Amicus Curiae Brief — Environmental Defense v. Duke Energy Corporation

Supreme Court brief2007

Ask Donna

What actually matters in this document.

Text

IN THE

Supreme Court of the Anited States

ENVIRONMENTAL DEFENSE, ET AL.,

Petitioners,

DUKE ENERGY CORP., ET AL.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF OF AMICI CURIAE

U.S. REPRESENTATIVE JOE L. BARTON

IN SUPPORT OF THE RESPONDENTS

GEORGE C. LANDRITH *

CHRISTOPHER C. HORNER

FRONTIERS OF FREEDOM

P.O. Box 69

Oakton, VA 22124

(703) 246-0110

Counsel for Amici Curiae

U.S. Representative Joe L. Barton

Wit SOn-EP€sS PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

7 eh

; tae

Mes ee ad Sar

—

' a

Baad, at A ees:

. \

pot

PT.

ane

Read san

a! Ey tees)

oue Pom Lease

ier Pa ere | =

a Vie.

yaad

eps Le

rar nh Np

ft De

Sern te -

ee nah a aa

ad #i<

aise

y at ABN,

4 dy $ p 7 4 ‘ tay /

fi ered

* hd

ee CRE a re eee eet ee eo Sh aiey

Serer. oy he ;

+s ine? a « meets tas : at

Pe ae ol Fe ae an arr. “s thie ¢ ms ; Bays Sant

TAS Sar a at yea gi Fi e, a: 63 2 c het me: koa ees oS sa Dro

RNa ncs Danie «Sekai canal NOP ale SBP Ya Parts es

wr 5

edit * deny hire a ond

A il

TABLE OF CONTENTS

CONGRESS DID NOT INTEND THE NSR

PROGRAM TO THREATEN ALL EXIST-

ING FACILITIES WITH A “SUBMIT OR

SHUT DOWN” ULTIMATUM UPON

EXPIRATION OF SOME UNWRITTEN

“GRACE PERIOD” OR “GRAND-

FARE UUIEUEDs. wernscensentnncsansininecinntecaseviniamsantigneeee

A. The Clean Air Act’s Deliberate Scheme .....

B. Controlling New and Existing Sources .......

1. Addressing New Sources.................00+

2. Controlling Existing Sources.................

3. NSR was deliberately designed to

4. In the 1990 Clean Air Act Amend-

ments, Congress reaffirmed previous

regulatory choices, and strengthened

controls on existing sources, without

altering NSR’s role in the hierarchy ......

C. Grandfathering in the Clean Air Act;

Congress did not play Petitioners’ argued

I ID vsccisicestiicietibrssciisitnligtiticns

(i)

mw NO —

aon UM WU

TABLE OF CONTENTS—Continued

Il. THE NEW SOURCE PROGRAMS

MODIFICATION RULE APPLIES ONLY

TO EXISTING SOURCE CHANGES THAT

CREATE NEW AND UNREGULATED

FE AP RI crcenicrsssnsenmaiiirteneeiinminennennimarieds 19

A. The Modification Rule focuses on new

GHUASSIOMS COMECIRY 0. ....0ccccccecssccccocssccccconseces 20

B. NSPS and NSR are closely related pro-

grams sharing common features, including

the same definition of “Modification.”........ 21

1. Congress deliberately defined -NSR

modification by references to NSPS

ai intinsntsiiiciniinimcintiniicssiaccanees 21

2. NSPS and NSSR share overlapping

INET ATES vcccsnipicistsasscsesarevintecncenes 23

CMG IIOY encivedetanjniinstcbesisncanieepteiahislibdabeiedeabendociiiee 27

iii

TABLE OF AUTHORITIES

CASES Page

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

8. , SCR nee a Sema ETRE al we 18, 25, 26

General Motors Corp. v. United States, 496 U.S.

SO Ca hacia nisiecicenninbilepettinnittintpiapiententitannsdpsones 6

IBP, Inc. v. Alvarez, 126 S. Ct. 514 (2005)........... 23

New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005)..... 10

Puerto Rican Cement Co. v. EPA, 889 F.2d 292

CSUR GA, Bie Ricks tihidebiiiatd coi ciiiibtiepietaduiatiinndbbiinsboipe 21

Sullivan v. Stroop, 496 U.S. 478, 484 (1990)........ 22

Union Elec. Co. v. EPA, 427 U.S. 246 (1976)....... 6

United States v. Alabama Power Co., (N.D. Ala.;

Case No. 2:01-cv-00152-VEH (Memorandum

Opinion, Aug. 14, 2006))................ccescccceeeeereeees 5

United States v. Cinergy Corp., No. 06-1224 (7th

Saas Seve a iciciepsidothstipnapinibibetaashinciphiiaiacienitiodndinssiesaite 23

Whitman v. American Trucking Ass’ns, 531 U.S.

