Burford abstention is required with respect to the threshold determination of whether defendant is a major source - particularly in this case given the apparent lack of availability of timely and adequate direct state court review for the reasons discussed in the next section.

         The other Supreme Court case that is particularly instructive is NOPSI i t s e l f . I n N O P S I, the Federal Energy Regulatory Commission (“FERC”) had made an allocation to NOPSI (the electric utility serving the City of New Orleans) of its share of costs in a failed nuclear power project for purposes of recovering the costs in its rates. The City Council, while deferring to FERC’s finding that the initial decision to participate in the nuclear project was reasonable, took the position that full rate relief was not warranted because NOPSI was negligent in failing to diversify its power supply by selling off a part of its interests in the project after it became apparent there might be problems. NOPSI, 491 U.S. at 353-58.

         Seeking to overturn this decision and after other proceedings not relevant here, NOPSI filed both an action in federal court seeking relief and a petition in state court seeking review of the City Council’s decision. NOPSI then proceeded to make the same two arguments in both forums. One was that FERC’s decision was preemptive. The other was that the City’s Council articulated reason for not allowing full rate relief, that NOPSI had not acted prudently after it should have known of the problems with the nuclear project, was unwarranted and pretextual. Id. at 357-58, 362-63.

         The Supreme Court concluded in NOPSI that Burford abstention was not appropriate. In so holding, the Court first observed that the case “did not involve a state-law claim, nor even an assertion that the federal claims are in anyway entangled in a skein of state-law that must be untangled before the federal case can proceed.” Id. at 361 (internal quotation marks omitted). As already discussed, that appears to be true in this case.

         The Court then went on to address whether the federal adjudication in that case would disrupt “the State’s attempt to ensure uniformity of treatment of an essentially local problem.” Id. at 362 (internal quotation marks omitted). In addressing that question, the Court first observed that, “[w]hile Burford is concerned with protecting complex state administrative processes from undue federal interference, it does not require abstention whenever there exists such a process, or even in all cases where there is a potential for conflict with state regulatory law or policy.” Id. (internal quotation marks omitted). The Court then concluded that NOPSI’s first grounds for attack presented only the facial question of federal preemption that could be resolved without having to look beyond the face of the City’s rate order, so Burford abstention would not be appropriate for that issue. As for NOPSI’s second grounds of attack, the Court stated:

Unlike the facial challenge, this claim cannot be resolved on the face of the rate order, because it hinges largely on the plausibility of the Council's finding that NOPSI should have, and could have, diversified its supply portfolio and thereby lowered its average wholesale costs. See n. 2, supra. Analysis of this pretext claim requires an inquiry into industry practice, wholesale rates, and power availability during the relevant time period, an endeavor that demands some level of industry-specific expertise. But since, as the facts of this case amply demonstrate, wholesale electricity is not bought and sold within a predominantly local market, it does not demand significant familiarity with, and will not disrupt state resolution of, distinctively local regulatory facts or policies. The principles underlying Burford are therefore not implicated.

Id. at 363-64. For essentially the same reasons, the principles underlying Burford are not implicated in this case; that is, the problems that the PSD program addresses are in significant part national and the resolution of whether or not the defendant’s coal mine is a major source does not require familiarity with, nor is it likely to be unduly disruptive of, “distinctively local regulatory facts or policies” for the reasons set forth above.

         d. Lack of availability of timely and adequate ...


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