Opposition Brief — Cinergy Corp. v. United States (No. 06-850)

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| FILED

(4) | FB 20 207

No. 06-850 | OFFICE OF THE CLER

ey U.S.

In the Supreme Court of the Gunited States |

CINERGY CORPORATION, ET AL., PETITIONERS

UNITED STATES OF AMERICA, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

PAUL D. CLEMENT

Solicitor General

Counsel of Record

MATTHEW J. MCKEOWN

Acting Assistant Attorney

General

JOHN A. BRYSON

KATHERINE J. BARTON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the Environmental Protection Agency

(EPA) reasonably construed its regulations defining the

statutory term “modification” for purposes of the New

Source Review (NSR) program to measure emissions

increases based on total annual emissions.

2. Whether the courts have jurisdiction in this civil

enforcement action to adjudicate petitioners’ contention

that the Clean Air Act (CAA) requires EPA to interpret

its NSR regulations to measure emissions increases

based solely on increases in the hourly emissions rate.

3. Whether the CAA requires EPA to measure

emissions increases for purposes of the NSR program

the same way it has historically calculated them for pur-

poses of the New Source Performance Standards pro-

gram.

(1)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

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

NEE Kee ducted atonceresarivelaivesntecsces 13, 14

Auer v. Robbins, 519 U.S. 452 (1997) ................. 11

Brotherhood of Locomotive Firemen v. Bangor &

Aroostook R.R., 389 U.S. 327 (1967) ................ 8

Cameo Convalescent Ctr. v. Percy, 800 F.2d 108

GE Ga SEE c+ Cbaubevavesdenedbamedacenbeeeenas 9

Major League Baseball Players Ass’n v. Garvey, 532

GOED a hukecdaatstéperserenkvcsbeaneeuwen 9

New York v. United States EPA, 413 F.3d 3 (D.C.

Ss SEE Veawhdeseesubodeeswodeeseuneriess 9,14, 18

Puerto Rican Cement (a. v. United States EPA, 889

ff fe te BY | Re reer rrr 10, 14

Union Elec. Co. v. EPA, 42% U.S. 246 (1976) ............ 2

United States v. Duke Snergy Corp, 411 F.3d 539

(4th Cir. 2005), cert. granted, 126 S. Ct. 2019

Ns 0 ahd ade cdavniiconccscencckioteeeesianes 7, 18,19

Virginia Military Inst. v. United States, 508 U.S. 946

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Cases—Continued: Page

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

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

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Ind. Air Pollution Control Bd. reg. APC 19 (Feb. 9,

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Ohio Admin. Code (2003):

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Miscellaneous:

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45 Fed. Reg. (1980):

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Miscellaneous—Continued: Page

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In the Supreme Court of the Gnited States

No. 06-850

CINERGY CORPORATION, ET AL., PETITIONERS

vz.

UNITED STATES OF AMERICA, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-8a)

is reported at 458 F.3d 705. The opinion of the district

court (Pet. App. 9a-20a) is reported at 384 F. Supp. 2d

1272.

JURISDICTION

The judgment of the court of appeals was entered on

August 17, 2006. On November 6, 2006, Justice Stevens

extended the time within which to file a petition for a

writ of certiorari to and including December 15, 2006,

and the petition was filed on that date. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

In this civil enforcement action, the United States

alleged that petitioners Cinergy Corp., Cinergy Ser-

(1)

vices, Inc., PSI Energy, Inc., and Cincinnati Gas & Elec-

tric Co. failed to comply with the New Source Review

(NSR) requirements of the Clean Air Act (CAA), 42

U.S.C. 7401 et seg., when they undertook massive con-

struction projects to refurbish coal-fired power plants in

Indiana and Ohio. The district court upheld the Envi-

ronmental Protection Agency’s (EPA’s) interpretation

of its own regulations as requiring that emissions in-

creases be calculated on an actual, annual basis for pur-

poses of determining whether a project is a “modifica-

tion” subject to NSR. On interlocutory appeal, the court

of appeals affirmed.

1. The CAA directs EPA to promulgate National

Ambient Air Quality Standards (NAAQS) specifying al-

lowable concentrations of some air pollutants. 42 U.S.C.

