Respondents Brief — Environmental Defense v. Duke Energy Corporation

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| No. 05-848 -

Jn the Supreme Court of the Gnited States

ENVIRONMENTAL DEFENSE, ET AL., PETITIONERS

DUKE ENERGY CORPORATION, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AS

RESPONDENT SUPPORTING PETITIONERS

PAUL D. CLEMENT

Solicitor General

Counsel of Record

SUE ELLEN WOOLDRIDGE

Assistant Attorney General

THOMAS G. HUNGAR

Deputy Solicitor General

ANN R. KLEE

General Counsel

CHET M. THOMPSON

Deputy General Counsel

GRANTA Y. NAKAYAMA

Assistant Administrator JAMES A.FELDMAN —

THOMAS W. SWEGLE Assistant to the Solicitor

CAROL S. HOLMES General

David W. SCHNARE KATHERINE J. BARTON

ALAN DION JASON A. DUNN

Attorneys Attorneys

United States Environmental Department of Justice

Protection Agency Washington, D.C. 20530-0001

Washington, D.C. 20460 (202) 514-2217

FILED —

15 JUL 2.1 2085

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QUESTIONS PRESENTED

In this civil enforcement action under the Prevention of

Significant Deterioration (PSD) provisions of the Clean Air

Act, 42 U.S.C. 7401 et seg., the court of appeals held that the

Environmental Protection Agency (EPA) regulations con-

struing the statutory term “modification” for purposes of the

PSD program must be given the same meaning as EPA’s

regulations construing that term for purposes of the separate

New Source Performance Standards (NSPS) program. The

questions presented are:

1. Whether the court of appeals’ decision contravenes

Section 307 of the Clean Air Act, 42 U.S.C. 7607, which pro-

vides that nationally applicable regulations issued by EPA to

implement the Clean Air Act may be reviewed only through

properly filed petitions for review in the D.C. Circuit, not in

an enforcement action.

2. Assuming the answer to the first question is no, the

following question is presented: whether the Clean Air Act,

which defines “modification” in both the PSD and NSPS

programs as a physical or operational change that “increases”

emissions of pollutants, requires EPA to measure emission

“increases” under the PSD program in the same manner as it

measures emission “increases” under the NSPS program.

(1)

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TABLE OF CONTENTS

Page

Ns 5S caccecccdccucsvocedeyasnecdseeteseer 1

SE ESTEE RC PENNE E SOP STO STEEL YO ae 1

Statutory and regulatory provisions involved ............. 2

ER HiNCca Ss ease euddee ahs be bbbds bhp ktwkis eons 2

NT INOS 5 oso o'o.c000 savevidieeccseessicsion 12

Argument:

I. The court of appeals lacked jurisdiction over the claim

that the statute requires the same regulatory definition

of “modification” in the NSPS and PSD programs ...... 17

A. If review of an agency action “could have been

obtained” in the D.C. Circuit under Section

307(b)(1), such review may not be had as a defense

to a civil enforcement action ...................... 17

B. The claim that the PSD regulations must be

consistent with the NSPS regulatory definition of

“modification” goes to the validity of the PSD

regulations and could have been heard by the D.C.

RE add Keds Re cebd cies bbenbdededicncdebnavee 19

1. The only reasonable construction of the PSD

regulations is that a physical change that

increases a source’s hours of operation is a

ME, dentesckintevntmasaatiecetndan 20

2. The “hours of operation” exclusion does not

support the court of appeals’ conclusion that

the regulations can be read to require that

only an hourly-rate increase in emissions is a

EE, cick it ad dnd Nha deena okaei 25

(III)

TABLE OF CONTENTS—Continued: Page

3. Even under the district court’s reading of

the “hours of operation” exclusion, there

are inconsistencies between the treatment

of “modification” in the PSD and NSPS

PRED 5 cv cccdevccundsbidedseeaevanuns 29

4. Because review of the claim that the PSD

regulations must be consistent with the

NSPS regulations “could have been

obtained” in a petition for review, that

claim was precluded here ................-. 31

II. The court of appeals erred in holding that EPA

lacks discretion to apply a regulatory test for PSD

“modifications” that differs from the NSPS

gS rrr eer me font ore ee 35

A. EPA may interpret the statutory definition of

“modification,” including the ambiguous term

“increases,” differently to effectuate the

distinct purposes of the separate PSD and

Fe IN 5.0 op ns cntndboddnrenecadovenss 35

B. Congress’s use of the same definition of

“modification” in the provisions governing

NSPS and PSD does not eliminate EPA’s

discretion to resolve ambiguities in that

definition in different ways for each program .... 37

CORSE © cc ccccdccdasicccecssceteseonnsedseumeuee 50

ROE ocwcccccctccivcccovactetatsseussieeneaee la

TABLE OF AUTHORITIES

Cases:

Abbott Labs. v. Young, 920 F.2d 984 (D.C. Cir. 1990) ... 46

Cases—Continued: Page

Adamo Wrecking Co. v. United States, 434 U.S. 275

EE Udbelicddiinenchive dacbenbeosenectanendese 18, 32

Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir.

ie ieee k id wid bee cuae aula é 3, 41

Alaska Dep't of Envtl. Conservation v. EPA, 540 U.S.

ee ie enaeae 3

Atlantic Cleaners & Dyers v. United States, 286 U.S.

TT (citi ntl, tt deed ekicubtsniadesve 39, 40, 49

Barnhart v. Thomas, 540 U.S. 20 (2008) .............. 38

Chemical Mfrs. Ass'n. v. EPA, No. 79-1112, 1999 WL

1338364 (D.C. Cir. Dec. 15,1999) .............. 32, 34

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837

MEE Sebiddenncsccecnendtecccdcesesesees passim

Comite Pro Rescate De La Salud v. Puerto Rico

Aqueduct & Sewer Auth., 888 F.2d 180 (ist Cir.

Dalai n aed cen tvbadeGebdeseebabeneveceeses 46

Connecticut Coastal Fishermen’s Ass'n v. Remington

Arms Co., 989 F.2d 1305 (2d Cir. 1993) ............. 46

District of Columbia v. Carter, 409 U.S. 418 (1973) ..... 41

General Dynamics Land Sys., Inc. v. Cline, 540 US.

DT Cen icdacbbeidps he eeenGesanbarececeacecs 41

Harrison v. PPG Indus., Inc., 446 U.S. 578

REESE Sere oe ee 17, 18, 19

Helvering v. Reynolds, 313 U.S. 428 (1941) ........... 50

Helvering v. Stockholms Enskilda Bank, 293 U.S. 84

DM MASUMe dee Dacuebawkbedsned6eéGnnscecccce 40

Household Credit Servs. v. Pfennig, 541 U.S. 232

SE Shen hOndeedbbbnnsadedtedecediecdccercece 38

Lubrizol Corp. v. Train, 547 F.2d 310 (6th Cir. 1976) ... 18

Cases—Continued: : Page

National Cable & Telecomms. Ass’n v. Brand X

Internet Servs., 125 S.Ct. 2688 (2005) .............. 44

NRDC vy. EPA:

512 F.2d 1861 (D.C. Cir. 1975) 2.0... cece ccc ccccce 18

— ie Ff) ek | | errr errr 46

New York v. U.S. EPA, 413 F.3d 3 (D.C. Cir.

PED Nkok Sd dune Cunchietiwnrecidnseeentacts passim

Northern Plains Res. Council v. United States EPA,

645 F.2d 1349 (9th Cir. 1981) ..........ccceecccees 49

Pharmanex v. Shalala, 221 F.3d 1151 (10th Cir.

SE iadtiidubas dimenbadsideddnadebadebaiaien ae wibn 46

Potomac Elec. Power Co. v. EPA, 650 F.2d 509 (4th

Cir. 1981), cert. denied, 455 U.S. 1016 (1982) ..... 42, 48

Puerto Rican Cement Co. v. United States EPA, 889

PTD occ. océcnesdsenseudnsnd 24, 29

Robinson v. Shell Oil Co.:

ED - cust dvidaudtccsecccesecs 40, 45, 46

70 F.3d 325 (4th Cir. 1995), rev'd, 519 U.S. 337

ST aU séccenadciuhsancweecdunséinedaekhaese 45

Rowan Cos. v. United States, 452 U.S. 247

PY dgnnéucdsbenceeabdbaastusth tant 10, 16, 42, 43

Sierra Club v. Ruckelshaus, 344 F. Supp. 253 (D.D.C.

1972), aff’d without opinion, 4 Env’t Rep. Cas.

(BNA) 1815, No. CIV. A. 1031-72 (D.C. Cir. Nov. 1,

1972), aff’d by an equally divided court, 412 U.S.

BER GEBGED cv cccecccssuscccccsenessenecsnecoseccess 3

SKF USA, Inc. v. United States, 263 F.3d 1369 (Fed.

CUR. BREED a ccccveccccccccuccccccccccccesccesenes 46

Vil

Cases—Continued: Page

United States v. Cleveland Indians Baseball Co. , 532

DEED. cdnobadnddccesccsunabcodeune sd 40, 43

United States v. Louisiana-Pac. Corp., 682 F. Supp

AMEE 2: ced detuceetibnneecnbheneben 24

United States v. Ohio Edison Co., 276 F. Supp. 2d

I ne een ndaeh 29

United States v. Pornes-Garcia, 171 F.3d 142 (2d

Cir.), cert. denied, 528 U.S. 880 (1999) ............. 46

Wachovia Bank v. Schmidt, 126 S. Ct. 941 (2006) ...... 41

Whitman v. American Trucking Ass'ns, 531 U.S. 457

DED dendadviiveccetdndsauieseweotactensecunee 2

Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901

DEED S64kb6ESEsscovecveehanncceses passim

Statutes and regulations:

Age Discrimination in Employment Act of 1967,

ED « cienvcusdhmaceecnbiteeMadnh seed 41

Civil Rights Act of 1964, Tit. VII, 42 U.S.C. 2000e

SOE. kc bbek ida vctcccnsséesedittenesteseesi 41,45

SED nicuiucduencceaadkvedciink aces 45

Clean Air Act, 42 U.S.C. 7401 et seg. ............ passim

DUE pds ccbepasamendents eeumdneeuen 47

SED ciududcvedectcbésecécnesenumia 2

SE EEE Scnupcdvesncaccueceueneessasae 2

SLE Kinks doueceeesoetednss stented 2

SE bb b0 06 cee ck chavaddnbindsabiads 2, 48

DT nin detcbeiebeunpaieesdcelenees 4, 39

Se EE cocceccdcanesehuscsocvenes 36, 47

Vill

Statutes and regulations—Continued: Page

LEY évcdopcipacehedasmeaeacnes 3, 37, 46, 49

SEED © ccwseissediécenusiccersedes 3, 47, 49

SO IED | Kndcdecednicgesdbicceneusaceuts 47

SD DEED cewsstedeccddwoséninécvacwias 3, 47

GRE OED cons vectevetitiesevescivescadns 47

EE '6.b 0k. 000 sc ccduneelasdeee denen wéoute 46

SEED. | ducdncckcdecuceahevisdccnnes 3, 5, 36

er 3

SRE CUED. cvrccevcecedécvevatesedencense 46

SP HD ecccccketedscacdadevecteonnbe 3, 49

GPU CUUUEED Sc ccvccccvdicccdcnscessovasinns 3

es SEED ba nccrinccdgeseorncnentenavewes 49

Se PD ov cecndvwcccduncscacctussédes 49

. ED . sc omncedsccedncsccuscneenconedesn 5

Ss COED dh scccvacscvcsosécene 4, 15, 36, 39

SEED . wand eqcunddcddcdsecetuhentobeush 3

es PD ncn ce cccdvevecndcéecceswascedecs 3

42 U.S.C. T607(b) (§ B07(b)) 2... eee eee eee eee 11, 18

42 U.S.C. 7607(b)(1) (§ 307(b)(1)) ....... 8, 12, 17, 31, 32

42 U.S.C. 7607(b)(2) (§ 307(b\(2)) .......-..--- passim

GUE COPS se ktccisccwendcectecne seve 46

GR SEED cenccccdésnsssveqesnccesees 17

GED naveccevcccseteddsoencceendeseuy 18

i SE. ov bceveccscccsssccbossxiceds 12

Clean Air Act Amendments of 1970, Pub. L. No. 91-

IEE Gddduccdawenekswand désdkedceecus 48

Statutes and regulations—Continued: Page

Clean Air Act Amendments of 1977, Pub. L. No. 95-

MRE beevcccudusbdskadodsinasiesesoctes 2

Resource Conservation and Recovery Act of 1976, 42

EE oi arc ects cdbedenstisesetases 46

Safe Drinking Water Amendments of 1977, Pub. L.

No. 95-190, § 14(a)(54), 91 Stat. 1402 ............... 36

Sherman Act, 15 U.S.C. 1 et seg. .......... 2c cece eeeee 40

Pe ES O pddcdeddawedcddsbencdeietdésconees 40

pe i ot errr e enevisdudwesdsteakes 40

PE EEE envoccconewwnntevidatecesadanes 46

SPEED abévdces de snvcuashcddedubeesecannr 46

RED Ghd gdbdadébecddsbcbdedatncsasddaoes’ 4)

EEE nd ndUbnddd chobicccee cansdesteekern? 41

40 C.F.R. (1987):

Section 51.24 (1981) ...............-. atensenwedes 4

RIE Senatcéccovctukessedsdneandsanubbos 4

SEED é de cndctncdaddacpidecdatsobad 4

Section 51.166(a)(7)(iv)(c) (2003)... 6. eee cece eee ee. 8

ss Se wn sc unéneceapeaeetnumeee 31

IEEE g0ciscbseccveseudedcheseaseie 31

Section 51.166(b)(2)i) ............46. 20, 22, 23, 26, 30

Section 51.166(b)(2)ii)(f) .........222.0.. 5, 24, 26, 31

Section 51.1GG(DMSMi) .. wee cc eee ccc eee eeees 23, 30

Section 51.166(b)(3)G)M@) 2.2... eee eee ee eee 5, 6, 21

IE 654 vids cducededuhdseddcsenebds 6

Section 51.166(b)(21) (1998) .........-ccceceeeceees 25

Section 51.166(b)(21)Gi) .. 2... eee eee eee eee 6, 22

Statutes and regulations—Contin ved: Page

Section 51.166(b\(21)iv) 2... 2 eee ee eee ee 6, 25

Section 51.166(b)(21)(iv) (1998) 22... eee eee eee. 8

Section 51.166(b)(21)(v) (1993) ...............2.006. 7

Section 51.1GG(DMZBMI) ow. cc ccc ccc vcces 22, 30

Section 51.166(b)(32) (1993) ..... 2... cece cece eens 8

RID 6.060606. 6 6000-066 6s cdcvteetbecnsede 5

SEE “vnc n cg chinde dine eneneaenenene 31

BRD boc queens eesiW ise raeecorrsneseuds 31

RR Be ate SAREE G ARE Rete AR HALOS 7,21

I 65h da cccvdbtanctidecncenes 7, 21, 22

Section 60.14(e)(2) .......... cece eee eee pescesedes 31

Section 60.14(h) (1993) ........cccccccccccccccceees 7

N.C. Admin. Code tit. 15A r.2D.0530 (1994) ............ 4

S.C. Code Ann. Regs. 61-625, std. 7 (Supp. 2005) ........ 4

Miscellaneous:

123 Cong. Rec. (1977):

CTE bd ccccncepees oscnecbdsccwcaseeesesasonsd 49

DEE: padkbreduvecndenessdivassaudesnaneaioaks 44

TEER. kd cosy ddansees adsndcueddaeucceoenesusd 45

39 Fed. Reg. 42,510 (1974) ......... ccc ccccccceescnves 3

41 Fed. Reg. (1976):

PP. 56,767-56,768 . 2... eww ccc cece eeeceeeeeeees 18

GED avbenccccccasessccciveesesssccsesvestve 19

43 Fed. Reg. (1978):

DTD cbccncndccvcecccccssdvebesosecevtecneees 4

Miscellaneous—Continued: Page

45 Fed. Reg. (1980):

DP GRE covcvvcccccccececcsesecccsccescussoseoss 4

DL EEDG cisevcccccressoveversececoeseveveveeses 27

TED co cccccccdccccccccsesstcesséenessecesic 23

DRE. 6005 $e cr ce sescccessescereesecoeceteses 48

47 Fed. Reg. (1982):

GEE bbcccccccvccccccesevevcvecsccecoecooecces 5

56 Fed. Reg. 27,633 (1991) ....... cc cece eeeneceeeee 6,7

57 Fed. Reg. (1992):

ED b4 bb deviodedossccusaconsscvgpeceuees ts 4,7

SD heb sou dicvaedses cvecvacsseseces 8, 25, 26, 48

REET .Cebsnecccddcovorseveccendseedsersdewoete 7

DEED. cap on wodednsebeesuscvedsasenncsseanedice 7

EEE dxctddesuphecdsondenwoacassddeccseens 24, 28

60 Fed. Reg. 51,923 (1995) .......... cece cece cece eee 5

61 Fed. Reg. (1996):

REE Ueedewecedivesebeovesicessoestveercenes 33

ED ip dove dsiceccconvavedivcsedee 8

PT incindedbthbonsestdbessstecnnsndestebens 33

63 Fed. Reg. 57,356 (1998) ........ ccc ce cece eee eaeee 12

67 Fed. Reg. (2002):

DE Keb edcedccdwoscecesceddacaees penecen pes 8

ED pn dbeerdsedeestceessiovesdéeenses 8

RD beh sebavandddcvanceduresvbee dees sede 8

70 Fed. Reg. (2005):

EY aekkNEdeu Cp ovcnecensseceoseennseesoncee 12

XII

Miscellaneous—Continued: Page

ARE 55d née eyed dpabiacdnaasioketanhene 8, 11

DE cciccentepeoadesseuvedesoas weaawakaeenes 12

EEE bv Sd ceues padevedhekbeinthesécelewsaguin 12

UE nicicadss chk dav iinenesdcesameebwnamed 8, 33

ee 12

H.R. Rep. No. 294, 95th Cong., 1st Sess.

