Greater Detroit Resource Recovery Authority and Combustion Engineering v. The United States Environmental Protection Agency

916 F.2d 317, 21 Envtl. L. Rep. (Envtl. Law Inst.) 20506, 1990 U.S. App. LEXIS 15556

• Court: Court of Appeals for the Sixth Circuit
• Decided: August 30, 1990
• Docket: 88-2269
• Status: Published

Opinions

GRAHAM, District Judge.

Defendant-appellant, the United States Environmental Protection Agency (EPA), appeals from the order of the United States District Court for the Eastern District of Michigan awarding attorney’s fees under the Equal Access to Justice Act, 28 U.S.C. § 2412. This litigation involves a municipal solid waste incinerator and steam generating plant owned by the Greater Detroit Resource Recovery Authority (GDRRA), a public body created by the cities of Detroit and Highland Park, Michigan. Plaintiffs-appellees are the GDRRA and Combustion Engineering, Inc., the contractor GDRRA retained to construct and operate the facility-

The Michigan Department of Natural Resources (MDNR), acting pursuant to authority delegated to it by EPA, granted Combustion Engineering a permit to construct the facility. GDRRA then issued bonds in the amount of $438,000,000 to finance the construction. Thereafter, EPA raised questions about the validity of the permit, specifically, whether MDNR had followed proper procedures in determining whether the facility’s sulfur dioxide emissions were subject to the best available control technology (BACT). Construction of the facility began on May 9, 1986. On May 20, 1986, EPA notified MDNR by letter that it had made a provisional determination that the State of Michigan had not followed proper procedures with respect to the GDRRA permit and that it was revoking its delegation of authority to MDNR for the purpose of instituting proceedings to revoke the permit.

On July 7, 1986, appellees instituted this litigation seeking a declaration that the EPA had exceeded its authority in attempting to revoke the GDRRA permit, and further seeking to enjoin the EPA from any future attempt to do so. The district court established an expedited schedule for discovery and the case was submitted on cross motions for summary judgment. One week prior to the scheduled oral argument on the motions, the EPA withdrew its May 20, 1986 letter, stating that based on the facts then known to it, it had no grounds to proceed with efforts to revoke the GDRRA permit. EPA then requested that the court dismiss the lawsuit as moot. In an opinion dated October 21, 1986, the district court found that the relief sought by the appel-lees was not moot because EPA refused to acknowledge the validity of the permit. The court then enjoined the EPA from attempting to revoke the permit based on any evidence known or discovered as of that date. EPA did not appeal that order. Thereafter, appellees moved for costs and attorney’s fees under Fed.R.Civ.P. 11 and the Equal Access to Justice Act, 28 U.S.C. § 2412. The district court found that the EPA was liable for attorney’s fees and expenses under the bad faith exception to the American Rule and granted appellees’ motions for attorney’s fees and expenses under 28 U.S.C. § 2412(b). The district court awarded $161,365.62 to GDRRA and $269,193.01 to Combustion Engineering.

The EPA contends inter alia that the district court’s award of attorney’s fees and expenses must be reversed because the court did not have subject matter jurisdiction over this litigation.

The standard of review on the issue of subject matter jurisdiction is de novo review. See Hilliard v. United States Postal Service, 814 F.2d 325 (6th Cir.1987). Furthermore, “every federal appellate court has a special obligation to ‘satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review’.” Bender v. Williamsport Area School District, 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89 L.Ed.2d 501 (1986), quoting Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 165, 79 L.Ed. 338 (1934).

Unless the statute under which a party seeks attorney’s fees contains an independent grant of jurisdiction, an appellate court must vacate an award of attorney's fees if the district court did not have subject matter jurisdiction over the litigation. Latch v. United States, 842 F.2d 1031, 1033 (9th Cir.1988). The Equal Access to Justice Act, 28 U.S.C. § 2412, does not contain an independent grant of jurisdiction, but instead specifically requires subject matter jurisdiction as one of the predicates of an award of attorney’s fees. Under 28 U.S.C. § 2412(b) a court may award reasonable fees and expenses to the prevailing party in any civil action brought by or against the United States “in any court having jurisdiction of such action.” The phrase “jurisdiction of such action” refers to subject matter jurisdiction, and the language of the statute requires an independent examination of that issue when a court undertakes consideration of an award of attorney’s fees even though the parties may not have contested that issue in the original proceedings or, as here, declined to appeal an earlier finding on that issue. See Lane v. United States, 727 F.2d 18 (1st Cir.1984); Antosh v. Federal Election Commission, 664 F.Supp. 5 (D.D.C.1987).

