# Reply Brief — Environmental Defense v. Duke Energy Corporation

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0237%3A15

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 2007
- **Citation:** 549 U.S. 561

## Text

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ENVIRONMENTAL DEFENSE, ET AL., PETITIONERS
Vv.
DUKE ENERGY CORPORATION, ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

REPLY BRIEF FOR THE UNITED STATES
AS RESPONDENT SUPPORTING PETITIONERS

PAUL D. CLEMENT
Solicitor General
ROGER R. MARTELLA, JR. D ve pan be fey at
Acting General Counsel CPETeMens Saee
U nited States Environmental weeneng _— D.C. 20530-0001
Protection Agency 202) 514-2217
Washington, D.C. 20460

In the Supreme Court of the Gnited States

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I. The court of appeals exceeded its jurisdiction

TABLE OF CONTENTS

A. Section 307(b) precluded the judgment

B.

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Petitioner offers no defense of the court of

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II. Duke’s arguments are inconsistent with the regulatory

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A. The regulations preclude Duke’s new

B.

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Duke’s new theory conflicts with the
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III. The Act does not require an hourly-rate test

A. Congress expressed no intent to condition

Cases:

PSD modifications on a finding of an NSPS

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Congress did not incorporate any
regulatory definition of modification into

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Duke’s remaining arguments ignore the

plain language of the Act .................

TABLE OF AUTHORITIES

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

1980)

II

Cases—Continued: : Page
Auer v. Robbins, 519 U.S. 452 (1997) ................. 11
Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

SEP. sb5cddd waned tbudaseuededkedsiebaneneeeene 11
Bragdon v. Abbott, 524 U.S. 624 (1998) ............... 18

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984) .. 15, 20
FDIC v. Philadelphia Gear Corp., 476 U.S. 426

i kwdbayen. dns teenhsdadudecsnnntiecdanenesed 18
Helvering v. Reynolds, 313 U.S. 428 (1941) ........... 18
IBP, Inc. v. Alvarez, 126 S. Ct. 514 (2005) ............. 17
New York v. United States EPA, 413 F.3d 3 (D.C. Cir.

DT inGucnnatubeniibsuccanuseniexene 4, 9, 14, 16, 18
Puerto Rican Cement Co. v. United States EPA, 889

Pa GE CIUED be cdcrecscnestcoseceses 10, 14
United States v. Chevron U.S.A., Inc., 639 F. Supp.

SY WE MED cud cedwascuuegecsoudnensaens 8
United States v. Cinergy Corp., 458 F.3d 705 (7th Cir.

DEN ddidibeddslbhtavhy skamhawdute akeon 3, 10, 12, 17
Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901

GL ED Kedccusctiinexiendcksdunctess 9, 12,14

Statutes, regulations and rule:

Clean Air Act, 42 U.S.C. 7401 et seq.:

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Statutes, regulations and rule—Continued: Page

42 U.S.C. 7607(b)(2) (§ 307(b)(2)) .. 0.6.6.6. 20 ee 3, 5, 15

40 C.F.R. (1987):

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Regulations and rule—Continued: Page
Pt. 60:
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N.C. Admin Code tit. 15A r.2D.0530 .................. 8
S.C. Code Ann, Regs. 61-62.5., std. 7 ...............4-- 8
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Miscellaneous:

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70 Fed. Reg. (2005):

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REPLY BRIEF FOR THE UNITED STATES
AS RESPONDENT SUPPORTING PETITIONERS

Perhaps the most significant aspect of Duke’s brief is what it
does not say: Duke offers no defense of the court of appeals’
central holding that the New Source Performance Standards
(NSPS) and Prevention of Significant Deterioration (PSD) regu-
latory definitions must be identical, and instead characterizes the
court’s rationale as merely a “straw man” (Br. 31) that does not
reflect Duke’s position. Also remarkable, however, is what Duke
does embrace as its position. For the first time ever in this case,
Duke asserts that a series of regulatory provisions, whose al-
leged significance had somehow escaped the attention of the
regulators and the regulated alike, requires that a separate regu-
latory definition of “modification” set forth in a different part of
the regulations actually applies of its own independent force in
the PSD context, serving as a sort of threshold hourly-rate test
that must be met before the PSD definition of “major modifica-
tion” even comes into play. Br. 23, 28, 33-34. Duke's arguments
lack merit, and should be rejected.

Duke seeks to bolster its new and implausible legal argu-
ments by erroneously suggesting that EPA’s contrary interpre-
tation was adopted only in 1999 (Br. 2) and by exaggerating the
real-world impact of EPA’s position. In reality, EPA consis-
tently stated and reaffirmed its current position during the en-
tire time period relevant to this case (see, e.g., U.S. Br. 27-28 &
n.9; notes 7-8, 10, infra), and that longstanding position has not
had the drastic consequences posited by Duke. According to
Duke, EPA’s interpretation means that PSD “would unavoidably
be triggered, repeatedly, during the life of any industrial facil-
ity.” Br. 46. Under the 1980 and 1992 rules that control this
case, however, PSD requirements would not apply to mainte-
nance work performed by Duke at one of its facilities if the work
(a) constituted routine maintenance, repair, or replacement;

——_

q (1)

|

2

(b) resulted in emissions increases that were cancelled out by
contemporaneous emissions reductions; (c) resulted in emissions
increases that were not “significant”; (d) restored a temporarily
disabled unit to service; or (e) did not result in increased actual
annual emissions. 40 C.F .R. 51.166(b)(2), (3), (21) and (23). (Un-
less otherwise indicated, this brief cites to the 1987 regulatory
recodification.) This Court’s review in this case should proceed
from the position consistently advanced by EPA and required by
its rules, not the caricature offered by Duke and its amici.’