EE cb ed ddan sonanceoedcudbckeneobecon dpaacter 18

S. Rep. No. 1196, 91st Cong., 2d Sess. (1970) .......... 18

In the Supreme Court of the Gnited States

No. 05-848

ENVIRONMENTAL DEFENSE, ET AL., PETITIONERS

DUKE ENERGY CORPORATION, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AS

RESPONDENT SUPPORTING PETITIONERS

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-19a) is

reported at 411 F.3d 539. The opinion of the district court

(Pet. App. 22a-84a) is reported at 278 F. Supp. 2d 619.

JURISDICTION

The judgment of the court of appeals was entered on June

15, 2005. A petition for rehearing was denied on August 30,

2005 (Pet. App. 20a-21a). On November 17, 2005, the Chief

Justice extended the time within which to file a petition for a

writ of certiorari to and including December 28, 2005, and the

petition was filed on that date. The petition for a writ of cer-

tiorari was granted on May 15, 2006. The jurisdiction of this

Court rests on 28 U.S.C. 1254(1).

(1)

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

The relevant statutory and regulatory provisions are set

forth in an appendix to this brief: App., infra, la-23a.

STATEM ENT

This case is a civil enforcement action brought by the

United States against respondent Duke Energy for illegally

modifying generating plants without complying with the Pre-

vention of Significant Deterioration (PSD) program of the

Clean Air Act (CAA), 42 U.S.C. 7401 et seq.

1. The CAA was enacted “to protect and enhance the

quality of the Nation’s air resources so as to promote the pub-

lic health and welfare and the productive capacity of its popu-

lation.” 42 U.S.C. 7401(b)(1). It directs the U.S. Environmen-

tal Protection Agency (EPA) to promulgate National Ambient

Air Quality Standards (NAAQS) specifying allowable concen-

trations of air pollutants. 42 U.S.C. 7408-7409; Whitman v.

American Trucking Ass’ns, 531 U.S. 457, 462 ‘2001). Each

State must develop a “State implementation plan” (SIP) to

achieve and maintain the NAAQS. E.g., 42 U.S.C. 7410; Un-

ion Elec. Co. v. EPA, 427 U.S. 246, 249-250 (1976).

In 1970, Congress added the New Source Performance

Standards (NSPS) program, which directs EPA to promul-

gate technology-based performance standards for new or

modified facilities in certain categories of stationary sources.

42 U.S.C. 7411. The NSPS program is intended to ensure that

pollution from new and modified emissions sources will be

controlled. Thus, its standards are based on application of the

best demonstrated system of emission reduction across par-

ticular industries and across the country, regardless of the

actual effect of a source’s emissions on local air quality. /bid.

The NSPS program “was not entirely successful.” Pet.

App. 3a. In 1977, Congress enacted the Clean Air Act Amend-

ments of 1977, Pub. L. No. 95-95, 91 Stat. 685, which estab-

lished a statutory PSD program.’ The PSD program is part

of the larger New Source Review (NSR) program, which also

includes a nonattainment component for areas not satisfying

ambient air standards. 42 U.S.C. 7501-7508. The nonattain-

ment NSR program is not directly at issue in this case.

The PSD program is intended to prevent significant dete-

rioration of air quality in areas other than the nonattainment

areas (viz. where ambient air quality standards are already

being met and in unclassified areas), while also fostering eco-

nomic growth in a manner consistent with the preservation of

existing clean air resources. 42 U.S.C. 7470(1) and (3); Alaska

Dep’t of Envtl. Conservation v. EPA, 540 U.S. 461, 470-471

(2004); Alabama Power Co. v. Costle, 636 F.2d 323, 346-351

(D.C. Cir. 1979). The PSD program directly addresses the

impact on ambient air quality resulting from new construction

of, and modifications to, pollutant-emitting facilities in such

areas. 42 U.S.C. 7470, 7475(a)(3).

The core provision of PSD provides that “[nJo major emit-

ting facility * * * may be constructed in any area to which

[the PSD provisions] appl[y] unless” various requirements are

met. 42 U.S.C. 7475(a) (emphasis added). Those require-

ments include obtaining a permit setting forth emission limi-

tations and applying “best available control technology”

(BACT). See 42 U.S.C. 7475(a)(1) and (4); 42 U.S.C. 7479(3).

The PSD provisions apply to “construct{ion]” of facilities,

and they further provide that “[t]he term ‘construction’ * * *

’ In 1974, EPA had established a regulatory PSD program as a result of a

lawsuit, Sierra Club v. Ruckelshaus, 344 F. Supp. 253 (D.D.C.1972), aff’d

without opinion, 4 Env’t Rep. Cas. (BNA) 1815, No. CIV. A. 1031-72 (D.C. Cir.

Nov. 1, 1972), aff'd by an equally divided court, 412 U.S. 541 (1973). See 39

Fed. Reg. 42,510 (1974). The 1977 Amendments “drew upon, expanded, and

superseded” that earlier regulatory program. New York v. U.S. EPA, 413 F.3d

3, 12 (D.C. Cir. 2005).

includes the modification (as defined in Section 7411(a) of this

title) of any source or facility.” 42 U.S.C. 7479(2)(C) (empha-

sis added). Section 7411(a) (which is one of the statutory pro-

visions applicable to the NSPS program) defines the crucial

term “modification” as:

any physical change in, or change in the method of opera-

tion of, a stationary source which increases the amount of

any air pollutant emitted by such source or which results

in the emission of any air pollutant not previously emitted.

42 U.S.C. 7411(a)(4).

Thus, determining whether a planned activity is a “modi-

fication”—and is therefore “construction” subject to the PSD

permitting requirements—involves a two-step process: (1)

determining whether a project is a physical or operational

change; and (2) if so, determining whether the change in-

creases emissions or results in the emission of new pollutants.

2. EPA promulgated regulations to implement the statu-

tory PSD program in 1978. 43 Fed. Reg. 26,380 (1978). It

revised those regulations in 1980, 1992, and 2002. The Duke

projects that are the subject of this enforcement action were

undertaken between 1988 and 2000. Thus, the applicable reg-

ulations are (a) the 1980 regulations, 45 Fed. Reg. 52,676,

which were recodified in 1987, 40 C.F.R. 51.166; and (b) the

1992 regulations, 57 Fed. Reg. 32,314; 40 C.F.R. 51.166

(1993).° Both versions determine whether a change has in-

* EPA’s 1980 PSD regulations setting forth the minimum requirements for

EPA-approved state PSD programs were originally promulgated at 40 C.F.R.

51.24 (1981) and were later redesignated at 40 C.F.R. 51.166 (1987). Unless

otherwise indicated, this brief cites to the 1987 recodification, as did the court

of appeals. Both the North and South Carolina SIPs, which provide the law

underlying the enforcement actions in this case, include EPA-approved PSD

programs that are based on the requirements of those EPA regulations. See

N.C. Admin. Code tit. 15A r.2D.0530; S.C. Code Ann. Regs. 61-62.5, std. 7; see

also 47 Fed. Reg. 7836 (1982) (approving original North Carolina PSD

creased emissions solely by applying an actual annual emis-

sions test to the types of projects at issue in this case.

a. By statute, PSD applies to the construction or modifi-

cation of “major emitting facilit{ies],” defined by reference to

specified types of stationary sources. 42 U.S.C. 7475(a),

7479(1). EPA’s PSD regulations require a pre-construction

permit for the construction of any “major stationary source”

or “major modification.” 40 C.F.R. 51.166(i). The PSD regu-

lations define “major modification” as:

any physical change in or change in the method of opera-

tion of a major stationary source that would result in a

significant net emissions increase of any pollutant subject

to regulation under the Act.

40 C.F.R. 51.166(b)(2)(i).

The inquiry under that definition first requires identifica-

tion of a “physical change in or change in the method of opera-

tion.” At that step, there is an “hours of operation” exclusion,

which provides that “[a] physical change or change in the

method of operation shall not include * * * {a]n increase in the

hours of operation or in the production rate.” 40 C.F.R.

51.166(b)(2) (iii) (/).

If there is a physical or operational change, the inquiry

considers whether it would result in a “[n]jet emissions in-

crease,” which is defined in relevant part as “[a]ny increase

in actual emissions from a particular physical change or

change in the method of operation of a stationary source.” 40

C.F.R. 51.166(b)(3)()(a). Pre-change “actual emissions”

equal “the average rate, in tons per year, at which the unit

actually emitted the pollutant during a two-year period which

precedes the particular date and which is representative of

regulations); 47 Fed. Reg. 6017 (1982) (same for South Carolina); 60 Fed. Reg.

51,923 (1995) (North Carolina incorporation of 1992 amendments of EPA’s

rules).

normal source operation.” Actual emissions are “calculated

using the unit’s actual operating hours, production rates and

types of materials processed, stored, or combusted during the

selected time period.” 40 C.F.R. 51.166(b)(21 (ii).

To determine whether there has been an “increase in ac-

tual emissions from a particular physical change,” 40 C.F .R.

51.166(b)(3)(i)(a), the pre-project average annual emissions

must be compared to the post-project average annual emis-

sions. Because the PSD permit must be obtained before com-

mencement of construction or modification, the post-project

emissions must be projected or otherwise estimated. Recog-

nizing that in some circumstances future actual emissions

would be difficult to predict, 56 Fed. Reg. 27,633 (1991), the

1980 regulations provided: “For any emissions unit which has

not begun normal operations on the particular date, actual

emissions shall equal the potential to emit of the unit on that

date,” which refers to the unit’s “maximum capacity * * * to

emit a pollutant under its physical and operational design.”

40 C.F.R. 51.166(b)(4) and (21)(iv). Thus, for units that

had not begun normal operations, past actual annual emis-

sions were compared to future maximum potential emis-

sions—an “actual-to-potential” comparison.

In Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901,

913 (7th Cir. 1990) (WE PCO), the court held that a utility that

engaged in like-kind replacement of aging equipment had in

fact “begun normal operations” and therefore did not come

within the “potential to emit/maximum capacity” regulation.

Accordingly, the court required a more “realistic” approach

that would examine “the maximum emissions that can be gen-

erated while operating the source as it is intended to be oper-

ated and as it is normally operated.” /d. at 916, 918 (citation

omitted). On remand, EPA estimated WEPCO’s future total

annual emissions “based on ali the available facts in the re-

cord,” taking into account how much the unit was likely to be

used and what the rate of emissions would be—typically re-

ferred to as the “actual-to-projected-actual” test. J.A. 68-72;

56 Fed. Reg. at 27,633 & n.10; 57 Fed. Reg. at 32,317 & n.10.

b. The NSPS regulations, by contrast, provide that a

“modification” is “any physical or operational change * * *

which results in an increase in the emission rate to the atmo-

sphere of any pollutant.” 40 C.F.R. 60.14(a). The “emission

rate” is defined as the maximum hourly emissions from the

relevant piece of equipment operating at its maximum achiev-

able capacity. 40 C.F.R. 60.14(b); 40 C.F.R. 60.14(h) (1993);

WEPCO, 893 F.2d at 913. The emission rate is “expressed as

kg/hr.” 40 C.F.R. 60.14(a) and (b). The NSPS emissions test

thus determines whether an “increase in the emission rate”

has occurred by comparing maximum hourly emissions at

maximum capacity both before and after the change. Because

it considers only maximum hourly rates, the NSPS test is not

triggered by changes that increase emissions due only to in-

creased hours of operation.

c. In 1992, in response to the WEPCO decision, EPA is-

sued amendments to the 1980 PSD regulations that “clari-

flied] its methodology for calculating emissions increases” for

electric utilities that “had begun normal operation.” 57 Fed.

Reg. 32,314, 32,323 (1991). The 1992 amendments generally

provided that utility units that satisfy certain requirements

should use the actual-to-projected-actual test rather than the

actual-to-potential test, regardless of whether or not they had

“begun normal operations.” 56 Fed. Reg. at 27,633 & n.10;

57 Fed. Reg. at 32,323; 40 C.F.R. 51.166(b)(21)(v) (1993). The

1992 regulations also added a provision to the definition of

“actual emissions” providing that, for electric generating

units, actual emissions after the change equal the “represen-

tative actual annual emissions” of the unit. 40 C.F.R.

51.166(b)(21)(v) (1993). “Representative actual annual emis-

sions” is defined similarly to “actual emissions” and means

“the average rate, in tons per year, at which the source is

projected to emit a pollutant for the two-year period” after a

change.” 40 C.F.R. 51.166(b)(32) (1993). It considers “the

effect any such change will have on increasing or decreasing

the hourly emissions rate and on projected capacity utiliza-

tion.” Ibid. (emphasis added).

The preamble to the 1992 regulations explained that for

electric generating units, both NSPS and PSD calculations

start with the hourly emission rate but differ in that the PSD

calculation then multiplies “the hourly emissions rate times

the utilization rate, expressed as hours of operation per year.”

57 Fed. Reg. at 32,316 & n.6. The 1992 regulations retain the

actual-to-potential test for other types of sources where a

unit “has not yet begun normal operations.” 40 C.F.R.

51.166(b)(21)(iv) (1993).

d. In 1996, pursuant to a conditional settlement agree-

ment with parties who had challenged the 1980 PSD regula-

tions, EPA proposed a “potential-to-potential” PSD test

that was based on maximum hourly emissions, similar to the

NSPS test. 61 Fed. Reg. 38,268-38,270 (1996); see 67

Fed. Reg. 80,204-80,205 (2002); 70 Fed. Reg. 61,081, 61,098

(2005). In 2002, however, EPA determined not to adopt

the 1996 proposal, and instead issued revised PSD regulations

that retained the actual-to-projected-actual test for exist-

ing utilities and broadened its applicability to all existing

sources. 67 Fed. Reg. 80,186, 80,275 (2002); 40 C.F.R.

51.166(a)(7)(iv)(c) (2003).

3. Pursuant to CAA Section 307(b)(1), Duke and other

electric utility companies, as well as other interested parties,

filed various petitions for review in the D.C. Circuit challeng-

ing the 1980, 1992, and 2002 NSR regulations. Ultimately,

those challenges were consolidated into a single action.

On June 24, 2005, the D.C. Circuit issued its ruling on

those consolidated challenges in New York, 413 F.3d 3. The

decision expressly rejected the utility companies’ challenges

to the 1980 and 2002 regulations’ definition of “major modifi-

cation” under the PSD program, including their claim that

the 1980 and 2002 NSR rules were invalid to the extent their

definition of “modification” differed from a pre-1977 NSPS

definition of that term. /d. at 18, 20. (Although the D.C. Cir-

cuit did not expressly address the 1992 regulations, they are

identical in relevant respects to the 2002 regulations.) The

court acknowledged the holding of the Fourth Circuit in this

case that “Congress intended to require that EPA use identi-

cal regulatory definitions of modification across the NSPS

and NSR programs,” but found that the argument accepted

by the court of appeals here “was not made by industry peti-

tioners in their opening brief and is therefore waived.” Jbid.

4. Duke is an energy company; it operates 30 coal-fired

generating units at eight electric power plants in North and

South Carolina that began service before 1977. Pet. App. 24a.

In 2000, the United States brought this suit against Duke,

alleging that Duke executed 29 “modifications” at its coal-

fired plants between 1988 and 2000 without complying with

PSD. /d. at 22a, 25a. One representative project was the

subject of the plaintiffs’ summary judgment briefing: Unit 4

at Duke’s Buck plant. Buck 4, which had been placed in “cold

shutdown” status, J.A. 227, was part of Duke’s “Plant Mod-

ernization Program,” in which Duke sought to undertake

“necessary plant modifications and maintenance” to “extend| |

[the] operating life” of units that normally “would be retired

and scrapped.” J.A. 204, 227, 229, 232. After Duke spent

some $17 million to rehabilitate Buck 4, it resumed commer-

cial operation in 1995, C.A. App. 785, 789, 790, more than a

decade after it was placed in shutdown status. J.A. 227.

