Amicus Curiae Brief — Environmental Defense v. Duke Energy Corporation
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(spate UE
FILED
An ™
(yA) SEP 15 2006
No. 05-848 OFFICE OF THE CLERK .
IN THE
Supreme Court of the Anited States
ENVIRONMENTAL DEFENSE, ef al.,
Petitioners,
Vv.
DUKE ENERGY CORPORATION,
Respondent.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF OF MANUFACTURERS ASSOCIATION
WORK GROUP AS AMICUS CURIAE IN SUPPORT
OF RESPONDENT DUKE ENERGY CORPORATION
CHARLES H. KNAUSS
Counsel of Record
ROBERT V. ZENER
SHANNON S. BROOME
BINGHAM MCCUTCHEN LLP
3000 K Street, NW
Suite 300
Washington, DC 20007
(202) 424-7500
September 15, 2006
[Additional Counsel Listed Inside]
—————____O SS eee oO
Of Counsel:
JULIE C. BECKER
ALLIANCE OF AUTOMOBILE
MANUFACTURERS
1401 Eye Street, NW
9th Floor
Washington, DC 20005
LESLIE A. HULSE
AMERICAN CHEMISTRY COUNCIL
1300 Wilson Boulevard
Arlington, VA 22209
RICHARD S. WASSERSTROM
AMERICAN FOREST & PAPER
ASSOCIATION
1111 19th Street, NW
Suite 800
Washington, DC 20036
SO
\KEVIN B. BELFORD
PAMELA A. LACEY
AMERICAN GAS ASSOCIATION
400 North Capitol Street, NW
Washington, DC 20001
M. ELIZABETH COX
AMERICAN PETROLEUM
INSTITUTE
~ 1220 L Street, NW
_ Washington, DC 20005
JAN S. AMUNDSON
QUENTIN RIEGEL
NATIONAL ASSOCIATION OF
MANUFACTURERS
1331 Pennsylvania Avenue, NW
6th Floor
Washington, DC 20004
ROBIN S. CONRAD
AMAR D. SARWAL
NATIONAL CHAMBER LITIGATION
CENTER, INC.
1615 H Street, NW
Washington, DC 20062
ROBERT G. SLAUGHTER
NATIONAL PETROCHEMICAL &
REFINERS ASSOCIATION
1899 L Street, NW
Suite 1000
Washington, DC 20036
TABLE OF CONTENTS
TABLE OF AUTHIORITIES.......c.c-coccccosccssessessescsseoss
BW REED 6 GI BIO cccececctosorecnsncncecccsrovenecotanseee
SUMMARY OF ARGUMENT..........c:ccssssessrsssssesees
ENVIRONMENTAL PETITIONERS’ VIEW OF
THE LAW CANNOT BE SQUARED WITH
THE
STATUTE OR GENERAL
MANUFACTURING OPERATION .....0.0.... cece
I.
NSR, if Applied as Petitioners Argue,
Would Have Led to Serial NSR Permit
Requirements for Manufacturing Facilities
and Rendered Most of the 1990
Amendments to the CAA Unnecessary ........
The Significant Investment That is Required
to Build Manufacturing Facilities Means
They Must Be Designed to Operate for
Many Years, in a Variety of Modes, and at
the Highest Efficiency Possible ....................
EPA’s Application of the Regulations
Shows That the Examples Above Are Not
and Never Have Been “Modifications” or
“Major Modifications” ............:ccc-sssceceeeeeeeee
17
TABLE OF CONTENTS - Continued
EPA’s Claimed Need for Discretion to
Address the NSR and NSPS Program
Purposes Cannot Undo Plain Statutory —
Language and Ignores the Requirements
Congress Established to Address Them. .......
Petitioners Misconstrue General Motors’
Brief in Prior Litigation on the 1980 Rules;
Moreover, Petitioners’ Focus on Industry
Briefs Instead of EPA Statements Highlights
the Lack of Support for Their Reading of
TEE cisdachscescicsiceestisieeanetinterhiadslniiemnanitedaselcanbans
A. STAPPA/ALAPCO’s claim that the
lower court ruling will adversely
affect air quality is incorrect ................
B. STAPPA/ALAPCO’s claim that state
and local agencies cannot meet their
CAA obligations without reductions
from existing electric generating units
Be I TO BR ev cciccermiincsnsobsciesiptnensne
C. STAPPA/ALAPCO’s claim that the
lower court ruling will limit economic
SITES BE CIID saiecectccstotncesesvimnsoissonne
Fe cntccvenscninetcseintnenetetsecsaqesensententeantonstonne
18
20
26
26
27
29
30
TABLE OF AUTHORITIES
Page
CASES
Alabama Power vy. Costle, 636 F.2d 323 (D.C. Cir. 1979) 29
New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005).........00--- 5
Train v. NRDC, 421 U.S. 60 (1975) ..ccsscccsssscsscssssessssseseen 28
Whitman v. American Trucking Ass'ns, 531 U.S. 457 (2001) 4
STATUTES
te 27
i a 3
Lt et, Wee? CRE eee Pree osure 9
a kt SEE See ON Res: 30
E.R aE ERA NES Oe ass Ea 4
ee Ln ED TEER 19
OI I iss sictiniciciciecistsccince bani 3, 5,17
Mente RO i 5
PARLEY see 7 CED aE 4,9
a i i 28
ill
TABLE OF AUTHORITIES - Continued
Page
ADMINISTRATIVE MATERIALS
GCF Bs § SE A Ci ic seccnsssseventestctiginsindsabiviicties 6
OCT RR. F FU DO CIP icceccnseseconstotenniscutipitanititaiap 6
SCF The B FN. TD CIGD wr vicncnsoscestihisivnnstestnnianntinaiidatabipinn 6
A tee FFE OD picccccieivssencnccnisjerninsitgiompensteibassaiiiaen 27, 29
OTe § SE BG cecicssccsiessccsnmvessttitininntinisdedulihbiiiduba 27, 29
QD CPs § DE. HOGI) (IGF Ps ccccccscninsivasicessonissshstcibidiinnn 6
Ir ies Fe GO vivecsisinsnnitinasninievsntiinnlichilepiauiiipaigalin 17
ADCIT, BF SEO AGI insect ccistcieiies) 6
Ge tis © TSE cecicinininhcsctrsctennvimnitinacininaiiinieaasiiatsaimaniiaia 23
SD CEA § FB.25 CRG siccesccscvssevsecrneconsensstncapeiinneniiiniags 6
GCF Re § FSSA CT ecivirsssscccovstinitiviibssniaiciniaia 6
ST Bas B FR BOG cecistctnssssnnsesinsinninnssisesiapsitiitinmpanbiibinaias 17
QD CE Be | TE. BO IED sccpetstsvionccsvesemistnissnnsntemnesnsiitaiiaiinns 10
40 C.F .R. past GO, Subpart BB ....cccccsersscoscossescossessosesosssees 26
40 C.F.R. part 60, Subpart DD 0000.0... eceeesesseeeseeeeenens 26
iV
TABLE OF AUTHORITIES - Continued
Page
40 C.F.R. part 60, Subpart MM..............-..:ccccccesseceseeeeenees 26
40 C.F.R. part 60, Subpart GGG ............ccccccceseeeseeeneneeeees 26
40 C.F.R. part 60, Subpart QQQ ........ccccccscssercesecreeeeeresenes 26
er es Oe CEE OD cevtccspecscncerccnccececcsccecoesnanseesesee 17
Sr ie Bh Gi ccc ersccccotccescccsesccssecsseccsenssecceses 16
a eins OF I cccnscscestinsntanecetneccnssncedennsesntuesnanertietes 16
ns Ae ciectaipcntrcncicinnnteprascoesaasncnseccsssdeiconestotees 16
43 Fed. Reg. 34,340 (Aug. 3, 1978) .........ccecccssseessseeeeeeees 15, 16
45 Fed. Reg. 52,676 (Aug. 7, 1980) ............cccccscceeseeeeeeees 29
70 Fed. Reg. 17,018 (Apr. 4, 2005).............cccccccceeeseeeeeeees 8
70 Fed. Reg. 39,413 (July 8, 2005) ..........cccccccscesseseeeeeeees 8
LEGISLATIVE HISTORY
SENATE COMM. ON ENV’T AND PUB. WORKS, 95TH
CONG., LEGISLATIVE HistoRY OF THE CAA
AMENDMENTS OF 1977 (1978) ...........scsessssesssscesecseseseeeees 4,5,6
SENATE COMM. ON ENV’T AND PuB. WorKS, 103D
CONG., LEGISLATIVE HisToRY OF THE CAA
AMENDMENTS OF 1990 (1993) .........cccccscssssssesseeecsesecsseees 5
TABLE OF AUTHORITIES - Continued
H.R. Rep. No. 95-294 (1977), as reprinted in
a ees SUEY cccnintintcentenietinnentannninesdisrnminsiaines 8
MISCELLANEOUS
EPA, Standards Support and Environmental Impact
Statement Vol. 1: Proposed Standards of Performance
for Stationary Gas Turbines, EPA-450/2-77-017a (Sept.
