Amicus Curiae Brief — Environmental Defense v. Duke Energy Corporation

[Supreme Court, US.

17 FILED ‘

JUL 2 1 2006

No. 05-848 OFFICE OF THE CLERK

Supreme Court of the United States

ENVIRONMENTAL DEFENSE, NORTH CAROLINA

SIERRA CLUB, and NORTH CAROLINA PUBLIC

INTEREST RESEARCH GROUP CITIZEN

LOBBY/EDUCATION FUND,

Petitioners,

v.

DUKE ENERGY CORPORATION,

Respondent.

On WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF OF THE STATES OF NEW JERSEY, ARIZONA,

KENTUCKY, MICHIGAN, WASHINGTON AND

THE DISTRICT OF COLUMBIA AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

ZULIMA V. FARBER .

Attorney General of New Jersey

PATRICK DEALMEIDA |

Assistant Attorney General

KEVIN P. AUERBACHER*

JUNG W. KIM

Deputy Attorneys General

R.J. Hughes Justice Complex

25 Market Street, P.O. Box 093

Trenton, New Jersey 08625-0093

* Counsel of Record (609) 292-6945

Attorneys for Amici Curiae

(Additional Attorneys Listed on Inside Cover)

TERRY GODDARD

Attorney General

State of Arizona

JOSEPH P. MIKITISH

Assistant Attorney General

1275 W. Washington

Phoenix, AZ 85007

(602) 542-8553

GREGORY D. STUMBO

Attorney General

Commonwealth of Kentucky

DOUGLAS SCOTT PORTER

Assistant Attorney General

700 Capitol Avenue

Suite 118

Frankfort, KY 40601

(502) 696-5669

MICHAEL A. Cox

Attorney General

State of Michigan

THOMAS L. CASEY

Solicitor General

ALAN F. HOFFMAN

NEIL D. GORDON

Assistant Attorneys General

Michigan Department of

Attorney General

Environment, Natural

Resources and Agriculture

Division

P.O. Box 30755

Lansing, MI 48909

(517) 373-7540

ROB MCKENNA

Attorney General

State of Washington

LESLIE R. SEFFERN

Assistant Attorney General

Ecology Division

1125 Washington Street

P.O. Box 40100

Olympia, WA 98504-0100

(360) 586-4613

ROBERT J. SPAGNOLETTI

Attorney General

District of Columbia

EDWARD E. SCHWAB

Deputy Solicitor General

Office of the Solicitor

General

DONNA M. MURASKY

Senior Assistant Attorney

General

Office of the Attorney

General for the District of

Columbia

One Judiciary Square—

6th Floor South

441 Fourth Street, N.W.

Washington, D.C. 20001

(202) 724-5667

i

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES ..............

INTEREST OF AMICI CURIAE ...............:

SUMMARY OF ARGUMENT ............--++--

I.

IT.

TO SUCCESSFULLY CARRY OUT THEIR

PRIMARY RESPONSIBILITY OF ACHIEVING

AND MAINTAINING THE NAAQS THROUGH

THEIR SIPS, STATES MUST BE ABLE TO

RELY ON FINAL DETERMINATIONS

REGARDING NATIONALLY APPLICABLE

ET dc. dcivhicncncnidddakencdnns

A. The Effective and Efficient Development

of State Implementation Plans Requires

Extensive Effort and Use of Significant

Resources by Each State ..............

B. To Perform Their Role Under the CAA

Effectively, the States Require the Finality

and Certainty that Section 307(b) is

RE GP UINEED occ cccccocecessucs

THE FOURTH CIRCUIT’S RULING

CONFLICTS WITH THE CLEAN AIR ACT’S

REQUIREMENT THAT THE D.C. CIRCUIT

DECIDE THE VALIDITY OF NATIONALLY

APPLICABLE REGULATIONS .............

Page

il

Contents

A. Section 307(b)’s Pre-Enforcement Review

of CAA Regulations in the D.C. Circuit

and the Deferential Standard of Review

Afforded EPA Regulatory Interpretations

Promote Stability in State Planning and

Administration of the Act ............

B. The Fourth Circuit Did Not Follow Section

307(b) or this Court’s Administrative Law

Il. THE FOURTH CIRCUIT’S RULING

THREATENS THE UNIFORMITY AND

CERTAINTY OF NATIONWIDE

REQUIREMENTS UNDER OTHER

ENVIRONMENTAL LAWS ...........-++:

CPOE onc cccncussecciudessdeeeecen

Page

12

16

19

21

iii

TABLE OF CITED AUTHORITIES

Page

CASES:

Adamo Wrecking Co. v. United States,

BP RE SUPE 6 vn cbdsveccacedsasccesance 13

Alabama Power Co. v. Costle,

pe peep lieks Serre 16

Alaska Dep’t of Envtl. Conservation v. EPA,

Oe Me GHEE ok SSS evecubdcosceneeys 1,2,5

Appalachian Power Co. v. EPA,

249 F.3d 1032 (D.C. Cir. 2001) .......... eee ees 7

Auer v. Robbins,

Pe CED aviv cic daw s ow dindeenchanes’ 14

Bowles v. Seminole Rock & Sand Co.,

eT TT Tree ee 14,15

Chrysler Corp. v. EPA,

600 F.2d 904 (D.C. Cir. 1979) ........... eee eee 13

Dayton Power & Light Co. v. EPA,

be yf le 8. eer err ee rere 2

Eagle-Picher Indus., Inc. v. EPA,

peo le | err 20

Halogenated Solvents Indus. Alliance v. Thomas,

763 F.2d 1262 (Sth Cir. 1986) ..... 2. ccc ec cccese 20

Harrison v. PPG Industries, Inc.,

EN 6 dived vaveses evissconabins 19

Kentuckians for the Commonwealth, Inc. v. Rivenburgh,

BEF Oe ee GR BUD ccc ceccvecccaseces 14

iv

Cited Authorities

Page

Lubrizol Corp. v. Train,

$47 F.2d 310 (6th Cir. 1976) ........cccccccccecs 9

Michigan v. EPA,

213 F.3d 663 (D.C. Cir. 2000) .................. 11

Monongahela Power Co. v. Reilly,

oe beet Le er ere re 17

New York v. EPA,

413 F.3d 3 (D.C. Cir.), reh’g denied,

431 F.3d 802 (2005) ............... 4,10, 11, 15, 17

New York v. EPA,

443 F.3d 880 (D.C. Cir. 2006) .................. 14

NRDC v. Reilly,

788 F. Supp. 268 (E.D. Va. 1992) ............45. 11

Potomac Elec. Power Co. v. EPA,

650 F.2d 509 (4th Cir. 1981) ................ 16, 18

Rowan Cos. v. United States,

GI GE, DOr CED ov ccc cdnewcvvecsst tedden 17

Thomas Jefferson University v. Shalala,

FER Wel SP GNOED hk voccdsvecshvecsenewes 14, 15

Train v. NRDC,

GE Th GCI OFED 6 op cn cevccvsesdesdnceanens 5, 11

Udall v. Tallman,

. 4) Sei, | ewrrrrrrrrrrry rrr 15

Union Electric Co. v. EPA,

CaF UD BOBS FEe occ cvccccdccnccsacausneueen 6

Vv

Cited Authorities

Page

United States v. Duke Energy Corp.,

411 F.3d 539 (4th Cir. 2005) ............ 1,9, 12, 17

United States v. Ethyl Corp.,

761 F.2d 1153 (Sth Cir. 1985) ........---.5-- 13, 16

Virginia v. EPA,

74 F.3d 517 (4th Cir. 1996) ........06-- 200s 11,13

Waste Mgmt. of Illinois, Inc. v. EPA,

714 F. Supp. 340 (N.D. Ill. 1989) ................ 18

Whitman v. Am. Trucking Ass‘ns,

SE ET EEE oc-ccccatcvccscoscensees 3, 5, 6

Wisconsin Elec. Power Co. v. Reilly,

893 F.2d 901 (7th Cir. 1990) ..........-..4-- 15, 18

STATUTES:

ED ow ccbediscccvtscadccvsesees 18

i ce sew eteeneseteecsend es 19, 20

i ess cae cedtooneeeedivanens 19, 20

ee PEED cc vcecdeccccvescsevcces 19, 20

6 ose p enc adeseeecescess ts 19, 20

EE PEED ccvcnvcecccesdecscosesovenen 3

Td dence cupaceneebede ddcneneesses 6

i <.) iecigebesedcdectervevercetes 5

EE EES RA Oe Terme 5

vi

Cited Authorities

Page

SS PU cédctdnedatsticadenseennssd loess 2,6

te SOE Oh chdS en cbeshiadncssenentieenines l

ep tt PUD 6 eedenccccaiecscectsvavaess ie 2,7

Pe et PU vend ncenudccasebdbcceccduanes 7

Ty ae PUP veces cécccuncensoccuneee 8

Ge SE TNED Eid ddeconbatesédivibereuseseunes 1]

