Amicus Curiae Brief — Environmental Defense v. Duke Energy Corporation

6

must interpret the statutory term “modification” identically.

There is no question, though, that the regulations are not

uniform. Whereas the NSPS requirements-are triggered only

if there is a post-project increase in the hourly rate of

emissions from a unit, the PSD requirements are triggered

by an increase in a unit’s total annual emissions. By requiring

that the PSD regulations conform with the NSPS regulations,

the Fourth Circuit effectively invalidated those regulations

without jurisdiction to do so.

ARGUMENT

Il. THE FOURTH CIRCUIT’S DECISION CONFLICTS

WITH DECISIONS OF OTHER COURTS OF

APPEALS AND OF THIS COURT ON A MATTER OF

PUBLIC IMPORTANCE.

A. The Fourth Circuit’s Decision Conflicts With New

York v. EPA, tn Which the D.C. Circuit Upheld the

1980 PSD Emissions Test Effectively Invalidated by

the Court Below.

The Fourth Circuit’s decision is directly contrary to the

decision of the D.C. Circuit in New York v. EPA, issued nine

days after the Fourth Circuit ruled.* In rejecting a challenge

by industry (including Duke) to the PSD modification

regulations, the D.C. Circuit likewise rejected industry's

argument that “modification must have the same regulatory

meaning for NSR as prevailed for NSPS in 1977 [because]

Congress, by a cross-reference, used the same language in

both statutory contexts.” 413 F.3d at 19-20. The D.C. Circuit's

4. Although New York was brought to the Fourth Circuit's

attention on petition for rehearing, the court refused to modify its

ruling.

J

decision that EPA is not required to use the NSPS hourly

emission rate test in the PSD regulations cannot be squared with

the Fourth Circuit’s holding that the NSPS and PSD regulations

must have the same test for modifications. This case therefore

presents a conflict between the Fourth Circuit’s decision and

the authoritative decision of the D.C Circuit, which, as explained

below, has exclusive power to review the validity of EPA

regulations under the CAA. See infra Point II.

B. The Fourth Circuit’s Decision Conflicts With the

Decisions of Several Other Courts That Have

Recognized The Differences Between the Emissions

Tests under NSPS and PSD.

The Fourth Circuit’s decision upholding the district court's

interpretation of the PSD emissions test as necessarily identical

to the NSPS emissions test also conflicts with decisions of the

Seventh and First Circuits, recognizing that the tests can and

do differ. In Wisconsin Electric Power Co. v. Reilly, 893 F.2d

901 (7" Cir. 1990), for example, the Seventh Circuit noted that,

[t]o determine whether a physical change constitutes

a modification for purposes of NSPS, the EPA must

determine whether the change increases the facility’s

hourly rate of emission. 40 C.F.R. § 60.14 (1988).

For PSD purposes, current EPA regulations provide

that an increase in the fofal amount of emissions

activates the modification provisions of the

regulations. 40 C.F.R. § 52.21(b)(3) (1988).

893 F.2d at 905; see also id. at 915 (“unlike NSPS, PSD is

concerned with changes in fetal annual emissions, expressed

in tons per year”); Puerto Rican Cement, 889 F.2d at 296-99

(1980 PSD regulations triggered even if hourly rate of emissions

remained the same).

8

The Fourth Circuit’s decision is also contrary to the

_ dectsions of two district courts that have relied on WEPCo

and applied the PSD modification regulations as written, to

require an increase in annual, not hourly, emissions as a

predicate for application of the PSD permitting requirements.

See United States v. Cinergy Corp., 384 F. Supp.2d 1272,

1277 (S.D. Ind. 2005) (“The Court disagrees with ... the

Duke court that the EPA’s definition of ‘actual emissions,’

means that ‘a net emissions increase can result only from an

increase in the hourly rate of emissions.’”);° United States v.

Ohio Edison Co., 276 F. Supp.2d 829, 863-64 (S.D. Ohio

2003) (proposed change must “result in an increase in

emissions, also expressed in tons per year,” to trigger PSD).

These decisions reflect a reality that the Fourth Circuit

chose to ignore: that the divergent purposes of the NSPS

and NSR programs strongly suggest that Congress intended

the use of different emissions increase tests under the two

programs. The NSPS provisions of the CAA are intended to

ensure that new and modified sources use emission controls

that are at least as effective as the “best system of emissions

reduction which ... has been adequately demonstrated.”

42 U.S.C. § 7411(a)(1). This requirement is the same

regardless of the quality of air in the area where the plant is

located or the number of sources located in the area. In

contrast, the NSR provisions are concerned with maintaining

(in the case of PSD) and improving (in the case of NNSR)

air quality in areas where new or modified plants are located.