I. THE COURT OF APPEALS EXCEEDED ITS JURISDICTION

A. Section 307(b) Precluded The Judgment Below

1. As previously demonstrated (U.S. Br. 35-50), the court of
appeals erred in holding that “modification” must “be inter-
preted identically in the [NSPS and PSD] programs.” Pet. App.
17a.” But more fundamentally, the court of appeals erred in even
reaching that question, because the purported “identical{ity]”
requirement would operate to invalidate the regulations. The

' Duke’s contention (Br. 3) that it conducted its modifications “in full view
and with the knowledge of EPA and the state authorities” is incorrect. Mere
knowledge of the existence of a maintenance project does not provide know-
ledge that the project is a PSD “major modification.” For just that reason,
States such as North Carolina cannot and do not conduct PSD evaluations as
part of routine inspections. See, ¢.g., J.A. 333 (“|Wlithout doing rather
extensive and complex testing you really can’t make definitive statements as
to whether a facility is in compliance” for PSD.); J.A. 344-345 (State did not
perform PSD evaluation during inspections of Duke facilities); J.A. 347 (“[J Just
from the inspection and looking at the boiler, you couldn't say it is subject to
PSD or not.”); J.A. 363 (PSD “determinations are not made in the field.”); see
also J.A. 386 (Duke's primary permitting employee never told the State about
the projects alleged in the complaint.).

* The government reiterates that, because the statutory term “modification”
is ambiguous, EPA retains discretion to adopt other reasonable definitions of
that term that may differ from those in the 1980 and 1992 PSD regulations.
U.S. Br. 47-48 0.18, 50 n.20.

3

PSD regulations—which do not so much as mention an hourly-
rate emissions test, repeatedly refer to “actual emissions,” and
measure emissions in “tons per year”—cannot be read to apply
the hourly test found in the NSPS regulations, and contain provi-
sions for netting and determining significant levels of emissions
that are undisputedly absent from the NSPS regulations, as
Duke concedes (Br. 34-35). Thus, if the court of appeals were
right that Congress required the meaning of “modifica-
tion”—including the resolution of any ambiguities in that
term—to be “identical{]” in the two programs, the effect would
necessarily be to invalidate one or the other set of regulations as
contrary to the Clean Air Act (CAA). As the Seventh Circuit has
recently explained, because the PSD “regulation does not define
[modification] as a change in the hourly emissions rate,” an argu-
ment that it must be defined that way “seems an attack on the
validity of the regulation rather than an argument about its
meaning, and issues of validity * * * are beyond the jurisdic-
tion of a regional circuit to resolve.” United States v. Cinergy
Corp., 458 F.3d 705, 709 (2006). The court of appeals exceeded
its jurisdiction under Section 307(b)(2), 42 U.S.C. 7607(b)(2).

2. The Section 307(b)(2) preclusion is particularly clear in this
case, because Duke actually did participate in a D.C. Circuit case
involving a claim that the 1980 and 1992 PSD regulations were
unlawful because the CAA requires EPA to apply a maximum
hourly emissions test for PSD. See U.S. Br. 32-35. Review of
Duke’s current assertions thus “could have been obtained” on a
petition for review and is precluded in an enforcement action like
this one. 42 U.S.C. 7607(b)(2).

Duke’s contention (Br. 20, 23, 32) that it could not have raised
in the D.C. Circuit the issue that the court of appeals decided in
this case is wrong. As set forth in our opening brief (at 33), the
question whether the Act required an hourly-rate PSD test was
raised in the challenge to the 1980 rules in the D.C. Circuit,
which resulted in a settlement agreement in which the parties

4

agreed that EPA would propose amending the regulations to
delete language requiring an “actual, annual” test and add a test
based on “potential to emit (as calculated in terms of pounds of
pollutant emitted per hour).” Settlement Agreement at 2 & Exh.
B (Petitioner has requested leave to lodge the agreement with
this Court per Sup. Ct. R. 32.3.). Ultimately, the D.C. Circuit
decided that very challenge in New York v. United States EPA,
413 F.3d 3 (2005). See id. at 19-20 (ruling on industry's challenge
to “the 1980 rule’s definition of modification in the NSR context
to the extent that it differs from the NSPS definition”); U.S. Br.

B. Petitioner Offers No Defense Of The Court Of Appeals’ Hold-

ing

Duke makes no effort to defend the reasoning or holding of
the court of appeals. Indeed, in response to the government’s
showing that the CAA cannot plausibly be read to require EPA
to “adopt identical modification regulations for the NSPS and
NSR programs,” Duke asserts that the government has attacked
a “straw man” that “does not accurately describe Duke’s posi-
tion.” Br. 31. But, whether or not Duke wishes to defend it, that
is precisely what the court of appeals held. See Pet. App. 14a
(“Congress intended the statutory definitions of ‘modification’ in
the PSD and NSPS provisions to be interpreted identically”); id.
at 17a.”

Duke thus concedes that the court of appeals’ holding was
incorrect. Moreover, Duke makes no effort to dispute the govern-
ment’s showing that the court of appeals’ holding effectively
invalidated the PSD regulations. Accordingly, Duke offers no

* The sole basis for the court of appeals’ ruling was its view that the NSPS
and PSD regulations must be “identicaljJ.” Indeed, the court conceded that it
would be permissible for the PSD regulations to “he enforced as the EPA
urges”—but only if “the NSPS regulations are similarly interpreted and
enforced.” Pet. App. 15a n.7; see id. at 18a.

5

basis on which this Court could avoid the conclusion that Section
307(b)(2) precluded the court of appeals from undertaking the
statutory review that provides the essential underpinning for its
judgment. The Court should therefore reverse the judgment of
the court of appeals.

II. DUKE’S ARGUMENTS ARE INCONSISTENT WITH THE
REGULATORY TEXT AND EPA’S INTERPRETATIONS

It is common ground in this case that PSD review applies only
to “[mJajor modification[s}.” 40 C.F.R. 51.166(b)(2)(i). For the
first time in this case, however, Duke now advances the argu-
ment (Br. 23, 28, 33-34, 36-37) that, by virtue of provisions never
previously relied on in this case, a regulatory definition of “modi-
fication” set forth in a different part of the regulations applies of
its own force as an independent threshold requirement in the
PSD context as well. In Duke’s latest view, a “major modifica-
tion” for PSD purposes must first be shown to be a “modifica-
tion” for NSPS purposes because “(t]he general provisions of
both Parts of the 1980 rules define ‘modification’ as * * * an
NSPS ‘modification.” Br. 34.