Three private groups (petitioners in this Court) inter-

vened as plaintiffs. Pet. App. 6a. On cross-motions for sum-

mary judgment, the district court rejected EPA’s argument

that its regulations permissibly measured PSD emissions

increases based on an actual annual emissions test. /d. at

58a-72a. Rather, the court held that the PSD requirements

are triggered only when a unit’s maximum hourly emission

rate increases, regardless of whether actual annual emissions

increase due to increased hours of operation. The district

court concluded that Congress, by cross-referencing the

NSPS definition of “modification” in the PSD program in

1977, incorporated the 1977 NSPS regulations into the statu-

tory definition of “modification” for PSD. /d. at 62a-67a. The

court also concluded that the “hours of operation” exclusion

in the PSD regulations itself required the application of an

hourly-rate test. Jd. at 59a-62a. Because the United States

and petitioners did not contend that Duke’s projects resulted

in increases in maximum hourly emission rates, the district

court entered final judgment for Duke. /d. at 87a-95a.

5. The court of appeals affirmed, but on different reason-

ing. Pet. App. la-19a. “Phe court held that Congress’s deci-

sion to define “modification” in the PSD provisions by cross-

refereiice to the NSPS statutory definition requires EPA to

interpret the term consistently in the two programs. The

court believed that its analysis was dictated by Rowan Cos. v.

United States, 452 U.S. 247 (1981), which held that Congress

intended substantially identical definitions of the term

“wages” in two different tax statutes to be interpreted to

mean the same thing. Pet. App. 1la-14a. In the court of ap-

peals’ view, “Congress’ decision to create identical statutory

definitions of the term ‘modification’ has affirmatively man-

dated that this term be interpreted identically in the two pro-

grams. The different purposes of the NSPS and PSD pro-

grams cannot override that mandate.” /d. at 17a-18a.

Although the court of appeals held that “modification”

must be interpreted consistently in both programs, it did not

hold that the statute mandated any particular definition. The

court concluded that the PSD regulations “could even be en-

forced as the EPA urges provided that, as long as the PSD

and NSPS statutes define ‘modification’ identically, the NSPS

regulations are similarly interpreted and enforced.” Pet.

App. 15a n.7. However, because the NSPS regulations were

in place at the time EPA promulgated the 1980 PSD regula-

tions and, unlike PSD, defined “modification” to include only

projects that increase a plant’s hourly emissions rate, the

court of appeals concluded that EPA “must * * * interpret its

PSD regulations defining ‘modification’ congruently” with the

NSPS regulatory definition. Pet. App. 18a.

The court of appeals recognized that, under 42 U.S.C.

7607(b), it lacked jurisdiction to invalidate the PSD regula-

tions. Pet. App. 15a n.7. The court reasoned, however, that

“no question of the validity of the PSD regulations is * * *

presented here,” because “the PSD regulations can be inter-

preted consistently with pre-existing principles—the NSPS

regulations—as the district court demonstrated and as the

EPA’s Director of the Division of Stationary Source Environ-

ment twice opined shortly after promulgation of the regula-

tions.” Jbid. Although the United States had informed the

court that the identical issue was pending before the D.C.

Circuit in New York, the court of appeals did not address the

relationship of its ruling to those ongoing proceedings.

6. In October 2005, EPA proposed to revise the test for

determining when projects at existing electric generating

units constitute a PSD “modification” by adopting a test simi-

lar to the NSPS test that would apply prospectively to future

modifications. 70 Fed. Reg. 61,081. The proposed regulation,

if adopted, “would establish a uniform emissions test nation-

ally under the NSPS and NSR [including PSD] programs for

existing” electric generating units. /bid. In issuing the pro-

posed regulation, EPA stated that it continued to believe that

the agency has “the authority to define ‘modification’ differ-

ently in the NSPS and NSR programs.” /d. at 61,083 n.3,

61,090. The proposed rules were formulated to take into ac-

count changing conditions and air quality programs developed

since 1980 to reduce emissions. /d. at 61,099.*

This latest proposal is part of EPA’s ongoing evaluation

of the PSD regulatory program. EPA has made adjustments

to the program throughout the years as part of its continuing

responsibility to “consider varying interpretations and the

wisdom of its policy.” Chevron U.S.A. Inc. v. NRDC, 467 U.S.

837, 863-864 (1984). EPA believes that, under its broad dis-

cretion to implement the PSD program, it can continue to

address difficulties or challenges that arise in the program,

as well as improvements in air quality achieved through im-

plementation of other programs under the CAA, through the

rulemaking process.

SUMMARY OF ARGUMENT

I. Under Section 307(b)(1) of the Act, “{a] petition for

review” of any nationally applicable regulations or final action

of the EPA “may be filed only in the United States Court of

Appeals for the District of Columbia.” 42 U.S.C. 7607(b)(1).

Under Section 307(b)(2), “[alction of the Administrator with

respect to which review could have been obtained under para-

graph (1) shall not be subject to judicial review in civil or

criminal proceedings for enforcement.” 42 U.S.C. 7607(b)(2).

Because the court of appeals’ ruling had the effect of invali-

dating EPA’s regulations as contrary to the statute, and be-

cause review of that issue “could have been”—and in fact

* Since 1980, a number of new programs that improve air quality have come

into existence. Those programs include the Acid Rain Program, 42 U.S.C.

7651-76510, the NOx SIP Call (63 Fed. Reg. 57,356 (1998)) , and the Clean Air

Interstate Rule (CAIR), promulgated by EPA in 2005 to reduce interstate

transport of SO, and NO, emissions. See 70 Fed Reg. 25,162.

was—“obtained” in the D.C. Circuit, Section 307(b)(2) pre-

cluded review of that issue in this enforcement proceeding.

The court of appeals held that the statute requires EPA

to adopt the same test for a PSD “modification” that it applies

to determine whether a modification has occurred under the

NSPS program. In the court’s view, its adjudication of that

issue was permissible under Section 307(b)(2) because the

PSD regulations were open to an interpretation under which

they applied the same test as the NSPS regulations. The

court of appeals was mistaken.

First, the only reasonable construction of EPA’s regula-

tions is that they apply a different test under the two pro-

grams, and the court of appeals’ holding that they must apply

a consistent test thus amounts to an invalidation of the regu-

lations, forbidden by Section 307(b)(2) in an enforcement ac-

tion. Under the PSD regulations applicable here, a modifica-

tion occurs if a physical or operational change results in an

increase in actual annual emissions, which could occur when

a covered change would result in an increase in hourly emis-

sions, an increase in hours of operation, or both. By contrast,

under the NSPS regulations, a modification occurs only if

there is an increase in maximum achievable hourly emissions.

The differences in the tests applied under the two programs

are apparent from the significantly different wording of the

two sets of regulations, the consistent use of an annual mea-

sure of emissions in the PSD regulations and an hourly mea-

sure in the NSPS regulations, and other regulatory provi-

sions. The differences are also apparent from statements

made by EPA in promulgating the 1980 and 1992 regulations.

The court of appeals mentioned two bases for its belief

that the PSD regulations are open to an “hourly rate only”

interpretation: the “hours of operation” exception in the reg-

ulatory definition of “major modification,” and statements by

a mid-level EPA official in 1981. As every other court of ap-

peals to examine those sources has concluded, however, the

regulatory exception by its terms is an exception only from

what constitutes a “physical change or change in the method

of operation” at the first step of the “modification” inquiry,

and is not relevant to the inquiry into the net emissions in-

crease at the second step. Once it has been established that

there has been a physical or operational change, as in this

case, the regulatory exception has no application. As the

other courts of appeals have also concluded, the statements

by the EPA official were not authoritative and were mistaken.

Even if the “hours of operation” exclusion did require an

“hourly rate only” interpretation, the court of appeals’ hold-

ing would still be inconsistent with important aspects of the

PSD definition of “modification,” and the court therefore still

lacked jurisdiction to consider the issue. While a covered

change that results in no net increase of emissions is not a

PSD “major modification,” such a change could be a “modifi-

cation” under the NSPS regulations if the particular unit’s

maximum hourly emissions rate increased. Moreover, an

“increase” is counted under the PSD program only if it ex-

ceeds specified threshold emissions levels; the NSPS regula-

tions contain no analogous provision.

In any event, there is a straightforward basis for conclud-

ing that review “could have been obtained” in the D.C. Cir-

cuit—and is thus barred here under Section 307(b)(2): Duke

and other industry parties actually did bring substantially

the same challenge in the D.C. Cireuit. In the New York ac-

tion, Duke and other industry petitioners raised, briefed in

part and waived in part, and ultimately lost the issue decided

below: whether EPA’s use of an actual annual emissions in-

crease test under the PSD program was unlawful because the

CAA required EPA to apply instead the NSPS maximum

hourly emissions test. Review of that issue was accordingly

unavailable here.

II. Assuming, arguendo, that the court of appeals did not

exceed its jurisdiction, the court nonetheless erred in its rul-

ing on the merits. The court of appeals accepted that the

statutory definition of “modification” contains some ambigu-

ities that would ordinarily be up to EPA to resolve, and it also

accepted that EPA could apply a total-annual-emissions test

for modifications. Those conclusions should have sufficed to

resolve this case in EPA’s favor. But the court held that EPA

must apply the same test for both NSPS and PSD purposes,

based solely on the fact that Congress had cross-referenced

the programs, providing in the PSD provisions that the term

“construction” includes modification “as defined in” the NSPS

statutory provisions. 42 U.S.C. 7479(2)(C).

That conclusion reflects a fundamental misapplication of

Chevron. Congressional use of an ambiguous term reflects a

delegation of authority to the agency to resolve ambiguities.

Having found the relevant terms ambiguous, the court of

appeals should have found Congress’s repeated use of that

term, through a cross-reference, to reflect repeated delega-

tions. Instead, the court treated the cross-reference as limit-

ing agency discretion.

The court below focused on the fact that the statute pro-

vides, for purpose of the PSD program, that “construction”

includes modification “as defined in” the NSPS statutory pro-

visions. 42 U.S.C. 7479(2)(C). That instruction is not mean-

ingfully different from repeating the NSPS definition verba-

tim in the PSD provisions. Accordingly, it triggers the “iden-

tical terms” maxim, under which identical terms in different

parts of the same statute are presumed to have identical

meanings. In a long line of cases, however, this Court has

found that maxim to be overridden by other considerations of

statutory context, and it has frequently cautioned that the

maxim is rarely dispositive. Accordingly, while a court that

is faced with the need to construe a statute in the first in-

stance may, with caution, employ the “identical terms” maxim

in conjunction with an examination of the surrounding statu-

tory context, that maxim alone is not sufficient to establish

that Congress had a “clear intent” on whether the identical

terms must be construed identically by a regulatory agency.

The maxim is insufficient to establish that Congress left no

ambiguity for the agency to resolve.

This Court’s pre-Chevron decision in Rowan Cos. v.

United States, 452 U.S. 247 (1981), cited by the court of ap-

peals as the sole support for its ruling, is not to the contrary.

The court in Rowan did not simply apply the “identical

terms” maxim, but carefully analyzed the legislative histories

of the statutes at issue and placed great weight on the lack of

contemporaneous administrative constructions that would

contradict that maxim. Neither consideration is of signifi-

cance here. In any event, Rowan establishes at most that a

court, faced with the need to arrive at its own construction of

a statute, may in some cases use the “identical terms” maxim.

It does not support the court of appeals’ conclusion that that

maxim, taken by itself, is sufficient to establish that Congress

had a “clear intent” on the question at issue and therefore

precluded the agency from resolving any ambiguity or filling

any statutory gap.

In the specific context of the PSD program, moreover,

Congress has required EPA to promulgate regulations and

has set forth the goals and purposes of the PSD program.

Those goals and purposes are not identical to the goals and

purposes of the NSPS program, and Congress has therefore

anticipated that EPA could adopt regulations that, inter alia,

construe the component terms in the statutory definition of

“modification” with sensitivity to the particular goals and

purposes of the PSD program. The statute precludes the

inference that Congress required that any and all ambiguities

in the definition of “modification” be resolved in identical

ways for purposes of the PSD and NSPS programs.

ARGUMENT

I. THE COURT OF APPEALS LACKED JURISDICTION

OVER THE CLAIM THAT THE STATUTE REQUIRES

THE SAME REGULATORY DEFINITION OF “MODIFI-

CATION” IN THE NSPS AND PSD PROGRAMS

A. If Review Of An Agency Action “Could Have Been Ob-

tained” In The D.C. Circuit Under Section 307(b)(1),

Such Review May Not Be Had As A Defense To A Civil

Enforcement Action

Section 307(b)(1) of the CAA provides that “[a] petition

for review of action of the Administrator in promulgating

** * any * * * nationally applicable regulations promulgated,

or final action taken, by the Administrator under [the Act]

may be filed only in the United States Court of Appeals for

the District of Columbia,” within 60 days of the notice of such

action in the Federal Register. 42 U.S.C. 7607(b)(1). In such

a review, “the court may reverse any such action found to be,”

inter alia, “in excess of statutory jurisdiction, authority, or

limitations, or short of statutory right.” 42 U.S.C.

7607(d)(9)(C).

The judicial review mechanism established by Section

307(b)(1) is exclusive. Under Section 307(b)(2), “laletion of

the Administrator with respect to which review could have

been obtained under paragraph (1) shall not be subject to

judicial review in civil or criminal proceedings for enforce-

ment.” 42 U.S.C. 7607(b)(2). Thus, as this Court has ex-

plained, “any agency action that was reviewable in the courts

of appeals cannot be challenged in an enforcement proceed-

ing, whether or not review was actually sought.” Harrison v.

PPG Indus., Inc., 446 U.S. 578, 605 (1980) (emphasis added).

Reinforcing that rule, Congress further provided that

“{njothing in [the Act] shall be construed to authorize judicial

review of regulations or orders of the Administrator under

[the Act], except as provided in [Section 7607].” 42 U.S.C.

7607(e).

The exclusive review provisions of Section 307(b) promote

the “even and consistent national application” of EPA regula-

tions, S. Rep. No. 1196, 91st Cong., 2d Sess. 40-41 (1970), thus

serving “twin congressional purposes” of insuring CAA stan-

dards are “uniformly applied and interpreted” and “would be

quickly reviewed by a single court intimately familiar with

administrative procedures.” Adamo Wrecking Co. v. United

States, 484 U.S. 275, 284 (1978). Section 307(b) thereby

avoids inconsistent results and forum shopping, provides

speedy and authoritative review in a court of appeals with

particular expertise in the relevant area, and ensures that

regulated entities are treated consistently throughout the

country, thus ensuring a level playing field for the regulated

community. See Harrison, 446 U.S. at 593; NRDC v. EPA,

512 F.2d 1351, 1356-1357 (D.C. Cir. 1975); Lubrizol Corp. v.

Train, 547 F.2d 310, 317 (6th Cir. 1976).

Congress intended the preclusive effect of Section 307(b)

to be strictly enforced. In the 1977 Amendments, Congress

responded to a recommendation by the Administrative Con-

ference of the United States, 41 Fed. Reg. 56,767-56,768

(1976), and amended Section 307(b) to expand the statutory

limitations period from 30 to 60 days. In recommending that

change, the relevant House committee “reaffirm[ed] its intent

to strictly limit Section 307 challenges to those which are

actually filed within that time.” H.R. Rep. No. 294, 95th

Cong., Ist Sess. 322 (1977). The committee expressly rejected

other changes recommended by the Administrative Confer-

ence, including one “to permit the validity of a regulation to

be challenged in defense to an enforcement proceeding.” Jd.

at 324; see 41 Fed. Reg. at 56,768; see also Harrison, 446 U.S.

at 591 (noting that committee “expressly disclaimed an en-

dorsement of the recommendations of the Administrative

Conference” on certain matters).

B. The Claim That The PSD Regulations Must Be Consis-

tent With The NSPS Regulatory Definition Of “Modifi-

cation” Goes To The Validity Of The PSD Regulations

And Could Have Been Heard By The D.C. Circuit

In this case, the court of appeals rejected EPA’s interpre-

tation of the PSD regulations and held instead that, by virtue

of the statutory definition of “modification,” EPA “must in-

terpret th[e] term [modification] in a consistent manner in the

NSPS and PSD regulations.” Pet. App. 18a-19a; see id. at

lla. The court further concluded that its holding did not in-

trude upon the D.C. Circuit’s exclusive jurisdiction to hear

challenges to EPA’s regulations under the CAA. Pet. App. 15

n.7. In the court’s view, its newly minted requirement of con-

sistency between the PSD and NSPS regulations, and the

resulting rejection of EPA’s regulatory interpretation, did

not affect “the validity of the PSD regulations” because “the

PSD regulations can be interpreted consistently with pre-

existing principles—the NSPS regulations—as the district

court demonstrated and as the EPA’s Director of the Division

of Stationary Source Enforcement twice opined shortly after

promulgation of the PSD regulations.” /bid.