Re CE Bis ihneichtcnneiidenntincdvivabtaripiininivineptibetoeniosia 6

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

I CP SD iikiniiiideinitbcbsidincneneidintoats 19

STATUTES

Oe Geass UF PO IED diivstncseccndnsotsnsnspicinaieieenesciqne 6

Ae Race Ae PILED sccitiepsiietutntbinciniaetacinimaniente 14

Se ae PI ts dickies daicidecdgbtnnsatisibeinsdinssintiapdeanthegs 6

Sy Seen MN MEE sschiciiecaicandiciibiniphaaplonesnindanscinedptbeiite 6

42 U.S.C. § 7410(a)(2)(D), (a)(4).....cccesececceereeenee 23

de ins Th PRR IUD tithes tnsstndacsisctnsicsnnrnicenane 20

ee cs Oe I i ldaiteteiniscesabiniisetenniencnstdistnces 17

Ae cs Te INET vininchthiiesicindhibnsecncdansasitinnsabieaisineroets 14

Ae Sas Se BI Bihitiiiictic ce idntnctclictsisansindannanacnces 15

Ie ie Oe Fe rkineetictintstncictncpeensctninastncncecss 25

42 U.S.C. §§ 7491(b)(2)(A)........scecrcsrcessesccerereesenss il

Oe Recs Op FR Or tintinsincesvlituissdtucladstueaniciannieanastne 11

TABLE OF AUTHORITIES—Continued

Page

Bey UF han Fa ea ianrcececntcinignitelitaiittenleseahibasniendiien 9, 20, 22

GE UBB TD svintintisiiatinnibaiitidaitaantcseetintvitiais 11

42 U.S.C. §§ 7651(a)(28)-(29), 7651(b)................ 15

Fe Beate Ae: FRc cieciisebicicbamiipesinadiallimtspubstuiecinias 16

REGULATIONS

40 C.F.R. §§ 51.166(b)(2)(iii); 60.14(e)(3)........... 25

GO CP TR, F SERRA) cccsistcdesncisstisncetsininpitcnte 25

OTHER SOURCES

116 Cong. Rec. 42,520 (1970)...........ccccccsscssseeseeees 9

116 Cong. Rec. 19,206 (1970)...........ccsccsssscserreeees 9

116 Cong. Rec. 33,115 (1970).......ccccccorscccccccsscocess 17

123 Cong. Rec. 18,019 (1977)..........ccccccceceeeeeeeeees 12

123 Cong. Rec. 18,021 (1977)..........escscessrsceseeees 20

123 Cong. Rec. 18,040 (1977)............ccccccccececeeeeees 21

BZ3 Coptam, Rae. TE IISZ (IGT Fiisccrscccccencnesiscscnnincosse 22

Environmental Policy Division (1978), Library

of Congress, 95th Cong., 2nd Sess., A Legisla-

tive History of the Clean Air Act Amendments

of 1977: a Continuation of the Clean Air Act

Amendments of 1970 (1978), Washington,

DC: US Senate Committee on Environment

en PES WORE PIII sicstiscstiiniiiccncinstervencscscicnne 12

H.R. Rep. No. 91-1146 (1970) oo... eceeeceseeseseeeeee 8, 20

H.R. Rep. No. 95-294 (1977) .....cccccscesessseeeeesenes 11, 14, 22

H.R.4567, 99th Cong. (1986) ...........ccccccsesecesereeeees 12

H.R.5555, 97th Cong. (1982) .........sscciscsssssceceseseees 12

Pub. L. No. 91-604, § 4(a), 84 Stat. 1676, 1685-

Er ree nncinnchsticibllnhintitiinibakaddiitntntniguistetaiasnianded 17

BD. Ba PE. Dh F FS CaP re i cesinatovescpennnsscnninaitsnntin 10

BD. Bae DE. SSE CAT Fo cccccrsicescncssenstanvonntininninsie 20, 21

S.321, 100th Cong. (1987) ....cciecoccesccovecescvscossscerceee 12

TABLE OF AUTHORITIES—Continued ,

Page

ke 8 | .__; ; Seer eee 12

att CU CIID, CINE Prtncccccccccncnoccccnnscescenssesaces 12

By See Is CRIED cxcceccncccscpencsssocsonstesncsnens 12

ey PN I, CE Pacenccecacecncseicsosnecceceosncesees 12

S.2200, 99th Cong. (1986).............ccccccccscerssssseerees 12

ESR Ss a 12

Sen. George Voinovich, Chairman, Senate Sub-

committee on Clean Air, Climate Change and

Nuclear, “7he Clean Air Act's New Source

Review Program: A Policy in Desperate Need

IIIA Inheditviichitenedssbobendincintetientidsdentninieindicbes 8

FEDERAL REGISTER

39 Fed. Reg. 36,946 (Oct. 15, 1974) ......cccceeceeees 19

39 Fed. Reg. 42,510 (Dec. 5, 1974)........cccccecseeeees 9, 22

39 Fed. Reg. 42,512 (Dec. 5, 1974)..........ccccccceees 22

39 Fed. Reg. 42,513 (Dec. 5, 1974).........:cceccceeeees 22

40 Fed. Reg. 58,416 (Dec. 16, 1975)...........:...c000 13

41 Fed. Reg. 55,524 (Dec. 21, 1976)...........cc000000 9

45 Fed. Reg. 52,677 (Aug. 7, 1980).................-.... 26

45 Fed. Reg. 52,691-92 (Aug. 7, 1980)................. 24

45 Fed. Reg. 52,704 (Aug. 7, 1980) ..................... 27

68 Fed. Reg. 61,248, 61,273 (Oct. 27 2003)......... 10

68 Fed. Reg. 61,248, 61,268 (Oct. 27, 2003) ........ 10

68 Fed. Reg. 61,253 (Oct. 27, 2003) ................000 27

69 Fed. Reg. 23,951, 23,986 (Apr. 30, 2004)........ 14

ised ase can as Se

= a ‘ moe

aS agee

Dems = + ee

j Ck

; eae,”

fp TS . ety ‘Se

a =. tage es : ; ; d .

ety , A. ‘ P : . a

Pate ty Te oe easeog Ke aaa = ie he Oe eS pe Yim BA Le ld pt RS See cae ah ee oe dap

ny Asm ernie MUP t 26s niet pa HOA - e te. DR FP OAPI IPO ETA OR Re Pon

=f gt Nae) aad eie > FO Pl eee a A By LEC re vig» Yee G2 a sa, ee

gems etaed a nes Oa eeaaee me “Sh 285 ae at ae eT et) Raga £ SE a ol

. Pe pitee ve ages ge ye kings apolar’ dedi oe tre SN dee a dk eT 35 dis er.

Tiras

‘ashe jth Sa : a i is! ‘ a* a . a x eh : tee ‘Qf 4 phe

yi a Wade nt dtd y - ’

y .

ot ies Sine

age => r]

maar’ wae {ore

IN THE

Supreme Court of the Anited States

No. 05-848

ENVIRONMENTAL DEFENSE, ET AL.,

Petitioners,

Vv.

DUKE ENERGY CORP., ET AL.,

Respondent.

On Writ of Certiorari to the —

United States Court of Appeals

for the Fourth Circuit

BRIEF OF AMICI CURIAE

U.S. REPRESENTATIVE JOE L. BARTON

IN SUPPORT OF THE RESPONDENTS

STATEMENT OF AMICUS CURAE

IDENTITY AND INTEREST '

Current and former Members of Congress Waxman,

Markey, Rooney, Maguire, Ottinger, Moffett, and Anderson

(“Waxman, et al. Amici”) have filed amicus curiae brief in

this case. U.S. Representative Joe L. Barton files this amicus

brief in response as well as to correct inaccurate represen-

tations by Petitioners of Congress’ intent. Representative

' Pursuant to Supreme Court Rules 37.3 and 37.6, the undersigned

represents that (1) all parties consented to the filing of this brief; (2) no

counsel for any party authored this brief either in whole or in part; and (3)

no person or entity other than the above-named amici curiae and their

counsel made any monetary contribution to its preparation or submission.

Barton participated in the lengthy legislative debates and

discussions that led to the 1990 amendments to the Clean Air

Act (“CAA” or the “Act”) and, as Chairman of the House

Committee on Energy and Commerce with oversight re-

sponsibility over the CAA, has a unique interest in ensuring

that the Act is properly construed and implemented.

INTRODUCTION

Chairman Barton respectfully requests that this Court take

note that the conclusion advanced by Petitioners and Amici

Waxman, ef al. (hereinafter, “Petitioners”) in Environmental

Defense, et al., v. Duke Energy Corp., et al.—that the Act’s

New Source Review program was intended to serve as an

omnibus pollution control regime ultimately applicable to all

existing sources electing to continue in operation—is wrong

for several particular and compelling reasons made quite clear

by the Act’s history, language and implementation.

First, Congress never intended New Source Review as

even a principal vehicle for achieving pollution control from

existing sources. Had Congress intended such an outcome it

would have said so, as revealed by the Act’s very deliberate

construction. Instead, Congress intentionally created a regu-

latory regime where existing sources of pollution were

principally regulated by the individual states. Moreover, as

the program’s name implies, Congress intended New Source

Review to address new sources of otherwise unregulated

pollution—that is, newly constructed sources or those that

undergo “modification” expanding their capacity to emit.

The Act’s history is replete with clear illustrations that the

counterintuitive reading advanced by Petitioners was not in

fact Congress’ intent. Unavoidable among these is that the

radical policy shift Petitioners advocate would also make

numerous, significant Clean Air Act regulatory programs

superfluous. Further, Congress expressly addressed and re-

jected Petitioners’ suggested policy both in the 1977 and

1990 CAA amendments.

Specifically, therefore, the Fourth Circuit accurately deter-

mined that EPA’s 1980 “modification” rule must be con-

sistent with Congress’ view that neither the New Source

Review program (“NSR”) nor the New Source Performance

Standards Program (“NSPS”) (hereinafter, “New Source

Programs”) were intended to be the primary regulatory

mechanism for reducing pollution from existing sources.

