ENVIRONMENTAL DEFENSE v. DUKE ENERGY CORP.: WHY POLLUTION IS
STILL POLLUTION DURING NON-BUSINESS HOURS
PHILIP TERWILLIGER†
I. INTRODUCTION
Environmental Defense v. Duke Energy1 decided the question of whether Duke Energy
Corporation violated the New Source Performance Standards (NSPS)2 and the Prevention of
Significant Deterioration (PSD)3 amendments to the Clean Air Act (CAA)4 when it redesigned
several tube assemblies to allow the boilers of the coal-powered electric generation units in eight
of its plants to run longer each day.5 The controversy was ignited when the plaintiffs, United
States and intervener Environmental Defense brought suit against Duke Energy Corporation. 6
The suit alleged that Duke violated the PSD via operating power plants without the proper
permits for a modified stationary source of pollution.7
This article examines the Supreme Court’s decision in Environmental Defense v. Duke
Energy Corporation. First, this article explores the relevant facts of the case. Second, the article
examines the background information of the case. Next, the procedural history of the case is
provided. Finally, the issues presented are analyzed. The foregoing section discusses the history
†
Philip Terwilliger, B.A. Economics, University of Iowa, Juris Doctorate Candidate, May 2009, University of South
Dakota School of Law.
1
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
2
Clean Air Act 42 U.S.C. § 7411 (2007).
3
40 C.F.R. § 51.166.
4
42 U.S.C.A. § 7401 (2007).
5
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1430 (U.S. 2007).
6
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1430 (U.S. 2007).
7
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1425 (U.S. 2007).
and purpose of the CAA and its applicable amendments. The article continues with a discussion
of the procedural history of the case, including an analysis of each court’s reasoning in reaching
their conclusions. A discussion of the issues surrounding this controversy follows. The author
argues that the conclusions made by the Supreme Court were correct and the resolution of
Environmental Defense v. Duke Energy was well-founded.
II. FACTS
Duke Energy Corporation (Duke) is a major power company based in South Carolina.8
Duke consists of eight plants with thirty coal-fired electricity generating units.9 The units were
put on line between the years of 1940 and 1975.10 Each unit includes a boiler with thousands of
steel tubes arranged in sets.11 Between 1988 and 2000, Duke changed the design of twenty-nine
tube assemblies.12 Duke initiated the modifications for the purpose of extending the operating
life of the assemblies and allowing the assemblies to run longer each day.13
In the 1970s, Congress enacted two air pollution control amendments to the CAA. These
amendments included the NSPS and PSD.14 Both amendments explicitly bring modified and
new stationary sources of air pollution within the scope of the CAA.15 The NSPS requires the
EPA to establish emission standards for certain sources of air pollution.16 These regulations
8
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
10
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
11
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
12
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
13
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
14
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1425 (U.S. 2007).
15
Clean Air Act 42 U.S.C. § 7411 (2007). and 40 CFR 51.166
16
“New Source Performance Standards,” http://www.epa.gov/Region7/programs/artd/air/nsps/nsps.htm, January 21,
2008.
9
focus on certain pollutants and are not ‘region-specific.’17 The NSPS calls on cooperation
among different levels of government in an effort to implement and encourage practices which
lead to cleaner and healthier air.18 The PSD’s purpose is quite different.19 The PSD is not
intended to prevent emissions increases; instead, its provisions encourage the use of pollutionlimiting technology.20 The PSD does not set emission standards for sources of certain pollutants
(like the NSPS), but rather it creates special, more stringent requirements for certain areas.21 The
PSD uses a permit system with which pollution-emitting sources must comply.22
“New Source Performance Standards,” http://www.epa.gov/Region7/programs/artd/air/nsps/nsps.htm, January 21,
2008.
18
Generally, state and local air pollution control agencies are responsible for implementation, compliance
assistance, and enforcement of the new source performance standards (NSPS). EPA retains concurrent enforcement
authority and is also available to provide technical assistance when a state or local agency seeks help. EPA also
retains a few of the NSPS responsibilities -- such as the ability to approve alternative monitoring methods -- to
maintain a minimum level of national consistency. “New Source Performance Standards,”
http://www.epa.gov/Region7/programs/artd/air/nsps/nsps.htm, January 21, 2008.
19 PSD does not prevent sources from increasing emissions. Instead, PSD is designed to:
17
1.
2.
3.
