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Sierra Club v. Mosier

Supreme Court of Kansas

March 17, 2017

Sierra Club, Appellant,
v.
Susan Mosier, M.D., in her Official Capacity as Secretary of the Kansas Department of Health and Environment, and the Kansas Department of Health and Environment, an Agency of the State of Kansas, Appellees, and Tri-State Generation and Transmission Association, Inc., and Sunflower Electric Power Corporation, Intervenors.

         SYLLABUS BY THE COURT

         1.

         The Kansas Judicial Review Act, K.S.A. 77-601 et seq., governs the scope of judicial review of an agency's action, and K.S.A. 2015 Supp. 77-621(c) lists the circumstances under which a court may grant relief. Under the Act, the party appealing from an agency's decision bears the burden of establishing error.

         2.

         Under the federal Clean Air Act, 42 U.S.C. § 7401 et seq. (2012), and the Kansas Air Quality Act, K.S.A. 65-3001 et seq., a permit under the prevention of significant deterioration construction permit program for an "anyway source"-that is, a source required to obtain a prevention of significant deterioration construction permit "anyway" for pollutants other than greenhouse gases-must contain limitations on greenhouse gas emissions based on the application of the best available control technology, but only if the permit is issued on or after January 2, 2011.

         3.

         A party abandons an argument by not briefing it.

         4.

         An appellate court exercises de novo review over questions of law regarding whether its mandate has been followed and properly interpreted.

         5.

         The Kansas Judicial Review Act, specifically K.S.A. 77-622(b), allows for a wide range of remedies. In granting relief, a court may order agency action required by law, order agency exercise of discretion required by law, set aside or modify agency action, enjoin or stay the effectiveness of agency action, remand a matter for further proceedings, render a declaratory judgment, or take any other action that is authorized and appropriate.

         6.

         K.S.A. 77-616 and K.S.A. 77-622(b) of the Kansas Judicial Review Act authorize an administrative agency to enjoin or stay the effectiveness of an agency action on appropriate terms unless otherwise precluded by law.

         7.

         In this case, appellant fails to establish that the Kansas Department of Health and Environment erred in granting a stay and limiting the scope of remand proceedings to only those issues subject to the remand order in Sierra Club v. Moser, 298 Kan. 22, 310 P.3d 360 (2013).

         8.

         Under the separation of powers doctrine, determination of appropriate policy must be left to the legislative and executive branches of Kansas government, and courts are limited to the exercise of judicial power in interpreting and applying the law.

         9.

         When statutes and regulations are silent about a particular policy matter, courts are ill-equipped to fill such a gap. Often the wisest course is for courts to defer to the legislature to fill the gap.

         10.

         Courts do not afford significant deference to an administrative agency's statutory interpretation, but where an agency possesses discretion, a court must presume the validity of the agency action and cannot substitute its judgment for that of the administrative agency unless the agency's action is unlawful, unreasonable, arbitrary, or capricious.

         11.

         Before the Secretary of the Kansas Department of Health and Environment may approve a permit for an air containment emission source, K.S.A. 2015 Supp. 65-3008a requires the Secretary to provide a public comment period. All relevant comments must be considered in making a final decision on a proposed permit action.

         12.

         As a general rule, a party may not raise a new argument in a motion for reconsideration, although some courts recognize an exception when the arguments could not have been presented earlier.

         13.

         K.S.A. 2015 Supp. 77-617 of the Kansas Judicial Review Act limits when a person may obtain judicial review of an issue that was not raised before an administrative agency.

         14.

         The Environmental Protection Agency has established recommended guidelines for air quality modeling to establish a level of consistency. However, it never intended for its guidelines to be a compendium of all acceptable modeling techniques. Use of an alternative model, or the modification of a preferred model, means the model must then be justified on a case-by-case basis. The Environmental Protection Agency permits appropriate reviewing authorities-which includes state agencies like the Kansas Department of Health and Environment-to act as its representatives in approving models.