SUMMARY OF THE ARGUMENT

Statutory language and history make clear that in enacting

and amending the Clean Air Act, Congress rejected the

concept of demanding universal, immediate and across-the-

board pollution reductions through the mandatory retrofit of

new source pollution control technologies. Instead, from the

Act’s inception, to achieve its goal of reducing air pollution

_ to protect public health with an adequate margin of safety

* Congress adopted a system of pollutant-specific National

Ambient Air Quality Standards (“NAAQS”), subject to

periodic review and revision by EPA consistent with the

latest available scientific and technical data. Each area

throughout the United States was required to meet the

NAAQS, with primary responsibility for NAAQS compliance

and maintenance expressly with the States.

Contrary to Petitioners’ arguments, NSR was not intended

to confront utilities or any other major stationary sources with

an option of either shutting down or retrofitting new

advanced pollution controls within a specified period of time.

Unlike other CAA control regimes, Congress did not intend

the New Source Programs to reduce emissions from existing

sources operating in accordance with their original design

capacity; pollution from existing sources is already fully

accounted for by the relevant air quality plans. Instead, New

Source Programs were to control new emissions growth, that

is, newly constructed facilities or existing facilities under-

going construction to expand their capacity to emit (“modi-

fication”). Emissions from existing facilities not so “modi-

fied” remain within the discretion and purview of the

individual States to devise and implement actions to attain the

NAAQS, subject to EPA approval, as provided in the 1970

and 1977 CAA Amendments.

Neither the Act’s statutory language nor legislative history

indicate any intention by Congress that New Source Programs

be triggered by activities that accomplish nothing more than

enabling a facility to operate as constructed and within

permitted limits. Nor do New Source Programs otherwise

disrupt Congress’ deliberately constructed hierarchy of Clean

Air Act regulatory programs for obtaining emission reduc-

tions from existing sources, with NSR created to respond to

activities adding new pollution for which States had not

previously accounted in their role as primary regulatory

authority over existing facility emissions.

Construing the term “modification” to include “the most

mundane activities” at existing sources, irrespective of

whether they actually create new pollution, requires believing

that Congress intended to make redundant and/or obsolete

other regulatory programs it went to great effort and detail to

enact, and that Congress intended to drive the entire emission

inventory attributable to the operations of major stationary

sources down to the lowest, technologically feasible levels

within a relatively short window of time. The structure and

entire legislative history of the Act defy this conclusion.

Petitioners’ view of NSR begs the question why Congress

bothered to enact the highly complex CAA programs, such as

the landmark Title [V acid rain provisions and elaborate Title

I reasonable further progress (“RFP”) provisions designed to

independently achieve NAAQS attainment, which Petitioners

would make redundant and unnecessary. This outcome defies

credulity and all available evidence, seeking to institute

“regulation by litigation instead of by notice and comment

rulemaking.” See United States v. Alabama Power Co., (N.D.

Ala.; Case No. 2:01-cv-00152-VEH (Memorandum Opinion,

Aug. 14, 2006)).

Congress developed an extensive hearing record, in the

years-long debate over the 1990 Amendments, to assess the

sufficiency of extant programs including NSR and NSPS to

attain the large additional reductions in key air pollutants

necessary to address acid rain. Congress concluded and

plainly articulated that NSR was neither capable of secur-

ing nor designed to secure emission reductions from exist-

ing sources.

Construing the NSR provisions established by the CAA

Amendments of 1977 as Petitioners request would therefore

ignore this history and also strip the subsequently enacted

1990 Amendments of any discernible meaning. It is axio-

matic that such a construction defies congressional intent,

specifically as reflected in at least the major 1977 and 1°90

CAA revisions. This Court should therefore reject Petition-

ers’ construction of the Act and the 1980 NSR regulations.

ARGUMENT

I. CONGRESS DID NOT INTEND THE NSR

PROGRAM TO THREATEN ALL EXISTING

FACILITIES WITH A “SUBMIT OR SHUT

DOWN” ULTIMATUM UPON EXPIRATION OF

SOME UNWRITTEN “GRACE PERIOD” OR

“GRANDFATHERING.”

A. The Clean Air Act’s Deliberate Scheme.

Congress deliberately titled its “New Source” Programs as

such because ‘these Programs were intended to cover new

facilities, that is, new and otherwise unregulated capacity to -

pollute, or “new sources.” These include existing sources

that are “modified” to create new pollution not yet regulated

under the CAA programs applying to existing sources of

pollution, thereby protecting public health and welfare. The

Act’s evolution clearly and obviously reveals this scheme.

While Congress, through its 1970 Clean Air Act amend-

ments, introduced a federal requirement for States to com-

ply with the National Ambient Air Quality Standards

(“NAAQS”), see 42 U.S.C. § 7409, Congress also reserved

“primary responsibility” for the States to attain and maintain

NAAQS, see 42 U.S.C. § 7401(a)(3); see also Union Elec.

Co. v. EPA, 427 U.S. 246, 269 (1976) (emphasizing that

Clean Air Act section 110 left to the States “the power to

determine which sources would be burdened by regulations

and to what extent”). This hierarchy reflects Congress’

considered judgment that State governments better under-

stand local needs and circumstances and are thus best able to

craft appropriately tailored programs to improve air quality.

See, e.g., Whitman v. American Trucking Ass’ns, 531 U.S.

457, 470-71 (2001); id. at 493 (Breyer, J., concurring in part

and concurring in the judgment); General Motors Corp. v.

United States, 496 U.S. 530, 532-33 (1990).

This same conclusion—that States are better suited to

determine local conditions, needs and solutions—informed

Congress’ decision to leave to the States with discretion over

what specific retrofit measures were needed to attain the

NAAQS. Thus, each State’s individual State Implementation

Plan or “SIP” articulates how best to achieve the Clean Air

Act’s air quality goals through emission reductions and

controls from sources within each State’s border. See 42

U.S.C. § 7410. In that SIP, the State calculates an attainment-

level “emissions budget,” comparing it with the existing

and projected base-line “business as usual” emissions level.

The State is thus able to determine the required aggregate

emission reductions, and to assign detailed emissions limi-

tations to existing sources to achieve this required quantity

of reductions.

It is noteworthy that Congress did assert federal primacy

for regulating particular categories of pollution. These

national programs generally focus on sources that individual

States are unable to control such as automobiles and other

mobile source standards. This reinforces State primacy over

pollution sources they can control such as large stationary

sources. The interpretation of the NSR program that

Petitioners advance, by contrast, both subverts the State’s

regulatory primacy in this area and significantly revises the

CAA’s scheme by abandoning the concept of State discretion

over how to regulate existing sources to attain the NAAQS.

Finally, it is important to note that existing facility emis-

sions from sources operating as constructed and permitted to

operate and not installing or creating new capacity ensure

attainment, and are, therefore, by definition not “increas[ing]

pollution.” In establishing individual source emissions limits,

States assume the maximum potential emissions from each

existing source—based on around-the-clock operations,

unless otherwise limited by an enforceable permit term. A

State must demonstrate that with the controls implemented

for each source it will attain the standard for the relevant

criteria pollutant by the required attainment date, even with

all sources operating at maximum capacity. As a result, the

relevant SIP already takes into account all the existing air

pollution capacity in a way designed to attain and maintain

the NAAQS. There is, therefore, no new pollution capacity

created by a source that repairs a broken or failing component

so that the source can continue to operate as it was

constructed and permitted by the State to operate, and then

continues to operate in subsequent years in accordance with

the SIP and its Clean Air Act permits.