The court of appeals’ jurisdictional theory rests on a

flawed premise. As the court of appeals itself recognized, its

assertion of jurisdiction rests on the belief that the emissions

increase test set forth in the PSD regulations can be inter-

preted identically with the maximum hourly emissions ap-

proach contained in the NSPS regulations. That belief is

unfounded. The only reasonable interpretation of the PSD

regulations is that they define “modification” differently from

the NSPS regulations. Moreover, the district court’s reliance

on the “hours of operation” exclusion was wholly misplaced.

And the court of appeals overlooked additional differences

between the PSD and NSPS regulatory definitions of “modifi-

cation.” Accordingly, the court of appeals was simply wrong

that its holding that “modification” must be construed “con-

gruently” under the two programs, Pet. App. 18a, did not

invalidate the PSD regulations. As the court of appeals itself

implicitly recognized, it lacked jurisdiction to issue a decision

that necessarily invalidated the PSD regulations.

1. The only reasonable construction of the PSD regula-

tions is that a physical change that increases a

source’s hours of operation is a “modification”

The regulations that govern this case are the 1980 and

1992 regulations. See pp. 4-8, supra.’ Both versions deter-

mine whether a change has increased emissions solely by

applying the same actual, annual emissions test to the types

of projects at issue in this enforcement action.

a. EPA’s PSD regulations define a “major modification,”

which under the regulations may trigger the need for a PSD

permit, as

any physical change in or change in the method of opera-

tion of a major stationary source that would result in a

significant net emissions increase of any pollutant subject

to regulation under the Act.

40 C.F.R. 51.166(b)(2)(i). “Net emissions increase” is defined

in relevant part as “any increase in actual emissions from a

* The court of appeals stated that “the parties agree” that “[t|he 1980

regulations * * * control the projects at issue here.” Pet. App. 5a n.1; ef. id. at

36a. The government did take the position that the 1980 and 1992 regulations

did not materially differ with respect to the legal question at issue here. But

the government clearly informed the courts below that some of the projects in

this case were governed by the 1992 regulations. See Gov't C.A. Br. 6.

particular physical change or change in the method of opera-

tion of a stationary source.” 40 C.F.R. 51.166(b)(3)(i)(a). By

focusing on “net emissions increase{s]” and “actual” emis-

sions, the PSD regulations focus on the total amount of pollut-

ants actually released into the atmosphere as the result of a

physical change. It does not matter, under the PSD regula-

tions, whether the increase comes from an increased hourly

rate of emissions or a decreased hourly rate that is more than

offset by increased hours of operation.

By contrast, the corresponding provision of the NSPS

regulation is worded quite differently. The NSPS regulation

provides that, with exceptions not applicable here,

any physical or operational change to an existing facility

which results in an increase in the emission rate to the

atmosphere of any pollutant to which a standard applies

shall be considered a modification within the meaning of

section 111 of the Act.

40 C.F.R. 60.14(a) (emphasis added). The NSPS regulation

does not refer to “net emissions increase” or “actual” emis-

sions; instead, it focuses on the hourly rate and makes clear

that a modification occurs only if the “emission rate,” mea-

sured in kilograms per hour, see 40 C.F.R. 60.14(b), increases

as the result of a physical change. If EPA had wanted the

presence of a major modification in the PSD regulations to

turn only on physical changes that result in hourly rate in-

creases, and not increases in hours of operation, it could have

simply adopted the NSPS regulations for the PSD program

as well. It likewise could have adopted different regulatory

language that focused on hourly emission rates. Instead,

EPA adopted PSD regulations focused on the total amount of

emissions and so embraced a quite different concept of “modi-

fication” for use in the PSD program.

b. Other aspects of the PSD regulations confirm that the

regulatory “actual emissions” test is triggered when a physi-

cal change results in increased actual annual emissions,

whether because of an increase in hourly rate of emissions or

an increase in hours of operation or some combination of the

two. Actual emissions “shall be calculated using the unit’s

actual operating hours, production rates and types of materi-

als processed, stored, or combusted during the selected time

period.” 40 C.F.R. 51.166(b)(21)(ii). Thus, if the “actual oper-

ating hours” or “production rates” increase as a result of

a physical or operational change, then the actual annual emis-

sions would increase as well. Moreover, the PSD regulations

require that “actual emissions” be calculated annually, in

tons per year, based on periods that are “representative of

normal source operation.” See ibid. The use of an annual

measure, as well as the reference to a time period “represen-

tative of normal source operation,” further emphasize the

focus in the regulations on the actual annual emissions from

the source, not merely the rate per hour of emissions.” In

addition, only a physical or operational change that results in

a “significant net emissions increase” triggers PSD. 40

C.F.R. 51.166(b)(2)(i); ef. 40 C.F.R. 60.14(b) (requiring use of

kilograms per hour, not tons per year, to determine if there

is an increase in “emission rate,” and therefore a modifica-

tion, under NSPS). A net increase is “significant” under the

PSD regulations if it would exceed specified amounts of par-

ticular pollutants, which are expressed in “tons per year,” not

the hourly rate of emissions. 40 C.F.R. 51.166(b)(23)(i).

* The focus on “representative” operations also makes clear that the PSD

reuglations are not, like the NSPS regulations, focused on maximum hourly

rates. There is no reason to suspect that representative operations will be at

maximum capacity, and a regime focused on maximum hourly rates would have

no reason to assess representative operations. That assessment, of course, is

critical in assessing likely future emissions for an “actual to actual” comparison.

Finally, unlike the NSPS regulations, the PSD regulations

provide for “netting” of emissions changes in making the ma-

jor modification determination. Only a physical or opera-

tional change that results in a “significant net emissions in-

crease” triggers PSD. 40 C.F.R. 51.166(b)(2)(i). Whether

there is a “net” increase is determined by examining any

creditable contemporaneous decreases and increases in actual

annual emissions at the source. 40 C.F.R. 51.166(b)(3)(i).

Thus, an increase caused by a particular physical or opera-

tional change may generally be offset by a contemporaneous

decrease. The provision for “netting” reinforces the emphasis

in the PSD regulations on the actual annual emissions into

the atmosphere, not the measure of maximum hourly emis-

sions from a unit.

The EPA’s own official statements regarding the 1980

regulations demonstrated that an increase in actual emissions

resulting from a qualifying physical or operational change

may be a modification, regardiess of whether the change re-

sults in increased hours of operation or increased emissions

during the same hours of operation. The preamble to the

1980 regulations provided a detailed example of how the PSD

regulations would work. It recites the case of a source that

both adds a new emission unit and “plans to increase the

hours of operation” at its existing unit above the level allowed

in its existing permit. 45 Fed. Reg. at 52,705. EPA explained

that “both changes will result in significant net increases in

actual emissions” and therefore “/bJoth changes then qualify

as modifications.” /bid. (emphasis added).° The example

* The hypothetical also provides an example of how the “hours of operation”

exclusion, discussed in further detail below, is intended to function. Normally

a simple increase in hours of operation in response to increased demand for a

product is excluded from the regulatory definition of a physical or operational

“change.” However, because the increased hours of operation described in the

example required a permit change, the increase was considered an operational

“change,” under the express terms of the regulatory exclusion. See 45 Fed.

makes clear that a modification may result from either an

increase in hourly emissions or in hours of operation.’

c. In 1992, EPA promulgated new regulations that govern

some of the projects at issue in this case. In the 1992 pream-

ble, EPA confirmed that a physical or operational change that

results in an actual increase in emissions is a “modification”

under the PSD program, even if the change does not increase

the hourly rate of emissions. As EPA explained, “[a]lthough

a source may vary its hours of operation or production as part

of its everyday operations, an increase in emissions attribut-

able to an increase in hours of operation or production rate

which is the result of a construction-related activity is not

excluded from review.” 57 Fed. Reg. at 32,328.

Furthermore, the preamble compares the NSPS and PSD

tests, noting that they are “largely the same” in determining

“whether a physical or operational change will occur,” but

that in the second step, “the applicable rules branch apart,”

with the “NSPS program examin[ing] maximum hourly emis-

Reg. at 52,705; 40 C.F.R. 51.166(b)(2)(iii() (excluding hours-of-operation

increase from “physical change or change in the method of operation” “unless

such change would be prohibited under any federally enforceable permit

condition” established under certain regulations).

’ Aside from the court of appeals in this case, the other courts of appeals

that have addressed the issue have concluded that a physical or operational

change that results in increased emissions because of increased hours of

operation is a “modification” under the regulations. See WE PCO, 893 F.2d at

915, 918 (“Unlike NSPS, PSD is concerned with changes in total annuol

emissions, expressed in tons per year”; PSD measures “the maximum

emissions that can be generated while operating the source as it is intended to

be operated and as it is normally operated”) (quoting United States v.

Louisiana-Pac. Corp., 682 F. Supp. 1141 (1988)); Puerto Rican Cement Co. v.

EPA, 889 F.2d 292, 297 (ist Cir. 1989) (Breyer, J.) (noting that “EPA has

simply taken account of * * * the fact that a firm’s decision to introduce new,

more efficient machinery may lead the firm to decide to increase the level of

production, with the result that, despite the new machinery, overall emissions

will increase.”).

sion rates, expressed in kilograms per hour,” and the PSD

program “examin[ing] total emissions to the atmosphere,”

which “are determined by changes in annual emissions as

expressed in tons per year.” 57 Fed. Reg. at 32,316."

2. The “hours of operation” exclusion does not support

the court of appeals’ conclusion that the regulations

can be read to require that only an hourly-rate in-

crease in emissions is a “modification”

The court of appeals did not itself attempt to explain how

the 1980 or 1992 regulations could be read to be consistent

with the NSPS definition of “modification.” The court instead

relied on the district court’s analysis of the “hours of opera-

tion” exclusion, and on the views expressed by a single EPA

official. Pet. App. 15a n.7. Neither the district court’s ratio-

nale, however. nor the EPA official’s views establish that,

* The 1980 PSD regulations originally established a test for “any emissions

unit which has not begun normal operations on the particular date” under

which actual pre-change emissions were compared with “the potential to emit

of the unit on that date,” e., the maximum potential post-change emissions.

40 C.F.R. 51.166(b)(21)(iv). The court in WEPCO, however, rejected that

comparison, at least for like-kind replacements at electric utilities, suggesting

instead a comparison between actual pre-change emissions and “a more realis-

tic” assessment of post-change emissions. 893 F.2d at 917. On remand in

WEPCO, the agency applied such an actual-to-projected-actual test, and it

included that test for some categories in the 1992 regulations. See J.A. 57-79:

40 C.F.R. 51.166(b)(21) (1993). For present purposes, however, what is impor-

tant is that both the actual-to-potential test and the actual-to-projected-actual

test took either maximum potential post-change hours of operation (actual-to-

potential) or likely post-change hours of operation (actual-to-projected-actual)

into account in determining whether a change is a modification. Both tests

focus on sums, not hourly rates. Neither test is consistent with a sole focus on

hourly rate of emissions, since the hours of operation are not held constant

under either test. Accordingly, the fact that the agency used both the actnal-to-

potential and the actual-to-projected-actual tests confirms that the agency's

“actual emissions” definition of “major modification” does not limit major

modifications to changes that produce an increase in hourly emissions.

notwithstanding the clear and unmistakable differences be-

tween “major modification” under the PSD regulations (with

their focus on total emissions) and “modification” under the

NSPS regulations (with their focus on hourly rate), the PSD

regulations can be construed to adopt the NSPS test.

a. The district-eourt held that the so-called “hours of op-

eration” exclusion in the PSD definition of “major modifica-

tion” requires EPA to keep hours of operation constant be-

fore and after the change in calculating emissions increases,

such that there is an emissions increase under PSD only if

there is a change resulting in increased hourly emissions.

Pet. App. 59a-60a. That reading of the regulations conflates

the two steps in the regulatory definition and is not tenable.

A “major modification” under the PSD regulations is

“any physical change or change in the method of operation

of a major stationary source that would result in a significant

net emissions increase of any pollutant.” 40 C.F.R.

51.166(b)(2)(i). Applying that definition requires a two-step

inquiry: first, a determination whether a project is a “physi-

cal or operational change;” second, whether such change

“would result in a significant net emissions increase.” See,

e.g., 57 Fed. Reg. at 32,316.

The definition of “major modification” has a number of

exclusions from what constitutes a “physical change or

change in the method of operation,” at the first step of the

inquiry. One such exclusion provides that, in general, “/a/

physical change or change in the method of operation shall

not include * * * [a]n increase in the hours of operation or in

the production rate.” 40 C.F.R. 51.166(b)(2)(iii)(f) (emphasis

added). By its terms, that “hours of operation” exclusion is

not an exclusion from the entire definition of “major modifica-

tion,” nor from the portion of the definition pertaining to

emission increases at the second step of the analysis. Rather,

it is an exclusion only from what constitutes a qualifying

“physical change or change in the method of operation” at the

first step. Accordingly, a mere increase in hours of operation

standing alone is not a “change,” and the “modification” in-

quiry need proceed no farther.

By contrast, if there has been a “change” other than a

mere increase in hours of operation or other excluded event,

the inquiry proceeds to the second step: whether the pro-

posed “change” “would result in a significant net emissions

increase.” The “hours of operation” exclusion has no applica-

tion at that stage of the inquiry, because on its face it applies

only to the “change” analysis, not the “emissions increase”

analysis of a conceded “change.” Thus, if the proposed

“change” would result in a significant net emissions increase,

it constitutes a “modification” for PSD purposes, even if the

emissions increase is the result of the fact that the cognizable

“change” will facilitate or lead to increased hours of operation

rather than increased hourly emissions.

EPA explained in the preamble to the 1980 regulations

that the exclusion applies to market fluctuations, not to in-

creases in hours of operation made possible by a physical or

operational change. The preamble explained:

While EPA has concluded that as a general rule Congress

intended any significant net increase in [actual] emissions

to undergo PSD or nonattainment review, it is also con-

vinced that Congress could not have intended a company

to have to get a NSR permit before it could lawfully

change hours or rate of operation. Plainly, such a re-

quirement would severely and unduly hamper the ability

of any company to take advantage of favorable market

conditions.

45 Fed. Reg. at 52,704. In later statements, in 1988 and in

promulgating the 1992 regulations, EPA reiterated that the

“hours of operation” exclusion should be read in accordance

with its plain meaning, as a modest exclusion from what con-

stitutes a “physical change or change in the method of opera-

tion” and that the exclusion has no effect when there has been

a qualifying “change.”” The “hours of operation” exclusion

does not support the argument that the regulations can be

read to limit a PSD “major modification” to cases in which

there has been an increase in per-hour emissions.

b. Given the clarity of the regulatory language, and

EPA’s explanation of the exclusion in the regulatory pream-

ble, it is immaterial whether, as the district court concluded

(Pet. App. 60a-62a), a mid-level EPA official, Edward Reich,

then-Director of the Division of Stationary Source Enforce-

ment, interpreted the provisions differently in an internal

memorandum and a letter written in 1981. See J.A. 27-28, 35-

37. Even agency officials may misunderstand some details of

newly promulgated regulations, and any such interpretation

by Mr. Reich was plainly incorrect. That conclusion is rein-

forced when, as here, the letters provide no indication of the

care or attention Mr. Reich gave to the issue and contain no

explanation of how he arrived at his variant understanding."

* See J.A. 255 (“the exclusion for increases in hours of operation or produc-

tion rate does not take the project beyond the reach of PSD coverage if those

increases do not stand alone but rather are associated with non-excluded

physical or operational changes”); J.A. 44 (“EPA has properly interpreted the

PSD * * * regulations as applying to increases in emissions due to increases in

hours of operation or production rate where, as here, such operational or pro-

duction increases are closely related to physical or operational changes”); see

also 57 Fed. Reg. at 32,328 (explaining in 1992 preamble that “lallthough a

source may vary its hours of operation or production as part of its everyday

operations, an increase in emissions attributable to an increase in hours of

operation or production rate which is the result of a construction-related

activity is not excluded from review”) (emphasis added).

If he had provided some analysis, the source of his misunderstanding

might be more clear, as in the case of the district court, which clearly conflated

the two distinct steps of the relevant regulatory definition.

The other courts of appeals to consider the scope of the

“hours of operation” exclusion have correctly rejected argu-

ments, based on the same 1981 misinterpretation by Mr.