4.
protect public health and welfare;
preserve, protect, and enhance the air quality in national parks, national wilderness areas, national
monuments, national seashores, and other areas of special national or regional natural, recreational, scenic,
or historic value;
insure that economic growth will occur in a manner consistent with the preservation of existing clean air
resources; and
assure that any decision to permit increased air pollution in any area to which this section applies is made
only after careful evaluation of all the consequences of such a decision and after adequate procedural
opportunities for informed public participation in the decision making process.
“Prevention of Significan Deterioration (PSD) Basic Information,” http://www.epa.gov/nsr/psd.html, January 21,
2008.
20
“Prevention of Significan Deterioration (PSD) Basic Information,” http://www.epa.gov/nsr/psd.html, January 21,
2008.
21
These areas include national parks, wilderness areas, national seashores and other valued areas. “Prevention of
Significan Deterioration (PSD) Basic Information,” http://www.epa.gov/nsr/psd.html, January 21, 2008.
22
PSD increment is the amount of pollution an area is allowed to increase. PSD increments prevent the air quality
in clean areas from deteriorating to the level set by the NAAQS. The NAAQS is a maximum allowable
concentration "ceiling." A PSD increment, on the other hand, is the maximum allowable increase in concentration
that is allowed to occur above a baseline concentration for a pollutant. The baseline concentration is defined for each
pollutant and, in general, is the ambient concentration existing at the time that the first complete PSD permit
application affecting the area is submitted. Significant deterioration is said to occur when the amount of new
pollution would exceed the applicable PSD increment. It is important to note, however, that the air quality cannot
deteriorate beyond the concentration allowed by the applicable NAAQS, even if not all of the PSD increment is
consumed.
As the amendments were created at different times and for different purposes, the NSPS and the
PSD define the word “modification” differently.23 NSPS defines “modification” as a “physical
change to a source in the method of its operation that increases the amount of a pollutant
discharged or emits a new one.”24 The NSPS regulations require a source to use the best
available pollution-limiting technology when a modification would increase the discharge of
pollutants measured in kilograms per hour.25 The PSD regulations, however, require a permit
only for a major modification, and only when it would increase the actual annual emissions
above the actual average for the two prior years.26
Significantly, Duke made no technologically advanced changes to its generation units.27
If the changes satisfied the definitions of “modification” in the PSD and NSPS, Duke would have
been required to use the best pollution-limiting technology available. In this instance, the
changes made increased the actual annual emissions of the units, but did not increase the
discharge of pollutants measured in kilograms per hour.28 In sum, the changes by Duke did not
amount to a modification as defined under NSPS, but did satisfy the definition as utilized under
PSD. Thus, a permit would be required under PSD, but not under NSPS.
III. BACKGROUND
“Prevention of Significant Deterioration (PSD) Basic Information,” http://www.epa.gov/nsr/psd.html, January 21,
2008.
23
Clean Air Act Clean Air Act 42 U.S.C. § 7411 (2007).(a)(2) (2007), 40 CFR 51.166(b)(2)(iii)(f).
Clean Air Act 42 U.S.C. § 7411 (2007).(a)(4) (emphasis added).
25
40 CFR § 60.14(b).
26
40 CFR § 51.166(b)(21)(ii).
27
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
28
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
24
The CAA was enacted in 1963 and addressed the pollution brought about by the growth
of cities.29 In the decades leading up to the CAA, major population increases forced
metropolitan sprawl to cross local jurisdictional and state lines.30 The larger populations meant
larger numbers of automobiles, as well as increased industrialization—two of the most
significant sources of air pollution.31 The mounting sources of pollutants “had [resulted] in
mounting dangers to the public health and welfare, including injury to agricultural crops and
livestock, the deterioration of property, and hazards to air and ground transportation . . .”32 The
time had come for federal regulation of the Nation’s air pollution.
The CAA explicitly declared four main purposes behind the federal regulation of air
pollution:
1) to protect and enhance the quality of the Nation’s air resources; 2) to initiate
and accelerate research and development of programs designed to prevent air
pollution; 3) to provide financial and technical assistance to State and local
governments in connection with the air pollution prevention and control
programs; and 4) to encourage and assist the development and operation of
regional air pollution prevention and control programs.33
These purposes implicitly strove toward a broad goal of the reduction of overall air pollution.
The CAA was amended, rewritten, and bolstered in 1971 to include a notable air
pollution control addition called New Source Performance Standards.34 The NSPS accompanied
the National Ambient Air Quality Standards (NAAQS), which were devised by the
Environmental Protection Agency (EPA) to limit various pollutants.35 The NSPS amendments
required operators of stationary sources generating air pollutants to use the best available
29
42 U.S.C. § 7401(a)(1) (2007).
42 U.S.C. § 7401(a)(1) (2007).
31
42 U.S.C. § 7401(a)(2) (2007).
32
42 U.S.C. § 7401(a)(2) (2007).
33
42 U.S.C. § 7401(b)(1),(2),(3),(4) (2007).
34
Clean Air Act 42 U.S.C. § 7411 (2007).