B. Controlling New and Existing Sources.

NSR has always been focused on regulating new capacity

to pollute, that is, on managing new growth. It was never

about obtaining additional reductions from existing facilities

as Petitioners advance. Such a result would blur and indeed

obviate Congress’ clearly drawn lines. What Petitioners

actually seek is judicial implementation of a 1997 internal

enforcement policy memo to impose this radical policy

change’—eviscerating major programs specifically designed

to regulate precisely those sources.

1. Addressing New Sources.

Although State-level SIP actions are the principal Clean Air

Act mechanism to achieve NAAQS compliance, Congress

also envisioned several CAA regulatory measures directed

exclusively at new sources. Congressional considerations in

adopting those new source provisions included avoiding

industrial relocation, or “forum shopping,” which Congress

addressed by calling upon new sources to install advanced

pollution controls, irrespective of the local air quality needs,

again while reserving primacy over existing sources to the

States. H.R. Rep. No. 91-1146, at 3 (1970). Despite this and

select other new source-specific regulatory programs, Con-

gress was clear that the NSPS was a narrow departure from

the overall State primacy in abating air pollution.

? See, e.g., “[A] 1997 enforcement memorandum leaked to the media

. Shows EPA’s desire to force additional reductions in emissions by

arbitrarily revising enforcement practices instead of the more appropriate

regulatory process complete with its public comment and review

requirements. In 1998, the EPA changed enforcement practices when they

renounced the 1992 NSR interpretation in a proposed rule calling parts of

the WEPCO decision a departure from Agency policy which should not

be continued. . . . Finally, in 1999, the EPA filed NSR lawsuits against

seven electric utility companies and an administrative enforcement order

against the Tennessee Valley Authority, alleging NSR modification

violations at 24 different facilities, reaching back as many as 22 years.”

Sen. George Voinovich, Chairman, Senate Subcommittee on Clean Air,

Climate Change and Nuclear, “The Clean Air Act’s New Source Review

Program: A Policy in Desperate Need of Reform,” found at http://

voinovich.senate.gov/policy_paper/nsr_whitepaper.pdf.

Numerous Members of Congress instrumental in the 1970

CAA amendments elaborated on this State/federal hierarchy

in the CAA, including Representative Harley O. Staggers®

and Representative William L. Springer.‘

In 1974, EPA created the NSR program, by regulatory

fiat.” Congress codified this program in 1977, incorporating

in the process the NSPS definition .of “modification.” See,

e.g., 42 U.S.C. § 7501(4) (“The terms ‘modifications’ and

‘modified’ mean the same as the term ‘modification’ as used

in section 7411(a)(4) of this title [the NSPS program].”)

(emphasis added).

As with other CAA decisions described herein, this was a

deliberate act. By incorporating the NSPS modification

definition into the NSR program, Congress ensured that

> “The enforcement of air pollution regulations is partly the

responsibility of the States and partly that of the Federal Government.

The [1970 amendment] provides that the Federal Government shall have

primary responsibility for the enforcement of performance standards for

new stationary sources and hazardous emissions from stationary sources.

The States on the other hand will have primary responsibility for the

enforcement of State plans and the emission limitations provided for in

those plans with regard to existing stationary sources.” 116 Cong. Rec. 42,

520 (1970).

* Springer noted during the floor debates that NSPS was a “departure”

from the ordinary division of responsibility, but that the departure was

“sensible” because “[s]topping these extraordinary problems before they

develop is best for the antipollution effort and it is also best for those who

would build such installations and then find they could not operate.” 116

Cong. Rec. 19,206 (1970).

° EPA established the Prevention of Significant Deterioration (“PSD”)

component in 1974 for sources located in attainment areas, see val

and Promulgation of Implementation Plans: Prevention of Significant Air

Quality Deterioration, 39 Fed. Reg. 42,510 (Dec. 5, 1974), and the non-

attainment sources were subjected to NSR through a 1976 EPA rule, see

Requirements for Preparation, Adaption [sic], and Submittal of Imple-

mentation Plans: Air Quality Standards; Interpretive Ruling, 41 Fed. Reg.

55,524 (Dec. 21, 1976).

existing sources traditionally addressed at the State level

became subject to federal requirements to install new pollu-

tion control equipment only when projects at these sources

increased their capacity to emit pollutants—which is the clear

threshold for becoming a “new source” of pollution.

It was for these reasons that Congress never described NSR

as a program to decrease emissions from existing sources.

Despite its current litigation posture, EPA agrees—recently

declaring that to interpret the Clean Air Act to “ensure that all

major facilities eventually trigger NSR cannot be squared

with the plain language of the Clean Air Act.” Prevention of

Significant Deterioration (PSD) and Non Attainment New

Source Review (NSR): Equipment Replacement Provision of

the Routine Maintenance, Repair and Replacement Exclusion,

68 Fed. Reg. 61,248, 61,273 (Oct. 27, 2003).

Similarly, EPA also acknowledges Congress’ view that

SIPs, not NSR programs, were the primary vehicle for

obtaining emissions reductions: “Rather than NSR, the Act’s

primary mechanisms for achieving the emission reductions

needed to attain or maintain NAAQS are State Imple-

mentation Plans.” Brief of the Envtl. Prot. Agency 75, New

York v. EPA, 413 F.3d 3 (D.C. Cir. 2005).

2. Controlling Existing Sources.

Beginning in 1970, Congress also emphasized the distinc-

tion between its approaches to regulating new and existing

sources by repeatedly considering and rejecting schemes to

impose on existing sources the mandatory control technology

required of new sources. For example, in 1970, Congress

considered and rejected imposing NSPS requirements on

existing “missions sources covered by the SIP limits. See

S. Rep. No. 91-1196, at 15-16 (1970).

Then, during debate over the 1977 Clean Air Act Amend-

ments Congress again specifically rejected attempts to impose

universal retrofitting of all existing major stationary sources.

See H.R. Rep. No. 95-294, at 185 (1977):

Building control technology into new plants at time of

construction will plainly be less costly than requiring

retrofit when pollution ceilings are reached. For

example, testimony from the electric utility industry

indicates that it costs about 25 percent less to purchase

and install flue gas desulfurization technology on a new

plant than it would cost to retrofit that plant

subsequently.

Congress’ reasoning is inescapable: requiring NSR and the

installation of advanced pollution controls would be prohib-

itively expensive for existing sources. Congress therefore

rejected using the blanket approach of across-the-board,

technology-forcing regulation for existing sources, favoring

instead narrowly tailored, State-administered schemes to

achieve emission reductions from existing sources. See, e.g.,

42 U.S.C. §§ 7491(b)(2)(A) (providing for “best available

retrofit technology” for a limited class of existing faciliues),

7502(c) (providing for “reasonably available control tech-

nology” (“RACT”) for certain existing facilities in non-

attainment areas). In this regard, the mandatory RACT

requirement was limited to helping provide for the afore-

mentioned “reasonable further progress” (“RFP”) to ensure

“attainment of the applicable [NAAQS] by the applicable

date.” 42 U.S.C. § 7501(1).