Reich, that the exclusion prohibits consideration of increases

in hours of operation resulting from physical or operational

changes in calculating emission increases under the PSD pro-

gram. See WEPCO, 893 F.2d at 916 n.11 (exclusion “was pro-

vided to allow facilities to take advantage of fluctuating mar-

ket conditions, not construction or modification activity”);

Puerto Rican Cement Co. v. EPA, 889 F.2d 292, 298 (1st Cir.

1989) (Breyer, J.) (upholding EPA interpretation of exclusion

as allowing sources “simply to increase their output” through

“increased use of existing facilities” as opposed to increases

resulting from construction or modification activity); see also

United States v. Ohio Edison Co., 276 F. Supp. 2d 829, 876-

877 (S.D. Ohio 2003). The “hours of operation” exclusion does

not alter the conclusion that a “modification” may occur not

only when a physical or operational change results in an in-

crease in per-hour emissions (without an offsetting decrease

in hours of operation), but also when such a change results in

increased hours of operation without any sufficiently offset-

ting decrease in the hourly emissions rate.

3. Even Under The District Court’s Reading Of The

“Hours Of Operation” Exclusion, There Are Inconsis-

tencies Between The Treatment Of “Modification” In

The PSD And NSPS Regulations

The district court’s erroneous interpretation of the “hours

of operation” exclusion is not the only flaw in the court of ap-

peals’ jurisdictional analysis. Even if the exclusion could rea-

sonably be construed as the district court read it, the court of

appeals’ holding would still effectively invalidate important

aspects of the PSD regulatory definition of modification, and

the court therefore lacked jurisdiction to consider the issue.

In some instances, for example, expansion or refurbishment

of an existing unit may increase the hourly emissions rate but

also, by virtue of the modified unit’s increased efficiency and

productive output, enable the facility’s owner to reduce oper-

ating hours and thereby avoid any increase in emissions on an

annualized basis. Or, under the “net emissions” test in the

PSD regulations, certain contemporaneous emissions reduc-

tions at a source may be used to offset emissions increases at

a particular unit. 40 C.F.R. 51.166(b)(2)(i) and (3)(i). Under

the NSPS regulations with their focus on hourly emission

rates, such changes would generally qualify as “modifica-

tions.” They would generally not qualify as “major modifica-

tions” under the PSD regulations, however, because the total

projected annual emissions at the source as a whole had not

increased. Neither the district court nor the court of appeals

offered any analysis of the PSD regulations that could reason-

ably harmonize them with the NSPS regulations in those cir-

cumstances, and for good reason: none exists. The PSD reg-

ulations focus on the sum of total emissions, and the NSPS

focus on hourly rates is simply inconsistent with that focus.

As discussed above, see pp. 20-23, supra, moreover, there

are other substantial differences between the PSD and NSPS

definitions of “modification,” even assuming arguendo that

the “hours of operation” exclusion could be interpreted in the

unreasonable manner proposed by the district court. Thus,

for example, the PSD regulations provide that only a “stgnzf-

icant net emissions increase” is a PSD “major modification,”

and set forth various threshold emissions levels that will be

deemed significant, measured in “tons per year.” 40 C.F.R.

51.166(b)(2)(i) and (23)(i) (emphasis added). The NSPS defi-

nition of “modification,” by contrast, contains no such re-

quirement of a “significant” annual increase before a “modifi-

cation” will be found, and would thus be triggered in some

circumstances in which the PSD definition would not.”

It is thus undeniable that, as promulgated by EPA, the

PSD regulations define “modification” differently from the

NSPS definition of “modification” in multiple and substantial

respects. The decision of the court of appeals effectively in-

validates the PSD regulations in those respects. Accordingly,

the court of appeals lacked jurisdiction to consider the issue

on which its judgment rests, because under Section 307(b)(1)

and (2) only the D.C. Circuit has jurisdiction to entertain

challenges to the PSD regulations.

4. Because Review Of The Claim That The PSD Regu-

lations Must Be Consistent With The NSPS Regula-

tions “Could Have Been Obtained” In A Petition For

Review, That Claim Was Precluded Here

An examination of the challenges actually advanced by

Duke and other industry petitioners in the D.C. Circuit pro-

ceedings confirms that the court below was jurisdictionally

precluded from deciding the case as it did. Under Section

307(b)(2), “[aletion of the Administrator with respect to which

review could have been obtained under paragraph (1) shall

not be subject to judicial review in civil or criminal proceed-

'' Among other differences, the NSPS modification provision applies to

“existing facilitjies],” defined as “any apparatus of the type for which a

standard is promulgated,” see 40 C.F .R. 60.2, 60.14, while the PSD definition

of “major modification” applies to any “major stationary source,” defined as an

entire plant or factory, see 40 C.F.R. 51.166(b)(1) and (2). The NSPS regula-

tions include a capital expenditure requirement in the “production rate” exclu-

sion, 40 C.F.R. 60.14(e)(2), while the PSD regulations do not, 40 C.F.R.

51.166(b)(2)(iii), and the NSPS production rate exclusion is an exclusion from

what constitutes a “modification{],” while the PSD exclusion is only from what

constitutes a “physical change or change in the method of operation.” Those

differences too reinforce the emphasis in the PSD regulations, unlike the NSPS

rule, on the actual annual amount emitted into the atmosphere, not the maxi-

mum achievable performance of a particular unit.

ings for enforcement.” 42 U.S.C. 7607(b)(2). The CAA thus

bars courts in enforcement proceedings (like this case) from

entertaining challenges that could have been brought on a

petition for review under Section 307(b)(1) in the D.C. Circuit.

As this Court has emphasized, such courts simply cannot

“pursue any of the * * * familiar inquiries which arise in the

course of an administrative review proceeding.” Adamo

Wrecking Co., 434 U.S. at 285.

Perhaps the clearest evidence that Duke could have

brought its statutory challenge in ‘he D.C. Circuit is that it in

fact did so. During the course _: the New York litigation in

the D.C. Cireuit, and beginning iong before the United States

brought this enforcement action, Duke and other industry

petitioners raised, briefed in part and waived in part, and

ultimately lost the question in this case. whether EPA’s use

of an actual annual emissions increase test under the PSD

program was unlawful because the CAA required EPA to

apply instead the NSPS maximum hourly emissions test.

The issue was first raised in 1981, when several industry

parties filed opening briefs in their D.C. Circuit challenge to

the 1980 PSD rules. One of those briefs, which was entitled

“Brief for Industry Petitioners on Actual Emissions Defini-

tion of Net Increase” (Industry Br.), raised the question

whether EPA’s PSD regulations unlawfully “provided that a

modification * * * would occur when actual emissions from a

source increased as a result of an alteration to that source,

even where the source’s capacity to emit remains constant.”

Industry Br. at 1, Chemical Mfrs. Ass’n v. EPA, No. 79-1112,

1999 WL 1338364 (D.C. Cir. Dec. 15, 1999) (per curiam); see

id. at 43. That brief criticized the PSD actual emissions test

because it is a function “of the production rate at which the

source operates” and “requires that variations in the source's

hours and rates of operation be taken into account.” Jd. at

28-29. Thus, EPA’s actual annual emissions test, including its

consideration of hours of operation, was subjected to industry

challenge as early as 1981.

In 1982, the parties to the review proceedings in the D.C.

Circuit entered into a conditional settlement agreement.

That agreement required EPA to propose, and take final ac-

tion adopting or rejecting for NSR purposes, “an NSPS-like

hourly-potential-to-hourly-potential emissions increase test

for modifications.” 70 Fed. Reg. at 61,098. If adopted, that

proposal would have provided industry with the very relief it

sought in the D.C. Circuit—relief that it ultimately obtained

only as a result of the court of appeals’ decision in this case.

Specifically, the proposal would have added PSD regulatory

language allowing industry to measure emission increases by

using an hourly emissions rate based on “the source’s poten-

tial to emit (as calculated in terms of pounds of pollutant

emitted per hour).” 61 Fed. Reg. at 38,255, 38,269. As EPA

explained, under the proposed approach “the level of opera-

tions and actual emissions would generally no longer be perti-

nent” for NSR purposes. /d. at 38,269 (emphasis added).

EPA rejected the proposed changes in 2002. The Utility

Air Regulatory Group (UARG), of which Duke is a member,

filed a petition for review challenging that decision in the

D.C. Circuit. See Utility Air Regulatory Group v. EPA, No.

03-1046 (filed Feb. 27, 2003). One of the issues raised by

UARG was whether the 1980 NSR (and, thus, PSD) regula-

tions were invalid “if the actual emissions test in the 1980

NSR rule does not require a physical or operational change

that results in an increase in the maximum achievable emis-

sion rate of an existing unit.” UARG Non-Binding Statement

of Issue at 2, New York, supra (No. 02-1387); see Motion of

Alabama Power Co. to Reopen Administratively Terminated

Petitions for Review at 3-4, Chemical Mfrs. Assn, supra

(“Whether the [1980 and 1992] NSR rules * * * are lawful, if

it is permissible to interpret those rules, as EPA does today,

as providing that an increase in emissions at an existing unit

that is attributable to the unit operating more hours can con-

stitute a “major modification,” where there is no relaxation of

an enforceable limitation on the number of hours that the unit

may operate.”). Industry petitioners also raised the following

challenge to the 1980 and 1992 NSR regulations:

Whether, if the 1980 rules repealed the requirement that

there must be an emission rate increase at an existing

unit for there to be an NSR modification, the 1980 rules

are unlawful?

Joint Brief of Industry Petitioners at 2, New York, supra (No.

02-1387)

On June 24, 2005, the D.C. Circuit ruled against industry

petitioners, including Duke, expressly rejecting their “claim

that modification must have the same regulatory meaning for

NSR as prevailed for NSPS in 1977.” New York, 413 F.3d at

19. The court held that the CAA did not compel EPA to apply

the NSPS regulatory definition of emissions increases in mea-

suring increases under the PSD program. /d. at 18-20. To be

sure, although the court addressed the general claim that the

Act precluded the actual annual increase standard, the court

did not rule on the precise argument accepted by the Fourth

Circuit in this case—that the Act requires that the term

“modification” have a consistent meaning in both the PSD

and NSPS programs. But the reason the court did not ad-

dress that precise argument was that it “was not made by

industry petitioners in their opening brief and is therefore

waived.” Jd. at 20. The D.C. Circuit at no point indicated

that the argument, had it been preserved, would have been

unripe or otherwise not justiciable. Indeed, the fact that the

court addressed, and rejected, other statutory-based argu-

ments challenging the actual annual emissions test on their

merits establishes that such claims were ripe for review. And

because review of challenges to the actual annual emissions

test on the ground that it was contrary to the statute “could

have been obtained” in a petition for review, it is unavailable

in this enforcement action.

Il. THE COURT OF APPEALS ERRED IN HOLDING THAT

EPA LACKS DISCRETION TO APPLY A REGULATORY

TEST FOR PSD “MODIFICATIONS” THAT DIFFERS

FROM THE NSPS REGULATORY TEST

Assuming arguendo that the court of appeals had jurisdic-

tion to review the statutory validity of the annual actual emis-

sions test applied by EPA under the PSD program, the court

of appeals erred in invalidating that test. Congress’s use of

identical statutory definitions of “modification” for the PSD

and NSPS programs indicates that it would have been per-

missible for EPA to adopt the same regulatory interpretation

of “modification” for both programs, but it does not compel

that result. Rather, to the extent that the statutory definition

leaves ambiguities and gaps for EPA to fill, Congress autho-

rized EPA to resolve those questions separately for purposes

of the PSD and NSPS programs in any reasonable fashion

consistent with the statute, in light of the distinct structure

and purposes of the two programs. Because EPA’s regula-

tions did just that, the court of appeals owed deference to

EPA’s construction of the Act in the context of the PSD pro-

gram, and the court should have held that the regulations’

actual annual emissions standard is a permissible one.

A. EPA May Interpret The Statutory Definition Of “Modi-

fication,” Including The Ambiguous Term “Increases,”

Differently To Effectuate The Distinct Purposes Of The

Separate PSD And NSPS Programs

In reviewing an agency’s construction of a statute, this

Court asks “whether Congress has directly spoken to the

precise question at issue” and, if Congress has instead been

“silent or ambiguous,” whether “the agency’s answer is based

on a permissible construction of the statute.” Chevron, 467

U.S. at 842-843. Congress has not clearly spoken to the pre-

cise question at issue in this case: what constitutes an emis-

sions “increase” for the purposes of determining whether a

project is a “modification” under the PSD program. EPA’s

interpretation of that ambiguous term for PSD purposes is

reasonable and entitled to deference.

1. The requirements of the PSD program apply to “con-

struction” of covered facilities. 42 U.S.C. 7475(a). By the

time the PSD provisions were enacted in 1977, the term “con-

struction” had been defined for purposes of the pre-existing

NSPS program. As originally enacted, however, the PSD

provisions themselves did not define “construction.” The

PSD cross-reference to the NSPS definition was added three

months later, as part of a set of 84 “Clean Air Act Technical

and Conforming Amendments.” Safe Drinking Water

Amendments of 1977, Pub. L. No. 95-190, § 14(a)(54), 91 Stat.

1402. The new PSD definition provides that “(t]he term ‘con-

struction’ when used in connection with any source or facility,

includes the modification (as defined in [42 U.S.C.] 7411(a)

* * * ) of any source or facility.” 42 U.S.C. 7479(2)(C). Thus,

for both PSD and NSPS, the overarching statutory definition

of “modification” is the same: a modification is “any physical

change in, or change in the method of operation of, a station-

ary source which increases the amount of any air pollutant

emitted by such source or which results in the emission of any

air pollutant not previously emitted.” 42 U.S.C. 7411(a)(4).

2. The statutory definition of “modification” leaves sev-

eral constituent terms undefined, and therefore open to rea-

sonable agency interpretation. Among them is the phrase at

issue in this case: “increase[] the amount of any air pollut-

ant.” Although a change is not a “modification” unless it “in-

creases” the amount of emissions, the statute “is silent on

how to calculate such ‘increases’ in emissions.” New York,

413 F.3d at 22. There is substantial ambiguity in the term

“increase” in this context and many ways to evaluate an “in-

crease” in amount of pollutants. Such an increase could be

measured by the minute, the hour, the year, or some other

period. It could be measured in terms of actual amounts,

average amounts, maximum possible amounts, estimates or

projections of likely amounts, or some other metric.

Under the Chevron doctrine, that ambiguity grants the

EPA the discretion to select the method of evaluation it

thinks best, so long as EPA’s action is reasonable and not

inconsistent with the statute itself. Congress “did not specify

how to calculate ‘increases’ in emissions, leaving EPA to fill

in that gap while balancing the economic and environmental

goals of the statute.” New York, 413 F.3d at 27.

B. Congress’s Use Of The Same Definition Of “Modifica-

tion” In The Provisions Governing NSPS and PSD Does

Not Eliminate EPA’s Discretion To Resolve Ambiguities

In That Definition In Different Ways For Each Program

The court of appeals accepted that the statutory definition

of “modification” contains some ambiguities, and the court

also accepted that EPA could validly construe the ambiguous

term “increase” in that definition to yield the interpretation

at issue in this case—an actual annual emissions, rather than

a maximum hourly rate of emissions, test. See Pet. App. 15a

n.7 (“The PSD regulations * * * could even be enforced as the

EPA urges provided that * * * the NSPS regulations are sim-

ilarly interpreted and defined.”). Those conclusions should

have sufficed to uphold the regulations under Chevron. But

the court held that the EPA was precluded from construing

“increases” to mean something different in the PSD program

than in the NSPS program. In the court’s view, because Con-

gress had used a single definition for “modification” for use

in both programs, Congress had “directly spoken to the pre-

cise question at issue” of whether the component parts of that

term could have somewhat different meanings for the PSD

and NSPS programs and had decided that the meaning must

remain constant. /d. at. 10a-l1la (quoting Chevron, 467 U.S.

at 842); see id. at 18a-19a. The court further held that, be-

cause the NSPS regulations were issued first, their construc-

tion of the term “modification” had to be used for the PSD

program.”

1. The court of appeals gave only one reason for its con-

clusion that the statute unambiguously compels EPA to con-

strue the constituent terms of the “modification” defini-

tion—in particular, the term “increases”—in the same way

for the PSD and NSPS programs. According to the court,

this Court’s decision in Rowan established an “effectively

irrebuttable” presumption that the term “increases” must be

given a consistent meaning in the NSPS and PSD programs,

because “Congress’ decision to create identical statutory defi-

nitions of the term ‘modification’ has affirmatively mandated

that this term be interpreted identically in the two pro-

grams.” Pet. App. 17a. On that basis, the court of appeals

concluded that Congress had “directly spoken” to the ques-

tion before it.

2. The court of appeals was mistaken. As this Court has

explained, at the first stage of the Chevron analysis, “when a

statute speaks clearly to the issue at hand [a court] ‘must give

effect to the unambiguously expressed intent of Congress.’”