35
42 U.S.C. §§ 7409, 7410. (2007).
30
technology for limiting pollution.36 These requirements applied to both newly constructed
sources of pollution and those sources undergoing modification.37 “Modification” was defined
in the NSPS amendments of 1970 as
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 emitted.38
The 1970 amendment notably speaks to the overall ‘amount’ of pollution rather than focusing on
the short-term increased rate of pollution.
The EPA’s 1975 regulations, which implemented the NSPS, identified a “modification”
as “any operational or physical change to an existing facility which results in an increase in the
emission rate to the atmosphere of any pollutant to which a standard applies.”39 The regulations
continued to define ‘emission rate’ as “kg/hr of any pollutant discharged into the atmosphere for
which a standard is applicable.”40 Within the EPA regulations definition, there is a natural
inference of “modification” as being a change that increases the ‘emission rate.’ The same
regulations, however, later offer a different definition of “modification:”
Modification means any physical change in, or change in the method of operation
of, an existing facility which increases the amount of any air pollutant (to which a
standard applies) emitted into the atmosphere by that facility.41
There is no explanation in the NSPS indicating why the different meanings of ‘modification’
appear in the same document.
36
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837, 846.
Clean Air Act 42 U.S.C. § 7411 (a)(2) (2007).
38
Clean Air Act 42 U.S.C. § 7411 (a)(4) (2007). Other relevant statutory definitions under NSPS are: “standard of
performance,” “new source,” “stationary source,” “owner or operator,” “existing source” and “technological system
of continuous emission reduction.” Clean Air Act 42 U.S.C. § 7411(a)(1) to (7) (2007).
39
40 CFR § 60.14(b).
40
40 CFR 60.14(b).
41
40 CFR § 60.2(h); see also New York v. EPA, 413 F.3d 3, 11-12 (C.A.D.C.2005).
37
The Clean Air Act Amendments of 1977 sought to bolster NSPS by including PSD
provisions.42 The amendments required a PSD permit before the commencement of construction
on a major emitting facility in an area covered by the scheme.43 The PSD required EPA approval
of both the applicants and their projects.44 Although PSD permits were originally required only
for newly constructed facilities, a technical amendment brought modifications to existing
facilities within the scope the PSD scheme.45 Under the new statutory regulations,
“modification” was defined as
any physical change in, or change in the method of operation of, a stationary
source which increases the emission rate of any pollutant for which a national
standard has been promulgated.46
This definition notably contained the phrase “emission rate” as opposed to an overall increase in
the amount of emissions.
In 1980, the EPA again modified the PSD regulations.47 This time, the application of
PSD review of modified sources was limited to “major modifications.”48 The new regulations
defined “major modifications” as
any physical change in or change in the method of operation of a major stationary
source that would result in: a significant emissions increase of a regulated NSR
pollutant; and a significant net emissions increase of that pollutant from the major
stationary source.49
Further, the regulations defined “significant emissions increase” as “any increase in actual
emissions from a particular physical change or change in method of operation, net of other
42
91 Stat. 685.
42 U.S.C. § 7475(a) (2007).
44
42 U.S.C. § 7475 (2007).
45
91 Stat. 1402.
46
39 Fed.Reg. 42514.
47
40 CFR 51.66(b)(2)(i) (1987).
48
40 CFR 51.166(b)(2)(i) (1987).
49
40 CFR 51.166(b)(2)(i) (1987).
43
contemporaneous increases and decreases in actual emissions at the source.”50 ‘Actual
emissions’ were measured in tons per year, over at least a two-year period.51 Additionally, under
the PSD changes, actual emission rates were to be calculated using the production rates and the
unit’s actual operating hours.52 Finally, the term “significant” was expressed in terms of tons (of
pollutant emitted) per year.53
The PSD amendments provided that an operational change which consisted only of an
increase in the hours of operation or in the rate of manufacture would not generally constitute a
physical change or change in the method of operation.54 When the language of the PSD
amendments are parsed, the statutory provisions of the PSD amendments do not require a permit
for an existing facility which increased only the hours of operation.55 Such a change would not
be considered a major modification unless that change resulted in a significant increase in
pollution emitted.56
IV. PROCEDURAL HISTORY
The United States brought suit against Duke in 2000, claiming that Duke violated the
PSD provisions by operating without obtaining the proper permits.57 Environmental Defense,
North Carolina Sierra Club, and North Carolina Public Interest Research Group Citizen
Lobby/Education Fund intervened and joined the United States as plaintiffs, charging similar