Duke’s new theory that the regulations impose an independ-
ent “modification” requirement in the PSD context is patently
incorrect. The text of the regulations, EPA’s consistent interpre-
tations, and the relevant case law have uniformly established
that PSD “major modifications” are neither a subset nor a
superset of NSPS “modifications,” but rather are a distinct con-
cept of “modification” that EPA has tailored to the varied needs
of the PSD program over time. Duke’s belatedly discovered
regulatory “modification” argument should be rejected.

A. The Regulations Preclude Duke’s New Position

1. Duke’s new regulatory theory is irreconcilable with the
language and structure of the PSD regulations themselves. No-
where do those regulations provide or suggest that PSD is trig-
gered only by changes that first qualify as “modification{s]” un-

6

der the NSPS regulations. Indeed, while the PSD regulations
consistently focus on actual, annual increases and measurements
in tons per year, the PSD regulations do not even mention the
NSPS test or any hourly-rate measurement. Nor can it be ar-
gued that EPA somehow intended to apply the NSPS test sub
stlentio; where EPA intended a reference to the NSPS rules, it
made that intent explicit.“

Far from imposing the NSPS “modification” test as a sepa-
rate prerequisite for PSD coverage, the PSD regulations instead
make clear that a “major modification” is sufficient in itself to
trigger PSD applicability. See 40 C.F.R. 51.166(i)(1) (“no * * *
major modification shall begin actual construction” unless it sat-
isfies the PSD requirements). The PSD regulations define “ma-
jor modification” without reference to the distinct NSPS “modifi-
cation” concept, and use terminology that differs in crucial re-
spects from the NSPS regulatory definition. See U.S. Br. 20-23.
And to the extent that Duke’s argument rests on the suggestion
that the regulatory test for “modification” must be read into the
“major modification” concept because the latter phrase also uses
the word “modification,” that suggestion is refuted by the unam-
biguous regulatory text. “‘Major modification’ means any physi-
cal change in or change in the method of operation of a major
stationary source that would result in a significant net emissions
increase.” 40 C.F.R. 51.166(b)(2)(i) (emphasis added). There is
no room in that definition for an additional threshold inquiry

* See, e.g., 40 C.F.R. 51.166(b)12) (BACT under PSD must comply with
“any applicable standard under 40 CFR parts 60 and 61,” which govern NSPS);
40 C.F.R. 51.166(b)(16)() (PSD emissions standards must be at least as
stringent as “[t]he applicable standards as set forth in 40 CFR parts 60 and
61"); 40 C.F.R. 51.166(b)(17) (“Federally enforceable means all limitations and
conditions which are enforceable by the Administrator, including those
requirements developed pursuant to 40 CFR Parts 60 and 61.”); 40 C.F.R.
51.166(j)(1)) (requiring a major source or modification to “meet each applicable
emissions limitation under the |SIP| and * * * under 40 CFR parts 60 and
61”).

7

under the NSPS test for “modification.” Indeed, any such in-
quiry would render much of the PSD definition entirely superflu-
ous, because the NSPS test likewise requires a physical or opera-
tional change. 40 C.F .R. 60.14(a).

2. Duke’s new theory of an independent “modification” re-
quirement is based on three regulatory provisions that are said
to make an NSPS “modification” a prerequisite to a PSD “major
modification.” First, Duke cites 40 C.F.R. 51.166(b)(8)—a provi-
sion that it has never previously cited in this case—for the propo-
sition that “‘Construction’ means the ‘fabrication, erection, in-
stallation, demolition, or modification’ of a facility.” Br. 33 (first
emphasis added); see Br. 23, 35. Duke’s quotation elides a key
word; the regulation does not state that construction “means”
modification, but rather that construction “means any physical
change,” “including” modification. 40 C.F.R. 51.166 (b)(8) (em-
phasis added). Thus, the regulation provides no support for
Duke’s view that PSD is limited to NSPS “modifications.”

Second, Duke relies (Br. 2, 10, 23, 28, 34) on another regula-
tion it has never previously cited in this litigation, which provides
that “all terms not defined herein will have the meaning given
them in the Act.” 40 C.F.R. 51.100. That provision has no appli-
cation, because the term “major modification” is defined in the
regulations (without mention of NSPS or an hourly-rate test). In
any event, as the court of appeals recognized, the statutory defi-
nition of “modification” at 42 U.S.C. 7411(a)(4) permits either an
“hourly rate” test or an “actual, annual increase” test. See Pet.
App. 15a n.7, 18a. Thus, even if 40 C.F.R. 51.100 were applicable
here, it would not advance Duke’s new theory.

Third, Duke cites (Br. 2, 10, 23, 28, 34-35) the definition of
“modification” found at 40 C.F.R. 52.01(d). The Part 52 regula-
tions, however, are simply inapplicable in this case. They apply
only in the absence of an EPA-approved state SIP, see 40 C.F.R.
52.21(a); 45 Fed. Reg. 52,676 (1980), but the state SIPs in this
case were approved by EPA. See U.S. Br. 4 n.2; Duke Br. 10 n.3.

8

Moreover, state SIPs are required to (and do) incorporate the
regulations in Part 51, not Part 52. See 40 C.F.R. 51.166(a)(1)
and (b); N.C. Admin. Code tit. 15A r.2D.0530; S.C. Code Ann.
Regs. 61-62.5, std. 7. And Section 52.01(d) is expressly limited to
a narrower category of pollutants than the PSD program covers,
so it would be nonsensical to apply it to PSD.