7408, 7409; Whitman v. American Trucking Ass’ns, 531

U.S. 457, 462 (2001). Each State must develop a “State

implementation plan” (SIP) to achieve and maintain the

NAAQS. 42 U.S.C. 7410; Union Elec. Co. v. EPA, 427

U.S. 246, 249-250 (1976).

The CAA establishes various other programs to pro-

tect air quality. The NSR program consists of a Preven-

tion of Significant Deterioration (PSD) program that

seeks to prevent a significant decline of air quality in

areas that already meet ambient air quality standards,

and a nonattainment program for areas not satisfying

those standards.’ See 42 U.S.C. 7470-7479, 7501-7508.

The NSR program imposes various requirements that

must be satisfied when certain emissions sources are

“constructed.” 42 U.S.C. 7475(a). Enacted in 1977, the

' Inthis enforcement action, the United States has alleged violations

of both the PSD and nonattainment components of the NSR program.

Because the programs do not differ in any respect material here, this

brief cites only the PSD provisions.

NSR provisions define “construction” to include “modifi-

cation,” which is defined in turn by reference to the stat-

utory definition of “modification” applicable to the pre-

existing New Source Performance Standards (NSPS)

program. 42 U.S.C. 7479(2)(C), 7501(4). The NSPS pro-

visions, enacted in 1970, define “modification” to be “any

physical change in, or change in the method of operation

of, a stationary source which increases the amount of

any air pollutant emitted by such source or which results

in the emission of any air pollutant not previously emit-

ted.” 42 U.S.C. 7411(a)(4).

Although NSR and NSPS share a statutory defini-

tion of the term “modification,” EPA has interpreted

aspects of that definition differently for the two pro-

grams. By statute, NSR applies to the construction or

modification of “major emitting facilitlies]” or

“major stationary sources.” 42 U.S.C. 7475(a), 7479(1),

7502(c)(5), 7508. EPA’s implementing regulations re-

quire a preconstruction permit for the construction of

any “major stationary source” or “major modification,”

40 C.F.R. 52.21(i), and define “major modification” to

include “any physical change in or change in the method

of operation of a major stationary source that would re-

sult in a significant net emissions increase of any pollut-

ant subject to regulation under the Act,” 40 C.F.R.

52.21(b)(2)(i).”

The inquiry under that definition first requires iden-

tification of a “physical change in or change in the

method of operation.” 40 C.F.R. 52.21(b)(2)(i). At that

step of the inquiry, there is an “hours of operation” ex-

clusion, which provides that “{a] physical change or

* Like the petition, this brief cites to the 1987 recodification of EPA's

regulations unless otherwise indicated. See Pet. 3 n.2.

change in the method of operation shall not include

* * * [aJn increase in the hours of operation or in the

production rate.” 40 C.F.R. 52.21(b)(2)(iii)(/).

If there is a physical or operational change, the next

question is whether that change would result in a signifi-

cant “net emissions increase.” 40 C.F.R. 52.21(b)(2)(i).

Under the regulations, a net emissions increase is an

“increase in actual emissions from a particular physical

change or change in method of operation at a stationary

source.” 40 C.F.R. 52.21(b)(3)(i)(a). Pre-change “actual

emissions” equal “the average rate, in tons per year, at

which the unit actually emitted the pollutant during a

two-year period which precedes the particular date and

which is representative of normal source operation.” 40

C.F .R. 52.21(b)(21)(ii). Actual emissions are “calculated

using the unit’s actual operating hours, production rates

and types of materials processed, stored, or combusted

during the selected time period.” /bid.

The NSPS regulations, by contrast, provide that a

“modification” is “any physical or operational change

* * * which results in an increase in the emission rate

to the atmosphere of any pollutant.” 40 C.F.R. 60.14(a).

The “emission rate” is the maximum hourly emissions

from the relevant piece of equipment operating at its

maximum achievable capacity, and is “expressed as

kg/hr.” 40 C.F.R. 60.14(b). Because it considers only

maximum hourly rates, the NSPS test is not triggered

by changes that increase emissions due only to increased

hours of operation.

2. The United States brought suit against petition-

ers for failing to comply with NSR requirements in con-

ducting certain refurbishment projects. The district

court granted summary judgment for the United States

on the question how to determine whether a physical or

operational change would result in an emissions increase

for purposes of the PSD program. Pet. App. 9a-20a.