Congress certainly would have seen such a detailed scheme

for existing sources as unnecessary if it had already required,

as Petitioners suggest, that NSR mandate eventual universal

retrofitting of advanced pollution controls on all existing

facilities.” Indeed, further betraying this interpretation is that

° As explained in both the utility and industry amici briefs, the types of

projects that Petitioners contend trigger NSR are similar to projects

undertaken every year across industry by every industrial facility merely

to maintain the ability to operate as constructed and permitted to operate.

universal application of new source control technology

contradicts Congress’ express belief that such retrofitting

would be unnecessary because of other targeted, existing

source-level controls. As made clear by the principal

architect of the 1977 Clean Air Act Amendments, Senator

Edmund Muskie: “It is [Congress’] intent that ‘reasonable

further progress’ means pollution control will reduce emis-

sions at a rate that will lead to attainment of the ambient

standards in the time required.” 123 Cong. Rec. 18,019

(1977); Environmental Policy Division (1978), Library of

Congress, 95th Cong., 2nd Sess., A Legislative History of the

Clean Air Act Amendments of 1977: a Continuation of the

Clean Air Act Amendments of 1970 (1978), Washington,

DC: US Senate Committee on Environment and Public

Works Print. Accordingly, the RFP requirements, including

RACT-level controls, were intended to attain the NAAQS

without additional reductions secured through the non-

attainment NSR program.

This pattern continued during the 1980s when Congress

repeatedly considered and rejected legislative proposals to

impose, on existing coal-fired boilers, the choice between

retrofitting with new source control technologies and shutting

down. See §.321, 100th Cong. (1987); $.316, 100th Cong.

(1987); $.300, 100th Cong. (1987); S.2813, 99th Cong.

(1986); S.2203, 99th Cong. (1986); S$.2200, 99th Cong.

(1986); H.R.4567, 99th Cong. (1986); S.52, 99th Cong.

(1985); H.R.5555, 97th Cong. (1982). That Congress

bothered considering these sector-specific bills reveals its

understanding that all existing facilities do not ultimately

trigger NSR. Rejecting the proposals only affirms Congress’

intent that ultimate NSR coverage of all industrial facilities

If one accepts at face value the complaints filed by citizen groups and the

Government in the NSR enforcement initiative, every individual industrial

facility in this country has routinely triggered NSR preconstruction

permitting under the NSR program year after year since 1980.

could not be the case. The present EPA NSR enforcement

initiative implausibly assumes that the entire electric utility

industry, refining industry, and much of the American Indus-

trial sector were for decades all in massive non-compliance

with existing regulatory requirements. That Congress

engaged in the major 1977 and 1990 rewrites of the Clean Air

Act without taking notice of such an anomaly, were it real,

only further exposes the unsupportable nature of EPA’s

litigation position.

In sum, the history of the Clean Air Act prior to its 1990

Amendments manifests serial congressional rejection of Peti-

tioners’ preferred “retrofit or shut down” mandate to control

emissions from existing sources. Instead, Congress left

cisions regarding existing-source pollution primarily to the

sates and reserved authority to EPA only in limited areas

consistent with the statutory hierarchy, explicitly avoiding the

massive economic disruption that would follow from a heavy-

handed, top-down approach to controlling pollution from

existing sources.’

” In fact, EPA had the same understanding when it included the

reconstruction provision in the NSPS rules. Reconstruction is an excep-

tion to the requirement that an emissions increase triggers NSPS for an

existing unit. When an existing unit expends 50% or more of the cost of a

comparable entirely new facility, then that expenditure triggers appli-

cation of NSPS. This is because EPA, like Congress, understood new

source controls rarely apply to existing sources, and thus only required

pollution or spending so much on an old facility that it becomes in essence

a new facility. 40 Fed. Reg. 58,416 (Dec. 16, 1975) (final rule); 39 Fed.

Reg. 36,946 (Oct. 15, 1974) (proposed rule), id. at 36,948 (“The purpose

of this proposed [reconstruction] provision is to discourage the per-

petuation of a facility, instead of replacing it at the end of its useful life

with a newly constructed facility.”).

3. NSR was deliberately designed to address

growth.

Though it repeatedly confirmed that mandatory new source

pollution control retrofits from existing sources was not the

law, Congress did stake out a deliberate role in the overall

Clean Air Act scheme for EPA’s regulatory PSD and NNSR

programs. The 1977 Clean Air Act Amendments established

a PSD “increment” program managing growth in areas

meeting air quality standards to ensure that air quality did not

significantly deteriorate. See 42 U.S.C. § 7470 (PSD

program is intended “to protect health and public welfare

from any actual or potential adverse effects . . . notwith-

standing attainment,” while ensuring that economic growth

“will occur in a manner consistent with the preservation of

existing clean air resources.”) As EPA recently explained,

“the NSR program is a growth measure and is not specifically

designed to produce emission reductions. Instead, its purpose

is to allow new source growth to occur without interfering

with an area’s ability to attain.” Final Rule to Implement the

8-Hour Ozone National Ambient Air Quality Standard, 69

Fed. Reg. 23,951, 23,986 (Apr. 30, 2004).

NSR’s focus on new emissions growth, and not on in-

creased utilization of existing permitted emissions capacity,

reflects Congress’ balancing of economic and environmental

concerns. The Clean Air Act repeatedly took care to note its

goal, in addition to protecting and improving the nation’s air

quality, of regulating in a fashion that is protective of the

American economy. 42 U.S.C. § 7401(b)(1). The purpose of

the 1977 Amendments, which included the NSR provisions,

was to “insure the protection of the public health and the

environment . . . while at the same time considering the

energy and economic needs of this Nation.” H.R. Rep. No.

95-294, at 34-35 (1977). With respect to the PSD program

itself, Congress declared that the occurrence of economic

growth is among the purposes of the PSD provisions in the

Clean Air Act. 42 U.S.C. § 7470(3). Petitioners ignore these

express considerations by predicating mandatory retrofit of

new source control technology on the act of performing

maintenance on existing productive capacity. Thus, while

_ Petitioners cite the Act’s purpose in their attempt to support

the need to interpret “modification” differently in NSPS and

PSD, they conveniently avoid citing, and ignore invoking the

entirety of, the Act’s stated purpose.

4. In the 1990 CAA Amendments, Congress

reaffirmed previous regulatory choices, and

strengthened controls on existing sources,

without altering NSR’s role in the hierarchy.

The 1990 Clean Air Act Amendments further affirm that

NSR does not mandate all existing units eventually to retrofit

mandatory new source control technology, and that NSR does

not apply when existing power plants undertake activities not

changing their original design capacity, even if those

activities extend the source’s productive life.

A major objective of the 1990 Clean Air Act Amendments

was to mitigate potential environmental damage from acid

rain. The major pollutants implicated in acid rain are sulfur

dioxide (“SO”) and nitrogen oxides (“NO,”). Consequently,

Congress required massive reductions in SO, and NO,

emissions. When considering potential control tools, Con-

gress understood that electric utilities were never subject to

the NSPS or NSR programs were undergoing refurbishment

and life extension work, that they would be operated without

new source pollution controls beyond 2010, and that their

longer operating lives and increased utilization would cause a

steady rise in national emissions in compliance with extant

Clean Air Act permits and regulations. See 42 U.S. C.

§§ 765 1(a)(28)-(29), 7651(b).

Congress nonetheless elected against requiring each exist-

ing power plant to retrofit new source pollution control

equipment, favoring instead a national cap-and-trade regime

designed to reduce SO, emissions much more efficiently and

at much lower cost than by mandating uniform technology.