In any event, the Section 52.01(d) definition of “modification”
was part of the 1974 PSD regulatory program, which was re-
placed by EPA’s 1978 and 1980 regulations at 40 C.F.R. 51.166
and 52.21. See 45 Fed. Reg. at 52,735. Not surprisingly, then,
Duke identifies no relevant instances post-dating promulgation
of the 1980 regulations in which EPA has relied on 40 C.F.R.
52.01(d) in the PSD context. Nor, with the exception of one case
involving violations of the pre-1980 PSD regime, has Section
52.01(d) been cited at all, for any reason, by any federal court
since 1980, with the exception of one case involving violations of
the pre-1980 PSD regime. See United States v. Chevron U.S.A,
Inc., 639 F. Supp. 770, 778 (W.D. Tex. 1985) (1977-1979 violation).
Indeed, Duke itself did not make its newfound argument (or cite
Section 52.01(d)) in the court of appeals or in its brief in opposi-
tion in this Court.” ;

B. Duke’s New Theory Conflicts With The Consistent Views

Expressed By EPA And The Courts

Duke’s new regulatory theory conflicts not only with the PSD
regulations themselves, but with EPA’s consistent interpretation
of those regulations. The first rules proposed after enactment of
the 1977 CAA amendments, for example, make clear that PSD

* While Duke did cite Section 52.01(d) once in the district court, in its brief
in support of its summary judgment motion (at 6 n.12), it did so in a footnote
giving the history of the regulations and in the course of arguing that Congress
in 1977 codified the pre-1977 PSD regulations. It did not make its current
regulatory argument in the district court or otherwise argue that Section
52.01(d) has continuing effect for PSD purposes.

9

applicability was determined by reference to the “major modifica-
tion” definition, not some separate definition of “modification.”
See, e.g., 42 Fed. Reg. 57,480 (1977) (“Sources subject to PSD
review will be those identified in the proposed definitions of ‘ma-
jor stationary source’ and ‘major modification.’); 44 Fed. Reg.
51,948, 51,952 (1979) (“The term ‘major modification’ serves as
the definition of ‘modification’ or ‘modified’ when used in the Act
in reference to a major stationary source.”). EPA made the same
point explicitly when it later adopted rules and amendments. 45
Fed. Reg. at 52,677 (the “primary criterion in determining PSD
applicability is whether the proposed project is * * * a major
modification”); 57 Fed. Reg. 32,316 (1992) (“The EPA’s regula-
tions implementing the PSD and nonattainment programs re-
quire preconstruction review for sources undertaking a ‘major
modification.’”); 70 Fed. Reg. 61,088 (2005) (PSD contains a defi-
nition of “major modification” but not “modification”). EPA
never discussed an hourly-rate test, or use of the NSPS regula-
tions or definition of modification, in determining the applicabil-
ity of PSD.

In addition, courts addressing the scope of the PSD program
have relied solely on the regulatory term “major modification.”
See New York, 413 F.3d at 14 (noting that in 1980 “EPA changed
its definition of modification. The final 1980 rule defined the
term as follows: ‘“[mJajor modification” means any physical
change in or change in the method of operation.’”);° Wisconsin
Elec. Power Co. v, Reilly, 893 F.2d 901, 915 (7th Cir. 1990)

* In New York, Duke itself recognized that, under the 2002 PSD regulations,
“a project is deemed a ‘modification’ if it is expected to cause a significant net
increase in annual emissions, even if it does not increase the unit's maximum
hourly emission rate and there is no increase in the facility’s permitted
capacity,” and Duke unsuccessfully attacked the regulations on that very basis.
Industry Br. at 23, New York, supra (emphasis added): see New York, 413 F 3d
at 20. None of the provisions on which Duke relies for its new regulatory
argument—40 C.F .R. 51.100, 51.166(b)(8), 52.01(d)—was altered in 2002.

10

(WEPCO) (PSD regulations “define their key term” in “major
modification” definition); Puerto Rican Cement Co. v. United
States EPA, 889 F.2d 292, 295-297 (1st Cir. 1989) (Breyer, J.)
(finding unit subject to PSD based on “actual emissions” provi-
sion of “major modification”); Alabama Power Co. v. Costle, 636
F.2d 323, 399-400 (D.C. Cir. 1980) (PSD review is limited to “ma-
jor modification,” which is “EPA’s [rJegulatory [dJefinition of
‘{m]odification’”). In short, as the Seventh Circuit recently con-
cluded in Cinergy, Duke’s newly minted regulatory theory is
“makeweight.” 458 F.sd at 711.

C. Duke’s Other Arguments That The PSD Regulations Require
An Hourly-Rate Test Are Mistaken

Apparently as an alternative to its new regulatory theory,
Duke argues (Br. 35-39) that an hourly-rate test is also required
by two provisions in the PSD definition of “major modification”
itself—namely, the “hours of operation” exclusion and the defini-
tion of “actual emissions.” Duke’s interpretation of the “major
modification” test fares no better than its newly devised substi-
tute theory.

1. As previously explained (U.S. Br. 26-28), the plain language
of the “hours of operation” exclusion makes clear that it has no
bearing on a case like this one. The exclusion is expressly limited
to the physical-or-operational-change prong of the PSD defini-
tion of major modification, and provides that “[aJn increase in the
hours of operation” will not itself satisfy that prong. 40 C.F.R.
51.166(b)(2)(iii)(). It has no application when a change other
than an increase in hours of operation is at issue. Thus, once a
physical change has been identified, as here, the exclusion by its .
own terms can do no further work.’

* Duke contends (Br. 39) that EPA’s 1996 proposal to add the words
“standing alone” to the “hours of operation” exclusion somehow confirms
Duke's contention about the meaning of the exclusion. In 1996, EPA «lid
consider making such an amendment in order “to make the existing exclusion

11

Ultimately, Duke rests (Br. 36-39) its “hours of operation”
argument on the two isolated examples of a contrary interpreta-
tion by Mr. Reich in 1981. Mr. Reich’s misreading of the hours
of operation exclusion cannot trump the plain language of the
regulation or EPA’s statements repeatedly confirming the lim-
ited scope of the exclusion. Duke baldly asserts (Br. 28) that
“there are no contrary Agency pronouncements,” but that asser-
tion is patently incorrect, as it ignores the long history of author-
itative agency explanations expressly taking the same position
advocated by EPA here.” Those explanations are plainly entitled
to deference, because they reflect the agency’s interpretation of
its own regulations. Auer v. Robbins, 519 U.S. 452, 461 (1997);
Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).