50
40 CFR 51.166(b)(2)(iii)(f).
40 CFR 51.166(b)(21)(ii).
52
40 CFR 51.166(b)(21)(ii).
53
40 CFR 51.166(b)(23)(i).
54
40 CFR 51.166(b)(2)(iii)(f).
55
40 CFR 51.166(b)(2)(iii)(f).
56
40 CFR 51.166(b)(2)(iii)(f).
57
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
51
violations.58 Duke moved for summary judgment on the ground that a PSD permit was never
required, due to the fact that none of its plants increased the hourly rate of emission.59 The
District Court of North Carolina sided with Duke.60 The court concluded that a “major
modification” can occur only if the project increases the hourly rate of emissions.61 To aid in its
interpretation of the PSD regulations, the district court cited a 1981 letter and memorandum
written by EPA’s Director of the Division of Stationary Source Enforcement, Edward E. Reich.62
Environmental Defense conceded that no increase in the hourly rate of emissions had
occurred, but argued that the increase in active pollution-generating hours constituted a major
modification.63 The District Court entered summary judgment for Duke on all claims.64 The
court’s decision indicated that short-term emission rate increases were necessary for a major
modification to have taken place.
Environmental Defense appealed to the Fourth Circuit Court of Appeals.65 The Fourth
Circuit affirmed, but on different grounds.66 The court concluded that the term ‘modification’
was used by the legislature in both the PSD and NSPS.67 According to the court, since the NSPS
required the hourly rate of emissions to increase in order for a major modification to take place,
58
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
60
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
61
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
62
United States v. Duke Energy Corp., 278 F.Supp.2d 619, 640-641 (M.D.N.C.2003).
[T]he Clean Air Act provides in Section 169(1)(c) that for PSD purposes the term modification
shall be defined as that term is defined in Section 111(a) of the Act relating to NSPS. EPA has
interpreted this to mean that for PSD purposes Congress intended the term modification to include
all exemptions included in the NSPS regulations promulgated under Section 111 of the Act prior
to the date of enactment of Section 169. (Mem. from Reich to Davis (Apr. 21, 1983) at 2 (Duke
Energy Ex. 16).
63
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1428, 1431 (U.S. 2007).
64
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1428, 1431 (U.S. 2007).
65
United States v. Duke Energy Corp., 411 F.2d 539, 542 (C.A.4 2005).
66
United States v. Duke Energy Corp., 411 F.2d 539, 542 (C.A.4 2005).
67
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
59
the PSD’s definition of ‘modification’ should be interpreted similarly.68 The court reasoned that
if the EPA wished to abandon the hourly rate increase requirement for both the PSD and the
NSPS, it was free to do so.69 It had not done this, so the standard should not be interpreted to be
more restrictive in one instance than in another.70 The Fourth Circuit Court of Appeals’ decision
signaled that the EPA’s failure to proactively change its definition of “modification” was an
ongoing endorsement of the existing definition of the word.
Finally, Environmental Defense applied for, and was granted, certiorari to the Supreme
Court of the United States where it sought a determination of which definition of “modification”
was applicable to Duke’s plant alterations.71 Environmental Defense continued to assert that
Duke modified its operation when it changed the tube assemblies, allowing the plant to operate
and emit pollutants for more hours during the day; and even though the hourly rate of emissions
were unchanged, the changes amounted to major modifications under the PSD’s specifications.72
Duke maintained that since the changes to the plants did not increase the hourly rate of emission,
the changes were not modifications under the PSD’s specifications.73
V. ANALYSIS
A. THE DISTRICT COURT
68
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
United States v. Duke Energy Corp., 411 F.2d 539, 550-551 (C.A.4 2005).
70
United States v. Duke Energy Corp., 411 F.2d 539, 550-551 (C.A.4 2005).
71
Environmental Defense v. Duke Energy Corp., 126 S.Ct. 2019 (U.S. 2006).