Te Oe FUE cb bb ecisctak cadacnupntacooasenses 7

Me EEE ncéovsdetcciccesnnesdesueres |

Ger OP PRN OSED ca ccccdcccitccnctebcsssuacns l

Ge ae FD bo whe cncbs ccceccdbecsdnuesuanes 2

Ge ae PE ook cc vocestcccveccvedasnentes 6

Gp ete EEE s ebb odccdectéincdsosccnere 2, 3, 4,8

Ee SEED Siccccwecdcuccussevessec 2, 8, 13

SE in OF PEED oscccndscccccccossnces 2, 13, 17

Pan POE vc cdcevccseccdiéeviwesedusessceus 3

SEU. BODIED ev cc cccsncccccccccsccccees 19, 20

FEDERAL REGULATIONS:

GPG Secaceccvcnckvcdcdccesayeutetocnds 5

I isos nies cacdscdead aoe 3,6

Vii

Cited Authorities

Page

Grae OE FMR sc iicdccchvecdnidaccedcsse 6,7

SP ED Kann skb 6564500060544 000ndneeees 7

GOCE BSED ce vccccccccccceseceess 16

NTE doc oeguaccdatenacdsedavdadus 7

Pe Se OB bo necapseesesiccenevesvacas 7

SM DURA ic ccddancsiceccnucduseudec 6,7

CONGRESSIONAL DOCUMENTS & RECORDS:

H.R. Rep. No. 95-294, 95" Cong., 1* Sess. 324 (1977) .. 19

S. Rep. No. 91-1146, 91% Cong., 2d Sess. 41 (1970) .. 13, 19

ADMINISTRATIVE MATERIALS:

67 Fed. Reg. 80,186 (Dec. 31, 2002) ..........20..000- g

70 Fed. Reg. 61,081 (Oct. 20, 2005) .............-05. 10

70 Fed. Reg. 65,984 (Nov. 1, 2005)...........000000. 1

Viii

Cited Authorities

Page

MISCELLANEOUS:

Emissions Inventory Guidance for Implementation of

Ozone and Particulate Matter National Ambient Air

Quality (NAAQS) and Regional Haze Regulations,

available athttp://www.epa.gov/ttn/chief/eidocs/eiguid/ 7

eiguidfinal nov200S.pdf .................0005:

Green Book Nonattainment Areas for Criteria

Pollutants, available at http://www.epa.gov/oar/oaqps/ 5

ED ac ndeccedsdccnnsoaceueuens

]

INTEREST OF AMICI CURIAE

The threshold issue presented in this case is whether the

Fourth Circuit in United States v. Duke Energy' erred by ruling

on the substantive validity of EPA’s nationally applicable

regulations governing the Prevention of Significant

Deterioration (“PSD”) program of the Clean Air Act (“CAA”

or “Act”).? Because the States have the primary responsibility

under the CAA for achieving and maintaining the air quality

standards to protect the public health of the nation, see Alaska

Dep't of Envtl. Conservation v. EPA , 540 U.S. 461, 470, 490

(2004), the decision below affects the interests of amici States

in two fundamental ways.

First, the Fourth Circuit’s decision undermines the State

Implementation Plan (“SIP”) process, the principal mechanism

by which States exercise their responsibility for implementing

the CAA’s regulatory programs, including New Source Review

(“NSR”). See 42 U.S.C. § 7410. Pursuant to Section 110 of

the CAA, States are required to develop, implement, and

enforce SIPs, a component of which is the NSR program, to

attain and maintain the National Ambient Air Quality Standards

(“NAAQS”). Jd. Section 307(b)’s framework for the judicial

review of nationally applicable regulations “only in” the

District of Columbia Circuit Court of Appeals ensures uniform

and final determinations regarding the validity of rules that

' 411 F.3d 539 (4th Cir. 2005).

* The PSD provisions of the CAA, 42 U.S.C. §§7470-7492, cover

geographic areas that have already attained the National Ambient Air

Quality Standards for an air pollutant. Areas that are in nonattainment for

one or more air pollutants are subject to the Act’s Nonattainment New

Source Review (“NNSR”) program, 42 U.S.C §§ 7501-7515. The PSD and

NNSR programs are together referred to New Source Review. Although

only the PSD requirements are at issue in this case, given the similarity in

the two programs, the Fourth Circuit’s decision also applies to areas

governed by the NNSR program.

2

form the minimum standards for SIPs?See 42 U.S.C. § 7607(b).

The States rely on the certainty of this review process in

developing their SIPs, a resource-intensive process that must be

completed within strict deadlines. See 42 U.S.C. §§ 7410(a)

and 7502(b). The Fourth Circuit’s decision exposes to judicial

review — by multiple courts — longstanding EPA regulations on

which the States have based the CAA programs in their SIPs for

decades. This will inhibit the efficient use of state and judicial

resources and undermine the credibility of state regulations

implementing CAA programs and determinations made by state

environmental officials in reliance on the plain language of

EPA’s regulations. See Alaska Dep't of Envtl. Conservation,

540 U.S. at 516 (“[rjegulated persons and entities should be

able to consult an agency staff with certainty and confidence”)

(Kennedy, J., dissenting). This would create “a substantial risk

of seriously inconsistent results and an inevitable delay in the

effectuation of the important national policies underlying the

Clean Air Act.” Dayton Power & Light Co. v. EPA, 520 F.2d

703, 708 (6th Cir. 1975). Most importantly, it could frustrate

state efforts to reduce air pollution to levels that protect the

public health with an adequate margin of safety. 42 U.S.C. §

7409.

Second, allowing any court to rule on the validity of

nationally applicable regulations in enforcement cases risks

creating uneven minimum standards across the nation. Because

air pollution recognizes no boundaries, air pollution resulting

* Section 307(b)\(2) prohibits judicial review in a civil enforcement

proceeding of EPA actions “with respect to which review could have been

obtained under paragraph (1).” 42 U.S.C. § 7607(b)(2). Section 307(b\(1),

in turn, mandates a petition for review of EPA action within sixty days of the

action in, among other things, “promulgating any national primary or

secondary ambient air quality standard . . . or any other nationally applicable

regulations promulgated, or final action taken, by the Administrator.” 42

U.S.C. § 7607(b)(1). Section 307(b\(1) grants the Circuit Courts of Appeal

jurisdiction to review, among other things, EPA actions approving or

promulgating SIPs and local or regional EPA final actions, if the petition for

review is filed within sixty days of the notice date. /d.

3

from modifications in one state could harm air quality in

neighboring States, compromising the ability of downwind

States “to protect and enhance the quality of the Nation’s air

resources so as to promote the public health and welfare and the

productive capacity of the population.” 42 U.S.C. § 7401(b)(1).

SUMMARY OF ARGUMENT

As this Court has noted, the States’ development of SIPs

to implement the NAAQS is a “lengthy and expensive task.”

Whitman v. Am. Trucking Ass ’ns, 531 U.S. 457, 479 (2001). To

meet the SIP requirements, each State must (1) develop

comprehensive and accurate emissions inventories for all

sources of air pollution, e.g., stationary, fugitive, and mobile

sources, (2) use sophisticated models to predict emissions from

these sources well into the future, taking into account the

interstate transport of air pollutants, and (3) develop strategies

for meeting the various NAAQS promulgated by EPA. See 42

U.S.C. § 7610; 40 C.F.R. pt. 51. The PSD and NNSR

programs are just two of the tools that States must have in place

~— and update as necessary based on regulations EPA issues — to

battle air pollution. Not only is the process of updating SIPs

complex and resource-intensive, but States are also under strict

deadlines to meet the NAAQS and to enact SIP revisions to

comply with EPA-mandated changes to NSR and other

programs. In addition to meeting their CAA obligations, States

must often comply with notice and comment requirements

mandated by state administrative laws, adding more time and

expense to the process.