SIP 8 Picsicmntaepencnerctrsnmsesensninetotatennsiitastaientaitincsnnnitatiitienseteds 15
vi
INTEREST OF AMICUS
The Manufacturers Association Work Group (hereafter
“Associations”) encompasses trade associations representing
manufacturers in their respective industries on matters
affecting their businesses.’ The Associations’ members
manufacture, produce, refine and transport an array of
products in virtually every state in the nation. The outcome
of this case will significantly affect the members because the
New Source Review (“NSR”) rules at issue here apply not
just to electric utilities but also to all manufacturing facilities
in the United States. These rules have historically applied to
projects the Associations’ members have undertaken, and in
many states, icy continue to apply today.” Moreover, the
Associations’ members have been and continue to be subject
to enforcement actions by the Environmental Protection
Agency (“EPA”) under the rules at issue in this case.
In addition to being current or potential subjects of
enforcement proceedings, the Associations’ members have
extensive experience relevant to the resolution of this
petition, specifically with the:
' All parties have consented to the filing of amicus briefs in letters that
are on file with the Clerk. Counsel of record for Manufacturers
Association Work Group, Charles H. Knauss, certifies pursuant to
Supreme Court Rule 37.6 that this brief was not authored in whole or in
part by counsel for a party and that no person or entity, other than the
amicus curiae, its members, or its counsel, made a monetary contribution
to the preparation or submission of the brief. The Associations consist of
the Alliance of Automobile Manufacturers; American Chemistry
Council; American Forest & Paper Association; American Gas
Association; American Petroleum Institute; Council of Industrial Boiler
Owners; Interstate Natural Gas Association of America; National
Association of Manufacturers; Chamber of Commerce of the United
States of America; National Petrochemical & Refiners Association;
National Oilseed Processors Association; Corn Refiners Association; and
the National Cotton Council! of America.
? While EPA revised its NSR rules in 2002, those rules have not yet been
adopted and approved into state implementation plans throughout the
country. Therefore, the 1980 rules continue to apply in many states
where the Associations’ members operate facilities.
l
- construction and operation of industrial facilities;
- types of activities necessary for safe, efficient and
reliable operation of those facilities; and
- historical application of EPA’s NSR program.
Through this experience, the Associations bring a broader
context to the dispute this Court must address. An
understanding of how plants are designed, constructed, and
maintained and operated throughout their lives is essential
for an accurate and complete consideration of the issues
presented.
As discussed below, the Court should affirm the ruling of
the U.S. Court of Appeals for the Fourth Circuit because it is
consistent with a plain reading of the 1980 regulations and
the language and structure of the Clean Air Act (“CAA” or
the “Act”). Adopting the Environmental Group Petitioners’
view could be devastating to American industry because
activities that are and have been common industrial practice
could be viewed as having triggered the requirement for
sources to obtain NSR permits, even though no
“modification” of their permitted operations has occurred.
Affirming the Court of Appeals would categorically clarify
that such commonplace projects are not subject to NSR.
SUMMARY OF ARGUMENT
The lower court’s decision not only reflects EPA’s
longstanding interpretation of its NSR regulations but also is
consistent with the way that manufacturers have designed
and operated their plants in accordance with these
regulations.
As the Associations demonstrate below, the normal
course of business operation of industrial plants mandates
that they be maintained and that their efficiency be optimized
over time. Moreover, operation of an industrial facility in a
competitive environment requires constant activity to
accommodate changes in product mix or to allow for newer
versions of products to be timely introduced.
2
In part Il, below, we describe four examples of common
and frequent activities at industrial plants that, under
Petitioners’ view of the law, would require NSR analysis.
The examples include: (1) adjustments or “tweaks” to
consumer product manufacturing processes (p. 12); (2) repair
and replacement of gas turbine components (p. 14);
(3) equipment alteration at grain elevators and other facilities
(p. 15); and (4) engineering adjustments to paper mill fuel
delivery systems (p. 16). Petitioners’ interpretation would
require these commonplace activities (and hundreds of others
like them) to undergo NSR analysis and potentially a
permitting process—typically lasting more than a year—
even if their actual hourly emissions rate is unchanged and
emissions stay below permit limits that have already been
reviewed for compliance with air quality requirements.
These types of activities have not in the past been
considered to trigger NSR inquiries, in part because many
were not considered “modifications” under the New Source
Performance Standard (“NSPS”) program. As the lower
court recognized, Congress defined “modification” under
NSR as identical to the NSPS program definition. 42 U.S.C.
§§ 7411, 7479(2)(C).
Petitioners and their amici claim that the lower court
ruling would lead to increased emissions and severe air
quality impacts. These claims have no basis in reality.
Section 110 of the CAA requires each state to develop a
State Implementation Plan (“SIP”) for attaining national
ambient air quality standards (“NAAQS”). Each state has
complied with this directive and SIPs have been approved by
EPA and implemented without any reliance on NSR
permitting as the basis for achieving the NAAQS. Indeed,
any emissions from manufacturing plants were permitted and
accounted for by the states in their SIP planning process.
ARGUMENT
ENVIRONMENTAL PETITIONERS’ VIEW OF
THE LAW CANNOT BE SQUARED WITH THE
STATUTE OR GENERAL MANUFACTURING
OPERATION.
The CAA vests the primary responsibility for achieving
air quality standards with the states. Section 110 of the Act
allows the states substantial discretion to tailor their air
emission control programs to meet the NAAQS consistent
with local concerns. Whitman v. American Trucking Ass’ns,
531 U.S. 457, 470 (2001). Section 110(a)(2) of the CAA as it
existed in 1980 established the requirements for state
agencies to develop implementation plans to achieve the
NAAQS in relatively broad terms. In so doing, it listed
eleven requirements in subparagraphs (A) through (K),
beginning with the overarching broad directive that each
state submit to EPA a plan to implement the NAAQS and
provide for attainment “as expeditiously as practicable” and
to include “emission limitations ... and such other measures
as may be necessary to insure attainment and maintenance”
of such standards. SENATE COMM. ON ENV’T AND PUB.