For example, the PSD provisions require that the effect of a

new or modified source on air quality in the region be

analyzed, 42 U.S.C. § 7475(a), while the NNSR provisions

5. The Seventh Circuit has granted Cinergy’s motion for

interlocutory appeal of this decision.

9

require such a source to obtain emissions offsets so that total

emissions will be sufficiently less after the source begins

operation, 42 U.S.C. § 7503(a)(1). No similar requirements

exist in the NSPS program.

EPA’s regulations simply reflect these differences between

the two programs. Because the NSPS program is primarily

concerned with the efficacy of emission controls, without regard

to the total amount of pollution emitted, the NSPS regulations

require an increase in the hourly emission rate as a prerequisite

for a major modification. See 40 C.F.R. § 60.14(b)(NSPS

emissions test based on rate of emissions “expressed as ky/hr’’).

On the other hand, because NSR is concerned with the total

amount of pollution being emitted, a modification that increases

total annual emissions triggers NSR requirements regardless of

whether the hourly emission rate is increased. See, e.g., 40 C.F.R.

§ 52.21(b)(2)(1), (3)(i), (21)G) (PSD emissions test based on

actual amount of emissions increase expressed in terms of fons

per year), see generally 57 Fed. Reg. 32314, 32316 col. | (July

21, 1992) (different emission increase tests reflect “the

fundamental distinctions between the technology-based

provisions of NSPS and the air quality-based provisions of

NSR”).

C. The Fourth Circuit’s Deeision is Contrary to

Chevron and Alabama Power, Which Allow EPA

to Interpret a Statutorily-Defined CAA Term

Differently in the NSPS and NSR Regulations.

The Fourth Circuit’s holding that EPA must construe a

statutorily-defined term identically in its NSR and NSPS

regulations is also contrary to Chevron U.S.A. Inc. v. NRDC,

467 U.S. 837, 863-64 (1984), and Alabama Power v. Costle,

636 F.2d 323 (D.C. Cir. 1979). In Chevron, this Court upheld

10

EPA’s authority to interpret a single CAA term differently in

its NNSR regulations than it did in its NSPS regulations.

At issue was EPA’s interpretation of the statutory term

“stationary source,” under 42 U.S.C. § 7411(a)(3), CAA

§ 111(a)(3),° as it applies to determining whether a physical

change at a facility results in an emissions increase that

triggers the NNSR modification requirements. EPA

interpreted “stationary source” to include all emissions

sources located at a single facility and allowing the facility

to net (or “bubble”) emissions increases and decreases across

sources. 467 U.S. at 840. Notably, at the time the NNSR

regulations were promulgated, EPA did not allow such netting

under the NSPS regulations,’ in accordance with the D.C.

Circuit’s decision in ASARCO, Inc. v. EPA, 578 F.2d 319

(D.C. Cir. 1978). See 45 Fed. Reg. 5617 (Jan. 23, 1980)

(“revok[ing] the bubble concept as a means of determining

what constitutes a ‘modified’ source for the purpose of

applying new source performance standards”).

On petition for review, the D.C. Circuit set aside the

NNSR regulations, finding that EPA was required to interpret

“stationary source” to preclude netting, as it had done in the

NSPS context. 467 F.2d at 841-42 (citing 685 F.2d 718,

726 (D.C. Cir. 1982)). This Court reversed, emphasizing

6. While the CAA § 111(a)(3) definition of “stationary source”

is not explicitly cross-referenced in the NNSR provisions, the Court

found that “it sheds as much light on the meaning of the word ‘source’

as anything in the statute.” 467 U.S. at 860.

7. As noted above, the NNSR regulations applicable to

modifications are in all relevant respects identical to the

corresponding PSD regulations at issue here. Compare 40 C.F.R.

§ 52.24(1)(5). (6), ({NC10) and (f)(13) with 40 C.F.R.§ $2.21(b)(2),

(b)(3), (b)(21) and (b)(23).

1]

EPA’s authority to define a single CAA term differently

depending on the regulatory program at issue:

Our review of the EPA’s varying interpretations

of the word “source” — both before and after the

1977 Amendments — convinces us that the agency

primarily responsible for administering this

important legislation has consistently interpreted

it flexibly — not in a sterile textual vacuum, but in

the context of implementing policy decisions ina

technical and complex arena. ... Moreover, the

fact that the agency has adopted different

definitions in different contexts adds force to the

argument that the definition itself is flexible,

particularly since Congress has never indicated

any disapproval of a flexible reading of the statute.

467 U.S. at 863-64. Thus, Chevron recognized that the same

language supported an emission increase test based on plant-

wide emissions for modifications under the NNSR

regulations and a dramatically different test prohibiting

“netting” under the NSPS regulations. The term at issue here,

“modification,” is defined in the same section of the CAA

(§ 111) as “stationary source” and must be governed by the

same interpretive rules.