In light of this challenging task, States need clear and

expeditious guidance on the “rules of the game.” Since the

inception of the 1970 CAA, States have come to rely upon EPA

to provide guidance and on the D.C. Circuit, pursuant to the

Act’s judicial review provision, 42 U.S.C. § 7607(b), to provide

the needed certainty regarding regulations that are national in

scope, as well as the NAAQS themselves, in relatively quick

fashion. The preparation and implementation of SIPs would

become unworkable if the rules of the game are instead

developed on a piecemeal basis in challenges raised against

4

regulations in enforcement cases throughout the nation. This

would be particularly true if courts in different areas of the

country were to disagree on the validity of nationally applicable

regulations.

Here, the Fourth Circuit’s ruling in an enforcement action,

effectively invalidating the PSD regulations, conflicts with the

judicial review provision’s limitations on the scope of

substantive challenges to nationally applicable regulations.

Specifically, the ruling conflicts with Section 307(b)’s mandate

that the D.C. Circuit have exclusive jurisdiction to adjudge the

validity of nationally applicable regulations. See 42 U.S.C. §

7607(b). As evidenced by this Court’s decisions and the

legislative history of the Act, Congress wanted to ensure

consistent national application of nationwide regulations. This

congressional intent will be frustrated if the Fourth Circuit’s

decision — which directly conflicts with the D.C. Circuit’s

ruling on the same issue, see New York v. EPA, 413 F.3d 3, 19-

20 (D.C. Cir.), reh’g denied, 431 F.3d 802 (2005) (“New York

I’) — stands. Moreover, in concluding that regulations

stemming from the same statutory definition must be

interpreted identically, the Fourth Circuit failed to apply this

Court’s precedent regarding the standard of review afforded an

agency’s interpretation of its own regulations. Finally, given

that several other environmental statutes have nearly identical

judicial review provisions, the Fourth Circuit’s ruling could

also lead to the disruption of other nationwide environmental

programs.

5

ARGUMENT

I. TO SUCCESSFULLY CARRY OUT THEIR

PRIMARY RESPONSIBILITY OF ACHIEVING

AND MAINTAINING THE NAAQS THROUGH

THEIR SIPS, STATES MUST BE ABLE TO RELY

ON FINAL DETERMINATIONS REGARDING

NATIONALLY APPLICABLE REGULATIONS.

The States are primarily responsible for achieving and

maintaining the health-based NAAQS for each of the six

criteria pollutants: particulate matter, sulfur dioxide, ozone,

nitrogen dioxide, carbon monoxide and lead.*42 U.S.C. §

7408(a)(2). See Alaska Dep't of Envtl. Conservation, 540 U.S.

at 469-70; Am. Trucking Ass ‘ns, 531 U.S. at 465. The States

meet this mandate through the development of SIPs, which is

a time-sensitive and resource-intensive process. For the SIP

framework to work as intended — to timely achieve and

maintain the NAAQS, see Train v. NRDC, 421 U.S. 60, 66-67

(1975) — the States must be able to develop and implement

their SIPs in reliance on clear and conclusive decisions

regarding the validity of nationally applicable regulations, as

provided by Section 307(b) of the Act. Exposing nationally

* Each of the six criteria air pollutants — particulate matter (PM, ,

and PM,,), sulfur dioxide, ozone, nitrogen dioxide, carbon monoxide and

lead — that are regulated under Title I of the CAA has its own air quality

standard. See 40 C.F.R. pt. 50. Areas are classified as either having

attained (or unable to be classified) or not attained the NAAQS for each air

pollutant. 42 U.S.C. § 7407(d). Currently, thirty-one states and the District

of Columbia have eight-hour ozone standard nonattainment areas. See

Green Book Nonattainment Areas for Criteria Pollutants, available at

http://www.epa.gow oar/oagps/greenbk/index.html. Twenty states and the

District of Columbia have areas that are in nonattainment of the PM__,,

standard. Jd Thirteen states and Puerto Rico have areas that are in

nonattainment of the PM,, standard. Six states and Guam have areas that

are in nonattainment of sulfur dioxide. /d Five states have areas that are in

nonattainment of carbon monoxide. /d And two states have areas that are

in nonattainment of lead. /d.

6

applicable regulations to collateral attack in enforcement cases

would undermine the entire federal-state framework of the

CAA that is intended to achieve and maintain ambient air

quality standards that protect the public health and welfare.

A. The Effective and Efficient Development of

State Implementation Plans Requires

Extensive Effort and Use of Significant

Resources by Each State.

The SIP has been described as the “heart” of the 1970

CAA Amendments. Union Electric Co. v. EPA, 427 U.S. 246,

249-50 (1976). The process of developing a SIP is arduous.

See Am. Trucking Ass’ns, 531 U.S. at 479 (referring to “the

lengthy and expensive task of developing state implementation

plans”). This is especially true for a NAAQS attainment SIP,

which is necessary when EPA formally finds that the air quality

in a defined area does not meet the national standard. An

attainment SIP is a plan tailored to that nonattainment area

designed to achieve the NAAQS within a statutorily prescribed

time frame. See 42 U.S.C. §§ 7407, 7409. A State with a

designated nonattainment area begins the SIP process by

developing “a comprehensive, accurate, current inventory of

actual emissions from all sources of the relevant pollutant or

pollutants in such area” that must be included in the SIP. 42

U.S.C. § 7502(c)(3). The emissions inventory is the foundation

for SIPs that implement EPA’s ozone, fine particulate matter,

and visibility rules, and the federal emission inventory

regulations are extensive and complex. See 40 C.F.R. pt. 51.

Once the State has its complete emissions inventory, the

State then conducts extensive and complex air quality

modeling. See 40 C.F.R. pt. 51, subpt. G and App. W. The

modeling process requires the State to project emissions levels

in the year in which the State is required to demonstrate

attainment. This requires the State to account for all changes

that will reduce (as well as increase) emissions, e.g., known and

foreseeable changes in emission standards and rules, and

anticipated growth (or decline) of source sectors, including

construction of new sources and/or retirement of existing

7

sources. See id. and App. V. The State must also account for

air pollution. that may enter the State from upwind sources in

other States.’ See 42 U.S.C. § 7410(a)(2). Equipped with this

and other data,” the State must model the ambient levels of

pollutants in the nonattainment areas for the statutory

attainment year. See 40 C.F.R. pt. 51, subpt. G and App. W.

If the model does not show attainment in that year, the State

must develop and model emission control strategies to

demonstrate attainment. These computer simulations are so

complex that a single strategy may take weeks or months to

process and can produce extraordinary volumes of data that

then must be distilled into a decipherable product. Once the

State settles on a preferred control strategy to achieve

attainment, the State must demonstrate to EPA that the

emission reductions will be surplus, quantifiable, enforceable

and permanent. See id. and App. S. Finally, the State embarks

on its rulemaking process to formally adopt these strategies

after proposal and public comment. 42 U.S.C. § 7410(a); 40

C.F.R. § 51.102. The rules must then be sent to EPA for

approval. 42 U.S.C. § 7410(a).

At a minimum, whether it applies to a nonattainment

area or an area that is already attaining the NAAQS, the SIP

must include certain mandatory programs. For example, each

* The interstate transport of air pollution has been recognized by

Congress, EPA and the courts. See, e.g., 42 U.S.C. § 7426 (Interstate

pollution abatement); Appalachian Power Co, v. EPA, 249 F.3d 1032, 1037

(D.C. Cir. 2001) (recognizing that some air pollution “is caused or

augmented by emissions from other states” and upwind region emissions

may significantly contribute to downwind attainment).

* The State must also collect meteorological data so that the

chemical reactions and physical movements of these particles in the air can

be modeled as accurately as state of the art tools allow. EPA has provided

an “Emissions Inventory Guidance for Implementation of Ozone and

Particulate Matter National Ambient Air Quality (NAAQS) and Regional

Haze Regulations, available at http://www .epa.gov/ttn/chiefeidocseiguid/

eiguidfinal_nov2005.pdf.

SIP for a nonattainment area must include the NNSR program

and each SIP for an attainment area must include PSD rules. 42

U.S.C. § 7410(a)(2)J). These minimum program elements

must be adopted by each as enforceable state law, which

generally requires a full rulemaking proceeding. EPA itself

recognized that “[p]Jerhaps the biggest potential disadvantages

to implementing the new applicability provisions as part of our

base programs are the time and effort required to revise existing

State programs and to have the revised programs approved as

part of the SIP.” Prevention of Significant Deterioration (PSD)

and Nonattainment New Source Review (NNSR), 67 Fed. Reg.

80,186, 80,241 (Dec. 31, 2002) (“2002 NSR Rule”).