Two months after this litigation was commenced, the regional administrator of Region V, EPA issued a second letter dated September 19, 1986 rescinding the letter of May 20, 1986, in which he stated, “Despite my very grave concerns regarding the sulfur dioxide best available control technology decision made by the State of Michigan for the Detroit facility, there is an insufficient basis for U.S. EPA to go forward with any action to revoke the ... permit.” Thereafter, the government offered to settle the litigation by stipulating that EPA considered the permit and the Michigan BACT determination to be valid based on the known facts, but the EPA would not agree to a consent decree. The judgment rendered by the district court enjoined the EPA from any

action or attempt to revoke this permit on the basis solely of any evidence now discovered and facts known as of this date. This order does not preclude the EPA, based on additional evidence previously not available, new information, and/or new legislation, from doing what is appropriate or required at that time.

Since the court’s order granted no more relief than the EPA had offered to stipulate, it logically decided not to appeal the district court’s judgment.

In light of the procedural history of this case and the express language of 28 U.S.C. § 2412(b), we reject appellees' argument that principles of res judicata or collateral estoppel preclude appellant from raising the issue of subject matter jurisdiction. Thus, our review of the district court’s award of attorney’s fees under 28 U.S.C. § 2412(b) begins with the question of whether or not the district court had subject matter jurisdiction over the underlying action.

This litigation had its genesis in the EPA’s performance of its functions under the Clean Air Act, 42 U.S.C. § 7401 et seq. which establishes a combined federal and state program to control air pollution. Under this Act, the EPA promulgates national air quality standards and each state is required to develop and submit to EPA for approval a state implementation plan that provides for the attainment and maintenance of those standards. 42 U.S.C. §§ 7410(a)(1) and (2). In 1977, Congress added provisions to the Act which included a program for the prevention of significant deterioration (PSD) of air quality. 42 U.S.C. §§ 7470-7479. The PSD program is implemented through a preconstruction review and permitting procedure applicable to major emitting facilities. The permit, in turn, requires the application of the best available control technology. 42 U.S.C. §§ 7475(a)(3) and (4). A state is required to include a PSD permit program in its state implementation plan. 42 U.S.C. § 7410(a)(2)(D). If a state has failed to submit an approved PSD program, the EPA may nevertheless delegate its permit issuing authority to the state. 42 U.S.C. § 7410(c)(3); 40 C.F.R. § 52.21(u). Permits issued under such a delegation are considered to be EPA issued permits. See 45 Fed.Reg. 33,413 (1980).

The EPA has not approved a PSD program for inclusion in Michigan’s state implementation plan. In 1979, however, the EPA executed a written agreement delegating its PSD permitting authority to MDNR. That agreement provided for whole or partial revocation of the delegation if Michigan failed to properly implement the PSD program. It is within this regulatory framework that the MDNR issued a permit to the GDRRA, and it was the EPA’s revocation of its delegation of PSD authority with respect to that permit which generated this litigation.

In 1977, Congress amended § 307(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b)(1), so as to vest jurisdiction in the United States courts of appeals to review certain specified actions of the Administrator of the EPA and “any other final action of the Administrator under [the Act] ... which is locally or regionally applicable.” In Harrison v. PPG Industries, Inc., 446 U.S. 578, 100 S.Ct. 1889, 64 L.Ed.2d 525 (1980), the Supreme Court held that this amendment vested the courts of appeals with jurisdiction to review any and all final actions of the EPA under the Clean Air Act.

It is a well settled principle that where Congress establishes a special statutory review procedure for administrative action, that procedure is generally the exclusive means of review for those actions. Louisville and Nashville R. Co. v. Donovan, 713 F.2d 1243, 1246 (6th Cir.1983), cert. denied, 466 U.S. 936, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984). Accordingly, most circuits have held that the courts of appeals have exclusive jurisdiction to review actions of the Administrator of the EPA. See Mountain States Legal Foundation v. Costle, 630 F.2d 754, 757 (10th Cir.1980), cert. denied, 450 U.S. 1050, 101 S.Ct. 1770, 68 L.Ed.2d 246 (1981). This court so held even prior to the 1977 amendments. See Lubrizol Corp. v. Train, 547 F.2d 310 (6th Cir.1976). That position was reaffirmed in Motor Vehicle Manufacturers Association v. Costle, 647 F.2d 675, 677 (6th Cir.), cert. denied, 451 U.S. 907, 101 S.Ct. 1975, 68 L.Ed.2d 295 (1981). In the latter case, this court specifically held that review of the EPA’s adoption of a performance warranty regulation under the Clean Air Act was not authorized under the Mandamus Act, the Declaratory Judgment Act, or a district court’s federal question jurisdiction. Id. at 677, n. 3. We held instead that “[ajctions for declaratory relief or to enjoin the enforcement of a performance warranty regulation must be brought in the United States Court of Appeals for the District of Columbia.” Id. at 678.