The district court rejected petitioners’ argument that

Congress required EPA to define “modification” for pur-

poses of PSD in the same manner it had defined “modifi-

cation” for purposes of NSPS. Pet. App. 16a-17a. The

court concluded that Congress did not “intend[] to incor-

porate the regulatory definition” of modification under

NSPS into the statute; that Congress “did not limit the

EPA’s authority to further define ‘modification’ in the

regulations as it deemed fit to serve the purposes of the

PSD program”; and that “nothing about the EPA’s defi-

nition of ‘modification’ [for the PSD program] contra-

dicts the statutory definition.” /bid.

The district court further upheld EPA’s reading of

its own PSD regulations, and rejected petitioners’ argu-

ment that, under those regulations, emissions increases

must be measured solely on an hourly basis, such that

emissions increases could result only from an increase

in the hourly rate of emissions, as opposed to an increase

in the number of hours a plant is expected to be oper-

ated over the course of a year. Pet. App. 17a-20a. The

court explained that under EPA’s regulations, PSD re-

quirements are triggered by a “major modification,”

which is a change causing “a significant net increase in

a unit’s ‘actual emissions.’” /d. at 18a (quoting 45 Fed.

Reg. 52,698 (1980)). Because actual emissions are mea-

sured using a unit’s “actual operating hours and produc-

tion rates,” the court determined that “if a physical

change will result in a unit increasing its operating

hours, the projected actual operating hours would in-

clude the increase.” /bid. The court further explained

that although increased hours of operation are excluded

when determining whether there has been a physical or

operational change, they are not excluded when deter-

mining whether such a change has increased the plant’s

emissions. /d. at 19a.

3. The Seventh Circuit affirmed. Pet. App. la-8a.

Examining the regulatory definitions of “major modifica-

tion” and “significant net emissions increase,” the court

concluded:

Since both the base emissions rate from which a sig-

nificant increase is calculated, and the amount of the

ierease, are in terms of tons per year rather than

per hour, the natural reading of the regulation is that

any physical change or change in operating methods

that increases annual emissions is covered.

Id. at 3a. The court rejected petitioners’ argument that

calculating emissions using “actual operating hours”

requires EPA to use a constant, representative number

of operating hours to calculate both pre- and post-

change emissions, thus limiting increases to changes

that result in an increase of the hourly emissions rate.

See ibid. Rather, the court concluded that “‘actual op-

erating hours’ is more naturally read to mean the total

number of hours that the plant is in operation.” /bid.

The court also found sufficient policy reasons supporting

EPA’s interpretation to “scotch the argument that the

interpretation produces such outlandish consequences

that it must be incorrect.” /d. at 5a.

The court of appeals then turned to petitioners’

“principal argument”: that “Congress required that the

regulation define ‘modification’ as a change in the hourly

emissions rate.” Pet. App. 5a-6a. The court of appeals

concluded that, “(since the regulation does not define it

st, {is seems an attack on the validity of the regulation

rather {kan an argument about its meaning.” /d. at 6a.

Because only the D.C. Circuit has “jurisdiction to review

the validity of nationally applicable regulations issued

pursuant to the Clean Air Act,” the court concluded that

petitioners’ challenge is “beyond the jurisdiction of a

regional circuit to resolve.” Jd. at 2a, Ga (citing 42

U.S.C. 7607(b)(1)). The court noted that the Fourth Cir-

cuit had “stepped out of bounds” in United States v.

Duke Energy Corp., 411 F.3d 539 (2005), cert. granted,

126 S. Ct. 2019 (2006), by adjudicating the same statu-

tory argument. Pet. App. 7a.

The court of appeals nevertheless proceeded, in the

alternative, to address petitioners’ statutory argument

and found it “unconvincing.” Pet. App. 6a. The court

held that Congress’s use in the PSD program of a cross-

reference to the statutory NSPS definition of “modifica-

tion” did not “incorporate the agency’s regulatory defi-

nition of modifications under the New Source Perfor-

mance Standards into the provisions relating to the Pre-

vention of Significant Deterioration program.” /bid.