B. To Perform Their Role Under the CAA

Effectively, the States Require the Finality

and Certainty that Section 307(b) is Intended

to Provide.

For the SIP framework to function as intended — to

attain and maintain the NAAQS within the statutorily required

time periods — the judicial review structure mandated by

Section 307(b) must be followed. The States’ ability to plan for

and meet their obligations under the CAA depends on the

stability of nationwide regulations. Congress addressed this

important need when it demanded that the federal minimum

requirements be reviewed, if at all, by filing a petition in the

D.C. Circuit within sixty days of notice of EPA’s action. 42

U.S.C. § 7607(b)(1). Such rules may not be reviewed in an

enforcement proceeding when that review “could have been

obtained” by the D.C. Circuit and the validity of such rules will

not be disturbed once reviewed by the D.C. Circuit (and this

Court). See 42 U.S.C. § 7607(b).

Congress’ balanced approach, which allows for judicial

review but also provides the certainty necessary to stabilize the

SIP process, is jeopardized by the Fourth Circuit’s decision.

Based on what the Fourth Circuit believed to be an irrebutable

rule of statutory construction , that court held that the statute

requires EPA to interpret the statutory term “modification” for

PSD purposes identically to the way it interprets that term in the

9

context of the NSPS program. Duke Energy, 411 F.3d at 550.

Finding that the NSPS regulations define “modification” in

terms of whether a change increases a facility’s hourly

emissions rate, the Fourth Circuit concluded that EPA must

read its PSD regulations to also establish an hourly rate test. Jd.

In reaching this conclusion, the Fourth Circuit effectively

invalidated the PSD regulations’ unambiguous annual emission

test, replacing it with the NSPS hourly emissions test.’ /d.

The decision reached by the Fourth Circuit in an

enforcement proceeding has, to the alarm of the States, shaken

the foundation upon which the SIPs are based. The integrity of

the state planning process is impaired, as the projections and

modeling upon which the State’s control strategies and rules are

based lack certainty. More fundamentally, the States’ ability to

assure their citizens healthy air in a timely manner that meets

national air quality standards is damaged. See Lubrizol Corp.

v. Train, 547 F.2d 310, 315 (6th Cir. 1976) (“incessant

litigation and inconsistent decisions” would cause “needless

delays in the implementation of important national programs”).

Review of nationally applicable rules in the several

Courts of Appeal will cause the precise evil that Congress

sought to avoid when it enacted the judicial review restrictions

in Section 307(b).* For example, now that the Fourth Circuit

” The Fourth Circuit stated that, consistent with the scope of its

jurisdiction under Section 307(b), it did not invalidate the regulations under

review. See Duke Energy, supra, 411 F.3d at 549, n.7. As the United States

pointed out, however, in its petition for rehearing, “requiring the EPA to

interpret the PSD regulations to adopt the NSPS test for measuring

emissions increases is inconsistent with the plain text of the regulations and

thus is not an “interpretation” at all, but an invalidation.” U.S. Br. at 12. By

way of analogy, the Fourth Circuit's decision could be likened to a court

holding that EPA regulations that require buses to limit their emissions

apply only to double-decker buses; this “interpretation” would leave the

regulations on the books, but render them meaningless.

* In EPA’s proposed rule to change the NSR emissions test for

electric generating units to an hourly test, EPA itself noted that the “need to

10

has ruled that PSD modifications must be determined using the

NSPS hourly maximum emissions rate test, States are faced

with the question of whether they need to change their PSD

regulations to implement the test adopted by the Fourth Circuit,

demonstrate that their actual annual test is more stringent than

the hourly maximum emissions rate test, or just to ignore the

Duke Energy decision as an anomaly. Similarly, States must

decide whether to allow regulated parties to continue to use

“netting,” which the D.C. Circuit previously ruled was required

under the PSD program’s method of determining emissions

increases but which is prohibited in determining whether

sources have been modified under the NSPS program.

Moreover, given that the Seventh Circuit is currently

considering, on interlocutory appeal in the enforcement

proceeding against Cinergy Corporation, whether to affirm the

district court’s rejection of the same emissions test argument

raiscd by Duke Energy,’ it is entirely possible that the Seventh

Circuit will reach the opposite result of the Fourth Circuit. If

that were to occur, States that have adopted the Duke Energy

approach may find it necessary to resume the actual annual

emissions approach of the PSD regulations. All of this

uncertainty and disorder has ensued despite the fact that the

the very PSD regulations that the

Fourth Circuit invalidated. See New York I, 413 F.3d at 19-20.

The cooperative federalism of the CAA accords States

real choices to adopt control measure options and determine the

provide national consistency for EGUs is apparent” in the wake of the

Fourth Circuit decision, which “create[d] a potential disparity in the way we

interpret the program in States in the Fourth Circuit compared to States in

other Circuits in the country.” Prevention of Significant Deterioration,

Nonattainment New Source Review, and New Source Performance

Standards: Emissions Test for Electric Generating Units, 70 Fed. Reg.

61,081, 61,082 (Oct. 20, 2005) (“2005 NSR Rule”).

* United States v. Cinergy , No. 1:99-cv-01693-LJM-VSS (S.D.

Ind.).

11

necessary “specific, source-by-source emission limitations” to

employ in their SIPs. See Train v. NRDC , 421 U.S. at 79;

Michigan v. EPA, 213 F.3d 663, 686-87 (D.C. Cir. 2000). To

be able to effectively exercise their options, States must know

what EPA expects, as it is to EPA that the States look for the

basic rules. See New York I, 413 F.3d at 21 (recognizing that

“(while states are responsible for writing SIPs, the Act gives

EPA responsibility for developing basic rules for the NSR

program ....”), Proposed Rule to Implement the Fine Particle

National Ambient Air Quality Standards, 70 Fed. Reg. 65,984,

65,990 (Nov. 1, 2005) (“For the States to be successful in

developing local plans showing attainment of standards, we

must do our part to develop standards and programs to reduce

emissions from sources that are more effectively and efficiently

addressed at the national level.”). To determine whether those

rules are valid, the States must be able to rely on a single round

of review by the D.C. Circuit and this Court, not the various

circuit courts. Without such certainty, the States would be less

able to evaluate their choices and determine, for example,

whether to adopt the federal regulations, to submit revised SIPs,

or to apply for an equivalency determination. Indeed, States

would be unable to submit an equivalency determination

without knowing with what standards their programs must be

“at least as stringent.” See 42 U.S.C. § 7416. States cannot

efficiently or effectively develop their SIPs — or successfully

implement the SIPs — until States can rely on the rules of the

game.

In short, allowing the validity of nationally applicable

regulations to be adjudicated in any enforcement proceeding

denies the States any certainty in their own regulatory programs

and subjects States to potentially more numerous SIP revisions

to account for the ever shifting and conflicting regulatory

framework. Such a result directly conflicts with Congress’

mandate to conserve judicial resources, prevent duplicative or

piecemeal litigation, eliminate the risk of contradictory

decisions, see Virginia v. EPA, 74 F.3d 517, 525 (4th Cir.

1996), NRDC v. Reilly, 788 F. Supp. 268, 273 (E.D. Va. 1992),

and ultimately clean our nation’s air. This mischief, set in

motion, must be undone to restore the integrity of the judicial

12

review process that Congress mandated, and assure the States

of the validity of their own implementing programs.

Il. ©THEFOURTH CIRCUIT’S RULING CONFLICTS

WITH THE CLEAN AIR ACT’S REQUIREMENT

THAT THE D.C. CIRCUIT DECIDE THE

VALIDITY OF NATIONALLY APPLICABLE

REGULATIONS.

By ruling that the Act requires EPA to interpret the PSD

regulations and NSPS regulations the same for “modifications,”

the Fourth Circuit effectively invalidated the PSD regulations

as written, holding that the NSPS regulations must be applied

instead. Despite the Fourth Circuit’s attempt to couch its ruling

as an “interpretation” of national regulations, see Duke Energy,

411 F.3d at 549, n.7, this ruling contravenes Section 307(b) of

the Act, which gives the Court of Appeals for the D.C. Circuit

exclusive jurisdiction to rule on the validity of nationally

applicable regulations in order to ensure “an even and

consistent national application” of such regulations, and with

this Court’s administrative law precedent.

A. Section 307(b)’s Pre-Enforcement Review of

CAA Regulations in the D.C. Circuit and the

Deferential Standard of Review Afforded

EPA Regulatory Interpretations Promote

Stability in State Planning and

Administration of the Act.