Barnhart v. Thomas, 540 U.S. 20, 26 (2003); see Household

Credit Servs. v. Pfennig, 541 U.S. 232, 242 (2004) (statute

ambiguous under Chevron because it does not provide “a

clear answer”). As the Court explained in Chevron, “liJf the

® The court of appeals provided no support whatever for its “first in time”

rule, which was its sole basis for preferring the NSPS regulations over the PSD

regulations. See Pet. App. 18a.

intent of Congress is clear, that is the end of the matter; the

court, as well as the agency, must give effect to the unambig-

uously expressed intent of Congress.” 467 U.S. at 842-843;

see id. at 843 n.9 (court “must reject administrative construc-

tions which are contrary to clear congressional intent”).

a. The Clean Air Act reveals no “unambiguously ex-

pressed intent of Congress” or “clear answer” with respect to

the question whether the ambiguities in the definition of

“modification” may be resolved differently in the NSPS and

PSD contexts. The statute simply provides that “(t]he term

‘construction’ when used in connection with any source or

facility, includes the modification (as defined in [42 U.S.C.}

7411(a)) of any source or facility.” 42 U.S.C. 7479(2\(C). That

shorthand reference is not meaningfully different from a rep-

etition of the Section 7411(a) definition in Part C of the CAA

(which establishes the PSD program), and it conveys no clear

congressional command that EPA is to be denied the usual

range of discretion conferred on agencies to resolve statutory

ambiguities in ways reasonably tailored to each particular

regulatory context. To the contrary, absent an express direc-

tion to treat two programs identically, Congress’s repeated

use of an ambiguous term reflects a repeated delegation, not

a command of parity.

Even in the absence of an authoritative agency interpreta-

tion construing the same ambiguous statutory term differ-

ently in two different, but related, contexts, this Court’s cases

have frequently reached that result as a matter of judicial

interpretation. And the Court has regularly cautioned

against assuming, without careful examination of the context,

that Congress’s use of the same term in two provisions man-

dates that it be given the same meaning in each.

Thus, in Atlantic Cleaners & Dyers v. United States, 286

U.S. 427 (1932), the Court considered the meaning of the term

“trade or commerce” in two different provisions of the

Sherman Act, 15 U.S.C. 1 et seg.—one in Section 1, forbidding

any combination “in restraint of trade or commerce among

the several states”; the other in Section 3, forbidding any

combination “in restraint of trade or commerce in any Terri-

tory of the United States or of the District of Columbia.” See

286 U.S. at 432. The court noted that “there is a natural pre-

sumption that identical words used in different parts of the

same act are intended to have the same meaning.” /d. at 433.

But the Court also explained that “the presumption is not

rigid and readily yields whenever there is such variation in

the connection in which the words are used as reasonably to

warrant the conclusion that they were employed in different

parts of the act with different intent.” /bid. The Court thus

held that the term “trade,” while likely “synonymous” with

the word “commerce” in Section 1, id. at 434, has the broader

meaning of “occupation, employment, or business,” in Section

3, id. at 436.

In a long line of cases, the Court has followed Atlantic

Cleaners in recognizing that Congress’s use of a single, am-

biguous term in two contexts does not, by itself, signal a clear

intent that the term must have the same meaning in each.

For example, the Court in Helvering v. Stockholms Enskilda

Bank, 293 U.S. 84, 86-88 (1934), concluded that the term “ob-

ligations” has distinct meanings for the purposes of two provi-

sions of the tax code—one that excluded interest on govern-

ment “obligations” from income and a second that defined

income for nonresident aliens to include interest on “obliga-

tions.” In United States v. Cleveland Indians Baseball Co.,

532 U.S. 200, 212-216 (2001), the Court concluded that the

term “wages paid” may have different meanings for purposes

of the statutes governing social security and federal unem-

ployment taxes than it has for purposes of the closely related

statute governing eligibility for social security benefits. In

Robinson v. Shell Oil Co., 519 U.S. 337, 342-344 (1997), the

Court held that the term “employee” may include former

employees for purposes of Title VII’s prohibition of retalia-

tion, while it refers only to current employees for purposes of

some other provisions. See Wachovia Bank v. Schmidt, 126

S. Ct. 941, 951-952 (2006) (term “located” in statutes laying

venue for actions against national banks has different mean-

ing than same term in statutes governing federal question

jurisdiction in such actions); General Dynamics Land Sys-

tems, Inc. v. Cline, 540 U.S. 581, 596-597 (2004) (holding that

“age” means “old age” in some provisions of Age Discrimina-

tion in Employment Act, 29 U.S.C. 623(a)(1), while it means

“comparative youth” in nearby provision setting forth BFOQ

defense); District of Columbia v. Carter, 409 U.S. 418, 421-

425 (1973) (District of Columbia is a “State or Territory” un-

der 42 U.S.C. 1982, but not under 42 U.S.C. 1983).

The principle that the same statutory term can be given

different meanings in different contexts carries even greater

force when, as here, the agency charged by Congress with

responsibility for construing the statute has adopted different

interpretations of a particular term in the exercise of its dele-

gated rulemaking authority. As this Court recognized in

Chevron itself, in upholding EPA’s interpretation of the very

statute at issue here, “the fact that the agency has adopted

different definitions [of the same statutory term] in different

contexts [in the Clean Air Act] adds force to the argument

that the definition itself is flexible.” 467 U.S. at 864. Thus, in

Cleveland Indians this Court deferred to the agency’s deci-

sion to give the same statutory term a different meaning, 532

U.S. at 218-220, and numerous decisions of the courts of ap-

peals likewise recognize the authority of agencies to interpret

identical statutory terms differently for different purposes.’

'’ Courts have recognized this genera) proposition in the specific context of

the NSPS and PSD programs. E.g., Alabama Power, 636 F.2d at 396 (holding

that while Congress intended the same statutory definition of “stationary

b. To be sure, the Court has also concluded that the same

term in two different provisions may be construed to have the

same meaning. In Rowan, the sole case on which the court of

appeals relied, Congress rejected a Treasury regulation de-

fining “wages” for purposes of FICA and FUTA withholding

to include the value of meals and lodging provided for the

convenience of the employer, instead holding that “wages”

excludes such meals and lodging, as in the income-tax with-

holding context. The Court noted that Congress had defined

“wages” in “substantially the same language” in the income-

tax withholding provisions as in the FICA and FUTA provi-

sions. 452 U.S. at 255. But the Court did not rely merely on

the fact that the same definitions were used. Instead, the

Court undertook its own extensive analysis of the legislative

histories of the statutes at issue, concluding that “[t]hese

histories reveal a congressional concern for ‘the interest of

simplicity and ease of administration’” and that “one of the

means Congress chose in order to promote simplicity was to

base withholding upon the same measure—‘wages’—as taxa-

tion under FICA and FUTA.” /bid.; see, e.g., id. at 256 (quot-

ing committee report explaining that Congress had “coordi-

nated” the three tax provisions “in order to facilitate the work

of both the Government and the employer in administering

the withholding system”). Moreover, the Court, acting prior

to Chevron, placed great weight on the lack of “substantially

contemporaneous constructions of the statutes” supporting

source” for PSD and NSPS modification purposes, EPA retained discretion to

interpret the ambiguous component terms of the same definition differently for

NSPS and PSD purposes); Potomac Elec. Power Co. v. EPA, 650 F 2d 509, 517-

518 (4th Cir. 1981) (“stationary source” need not be defined the same for NSPS

and PSD programs because of the “significant differences between the PSD ,

and NSPS programs”), cert. denied, 455 U.S. 1016 (1982); ef. WE PCO, 893 F.2d

at 904-905, 913 (noting that Congress “essentially adopted” the NSPS

statutory definition of modification for the PSD program, but holding that

“unlike NSPS,” PSD focuses on increases in “total annual emissions”).

Treasury’s position. Jd. at 262; cf. Chevron, 467 U.S. at 863

(“The fact that the agency has from time to time changed its

interpretation of the term ‘source’ does not * * * lead us to

conclude that no deference should be accorded the agency's

interpretation of the statute. An initial agency interpretation

is not instantly carved in stone.”).

Rowan illustrates the commonsense proposition that

when Congress uses the same terms in two different statu-

tory contexts, Congress may have an intent to ensure “sim-

plicity and ease of administration” and, if that intent can be

substantiated and is not contradicted by other indices of con-

gressional intent, a court may infer that Congress intended

the term to have the same meaning in both contexts. But

Rowan, which was decided before Chevron and does not apply

the Chevron framework, does not suggest that, even where a

court finds the “identical terms” maxim persuasive, the court

would conclude that Congress had an “unambiguously ex-

pressed” or “clear” intent on the matter.’ Rather, Rowan,

especially when read in the context of the line of this Court’s

cases evidencing a distinctly skeptical view of the “identical

terms” maxim, merely demonstrates that a court may use

that maxim as one of many means by which it can determine

the preferred interpretation of an ambiguous statute.

Under the Chevron framework, by contrast, when an ad-

ministrative agency with delegated authority to construe the

statute has resolved the statutory ambiguity, “the court does

not simply impose its own construction on the statute, as

would be necessary in the absence of an administrative inter-

This Court's subsequent treatment of the very terms at issue in Rowan

suggests that the “identical terms” maxim alone is never dispositive at Chevron

step one. In Cleveland Indians, the Court returned to the same statutory

terms at issue in Rowan and used a Chevron step-two analysis to defer to the

Internal Revenue Service’s reasonable interpretation of them. 532 U.S. at 209,

213-214.

pretation.” Chevron, 467 U.S. at 843 (footnote omitted).

Rather, Chevron teaches that “a court’s opinion as to the best

reading of an ambiguous statute an agency is charged with

administering is not authoritative.” National Cable &

Telecomms. Ass'n v. Brand X Internet Servs., 125 S.Ct. 2688,

2701 (2005). Where there is ambiguity, Chevron “requires a

federal court to accept the agency’s construction of the stat-

ute, even if the agency's reading differs from what the court

believes is the best statutory interpretation.” /d. at 2699; see

Chevron, 467 U.S. at 843 n.11 (“The court need not conclude

that the agency construction was * * * even the reading the

court itself would have reached if the question initially had

arisen in a judicial proceeding.”). As this Court’s numerous

cases rejecting the “identical terms” maxim illustrate, that

maxim, taken by itself, is insufficient to establish that Con-

gress directly addressed and clearly resolved the question

whether the ambiguous, component terms of the definition of

“modification” may have a somewhat different meaning in the

PSD and NSPS contexts.

ec. The court of appeals apparently believed that the

“identical terms” maxim is “effectively irrebuttable” in the

context of this case, because the terms at issue are found in

a definition. Pet. App. 17a." Words used in a definition, how

'° Aside from the “identical terms” maxim, the only other support suggested

by the court of appeals for its conclusion was a single statement in a summary

of amendments introduced into the Congressional Record by Senator Muskie

and Representative Rogers that, as the court of appeals summarized, embodied

an “expressed intent * * * to ‘conform’ the definition of modification in the PSD

provisions ‘to usage in other parts of the Act.’” Pet. App. 14a (quoting 128

Cong. Rec. 36,253 (1977)). The court made only the modest claim that that

statement “indicates congressional concern with the same sort of simplicity and

consistency that the Rowan Court discerned from the legislative history

examined there.” Pet. App. 14a-15a. The cited statement, however, in full ob-

served that the amendment in question “{i/mplements conference agreement

to cover ‘modification’ as well as ‘construction’ by defining ‘construction’ in

ever, are not subject to special rules of statutory interpreta-

tion or an emasculated version of the Chevron doctrine. In-

deed, this Court has never suggested that its repeated warn-

ings against reliance on the “identical terms” maxim apply

only to statutory terms that are not defined. To the contrary,

the Court has confirmed that different interpretations of a

term remain permissible even where Congress mandates a

single statutory definition of that term be used. In Robinson,

the term “employee” was statutorily defined, and Congress

instructed that the definition was to apply “for purposes of

Title VII” of the Civil Rights Act of 1964, 42 U.S.C. 2000e et

seq. 519 U.S. at 342 (citing 42 U.S.C. 2000e(f))—a clearer

statutory preference for a single definition than the vaguer

“as defined in section 7411(a)” CAA provision at issue in this

case. Notwithstanding the requirement that the single statu-

tory definition be applied throughout Title VII, this Court

held that the meaning of the defined term could differ for

different provisions serving distinct purposes in Title VII."

[PSD] to conform to usage in other parts of the Act.” 123 Cong. Rec. at 36,331.

To the extent that statement sheds any light on Congress's legislative purpose

at all, it suggests only that the intention was to ensure that modifications be

subject to PSD in the first place by defining construction to include the modifi-

cation of existing sources. That goal is fully accomplished under the EPA’s

interpretation. The statement does not suggest that Congress directly ad-

dressed, and clearly resolved, the question whether ambiguities in the defini-

tion of “modification” must receive the same resolution in the NSPS and PSD

programs.

that the statute provided the definition of “employer” “for purposes of all

provisions of Title VII” in holding that it must be interpreted identically for all

purposes of the Act. Robinson v. Shell Oil Co., 70 F 3d 325, 329 (1995), rev'd,

519 U.S. 337 (1997).

Id. at 343-344. The “identical terms” maxim does not acquire

special force just because the terms are used in a definition."’

3. a. In any event, the PSD provisions themselves demon-

strate that Congress intended EPA to have ample discretion

to construe ambiguities in the PSD statutory scheme in a way

that would be sensitive to the particular features and pur-

poses of the PSD program. In several provisions, Congress

required EPA to promulgate regulations specifically imple-

menting the PSD program. See 42 U.S.C. 7471, 7475(a)(2),

7607(d)(1)(J). In Section 7470, Congress specified a unique

set of goals for the PSD program in particular, which are not

" The courts of appeals have similarly found that the “identical terms”

maxim may be overridden with respect to defined, as with non-defined, terms.

In Comite Pro Rescate De La Salud v. Puerto Rico Aqueduct & Sewer

Authority, 888 F 2d 180, 187 (1st Cir. 1989) (Breyer, J.), for example, the court

held that EPA may interpret the “various parts” of the statutory definition of

“solid waste” in an environmental statute differently for the Resource

Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., differently for

different purposes under the Act, even though Congress mandated that a single

definition of “solid waste” apply for all purposes of the statute. See Connecti-

cut Coastal Fishermen’s Ass'n v. Remington Arms Co., 989 F.2d 1305, 1315 (2d

Cir. 1993) (same); SKF USA, Inc. v. U.S., 263 F.3d 1369, 1379-1382 (Fed. Cir.

2001) (recognizing agency discretion to interpret single statutory definition of

“foreign like product” differently for two purposes, even though the statutory

definition applied for both purposes); Pharmanezx v. Shalala, 221 F 3d 1151,

1155-1157 (10th Cir. 2000) (recognizing agency discretion to interpret definition

of term “dietary supplement” and its component term “drug” differently in

different sections of a singie statute); United States v. Pornes-Garcia, 171 F.3d

142, 144-145, 147 (2d Cir.) (rejecting argument that the incorporation of the

definition of “aggravated felony” from 8 U.S.C. 1101(a)(43) into the Sentencing

Guidelines mandated identical interpretations of that term in both places), cert.

denied, 528 U.S. 880 (1999); Abbott Labs. v. Young, 920 F .2d 984, 987 (D.C. Cir.

1990) (“it is not impermissible under Chevron for an agency to interpret an

imprecise term differently in two separate sections of a statute which have

different purposes”); NRDC v. EPA, 822 F.2d 104, 115-117 (D.C. Cir. 1987)

(EPA reasonably gave defined term “standard of performance” two different

meanings in a single sentence of 33 U.S.C. 1316(d)).

identical to the goals of the Clean Air Act as whole, set forth

in Section 7401 of the Act. Among the PSD-specific purposes

are “to protect public health and welfare from any actual or

potential adverse effect which in the Administrator's judg-

ment may reasonably be anticipate[d] to occur from air pollu-

tion * * * notwithstanding attainment and maintenance of all

national ambient air quality standards,” “to preserve, protect,

and enhance the air quality in national parks, national wilder-

ness areas, national monuments, national seashores, and

other areas of special national or regional] natural, recre-

ational, scenic, or historic value,” “to insure that economic

growth will occur in a manner consistent with the preserva-

tion of existing clean air resources,” and “to assure that any

decision te permit increased air pollution * * * is made only

after careful evaluation of all the consequences of such a deci-

sion.” 42 U.S.C. 7470(1), (2), (3), and (5).

By enacting a particularized set of “goals and purposes”

for the PSD program, Congress necessarily recognized the

corollary principle: that, insofar as those purposes would not,

in EPA’s judgment, be fulfilled by regulations identical to

those promulgated for use in the NSPS program, the PSD

regulations may be different from those applicable to NSPS.