(emphasis added). The court explained that “[tjhe same

word can mean different things in the same statute,” and

found that is “certainly the case with a vague word like

‘modification,’ and all the more when the statutory pro-

visions that contain the word were enacted by different

Congresses for different purposes.” /d. at 7a. While the

NSPS and PSD statutes both define modification to be

a physical change in a plant that results in an increase in

emissions, the court explained that the programs

are silent on whether the increase is in the hourly

rate of emissions or in some other rate. The task of

deciding was left to the EPA. There was nothing to

require that it flesh out the vague statutory meaning

in the identical way in different parts of the Clean

Air Act adopted years apart and reflecting, to an ex-

tent anyway, different philosophies of pollution con-

trol.

Id. at 8a.

ARGUMENT

The questions presented in this case are already be-

fore this Court in Environmental Defense v. Duke En-

ergy Co., No. 05-848, which was argued on November 1,

2006, and provides a sufficient vehicle for resolving

those questions. Because the petition is interlocutory,

this Court should deny review at this time. Alterna-

tively, this Court should hold the petition pending the

decision in Duke Energy, and then dispose of it as ap-

propriate in light of that decision.

1. As athreshold matter, this Court’s review is un-

warranted because of the interlocutory posture of the

case. The court of appeals affirmed the district court’s

ruling that the PSD regulations measure emissions in-

creases based on annual, rather than hourly, emissions.

Pet. App. la-8a. The court of appeals did not, however,

finally resolve EPA’s civil enforcement action. Rather,

it remanded for further proceedings in the district court,

where a variety of issues remain to be resolved. See

generally id. at 12a-13a. This Court “generally await[s]

final judgment in the lower courts before exercising [its]

certiorari jurisdiction,” even where the court of appeals

has resolved the merits of the case and only the “deter-

mination of an appropriate remedy” remains. Virginia

Military Inst. v. United States, 508 U.S. 946, 946 (1993)

(opinion of Scalia, J., respecting the denial of the peti-

tion for a writ of certiorari); see Brotherhood of Locomo-

tive Firemen v. Bangor & Aroostook R.R., 389 U.S. 327,

328 (1967) (per curiam).

Following denial of the petition, the district court

would have authority to apply this Court’s upcoming

decision in Duke Energy, see, e.g., Cameo Convalescent

Ctr. v. Percy, 800 F.2d 108, 110 (7th Cir. 1986), and peti-

tioners could seek certiorari from any adverse final

judgment, see, e.g., Major League Baseball Players

Ass’n v. Garvey, 532 U.S. 504, 508 n.1 (2001). Accord-

ingly, the most efficient course would be to deny review

at this time.

2. The court of appeals’ decision is correct.

a. For purposes of the PSD program, EPA’s regula-

tions measure emissions increases based on annual, not

hourly, emissions.

i. Those regulations require a preconstruction per-

mit for the construction of, as relevant here, any “major

modification.” 40 C.F.R. 52.21(i). The regulations de-

fine “major modification” to include “any physical

change in or change in the method of operation of a ma-

jor stationary source that would result in a significant

net emissions increase.” 40 C.F.R. 52.21(b)(2)(i). A

“Injet emissions increase,” in turn, is an “increase in

actual emissions.” 40 C.F.R. 52.21(b)(3)(i)(@).

As the court of appeals correctly recognized, the

PSD definition of “actual emissions” measures emis-

sions “in tons per year,” not per hour. 40 C.F.R.

52.21(b)(21)(ii); Pet. App. 3a. Whether a net emissions

increase is “significant” is also measured in “tons per

year.” 40 C.F.R. 52.21(b)(23)(i). Thus, the PSD regula-

tions plainly require consideration of actual, annual

emissions—not hourly emissions. Other courts have

likewise recognized that the PSD regulations, unlike the

NSPS regulations, focus on increases in actual annual,

not hourly, emissions. See New York v. United States

EPA, 413 F.3d 3, 15 (D.C. Cir. 2005); Wisconsin Elec.

Power Co. v. Reilly, 893 F.2d 901, 915 (7th Cir. 1990)

(WEPCO); Puerto Rican Cement Co. v. United States

EPA, 889 F.2d 292, 293-294, 297-298 (1st Cir. 1989).