Because Section 307(b) bars challenges to the validity

of nationally applicable regulations in enforcement cases, the

court’s review authority in deciding whether to uphold an EPA

interpretation of its regulations is narrowly circumscribed.

This structure, combined with this Court’s precedent

establishing a deferential standard of review of an agency’s

interpretation of its own regulations, provides States with a

measure of stability in their implementation of the Act’s

complex regulatory requirements.

13

The States’ reliance on the D.C. Circuit having the final

word on the validity of nationally applicable regulations, the

importance of which is detailed in the preceding section, has

firm grounding in Section 307(b)’s structure and legislative

history. Pursuant to Section 307(b)(1), challenges to

“nationally applicable regulations” must be filed in the D.C.

Circuit within sixty days of promulgation. 42 U.S.C. §

7607(b)(1). If an EPA action that is nationally applicable

“could have been” challenged in the D.C. Circuit, such an

action “shall not be subject to judicial review in civil or

criminal proceedings for enforcement.” /d., § 7607(b)(2). As

this Court has recognized, the structure of Section 307(b)(1)

furthers the congressional purposes of “insur[ing] that the

substantive provisions of the [CAA regulations] would be

uniformly applied and interpreted and that the circumstances of

[their] adoption would be quickly reviewed by a single court

intimately familiar with administrative procedures.” Adamo

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

S. Rep. No. 91-1146, 91% Cong., 2d Sess. 41 (1970) (giving the

D.C. Circuit exclusive jurisdiction “[bJecause many of these

administrative actions are national in scope and require even

and consistent national application”). See also Virginia v.

United States, 74 F.3d at 525 (the structure of Section 307(b) is

based on a “concern for judicial economy; to wit, the risk of

duplicative or piecemeal litigation, and the risk of contradictory

decisions”) (citation omitted); United States v. Ethyl Corp.,761

F.2d 1153 (Sth Cir. 1985) (the plain language shows Congress’s

intent to avoid protracted and inconsistent adjudications over

the validity of EPA’s emission standards); Chrysler Corp. v.

EPA, 600 F.2d 904, 911 (D.C. Cir. 1979) (Congress intended

“to limit judicial review as to forum and time so as to assure

expeditious, authoritative and central judicial resolution of

issues which were national in impact and which could hold up

the timely accomplishment of the Act’s objectives if not settled

at the outset.”) (internal quotations and citation omitted).

As a result of this structure, it is a long-established

practice for the D.C. Circuit to decide, in direct appeals of EPA

rulemakings, whether CAA regulations of national applicability

are consistent with the Act and supported by the administrative

14

record. Given that regulatory challenges must be filed within

sixty days of a rule’s promulgation and are based on the

administrative record, these cases proceed to decision relatively

quickly.” States rely on the judicial review process set forth in

Section 307(b) to carry out their responsibilities under the Act.

See Point 1, supra.

Next, this Court’s administrative law precedent — as the

Fourth Circuit has recognized — sets a formidable bar for a

defendant in an enforcement proceeding seeking to overturn an

agency interpretation of its own regulations. In this context, an

agency’s interpretation of its regulations is “controlling unless

‘plainly erroneous or inconsistent with the regulation.’” Auer

v. Robbins, 519 U.S. 452, 461 (1997) (quoting Bowles v.

Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945))

(citations omitted);Thomas Jefferson University v. Shalala, 512

U.S. 504, 512 (1994); see Kentuckians for the Commonwealth,

Inc. v. Rivenburgh , 317 F.3d 425 (4th Cir. 2003) (“The

reviewing court does not have much leeway in undertaking this

interpretation . . . because the agency is entitled to interpret its

own regulation.”).

Thus, in light of Section 307(b)’s limit on substantive

regulatory challenges and the standard of review under this

Court’s precedent, the only question in a CAA enforcement

case where the defendant has challenged an EPA interpretation

of its regulations is whether the agency’s interpretation is

“plainly erroneous or inconsistent with the regulation.”

'° The D.C. Circuit’s review of the validity of the 1980 PSD

regulations was delayed by twenty years pursuant to an unusualsettlement

agreement between EPA an industry. Such a lengthy delay is the exception

to the rule of prompt review. See, e.g, New York v. EPA, 443 F.3d 880

(D.C. Cir. 2006) (ruling on validity of EPA regulations less than three years

after promulgation of final rule, which included an approximately one-year

delay for administrative reconsideration of the regulations). =~

' The court may also have to address the question of whether

the defendant had to challenge the EPA interpretation in the D.C. Circuit.

15

Thomas Jefferson Univ., 512 U.S. at 512. As an initial matter,

the district court should look to the plain meaning of the

regulations (as expressed in the regulatory language and

preamble), the purpose of the regulations, the practical

consequences of suggested interpretations, and the agency’s

previous interpretations. See, e.g., Wisconsin Elec. Power Co.

v. Reilly, 893 F.2d 901, 910-18 (7th Cir. 1990) (hereinafter,

“WEPCo”)(using these tools in reviewing EPA’s interpretation

of its PSD regulations). If the court finds that the Agency’s

interpretation in the proceeding to enforce its regulations is

consistent with the regulations, there is no basis for the court to

look to the statute or legislative history. '? As long as the

agency’s interpretation of its regulation in the enforcement

proceeding is not plainly erroneous, the court’s inquiry is at an

end and it must give “controlling weight” to the agency’s

regulatory interpretation against defendant’s attack. See

Thomas Jefferson Univ., 512 U.S. at 512; Udall v. Tallman, 380

U.S. 1, 16-17 (1965).

I”, however, the agency’s interpretation does not follow

from th. plain meaning of a regulation and the regulatory

preamble (e.g., one or more relevant terms in the regulation is

ambiguous), reference to the statute and legislative history, as

well as decisions of this Court and of the D.C. Circuit, may be

appropriate in addressing a defendant’s argument that EPA’s

interpretation of its own regulation is erroneous. See Seminole

Rock, 325 U.S. at 414 (“The intention of Congress or the

principles of the Constitution in some situations may be

relevant in the first instance in choosing between various

[agency] constructions.”); see also WEPCo, 893 F.2d at 917-18

(relying on the D.C. Circuit’s statutory interpretation set forth

See New York I, 413 F.3d at 20-21 (discussing proper forum for

challenging EPA statement in preamble that explained provision in 1980

PSD regulations).

? Indeed, where a court does resort to evaluating congressional

intent, it is not interpreting the meaning of the regulations, but is instead

addressing the regulations’ validity under the statute.

16

in Alabama Power Co. v. Costle, 636 F.2d 323, 379 (D.C. Cir.

1979) to construe the concept of “potential to emit” under the

PSD regulations). But given the structure of Section 307(b),

the consideration of congressional intent should be limited to

dealing with the specific regulatory issue left open, e.g. , a single

vague regulatory term should not open up the Agency’s entire

regulatory approach to challenge. This follows from the

corollary principle that a defendant may not, in the guise of

challenging an EPA “interpretation,” invoke the statute or

legislative history to challenge the validity of regulations

themselves. See Ethyl Corp., 761 F.2d at 1155-57 (the district

court lacked subject matter jurisdiction to consider the

substantive validity of EPA’s CAA regulations); Potomac

Electric Power Co. v. EPA, 650 F.2d 509, 513 (4th Cir. 1981)

(hereinafter, “PEPCo”) (under Section 307(b), the Fourth

Circuit lacks jurisdiction to rule upon arguments that “may be

read as challenging not only the EPA’s interpretation of its

regulations but also the regulations themselves.”). As discussed

above, such an approach promotes stability in States’

implementation of the Act.

B. The Fourth Circuit Did Not Follow Section

307(b) or this Court’s Administrative Law

Precedent.

Applying the principles discussed in Point II.A, the

Fourth Circuit should have limited its review to determining

whether the district court erred in holding that EPA’s reading

of its PSD regulations as establishing an actual annual

emissions increase test for determining PSD applicability was

plainly erroneous.'? Instead, the Fourth Circuit began — and

ended ~ its analysis based on what it believed was required by

the definition of “modification” in the Act and by this Court’s

8 Specifically, this analysis would have included an assessment of

whether EPA’s interpretation of the “increased hours of operation

exclusion,” 40 C.F.R. § 51.166(b)(2\iii(f), does not apply to increased

hours of operation made possible by the equipment replacement project.

17

decision in Rowan Cos. v. United States, 452 U.S. 247 (1981).

Duke Energy, 411 F.3d at 547-51.

The Fourth Circuit’s approach conflicts with Section

307(b) of the Act because it ruled on the merits of an argument

that could have been, and in fact was, raised before the D.C.