Congress also achieved a reduction in NO, emissions of

approximately two million tons under Title IV, and addressed

the long-range transport of NO,. 42 U.S.C. § 7651(b). These

provisions, not NSR, were designed to generate massive

reductions in air pollution from existing sources. Unlike

applying NSR to existing facilities, the Title [V acid rain

program did so with economic efficiency, and deliberately so.

Congress’ decision to create the Title IV acid rain program

is important for three reasons. First, it shows yet again

Congress’ understanding that NSR is not triggered when

existing facilities undergo life extension projects allowing

them to operate within existing, regulated capacity. Second,

Title IV demonstrates that Congress deliberately avoided

requiring universal retrofitting of new source pollution

controls on existing coal-fired facilities. Third, Congress

pioneered the use of “market-based” tools (cap-and-trade)

rather than command-and-control measures (such as NSR),

for the explicit purpose of striking a balance between pollu-

tion abatement and economic prosperity. These assumptions

underlying the 1990 Amendments regarding power plant

operation, and the very cap-and-trade mechanism that Con-

gress created in this legislation, belie claims that NSR

required all existing units to “retrofit or shut down.”

C. Grandfathering in the Clean Air Act; Congress

did not play Petitioners’ argued “expectations”

game.

Despite ample opportunity, particularly including during

significant amendment of the Clean Air Act, at no time

between 1970 and 1990 did Congress statutorily mandate

immediate reductions in air emissions from existing facilities,

exempt sources entirely from the need to reduce emissions, or

impose pollution cuts on existing sources after “grand-

fathering” them for some limited period of time.

In instances where Congress instituted limited “grand-

fathering,” the relevant statutory language does not require

mystical divining of an unwritten reality. Instead Congress

spoke clearly and unambiguously to the issue. For example,

the 1970 Clean Air Act Amendments provided a 90-day grace

period for existing sources to bring their emissions of

Hazardous Air Pollutants (“HAPs”) to within prescribed

limits. Pub. L. No. 91-604, § 4(a), 84 Stat. 1676, 1685-86

(1970) (enacting 42 U.S.C. § 7412); see also 116 Cong. Rec.

33115 (1970) (statement of Senator Prouty: “An innovative

feature of the [1970] bill, in keeping with the urgency of the

problem, is the establishment of definite deadlines.)

Likewise, section 112, as revised by the 1990 Amendments,

gives existing sources three years to comply with the

Maximum Available Control Technology for air toxics. 42

U.S.C. § 7412(i)(3).

Instead of a definite time-measured mandate, the Clean Air

Act trigger for subjecting existing sources to NSR, a source

triggers NSR when and if it undertakes activity that creates,

new, heretofore unregulated, pollution.

Petitioners argue that the NSR program mandates some

unspecified grandfathering that eventually forces all sources

into NSR. This confuses an expectation—that some number

of existing sources might eventually be replaced with new

sources—with a statutory mandate ultimately compelling

installation of advanced controls on all existing sources.

Manifesting this confusion is Petitioners’ misplaced reliance

on a passage from the House report on the 1977 amendments

quoting an industry representative’s statement to the effect

that “[pjroven FGD [flue gas desulfurization] systems are

justified for new plants utilizing higher sulfur fuel where

sizable emission reductions are needed to meet new source

performance standards. * * * [I]t is imprudent to backfit

FGD into existing plants, especially older units facing

retirement within 10-15 years.” This remark apparently

serves as a rhetorical “forehead of Zeus” from which

purportedly springs a fully-formed statutory requirement.

Certainly Congress would make such a significant policy

decision in a more direct and explicit way.* Yet even a

cursory examination of the quoted passage reveals that the

“10-15 years” reference is not a limitation on the universe of

existing plants for which backfitting FGD would be im-

prudent. It is simply a specific illustration—a subset of the

universe of existing units for which such backfitting would be

“especially” imprudent.

Such practical considerations aside, what this report

actually says is that some Members of Congress may have

expected that some existing power plants would be retired

and new ones constructed. And this indeed has occurred.

It certainly does not, however, indicate that Congress has

adopted statutory language designed to compel this outcome.

Building upon this misconstruction of the 1977 CAA

Amendments’ legislative history, Petitioners proceed to

torture the relevant case law in their attempt to make it

confess cooperation with Petitioners’ argument. For exam-

ple, Petitioners attempt to liberate the D.C. Circuit opinion in

Alabama Power v. Costle, 636 F.2d 323, 400 (D.C. Cir.

1979)}—which actually described the 1977 Clean Air Act

* Amici Waxman, ef al., particularly elevate this remark (Amici

Waxman, ef al. Brief at p. 21) stating, “Congress’s decision to allow these

sources to continue operating without NSR controls was based on the

expectation that many ‘older units fac[e] retirement in 10-15 years,’

meaning that they would have to be refurbished—and controlled—if they

were to continue operating.” Certainly Congressman Waxman appreciates

the nature of estimates. See, e.g., Cong. Waxman letter to Congressional

leadership reminding that estimates offered to and/or relied upon by gov-

ernment are just that and can prove to be conservative (in the context of

the Department of Homeland Security cost estimates), at http://www.

democrats.reform.house.gov/Documents/20040827 1407 14-65532.pdf.

Amendments as intending to “grandfather existing Indus-

tries,” but not create a “perpetual immunity from all stan-

dards, under the PSD program”—from its long-understood

meaning and scope to now stand for a proposition that the

court never addressed, specifically, that increasing pollution

for PSD purposes means something more than increasing the

capacity of the facility to emit. In Alabama Power, no party

challenged the provision of the 1978 PSD rules requiring an

increase in the “potential emission rate” of a source for there

to be a “modification.” Thus, the Alabama Power court’s

explanation that “Congress wished to apply the permit

process . . . only where industrial changes might increase

pollution,” and its related observation regarding “perpetual

immunity,” merely recognize that existing sources become

subject to NSPS and PSD when they undertake §111

modifications.

Similarly, statements by the Seventh Circuit in Wisconsin

Electric Power Co. v. Reilly, expressing concern over

opening “vistas of indefinite immunity from the provisions uf

NSPS and PSD,” must be read in the context of the Circuit’s

rejection of Wisconsin Electric Power’s rather bold argument

that “massive” and “unprecedented” projects, enabling

facilities to increase their hourly emitting capacity by up to

40 percent, were routine maintenance that failed to trigger

NSR. 893 F.2d 901, 909-10 (7th Cir. 1990).

Il. THE NEW SOURCE PROGRAMS MODIFI-

CATION RULE APPLIES ONLY TO EXISTING

SOURCE CHANGES THAT CREATE NEW

AND UNREGULATED POLLUTION.

The definition of “modification,” which is the trigger for

every new source program in the Clean Air Act, reflects

Congress’ deliberate and fundamental policy distinction

between regulation of new sources of pollution and existing

sources of pollution. This understanding has been a central.

feature of the Clean Air Act since 1970.

A. The Modification Rule focuses on new emis-

sions capacity.

The New Source Programs modification rule arises from

the 1970 Clean Air Act Amendments and the NSPS program

they created. At that time, Congress required review of

“modification” for reconstruction as well as “construction”

activities because both can create new capacity to emit. H.R.