WorKS, 95TH CONG., LEGISLATIVE HISTORY OF THE CAA
AMENDMENTS OF 1977 (“1977 Leg. History”),
§ 110(aX(2)(A)-(B), at 23- 24 (1978) (current version at 42
U.S.C. § 7410(a)(2)(A)-(B)).?
In addition to the broad directive that states take the steps
necessary to achieve the NAAQS, Congress included a
requirement for SIPs to regulate the construction,
modification and operation of stationary sources and, as a
subset of that SIP element, to establish a separate permitting
program for construction and modification of major emitting
facilities as provided in parts C and D of Title 1. Jd §
110(ay(2)(D), at 24 (current version at 42 U.S.C.
> Additional SIP requirements were included in Section 172 (for
nonattainment areas), 42 U.S.C. § 7502, and Section 163, 42 U.S.C.
§ 7473 (for certain pristine areas).
§ 7410(a)(2)(D)).
It is the meaning of the term “modification” under parts
C and D and former Section 110(a)(2)(D) that is at issue in
this case.* In establishing the requirements of parts C and D
in the 1977 amendments, Congress did not start with a clean
slate; it relied on an established regulatory program—the
NSPS program—which had been in existence for nearly a
decade. Under the amended statute, the Act (1) continued to
require new plants and “modifications” of existing plants to
meet “new source performance standards,”® and also
(2) required “major” new emitting facilities and
modifications of those facilities to meet the additional
requirements of NSR, both in areas that comply with air
quality standards and in areas that do not.°
Importantly, Congress chose not only to continue to
utilize the same definition of “modification” for purposes of
determining when both NSR and NSPS are triggered for an
existing facility, but expressly stated that “modification” for
NSR has the “meaning” and “use” it has under the NSPS
program. 42 U.S.C. §§ 7479(2)(C), 7501(4). When EPA
issued its rules implementing the NSR program, after the
CAA was amended in 1977, it continued to use a regulatory
concept called “major modification” (originally introduced
in a 1976 interpretive ruling on nonattainment NSR), based
* When Congress amended Section 110 in 1990, it expanded and refined
the requirements for SIPs but did not add any requirements related to
parts C and D permits. SENATE COMM. ON ENV’T AND PUB. WORKS,
103D CONG., LEGISLATIVE HISTORY OF THE CAA AMENDMENTS OF
1990, § 110(a)(1), at 32 (1993).
* 1977 Leg. History § 111(a)(1), at 35 (current version at 42 U.S.C.
§ 7411(aX(1)).
° In areas that do not comply with the NAAQS, NSR is frequently
referred to as “nonattainment NSR,” while it is called “PSD” (prevention
of significant deterioration) in areas that comply. New York v. EPA, 413
F.3d 3, 12-13 (D.C. Cir. 2005). The present case concerns PSD areas
rather than nonattainment areas, but for purposes of the legal analysis, the
difference is unimportant, and we shall use the term “NSR” to refer to
“new source review” in both types of areas.
5
on whether a “modification” caused source-wide or plant-
wide increases in annual emissions from an entire stationary
source above threshold levels. 40 C.F.R. §§ 52.21(b)(2)
(1978), 51.24(b)(2) (1978); 40 C.F.R. § 52.21(1980); 40
C.F.R. § 51.24(b)(2) (1980) (recodified as 40 C.F.R.
§ 51.166(b)(2) in 1987). “Modification” continued to be
defined by EPA as it had always been defined under NSPS.
40 C.F.R. §§ 52.01(d), 51.100 (1987).
EPA’s claim that it has discretion, and exercised that
discretion, to define “modification” differently for the NSR
and NSPS programs flies in the face of plain statutory and
regulatory language. The fact is that EPA has never defined
the term “modification” differently under NSPS and NSR,
but rather created a regulatory term limiting NSR review to
only those “modifications” that are also “major,” as
determined by source-wide netting and the significance
levels. The differences EPA cites between the NSR and
NSPS programs relate solely to requirements that ensue only
after the program applies,’ not to the threshold determination
as to whether a “modification” has occurred.
I. NSR, if Applied as Petitioners Argue, Would Have
Led to Serial NSR Permit Requirements for
Manufacturing Facilities and Rendered Most of the
1990 Amendments to the CAA Unnecessary.
The lower court held that only an NSPS “modification”
can trigger an NSR “major modification” analysis.
” The NSR program, as enacted in 1977, required a facility to undergo an
individualized review process, in which the control technology and its air
quality impacts are scrutinized, 1977 Leg. History § 165(a)(3), at 88 (air
quality review), /d, § 165(aX4), at 88 (control technology review)
(current version at 42 U.S.C. § 7475(a)), while the NSPS program as
implemented by EPA since its enactment in 1970 requires the plant to
comply with control technology requirements set on a national basis
based on EPA's determination of the best “adequately demonstrated”
control technology, Jd, § 111(a){1), at 35 (current version at 42 U.S.C.
§ 7411(a)(1)).
6
Petitioners and EPA would have this Court believe that all
air quality would fail to meet national standards if that
decision is upheld. The language of the rules and the statute,
and the facts, belie this prediction. Under Petitioners’ view, .
facilities would have triggered NSR permitting requirements
quite frequently, many facilities on a yearly or bi-annual
basis. Any uptick in product demand that is coincident with
a physical activity at the plant would then be deemed the
origin of a potential increase in annual emissions. Under this
view, facilities would have to face the paradox of having
undertaken projects that were not “modifications” but could
nonetheless be “major modifications.”
Title | contains a wide range of tools for states to achieve
NAAQS. Only one part of that is NSR. If Congress or EPA
had believed that the NSR program would be as broadly
applicable as Petitioners and EPA now advocate in this
litigation, the EPA and President George H.W. Bush would
have found no reason to draft and send to Congress proposed
legislation in 1989 that, after much debate, became the Clean
Air Act Amendments of 1990. These Amendments imposed
significant new emission mandates on existing air emission
sources, none of which would have been necessary under
EPA’s and Petitioners’ rationale advocated before this Court.
The litigation theory espoused by EPA and Petitioners would
obviate the need for the 1990 Amendments’ acid rain
program to reduce nitrogen and sulfur oxides from existing
utility sources and the Section 182 ozone nonattainment area
provisions because existing sources would already have been
subjected to NSR (by frequently undertaking projects that
were not NSPS “modifications” but nonetheless “major
modifications” under their view) and, thus, any controls
under the acid rain of ozone programs would have been
redundant with existing controls.
In sum, Petitioners seek to attribute to NSR a purpose so
broad that it would erase the remainder of Title I, making it
the primary vehicle through which CAA emission reductions
were and are to be achieved. These claims ring hollow given
7
the narrower purpose that Congress itself gave the major
NSR program when it was enacted, describing it as a
mechanism “to permit States to allow continued growth or
expansion in nonattainment areas, so long as this growth or
expansion is undertaken in a manner consistent with the
goals and objectives of the Clean Air Act.” H.R. Rep. No.
95-294, at 210 (1977), as reprinted in 1977 U.S.C.C.A.N.
1077, 1289 (emphasis added). Indeed, EPA explained that:
unlike the control measures required by
Section 172(c)(1) and (c)(6), major NSR is
not a measure to reduce emissions to assure
attainment; nor did Congress identify the
program as a control measure to help areas
achieve attainment “as expeditiously as
practicable.” Rather, Congress intended that
the effectiveness of major NSR in minimizing
the impact of increased emissions should be
considered together with the State’s other SIP
measures to assure, consistent with Section
172(a)(2), that emissions from new sources
will be consistent with [reasonable further
progress requirements].