Circuit in a challenge to the validity of the PSD regulations.

Duke Energy argued below that when Congress enacted the

PSD program in 1977, it incorporated by reference EPA’s

regulatory definition of “modification” under the NSPS

program, which only applies if the modification would cause an

increase in the unit’s maximum hourly emissions rate. See

Brief in Support of Duke Energy’s Motion for Summary

Judgment in United States v. Duke Energy Corp. (M.D.N.C.,

Case No. 1:00 CV 1262) (Jan. 31, 2003) at 5 (“Congress

adopted the NSPS concept of ‘modification’ into the NSR

program enacted in the 1977 Clean Air Act Amendments.”).'*

Duke Energy had in fact made the very same argument before

the D.C. Circuit in challenging the validity of the PSD

regulations. See Joint Brief of Industry Petitioners in New York

v. EPA (D.C. Cir., Case No. 02-1387) (Oct. 26, 2004) at 6

(“Congress adopted the NSPS concept of ‘modification’ into

the NSR program enacted in the 1977 CAA Amendments.”).'*

The D.C. Circuit rejected this argument, finding that

Congress’s adoption by reference of the definition of

modification in the NSPS provisions did not mandate an hourly

emissions rate test for NSR. New York I, 413 F.3d at 19-20.

Having had the opportunity to raise that issue in proper forum

— the D.C. Circuit - Duke Energy may not challenge the same

regulation in an enforcement action. 42 U.S.C. § 7607(b)(2).

See Monongahela Power Co. v. Reilly, 980 F.2d 272, 275 (4th

'* Based on this premise, Duke Energy contended that no

modifications of its power plant had occurred because the equipment

replacement projects were not expected to increase the maximum hourly

emissions rate.

'S Duke Energy was involved in the New York litigation as a

member of the Utility Air Resources Group (“UARG”).

18

Cir. 1992) (“Because [Section 307(b)(1)] embodies a grant of

exclusive jurisdiction, it appears that if the District of Columbia

[Circuit] has jurisdiction over the present action, the district

court does not.”); see also WEPCo, 893 F.2d at 914, n.6 (the

Seventh Circuit lacks jurisdiction “to review the propriety of

the NSPS regulations themselves”); PEPCo, 650 F.2d at 513

(the Fourth Circuit lacks jurisdiction to rule upon arguments

that “may be read as challenging not only the EPA’s

interpretation of its regulations but also the regulations

themselves.”); cf Waste Mgmt. of Illinois, Inc. v. EPA, 714 F.

Supp. 340 (N.D. Ill. 1989) (pursuant to Resource Conservation

and Recovery Act’s judicial review provision, modeled after

Section 307(b)(1) and (2) of the CAA, district court lacked

jurisdiction because although Waste Management styled its

complaint as challenge to an EPA interpretation, challenge was

in fact to the validity of the regulations themselves, which could

only be brought in the D.C. Circuit).

The Fourth Circuit’s failure to follow Section 307(b) is

further evidenced by the court’s misapplication of the Rowan

Cos. case. In RowanCos. , the Treasury Department’s

regulations at issue were subject to review under 28 U.S.C. §

1346(a)(1), which provides in relevant part that the district

court shall have original jurisdiction (concurrent with the

United States Court of Federal Claims) of “[a}ny civil action

against the United States for the recovery of any internal-

revenue tax alleged to have been erroneously or illegally

assessed or collected.” Unlike judicial review pursuant to

Section 307(b) of the Act, there was no statutory bar in Rowan

Cos. on the district court ruling on the validity of the

regulations that the government sought to apply. The Fourth

Circuit’s failure to recognize this important difference in the

scope of jurisdiction resulted in it misapplying Rowan Cos. to

the case at bar.

In addition, the Fourth Circuit’s willingness to expand

the scope of arguments that defendants can raise in CAA

enforcement cases is inconsistent with congressional intent that

judicial review in such cases be limited to challenges to the

agency’s application of its regulation to a particular defendant’s

19

conduct. For example, when Congress broadened the D.C.

Circuit’s jurisdiction in the 1977 CAA amendments to

encompass “any other nationally applicable regulations

promulgated . . . by the Administrator under [the Act],” see

Harrison v. PPG Industries, Inc., 446 U.S. 578, 590 (1980), it

also explicitly rejected a recommendation by an advisory group,

the Administrative Conference of the United States, that

Section 307(b) be amended to permit the validity of a

regulation to be challenged as a defense in an enforcement

proceeding. See H.R. Rep. No. 95-294, 95 “ Cong., 1* Sess.

324 (1977) (referring to the rejection of recommendation D.1,

which would have allowed defendants to challenge the validity

of a regulation in defending an enforcement action). The

Fourth Circuit’s decision to allow a challenge concerning the

validity of a regulation in an enforcement case directly

contravenes this congressional intent. See S. Rep. No. 91-1196,

91" Cong., 2d Sess. 41 (“Of course, the person regulated would

not be precluded from seeking review at the time of

enforcement i j r i

alone.”) (emphasis added).

fil. THE FOURTH CIRCUIT’S RULING

THREATENS THE UNIFORMITY AND

CERTAINTY OF NATIONWIDE

REQUIREMENTS UNDER OTHER

ENVIRONMENTAL LAWS.

Allowing the Fourth Circuit’s decision to stand could

frustrate the implementation of other environmental laws in

light of the fact that Congress gave the D.C. Circuit exclusive

jurisdiction to review the validity of national regulations in

other statutes as well. See 33 U.S.C. § 2717(a) (Oil Pollution

Prevention Act) (‘OPPA”); 42 U.S.C. § 300j-7(a)(1) (Safe

Drinking Water Act); 42 U.S.C. § 6976(a)(1) (Resource

Conservation and Recovery Act) (“RCRA”); 42 U.S.C. §

9613(a) (Comprehensive Environmental Response,

Compensation, and Recovery Act) (“CERCLA”); see also 30

U.S.C. § 1276(a)(1) (Surface Mining Control and Reclamation

Act). Similar to Section 307(b) of the CAA, these statutory

provisions establish a limited period to petition for review to

20

challenge the validity of regulations, ranging from forty-five

days under the Safe Drinking Water Act to ninety days under

OPPA, RCRA, and CERCLA. See id.

In interpreting the judicial review provisions under these

statutes, courts look to decisions interpreting Section 307(b) for

guidance. Forexample,in Halogenated Solvents Indus.

Alliance v. Thomas, 783 F.2d 1262, 1265 (Sth Cir. 1986), in

which an industry group sought to challenge EPA’s adoption of

Recommended Maximum Contaminant Levels (“RMCLs”)

under the Safe Drinking Water Act, the court looked to the

legislative history of Section 307(b) of the CAA in deciding

whether to transfer the case to the D.C. Circuit. After

concluding that the statutory language was not conclusive as to

whether this type of challenge had to be brought in the D.C.

Circuit, the court reasoned that having the D.C. Circuit rule on

the challenge would further congressional intent. Like

promoting Congress’ intent for an “even and consisient national

application” of CAA regulations, the court reasoned that

“[s]ince the RMCLs are national in scope . . . [a] needless

conflict would result if were we to retain jurisdiction over this

petition, invalidate the RMCLs as arbitrary, capricious, or not

based on substantial evidence, and the D.C. Circuit then

reviewed and upheld the revised primary regulations.” /d. at

1265; see also Eagle-Picher Indus., Inc. v. EPA, 759 F.2d 905,

916, n.60 (D.C. Cir. 1985) (citing Section 307(b) in interpreting

CERCLA’ s judicial review provision so as to promote “prompt,

uniform, ‘pre-enforcement’ review of CERCLA regulations”).

As a result, if the Fourth Circuit’s decision stands, the

uniformity and certainty of nationwide requirements applicable

under these other environmental regulations could be

threatened. Regional judicial review of agency actions

regarding regulations of national application would result in a

failure to achieve uniform and reliable minimum national

standards. In addition, this Court would be called upon more

often to settle different interpretations among the circuit courts

regarding the validity of various provisions in several

environmental laws.

21

CONCLUSION

For the foregoing reasons, the judgment of the Fourth

Circuit Court of Appeals should be reversed.