2. Duke also contends (Br. 23-24, 35) that the proper test for
“major modification” must measure a unit’s “actual emissions”
by keeping the hours of operation constant based on pre-change
hours of operation. In Duke’s view, EPA must ignore net pollu-
tion increases caused by a source’s increased hours of operation
resulting from a physical change even when, as here, increasing
the number of hours the source can operate is the express pur-
pose of the change. See J.A. 230; Pet. App. 27a-28a.

explicitly clear,” but it also expressly reaffirmed its longstanding “view that the
regulatory exclusion for certain increases in a source’s * * * hours of
operation applies only when such an increase is unaccompanied by construction
or modification activity.” 61 Fed. Reg. 38,254 (1996).

* See, e.g., J.A. 44 (1988 determination that PSD is triggered by “increases
in emissions due to increases in hours of operation or production rate where,
as here, such operational or production increases are closely related to physical
or operational changes”); J.A. 257-258 (1988 determination that increases in
“hours of operation” “inextricably intertwined with the physical changes”
should be considered under PSD); J.A. 294 (1989 determination that increased
hours of operation “if attributable to a physical or operational change, can
trigger an emissions increase for PSD purposes”); U.S. Br. 26-28 & n.9; pp. 8-
10, supra; p. 14 & note 10, infra.

12

Duke is mistaken. Measuring “actual emissions” based on
“actual operating hours,” 40 C.F.R. 51.166(b)(3)(i) and (21)(ii),
requires post-change emissions for units that have begun normal
operations to be measured based on their projected actual oper-
ating hours after the change. See U.S. Br. 20-23; Cinergy, 458
F.3d at 708 (concluding that the “natural reading” of the “major
modification” regulation “is that any physical change or change
in operating methods that increases annual emissions is cov-
ered,” and that annual emissions are measured based on “the
total number of hours that the plant is in operation”) (emphasis
added); 56 Fed. Reg. 27,633 & n.10 (1991).

Duke’s reliance (Br. 35) on the regulatory language defining
actual emissions by reference to emissions during a “representa-
tive” period is unavailing, because that language merely de-
scribes how to establish the pre-change emissions baseline. 40
C.F.R. 51.166(b)(21)(ii); see 57 Fed. Reg. at 32,316-32,317 (provi-
sion establishes baseline); WE PCO, 893 F.2d at 916 (same). The
PSD regulations require an examination of the “increase in ac-
tual emissions” over that baseline (40 C.F.R. 51.166(b)(3)(i)(@)
(emphasis added)), and thus mandate consideration of the actual
projected or potential future emissions (see U.S. Br. 6-7), not a
counterfactual assessment of what future emissions world be if
post-change hours of operation were held to pre-change levels.

3. As explained (U.S. Br. 7-8), the 1992 regulations provide
that most projects at electric utilities are evaluated under an
actual-to-projected-actual test that expressly considers “the
effect [a] change will have on increasing or decreasing the hourly
emissions rate and on projected capacity utilization.” 40 C.F.R.
51.166(b)(32) (1993) (emphasis added). Even if there were any
uncertainty about the meaning of the 1980 regulations, such un-
certainty would have been eliminated in the 1992 regulatory

13

amendments, which govern some of the projects at issue in this
case. See U.S. Br. 20 n.4.”

4. Duke repeatedly asserts (Br. 1-3, 15-16, 28-29, 36-37) that
its interpretation of the regulations has been obvious to all since
1980. That resort to revisionist history is irrelevant to the ques-
tion presented here, which turns on the regulations’ plain lan-
guage and EPA’s explanations. In any event, Duke’s assertion
that the government is now advancing only an “enforcement posi-
tion” (Br. 2, 16, 28) and that the 1980 rules “clearly provided that
a PSD ‘major modification’ first requires an NSPS ‘modifica-
tion” (Br. 28) is refuted by the actual history, which shows
EPA’s longstanding adherence to its “enforcement position.”

EPA announced in 1980 that the regulations measure in-
creases in “actual emissions,” calculated in “tons per year.” 45
Fed. Reg. at 52,677, 52,700, 52,705; U.S. Br. 23-24. By the late
1980s, EPA was issuing PSD applicability determinations that
unquestionably applied a total annual emissions test without
requiring an increase in hourly emissions before a “major modifi-
cation” could be found. See note 8, supra. Indeed, the WEPCO
and Puerto Rican Cement suits were actions brought against
EPA based on its application of that very standard, which both

* Duke is wrong to imply (Br. 14 n.4) that the government has changed
positions with respect to whether the 1992 rules apply in this case. The
government has consistently argued that the 1992 rules apply to projects
undertaken after the time those rules were incorporated into the applicable
SIP. Gov't C.A. Br. 6; Gov't Opp. to Duke Summ. J. Mot. 7-8. Duke also errs
in contending (Br. 14) that, if industry fails to submit records as required by the
1992 regulations, the analysis defaults toan NSPS-type test under which hours
of operations must, counterfactually, be deemed to remain constant. As
discussed in text, the 1980 PSD regulations take increases in hours of operation
into account in assessing emissions increases. The 1992 amendments merely
allow utilities to avoid undergoing the fact-intensive regulatory analysis of
whether they have “begun normal operations” to determine whether they must
apply the actual-to-potential test or the more favorable actual-to-projected-
actual test. 57 Fed. Reg. at 32,317; U.S. Br. 7-8.

14

courts upheld. WEPCO, 893 F.2d at 916 & n.11; Puerto Rican
Cement, 889 F.2d at 296-298; see New York, 413 F.3d at 15.
Later, in 1990, EPA specifically rejected any test limited to a
comparison of maximum hourly rates as “not fairly discernible
from any reading of the [1980] regulations.” J.A. 67. EPA con-
firmed shortly thereafter that the actual-to-projected-actual test
would continue to apply under the 1980 regulations when a unit
has begun normal operations. 56 Fed. Reg. at 27,633 & n.10.
EPA has regularly reiterated that the PSD regulations apply an
actual, annual emissions test that could be triggered by physical
or operational changes that increase emissions due to their effect
on hours of operation.’°

In fact, the record reflects that Duke and the rest of the util-
ity industry understood EPA’s interpretation. The settlement of
the original D:C. Circuit challenge to the 1980 regulations, which
required EPA to consider amending the regulations to authorize
an hourly-rate test, makes that point clear. So do numerous
other documents in the record dating from as early as 1989."'