70 Fed. Reg. 17,018, 17,022 (proposed Apr. 4, 2005).*
The statutory structure further indicates the narrower role
of NSR in the “air quality toolbox.” The Act directs the
states to include a wide variety of measures in their SIPs to
achieve NAAQS and many of these requirements address
emissions from existing facilities. For example, Section 172
required states: to provide for implementation of all
reasonably available control measures (“RACM”) as
* This reasoning was adopted by EPA in its final action on
reconsideration. 70 Fed. Reg. 39,413 (July 8, 2005). EPA further stated
that the offset ratio requirement and lower major stationary source
thresholds of the nonattainment NSR program were not included to
generate emissions reductions but rather to provide a buffer to
compensate for under-projections of growth in state planning. /d. at
39,420.
expeditiously as practicable; to require reasonable further
progress, including reduction in emissions from existing
sources as may be obtained through adoption, at a minimum,
of reasonably available control technology (“RACT”); and to
impose emission limitations, schedules of compliance and
such other measures as are needed to attain the NAAQS
expeditiously. 42 U.S.C. § 7502. Just one part of this
laundry list is the regulation of “new” and “modified” major
stationary sources through a permit program referred to as
NSR. If Congress had intended NSR to play the central role
in attaining air quality by being triggered almost
immediately after enactment for every manufacturing plant,
when those plants undertook projects that were never
understood to be NSPS “modifications,” it certainly would
have devoted more than a few words in the list to it and
stated so explicitly.? In any event, if NSR controls were
expected to apply to virtually every existing unit in a
nonattainment area shortly after the 1977 Amendments, it
would have made no sense for Congress to require in Section
172 RACT, which is less stringent than the controls required .
under NSR, for those same units.
Il. The Significant Investment That is Required to Build
Manufacturing Facilities Means They Must Be
Designed to Operate for Many Years, in a Variety of
Modes, and at the Highest Efficiency Possible.
Construction of a new industrial plant, be it a paper mill,
an automobile assembly plant, or a foundry, requires a
significant investment, often in the hundreds of millions of
dollars. When plants are built, SIPs provide for issuance of
air quality permits that require state-of-the-art controls, also
a significant investment. Because of the capital required to
build manufacturing facilities, they are designed to operate
for many years and, often, in a variety of modes. If the
Petitioners’ view of the law is accepted, then plants
* Cf 42 U.S.C. § 7419 (more than 1500 words devoted to smelters).
4
constructed in 1979 that obtained major NSR permits and
that operated as designed could have been subject to NSR
several times more since 1979 merely because of normal
maintenance and repair activities or product and process
refinements (“tweaks”) that were anticipated to occur when
the facilities were originally constructed. Petitioners’
baseless argument also conflicts with the clear recognition
by permitting agencies that components of such facilities
need to be maintained, repaired and replaced as they
deteriorate and that various products might be made with a
given set of equipment.
Obtaining the SIP air quality permits necessary to build a
new plant (or process) requires a comprehensive application,
with detailed emissions analyses. The permitting process
typically takes over a year and involves the public through
notice and comment procedures. Once a permit is issued, the
company is permitted to construct and operate its facility
based on its application. 40 C.F.R. § 52.21(r)(1).
Companies justifiably rely on these permits to define the
scope of their allowed emissions. After all, they have
indicated maximum emissions profiles in their permits and
been subject to permit review based on those emissions. The
states also have relied on these permits in their SIP planning
in establishing the maximum amount that a source can emit
and its maximum impact on local air quality.
In contrast, Petitioners’ reading of the statute and
regulations would mean that companies cannot rely on
permits they obtain that reflect their actual emissions
-anability. Instead, Petitioners would require permits but not
allow a company to operate at the levels permitted therein
because it is maintaining and operating its facilities as
required by the permit up to anticipated and allowed permit
levels. This view of the law undermines the permitting
process itself.
Indeed, in seeking these permits, companies do not look
to the next year’s demand. They look to the range of
potential fluctuations in demand and product mix over a long
10
planning period (in decades), and they obtain permits to
allow for these fluctuations. As a result, state permitting
agencies use continuous operation at maximum capacity as
the basis for permits to ensure the full air quality impact of a
plant is considered before it is allowed to be built. In actual
operation, this optimal level is rarely achieved both due to
demand and equipment outages that may occur for various
reasons. Companies devote considerable effort to small
improvements designed to bring their plants closer to
stoppage-free operation, by fine-tuning and optimization of
operations and repairs or replacements as needed to improve
reliability of production equipment. Such activities are
intended both to decrease unscheduled stoppages and to
increase the time between scheduled maintenance. These
improvements are not (and never have been) NSPS
“modifications” because they do not affect actual hourly
emissions rates, but only hours of operation.
In addition, most companies build and permit plants to
operate for many years while making a variety of products or
variations on the same product. When a plant is built, state-
of-the-art controls are installed, at considerable expense.
Under Petitioners’ view of the law, companies would not be
allowed to recoup these investments but instead could be
subject to repeated technology reviews under NSR, even
though operations remain within the scope and emission
levels of their permit and actual capability, without regard to
the number of hours they operate.
To the contrary, Congress, in enacting the NSR program,
and EPA, in promulgating the 1980 regulations, did not
create serial technology reviews of manufacturing
operations. This is the very reason that EPA has historically
looked to whether the actual emitting capability (measured
on an hourly or similar basis, unaffected by increased hours
of operation) has changed before inquiring into the impact on
actual annual emissions from a plant--i.e., whether there
would be a “modification” under the NSPS rules before
analyzing whether that “modification” would be a “major
1]
modification” that involved a significant increase in annual
emissions under NSR.
This approach made sense because as long as the actual
emissions capability remains stable, the plant is operating as
intended. It is what it was permitted to be, and has not been
transformed into a new operation that warrants a new review
for control technology. The following examples are
illustrative of the types of activities that companies
undertake consistent with their permits and actual operating
capability. In each case, the activity would not be
considered a modification under the NSPS program (ie.,
would not increase the emissions rate or otherwise be
excluded from the NSPS definition of “modification”), but
could allow a plant to operate more efficiently or reliably in
a manner consistent with its permitted and constructed
capacity.
Example 1: Consumer Product Manufacturing Tweaks
and Adjustments. In the United States, industrial facilities
manufacture many products made of metal, plastic and
composites, including trucks, cars, boats, trailers, buses,
appliances, furniture and more. To ensure the proper look
and durability (e.g, to prevent corrosion), these facilities
shape and apply protective and preparatory coatings and
finish paints to the metal to achieve a marketable, final
product.'® Consider a plant that installs a new coating line
and obtains a major NSR permit. The major NSR permit
includes emission limits and control requirements and the
State agency issues it based on the required air quality
analyses. After that permit is issued, the plant begins
production.
This is when the tweaking process begins. Plant
engineers, marketing staff, and other personnel make
'° The primary emissions from coating operations are volatile organic
compounds (“VOC”), an ozone precursor, and particulate. Permits
typically require sources to reduce VOC through use of control devices
or low VOC coatings and particulate through use of controls.
i2
incremental product or production process changes. These
changes can be reflected in the look and design of the
product, the colors, durability and texture of the coatings,
and even the coating nozzles and applicators. They are made
for a variety of reasons, e.g., to make the product more
appealing, to lower the cost of producing it, to make it more
durable, to solve quality problems, to reduce the amount of
paint required, efc. None of these tweaks constitutes an
activity that would change the nature of the coating line,
change its permitted emission limits, or change its actual
_ emitting capability. But, if the tweaks are successful, people
might buy more of the product, and the facility might be able
to reach the production its marketing people projected when
the project was approved. In addition, the annual emissions
might increase because the plant is making more product,
i.e., plant operating hours increase.’ Still, the plant is the
same as permitted—the coating line moves parts along a
conveyor while robotic applicators spray coatings and finish
paint, and emissions are routed to a control device.