Furthermore, the Fourth Circuit’s decision is contrary

to the D.C. Circuit’s decision in Alabama Power, which

upheld the bubble concept adopted by EPA under the PSD

regulations. 636 F.2d at 400-02. As in Chevron, the D.C.

Circuit’s analysis of the PSD bubble concept determined

“what types of industrial changes will be construed

as ‘modifications’ subject to PSD review requirements.”

Id. at 400. As noted above, the D.C. Circuit had previously

12

held the “bubble” concept to be unlawful under the NSPS

regulations. ASARCO, 578 F.2d at 329. In holding that EPA

was not only allowed but required to implement the PSD

requirements differently from the NSPS requirements, the

court concluded that “a bubble concept would be contrary to

the intent of the NSPS provisions, but such is clearly not the

case with regard to the PSD provisions.” Alabama Power,

436 F.2d at 402. The court explained that, although the

statutory definition of “stationary source” applicable under

PSD is the NSPS statutory definition found in CAA

§ 111(a)(3), id. at 395, EPA must interpret that definition

differently in implementing regulations under the NSPS and

PSD programs due to “differences in the purpose and

structure of the two programs.” /d. at 401-02."

Il. THE PETITION SHOULD BE GRANTED TO

PROMOTE THE INTERESTS IN CERTAINTY AND

UNIFORMITY UNDERLYING CAA SECTION

307(b)(2).

The Fourth Circuit’s decision deprives the States and

the regulated community of certainty about the applicable

PSD requirements, contrary to the purpose of § 307(b)(1).

The CAA forecloses any challenges to EPA’s PSD regulations

— which are “nationally applicable regulations” — except by

petition for review filed in the D.C. Circuit within 60 days

after promulgation of the regulations. CAA § 307(b)(1).

8. The Fourth Circuit erroneously relied on Rowan Cos. v.

United States, 452 U.S. 247 (1981), a case construing the provisions

of the Tax Code. The Rowan decision, however, relied upon the

explicit Congressional concern for “the interest of simplicity and

ease of administration” of the Tax Code, 452 U.S. at 255, which is

inapplicable here because of the different purposes behind the PSD

and NSPS programs.

13

Additionally, if a final EPA action “could have been”

challenged in the D.C. Circuit, such an action “shall not be

subject to judicial review in civil or criminal proceedings

for enforcement.” /d. at § 307(b)(2). The “twin congressional

purposes” in enacting § 307(b) were to “insur[e] that the

substantive provisions of the [regulation] would be uniformly

applied and interpreted and that the circumstances of its

adoption would be quickly reviewed by a single court

intimately familiar with administrative procedures.” Adamo

Wrecking Co. v. United States, 434 U.S. 275, 284 (1978);

see also United States v. Ethyl Corp., 761 F.2d 1153, 1157

(5" Cir. 1985) (“section 307(b)’s clear language and

Congress's manifest intent [was] to avoid protracted and

inconsistent adjudications over the validity” of nationally

applicable EPA regulations), cert. denied sub nom. Firestone

Tire & Rubber Co. v. United States, 474 U.S. 1070 (1986).

The decision below subverts these purposes and leaves

the States unsure of how to fulfill their obligations under

federal environmental statutes. States that have relied on the

validity of EPA’s PSD regulations — including the actual

annual emissions increase test for modifications — now face

uncertainty about the legality of their state implementation

plans (“SIPs”), which incorporate the annual emissions

increase test of the PSD regulations. If the Fourth Circuit's

decision stands, even after the window for judicial review

has closed, the States will no longer be able to rely on the

validity of EPA regulations they are required to enforce.

The result will be administrative confusion and effort wasted

on promulgating state regulations in mistaken reliance on

the validity of the federal programs being implemented.

The decision also guarantees, directly contrary to

Congressional intent, that federal CAA programs will not be

14

implemented uniformly across the fifty states. As discussed

above (pp. 6-12), the Fourth Circuit’s decision conflicts with

the decisions of other courts, which have given effect to the

differences between the NSPS and PSD emissions tests. Now,

though, the PSD requirements applicable in the Fourth Circuit

are different from those applicable in the remaining 45 states.

Nor can this disparity be fixed without this Court’s

intercession. In response to the Fourth Circuit’s decision, EPA

has proposed to change the PSD emissions test to correspond

to the NSPS emissions test in order to cure the serious disparity

and confusion created by the Fourth Circuit’s decision. See 70

Fed. Reg. 61,081, 61,083 col. 2 (Oct. 20, 2005) (“[Duke’s]

holding creates a potential disparity in the way we interpret the

program in the States in the Fourth Circuit compared to States

in other Circuits in the country,” creating need to “establish a[n

emissions] test consistent with the Fourth Circuit's holding”).

