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Envtl. Def. v. Duke Energy Corp. - 549 U.S. 561, 127 S. Ct. 1423 (2007)

Rule:

There is a difference between the two separate components of the regulatory definition of “major modification”: (1) any physical change in or change in the method of operation of a major stationary source that (2) would result in a significant net emissions increase of any pollutant subject to regulation under the Clean Air Act. 40 C.F.R. § 51.166(b)(2)(i). The statutory definition requires both a change – whether physical or operational – and a resulting increase in emissions of a pollutant. The exclusion of increase in hours or production rate, § 51.166(b)(2)(iii)(f), speaks to the first of these components (physical change or change in method under § 51.166(b)(2)(i)), but not to the second (significant net emissions increase under § 51.166(b)(2)(i). As the preamble to the 1980 Prevention of Significant Deterioration (PSD) regulations explains, forcing companies to obtain a PSD permit before they could simply adjust operating hours would severely and unduly hamper the ability of any company to take advantage of favorable market conditions. In other words, a mere increase in the hours of operation, standing alone, is not a physical change or change in the method of operation

Facts:

Under the Clean Air Act, as amended, both modified and new stationary pollution sources were covered under two sets of provisions: (1) New Source Performance Standards (NSPS), which, in 42 U.S.C.S. § 7411(a)(4), defined "modification"; and (2) Prevention of Significant Deterioration (PSD), which, in 42 U.S.C.S. § 7479(2)(C), used that word "as defined in" NSPS. In § 7411(a)(4), the Act generally defined modification of a stationary source as a physical change to it, or a change in the method of its operation, that increased the amount of a pollutant discharged or emitted a new one. The NSPS regulations of the Environmental Protection Agency (EPA), at 40 CFR § 60.14, generally required a source to use the best available pollution-limiting technology only when a modification would increase the rate of discharge of pollutants measured in kilograms per hour. The EPA's 1980 PSD regulations, at 40 CFR § 51.166, generally required a permit for a modification only when it was a major one and only when it would increase the actual annual emission of a pollutant above the actual average for the 2 prior years.

The present case involved some coal-fired electric generating units at plants run by an energy corporation in North and South Carolina. Between 1988 and 2000, the corporation replaced or redesigned some tube assemblies in order to extend the life of the units and to allow them to run longer each day. In 2000, the United States filed an action in the United States District Court for the Middle District of North Carolina, and included claims that the corporation had violated the PSD provisions by doing this work without permits. Some private entities intervened as plaintiffs and filed a complaint charging similar violations. However, after the corporation moved for summary judgment, the District Court expressed the view that a PSD major modification could occur only if a project increased the hourly rate of emissions, and eventually entered summary judgment for the corporation on all PSD claims. On appeal, the United States Court of Appeals for the Fourth Circuit, in affirming, expressed the view that Congress' decision to create identical statutory definitions of the term "modification" in the NSPS and PSD provisions affirmatively mandated that this term be interpreted identically in the regulations promulgated under those provisions. The United States Supreme Court granted certiorari review.

Issue:

Did the Clean Air Act require the EPA to conform its 1980 PSD regulations on “modification” to their NSPS counterparts?

Answer:

No.

Conclusion:

The United States Supreme Court held that the Clean Air Act did not require the EPA to conform its 1980 PSD regulations on "modification" to their NSPS counterparts, as nothing in the text or the legislative history of the technical amendments that added the cross-reference to NSPS suggested that Congress had details of regulatory implementation in mind when Congress imposed PSD requirements on modified sources. According to the Court, the PSD regulations on "modification" could not be taken to track the regulatory definition under the NSPS. A mere increase in the hours of operation alone was not a physical change or change in the method of operation under 40 C.F.R. § 51.166(b)(2)(iii). The text of the PSD "modification" regulations doomed the attempt to equate those regulations with their NSPS counterpart. Thus, the Fourth Circuit's construction of the PSD regulations was an implicit invalidation of those regulations, implicating 42 U.S.C.S. § 7607(b) which limited such challenges in enforcement proceedings when such review could have been obtained in the United States Court of Appeals for the District of Columbia Circuit within 60 days of EPA rulemaking. On remand, the Fourth Circuit had to consider § 7607(b).

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