The emissions reviewed when the major NSR permit
issued still represent the capability of the unit. Under
Petitioners’ view, each of these tweaks, from a larger or
smaller product size to a different shape that might require
more or less paint—to a paint applicator design
improvement—to a more protective undercoating that
prevents corrosion from salt, would require analysis of
whether there was a “major modification” that increased
annual emissions, and triggered major NSR. This would be
so, under Petitioners’ view, even though there has been no
increase in the unit’s hourly emitting capability and,
therefore, no “modification” as defined in the NSPS.
The tweaking and adjustment process occurs on every
plant operating day of every month of every year. Tweaking
'' In rough economic times or if this plant's tweaks make its product that
much more appealing to the public, a competitor plant might even shut
down, leading to a shift of production to this plant.
13
is the marketer’s job. It is the plant manager’s job. It is the
plant and design engineers’ job. It is also something that
companies contemplai= when they obtain a permit, as long as
they do not increase their actual hourly emitting capability.
EPA has never suggested that these commonplace and
necessary tweaks represent a “major modification” under
NSR, presumably because the tweaks would not be
“modifications” in the first instance as de“.ed in the NSPS.
Under the view advanced by Petitioners, cweaks would be
subject to repeated analysis to determine whether they were
“major modifications” even though the emissions had
already been reviewed in a major NSR permit, and the
coating line’s actual emitting capability had not changed. It
defies common sense to assume Congress or EPA intended
NSR to apply (or even an analysis of whether it applies)
repetitively to tweaks.
Example 2: Repair and Replacement of Gas Turbine
Components. Consider the replacement of major
components of gas turbines used in power generation or
industrial applications, like natural gas pipelines. During a
turbine’s life, components like stator blades, turbine nozzles,
buckets, fuel nozzles, seals, and packings are expected to be
replaced. These are the same types of components the
replacement of which, EPA argued below and
Environmental Group Petitioners argue here, turned Duke’s
generating units from “existing” into “new” facilities.
Replacing these components, however, does not convert an
existing turbine into a “new” one in any sense.'” Indeed, the
2 STAPPA/ALAPCO claims that no changes would be subject to NSR if
the lower court decision is upheld. This is patently false. If a company
replaces components in a way that is an NSPS modification, NSR
permitting would be required if the modification was “major.” For
example, if a company replaces a turbine section in a way that allows the
unit to burn more fuel, increases the output, and thereby generates higher
hourly emissions, the unit would have made a “modification” as defined
in the NSPS and analysis of whether a “major modification” has occurred
would need to ensue. If annual emissions were projected to increase by
more than significance levels in the rules, the company would have made
14
unit’s manufacturer will typically condition the emissions
performance warranty on the replacement of these parts
according to a schedule specified in the manual for the unit.
After the replacement, the turbine continues to be what it
was always able to be and what it was permitted to be.
In issuing the gas turbine NSPS, EPA recognized that
such activities are not NSPS modifications. Specifically,
EPA explained “replacement of stator blades, turbine
nozzles, turbine buckets, fuel nozzles, combustion chambers,
seals, and shaft packings” are not modifications under the
NSPS.'? Replacing these components is in no sense a
modification of the emissions unit, much less a “major” one.
Example 3: Activities Excluded from the NSPS
Modification Definition for Grain Elevators. Many NSPS
define “modification” as not including specified activities.
For example, grain elevators, which are buildings or
complexes of buildings for storage and shipment of grain,
are regulated under Subpart DD of the NSPS rules. EPA
issued a NSPS for these facilities in 1978. 43 Fed. Reg.
34,340 (Aug. 3, 1978). In so doing, the Agency explicitly
determined that the addition of gravity loadout spouts to
existing grain storage or grain transfer bins, installation of
automatic grain weighing scales, replacement of motor and
drive units driving existing grain handling equipment, and
installation of permanent storage capacity without an
increase in hourly grain handling capacity are not
modifications. EPA noted in issuing the final rule that these
alterations “frequently occur” and that the impact of
considering “these alterations as modifications, subject to
compliance with the [NSPS], was viewed as unreasonable.”
Id. at 34,344-45.
It would be truly remarkable for EPA to state that
a “major modification,” and NSR would apply.
'? See EPA, Standards Support and Environmental Impact Statement
Vol. 1: Proposed Standards of Performance for Stationary Gas
Turbines, EPA-450/2-77-01 7a, at 5-6 (Sept. 1977).
15
subjecting such activities to NSPS modification requirements
is unreasonable and just a short time later consider subjecting
such alterations to NSR major modification analysis to be
reasonable. Yet, under Petitioners’ view of the law, these
“frequent” activities that EPA had determined not to be
“modifications” would nonetheless be subject to NSR
analysis to determine if they were “major modifications.”
Surely if EPA had considered these activities potentially
subject to NSR analysis, there would have been some
statement so indicating and an analysis of the rule’s
economic impact.'*
Example 4: Debugging Bark Handling and Delivery
System to a Biomass Bark Boiler at a Paper Mill. Paper
mills need to remove the bark from wood (“debarking”) prior
to processing it into product. Rather than disposing of the
bark, mills put it to beneficial use by conveying it to plant
boilers for energy production. Because mills are permitted
for a variety of fuels, when there is no bark, their boilers
typically run on oil or natural gas. One reason that bark
might not be available is due to plugging that occurs in the
bark handling and delivery system.
Plant engineers spend considerable effort to minimize the
likelihood of unscheduled breakdowns of the bark handling
operations. Feeder system repairs and component
“ There are numerous other instances of activities excluded from the
definition of NSPS modification that EPA has never considered to
require a NSR modification analysis. See, eg, 40 C.F.R.
§ 60.560(a)(4\ii) (for polymer production, addition or replacement of
equipment for the purposes of improvement accomplished without an
expenditure of funds above a specified threshold is not a modification);
Id. §60.590(c) (for equipment leaks at refineries, addition or
replacement of equipment for the purpose of process improvement
accomplished without a capital expenditure is not a modification), /d
§ 60.751 (lateral expansion of a municipal solid waste landfill is not a
modification unless it results in an increase in the design capacity of the
landfill). Under Petitioners’ view of NSR, these activities could
nonetheless constitute “major” modifications, even though they were
not “modifications” in the first place.
16
replacements are implemented as needed to minimize the
likelihood, and the equipment used may vary depending on
the bark characteristics of the plant’s raw materials.
Debugging the feeder system does not affect emission rates
at all. It merely allows the system to operate more annual
hours within its constructed and permitted capacity, and is
entirely consistent with its prior emitting capability. Such
repair and replacement activity has never been considered a
“modification,” much less a “major modification” potentially
subject to NSR.
III.EPA’s Application of the Regulations Shows That the
Examples Above Are Not and Never Have Been
“Modifications” or “Major Modifications.”
The examples in the prior section are instructive
regarding how EPA has interpreted its regulations in practice
and its view of the statutory definition of modification. EPA
has defined modification in the NSPS program as follows:
“any physical or operational change to an existing facility
which results in an increase in the emission rate to the
atmosphere [excluding increases in hours of operation] of
any pollutant to which a standard applies shall be considered
a modification within the meaning of section 111 of the
Act.” 40 C.F.R. § 60.14(a) (1977). Congress, in turn,
defined modification for purposes of NSR by reference to its
meaning and use under Section 111. 42 U.S.C.
§ 7479(2)(C).
EPA further provided when it promulgated regulations to
implement the NSR program that permitting requirements
would only apply to those “modifications” that are also
“major modifications,” 40 C.F.R. §§ 52.21(i), 51.166(i). A
“major modification” is a modification that increases
plantwide annual emissions above “significance” levels.