The court of appeals’ reading of the regulations’ plain

language is supported by EPA’s explanations, from 1980

on, that the PSD regulations focus on the actual impact

of emissions on ambient air, on an annual basis, includ-

ing by examining a unit’s hours of operation. The pre-

amble to the 1980 regulations explains that the regula-

tions measure increases in “actual emissions,” calculated

in “tons per year,” and that a PSD permit is required if

plants “increase pollution.” 45 Fed. Reg. at 52,700. In

addition, preambles to the 1980 and proposed 1983 regu-

lations describe the effect that changing the hours of

operation could have on PSD emissions. /d. at 52,705; 48

Fed. Reg. 38,747 (1983). In a 1982 settlement agree-

ment with challengers to the 1980 reguiations, including

Cinergy, EPA agreed to propose to change the 1980 reg-

ulations to izclude the very hourly emissions rate test

that petitioners now contend the regulations already

mandated, thus clearly demonstrating EPA’s view that

the existing regulations did not impose such a test. See

54 Fed. Reg. 27,274 (1989); 61 Fed. Reg. 38,268-38,269

(1996); 70 Fed. Reg. 61,098 (2005).

In 1988 and 1989, EPA issued applicability determi-

nations that unquestionably applied a total annual emis-

sions test, resulting in the cases of WEPCO and Puerto

Rican Cement, which endorsed the use of such a test.

See WEPCO, 893 F.2d at 906, 916 (noting that EPA as-

sumed emissions increases would come “not from an

increase in emission rate, but rather from increases in

production rate or hours of operation”) (quoting EPA

Supplemental Determination at 9, WE PCO, supra (Nos.

88-3264, 89-1339)); Puerto Rican Cement, 889 F.2d at

294 (noting that EPA charts made clear “that emissions

will increase only if the company operates the new kiln

at significantly higher production levels”). In doing so,

EPA confirmed—well before initiation of this litiga-

tion—-that “hourly capacity demonstration for NSPS

purposes is not relevant to the PSD analysis.” U.S. Re-

ply Mem. in Support of Mot. for Partial Summ. J., Exh.

32, at 10 (U.S. Summ. J.) (EPA’s 1989 final determina-

tion that WEPCO’s actions triggered PSD require-

ments); see id. at 12 (an NSPS non-applicability deter-

mination “does not affect PSD applicability”); Pet. C.A

Supp. App. 259-269 (EPA’s 1990 WEPCO remand deter-

mination applying actual-to-projected-actual emissions

increase test). EPA’s interpretation of its own regula-

tions is entitled to deference. Auer v. Robbins, 519 U.S.

452, 461 (1997).

As a party to the 1982 settlement agreement, and to

the filing of industry amicus briefs in WEPCO and

Puerto Rican Cement, Cinergy was well aware of EPA’s

interpretation. In 1989, an industry briefing paper rec-

ognized that EPA’s WEPCO determination “found that

PSD review would be required even though the units

were not increasing their emission rate” and that “major

repairs and replacements that improve ‘reliability’ and

‘efficiency’ but do not increase (and may even reduce)

emission rates can require a PSD permit.” U.S. Summ.

J., Exh. 38, Attach. at 1,8. See id. Exh. 28, at 9 (indus-

try amicus brief in WEPCO notes that, in its WE PCO

determination, “EPA emphasized that PSD require-

ments would apply even where the project merely im-

proved the availability and reliability of the facility, and

was not needed to restore lost capacity”). Contrary to

petitioners’ assertions (Pet. 10), EPA explained its inter-

pretation to the States as well.’ See Pet. C.A. Supp.

App. 153 (1990 EPA letter to the Indiana Department of

Environmental Management stating that, for NSR pur-

poses, “[a]nnual emissions are the product of the hourly

emissions rate, which is the sole concern of NSPS, times

the utilization rate, expressed as hours of operation per

year”).

ii. Petitioners nonetheless complain (Pet. 11) that

the court of appeals “ignored” their argument that “the

plain language of the regulations and simple common

sense dictate that a project cannot be a ‘major modifica-

tion’ if it does not constitute a ‘modification’ in the

first instance.” The court of appeals correctly dismissed

that argument as “makeweight|].” Pet. App. 8a. Under

EPA’s regulations, as discussed above, PSD require-

ments are triggered by a “major modification,” which is

defined separately from the inapposite definition of

“modification” on which petitioners rely. (EPA’s use of

the term “major modification” as the regulatory trigger

for PSD, rather than “modification,” derives from the

fact that the PSD requirements apply to “major emitting

facilities.” See 42 Fed. Reg. 57,480 (1977); see generally

U.S. Br. at 9, Duke Energy, supra (No. 05-848).)