The Court of Appeals for the District of Columbia Circuit aptly noted in Telecommunications Research and Action Center v. Federal Communications Commission, 750 F.2d 70, 78 (D.C.Cir.1984):

Furthermore, there are compelling policy reasons for holding that the jurisdiction of the Court of Appeals is exclusive. Appellate courts develop an expertise concerning the agencies assigned them for review. Exclusive jurisdiction promotes judicial economy and fairness to the litigants by taking advantage of that expertise. In addition, exclusive jurisdiction eliminates duplicative and potentially conflicting review, Investment Co. Institute [v. Board of Governors], 551 F.2d [1270] at 1279 [D.C.Cir.1977], and the delay and expenses incidental thereto.

The district court based its exercise of jurisdiction on a finding of final agency action and the statutory authority for subject matter jurisdiction under 28 U.S.C. § 1337. In regard to the finality of the agency action, the district court stated at page 14 of the memorandum opinion and order of October 21, 1986:

The first prong of the Abbott test [Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967) ] requires final agency action which defendants’ claim is lacking. This court finds that final agency action occurred on November 9, 1984, when the EPA through its delegation of authority granted a permit to C-E.

The granting of the permit may have been final agency action, but it was certainly not the agency action complained of by the appellees. Rather, appellees objected to the May 20, 1986 action of the EPA revoking its delegation of permit authority with respect to the GDRRA facility. The district court never addressed the question of the finality of that action.

The May 20, 1986 letter revoked the PSD delegation in order to permit the EPA to exercise control over further proceedings concerning the permit which were intended to occur after a notice of proposed permit revocation had been published in the Federal Register. To the extent that the letter revoked the delegation of the permit authority to MDNR for purposes of the GDRRA facility, it arguably constituted a final action. However, appellees have failed to indicate how the revocation of permit authority alone resulted in any injury to them. Appellees have pointed to no provision which would entitle them to have their permit status determined by MDNR rather than EPA. To the contrary, Congress expressly reserved to the EPA the authority to implement and enforce the PSD program notwithstanding the delegation of authority to a state in § 110(c)(3) of the Clean Air Act, 42 U.S.C. § 7410(c)(3). Even assuming that appellees had standing to object to the revocation of permit authority, the proper forum to contest this final agency action would be the court of appeals.

The letter also conveyed the intent of the EPA to commence proceedings to investigate the revocation of the permit. The May 20, 1986 letter informed MDNR that it had made a provisional determination that MDNR did not implement the PSD program with respect to the GDRRA facility, and that it intended to propose that the permit be revoked. This action did not have the effect of revoking the permit or even of instituting proceedings necessary to revoke the permit. This portion of the letter did not constitute final agency action.

The district court apparently found that the issuance of the permit on November 9, 1984, coupled with the threat to that permit flowing from the May 20, 1986 letter was sufficient to satisfy the requirements of final agency action. While we disagree with this reasoning, even assuming it was correct, we would then be compelled to find that exclusive jurisdiction to review such purported final agency action lies in this court, not in the district court.

The district court relied on jurisdictional provisions of the Clean Air Act in § 304(e) of the Act, 42 U.S.C. § 7604(e), which provide in relevant part:

Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any emission standard or limitation or to seek any other relief (including relief against the Administrator or a State agency).¹

She then found subject matter jurisdiction under 28 U.S.C. § 1337, which provides original jurisdiction in the district courts for actions arising under acts of Congress regulating commerce, reasoning that the Clean Air Act was such an act.

Where a statute vests jurisdiction in a particular court, such exclusive jurisdiction precludes the exercise of original jurisdiction in other courts in all cases covered by that statute. Telecommunications Research & Action Center, 750 F.2d at 77. Thus, district court jurisdiction under 28 U.S.C. § 1337 may be precluded by a statutory scheme of review. Donovan, 713 F.2d at 1245. It has been held that district courts possess no jurisdiction in Clean Air Act cases through the Declaratory Judgment Act, the Mandamus Act or the federal question jurisdiction provisions of 28 U.S.C. § 1331, since Congress has provided for exclusive review by the appellate courts. Telecommunications Research & Action Center, 750 F.2d at 77; Costle, 647 F.2d at 677. The reasoning which precludes the exercise of jurisdiction under the above provisions applies to the exercise of jurisdiction under § 1337. See Natural Resources Defense Counsel, Inc. v. Thomas, 689 F.Supp. 246 (S.D.N.Y.1988), aff'd, 885 F.2d 1067 (2d Cir.1989). Thus, the district court’s conclusion that jurisdiction could be exercised under § 1337 was in error.