That principle extends even to regulations defining a common

term, such as “increase[] the amount of any air pollutant,”

that is used in the two programs. While any regulatory defi-

nition of “increase” must be consistent with the statutory

definition in Section 7411(a)(4), Congress authorized EPA to

tailor its regulatory treatment of the constituent terms of

that definition, insofar as they are ambiguous, to the “goals

and purposes” of each program.”

That is not to say that EPA is required to construe “modification” dif-

ferently for the PSD program than for NSPS purposes. Although at least since

1975 the NSPS regulatory definition of the same statutory term has looked to

maximum potential hourly emissions and was left undisturbed when Congress

b. There are other differences between the NSPS and

PSD programs that may warrant EPA, in the course of re-

solving statutory ambiguities, to do so differently with re-

spect to each.'* The NSPS program was enacted by Congress

as part of the Clean Air Act Amendments of 1970, Pub. L. No.

91-604, 84 Stat. 1676, and required EPA to develop broadly

applicable, uniform, technology-based emissions standards

for new or modified sources in specific industrial source cate-

gories. 42 U.S.C. 7411. Those standards are based on appli-

cation of the best demonstrated system of emission reduction

for particular industries as a whole, and apply regardless of

the actual effect that a source’s emissions has on air quality.

See ibid.; Potomac Elec. Power Co. v. EPA, 650 F.2d 509, 518

(4th Cir. 1981), cert. denied, 455 U.S. 1016 (1982) . That focus

extended the NSPS statutory definition to the PSD program in 1977, the D.C.

Circuit in New York erroneously held that “the CAA unambiguously defines

‘increases’ in terms of actual emissions” for PSD purposes. 413 F.3d at 39.

Congress’s use of the same definition of “modification” for both programs

demonstrates that EPA would be free to employ the same regulatory approach

for both if it concluded that such an approach would best advance the various

goals of the Act, and the new rules proposed in 2005 take a step in that

direction. See pp. 11-12, supra. But nothing in the Act compels the agency to

reach that conclusion.

’° EPA has consistently explained that the distinct purposes and structures

of the NSPS and PSD programs can justify different interpretations of “modi-

fication.” Even before the 1980 PSD regulations, EPA concluded that those

distinctions meant that it was not “bound to apply mechanically” the NSPS

definition of “modification” for PSD. 43 Fed. Reg. 26,394 (1978). That

understanding has continued through promulgation of the regulations at issue

here. See 45 Fed. Reg. at 52,713 (rejecting comment urging that PSD should

apply to certain pollutants only if NSPS is also applicable, because “the Act

requires PSD review, regardless of whether another rule already applies to the

source”); 57 Fed. Reg. at 32,316 (explaining divergence between PSD and

NSPS regulatory modification tests despite fact that both tests “are based on

the broad NSPS definition of ‘modification’ in section 111(a)(4) of the CAA”).

on efficient technology, independent of localized effect, makes

a focus on maximum hourly emissions rates reasonable.

The PSD provisions focus on ambient air quality and ap-

ply, through a permitting program, to sources that have the

potential to adversely impact such air quality. Thus, rather

than focus solely on technology-based performance standards,

as NSPS does, the PSD program focuses directly on the effect

of new construction and modification on local air quality,

which, in turn, makes a focus on the total amount of resulting

emissions in the 1980 and 1992 regulations reasonable. 42

U.S.C. 7470(1), 7475(a)(3), (6), and (7); see Northern Plains

Res. Council v. United States EPA, 645 F.2d 1349, 1356 (9th

Cir. 1981), whereas the 1970 NSPS program is “equipment

. ted” and applies regardless of effects on overall air qual-

it, , the “site-oriented” PSD program is “focused on where the

plant will be located and its potential effect on its environs”);

Potomac Elec. Power, 650 F.2d at 518 (significant difference

between PSD and NSPS is that PSD’s purpose “is to preserve

existing air quality” while NSPS applies “without regard to

the effect the emissions * * * will have on overall air quality”).

Congress thus enacted PSD under a sejarate statutory

mandate to regulate sources that might contribute to signifi-

cant deterioration of local air quality through increased emis-

sions, despite pre-existing CAA provisions, including the

technology-focused NSPS. 42 U.S.C. 7470; WEPCO, 893 F.2d

at 904 (noting that the NSPS program had not been entirely

successful); 123 Cong. Rec. 18,022 (1977) (statement by Sena-

tor Muskie that “[o}ne purpose of the committee provision to

prevent significant deterioration is to try to reverse the cur-

rent trend in air pollution. * * * The record to date under the

new source performance standards approach has been disap-

pointing.”). Such differences in the “purposes” and “scope of

the legislative power exercised,” Atlantic Cleaners, 286 U.S.

at 433, indicate that Congress did not mandate a single inter-

pretation of common statutory terms.”

CONCLUSION

The judgment of the court of appeals should be reversed.

Respectfully submitted.

PAUL D. CLEMENT

General Counsel SUE ELLEN WOOLDRIDGE

CHET M. THOMPSON Assistant Attorney General

Deputy General Counsel THOMAS G. HUNGAR

GRANTA Y. NAKAYAMA Deputy Solicitor General

Assistant Administrator JAMES A. FELDMAN

THOMAS W. SWEGLE Assistant to the Solicitor

CAROL S. HOLMES General

DAVID W. SCHNARE KATHERINE J. BARTON

ALAN DION JASON A. DUNN -

Attorneys Attorneys

United States Environmental

Protection Agency

JULY 2006

” Finally, the district court's alternative rationale for rejecting EPA’s

application of an actual, annual emissions test under the PSD program—that

Congress’s incorporation of the NSPS statutory definition of “modification”

into the PSD provisions also incorporated EPA’s then-existing NSPS regula-

tions interpreting “modification” and deprived EPA of discretion to depart

from them, see Pet. App. 58a, 62a-67a—is incorrect, and fundamentally at odds

with the principle of administrative deference at the core of Chevron. Indeed,

even the court of appeals rejected the proposition that Congress essentially

codified the 1977 NSPS regulations when it added the PSD provisions in 1977.

See Pet. App. 15a n.7 (The PSD regulations * * * could even be enforced as the

EPA urges”), 18a (“The EPA retains its authority to amend and revise this and

other regulations”). The district court's rationale is also inconsistent with this

Court’s recognition that, even when Congress reenacts a statutory provision

that is subject to a long-standing administrative interpretation, the agency

retains discretion to adopt other reasonable interpretations of the statute

through its rulemaking power. Helvering v. Reynolds, 313 U.S. 428, 432 (1941).

APPENDIX

STATUTORY AND REGULATORY PROVISIONS INVOLVED

1. 42 U.S.C. 7411 provides, in pertinent part:

§ 7411. Standards of performance for new stationary

sources

(a) Definitions

For purposes of this section:

* * * * *

(4) The term “modification” means any physical

change in, or change in the method of operation of,

a stationary source which increases the amount of

any air pollutant emitted by such source or which

results in the emission of any air pollutant not

previously emitted.

ok BS * + *

2. 42 U.S.C. 7470 provides:

§ 7470. Congressional declaration of purpose

The purposes of this part are as follows:

(1) to protect public health and welfare from any

actual or potential adverse effect which in the Admi-

nistrator’s judgment may reasonably be anticipate’ to

occur from air pollution or from exposures to pollu-

tants in other media, which pollutants originate

as emissions to the ambient air), notwithstanding

! So in original. Probably should be “anticipated”.

* So in original. Section was enacted without an opening par-

enthesis.

(1a)

attainment and maintenance of all national ambient

air quality standards;

(2) to preserve, protect, and enhance the air

quality in national parks, national wilderness areas,

national monuments, national seashores, and other

areas of special national or regional natural, recrea-

tional, scenic, or historic value;

(3) to insure that economic growth will occur in a

manner consistent with the preservation of existing

clean air resources;

(4) to assure that emissions from any source in

any State will not interfere with any portion of the

applicable implementation plan to prevent significant

deterioration of air quality for any other State; and

(5) to assure that any decision to permit increased

air pollution in any area to which this section applies

is made only after careful evaluation of all the conse-

quences of such a decision and after adequate pro-

cedural opportunities for informed public participa-

tion in the decisionmaking process.

3. 42 U.S.C. 7475 provides, in pertinent part:

§ 7475. Preconstruction requirements

(a) Major emitting facilities on which construction is

commenced

No major emitting facility on which construction is

commenced after August 7, 1977, may be constructed in

any area to which this part applies unless—

(1) a permit has been issued for such proposed

facility in accordance with this part setting forth

emission limitations for such facility which conform

to the requirements of this part;

(2) the proposed permit has been subject to a

review in accordance with this section, the required

analysis has been conducted in accordance with

regulations promulgated by the Administrator, and

a public hearing has been held with opportunity for

interested persons including representatives of the

Administrator to appear and submit written or oral

presentations on the air quality impact of such

source, alternatives thereto, control technology re-

quirements, and other appropriate considerations;

(3) the owner or operator of such facility demon-

strates, as required pursuant to section 7410(j) of

this title, that emissions from construction or

operation of such facility will not cause, or contri-

bute to, air pollution in excess of any (A) maximum

allowable increase or maximum allowable concen-

tration for any pollutant in any area to which this

part applies more than one time per year, (B)

national ambient air quality standard in any air

quality control region, or (C) any other applicable

emission standard or standard of performance

under this chapter;

(4) the proposed facility is subject to the best

available control technology for each pollutant sub-

ject to regulation under this chapter emitted from,

or which results from, such facility;

(5) the provisions of subsection (d) of this section

with respect to protection of class I areas have been

complied with for such facility;

(6) there has been an analysis of any air quality

impacts projected for the area as a result of growth

associated with such facility;

(7) the person who owns or operates, or proposes

to own or operate, a major emitting facility for

which a permit is required under this part agrees to

conduct such monitoring as may be necessary to

determine the effect which emissions from any such

facility may have, or is having, on air quality in any

area which may be affected by emissions from such

source; and

(8) in the case of a source which proposes to

construct in a class III area, emissions from which

would cause or contribute to exceeding the maxi-

mum allowable increments applicable in a class II

area and where no standard under section 7411 of

this title has been promulgated subsequent to

August 7, 1977, for such source category, the Ad-

ministrator has approved the determination of best

available technology as set forth in the permit.

* * * * *

4. 42 U.S.C. 7479 provides, in pertinent part:

§ 7479. Definitions

For purposes of this part—

(1) The term “major emitting facility” means any

of the following stationary sources of air pollutants

which emit, or have the potential to emit, one hun-

dred tons per year or more of any air pollutant from

the following types of stationary sources: fossil-fuel

fired steam electric plants of more than two hundred

and fifty million British thermal units per hour heat

input, coal cleaning plants (thermal dryers), kraft

pulp mills, Portland Cement plants, primary zinc

smelters, iron and steel mill plants, primary alumi-

num ore reduction plants, primary copper smelters,

municipal incinerators capable oi charging more than

fifty tons of refuse per day, hydrofluoric, sulfuric, and

nitric acid plants, petroleum refineries, lime plants,

phosphate rock processing plants, coke oven batter-

ies, sulfur recovery plants, carbon black plants

(furnace process), primary lead smelters, fuel conver-

sion plants, sintering plants, secondary metal pro-

duction facilities, chemical process plants, fossil-fuel

boilers of more than two hundred and fifty million

British thermal units per hour heat input, petroleum

storage and transfer facilities with a capacity exceed-

ing three hundred thousand barrels, taconite ore pro-

cessing facilities, glass fiber processing plants, char-

coal production facilities. Such term also includes

any other source with the potential to emit two hun-

dred and fifty tons per year or more of any air pollu-

tant. This term shail not include new or modified

facilities which are nonprofit health or education

institutions which have been exempted by the State.

* * * * *

(2) * * *

* * * * *

nection with any source or facility, includes the mod-

ification (as defined in section 7411(a) of this title) of

any source or facility.

(3) The term “best available control technuiogy”

means an emission limitation based on the maximum

degree of reduction of each pollutant subject to regu-

lation under this chapter emitted from or which

results from any major emitting facility, which the

permitting authority, on a case-by-case basis, taking

into account energy, environmental, and economic

impacts and other costs, determines is achievable for

such facility through application of production pro-

cesses and available methods, systems, and tech-

niques, including fuel cleaniiig, clean fuels, or treat-

ment or innovative fuel combustion techniques for

control of each such pollutant. In no event shall ap-

plication of “best available control technology” result

in emissions of any pollutants which will exceed the

emissions allowed by any applicable standard estab-

lished pursuant to section 7411 or 7412 of this title.

Emissions from any source utilizing clean fuels, or

any other means, to comply with this paragraph shall

not be allowed to increase above levels that would

have been required under this paragraph as it

existed prior to November 15, 1990.

* * * * *

5. 42 U.S.C. 7607 provides, in pertinent part:

§ 7607. Administrative proceedings and judicial review

* k * * *

(b) Judicial review

(1) A petition for review of action of the Admini-

strator in promulgating any national primary or secon-

dary ambient air quality standard, any emission stan-

dard or requirement under section 7412 of this title, any

standard of performance or requirement under section

7411 of this title, any standard under section 7521 of

this title (other than a standard required to be pre-

scribed under section 7521(b)(1) of this title), any de-

termination under section 7521(b)(5)' of this title, any

control or prohibition under section 7545 of this title,

any standard under section 7571 of this title, any rule

issued under section 7413, 7419, or under section 7420 of

this title, or any other nationally applicable regulations

promulgated, or final action taken, by the Admini-

strator under this chapter may be filed only in the

United States Court of Appeals for the District of

Columbia. A petition for review of the Administrator’s

action in approving or promulgating any implementa-

tion plan under section 7410 of this title or section

7411(d) of this title, any order under section 7411(j) of

this title, under section 7412 of this title,,’ under section

7419 of this title, or under section 7420 of this title, or

his action under section 1857c-10(c)(2)(A), (B), or (C) of

this title (as in effect before August 7, 1977) or under

regulations thereunder, or revising regulations for en-

hanced monitoring and compliance certification pro-

grams under section 7414(a)(3) of this title, or any other

final action of the Administrator under this chapter

(including any denial or disapproval by the Admini-

strator under subchapter I of this chapter) which is

locally or regionally applicable may be filed only in the

United States Court of Appeals for the appropriate

circuit. Notwithstanding the preceding sentence a peti-

tion for review of any action referred to in such sen-

tence may be filed only in the United States Court of

Appeals for the District of Columbia if such action is

based on a determination of nationwide scope or effect

and if in taking such action the Administrator finds and

publishes that such action is based on such a deter-

mination. Any petition for review under this subsection

' See References in text note below.

* So in original.

shall be filed within sixty days from the date notice of

such promulgation, approval, or action appears in the

Federal Register, except that if such petition is based

solely on grounds arising after such sixtieth day, then

any petition for review under this subsection shall be

filed within sixty days after such grounds arise. The

filing of a petition for reconsideration by the Admini-

strator of any otherwise final rule or action shall not

affect the finality of such rule or action for purposes of

judicial review nor extend the time within which a

petition for judicial review of such rule or action under

this section may be filed, and shall not postpone the

effectiveness of such rule or action.

(2) Action of the Administrator with respect to

which review could have been obtained under para-

graph (1) shall not be subject to judicial review in civil

or criminal proceedings for enforcement. Where a final

decision by the Administrator defers performance of

any nondiscretionary statutory action to a later time,

any person may challenge the deferral pursuant to

paragraph (1).

(d) Rulemaking

* * * * *

(9) In the case of review of any action of the

Administrator to which this subsection applies, the

court may reverse any such action found to be—

(A) arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law;

(B) contrary to constitutional right, power,

privilege, or immunity;

or limitations, or short of statutory right; or

(D) without observance of procedure required by

law, if (i) such failure to observe such procedure is

arbitrary or capricious, (ii) the requirement of

paragraph (7)(B) has been met, and (iii) the condition

of the last sentence of paragraph (8) is met.

ok + * * *

(e) Other methods of judicial review not authorized

Nothing in this chapter shall be construed to author-

ize judicial review of regulations or orders of the

Administrator under this chapter, except as provided in

this section.

* * * * *

6. 40 C.F.R. 51.166 (1987) provides, in pertinent part:

§ 51.166. Prevention of significant deterioration of air

quality.

* * * * *

(b) Definitions. All state plans shall use the fol-

lowing definitions for the purposes of this section. De-

viations from the following wording will be approved

only if the state specifically demonstrates that the sub-

mitted definition is more stringent, or at least as strin-

gent, in all respects as the corresponding definitions

below:

* * * * ok

(2)i) “Major modification” means any physical

change in or change in the method of operation of a ma-

jor stationary source that would result in a significant

10a

net emissions increase of any pollutant subject to regu-

lation under the Act.