72
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
73
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
69
The District Court began its analysis by recognizing that EPA, like all regulatory
agencies, should be given considerable deference regarding interpretation and administrative
implementation of applicable amendments.74 Further, the court pointed out that it is especially
important that deference be given to an administrative agency when the process of interpretation
or implementation is particularly complex.75 The District Court also recognized that the
agency’s interpretation of its own regulations should be given “controlling weight unless it is
plainly erroneous or inconsistent with the regulation.”76 Finally, the court qualified this highly
deferential standard of review by pointing out that “this standard does not give the EPA
unbridled discretion to construe the [CAA] Amendments free from oversight. [The court] must
consider whether the EPA’s construction comports with its statutory mandate and Congress’
intent in enacting clean air legislation.”77
On August 26, 2003, the District Court applied the above rules of interpretation and
created a three-faceted holding.78 First, the test for determining whether the modification made
was repair, replacement or routine maintenance was whether such a modification was routine for
the industry.79 Second, a “net emissions increase” happens only when the hourly rate of
emission increases.80 Third, Duke’s failure to obtain a PSD permit prior to its modifications
constituted a continuing violation for statute of limitations purposes.81 Accordingly, the suit was
not barred by a statutory limitation because the modifications, as determined to be in violation of
EPA’s regulations, continued past the first instance of violation.82
74
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003)(citing Chevron)
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (U.S. 1984).
76
Udall v. Tallman, 380 U.S. 1, 16-17 (1965).
77
Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901, 907 (7th Cir.1990).
78
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
79
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
80
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
81
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
82
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
75
The District Court’s major evidentiary finding was that under the PSD provisions, a “net
increase” of emissions can result only from an increase in the hourly rate of emission.83 The
court reasoned that the PSD rules required a post-project emission level calculation, and such a
calculation can be obtained only by holding the hours and conditions of operation constant. 84
Since Duke had indisputably held the hourly emission rate at its plants constant while increasing
the hours of operation, a subsequent calculation that holds the hours of operation constant shows
no net increase of emission.85 With no net increase of emission, the court held that Duke had not
violated the PSD rules by its failure to obtain a permit for a major modification.86 The District
Court entered summary judgment for Duke on all PSD related claims.87
B. THE COURT OF APPEALS
The United States appealed to the Court of Appeals for the Fourth Circuit.88 The court
affirmed, but its reasoning differed from that of the District Court.89 The Fourth Circuit focused
on the inconsistent interpretations of the word “modification” proposed by the
plaintiffs/appellants.90 The court reasoned that various interpretations of the PSD regulations are
irrelevant because Congress mandated that the statutory definition of “modification” be the same
83
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619, 640 (M.D.N.C.2003).
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619, 640 (M.D.N.C.2003).
85
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
86
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619, 653 (M.D.N.C.2003).
87
U.S. v. Duke Energy Corporation, 278 F.Supp.2d 619 (M.D.N.C.2003).
88
United States v. Duke Energy Corp., 411 F.2d 539 (C.A.4 2005).
89
United States v. Duke Energy Corp., 411 F.2d 539, 542 (C.A.4 2005).
90
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
84
in the PSD as it was in the NSPS.91 Accordingly, EPA could not choose to interpret
“modification” differently in the PSD than it did in the NSPS.92
The Fourth Circuit’s conclusion was not without precedent. The court relied on the 1981
case of Rowan Cos. v. United States.93 Rowan also involved the Government’s differing
interpretations of the key term “wages” in different tax provisions.94 In Rowan, the Supreme
Court concluded that the term “wages” must be interpreted similarly in different provisions of
the same regulation.95 The Fourth Circuit in the Duke pointed out that there is no requirement
that EPA interpret one definition of “modification” or the other for the duration of the NSPS and
PSD.96 There is a requirement, however, that the definitions be the same for both the NSPS and
the PSD.97
Since the Fourth Circuit relied on Rowan sua sponte, Environmental Defense was
allowed to inject a new issue into the case.98 Environmental Defense argued that a claim that the
1980 PSD provision exceeded statutory authority would amount to an attack on the validity of
the regulation, and could not be raised in an enforcement proceeding.99 The court rejected this
assertion on the ground that the PSD regulations can be interpreted to require an increase in the
hourly rate of emission as an element of a major modification which triggers a permit
requirement.100
C. THE SUPREME COURT
91
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
93
Rowan Cos. v. United States, 452 U.S. 247 (U.S. 1981).
94
Rowan Cos. v. United States, 452 U.S. 247 (U.S. 1981).
95
Rowan Cos. v. United States, 452 U.S. 247 (U.S. 1981).
96
United States v. Duke Energy Corp., 411 F.2d 539, 550-551 (C.A.4 2005).
97
United States v. Duke Energy Corp., 411 F.2d 539, 550-551 (C.A.4 2005).
98
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005).