The irrelevance of the regulation on which petition-

ers rely, 40 C.F.R. 52.01(d), is confirmed by other fac-

tors. That regulation is not contained in the relevant

SIPs, which provide the applicable law in this case. On

August 7, 1980, EPA disapprovea Ohio’s and Indiana’s

proposed PSD programs and incorporated by reference

* Petitioners’ contention (Pet. 10) that EPA’s interpretation consti-

tutes a federal power grab raising “cooperative federalism” concerns is

undercut by the fact that 21 States, the District of Columbia, and the

national association representing the air pollution directors of all the

States supported the United States in Duke Energy.

portions of the PSD regulations of 40 C.F.R. 52.21 into

the Ohio and Indiana SIPS, which apply here. See 40

C.F.R. 52.793, 52.1884. Because that incorporation did

not include Section 52.01(d), that provision is irrelevant.

See 40 C.F.R. 52.793, 52.1884; Ohio Admin. Code § 3745-

31-01(AAA) and (1)(a)(iv) (2003) (defining “modification”

as change that “{ils otherwise defined as a major modifi-

cation”); Ind. Air Pollution Control Bd. reg. APC 19

(Feb. 9, 1982); and Ind. Admin. Code tit. 326, r. 2-3-1

(2003) (two different Indiana SIPs, before and after De-

cember 6, 1994, contain no separate definition of “modi-

fication”).

Moreover, the definition of “modification” relied on

by petitioners applies only to sources emitting pollutants

“for which a national standard has been promulgated

under Part 50 of this chapter”—.e., pollutants for which

EPA has established NAAQS. Because the current PSD

program is not so limited, that definition could not apply

to that program. Cf. Alabama Power Co. v. Costle, 636

F.2d 323, 404 (D.C. Cir. 1979) (noting that “[t]he lan-

guage of the Act does not limit the applicability of PSD

only to one or several of the pollutants regulated under

the Act”).’

Nor is petitioners’ argument, as they would have it

(Pet. 5,11), based on “common sense.” It was not until

sometime in 2005—more than 25 years after the 1980

PSD regulations were promu!gated—that industry first

made the argument proffered here. Indeed, just as in-

dustry had never made the regulatory “modification”

argument in Duke Energy until it filed its merits briefs

* Cases like New York, WEPCO, and Puerto Rican Cement did not

involve only changes triggering the NSPS hourly emissions test,

confirming that the PSD regulations do not require both an NSPS

modification and a PSD major modification. See pp. 10-11, szpra.

in this Court, petitioners had never made that argument

in this case until they filed their merits brief in the court

of appeals. Every court to address the meaning of

“modification” for the PSD program has looked solely to

the definition of “major modification.” See Pet. App. 2a,

12a; New York, 413 F.3d at 14; WE PCO, 893 F.2d at 915;

Puerto Rican Cement, 889 F.2d at 295-297; Alabama

Power Co., 636 F.2d at 399-400. Contrary to petitioners’

assertions (Pet. 2), it is industry, not EPA, that has in-

vented a new regulatory interpretation for litigation

purposes.

iii. Petitioners’ other regulatory arguments fare no

better. Petitioners argue (Pet. 12) that for purposes of

determining whether a project would increase “actual

emissions,” as measured in “tons per year” under 40

C.F.R. 52.21, EPA’s regulations provide that the agency

must use, in petitioners’ words, “constant, representa-

tive hours of operation.” As petitioners explain (Pet.

12), holding hours constant in that manner, even when

a physical change would actually cause hours to in-

crease, would effectively convert EPA’s annual standard

into an hourly one.

That contention—which is a wholly implausible way

of measuring “actual emissions” in “tons per year” (40

C.F.R. 52.21)—finds no support in EPA’s regulations.