         15.

         Under K.S.A. 2015 Supp. 77-621(e), courts conducting judicial review of administrative action must consider the harmless error rule.

         16.

         An electric utility steam generating unit permit application must include technical information about proposed emissions, emission controls, and estimated control efficiency under 40 C.F.R. § 63.5(d)(2) (2016). But the Mercury and Air Toxics Standards, 77 Fed. Reg. 9304 (February 16, 2012), envision that even after construction a source will have some period of time to refine its emission controls and demonstrate initial compliance.

         17.

         In reviewing the evidence in light of the record as a whole, the court shall not reweigh the evidence or engage in de novo review.

         18.

         The impact of a written instrument is determined by giving words in the instrument their plain and ordinary meaning.

         19.

         An appellant may not raise new issues in a reply brief.

         Appeal from Kansas Department of Health and Environment.

          Amanda W. Goodin, of Earthjustice, of Seattle, Washington, argued the cause, and Todd D. True and Anna M. Sewell, of the same office, and Robert V. Eye, of Robert V. Eye Law Office, L.L.C., of Lawrence, were with her on the briefs for appellant.

          Steve R. Fabert, assistant attorney general, argued the cause, and Jeffrey A. Chanay, chief deputy attorney general, was with him on the brief for appellee.

          William L. Wehrum, of Hunton & Williams, LLP, of Washington, D.C., argued the cause, and James D. Oliver, of Foulston Siefkin LLP, of Overland Park, and Howard Kenison, of Lindquist & Vennum, of Denver, Colorado, were on the brief for intervenor Tri-State Generation and Transmission Association, Inc., and William L. Wehrum and Henry V. Nickel, of Hunton & Williams, LLP, of Washington, D.C., and Derek T. Teeter, of Husch Blackwell LLP, of Kansas City, Missouri, and Mark D. Calcara and Mark A. Rondeau, of Watkins Calcara, Chtd., of Great Bend, were on the brief for intervenor Sunflower Electric Power Corporation.

          OPINION

          Luckert, J.

         In Sierra Club v. Moser, 298 Kan. 22, 310 P.3d 360 (2013) (Sierra Club I), this court reviewed the Kansas Department of Health and Environment's (KDHE's) decision to issue a prevention of significant deterioration (PSD) construction permit to Sunflower Electric Power Corporation (Sunflower). The permit, issued December 16, 2010, authorized Sunflower to build an 895-megawatt coal-fired electric generating unit, referred to as Holcomb 2, at a site near Holcomb where Sunflower already operates a coal-fired station, Holcomb 1.

         In Sierra Club I, this court held KDHE had failed to comply with the federal Clean Air Act, 42 U.S.C. § 7401 et seq. (2006), because it had not applied federal Environmental Protection Agency (EPA) regulations setting 1-hour emission limits for nitrogen dioxide and sulfur dioxide. 298 Kan. at 26. We therefore remanded the permit to KDHE with directions to apply the 1-hour emission limits. We also noted that KDHE would have to apply some other regulations that had become effective during the period of judicial review in Sierra Club I; those regulations-known as the Mercury and Air Toxics Standards, 81 Fed. Reg. 24420 (April 25, 2016); 77 Fed. Reg. 9304 (February 16, 2012)-relate to the control of pollutants collectively referred to as hazardous air pollutants. 298 Kan. at 61. As to other issues, we determined that "the scope of the proceedings on remand must be determined by KDHE." 298 Kan. at 62.

         On remand, KDHE issued an Addendum to the 2010 permit. Sierra Club now seeks judicial review of that action. It argues KDHE could not simply craft an addendum to the 2010 permit but was required to conduct an entirely new permitting process. Sierra Club also argues, for various reasons, the Addendum fails to incorporate newly promulgated regulations for greenhouse gases; fails to properly address the 1-hour emission limits for nitrogen dioxide and sulfur dioxide; fails to properly comply with the hazardous air pollutant limits and the Mercury and Air Toxics Standards; and fails to meet new source performance standards.