EPA’s decision is structurally unsound, for it effectively

supplants the D.C. Circuit’s exclusive authority to review the

validity of nationwide regulations, instead allowing the Fourth

Circuit to dictate the substance of EPA’s PSD regulations.

Furthermore, even EPA’s proposed rule does not satisfy the

Fourth Circuit’s mandate, for it seeks to maintain certain

differences in the NSPS and PSD regulatory definition of

“modification” because “[t]here are differences between the two

programs.” /d. at 61,090 col. 2. Thus, not even EPA’s proposed

rule change will comply with the Fourth Circuit's requirement

that the regulatory definitions be identical.

Nor is the mischief created by the decision below confined

to the Clean Air Act. Numerous other environmental statutes

contain provisions similar to CAA § 307(b), vesting the D.C.

Circuit with exclusive authority to review nationwide

regulations. See, e.g., 33 U.S.C. § § 271 7(a) (Oil Pollution Act):

15

42 U.S.C. § 300)-7(a)(1) (Safe Drinking Water Act); 42 U.S.C.

§ 6976(a)(1) (Resource Conservation and Recovery Act):

42 U.S.C. § 9613(a) (Comprehensive Environmental Response,

Compensation and Liability Act). The need for uniformity and

predictability in the nationwide effort to protect and conserve

environmental resources likewise animates these provisions.

Unless this Court scrutinizes the Fourth Circuit's arrogation to

itself of authority to pass on the validity of environmental

regulations, the uniformity and certainty of nationwide

requirements applicable under these other environmental laws

will also be threatened.

CONCLUSION

For the reasons set forth above and in the petition, the Court

should grant certiorari in this case.

Respectfully submitted,

Peter H. LEHNER E.iot Spitzer

Chief, Environmental Attorney General of the

Protection Bureau State of New York

CaiTutn J. HALLIGAN*

ROBERT ROSENTHAL Solicitor General

J. JaneD SNYDER Danie SMIRLOCK

Assistant Attorneys General Deputy Solicitor General

120 Broadway

New York, NY 1027]

(212) 416-8016

* Counsel of Record

Bitt Lockyer

Attorney General

State of California

CALIFORNIA Dept. or JusTICce

1300 I Street

P.O. Box 944255

Sacramento, CA 94244

RicHARD BLUMENTHAL

Attorney General

State of Connecticut

P.O. Box 120

Hartford, CT 06141

Cart C. DANBERG

Attorney General

State of Delaware

DELAWARE DePpARTMENT

OF JUSTICE

Carvel State Building

820 N. French Street

Wilmington, DE 19801

Lisa MADIGAN

Attorney General of the

State of Illinois

MatTHew DuNN

Chief, Environmental

Enforcement/Asbestos

Litigation Division

ANN ALEXANDER

Assistant Attorney General

and Environmental Counsel

188 West Randolph Strect

Suite 2001

Chicago, IL 60601

(312) 814-3772

G. STEVEN Rowe

Attorney General

State of Maine

6 State House Station

August, ME 04333

J. JosepH CurRAN, JR.

Attorney General

State of Maryland

200 Saint Paul Place

Baltimore, MD 21202

(410) 576-6300

Tuomas F. ReILty

Attorney General

Commonwealth

of Massachusetts

200 Portland Street, 3" Floor

Boston MA 02114

Mike Hatcu

Attorney General

State of Minnesota

MINNESOTA ATTORNEY

GENERAL'S OFFICE

900 Bremer Tower

445 Minnesota Street

St. Paul, MN 55101

Ketty AYoTTE

Attorney General

State of New Hampshire

Orricet oF ATTORNEY GENERAI

33 Capitol Street

Concord, NH 03301

17

ZULIMA V. FARBER Rosert J. SPAGNOLETTI

Attorney General Attorney General

State of New Jersey District of Columbia

Richard J. Hughes The Wilson Building

Justice Complex 1350 Pennsylvania Ave., N.W.

25 Market Street Washington, DC 20004

P.O. Box 80

Rosert A. REILEY

Trenton, NJ 08625 Assistant Counsel,

W.A. Drew EDMONDSON Commonwealth of Pennsylvania,

Attorney General Department of Environmental

State of Oklahoma Protection

2300 N. Lincoln Boulevard — Rachel Carson State

Suite 112 Office Building

Oklahoma City, OK 73105 P.O. Box 8464

Witwiam H. Sorrece Harrisburg, PA 17105

Attorney General

State of Vermont

109 State Street

Montpelier, VT 05609

Attorneys for Amici Curiae