Under 40 C.F.R. 52.21(b)(21)(ii), the pre-change baseline

is generally measured based on “actual emissions * * *

during a two-year period which precedes the particular

date and which is representative of normal source opera-

tion.” That provision ensures that the pre-change base-

line reflects representative actual emissions. It does

not suggest, in any way, that post-change “actual” emis-

sions should be based on a counterfactual assessment of

what future emissions would be if post-change hours of

operation were held to pre-change levels (even when

they would actually increase because of a change). To

the contrary, the regulation stresses that “[a|ctual emis-

sions shall be calculated using the unit’s actual operat-

ing hours, production rates, and types of materials pro-

cessed, stored, or combusted during the selected time

period.” /bid. (emphasis added). Thus, the court of ap-

peals correctly concluded that EPA’s regulations re-

quire consideration of a unit’s actual hours of operation,

both before and after a physical or operational change.

Pet. App. 3a.

Petitioners also contend (Pet. 12) that the court of

appeals should have recognized that the regulatory

“hours of operation” exclusion from the definition of

physical or operational change precludes EPA from

considering hours of operation in measuring emissions

increases. Petitioners made no such argument before

the Seventh Circuit, which had previously, and correctly,

rejected that contention in WEPCO, 893 F.2d at 916

n.11.° Under EPA’s regulations, a “modification” re-

quires both a physical or operational change and an in-

crease in emissions. 40 C.F.R. 52.21(b)(2)(i). The provi-

sion relied on by petitioners states only that “[a] physi-

cal change or change in the method of operation shall

not include * * * [aJn increase in the hours of operation

or in the production rate.” 40 C.F.R. 52.21(b)(2)(ii) (f).

While that provision excludes increases in the hours of

operation from the definition of physical or operational

change, it does not exclude such increases from consid-

eration on the separate question whether a physical or

In their statement of facts, petitioners stated that the regulations

provide that the term “modification” does not include “{a|n increase in

the hours of operation” of the unit. Pet. C.A Br. 13. But petitioners

provided no analysis or argument on that point.

operational change would result in an emissions in-

crease. See 45 Fed. Reg. at 52,704; 57 Fed. Reg. 32,328

(1992). Thus, the court of appeals correctly explained

that the exclusion applies where a company runs “the

plant closer to its maximum capacity” without making a

physical or operational change, but does not apply if “a

physical change enables the plant to increase its out-

put.” Pet. App. 2a-3a.

iv. Petitioners assert (Pet. 12-13) that the court of

appeals ignored prior regulatory interpretations by two

subordinate EPA officials. The two 1981 statements,

however, pertain to the irrelevant “hours of operation”

exclusion discussed above. Even if those statements

were read to support petitioners’ argument, they could

not be reconciled with the regulations’ plain language

and contemporaneous preamble or with the subsequent

interpretation adopted by the EPA Administrator—the

head of the agency—and upheld by the Seventh Circuit

in the WEPCO proceeding. See WEPCO, 893 F.2d at

916 n.11. The 1982 memorandum from an EPA regional

employee simply states that a “modification [that] does

not cause any increase in emissions” does not trigger

PSD requirements, which is wholly consistent with

EPA’s longstanding interpretation. Pet. C.A. Supp.

App. 283-285. Moreover, as discussed above, EPA has

repeatedly expressed its interpretation of the regula-

tions’ plain meaning, and petitioners and other members

of industry have repeatedly acknowledged that interpre-

tation, since 1980.

v. Petitioners err in concluding (Pet. 2) that EPA’s

interpretation extends to “commonplace maintenance,

repair, and replacement projects.” The definition of

“major modification” excludes “|rjoutine maintenance,

repair and replacement.” 40 C.F.R. 52.21(b)(2)(iii)(a).

Here, the court of appeals noted that petitioners have

conceded for present purposes that their plant modifica-

tions were not routine maintenance, repair, or replace-

ment. Pet. App. 2a.

b. After determining that EPA’s PSD regulations

could not reasonably be read to measure emissions in-

creases based on an hourly rate test, the court of ap-

peals correctly rejected petitioners’ claim that the CAA

requires such a reading. Under Section 307(b), a court

adjudicating a CAA enforcement action may not invali-

date actions of the Administrator, such as the promulga-

tion of the nationally applicable PSD regulations at issue

here, if review “could have been obtained” pursuant to

a properly filed petition for review in the D.C. Circuit.