99
United States v. Duke Energy Corp., 411 F.2d 539, 547 (C.A.4 2005), in reference to 42 U.S.C. § 7607(b)(2)
100
United States v. Duke Energy Corp., 411 F.2d 539, 549 (C.A.4 2005)
92
The United States Supreme Court granted certiorari on appeal by Environmental
Defense.101 In an opinion written by Justice Souter, the Supreme Court unanimously vacated the
Fourth Circuit’s decision.102 The Supreme Court’s decision included three primary
determinations.103 First, the EPA was not required to apply the same definition to the term
“modification” in the NSPS as it applied to the PSD.104 Second, the Court of Appeals’ decision
that the PSD regulations necessarily conformed to the NSPS regulations effectively invalidated
the PSD regulation.105 The PSD regulations should have comported with the CAA regulations on
judicial review of EPA regulations.106 Finally, Duke’s claim that EPA had been inconsistent in
its interpretation of its regulations and had unfairly changed course on 20 years of accepted
practices could be addressed on remand to the District Court.107
Justice Souter’s opinion focused most of its discussion on the acceptability of the EPA
assigning different meanings to the term “modification” under PSD than it did under NSPS. The
Supreme Court ultimately disagreed with the Fourth Circuit’s determination that the EPA’s
definition of “modification” needed to mirror its definition in the NSPS.108 The Supreme Court
presumes an Act uses the same definition for a term in one instance that it does in another
instance, but this presumption is rebuttable when placed in the proper context.109 In other words,
there is no requirement that an Act use the same definition of even key terms throughout the Act
itself.
101
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1428 (U.S. 2007).(concurrence by Justice
Thomas).
103
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
104
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
105
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
106
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
107
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
108
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1432 (U.S. 2007).
109
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1432 (U.S. 2007).
102
The Supreme Court relied heavily on precedent when concluding that an act may include
different meanings for the same words within the act.110 The Atlantic Cleaners case recognized
that
[T]he natural presumption that identical words used in different parts of the same
act are intended to have the same meaning … is not rigid and readily yields
whenever there is such variation in the connection in which the words are used as
reasonably to warrant the conclusion that they were employed in different parts of
the act with different intent.111
Additionally, the Court cited Robinson v. Shell Oil Co., in which the Court heavily emphasized
the importance of contextualizing important terms in statutory provisions.112 Simply put, the
presumption of definitional uniformity may be overcome after an analysis of the language
surrounding the term.
The Court combined the notion of contextualization and deference to administrative
agencies relying on United States v. Cleveland Indians Baseball.113 The case involved use of the
term “wages” in two different manners within the same tax statute.114 In Cleveland Indians, the
Internal Revenue Service was given deference regarding the “longstanding, reasonable, and
differing” interpretations of its own statutes.115 Similarly, here the Court implied that as long as
an administrative agency’s interpretations are reasonable in a given context, great deference
should be given by the courts.116
The Supreme Court discounted the claim that the PSD’s referral to the NSPS created a
presumption of uniformity in definitions of key terms.117 The Court characterized administrative
110
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1432 (U.S. 2007), referring to Atlantic
Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433 (U.S. 1932).
111
Atlantic Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433 (U.S. 1932).
112
Robinson v. Shell Oil Co., 519 U.S. 337 (U.S. 1997).
113
United States v. Cleveland Indians Baseball Co., 523 U.S. 200 (U.S. 2001).
114
United States v. Cleveland Indians Baseball Co., 523 U.S. 200 (U.S. 2001).
115
United States v. Cleveland Indians Baseball Co., 523 U.S. 200 (U.S. 2001).
116
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1433 (U.S. 2007).
117
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1433 (U.S. 2007).
agencies’ discretion as customary, and difficult to disturb.118 Ultimately, the Court reasoned that
as long as the EPA’s reasons for regulating the NSPS and PSD differently are reasonable, the
EPA’s interpretation should not be disturbed.119
The Court’s deference to the EPA’s interpretation was uncontroversial. The analysis
used to reach this deference follows the infamous “Chevron Two-Step.”120 The Chevron court
fashioned a two-step analysis to be used in interpreting regulatory statutes.121 In such cases, the
courts give considerable deference to the administrative agency which administers the statute if
Congress is silent on the issue.122
After it resolved the first issue, the Supreme Court addressed the possibility that a
“modification” necessarily involved a change in the per hour rate of emission.123 The Court
noted that the 1980 PSD regulations made no indication that any kind of increase in emission
rate was necessary for a modification to have taken place.124 Further, when emission rates are
actually mentioned in regulatory terms, the rates are annual, not hourly. 125 Not only are
emissions thresholds described in tons per year, the regulations actually mandated that emissions
118
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1433 (U.S. 2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1434 (U.S. 2007).