Petitioners urged the Court of Appeals to simply read the
word “modification” out of the EPA definition and assume
that any activity that increases annual emissions above
significance levels is a “major modification” regardless of
17
whether it is also a “modification.” The Court of Appeals
declined that invitation, and this Court should too.
Indeed, under Petitioners’ theory, the increased
production, the grain loading equipment alterations and a
host of similar activities that are needed to maintain the
nation’s productive capacity as constructed and permitted to
Operate—activity that has never been considered a
“modification”—could trigger “major modification” NSR
analysis. Triggering the NSR permit process for activities
defined not to be “modifications” by EPA or that occur every
year at industrial facilities across the country to maintain and
improve reliability of existing permitted equipment would
subject companies to seria! NSR reviews.
The experience of the Associations’ members is that
obtaining an NSR permit typically takes well over a year,
with 3 to 6 months devoted to application preparation and 6
to 12 months or more required for agency processing.
Moreover, because no actual construction can occur until the
permit is issued, the activities in the examples above would
need to await issuance of the permit, bringing the
introduction of new versions of products to a virtual
standstill. If Congress had established a definition of
“modification” with such _ potentially far-reaching
implications, it surely would have said something indicating
as much. Instead, it said that for NSR purposes,
“modification” would have the meaning and use it has under
the NSPS program.
IV.EPA’s Claimed Need for Discretion to Address the
NSR and NSPS Program Purposes Cannot Undo
Plain Statutory Language and Ignores the
Requirements Congress Established to Address
Them.
The government argues that to effectuate the different
purposes of NSR, it needs discretion to interpret the term
“modification” differently for the NSPS and NSR programs.
United States Br. in Support of Pet’rs (“United States Br.”)
18
at 48-50. This assertion is without merit. The argument
ignores that Congress outlined which elements of NSR
should be based on NSPS and which should differ to take
into account the purposes of the NSR program. Congress
chose to use identical definitions of “modification,” but it
required more stringent contro] technology requirements for
NSR than NSPS, a case-by-case permitting procedure for
NSR as compared with the national standards for NSPS, and
a detailed air quality analysis for NSR which does not apply
under the NSPS program.
EPA and Petitioners fail to explain why the differences
Congress set forth do not adequately take into account the
differing purposes of the NSR and NSPS programs, or why
such purposes would allow EPA to ignore not just an
identical definition of modification for the programs, but the
adoption of the “meaning” and “use” of the NSPS
“modification” definition by reference into the NSR
program.
EPA’s litigation position is that much more untenable
because it goes well beyond what is needed to address any
differences in the purposes of the NSPS and NSR programs.
EPA’s interpretation offered in this litigation would require
NSR even where the emissions associated increased
operating hours following repaired or replaced equipment are
within the emission levels allowed by a plant’s construction
and operating permits, emissions that have already been
reviewed for their impact on local air quality. For example,
a plant operating under a permit obtained in a previous NSR
review already contains “emission limitations . . . which
conform to the requirements of [the Act],” and any
additional reviews would be redundant. 42 U.S.C.
§ 7475(a)(1).
The fact that the plant is currently operating with a
“compliance margin” or “cushion” between its actual
emissions and its permitted emissions—as most plants do—
is not a reason for a second review of an emission level that
has already been reviewed at least once. Such a rule can
19
only punish companies that operate their control equipment
at maximum capability, in that their efforts to keep their
plants well below permitted levels would only serve to
impair their ability to make future productivity
improvements without further duplicative NSR review.
Such a result has no conceivable relation to the differences
between NSR and NSPS, or to the goals of the CAA.
EPA has also taken into account local air quality impacts
by creating a regulatory definition of “major modification”
that looks at annual emissions source-wide. That EPA has
discretion to assess the overall impact of the source in
netting does not mean, however, that it can change the
definition of “modification” any way it likes.
For all of these reasons, the lower courts were correct in
concluding that under EPA’s established rules, there must be
a “modification” of a facility before there can be a “major
modification” at a stationary source.
V. Petitioners Misconstrue General Motors’ Brief in
Prior Litigation on the 1980 Rules; Moreover,
Petitioners’ Focus on Industry Briefs Instead of EPA
Statements Highlights the Lack of Support for Their
Reading of the Rules.
The Petitioners argue that the CMA litigation (Chemical
Mfrs. Ass’n v. EPA, No. 79-1112, et al. (D.C. Cir.)) shows
that, as of the time of promulgation of the 1980 rules,
“regulated parties understood that EPA had adopted a new,
PSD-specific approach to determining modifications.” Pet’rs
Br. at 24. Specifically, Petitioners contend, certain parties in
the CMA litigation, including “General Motors and other
major industrial firms,” had “attacked EPA’s use of an
‘actual emissions’ test in place of the capacity-based test
used in the 1978 PSD regulations and the 1979 proposal.”
Id. at 12.
General Motors Corporation (“GM”) is a member of the
Alliance of Automobile Manufacturers, participating as
20
amicus curiae in the preparation of this brief. Contrary to
Petitioners’ claims, GM has never stated nor understood the
1980 rules to adopt a different standard for judging whether
a “modification” has occurred than the NSPS definition of
“modification” Congress enacted for the NSR program.
GM’s challenge to the 1980 rules was directed at the second
step of the analysis that EPA created in those rules in
response to the Alabama Power remand—the determination
of whether a modification is “major” and the corresponding
annual accounting of emissions on a source-wide basis.
Quoting from the brief filed in 1981 by GM and other
industry petitioners, the Petitioners observe that GM “raised
as its first issue” in that case “whether EPA exceeded its
‘statutory authority’ by providing ‘that a modification
subject to review under Parts C and D of the Clean Air Act
would occur whenever actual emissions from a [major
stationary] source increased as a result of an alteration to that
source, even where the source’s capacity to emit remains
constant.” Pet’rs Br. at 12. (quoting Br. of Industry Pet’rs on
Actual Emissions Definition of Net Increase at 1, CMA, No.
79-1112, et al. (D.C. Cir. Feb. 12, 1981) (“1981 GM Brief”))
(emphasis added). According to Petitioners, this shows that
GM and other petitioners in CMA recognized that “EPA had
adopted [in the 1980 rules] a new modification standard
specially tailored to the PSD provisions,” insofar as the CMA
petitioners “complained vociferously that under the new
regulations PSD would apply to projects that ‘result in a
significant increase in actual emissions [of the source], even
though the source’s net capacity to emit remains constant or
declines.” Jd. at 32 (quoting 1981 GM Brief at 5-6) (italics
in original) (underline added)."°
Petitioners misconstrue the challenge GM sought to
'* The United States has a similar take on the CMA litigation, arguing
that “EPA’s actual annual emissions test, including its consideration of
hours of operation, was subjected to industry challenge as early as 1981.”
United States Br. at 32-33.
21
mount in the CMA litigation, have distorted the arguments
raised by GM in its 25 year-old brief that argued the original
PSD rulemaking was inconsistent with the CAA, and
selectively quote the content of the settlement agreement in a
way that changes its meaning. That GM challenge did not
involve the same issues presented in this case. When read in
its entirety, the 1981 GM Brief confirms that the portion of
the PSD rule at issue was EPA’s improper interpretation of
the CAA in promulgating the “significant net emissions
increase” definition. The GM petition and brief did not
engage the issue before this Court, ie., whether Congress
authorized EPA to deviate from the NSPS definition of
“modification” as the construction trigger for a “major
modification” analysis of projects at existing emission units.