Respectfully submitted,

ZULIMA V. FARBER

Attorney General of New Jersey

PATRICK DEALMEIDA

Assistant Attorney General

KEVIN P. AUERBACHER*

JUNG W. KIM

Deputy Attorneys General

R.J. Hughes Justice Complex

25 Market Street

P.O. Box 093

Trenton, New Jersey 08625-0093

(609) 292-6945

* Counsel of Record

Dated: July 21, 2006

22

TERRY GODDARD

Attorney General

State of Arizona

JOSEPH P. MIKITISH

Assistant Attorney General

1275 W. Washington

Phoenix, AZ 85007

(602) 542-8553

GREGORY D. STUMBO

Attor»y General

Commonwealth of Kentucky

DOUGLAS SCOTT PORTER

Assistant Attorney General

700 Capitol Avenue, Suite 118

Frankfort, KY 40601

(502) 696-5669

MICHAEL A. Cox

Attorney General

State of Michigan

THOMAS L. CASEY

Solicitor General

ALAN F. HOFFMAN

NEIL D. GORDON

Assistant Attorneys General

Michigan Department of Attorney

General

Environment, Natural Resources and

Agriculture Division

P.O. Box 30755

Lansing, MI 48909

(517) 373-7540

23

ROB MCKENNA

Attorney General

State of Washington

LESLIE R. SEFFERN

Assistant Attorney General

Ecology Division

1125 Washington Street

P.O. Box 40100

Olympia, WA 98504-0100

(360) 586-4613

ROBERT J. SPAGNOLETTI

Attorney General

District of Columbia

EDWARD E. SCHWAB

Deputy Solicitor General

Office of the Solicitor General

DONNA M. MURASKY

Senior Assistant Attorney General

Office of the Attorney General for the

District of Columbia

One Judiciary Square—6th Floor South

441 Fourth Street, N.W.

Washington, D.C. 20001

(202) 724-5667

“

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aS No. 03-848 JUL 2 1 2006

|_ OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

ENVIRONMENTAL DEFENSE, NORTH CAROLINA

SIERRA CLUB, and NORTH CAROLINA PUBLIC INTEREST

RESEARCH GROUP CITIZEN LOBBY/EDUCATION FUND,

Petitioners,

v

DUKE ENERGY CORPORATION,

Respondent.

On Writ oF CERTIORARI TO THE

UnNitrep STATES CouRT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF OF THE STATES OF New York, CALIFORNIA, CONNECTICUT,

DevLaware, ILLinois, lowa, MAINE, MARYLAND, MASSACHUSETTS,

Minnesota, New Hampsuire, New Mexico, OREGON, RHODE

ISLAND, AND VERMONT, AND THE COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF ENVIRONMENTAL PROTECTION, AS AMICI CURIAE

IN SUPPORT OF THE PETITIONERS —

——_ -—— — —----

—_——__— -_——

——

E.ioT SPITZER

Attorney General of the

Peter H. LEHNER State of New York

Chief, Environmental Cartuin J. HALLIGAN*

Protection Bureau Solicitor General

ANDREW BING

Daniet J. CHEPAITIS

Assistant Solicitors General

ROBERT ROSENTHAL

J. JARED SNYDER

MICHAEL J. Myers

Assistant Attorneys General 120 BROADWAY

New York, NY 10271

* Counsel of Record (212) 416-8016

Attorneys for Amici Curiae

(Additional Counsel Listed on Signature Pages)

TABLE OF CONTENTS

INTEREST OF THE AMICI CURIAE ...........

SUMMARY OF ARGUMENT .................

ARGUMENT

I.

Sa aeaewre Ce a Ta ee 8.8 a 66s. Ce ee Oe eh eo 2 ee

The Plain Language Of The PSD Regulations

Requires Increases In Actual Annual

Emissions, Not Hourly Potential Emissions.

A. The PSD Regulatory Emissions Test

Cannot Be Interpreted As An Hourly

Potential Emissions Test. ...........

l.

Unlike the NSPS Regulations, the

1980 PSD Regulations Require

Emissions Increases to Be Based on

Changes in Actual Annual Emissions.

The Fourth Circuit’s Conclusion that

the NSPS and PSD Regulations

Regarding Modifications Must Be

Interpreted Identically Ignores

Numerous Differences Between the

Two Regulatory Programs. .......

B. The Other Arguments Relied Upon By the

Fourth Circuit are Erroneous. ........

14

il

Contents

Page

ll. The PSD Regulations Requiring Emission

Increases To Be Based On Changes In Aciual

Annual Emissions Effectuate Congressional

SRS: ccdwaur ky Sob eked wee owe aa we eens 22

A. The Statutory Definition of “Modification”

Requires Actual Emissions Increases. . . 22

B. The Actual Annual Emissions Test

Under the PSD Regulations Furthers

Congressional Emphasis on Actual Air

ER Scho bbe CK oa as a ee 25

SEE 6 dao k 4Le Pec takee Seedahse. 29

iil

TABLE OF CITED AUTHORITIES

CASES

ASARCO Inc. v. EPA,

fe v.ae 219 (DL. Cm. 1978)... 2.22665.

Alabama Power Co. v. Costle,

636 F.2d 323 (D.C. Cir. 1979) ...........

Alaska Dept of Env tl Conservation v. EPA,

Oe rere

Bluewater Network v. EPA,

ye ew Be ee | errr

Bragdon v. Abbott,

oo Pere rere Perr ee

Chevron U.S.A., Inc.

v. Natural Resources Defense Council,

ee oe) airs

County of Los Angeles v. Shalala,

192 F.3d 1005 (D.C. Cir. 1999),

cert. denied, 530 U.S. 1204 (2000) .......

DIRECTV. Inc. v. Brown,

371 F.3d 814 (11th Cir. 2004) ...........

Demarest v. Manspeaker,

en NE i'd ha wah a 06 040 0

Page

...+ passim

iv

Cited Authorities

Page

Engine Mfrs. Ass'n

v. §. Coast Air Quality Management Dist.,

S54 UE: DO Ge oes cacecsissacedesanen 24

Env tl Defense Fund, Inc. v. EPA,

O56 F.26 1839 COL. Cor, WOOP oo oc de cckeseaces I]

FDIC v. Philadelphia Gear Corp.,

ick fe i1:,. PPLE EPPRET Er To 17

Muscogee (Creek) Nation v. Hodel,

851 F.2d 1439 (D.C. Cir. 1988),

cert. denied, 488 U.S. 1010 (1989) ............ 12

New York v. EPA (‘‘New York 1”),

4U3 F.38 3 GK. CA. Ae co davinvscscuwreeen passim

New York v. EPA (“New York II”),

463 7.36 Gee GK... CE. BO 6 vec ceucseeetens 13

Paralyzed Veterans of Am.

v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997),

cert. denied sub nom., Pollin v. Paralyzed

Veterans of Am.,

$23 U.S.. tOGD Chee er seve cr bwvekeosbsaekaae 20

Pennsylvania vy. Allegheny Energy Inc.,

2005 U.S. Dist. LEXIS 28894 (W.D. Pa. 2005) .. 2

Puerto Rican Cement Co. v. EPA,

SOD F.26 See COG: THe neces vbecccnces passim

Vv

Cited Authorities

Train v. NRDC,

i ee oe eas cekees 21

United States v. American Elec. Power Service Corp.,

137 F. Supp. 2d 1060 (S.D. Ohio 2001) ........ 2

United States v. Cinergy Corp.,

384 F. Supp. 2d 1272 (S.D. Ind. 2005) ......... 2,19

United States v. Duke Energy Corp.,

278 F. Supp.2d 619 (M.D.N.C. 2003) .... 17, 18, 19, 21

United States v. Duke Energy Corp.,

411 F.3d 539 (4® Cir. 2005) ............ 1,5, 8, 11,22

United States v. Ethyl Corp.,

761 F.2d 1153 (Sth Cir. 1985),

cert. denied, 474 U.S. 1070 (1986) ............ 6

United States v. Ohio Edison Co..,

276 F. Supp. 2d 829 (S.D. Ohio 2003) ..... 7, 8, 19, 20

Wisconsin Elec. Power Co. v. Reilly (“WEPCo”),

ee Sues We COU Ga. CSOOD wn cwevcccccccce: passim

vi

Cited Authorities

Page

FEDERAL STATUTES

United States Code (“U.S.C.”)