120
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984).
121
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984).
122
When a court reviews an agency's construction of the statute which it administers, it is
confronted with two questions. First, always, is the question whether Congress has directly spoken
to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for
the court, as well as the agency, must give effect to the unambiguously expressed intent of
Congress. If, however, the court determines Congress has not directly addressed the precise
question at issue, the court does not simply impose its own construction on the statute, as would be
necessary in the absence of an administrative interpretation. Rather, if the statute is silent or
ambiguous with respect to the specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute. The judiciary is the final authority on
issues of statutory construction and must reject administrative constructions which are contrary to
clear congressional intent. Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467
U.S. 837, 842-43 (U.S. 1984).
119
123
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1434 (U.S. 2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1434 (U.S. 2007).
125
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1434 (U.S. 2007).
124
should be calculated using the unit’s actual operating hours.126 The Supreme Court’s
recognition of these requirements severely weakened Duke’s contention that the hours of
operation should be held constant in an actual emissions calculation.127
The Supreme Court separated itself from the Fourth Circuit by pointing out that the
Fourth Circuit’s decision used the lack of an emissions rate specification as a mandate to use the
kilogram per hour rate from the NSPS, while the Supreme Court used an analysis of the
regulatory definition of “major modification” in the PSD itself.128 Quite simply, the definition of
“major modification” contains two components: “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 . . . ”129 This holding represented a departure from the shortterm emission rate increase requirement of the lower courts.
The Supreme Court conceded that the preamble to the 1980 PSD regulations explained
that in the interest of allowing companies to take advantage of favorable market conditions, the
PSD does not require a permit for a mere increase in hours of operation.130 The Court, however,
explained that the District Court took the contents of the preamble too far.131 The District Court
made the mistake of interpreting the provisions of the preamble to allow companies to increase
hours of operation without obtaining a permit, notwithstanding a physical change or change in
the method of operation.132 In fact, an increase of emissions that is due to an increase in the
hours of operation, and that is made possible by construction-related activity is not immune from
126
40 CFR 51.166(b)(21)(ii).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423 (U.S. 2007).
128
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
129
40 CFR 51.166(b)(2)(i).
130
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
131
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
132
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
127
PSD review.133 The Supreme Court based this lack of immunity on major decisions from two
different Courts of Appeals.134 The Seventh Circuit stated “If, however, a physical change
enables the plant to increase its output, then, according to the EPA’s interpretation, the exclusion
[from the scope of PSD] for merely operating the plant for longer hours is inapplicable.”135 The
Court of Appeals for the First Circuit stated “the regulatory exclusion for increases in the hours
of operation was provided to allow facilities to take advantage of fluctuating market condition,
not construction or modification.”136 Essentially, the Supreme Court determined that PSD
permits must be obtained when an increase in hours of operation results from new
construction.137
Next, the Supreme Court tackled Duke’s alternative argument. Duke argued that before a
project can become a major modification under the PSD, it must meet the NSPS definition of
modification.138 The Court held that the language of the NSPS and PSD regulations did not
support the argument. 139 The provisions of the respective regulations should be treated as
complimentary, and not as though PSD was a subset of the NSPS.140 The Court further
discounted the claim by the pointing out that such a judicial review of the regulations could have
been obtained in the Court of Appeals for the District of Columbia within 60 days of the
rulemaking.141 The Court of Appeals did not believe that its analysis reached validity and it
declined to consider its applicability.142 Given the lack of judicial reasoning or occasion to
133
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
135
Wisconsin Power Electric v. Reilly, 893 F.2d 901, 916 (C.A.7 1990).
136
Puerto Rican Cement Co. v. EPA, 889 F.2d 292, 298 (C.A.1 1989).
137
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
138
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
139
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
140
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
141
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
142
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
134
review the significance of the provision which limits challenges of this sort, the Supreme Court
declined to do so.143
The final argument that Duke presented to the Supreme Court was the notion that the
EPA’s current treatment of a PSD “modification” is inconsistent with 20 years of alternative,
more favorable treatment.144 Since the District Court had not made a conclusion on this
argument, the Supreme Court suggested that it may be raised on remand.145 The Supreme Court
then vacated the Fourth Circuit’s decision and remanded the case for further proceedings
consistent with the Supreme Court’s opinion.146
Justice Thomas joined in most of the court’s opinion, but opined that the statutory crossreference between the NSPS and the PSD mandated a single regulatory construction.147 In
support of this contention, Justice Thomas referenced Atlantic Cleaners by pointing out that
there is a presumption that the same words repeated in different parts of the same statute have the
same meaning.148 In Thomas’ estimation, this presumption had not been overcome by evidence
to the contrary.149
VI. CONCLUSION
This decision represents a resounding triumph of legislative intent over the manipulation
of technically confusing language. The expressly written intention of the CAA was to protect
143
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436 (U.S. 2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1436-1437 (U.S. 2007).
