Environmental Defense v. Duke Energy Corp.

Congress included the NSPS provisions among the 1970 amendments to the CAA in order to control newly built emissions-producing plants as well as emission-increasing modifications to existing power plants. Environmental Defense, 411 F.3d at 542. According to the NSPS, modifications are measured using an hourly approach, and the EPA has the power to regulate “any physical or operational change to an existing facility” that increases the number of kilograms of pollutants per hour that are discharged into the air. 40 C.F.R. § 60.14(a) & (b); see also Environmental Defense, 411 F.3d at 542.

The 1977 amendments to the CAA enacted the PSD permit provisions. Environmental Defense, 411 F.3d at 543. The PSD provisions were intended to supplement shortcomings in the NSPS program by protecting air quality in areas that had already met or exceeded relevant pollution standards. Id. The PSD require companies to apply for a permit before starting construction on emissions-producing power plants. 42 U.S.C. § 7475 ; see also Environmental Defense, 411 F.3d at 543. However, Congress stated that “construction” for the purposes of the PSD includes any modifications as defined by the NSPS. Pub. L. No. 95-190, 91 Stat. 1393, 1402 (1977); see also Environmental Defense, 411 F.3d at 543.

The EPA passed a series of regulations in order to enforce the PSD provisions. 43 Fed. Reg. 26,380 (June 19, 1978); see also Environmental Defense, 411 F.3d at 543. The EPA’s 1980 PSD regulations stated that a PSD permit is required for any major modification of a power plant that produced a “significant net emissions increase.” 40 C.F.R. § 51.166(b)(2)(i) (1987); see also Environmental Defense, 411 F.3d at 544. Importantly, the EPA determines whether there has been a net emissions increase by considering actual emissions in tons per year. 40 C.F.R. § 51.166(b)(21)(ii); see also Environmental Defense, 411 F.3d at 544.

Congress specifically allocated the responsibility of review of CAA enforcement cases to the D.C. Circuit. 42 U.S.C. § 7607(b) ; see also Brief for Petitioner, at 50. A request for review should be filed in this court within 60 days of the disputed action. Brief for Petitioner, at 50 Other courts are not authorized to hear cases which should be properly brought in the D.C. Circuit in accordance with the statute. 42 U.S.C. § 7607(d) ; see also Brief for Petitioner, at 118.

Environmental Defense’s Argument

Environmental Defense first argues that, since this case involves a CAA issue, the proper venue was the D.C. Circuit. Brief for Petitioner, at 26. They contend that the Fourth Circuit overstepped its authority when it evaluated the meaning of “modification” in the PSD provisions. Id . According to Environmental Defense, Congress’s purpose in specifying a certain court for CAA cases was to delegate responsibility to a body with extensive knowledge and understanding of the CAA. Id . at 27. Additionally, Congress intended to ensure that “regulatory stability” and “national uniformity” are the benchmarks of CAA judicial review, so they chose one court to hear these cases in order to avoid conflicting decisions among jurisdictions. Id . at 38. Proponents of Environmental Defense’s opinion contend that a victory in the Supreme Court will tell power companies that they cannot circumvent proper authority when a regulation is contrary to their interests by making “an end-run on the appeals court.” Editorial, The Court and Clean Air, Wash. Post, May 16, 2006 at A16.

Environmental Defense also argues that the Fourth Circuit erred in its interpretation of “modification” under the PSD. Brief for Petitioner, at 3. According to Environmental Defense, when read correctly, the PSD provisions measure actual emissions in tons per year and do not use the NSPS method of measuring potential emissions by looking at hourly emissions capacity. Id. at 24. Environmental Defense cites a previous D.C. Circuit decision, Alabama Power v. Castle, in which the court decided that the PSD measures actual emissions. Id. at 2-3 (citing 636 F.2d 323 (1979)). In Environmental Defense’s view, the Fourth Circuit did not consider context, Congressional intent, and previous interpretations of the PSD when they ruled that the definition of modification mirrors the NSPS definition. Id. at 3, 38-40. Law professors in support of Environmental Defense argue that if the Fourth Circuit had followed the usual procedure for interpreting a statute by examining “statutory text, context, purposes, and [the] history of the Clean Air Act and giving proper deference to the EPA for its resolution of statutory ambiguities,” it would be clear that Environmental Defense’s interpretation of the PSD provisions is correct. Brief of Jared A. Goldstein, et. al. as Amicus Curiae Supporting Petitioners, at 8.