42 U.S.C. 7607(b)(2); Harrison v. PPG Indus., Inc., 446

U.S. 578 (1980).

Petitioners do not dispute that Section 307(b) bars

invalidation of the regulations. Rather, they argue (Pet.

16-17) that they are challenging not the regulations, but

a new interpretation of those regulations. As the court

of appeals explained, that argument fails because, as

discussed above, the regulations’ meaning is evident on

their face, and they are not reasonably susceptible of the

interpretation proffered by petitioners. See Pet. App.

6a. Nor, as discussed above, has EPA changed its inter-

pretation. Instead, petitioners are impermissibly chal-

lenging the regulations themselves, no matter how they

characterize their challenge.

Indeed, petitioners not only could have obtained re-

view of their claim in a challenge to the regulations’ va-

lidity in the D.C. Circuit; they did so. In New York, su-

pra, the D.C. Circuit ruled on numerous petitions for

review filed in 1980, 1992, and 2002 to challenge PSD

regulations issued in those years. Cinergy was a party

to petitions challenging all three sets of PSD regula-

tions, including the 1980 regulations at issue here. The

brief filed by the electric utility industry parties, includ-

ing Cinergy, expressly argued that the 1980 PSD regu-

latory definition of modification was unlawful to the ex-

tent that it differed from the NSPS hourly rate emis-

sions test. New York, 413 F.3d at 18. The D.C. Circuit

“reject[ed| this portion of industry’s challenge to the

1980 * * * rules.” /d. at 20.

c. In the alternative, the court of appeals correctly

held that petitioners’ statutory challenge to EPA’s regu-

lations fails on its merits. As that court recognized, the

PSD cross-reference to the NSPS statutory definition of

“modification” “says nothing about hourly versus annual

emissions” and “does not purport to incorporate the

agency’s [hourly-rate-based] regulatory definition of

modifications” under NSPS into the PSD provisions.

Pet. App. 6a. The D.C. Circuit has similarly rejected

petitioners’ argument. New York, 413 F.3d at 19.

The court of appeals also correctly rejected the the-

ory relied on by the Fourth Circuit in United States v.

Duke Energy Corp., 411 F.3d 539, 546-547 (2005), cert.

granted, 126 S. Ct. 2019 (2006), which is that Congress’s

use of identical statutory definitions of “modification” in

the PSD and NSPS programs requires EPA to apply the

term identically in both programs. The court followed

the well-established rule that “[t]he same word can

mean different things in the same statute,” which is

“certainly the case with a vague word like ‘modification’

(particularly when that term is defined using other am-

biguous terms). Pet. App. 7a. Moreover, the Fourth

Circuit’s theory is irreconcilable with fundamental prin-

ciples of deference to agency interpretations of ambigu-

ous statutory text. By directing EPA to employ the

same ambiguous statutory definition of “modification” in

two separate regulatory programs, Congress necessarily

delegated to EPA the discretion to resolve those ambi-

guities differently for (or within) each program if the

agency reasonably concludes that different approaches

would best achieve the purposes of the respective pro-

grams.

Even the Fourth Circuit in Duke Energy rejected the

theory advanced by petitioners here (Pet. 14): that the

CAA requires EPA to apply an hourly emissions rate

test in determining whether there is an NSR modifica-

tion. As the Fourth Circuit recognized, the statutory

definition of “modification” contains ambiguous terms

that delegite to EPA the discretion to determine how

emissions increases should be measured. Duke Energy,

411 F.3d at 550-551. Thus, that court held only that

EPA must apply the same test to both programs; not

that it must apply an hourly-rate test to both. /d. at 549

n.7. During the seven years before Congress created

the statutory PSD program, EPA certainly had discre-

tion to measure emissions increases under the NSPS

program alone in different manners for different sources

or pollutants, assuming there was a reasonable justifica-

tion for doing so. Nothing in the 1977 amendments add-

ing the NSR program to the CAA demonstrates a con-

gressional intent to remove such discretion, with respect

to either the NSPS or the NSR program.

CONCLUSION

The petition for a writ of certiorari should be denied.

In the alternative, the petition should be held pending

this Court’s decision in Environmental Defense v. Duke

Energy Co., No. 05-848, and then disposed of as appro-

priate in light of that decision.

Respectfully submitted.