145
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1437 (U.S. 2007).
146
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1437 (U.S. 2007).
147
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1437 (U.S. 2007).
148
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1437 (U.S. 2007).
149
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1437 (U.S. 2007).
144
and enhance the quality of the Nation’s air.150 The subsequent amendments to the Act
undoubtedly shared the original Act’s intention. With all other variables held constant, an action
which drastically increases the emission of air pollutants in total offends the intentions of the
CAA.
This case introduced the possibility that Duke, even after modifying its facilities and
increasing its hours of production, had operated beyond the scope of the CAA’s regulation.151
Duke’s most significant argument centered on the proposition that it had not modified its
facilities under the applicable definitions of “modification” under the NSPS and PSD.152 Duke
argued that since its changes enabled only longer hours of production and did not enable
increases in emissions per hour, the changes did not constitute “modifications” under the PSD
provisions.153
Duke’s arguments attempted to overreach the boundaries of the PSD’s allowances for
increased hours of production.154 The preamble to the PSD provisions of 1980 intended to make
allowances for increased hours of production when market conditions favored increased
production.155 The provisions simply did not include allowances for companies that make
physical changes or changes in method of production.156 Duke inarguably made physical
changes to its plants, which allowed the plants to operate for more hours in a given day.157
Further, the changes in hours of operation were not in response to market changes.
150
42 U.S.C. § 7401(b)(1) (2007).
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, (U.S. 2007).
152
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, (U.S. 2007).
153
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, (U.S. 2007).
154
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
155
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
156
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
157
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
151
The PSD allowed permit-free changes in hours of production so that companies could
take advantage of market conditions.158 The allowances are not environmentally friendly, but
they are well-founded. For instance, if a city is supplied with electricity by two major power
companies, and one of those companies experiences production problems and is unable to supply
one-half of the city’s homes and businesses with power, a crisis is imminent. The PSD
allowances for permit-free increases in production are designed to allow the remaining power
company to take advantage of the 200 percent demand for electricity. It would be unreasonable
to require a company that promptly increases supply in the face of an immediate doubling of a
demand to obtain a PSD permit before doing so. Public policy and common sense encourage
such reactions to favorable market conditions.
Duke was not faced with such a crisis. Duke made physical changes to its plants over a
period of twelve years.159 Such changes do not suggest a reaction to favorable market
conditions. Even if the changes were in response to some ongoing market shift, the changes
involved construction, and were thus “modifications” under the PSD provisions. Thus, the
changes required Duke to obtain a permit.
The court’s decision was not only analytically proper and in accord with public policy; it
was also compelled by precedent. Chevron presented a strikingly similar dispute over a key
phrase in a regulatory statute.160 The Chevron court laid out the “Chevron Two-Step” model,
which applies to cases such as Duke.161 Although the Duke court did not dwell on the guiding
force of Chevron, it stayed true to its holding. Perhaps relying heavily on a twenty-three year-
158
Environmental Defense v. Duke Energy Corporation, 127 S.Ct. 1423, 1435 (U.S. 2007).
United States v. Duke Energy Corp., 411 F.2d 539, 544 (C.A.4 2005).
160
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984).
161
Chevron U.S.A. Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984).
159
old decision was undesirable to the court. The staying power of the “Two-Step” analysis
however, is clearly evidenced by the outcome of this dispute.
The Supreme Court came to the proper conclusion in this case. Not only does the letter of
the law dictate the disposition of the case, but public policy and the general health of the nation
are satisfied by this decision. Duke’s increases in production were not commanded by a public
crisis or a major change in market conditions. The changes were simply “modifications” as they
involved new construction and a change in method of operation. A company should not be
allowed to pollute significantly more without significantly more regulatory scrutiny. The
protection of the United States’ citizens involves the protection of our air resources. A holding
for Duke in this case would have significantly endangered the quality of America’s air, and that
is unacceptable. The holding, as it was, served the nation’s interests and health. Pollution is still
pollution, even when the lights are out.