Appellees argue, however, that this case comes within an exception to the general rule that exclusive jurisdiction lies in the court of appeals. Although the district court did not rest its finding of jurisdiction on such an exception, we will, nevertheless, examine the merits of this argument. Appellees’ argument is based on Leedom v. Kyne, 358 U.S. 184, 79 S.Ct. 180, 3 L.Ed.2d 210 (1958), in which the Supreme Court held that a litigant may bypass available administrative procedures where there is a readily observable usurpation of power not granted to the agency by Congress. As this court noted in Donovan, 713 F.2d at 1246:

Nearly all the cases which address the question of district court jurisdiction for nonstatutory review of administrative action recognize that in narrow circumstances some residuum of federal question subject matter jurisdiction may exist in the United States District Court, although apparently otherwise precluded by a comprehensive statutory review scheme.

The Leedom exception is narrow, and is invoked only in exceptional circumstances. Id. As this court said in Shawnee Coal Co. v. Andrus, 661 F.2d 1083, 1093 (6th Cir.1981):

The Leedom jurisdiction exception to the exhaustion doctrine is not automatically invoked whenever a challenge to the scope of an agency’s authority is raised. On the contrary, it is a narrow anomaly reserved for extreme situations.

In order to bring a case within the exception, it must be shown that the action of the agency was a patent violation of its authority or that there has been a manifest infringement of substantial rights irremediable by the statutorily prescribed method of review. See Leedom, 358 U.S. at 188-90, 79 S.Ct. at 183-84; Donovan, 713 F.2d at 1247; Telecommunications Research and Action Center, 750 F.2d at 78.

This limited exception to the exclusive jurisdiction of the courts of appeals is not invoked by the facts of this case. In a very similar situation, the Third Circuit recently refused to apply the Leedom exception in an action challenging the action of the EPA in issuing a cease and desist order based on a finding that a gas turbine cogeneration facility did not adequately reflect the best available control technology even though the State of Pennsylvania had issued a PSD permit for the facility. See Solar Turbines Inc. v. Seif, 879 F.2d 1073 (3rd Cir.1989). Solar Turbines argued in that case that the action of the EPA was ultra vires since it had previously approved Pennsylvania’s state implementation plan. Appellees advance a similar argument here.

The actions of the EPA in this case cannot be characterized as a patent violation of its authority. Indeed the EPA was able to justify its action by reference to applicable provisions of the Clean Air Act, the Code of Federal Regulations and the language of the document by which it delegated PSD authority to the MDNR. The agreement delegating PSD permitting authority to the MDNR contained the following provision:

If the EPA Regional Administrator determines that the State is not implementing or enforcing the PSD program in accordance with the terms and conditions of this delegation, the requirements of 40 CFR Section 52.21, or the Clean Act, this delegation ... may be revoked in whole or in part.

The district court found that the EPA lacked inherent authority to revoke its delegation of PSD authority because “Congress also specifically regulated when and how the EPA could revoke a state’s delegated authority if it found the state was not properly implementing its authority.” October 21,1986 Memorandum Opinion and Order, page 17. But we have been unable to find any law which would impose constraints on the EPA’s revocation of its delegation of PSD authority to a state. By statute the PSD permit remains an EPA-issued permit. Under § 110(c)(3) of the Clean Air Act, Congress expressly reserved to EPA the authority to implement and to enforce the PSD program despite the delegation of authority to a state. The delegation of PSD authority to the State of Michigan contains an express reservation of the right to revoke PSD authority. We conclude, therefore, that this is not one of those exceptional cases involving a readily observable usurpation of power not granted to the agency by Congress, a patent violation of agency authority or a manifest infringement of substantial rights irremediable by the statutorily prescribed method of review.

In conclusion, we find that the district court did not have subject matter jurisdiction and was without authority to award attorney’s fees to appellees under the Equal Access to Justice Act. The judgment of the district court granting the application of the Greater Detroit Resource Recovery Authority and Combustion Engineering for attorney’s fees and costs is reversed.

1 . This subsection is contained in the provisions governing citizen suits found in § 304 of the Clean Air Act, 42 U.S.C. § 7604. Under § 304(a)(2) of the Act, 42 U.S.C. § 7604(a)(2), the district courts have jurisdiction to entertain suits against the Administrator which allege the failure on the part of the Administrator to perform a nondiscretionary act or duty. In the present case, it was not alleged that the Administrator failed to perform a nondiscretionary act, and neither appellees nor the district court relied on § 304(a)(2) as a basis of jurisdiction.