Rep. No. 91-1146, at 10 (1970) (“[IN Jew sources may take the

form either of entirely new facilities or expanded or modified

facilities. . . .”). The Clean Air Act defines “modification” as

any physical or operational change “which increases the

amount of any air pollutant emitted by such source.” 42

U.S.C. § 7411(aX(4). Accordingly, the “modification” defi-

nition from its inception focused on activity creating new

(i.e., unregulated) emissions, and until this enforcement was

initiated, EPA never interpreted the term “modification” to

the contrary.

It is inarguable from the text and structure of the 1977

Amendments that Congress carried over this NSPS meaning

of “modification” to the NSR program. See, e.g., 42 U.S.C.

§ 7501(4). The legislative history of the 1977 amendments

confirms that Congress focused NSR on new emissions—not

on the use or maintenance of existing facilities and their

already-regulated emissions capacity. S. Rep. No. 95-127, at

55 (1977) (Congress determined that “some mechanism [was]

needed to assure that before new and expanded facilities are

permitted, a State demonstrate that these facilities can be

accommodated within its overall plan to provide for

attainment of air quality standards.”) (emphasis added); see

123 Cong. Rec. 18,021 (1977) (Senator Muskie, one sponsor

of the 1977 Clean Air Act Amendments, noted that the NSR

procedures “apply only to new major emitting facilities and

do not affect existing facilities”); S. Rep. No. 95-127, at 29

(1977); see also 123 Cong. Rec. 18,040 (1977) (statement of

Senator Randolph) (“[{T]he nondeterioration section [PSD]

applies only to major new emission sources. It does not relate

to sources already in existence.”).

As illustrated, supra, as part of the SIP process, States

review and regulate emissions capacity from their resident

sources. So long as the SIP assessment of the regulated

emissions capacity of a source is not disturbed, air quality

remains protected no matter how many hours the source

operates or what physical changes are made to enable it to

continue such operation. Congress specifically intended the

term “modification” to encompass only activity that increases

the capacity of a facility to emit—not the use of existing

capacity as constructed and permitted, recognizing the

redundancy inherent in reviewing these sources again unless

the source is changed in a way that creates new, heretofore

unregulated emissions. See Puerto Rican Cement Co. v. EPA,

889 F.2d 292, 298 (Ist Cir. 1989) (“[T]he statute refers to the

‘construction’ of facilities, not to increased use of existing

facilities.”’).

B. NSPS and NSR are closely related programs

sharing common features, including the same

definition of “Modification.”

1. Congress deliberately defined NSR modif-

cation by reference to NSPS modification.

Far from scrapping the NSPS model and beginning anew

when crafting NSR, Congress instead modeled the statutory

NSR program after EPA’s 1974 regulatory PSD program, in

which EPA defined “modification” precisely as in the NSPS

program, emphasizing the Administrator’s intent for “the

definition of modification under Part 52 [addressing PSD]

to be consistent with the final definition of this term under

Part 60 [governing the NSPS program].” See 39 Fed. Reg. at

42,513 (Dec. 5, 1974).

In 1977, Congress codified the NSR program, incor-

porating the NSPS definition of modification into the NSR

definition. See, e.g., 42 U.S.C. §7501(4) (“The terms ‘modi-

fications’ and ‘modified’ mean the same as the term ‘modi-

fication’ as used in section 7411(a)(4) of this title [the NSPS

program].” ) (emphasis added).°

That Congress expressly incorporated the NSPS definition

into the statutory NSR program is not simply a case in which

two related programs, in the same Act, have identical words

that should normally be given the same meaning. See

Sullivan v. Stroop, 496 U.S. 478, 484 (1990). Here, Congress

expected that NSR review would occur in conjunction with

NSPS review and that the process would be much the same.

H. Rep. No. 95-294, at 144-45 (1977). This was also a major

concern for EPA when creating the regulatory PSD program.

See Approval and Promulgation of Implementation Plans:

Prevention of Significant Air Quality Deterioration, 39 Fed.

Reg. 42,510, 42,512 (Dec. 5, 1974). Appropriately, EPA

-——— —-ttself has recognized the close ties between the NSPS and

NSR programs. 68 Fed. Reg. 61248, 61268 (Oct. 27, 2003)

® Congress codified EPA’s regulatory program in the 1977 amend-

ments with some alterations, for instance, strengthening the statutory NSR

program’s contro] technology requirements from those required by EPA

in the regulatory program, reflecting the concern expressed at the time by

Senator Muskie that there existed a “gap” between “actual best available

technology and what has been required under new source performance

standards.” 123 Cong. Rec. 18,022. Senator Muskie’s statement, that

“the record to date under the [NSPS] approach has been disappointing,”

123 Cong. Rec. 18,022 (June 8, 1977) (quoted in Pets. Br. 5), specifically

referred to the difference in “control” technology between BACT and

NSPS, not to the scope of applicability of NSPS or PSD to activities at

existing facilities. See id; see also id at 18,018 (The new NNSR pro-

visions “establish controls more stringent than the [pre-existing NNSR]

ruling by EPA.”) (emphasis added).

(“The NSR program’s scope is closely related to the scope of

the NSPS program.”). In fact, given the explicit cross-

incorporation between the PSD and NSPS definition, the

application of NSPS and “major modification” review under

NSR should be identical. See /BP, Inc. v. Alvarez, 126 S. Ct.

514, 523 (2005).

Here, Congress once again acted deliberately, incorpo-

rating by reference to an existing term having a recognized,

accepted meaning. Congress failed to qualify “mean the

same as” with, for example, “but only for statutory purposes,

not for regulatory implementation purposes at which point its

meaning may be as the Agency decides.” Such qualification

is precisely what the court in United States v. Cinergy Corp.,

No. 00-1224 (7th Cir. 2006) would read into the statute.

2. NSPS and NSR share overlapping regulatory

goals. |

Unable to find support for their position in the statutorv

language, Petitioners argue that the NSPS and PSD programs

have fundamentally different purposes requiring that cov-

erage of projects undertaken at existing facilities be broader

under the PSD program than under the NSPS program.

Specifically, they argue that because the PSD program is an

“ambient-based” program, whereas NSPS is a “technology-

based” program, preconstruction permit coverage must be

coterminous with the activities that consume the PSD

“increments.” These claims are specious.

Petitioners’ argument fundamentally ignores that, starting

with the 1970 CAA, both technology requirements and

ambient-based preconstruction review were triggered by

NSPS “modification” activities. Specifically, under the 1970

Act, preconstruction review to ensure compliance with the

NAAQS was triggered by NSPS “modification,” 42 U.S.C.