         We reject Sierra Club's various arguments and affirm KDHE's action.

         Facts and Procedural History

         Our decision in Sierra Club I, 298 Kan. at 26-28, discusses the events leading to KDHE issuing the 2010 permit. Highly summarized, as a part of that process, KDHE conducted public hearings and a public comment period during which Sierra Club officials, experts, and members participated. After the hearings and the final public comment period, KDHE responded to the comments of Sierra Club and others and eventually issued the final PSD permit. Sierra Club sought judicial review, and Sunflower and Tri-State Generation and Transmission Association, Inc., which holds an option from Sunflower for rights to a portion of the new power to be generated, intervened.

         The Sierra Club I decision also discussed the legal framework for the parties' dispute and explained the interrelationship between the federal Clean Air Act and the Kansas Air Quality Act, K.S.A. 65-3001 et seq., as well as applicable Kansas administrative regulations. See 298 Kan. at 43-47. In essence, the federal Clean Air Act sets up a regulatory system in which the federal EPA bears some responsibility, but the states hold primary responsibility for maintaining air quality within their borders. States must adopt a state implementation plan aimed at assuring the state meets national ambient air quality standards set by Congress and the federal EPA. In Kansas, KDHE administers and enforces Kansas' state implementation plan. See K.S.A. 2015 Supp. 65-3005(b)(1); K.A.R. 28-19-200(hhh) (2009).

         We further explained:

"Kansas' [state implementation plan] follows the [Clean Air Act] by requiring a facility to obtain a permit under the PSD construction permit program, the purpose of which is well-described by its title-the prevention of significant deterioration; it is this type of permit that is at issue in this case. The program applies to the modification or construction of a 'major emitting facility' that is or will be located in an attainment or unclassified area. See 42 U.S.C. § 7475(a) (2006); 40 C.F.R. § 52.21 (2012); K.S.A. 2012 Supp. 65-3029; K.A.R. 28-19-300; K.A.R. 28-19-350 (2012 Supp.); see also 42 U.S.C. § 7479(1) (2006) (defining 'major emitting facility'); 42 U.S.C. § 7479(2)(C) ('construction' includes 'modification'); K.A.R. 28-19-200(p) (defining 'construction').
"Under the PSD regulations, the owner of a proposed source must prove that the construction will not cause violations of certain air quality standards. In the [Clean Air Act], Congress charged the EPA with promulgating PSD regulations that would 'provide specific numerical measures against which permit applications may be evaluated, a framework for stimulating improved control technology, protection of air quality values, and fulfill the goals and purposes set forth' in the PSD program. 42 U.S.C. § 7476(a), (c) (2006). In PSD regulations promulgated under this authority, the EPA sets maximum allowable increases, or 'increments, ' for some pollutants based on a mathematical relationship to each pollutant's [national ambient air quality standards]. See, e.g., 75 Fed. Reg. 64, 864, 64, 885 (October 20, 2010). The EPA has also established de minimis thresholds which set specific values, in relation to each pollutant's [national ambient air quality standards], below which the pollutant is not considered to cause or contribute to a violation of the [national ambient air quality standards] or to an established increment. These increments and de minimis thresholds are then used by the states to calibrate their [state implementation plan] requirements. See Environmental Defense Fund v. Adm'r of United States E.P.A., 898 F.2d 183, 185 (D.C. Cir. 1990).
"In addition, if the facility is located in an attainment area, the owner must prove the proposed operations are in compliance with the best available control technology (BACT) requirements or, if the facility is located in a nonattainment area, the lowest achievable emissions rate technology (LAER). See 42 U.S.C. §§ 7475(a)(4), 7479(3), 7503 (2006); 40 C.F.R. §§ 52.21(b)(12), (j)(2) (2012); K.A.R. 28-19-350(b) (2012 Supp.) (incorporating by reference 40 C.F.R. § 52.21); US Magnesium, LLC v. United States E.P.A., 690 F.3d 1157 (10th Cir. 2012). The LAER requirement is applied in nonattainment areas because the [Clean Air Act] seeks to offset emissions increases in those areas with emissions reductions from other sources in the area. New York v. E.P.A., 443 F.3d 880, 883 n.1 (D.C. Cir. 2006) (citing 42 U.S.C. § 7503).
"If a permitting authority determines an owner has met these burdens and issues a PSD permit, the permitting authority must include limitations or conditions to ensure that emissions from the permitted facility: (1) will not cause or contribute to violations of the [national ambient air quality standards] established by the [Clean Air Act] and (2) will be controlled sufficiently to maintain existing air quality in the surrounding region. See United States v. Pacific Gas & Elec., 776 F.Supp.2d 1007, 1013 (N.D. Cal. 2011).
"It is undisputed that the proposed Holcomb 2 power plant is a facility subject to the PSD program. The proposed capacity makes Holcomb 2 a major emitting facility, and Holcomb is located in Finney County, which has been designated as an attainment area for numerous pollutants. See 40 C.F.R. § 81.317 (2012).
"Hence, the KDHE's permitting process included a [best available control technology] analysis, and the Holcomb 2 PSD permit established emission limits for Holcomb 2." Sierra Club I, 298 Kan. at 45-46.