Further, Environmental Defense contends that the PSD language excluding a change in operating hours from the definition of a major modification was only meant to apply to plant procedure changes with no physical component. Brief for Petitioner, at 37. They view the analysis of the existence of a major modification requiring a PSD permit as a two step inquiry which evaluates first whether there is a physical change and then whether there is a change in actual emissions. Id. at 36. Using this standard they argue that Duke’s project clearly meets the criteria that make a PSD permit necessary, as the project includes physical construction that has the potential to increase operating hours, thus resulting in an increase in actual emissions. Id. at 50.

Duke Energy’s Argument

Duke argues that the Fourth Circuit did in fact have jurisdiction to rule in this case. Brief for Respondent, at 27. In their view, Congress only intended the D.C. Circuit to have exclusive jurisdiction over actions brought to enforce the PSD provisions, not in cases in which the issue is the interpretation of the provisions themselves. Id. at 26. Supporters of Duke say that if courts such as the Fourth Circuit cannot interpret regulations in this manner, this presents “serious constitutional questions regarding the availability of judicial review by preventing courts from carrying out their duty to say what the law is.” Brief of Washington Legal Foundation as Amicus Curiae Supporting Respondent, at 4. Duke also argues that there is no conflict with the statutory timing requirement. Brief for Respondent, at 28. In their view, the 60-day provision for bringing cases under the PSD would not have required them to bring their case within two months of the enactment of the PSD regulations because the question concerns the EPA’s novel interpretation of “modification,” which has only recently become an issue. Id.

Duke contends that Environmental Defense’s jurisdiction objection is nothing but a last minute effort to invalidate the Fourth Circuit’s decision after the Fourth Circuit refused to condone the interpretation of the rule advanced by Environmental Defense. Id. at 27. Duke says that it is unfair for Environmental Defense to invoke the procedural safeguards which mandate review in the D.C. Circuit within 60 days to protect what Duke considers to be a new EPA interpretation of the PSD, given that the EPA did not adhere to proper protocol for new interpretations of regulations when it changed its view of what the PSD provisions require. Id. at 29–30.

Duke also argues that a modification, as it is defined by the NSPS, is a necessary criterion for determining whether a project requires a PSD review. Id. at 31, 33. Under this definition, a project involves a modification when there is a “change [in] a unit’s basic emissions capacity.” Id. at 23. Duke says that this requires a change in the amount of pollution on an hourly basis. Id. According to Duke, this uniformity in definitions was dictated by Congress through the PSD statute, and also by the EPA in the definitions section of the PSD regulations. Id. at 23–24. Duke says that Congress made a conscious decision to use the NSPS definition in the PSD because they did not intend for the PSD to impose broad new requirements on already existing power plants. Id. at 24–25.

Duke advocates a different two-step inquiry for evaluating the necessity of a PSD permit. See id., at 23. Under their view, if a plant undergoes a modification as it is defined under NSPS, the next step in determining PSD applicability is to decide if the project constitutes a major modification. Id. Duke actually agrees with Environmental Defense that a major modification increases actual emissions. Id. However, in their view, an actual increase only occurs when there is an hourly increase in emissions because an “increase in actual emissions must be determined using the same representative period before and after the project.” Id. at 35. Duke contends that an extension of operating hours is not enough to constitute a major modification if there is no increase in hourly emissions. Id. at 23–24. According to Duke, in prior cases, even the Director of the EPA supported the view that an increase in operating hours was not a PSD modification. Id. at 36.