Thus, the settlement documents focus on the definition of
“major modification.” Petitioners’ statement that the
settlement agreement required EPA to propose that
“modification” be defined with respect to potential
emissions, id, is not true. The settlement agreement
required EPA to propose that “major modification” be
defined with respect to potential emissions.’
In CMA, GM challenged EPA’s promulgation of
‘© Conveniently dropping the word “major” from the settlement
language, Petitioners claim that the settlement required EPA to propose a
new (b)(2)(v) “providing that a modification ‘shall not be deemed to
occur if one of the following occurs: (a) there is no significant mer
increase in the source's potential to emit (as calculated in terms of
pounds of pollutant emitted per hour) or (b) there is no significant net
increase in the source's actual [annual] emissions.’*” Pet. Br. at 13
(emphasis in original removed) (emphasis added) (quoting 61 Fed Reg.
38,250, 38,269 (July 23, 1996)). The actual language of the settlement,
however, explicitly provided that EPA will propose a revision providing
that “[a] major modification shall be deemed not to occur if ...”
Settlement Agreement, Ex. B, JA.1, No. 79-1112 (D.C. Cir. Feb. 22,
1982) (“CMA Settlement”) (emphasis added). Moreover, as the
emphasized terms “net” and “source” demonstrate, it is clear that the
settlement addressed the netting rules, not what activity constitutes a
modification in the first place.
22
“netting” rules that were based on net increases in a major
stationary source’s overall “actual” emissions, instead of net
increases in the source’s overall “potential to emit” (as EPA
had originally proposed in 1979). At no point in its brief did
GM indicate any understanding that the 1980 rules provided
that projects or activities at a major stationary source that
were not NSPS “modifications” would nonetheless be
considered “major modifications” under NSR. To the
contrary, as explained in more detail below, GM’s brief is
clear on its face that the only type of “change” or “alteration”
to a major stationary source that the industrial petitioners
then contemplated would ever constitute a “major
modification” under the 1980 rules was the addition of an
entirely new emissions unit (either as a replacement for an
existing unit at the source or as additional capacity). See,
e.g., 1981 GM Brief at 6-11.
Contrary to Petitioners’ mischaracterizations, the 1981
GM Brief addressed only that portion of the PSD rules that
based source-wide “netting” on “actual emissions” rather
than “potential to emit.” In its brief, GM focused its
argument on the illogical netting'’ result under EPA’s 1980
rulemaking. The brief explained that replacement of an
existing unit with a new unit of identical size and capacity
would be deemed a “major modification,” and subject to
NSR, unless emissions from other units at the source were at
the same time reduced. A new emissions unit was presumed
under the 1980 rules to emit at its annual “potential to emit”
'” Netting refers to a process by which new emissions—i.e., those from a
new unit or modification of an existing unit—are internally offset within
the plant based on all increases and decreases over a 5-year period. 40
C.F.R. §52.21. If a source uses netting to internally offset new
emissions, there has not been a “major modification,” and NSR does not
apply. In GM’s view, EPA’s rules required an apples to oranges
comparison, in that the netting calculus was based on the potential
emissions from new units for increases and on actual emissions from
existing units in determining how much of a decrease in emissions had
occurred. See 1981 GM Brief at 8-11.
23
(i.e., assuming annual operation at 8,760 hours even though,
as a practical matter, no unit would, or could, reach that
level). At the same time, for “netting” purposes under the
1980 rules the emissions from the existing unit that was
being repiaced were determined on the basis of that unit’s
“actual emissions” (i.e., a level that would in all cases be
less, and likely considerably less, than the new unit’s annual
“potential to emit”).
It is this situation to which GM was referring when it
characterized the 1980 rules as providing that a “major
modification” would occur “whenever a series of
contemporaneous changes at a [major stationary] source
result in a significant increase in actual emissions, even
though the source’s net capacity to emit remains constant or
declines.” 1981 GM Brief at 5-6 (emphasis in original). GM
was not saying that, by shifting to an “‘actual emissions’ test
in place of the capacity-based test used in the 1978 PSD
regulations and the 1979 proposal,” see Pet’rs Br. at 12, EPA
had adopted rules under which an activity or project that did
not constitute a “modification” of an existing emissions unit
(because it did not increase the unit’s “capacity”) could |
nevertheless constitute a “major modification” of a source.
Put simply, the Petitioners’ entire argument with respect to
the CMA litigation founders on their failure to appreciate the
distinction between the “capacity” of a major stationary
source (i.e., the source’s “potential to emit”) and the
“capacity” of an individual emissions unit.
Whether GM’s view of the CAA would have been
sustained by the courts if it had been pursued fully in 1981
instead of settled is not relevant here. There is simply no
intersection between GM’s position advocated in a past
lawsuit and the current case. The prior case involved the
netting requirements addressed by the 1980 rules.'* This
'§ The settlement agreement in CMA required EPA to propose that
netting would be based on a comparison of potential emissions from new
units and potential emissions from existing units in summing increases
24
case involves the threshold question that precedes netting—
whether there has been a modification of an existing
emission unit in the first instance.
GM certainly would have raised an additional objection
to the rules if it had believed that they provided a
modification definition different from the NSPS definition as
Congress established. That GM only raised examples
involving new units that would be required to utilize the
source-wide netting process to determine if a “major
modification” had occurred clearly indicates that GM did not
address the NSR interpretation first advanced by Petitioners
some 20 years after GM filed its brief. Indeed, the very fact
that neither GM, nor any other industry party, raised such a
challenge to the 1980 rules at that time proves the point: no
one within industry had any notion at that time that EPA had
promulgated rules with that effect, or that EPA was so
interpreting the 1980 rules. This is not the least bit
surprising. EPA shared that view as evidenced in formal
applicability determinations issued by its chief of
enforcement in consultation with its Office of Air Quality
Planning and Standards and Office of General Counsel. See
JA 35-37; JA 27-28.
The Petitioners’ determination to rely so heavily on an
industry brief, which in fact does nothing to support the
Petitioners’ position, is instructive. If Petitioners could
produce statements by EPA at the time the 1980 rules were
issued, they surely would offer those in this case. Because
EPA’s contemporaneous records do not support the
revisionist interpretation of the 1980 rules, Petitioners
instead have resorted to misstating industry positions through
selective quotation of 25-year old briefs and settlement
agreements. That they need to misconstrue a brief filed by
industry to support their position indicates how weak their
theory truly is.
and decreases over a 5-year period. CMA Settlement, Ex. B.
25
VI. Claims of Amici STAPPA/ALAPCO Are Baseless.
A. STAPPA/ALAPCO’s claim that the lower court
ruling will adversely affect air quality is incorrect.
Amici STAPPA/ALAPCO’s brief contends that if the
lower court is upheld, “virtually all renovations on existing
industrial sources of air pollution will be exempted from
installing modern pollution controls.” STAPPA/ALAPCO
Br. at 4-5. Nothing could be further from the truth.
Member companies of the Associations filing this brief
have been subject to numerous NSPS requirements since that
program was established based on application of the
modification provisions of those rules. Moreover, many
NSPS have been revised over time to reflect advances in
technology. Virtually every automobile paint shop in the
United States is subject to the NSPS for automobile and light
duty truck coating which limits emissions of volatile organic
compounds from these operations. 40 C.F.R. part 60,
subpart MM. Similarly, numerous paper mills have become
subject to 40 C.F.R. part 60, subpart BB; corn refiners have
become subject to the standards for grain elevators in subpart
DD; and numerous refineries are subject to the control
requirements of subparts GGG and QQQ."” The
STAPPA/ALAPCO brief attempts to paint an EPA
memorandum regarding applicability of NSPS to utility
emission units as a broad statement that industry has never
become subject to NSPS requirements. Numerous additional
examples of NSPS that apply to units as a result of
modification exist (e.g., gas turbines, industrial boilers, glass
manufacturing furnaces). STAPPA/ALAPCO is well aware
of the broad applicability of these requirements because its
members administer the NSPS program in many states.