” 56 Fed. Reg. at 27,630 (stating that unlike NSPS, “the NSR regulations
examine total emissions into the atmosphere”); ‘did. (demonstrating that the
methodology for calculating emission increases for NSPS and PSD is entirely
different); 57 Fed. Reg. at 32,316, 32,328, 32,335; 61 Fed. Reg. 38,254 (1996)
(PSD emissions calculation involves determination of “how many hours per
year the source will be operated”); 63 Fed. Reg. 39,858-39,859 (1998) (confirm-
ing the emissions test depends on total annual emissions, not maximum hourly
rates); J.A. 68 (PSD can be triggered by changes in “capacity utilization”); J.A.
72-75 (PSD applicability determined by examination of the changes in the
actual annual emissions, not the hourly rate); J.A. 155 (1991 EPA statement to
Congress that emissions increases are measured “on an hourly basis (for NSPS
purposes) or an annual basis (for PSD and nonattainment new source review
purposes)”).

' See J.A. 243 (1991 Duke compliance manual statement that PSD is based
on “annual emissions” and can be triggered if a change causes a unit to be
“operated more frequently”) (emphasis added); see also J.A. 269, 274, 275
(6/5/89 industry letter recognizing EPA requires PSD review where there is no
increase in emission rates); J.A. 496 (1/90 study contrasting PSD regulations

15

Ill. THE ACT DOES NOT REQUIRE AN HOURLY-RATE TEST

Duke contends (Br. 41-47) that Congress specifically limited
PSD coverage to projects that result in an increase in a unit’s
hourly emissions rate. That argument is barred by Section
307(b)(2), because it would require invalidation of the PSD regu-
lations. Moreover, in order to trump the deference ordinarily
due to an agency’s interpretation of a statute under Chevron,
Duke’s argument requires finding in the statutory cross-refer-
ence an “unambiguously expressed intent of Congress” to re-
quire use of an hourly-rate test in the PSD program. Chevron,
U.S.A., Ine. v. NRDC, 467 U.S. 837, 842-843 (1984). No such
intent is discernible here.

A. Congress Expressed No Intent To Condition PSD Modifi-
cations On A Finding Of An NSPS Modification

Duke’s argument distorts the natural reading of the statutory
cross-reference at 42 U.S.C. 7479(2)(C). That PSD provision
provides that “construction when used in connection with any
source or facility, includes * * * modification (as defined in
section 7411(a)(4) of this title).” Section 7411(a)(4) is a statute
governing NSPS; it contains no reference to or incorporation of

with NSPS); J.A. 380 (11/28/90 e-mail stating that in evaluating whether a
project is a “major modification,” “[t}he primary consideration should be
whether the work will allow any greater utilization (more emissions)”); J.A.376
(11/2/90 internal Duke memo noting that application of PSD “will also depend
on the projected use of the new boilers versus the old boilers”); J.A. 371 (1995
internal training materials noting, under heading “avoiding PSD,” “no in-
creased capacity utilization, except for increased power demand”); J.A. 368
(2/13/95 internal Duke memo noting that “PSD regs disallow an increase in hr
of operation not attributed to increased electric demand”); see also WEPCO,
893 F.2d at 916 n.11 (“Despite WEPCO’s protestations, we note initially that
the EPA’s refusal to apply the ‘production rate/hours of operation’ exclusion
was proper.”).

16

the NSPS regulations.” Duke’s assertion (Br. 5) that Congress
intended by that cross-reference to “include{] only activities that
in essence create a ‘new source’” is improbable. Congress’s evi-
dent purpose in cross-referencing the pre-existing statutory
definition of “modification” was to ensure that PSD require-
ments apply not only to new construction (as would be the case
if the cross-reference did not exist), but also to changes at exist-
ing sources that increase emissions. New York, 413 F.3d at 13.
In addition, by adopting the definitional cross-reference, Con-
gress ensured that the term “modification” incorporated certain
statutory qualifications. See 42 U.S.C. 7411(a)(8) (certain coal
conversions not a “modification” for purposes of Section
7411(a)(4)).

According to Duke (Br. 45), Congress showed no intention
that PSD should apply to “projects at existing power plants that
neither NSPS nor regulatory PSD” reached prior to 1977. But
Congress simply did not address the question, and in any event,
with respect to sources and pollutants that are potentially sub-
ject to both programs, the regulations provide that the category
of “modifications” for PSD purposes is different from—but not
necessarily broader or narrower than—NSPS “modifications.”
In some respects the PSD category is broader, in that some
physical or operational changes may result in increased utiliza-
tion (and therefore in PSD applicability) even though they do not
result in an increased hourly rate of emissions that triggers
NSPS. But the PSD category is substantially narrower in other
respects, because it permits “netting” of contemporaneous emis-

" Contrary to Duke’s argument (Br. 43), the statute does not “define{}
‘modification’ for PSD as that term is ‘defined’ and ‘used’ for NSPS.” Instead,
it defines “modification” for PSD as that term is defined and used in the NSPS
statute. The difference is significant, because the NSPS statute (as opposed to
the regulations) is entirely agnostic as to the use of an hourly-rate test or an
actual, annual emission test. See New York, 413 F.3d at 19; Pet. App. 15a n.7.

17

sions increases and decreases, and applies only to “significant”
increases. See U.S. Br. 22-23, 30-31.

Nor is Duke’s position bolstered by its passing reference (Br.
42-43) to the “identical terms” canon. As the government has
explained (U.S. Br. 38-46), that canon lacks force in this context.
Tellingly, moreover, Duke’s reliance on that canon reflects sub-
stantial ambivalence: Duke carefully avoids any suggestion that
the NSPS and PSD regulations must actually define the statu-
tory term “modification” in an identical manner, as would be
required if the “identical terms” canon were applicable here.
Duke’s reluctance is no doubt attributable to the fact that Duke
desires to extend the NSPS hourly-rate test tothe PSD context,. -
but without thereby depriving itself of the substantial benefits
conferred by other differences between the NSPS and PSD defi-
nitions, such as the “netting” provision. See Duke Br. 34-36; U.S.
Br. 23, 30-31. Duke understandably wishes to have its cake and
eat it too, but canons of statutory construction must be applied
evenhandedly, or not at all.”