         Based on the plain language in 42 U.S.C. § 7475(a)(3) (2006), 40 C.F.R. § 52.21(k) (2012), and K.A.R. 28-19-350(a), (b) (2012 Supp.), in Sierra Club I we held that Sunflower had to demonstrate that the Holcomb 2 project would not cause "air pollution in excess of any [national ambient air quality standards] even if those standards have not been incorporated into Kansas' SIP, unless the federal regulatory requirements indicate otherwise." 298 Kan. at 58. That meant KDHE needed to apply the new 1-hour nitrogen dioxide and sulfur dioxide national ambient air quality standards and had erred in not doing so during the permitting process. 298 Kan. at 58.

         That holding, we determined, meant we either did not need to resolve or could not resolve the parties' arguments (1) regarding the methodology used in modeling nitrogen dioxide and sulfur dioxide emission or (2) regarding whether KDHE erred in issuing the Holcomb 2 PSD permit without setting adequate hazardous air pollution emission limits. As to this latter point, the parties had disagreed as to whether the hazardous air pollution regulations in place at the time the PSD permit had been issued applied to Holcomb 2. But the parties agreed the Mercury and Air Toxics Standards, adopted after the issuance of the permit and while Sierra Club I was pending before this court, would apply to Holcomb 2 and would have to be considered if the PSD permit was remanded. 298 Kan. at 59-60.

         We next considered whether these holdings rendered moot Sierra Club's contention that the Holcomb 2 PSD permit did not adequately reflect the best available control technology for each regulated pollutant. We concluded we could not determine whether the issue was moot on the record before us. We noted that 40 C.F.R. § 52.21(r)(2) and K.A.R. 28-19-301(c) (2009) provide that a PSD permit expires if construction does not begin within 18 months of issuance. This time limitation seeks to ensure a new emitting source uses up-to-date technology. But during Sierra Club I proceedings, KDHE issued a stay of the construction deadline. 298 Kan. at 61-62.

         The stay order was not part of the record in Sierra Club I, however, and the parties had not argued about the impact remand proceedings would have on the best available control technology assessment. We, therefore, concluded "the scope of the proceedings on remand must be determined by the KDHE." 298 Kan. at 62. Because the remand proceedings might rely on KDHE's 2010 best available control technology determinations, we considered and rejected Sierra Club's various arguments regarding those determinations. 298 Kan. at 64-78.