'? The memorandum cited in support of amici's contention that emission
units have not become subject to NSPS modification provisions referred
specifically to electric generating units and was in the context of
proposed electric utility NSPS revisions. STAPPA/ALAPCO Br. at 5.
26
Even if STAPPA/ALAPCO could legitimately claim that
the lower court’s interpretation would lead to all renovations
avoiding NSR, which it cannot, STAPPA/ALAPCO
members remain fully capable of regulating (and indeed are
required to regulate) existing sources through their SIP rules
as necessary to attain and maintain NAAQS, and to protect
the PSD increments. The member state and local agencies of
STAPPA/ALAPCO possess the regulatory authority to
require the controls they claim are needed under their SIPs
right now, without waiting for a source to make a
modification. As explained earlier, Section 110 mandates
that states include sufficient measures in their SIPs to attain
and maintain applicable NAAQS. 42 U.S.C. § 7410. States
regulate existing sources of emissions under SIPs all the
time.
For example, numerous SIP rules limit the amount of
particulate emissions per unit of product output from all
existing sources (so-called process weight rate rules).
Similarly, many SIPs impose limits on the NOx or SO,
emissions per unit of energy generated or on the pounds of
VOC that may be contained in a coating product (e.g., for
appliances or automobiles). Also, states are required to
“review the adequacy of a [PSD] plan on a periodic basis and
within 60 days of such time as information becomes
available that an applicable increment is being violated.” 40
C.F.R. § 51.166(a)(4). If the increments are violated, the
state is required to remedy any increment violation. Jd.
§ 51.166(aX3).
B. STAPPA/ALAPCO’s claim that state and local
agencies cannot meet their CAA obligations
without reductions from _ existing electric
generating units is beside the point.
STAPPA/ALAPCO devotes an entire section of its brief
to arguing that reductions from electric generating units are
needed to meet SIP obligations to attain the NAAQS.
STAPPA/ALAPCO Br. at 7-12. This discussion is entirely
27
inapposite. It has nothing to do with the proper
interpretation of the term “modification” under the CAA or
EPA’s NSR regulations. If emission reductions from one or
another source category are needed for an area to achieve a
NAAQS, Section 110 requires the state to regulate that
category or find other reductions to meet the NAAQS.
Section 110 does not require that EPA expand the scope of
NSR to relieve the state from its obligation to issue
appropriate regulations to meet the NAAQS. Congress
vested states with the decision-making authority for how
NAAQS would be achieved. The STAPPA/ALAPCO brief
disavows that approach and seeks to foist the technical and
political decisions that Congress asked states to make (and
that states fought vigorously to keep, see, e.g., Train v.
NRDC, 421 U.S. 60 (1975)) back to EPA under the guise of
the NSR program.”° |
STAPPA/ALAPCO’s claim that state law prevents their
members from meeting the NAAQS is a red herring.
STAPPA/ALAPCO Br. at 12. They claim that half the state
agencies are subject to state laws or policies prohibiting them
from adopting any regulation more stringent than the
“minimum federal law.” The “minimum federal law” is
Section 110, which requires those states to adopt regulations
as needed to attain the NAAQS. A state law that prohibits
rules more stringent than federal law has no application in
the case where a state agency shows that its rules are needed
to meet the requirements of CAA Section 110.
© STAPPA/ALAPCO's brief claims states wil] face sanctions if NSR is
not applied as they suggest. This is untrue. States only face sanctions if
they do not submit a SIP containing control measures needed to attain the
NAAQS. 42 U.S.C. § 7509(a). Indeed, STAPPA/ALAPCO’s approach
is backwards: States can revise their SIPs at any time to include the
controls needed to attain the NAAQS, and are subject to sanction if they
do not do so. /d If NSR is applied as STAPPA/ALAPCO’s brief
suggests, emissions will not necessarily decrease sufficient to meet the
NAAQS.
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C. STAPPA/ALAPCO’s claim that the lower court
ruling will limit economic growth is baseless.
The STAPPA/ALAPCO brief states that a “NSR
program that effectively exempts renovated units from
installing modern pollution control technology will limit
economic growth.” STAPPA/ALAPCO Br. at 12. In
particular, STAPPA/ALAPCO claims that unless Petitioners
view of NSR is adopted, the PSD increment will be
consumed by increased operating hours of existing units and
that this will prevent new units from being installed. There
is simply no basis for claiming that subjecting a lower
number of existing emissions units to NSR will limit
economic growth. Indeed, just the opposite is true. Stifling
business’ ability to operate their plants—both existing and
new (the latter become “existing” once they are built and
have started operating}—optimally will hinder economic
growth.
The preamble to the 1980 rules in fact recognizes and
addresses the specific issue raised by STAPPA/ALAPCO.
First, while noting that increments must be protected
separately from any preconstruction requirements, EPA
explained that states must periodically review air quality and
take “corrective action” if the increments are exceeded by
any activity, including activity at existing sources that
consumes increment but is not a major modification subject
to NSR permitting.2) 45 Fed. Reg. 52,676, 52,677 (Aug. 7,
1980). See also 40 C.F.R. §§ 51.166(a)(3)-(4). Second,
EPA explained that states could “revise SIPs and/or issue
operating permits so that SIP requirements and permits
reflect actual source operating conditions,” if needed to
protect the increments. 45 Fed. Reg. at 52,721-22. Thus,
*! This is one of the PSD program elements that Congress specifically
“tightened” in the 1977 Amendments. See Alabama Power v. Costle,
636 F.2d 323, 350 (D.C. Cir. 1979). The 1974 rules neither required nor
authorized state action to protect increments if exceeded as a result of
activity that was not a modification, e.g., raw material changes.
29
states have both the mandate and tools to protect increments
quite apart from preconstruction review, and there is no basis
for claiming that an overly broad reading of the
“modification” rules is essential for increment protection.
The “modification” definition is applicable to “renovated”
units whenever they exceed their past actual emissions
capability; if a source has been restricted in its emissions or
operating hours to protect increment, any exceedance of
those levels would be subject to PSD review. Thus, it is
simply untrue that renovated units can never be considered to
have been modified.
In the PSD program, Congress struck a delicate balance
“to insure that economic growth will occur in a manner that
is consistent with the preservation of existing clean air
resources.” 42 U.S.C. § 7470(3). Industrial operations
fluctuate constantly, on an hourly, daily, monthly and yearly
basis. The origins of these fluctuations are varied and
include the overall state of economic growth in the country
and the world economy, discovery of new uses for existing
products, consumer preferences, competition, the availability
of raw materials or other facilities, and more.
Companies seek and are issued permits to allow them to
operate in dynamic markets and to increase their operating
hours while maintaining their facilities. As EPA has
consistently recognized, Congress did not intend to regulate
fluctuations in operation. Rather, it is the litigating position
of Petitioners and EPA and advanced by STAPPA/ALAPCO
in its brief that would restrict economic growth by frustrating
the intended operation of American manufacturing facilities
that have already been reviewed for their emissions impact.
CONCLUSION
The judgment of the Court of Appeals should be upheld.
30
September 15, 2006
Respectfully submitted,
Charles H. Knauss
Counsel of Record
Robert V. Zener
Shannon S. Broome
Bingham McCutchen LLP
Suite 300
3000 K Street, NW
Washington, DC 20007
(202) 424-7500
Counsel for Amicus Curiae
Manufacturers Association
Work Group
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.