* + a BS +

(iii) A physical change or change in the method of

operation shall not include:

* * * * *

(f) An increase in the hours of operation or in the

production rate, unless such change would be pro-

hibited under any federally enforceable permit condi-

tion which was established after January 6, 1975, pur-

suant to 40 CFR 52.21 or under regulations approved

pursuant to 40 CFR Subpart I or § 51.166.

+ * * + *

(3)(i) “Net emissions increase” means the amount by

which the sum of the following exceeds zero:

(a) Any increase in actual emissions from a

particular physical change or change in the method of

operation at a stationary source; and

(6) Any other increases and decreases in actual

emissions at the source that are contemporaneous with

the particular change and are otherwise creditable.

+ * * * *

(4) “Potential to emit” means the maximum capacity

of a stationary source to emit a pollutant under its

physical and operational design. Any physical or opera-

tional limitation on the capacity of the source to emit a

pollutant, including air pollution control equipment and

restrictions on hours of operation or on the type or

amount of material combusted, stored, or processed,

shall be treated as part of its design if the limitation or

the effect it would have on emissions is federally

lla

enforceable. Secondary emissions do not count in

determining the potential to emit of a stationary source.

* * * * +

(21)(i) “Actual emissions” means the actual rate of

emissions of a pollutant from an emissions unit, as

determined in accordance with paragraphs (b)(21)(ii)

through (iv) of this section.

(ii) In general, actual emissions as of a particular

date shall equal the average rate, in tons per year, at

which the unit actually emitted the pollutant during a

two-year period which precedes the particular date and

which is representative of normal source operation.

The reviewing authority may allow the use of a dif-

ferent time period upon a determination that it is more

representative of normal source operation. Actual

emissions shall be calculated using the unit’s actual

operating hours, production rates, and types of ma-

terials processed, stored, or combusted during the

selected time period.

(iii) The reviewing authority may presume that

source-specific allowable emissions for the unit are

equivalent to the actual emissions of the unit.

(iv) For any emissions unit which has not begun

normal operations on the particular date, actual emis-

sions shall equal the potential to emit of the unit on that

date.

* + 4 * *

(23)G) “Significant” means, in reference to a net

emissions increase or the potential of a source to emit

any of the following pollutants, a rate of emissions that

would equal or exceed any of the following rates:

12a

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)

Nitrogen oxides: 40 tpy

Sulfur dioxide: 40 tpy

Particulate matter: 25 tpy of particulate matter

emissions. 15 tpy of PM,, emissions.

Ozone: 40 tpy of volatile organic compounds

Lead: 0.6 tpy

Asbestos: 0.007 tpy

Beryllium: 0.0004 tpy

Mercury: 0.1 tpy

Vinyl! chloride: 1 tpy

Fluorides: 3 tpy

Sulfuric acid mist: 7 tpy

Hydrogen sulfide (H,S): 10 tpy

Total reduced sulfur (including H.S): 10 tpy

Reduced sulfur compounds (including H,S): 10 tpy

* * * * *

7. 40 C.F.R. 60.14 (1987) provides, in pertinent part:

§ 60.14. Modification.

(a) Except as provided under paragraphs (e) and (f)

of this section, any physical or operational change to an

existing facility which results in an increase in the

emission rate to the atmosphere of any pollutant to

which a standard applies shall be considered a modifi-

cation within the meaning of section 111 of the Act.

Upon modification, an existing facility shall become an

affected facility for each pollutant to which a standard

applies and for which there is an increase in the

emission rate to the atmosphere.

13a

(b) Emission rate shall be expressed as kg/hr of any

pollutant discharged into the atmosphere for which a

standard is applicable. * * *

* + * * *

(e) The following shall not, by themselves, be con-

sidered modifications under this part:

(1) Maintenance, repair, and replacement which the

Administrator determines to be routine for a source

category, subject to the provisions of paragraph (c) of

this section and § 60.15.

(2) An increase in production rate of an existing

facility, if that increase can be accomplished without a

capital expenditure on that facility.

(3) An increase in the hours of operation.

(4) Use of an alternative fuel or raw material if,

prior to the date any standard under this part becomes

applicable to that source type, as provided by § 60.1, the

existing facility was designed to accommodate that

alternative use. A facility shall be considered to be

designed to accommodate an alternative fuel or raw

material if that use could be accomplished under the

facility’s construction specifications as amended prior to

the change. Conversion to coal required for energy

considerations, as specified in section 111(a)(8) of the

Act, shall not be considered a modification.

(5) The addition or use of any system or device

whose primary function is the reduction of air

pollutants, except when an emission control system is

removed or is replaced by a system which the

Administrator determines to be less environmentally

beneficial.

l4a

(6) The relocation or change in ownership of an

existing facility.

* * * * *

8. 40 C.F.R. 51.166 (1993) provides, in pertinent part:

§ 51.166. Prevention of significant deterioration of air

quality.

* * * * *

(b) Definitions. All state plans shall use the

following definitions for the purposes of this section.

Deviations from the following wording will be approved

only if the state specifically demonstrates that the

submitted definition is more stringent, or at least as

stringent, in all respects as the corresponding

definitions below:

* * * * *

(2)i) Major modification means any physical

change in or change in the method of operation of a

major stationary source that would result in a

significant net emissions increase of any pollutant

subject to regulation under the Act.

* + * * *

(iii) A physical change or change in the method of

operation shall not include: * * *

* * * * *

(f) An increase in the hours of operation or in the

production rate, unless such change would be pro-

hibited under any federally enforceable permit con-

dition which was established after January 6, 1975, pur-

suant to 40 CFR 52.21 or under regulations approved

pursuant to 40 CFR subpart I or § 51.166.

l5a

* * * * *

(3\i) Net emissions increase means the amount by

which the sum of the following exceeds zero:

(a) Any increase in actual emissions from a parti-

cular physical change or change in the method of

operation at a stationary source; and

(6) Any other increases and decreases in actual

emissions at the source that are contemporaneous with

the particular change and are otherwise creditable.

* * * * *

(4) Potential to emit means the maximum capacity

of a stationary source to emit a pollutant under its

physical and operational design. Any physical or opera-

tional limitation on the capacity of the source to emit a

pollutant, including air pollution control equipment and

restrictions on hours of operation or on the type or

amount of material combusted, stored, or processed,

shall be treated as part of its design if the limitation or

the effect it would have on emissions is federally

enforceable. Secondary emissions do not count in

determining the potential to emit of a stationary source.

* * + * *

(211) Actual emissions means the actual rate of

emissions of a pollutant from an emissions unit, as

determined in accordance with paragraphs (b)(21)(ii)

through (iv) of this section.

(ii) In general, actual emissions as of a particular

date shall equal the average rate, in tons per year, at

which the unit actually emitted the pollutant during a

two-year period which precedes the particular date and

which is representative of normal source operation.

The reviewing authority may allow the use of a dif-

l6a

ferent time period upon a determination that it is more

representative of normal source operation. Actual

emissions shall be calculated using the unit’s actual

operating hours, production rates, and types of mate-

rials processed, stored, or combusted during the se-

lected time period.

(iii) The reviewing authority may presume that

source-specific allowable emissions for the unit are

equivalent to the actual emissions of the unit.

(iv) For any emissions unit (other than an electric

utility steam generating unit specified in paragraph

(b)(21)(v) of this section) which has not begun normal

operations on the particular date, actual emissions shall

equal the potential to emit of the unit on that date.

(v) For an electric utility steam generating unit

(other than a new unit or the replacement of an existing

unit) actual emissions of the unit following the physical

or operational change shall equal the representative

actual annual emissions of the unit following the physi-

cal or operational change, provided the source owner

or operator maintains and submits to the reviewing

authority, on an annual basis for a period of 5 years

from the date the unit resumes regular operation, infor-

mation demonstrating that the physical or operational

change did not result in an emissions increase. A longer

period, not to exceed 10 years, may be required by the

reviewing authority if it determines such a period to be

more representative of normal source post-change

operations.

* * * * *

(23)(i) Significant means, in reference to a net emis-

sions increase or the potential of a source to emit any of

17a

the following pollutants, a rate of emissions that would

equal or exceed any of the following rates:

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)

Nitrogen oxides: 40 tpy

Sulfur dioxide: 40 tpy

Particulate matter: 25 tpy of particulate matter

emissions. 15 tpy of PM,, emissions.

Ozone: 40 tpy of volatile organic compounds

Lead: 0.6 tpy

Asbestos: 0.007 tpy

Beryllium: 0.0004 tpy

Mercury: 0.1 tpy

Viny! chloride: 1 tpy

Fluorides: 3 tpy

Sulfuric acid mist: 7 tpy

Hydrogen sulfide (H,S): 10 tpy

Total reduced sulfur (including H.S): 10 tpy

Reduced sulfur compounds (including H,S): 10 tpy

Municipal waste combustor organics (measured as

total tetra-through octa-chlorinated dibenzo-p-

dioxins and dibenzofurans): 3.2x10° megagrams

per year (3.5 x10° tons per year)

Municipal waste combustor metals (measured as arti-

culate matter): 14 megagrams per year (15 tons

per year) Municipal waste combustor acid gases

(measured as sulfur dioxide and hydrogen chlor-

ide): 36 megagrams per year (40 tons per year)

* * * * *

(32) Representative actual annual emissions

means the average rate, in tons per year, at which the

source is projected to emit a pollutant for the two-year

18a

period after a physical change or change in the method

of operation of a unit, (or a different consecutive two-

year period within 10 years after that change, where

the reviewing authority determines that such period is

more representative of normal source operations),

considering the effect any such change will have on

increasing or decreasing the hourly emissions rate and

on projected capacity utilization. In projecting future

emissions the reviewing authority shall:

(i) Consider all relevant information, including but

not limited to, historical operational data, the com-

pany’s own representations, filings with the State or

Federal regulatory authorities, and compliance plans

under title IV of the Clean Air Act; and

(ii) Exclude, in calculating any increase in emissions

that results from the particular physical change or

change in the method of operation at an electric utility

steam generating unit, that portion of the unit’s emis-

sions following the change that could have been accom-

modated during the representative baseline period and

is attributable to an increase in projected capacity

utilization at the unit that is unrelated to the particular

change, including any increased utilization due to the

rate of electricity demand growth for the utility system

as a whole.

* *K + + *

9. 40 C.F.R. 60.14 (1993) provides, in pertinent part:

§ 60.14. Modification.

(a) Except as provided under paragraphs (e) and (f)

of this section, any physical or operational change to an

existing facility which results in an increase in the

emission rate to the atmosphere of any pollutant to

which a standard applies shall be considered a modifi-

19a

cation within the meaning of section 111 of the Act.

Upon modification, an existing facility shall become an

affected facility for each pollutant to which a standard

applies and for which there is an increase in the

emission rate to the atmosphere.

(b) Emission rate shall be expressed as kg/hr of any

pollutant discharged into the atmosphere for which a

standard is applicable. * * *

* * * * *

(e) The following shall not, by themselves, be

considered modifications under this part:

(1) Maintenance, repair, and replacement

which the Administrator determines to be routine for

a scurce category, subject to the provisions of

paragraph (c) of this section and § 60.15.

(2) An increase in production rate of an

existing facility, if that increase can be accomplished

without a capital expenditure on that facility.

(3) An increase in the hours of operation.

(4) Use of an alternative fuel or raw material if,

prior to the date any standard under this part

becomes applicable to that source type, as provided

by § 60.1, the existing facility was designed to accom-

modate that alternative use. A facility shall be

considered to be designed to accommodate an alter-

native fuel or raw material if that use could be ac-

complished under the facility’s construction specifica-

tions as amended prior to the change. Conversion to

coal required for energy considerations, as specified

in section 111(a)(8) of the Act, shall not be considered

a modification.

20a

(5) The addition or use of any system or device

whose primary function is the reduction of air

pollutants, except when an emission control system

is removed or is replaced by a system which the

Administrator determines to be less environmentally

beneficial.

(6) The relocation or change in ownership of an

existing facility.

Ba BS + of *

(h) No physical change, or change in the method of

operation, at an existing electric utility steam

generating unit shall be treated as a modification for

the purposes of this section provided that such change

does not increase the maximum hourly emissions of any

pollutant regulated under this section above the

maximum hourly emissions achievable at that unit

during the 5 years prior to the change.

* ok * + BS

10. 40 C.F.R. 52.21 (2003) provides, in pertinent part:

§ 52.21. Prevention of significant deterioration of air

quality.

(a1) Plan disapproval. The provisions of this

section are applicable to any State implementation plan

which has been disapproved with respect to prevention

of significant deterioration of air quality in any portion

of any State where the existing air quality is better

than the national ambient air quality standards. Spe-

cific disapprovals are listed where applicable, in sub-

parts B through DDD of this part. The provisions of

this section have been incorporated by reference into

the applicable implementation plans for various States,

as provided in subparts B through DDD of this part.

2la

Where this section is so incorporated, the provisions

shall also be applicable to all lands owned by the

Federal Government and Indian Reservations located

in such State. No disapproval with respect to a State’s

failure to prevent significant deterioration of air quality

shall invalidate or otherwise affect the obligations of

States, emission sources, or other persons with respect

to all portions of plans approved or promulgated under

this part.

(2) Applicability procedures. (i) The requirements

of this section apply to the construction of any new

major stationary source (as defined in paragraph (b)(1)

of this section) or any project at an existing major

stationary source in an area designated as attainment

or unclassifiable under sections 107(d)(1)(A)Gi) or (iii) of

the Act.

(ii) |The requirements of paragraphs (j) through (r)

of this section apply to the construction of any new

major stationary source or the major modification of

any existing major stationary source, except as this

section otherwise provides.

(iii) No new major stationary source or major

modification to which the requirements of paragraphs

(j) through (r)(5) of this section apply shall begin actual

construction without a permit that states that the

major stationary source or major modification will meet

those requirements. The Administrator has authority

to issue any such permit.

(iv) The requirements of the program will be

applied in accordance with the principles set out in

paragraphs (a)(2)(iv)(a) through (f) of this section.

(a) Except as otherwise provided in paragraphs

(a)(2)(v) and (vi) of this section, and consistent with the

22a

definition of major modification contained in paragraph

(b)(2) of this section, a project is a major modification

for a regulated NSR pollutant if it causes two types of

emissions increases—a significant emissions increase

(as defined in paragraph (b)(40) of this section), and a

significant net emissions increase (as defined in

paragraphs (b)(3) and (b)(23) of this section). The

project is not a major modification if it does not cause a

significant emissions increase. If the project causes a

significant emissions increase, then the project is a

major modification only if it also results in a significant

net emissions increase.

(6) The procedure for calculating (before beginning

actual construction) whether a significant emissions

increase (i.e., the first step of the process) will occur

depends upon the type of emissions units being modi-

fied, according to paragraphs (a)(2)(iv)(c) through (f) of

this section. The procedure for calculating (before

beginning actual construction) whether a significant net

emissions increase will occur at the major stationary

source (7.e., the second step of the process) is contained

in the definition in paragraph (b)(3) of this section.

Regardless of any such preconstruction projections, a

major modification results if the project causes a

significant emissions increase and a significant net

emissions increase.

projects that only involve existing emissions units. A

significant emissions increase of a regulated NSR pol-

lutant is projected to occur if the sum of the difference

between the projected actual emissions (as defined in

paragraph (b)(41) of this section) and the baseline actual

emissions (as defined in paragraphs (b)(48)(i) and (ii) of

this section), for each existing emissions unit, equals or

23a

exceeds the significant amount for that pollutant (as

defined in paragraph (b)(23) of this section).

(d) Actual-to-potential test for projects that only

involve construction of a new emissions unit(s). A

significant emissions increase of a regulated NSR pol-

lutant is projected to occur if the sum of the difference

between the potential to emit (as defined in paragraph

(b)(4) of this section) from each new emissions unit

following completion of the project and the baseline

actual emissions (as defined in paragraph (b)(48)(iii) of

this section) of these units before the project equals or

exceeds the significant amount for that pollutant (as

defined in paragraph (b)(23) of this section).

(e) Emission test for projects that involve Clean

Units. For a project that will be constructed and

operated at a Clean Unit without causing the emissions

unit to lose its Clean Unit designation, no emissions

increase is deemed to occur.

(f) Hybrid test for projects that involve multiple

types of emissions units. A significant emissions in-

crease of a regulated NSR pollutant is projected to

occur if the sum of the emissions increases for each

emissions unit, using the method specified in para-

graphs (a)(2)(iv)(c) through (e) of this section as appli-

cable with respect to each emissions unit, for each type

of emissions unit equals or exceeds the significant

amount for that pollutant (as defined in paragraph

(b)\(23) of this section). For example, if a project in-

volves both an existing emissions unit and a Clean Unit,

the projected increase is determined by summing the

values determined using the method specified in para-

graph (a)(2)(iv)(c) of this section for the existing

unit and using the method specified in paragraph

(a)(2)(iv)(e) of this section for the Clean Unit.

* * * * *

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.