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er CED «vc b wns 6640009 4040084 6, 17

vil

Cited Authorities

Page

FEDERAL REGULATIONS

Code of Federal Regulations (“C.F.R.”)

oe RR ere 1,8, 14, 15

40 C.F.R. § 51.166(b)(2)(i11)(3) ... 2.2.2... ee. l

40 C.F.R. § 51.166(b)(2)(itile) . 2... eee 19

40 C.F.R. § 51.166(b)(2)(ii)(f) .. 2... ee eee. 17

SEs OEE Wetec be cecesecesues 9,14

40 C.F.R. § 51.166(b)(21)(i) .. 2. ee eee, 9

40 C.F.R. § 51.166(b)(21)(i)(1987) .........-. 9

et Oe lf) er rrr rrr Tere 9,15

40 C.F.R. § 51.166(b)(21 (iv) 1987) .......... 9, 22

40 C.F.R. § 51.166(b)(21)(v) ................ 22

SG: SUED wi sciscosesccteers 15

40 C.P.R. $ S1.1GG(QOM 23M)... eee, 1,8,9

Ss SEED Sa ccensevcvcacovan 21, 22

SP Gs OED 00 cccnvsbivsccepeses 8

Ps Oe ED is 0 p'oo oe 00.0 kknsee 654 8

EE 6 ob ces eddasepopesesets 11

ED SB écivoc ces secdss teveneee 9,14

we ree ee 9

ut BL , rer er rr rer rey 1S

Se EEE ic ce eds ccercknivtensess 15

vill

Cited Authorities

Page

MISCELLANEOUS

Federal Register

36 Fed. Reg. 15,704 (Aug. 17, 1971) .......... ll

39 Fed. Reg. 42,510 (Dec. 5, 1974) ........... 11

43 Fed. Reg. 26,380 (June 19, 1978) .......... 11

45 Fed. Reg. 52,676 (Aug. 7, 1980) .......... passim

56 Fed. Reg. 27,630 (June 14,1991) .......... 9

57 Fed. Reg. 32,314 (July 21, 1992) .......... 10

61 Fed. Reg. 38,250 (July 23, 1996) .......... 20

70 Fed. Reg. 25,162 (May 12, 2005) .......... 3

70 Fed. Reg. 65,984 (November 1, 2005) ...... 3

Legislative History

House CoMM. ON INTERSTATE AND FOREIGN COMMERCE,

Report 95-295 to Accompany H.R. 6161, 95" Cong.

I*Bess. 135, 397 CiGay 12, 19TT) .. cece cece: 26, 28

S. Rep. No. 101-228 (1989),

PA DUD wc bone w id vewdscowes 25

S. Rep. No. 127, Senate Env’T AND PuBLic Works

Como., 95" Cong., 1* Sess. (May 10, 1977) .... 25

Webster’s Thire. New International Dictionary, p. 742

SE i cieeek bneeheksnkeesei vir weds fa8u 23

l

INTEREST OF THE AMICI CURIAE*

States have primary responsibility for administering the

Clean Air Act’s (“CAA”), 42 U.S.C. § 7401 ef seq., regulatory

programs, including the prevention of significant deterioration

(“PSD”) program. See Alaska Dept of Envtl. Conservation v.

EPA, 540 U.S. 461, 470, 490 (2004). The limits on stationary

source emissions established by the CAA’s PSD provisions are

essential to the States’ efforts to limit degradation of air quality:

those provisions, fully enforced, provide assurance that

industrial facilities will not, by expanding operations and thus

emissions, undermine the States’ efforts to prevent air quality

from deteriorating. Critical to the PSD program’s success is

EPA’s longstanding regulatory position that projects resulting

in actual annual increases in pollution by a stationary source

trigger PSD requirements. See 40 C.F.R. § 51.166(b)(2)(i), (3),

(21), (23)(1) (1987).

The Fourth Circuit mandated a contrary test, which would

consider only changes in hourly emission rates during operation,

and would ignore plant refurbishments that increase emissions

by enabling a plant to increase its hours of operation. See United

States v. Duke Energy Corp., 411 F.3d 539, 546-48 (4" Cir.

2005). Amici States oppose any such deviation from the current

regulations that, contrary to congressional intent, would make

the applicability of the PSD requirements turn on paper and

pencil exercises which do not provide realistic measures, or

even projections, of changes in actual emissions.

Amici States have a strong interest in ensuring the continued

vitality of the PSD requirements as a tool for protecting air

quality. In particular, several of the Amici States are currently

enforcing the PSD regulations against electricity generating

* All parties have consented to the Commonwealth of

Pennsylvania Department of Environmental Protection appearing as

amicus on this brief and their consents are being filed herewith. This

brief was not authored in whole or in part by counsel for any party. No

person or entity other than amici have made a monctary contribution

toward the preparation or submission of this brief.

2

facilities, both within and outside their borders, which have

undertaken projects that increase plant utilization and therefore

actual emissions without complying with PSD requirements.'

As Respondent Duke Energy has in this action, the defendants

in those actions have sought to evade PSD requirements by

claiming that their applicability does not turn on whether a

project will in fact result in increased amounts of pollutants in

the air, but rather on whether it will increase a plant’s maximum

emission capacity, a theoretical calculation that bears little

connection to real world impacts. It is how much a plant actually

runs, not its capacity, that largely determines actual emissions.

This Court’s conclusions regarding the proper interpretation of

the current PSD regulations may be determinative of the

outcomes in those state enforcement actions.

If allowed to stand, the Fourth Circuit’s decision will

substantially reduce the air quality benefits of the PSD program.

Older plants, initially constructed without the state-of-the-art

controls required by the PSD program, emit harmful pollutants

at levels that are ten to twenty times higher than well-controlled

plants. When these plants are refurbished in ways that would

cause emissions to increase, the PSD provisions provide the

States with the choice of capping the plant’s allowed emissions,

thereby preventing any increased emissions, or requiring the

installation of emission controls determined by the States to be

the best available control technology (“BACT”). Under the

Fourth Circuit’s interpretation, however, changes at these plants

that substantially increase their actual annual emissions could

proceed without any scrutiny by the States of their detrimental

impact on ambient air pollution levels.

1. See, e.g., United States v. Am. Elec. Power Serv. Corp., 137 F.

Supp. 2d 1060 (S.D. Ohio 2001) (eight states and EPA filed claims

concerning cight power plants); United States v. Cinergy Corp., 384 F.

Supp. 2d 1272 (S.D. Ind. 2005) (three states and EPA filed claims

concerning six power plants), appeal docketed, No. 05-8029 (7" Cir.

Jan. 18, 2006) (argued on June 2, 2006); Pennsylvania v. Allegheny

Energy Inc., 05-cv-885, 2005 U.S. Dist. LEXIS 28894 (W.D. Pa. Nov.

21, 2005) (five states alleging violations at three power plants).

3

Allowing emissions from these upgraded plants to increase

has dire ramifications for the health of residents in the amici

States. For example, emissions of sulfur dioxide (SO,) and

nitrogen oxides (NO, ) from older, uncontrolled plants like those

at issue in this case lead to the formation of fine particulate

matter (soot) and ground level ozone (smog), which kill tens of

thousands of Americans annually and sicken hundreds of

thousands of others. See Proposed Rule to Implement the Fine

Particle Ambient Air Quality Standards, 70 Fed. Reg. 65,984,

66,006 col. 3 (EPA Nov. 1, 2005). The same NO, and SO,

emissions also cause the acid rain that has killed off the fish in

hundreds of lakes in the northeast and other areas of the country,

and NO, emissions contribute to eutrophication of coastal waters

—a condition that causes oxygen deficiency in the water, reducing

fish diversity and other marine life. See Clean Air Interstate

Rule, 70 Fed. Reg. 25,162, 25,310-15 (EPA May 12, 2005).’

SUMMARY OF ARGUMENT

Congress intended a particular divisionof labor with respect

to interpretation of the CAA and interpretation and application

of EPA’s implementing regulations. In an enforcement action

brought under the CAA, a court must first determine whether

EPA’s position in the action is supported by applicable

regulations interpreting the statute. If the regulations are on point

and support the enforcement action, the court's job is done: the

court cannot invalidate the regulations based on its conclusion

that they constitute an improper interpretation of the statute. By

comparison, the D.C. Circuit has exclusive jurisdiction to hear

2. Amici States agree with the arguments made in Petitioners’

brief that the Fourth Circuit intruded on the D.C. Circuit’s exclusive

authority to review final agency actions under 42 U.S.C. § 7607. The

CAA’s judicial review provisions ensure that the D.C. Circuit Court of

Appeals will promptly resolve any questions regarding the validity of

nationally applicable EPA regulations before the States undertake the

time — and resource ~ intensive process of adopting State Implementation

Plans (“SIPs”) to implement them. Amici States here also enderse the

arguments made in the brief filed by Amici State of New Jersey et al.