         Shortly after the issuance of the Sierra Club I mandate, Sunflower contacted KDHE and asked whether the stay was still in place. KDHE responded: "The Stay Order continues in effect since the reversal and remand did not result in final disposition of the permit and the terms of that permit." Sierra Club challenged the lawfulness of the stay; nevertheless, KDHE continued the stay "until completion of the remand proceedings."

         During the remand, Sunflower did not modify its application or propose the use of new technology, and KDHE therefore determined it need only address this court's remand directions in Sierra Club I. KDHE issued a draft "Addendum to Air Emission Source Construction Permit" in January 2014. KDHE did not issue new or updated monitoring data or other documentation with the Addendum. KDHE opened a 30-day public comment period and held a public hearing in Garden City near the Holcomb site.

         Sierra Club and some of its members submitted written comments. Sierra Club's comments incorporated its 2010 comments and added other objections. Regarding the remand proceedings, Sierra Club asked for a longer public comment period and more public hearings, arguing "the truncated permit 'addendum' process proposed by KDHE" was an inadequate "substitute for a full new permitting decision."

         As to specifics of the draft Addendum, Sierra Club argued that, although the draft noted the new Mercury and Air Toxics Standards and other hazardous air pollutants regulations applied, it did not adjust limits from the 2010 permit and those limits were not as stringent as required by the new regulations. Sierra Club noted that KDHE had relied on outdated modeling conducted for the 2010 permitting process and the 1-hour nitrogen dioxide and sulfur dioxide limits were not sufficiently stringent. Finally, Sierra Club objected that the best available control technology determination for Holcomb 2 was dated and, during the intervening time since remand, similar facilities had consistently achieved emission limits lower than those set in the Holcomb 2 PSD.

         Sierra Club reiterated its position that Sunflower would have to "substantially change the design" of Holcomb 2 and that "KDHE's alleged 'stay' is unlawful and without effect." Sierra Club commented that "Sunflower must apply for a new permit, or at the very least must update its [best available control technology] determination to ensure that the plant it constructs incorporates the most current and most protective pollution controls, " including those for greenhouse gases governed by a regulation that became effective January 2, 2011. Sierra Club attached expert analysis to support its contentions.

         Sunflower also provided public comments. Relevant to the issues on appeal, Sunflower provided updated modeling data-dated February 2014-regarding emissions at the Holcomb site.

         On May 30, 2014, KDHE responded to the comments it had received. Responding to Sierra Club's comment about the best available control technology determination, KDHE wrote:

"[T]he December 16, 2010 permit is still under the initial 18 months from issuance of the permit to commence construction. Because of the ongoing litigation after issuance of the permit, the facility requested and was granted a 'stay' by the Secretary of KDHE's July 11, 2011 Stay Order effective June 1, 2011. The facility further requested confirmation on November 7, 2013 that the Stay was still in effect until completion of the remand decision. On November 12, 2013 the Secretary of KDHE's letter stated the Stay Order continues in effect since the reversal and remand did not result in final disposition of the permit and the terms of that permit. The facility will still have 12 months and 2 weeks to construct once the Stay is lifted before an application for an extension, and possible re-evaluation of [best available control technology], would be required."

         On the same day, KDHE issued an "Addendum to the December 16, 2010 Construction Permit." In its Responsiveness Summary, KDHE indicated the Addendum "supplement[ed]" the already issued permit. The Addendum, unchanged from the draft, provided that "[e]xcept as specified in this Addendum, all provisions of the permit issued December 16, 2010 remain in effect." The Addendum provided:

"2a. (last paragraph)
The owner or operator shall not emit or cause to be emitted [nitrogen oxides] emissions exceeding 1740 lbs/hour on a one hour block average basis, including during startup and shutdown.
"2b. (last paragraph)
The owner or operator shall not emit or cause to be emitted [sulfur dioxide] emissions exceeding 4089 lbs/hour on a one hour block average basis, ...

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