In any event, Congress’s failure to express a clear intent re-
garding the scope of the statutory term “modification” does not
deprive EPA of authority; such ambiguity confers on EPA the
discretion to interpret that definition by regulation. See U.S. Br.
45-46 & n.17. That conclusion follows from a straightforward
application of Chevron, and no case cited by Duke holds other-
wise. See Cinergy, 458 F.3d at 711.

“ Duke argues (Br. 43) that “[t}his case does not turn on Rowan |Cos.v.
United States, 452 U.S. 247 (1981),| alone,” and it offers /BP, Inc. v. Alvarez,
126 S. Ct. 514, 523 (2005), as further support for its position. The court of
appeals, however, did rely exclusively on Rowan, see Pet. App. lla-18a, which
cannot be read to authorize the irrebuttable presumption of identical meaning
applied by the court of appeals. See U.S. Br. 38-46. And /BP provides no
support for Duke’s (or the court of appeals’) argument. /BP stands for the
unremarkable proposition that a reference to “said principal activity or
activities” means the same principal activities referred to earlier in the statute.
126 S. Ct. at 523-524 (emphasis added).

18

B. Congress Did Not Incorporate Any Regulatory Definition
of Modification Into The PSD Provisions

Because the statutory language says nothing about an hourly-
rate test or how to measure emissions increases, Duke argues
(Br. 44) that Congress either incorporated or ratified the pre-
existing regulatory interpretation of “modification,” which did
apply an hourly test. As the D.C. Circuit concluded in New York,
however, there is no indication that, by incorporating a
pre-existing statutory provision, Congress meant to codify and
freeze in place the pre-existing regulations governing modifica-
tions. New York, 413 F.3d at 18-19; see U.S. Br. 50 n.20. While
Congress no doubt tacitly approved the NSPS hourly-rate test
as one permissible approach for PSD, it did not mandate that
test. Helvering v. Reynolds, 313 U.S. 428, 432 (1941). This Court
has concluded that Congress’s use of a pre-existing statutory
term demonstrated its intent to incorporate a pre-existing regu-
latory definition only when it has found additional clear demon-
strations of such congressional intent in the statute or legislative
history. See Bragdon v. Abbott, 524 U.S. 624, 631-632 (1998)
(citing statutory language prohibiting use of lesser standard than
incorporated in agency regulations); FDIC v. Philadelphia Gear
Corp., 476 U.S. 426, 437-438 (1986) (noting legislative history
specified that statutory definition included prior existing regula-
tory definition). Duke cites no such indications in the statutory
PSD provisions.

Moreover, Duke’s insistence that Congress in 1977 expressed
a detailed “awareness of * * * the pre-existing regulatory PSD
program” (Br. 44) merely underscores that Congress would have
made explicit any intent to mandate an approach to modifica-
tions, as it did with other regulatory provisions. New York, 413
F.3d at 19. To be sure, one provision of the 1977 amendments,
42 U.S.C. 7478(a), did, as Duke says (Br. 44), “instruct{] that the
bulk of the pre-existing rules ‘shall remain in effect’ and

19

amended other provisions” of the pre-existing PSD rules.
Duke’s quotation of Section 7478(a), however, is selective. Sec-
tion 7478(a) provides that, “[u]ntil such time as an applicable
implementation plan is in effect for any area,” most of the pre-
existing rules “shall remain in effect.” 42 U.S.C. 7478(a). The
full statutory text makes clear Congress’s intent that, once state
implementation plans were in place, EPA would be free to retain
or change the pre-existing regulations.

C. Duke’s Remaining Arguments Ignore The Plain Lan-
guage Of The Act

Duke further contends (Br. 45-46) that EPA’s interpretation
violates a purported congressional intent to limit PSD applica-
tion to “newly constructed or expanded units.” Duke cites no
statutory language to support the proposition that PSD can ap-
ply only to new or expanded facilities, and the legislative history
it describes as focusing only on such facilities was created before
the term “modification” was added to the PSD statutory pro-
gram. See Alabama Power, 636 F.2d at 400 n.47 (legislator’s
statement that PSD has no effect on “existing sources” absent an
“expansion program” was overridden by addition of “modifica-
tion” to statute). Congress understood that “expansion” and
“modification” may mean two different things; had Congress
intended PSD to apply only to expanded sources, the definition
of “construction” would have referred to “expanded”—as op-
posed to “modified”—sources. See, e.g., 42 U.S.C. 7475(b) (ex-
empting the “expansion or modification of a major emitting facil-
ity” from PSD ambient air quality impact analysis).

Duke also contends (Br. 49) that the purposes of NSPS do not
differ from PSD, because NSPS focuses on ambient air quality
and was designed “to protect the NAAQS.” In enacting the PSD
provisions, however, Congress authorized EPA to apply PSD
“notwithstanding attainment and maintenance of” the NAAQS.
42 U.S.C. 7470(1). While certainly complementary and sharing

20

similar goals, the NSPS and PSD programs are not identical, and
it is untenable to argue that Congress deprived EPA of its dis-
cretion to regulate emissions increases under PSD that are not
regulated under NSPS.

In any event, Duke’s argument fundamentally distorts the
applicable deference analysis. Duke asserts (Br. 49) that its
emissions test reasonably “effectuates both the technology and
air quality purposes of PSD.” That may well be true with respect
to power plants in 2006, due to developments such as the creation
of more recent programs aimed at reducing their emissions, 70
Fed. Reg. at 61,083-61,088, but it does not follow that it would
also have been true in 1980. And even if Duke’s preferred ap-
proach would have been reasonable in 1980, that would not invali-
date EPA’s decision to adopt a different, but equally reasonable,
approach. Chevron, 467 U.S. at 843-845.

In short, faced with an admittedly ambiguous statutory defini-
tion, the court of appeals should have deferred to EPA’s reason-
able conclusion that a project that results in increased total emis-
sions because it leads to increased hours of operation can prop-
erly be viewed as a change that “increases the amount of any air
pollutant emitted by [the] source.” 42 U.S.C. 7411(a)(4). The
court of appeals’ rejection of that reasonable interpretation was
erroneous.