§§ 7410(a)(2)(D), (a)(4), that being activity that created new

pollution. By contrast, preconstruction review was nof

triggered by existing emissions already reviewed and regu-

lated under the SIP—like emissions resulting from increased

hours of operation or from switches to an alternate fuel that

the source was designed to accommodate. In other words,

like nearly everything else in the Clean Air Act regulatory

scheme, the decision to exclude these changes from the

definition of “modification” under the 1970 Act emerges as a

deliberate decision in the context of a regulatory regime

where SIPs regulate emissions from existing sources at full

capacity to ensure attainment and maintenance of the

NAAQS. Under this regime, because all pollution up to an

NSPS “modification” would be fully accounted for in the SIP,

variation. in operation of existing capacity would not trigger

preconstruction review (as EPA made clear in its early

regulations defining modification for NSPS and PSD), while

“new pollution” that had not been reviewed would heve

to undergo review to assure “attainment and maintenance”

of NAAQS."°

Furthermore, arguments seeking to defeat Congress’

instruction that “‘modifications’ and ‘modified’ mean the

same as the term ‘modification’ as used in [the NSPS

program],” by extrapolating different meanings between the

terms through touting differing purposes of the PSD and

NSPS programs, also ignore the fact that some activities that

could cause NAAQS exceedances or consume the PSD

“increment” are not, and have never been, regulated under the

preconstruction permit programs. For instance, Petitioners

suggest that because the “baseline” for increment consump-

tion accounting purposes in PSD areas is based on an area’s

air quality, any activity that increases “actual emissions” and

'° For such reasons, in its preamble of the 1980 Rules, EPA articulated

disagreement with commenting parties that had argued the focus of NSPS

was based solely on technology, explaining that “the decision to develop

the NSPS is clearly based on ambient air quality concerns.” 45 Fed. Reg.

at 52,691-92 (Aug. 7, 1980).

potentially affects the air quality must necessarily trigger PSD

preconstruction review. Pets. Br. at 40-41. This is incorrect.

Petitioners’ view conflates “baseline” for purposes of in-

crement accounting, which is the date of the first PSD permit

application filed in a PSD area, see 42 U.S.C. § 7479(4)

(“[t]he term ‘baseline concentration] means, with respect to a

pollutant, the ambient concentration levels which exist at the

time of the first application for a permit in an area subject to

this part”), with “baseline” for applicability purposes (i.e., for

determining whether a particular activity increased emissions

and thus was a “modification”), which is a period shortly

before the activity, see, e.g., 40 C.F.R. § 52.21(d)(21)(ii)

(establishing as a baseline date “a two-year period which

precedes the particular date and which is representative of

normal source operations’). These two dates can be separated

by years—indeed, decades, for projects conducted in the late

1980s through 2000, as is the case here—and thus bear no

relationship to each other.

Moreover, even where a correspondence between the two

exists, Petitioners’ argument proves too much. As recognized

in Alabama Power v. Costle, a fuel switch to a higher-

emitting fuel allowed under a facility’s permit potentially

consumes increment, but has always been excluded from PSD

review. 636 F.2d at 378. In the court’s own words, this

argument “conflates the different yet complementary func-

tions of [pre-construction] review and calculation of incre-

ment consumption.” Jd. EPA’s longstanding definition of

“modification” in both its NSPS and NSR programs has

excluded from the definition increased hours of operation

within permitted capacity. 40 C.F.R. §§ 51.166(b)(2)iii);

60.14(e)(3). Yet, under Petitioners’ reasoning every exclusion

under the PSD rules (fuel switch, production rate, hours of

operations, efc.) would be illegal, since every exclusion nec-

essarily describes activity that potentially consumes incre-

ment but that is not subject to pre-construction review. This

cannot be correct."'

Arguments about the ostensibly different purposes of the

NSPS and PSD programs ignore the fact that, like the NSPS

program, the PSD program is both technology-based and

ambient-based. As discussed above, the 1970 Clean Air Act

Amendments combined a technology-based NSPS program,

see 42 U.S.C. § 7411, and an ambient, NAAQS-based “pre-

construction” program, see 42 U.S.C. § 7410(a)(4), with

the same trigger for projects at existing facilities—an NSPS

“modification.” Under the 1974 PSD program, a “tech-

nology-based” program requiring installation or the best avail-

able control technology (“BACT”) and an “ambient-based”

program designed to protect “PSD increments” in attainment

areas were merged in one PSD program. In this program, the

permits required that new emissions capacity comply with

BACT, NAAQS and the PSD increment program.

'' EPA recognized as much, again in the 1980 Rules preamble,

discussing how States can should address this issue: First, noting that the

increments must be protected separately from any pre-construction

requirements, EPA explained that the State must periodically review air

quality and take “corrective action” if the increments are exceeded. This

is one of the aspects of the PSD programs that Congress specifically

“tightened” in 1977. See Alabama Power v. Costle, 636 F.2d at 361-64.

Under the 1974 PSD rules, there was no requirement (or authority) to take

action to protect the increments if they are exceeded due to “non-

modification” activity (e.g., fuel switch). 45 Fed. Reg. at 52,677 (Aug. 7,

1980). Second, EPA explained that States could “revise SIPs and/or issue

operating permits so that SIP requirements and permits reflect actual

source operating conditions.” /d. at 52,721-22. If the State does the

latter—i.e., revise a source’s permit to limit hours of operations, as the

example in the preamble posits, see id. at 52,705—any increase in hours

in excess of an enforceable permit limit, whether made possible by

maintenance work or not, would trigger PSD. If the permit does not

restrict hours, however, there is no basis in the regulations, or in logic, to

differentiate between the two types of increases in hours of operation of

the existing unit.

CONCLUSION

Electric utility operations routinely fluctuate, by the hour,

day, month, and year. This is due to variable demand driven

by many factors including the weather, economic health, and

the availability of other units on the system. Utilities are

legally obligated to keep their units in good repair to respond

to the market’s fluctuations. They are issued permits that do

not limit their operating hours, enabling them to meet these

obligations.'? To ensure that these fluctuating source-specific

emissions do not interfere with attainment or maintenance of

the-NAAQS, State regulators at the technical air quality

planning level issue permits to utility sources that either

reflect a specific emission limit or assume round-the-clock

operations, and translate the relevant pollution numbers into

the overall States’ attainment and maintenance plans.

At the more basic level, this approach to air quality

planning reflects the fundamental distinction between existing

source pollution, which is fully accounted for and subjected

to a NAAQS compliance-driven level of control, and green-

field units and modified sources creating “new” pollution.

The Clean Air Act’s language and history make clear that the

NSR and NSPS programs were always intended by Congress

to address and apply to this new pollution (emissions from

new sources). Old pollution (emissions from existing

sources), no matter how it fluctuates within the universe of

emissions generated by existing sources, is controlled by

other (ie, non-NSR) Clean Air Act programs. In their

pursuit of a major policy shift serially rejected by Congress,

'2 EPA has consistently recognized that Congress did not intend to

regulate such fluctuations. See 68 Fed. Reg. 61,253 (Oct. 27, 2003).

(“[A]pplication of the major NSR program to ‘modified’ plants is [not]

designed to require existing plants that are continuing to operate in a

manner consistent with their original design to curtail their rate of

production or hours of operation beyond limitations set forth in their

existing permits.”); see also 45 Fed.Reg. 52,704 (Aug. 7, 1980).

Petitioners make “grace period” or “grandfathering” argu-

ments and other similar claims that fundamentally misstate

and misconstrue all of the major policy choices made by

Congress throughout the entire life of the Clean Air Act.

In turn, the common definition of “modification,” to be

applied in the context of the NSR and NSPS programs, was

developed in response to, and is driven both by these

overarching regulatory policy imperatives and by Congress’

decision to regulate old and new pollution in fundamentally

different ways. Petitioners indicate that failure to adopt their

desired policy shift will result in a policy hole in America’s

air pollution regulations. To the contrary, revising the

definition “of modification” along the lines suggested by the

Petitioners so as to apply NSR to the fluctuating emis-

sions of already-regulated pollution would defeat congres-

sional intent and effectively emasculate the non-NSR Clean

Air Act programs. The Court should refuse to indulge in such

a fundamental re-write of one of this nation’s most important

and carefully balanced regulatory statutes.

Respectfully submitted,