* * *£ KF F

For the foregoing reasons and those stated in the govern-
ment’s opening brief, the judgment of the court of appeals should
be reversed.

Respectfully submitted.

PAUL D. CLEMENT

ROGER R. MARTELLA, JR. Solicitor General
Acting General Counsel
United States Environmental
Protection Agency

OCTOBER 2006

APPENDIX
REGULATORY PROVISIONS INVOLVED

1. 40 C.F.R. 51.100 (1987) provides, in pertinent part:
§$ 51.100. Definitions.

As used in this part, all terms not defined herein will have
the meaning given them in the Act * * *.

* ee K

2. 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 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:

*x* ke * *

(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:

(a) Routine maintenance, repair, and replacement;

x* * k * *

(1a)

2a

(f) An increase in the hours of operation or in the
production rate, unless such change would be prohibited
under any federally enforceable permit condition which was
established after January 6, 1975, pursuant 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 cnveration 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.

* * * *K

(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 operational 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.

x* ee kK *

(8) Construction means any physical change or change in
the method of operation (including fabrication, erection,
installation, demolition, or modification of an emissions unit)
which would result in a change in actual emissions.

3a

* *£ kek Kk *

(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 different 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
materials processed, stored, or combusted during the selected
time period.

(iii) The reviewing authority may presume that source-
specifie 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 emissions shall equal
the potential to emit of the unit on that date.

x** £ Kk *

(23)(i) “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:

4a

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

* * * * *

(i)(1) The plan shall provide that no major stationary

source or other major modification shall begin actual
construction unless, as a minimum, requirements equivalent
to those in paragraphs (j) through (r) of this section have been
met.

* ke ee

Sa

3. 40 C.F.R. 52.01 (1987) provides, in pertinent part:
§ 52.01. Definitions

All terms used in this part but not defined herein shall
have the meaning given them in the Clear Air Act and in
Parts 51 and 60 of this chapter.

x * ke €

(d) The phrases “modification” or “modified source” mean
any physical change in, or change in the method of operation
of, a stationary source which increases the emission rate of
any pollutant for which a national standard has been
promulgated under Part 50 of this chapter or which results in
the emission of any such pollutant not previously emitted,
except that:

(1) Routine maintenance, repair, and replacement shall
not be considered a physical change, and

(2) The following shall not be considered a change in the
method of operation:

(i) An increase in the production rate, if such increase
does not exceed the operating design capacity of the
source;

(ii) An inerease in the hours of operation;

(iii) Use of an alternative fuel or raw material, if prior
to the effective date of a paragraph in this part which
imposes conditions on or limits modifications, the source
is designed to accommodate such alternative use.

4. 40 C.F.R. 52.21(a) (1987) provides, in pertinent part:

(a) Plan disapproval. The provisions of this section are
applicable to any State implementation plan which has been
disapproved with respect to prevention of significant

6a

deterioration of air quality in any portion of any State where
the existing air quality is better than the national ambient air
quality standards.

(b) Definitions. For the purposes of this section:

* *e£ ke K

(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.

**¢¢ *

5. 40 C.F.R. 60.2 (1987) provides, in pertinent part:
§ 60.2. Definitions.

The terms used in this part are defined in the Act or in
this section as follows:

* * *x* kK *
.

“Modification” means any physical change in, or change in
the method of operation of, an existing facility which
increases the amount of any air pollutant (to which a standard
applies) emitted into the atmosphere by that facility or which
results in the emission of any air pollutant (to which a
standard applies) into the atmosphere not previously emitted.

x* * ke ££

6. 40 C.F.R. 51.166(b) (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

7a

specifically demonstrates that the submitted definition is
more stringent, or at least as stringent, in all respects as the
corresponding definitions below:

* ee KH

(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 prohibited
under any federally enforceable permit condition which was
established after January 6, 1975, pursuant to 40 CFR 52.21
or under regulations approved pursuant to 40 CFR subpart |
or § 51.166.

x* ee k *

(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.

* ke Ke ke *

(4) Potential to emit means the maximum capacity of a
stationary source to emit a pollutant under its physical and

8a

operational design. Any physical or operational 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.

* * ££ &

(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 different 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
materials 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 (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.

9a

(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 physical 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,
information 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.

* *e* kK *

(23)(i) 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:

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

10a

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
articulate matter): 14 megagrams per year (15 tons per
year) Municipal waste combustor acid gases (measured as
sulfur dioxide and hydrogen chloride): 36 megagrams per
year (40 tons per year)

* ee * *

(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 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 company’s own
representations, filings with the State or Federal regulatory

lla

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 emissions following the change
that could have been accommodated 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.

7. 40 C.F.R. 60.14 (1993) provides, in pertinent part:
§ 60.14. )odification.

(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 modification 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. * * *

*x**e ke Ke *
(e) The following shall net, by themselves, be considered
modifications under this part:

(1) Maintenance, repair, and replacement which the
Administrator determines to be routine for a source

12a

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.

(6) The relocation or change in ownership of an
existing facility.
* * ke ke *

(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.

l3a

* * * kK *

8. 40 C.F.R. 52.21 (2003) provides, in pertinent part:

§ 52.21. Prevention of significant deterioration of air
quality.

(a)(1) 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. Specific disapprovals are listed where
applicable, in subparts 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.

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)(ii) 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.

l4a

(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 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 emis-
sions increase.

(b) 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 modified, 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 (i.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

lSa

modification results if the project causes a significant
emissions increase and a significant net emissions increase.

(c) Actual-to-projected-actual applicability test for
projects that only involve existing emissions units. A
significant emissions increase of a regulated NSR pollutant 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 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 pollutant 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 increase 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 paragraphs (a)(2)(iv)(c) through (e) of this
section as applicable with respect to each emissions unit, for
each type of emissions unit equals or exceeds the significant
amount for that poliutant (as defined in paragraph (b)(23) of

l6a

this section). For example, if a project involves both an
existing emissions unit and a Clean Unit, the projected
increase is determined by summing the values determined
using the method specified in paragraph (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.

* * & *F €

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0237%3A15. Public record. Not legal advice.