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Supreme Court Decision Update - Environmental Defense v. Duke Energy Corp.

stacks.jpgToday saw two environmental opinions come down form the Supremes. In the first, Environmental Defense v. Duke Energy Corp. (PDF of the opinion), the Supremes are dealing with an issue of how to interpret statutes and EPA regulations, but on a more practical level they’re essentially looking at when electric utilities need to get permits from the EPA, ensuring that they won’t be increasing air pollution when making modifications to their plants.

QuizLaw Analysis: In what is, perhaps, a surprising move, the Supremes issue a unanimous opinion that’s pro-environment. The result of this ruling is that coal-fired power plants must meet EPA approval, and get the proper permits, prior to major modifications being made (regardless of whether or not there is an increase in the emissions/hour put out by one of the plants).

What’s the environmental law we need to worry about here? In the 70s, Congress amended the Clean Air Act by adding both New Source Performance Standards (“NSPS”) and Prevention of Significant Deterioration (“PSD”). Both amendments apply to any new stationary sources of air pollution, as well as old sources that are modified.

The provisions of the NSPS defined “modification” of a stationary source as being any physical change, or any change in the source’s method of operation, which leads to either an increase in air pollution, or the emission of a new air pollutant. A later EPA regulation clarified that a modification is any increase in the emission rate, where the emission rate is expressed by kilograms per hour.

When Congress then added the PSD provisions, an EPA procedure was setup where folks had to get a permit before they could construct a “major emitting facility,” and “construction” was defined to include any modification of an exiting facility (as “modification” is defined by the NSPS).

The EPA regulations, however, treat the term “modification” different under NSPS and PSD. Under NSPS, a regulated modification is where there is an increase of pollutants, measured in kilograms per hours, as mentioned above. But under PSD, a modification only requires a permit when the modification is “major.”

As it’s boiled down by the Court’s opinion: (i) “EPA’s NSPS regulations require 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;” and (ii) EPA’s 1980 PSD regulations require a permit for a modification (with the same statutory definition) only when it is a major one and only when it would increase the actual annual emission of a pollutant above the actual average for the two prior years.”

Ok, I think I kinda get it. So what’s the background of this particular case? Well, Duke Energy Corporation has a bunch of coal-fired electric generating units in plants in North and South Carolina. Between ‘88 and 2000, Duke replaced or redesigned a bunch of the tubes used within the boilers in these units. The Feds then sued Duke in 2000, saying Duke failed to get a permit first, in violation of the PSD regulations. Several private parties, such as the North Carolina Sierra Club, joined in with the government in this lawsuit.

Duke moved for summary judgment, and its relevant argument was that the neither the tube project, nor any of its other changes, were a “major modification” because they did not increase the hourly rates of emissions, and the NSPS definition of “modification” refers to emissions/hour. The District Court bought this argument:

It reasoned that [the PSD regulations’] express exclusions of “[a]n increase in the hours of operation” from the definition of a “physical change or change in the method of operation” implied that “post-project emissions levels must be calculated assuming” pre-project hours of operation. [citation] Consequently, the District Court said, a PSD “major modification” can occur “only if the project increases the hourly rate of emissions.”

The Feds and other plaintiffs stipulated that Duke’s projects didn’t increase the hourly rate of emissions. However, they argued that the projects would result in an increased utilization of the units, and that these extra hours of operations should be considered “major modifications.” On appeal, the Fourth Circuit affirmed the District Court’s decision, although it used “somewhat different reasons.” The Fourth said that Congress had created identical definitions of “modification” for both NSPS and PSD, which requires the term to be used identically in any regulations relating to either set of provisions. Thus, modification for the purposes of PSD means an increase of the hourly rate of emissions.

So what do the Supremes have to say about it all? Well, we’ve got a unanimous opinion written by Justice Souter, although Justice Thomas declined to join one part of the opinion and wrote a concurring opinion. Souter starts (and this is the section Thomas doesn’t join) by looking at what the principles of statutory interpretation mean in this instance. He notes that these principles aren’t rigid, so while it is okay to “presume that the same term has the same meaning when it occurs here and there in a single statute, the Court of Appeals mischaracterize that presumption as ‘effectively irrebuttable.’” In other words, the same word may be understood to have different meanings in two statutes when it’s obvious that the intent was different in each situation, and this is true “even when the terms share a common statutory definition, if it is general enough.”

Souter goes on to note that even in a recent 2001 decision, the Supremes showed that there does not have to be “uniformity when resolving ambiguities in identical statutory terms.” And as for the interpretation of “modification” here, for the purposes of the PSD, Souter doesn’t see anything in the PSD legislative history which suggests that cross-referencing to NSPS meant that Congress wanted the same regulatory implementation, and that cross-reference isn’t enough “for eliminating the customary agency discretion to resolve questions about statutory definition by looking to the surroundings of the defined term, where it occurs.”

All of which means:

Absent any iron rule to ignore the reasons for regulating PSD and NSPS “modifications” differently, [the] EPA’s construction need do no more than fall within the limits of what is reasonable, as set by the [Clean Air] Act’s common definition.

So Thomas doesn’t agree with any of this? Right - he agrees with the next section, the substantive ruling on the matter, he just doesn’t think any of what Souter just said matters (more on that in a bit).

Ok, but what does all of this mean for this case? Well, Souter says that:

The Court of Appeal’s reasoning that the PSD regulations must conform to their NSPS counterparts led the court to read those PSD regulations in a way that seems to us too far a stretch for the language used. The 1980 PSD regulations on “modification” simply cannot be taken to track the agency’s regulatory definition under the NSPS.

The PSD doesn’t define “major modification” with any connection to an hourly emissions rate. In fact, there’s no reference to any measured rate at all, only a requirement that there be a change to the stationary source which results in a net increase of emissions. And where there are other references to emissions rates, the PSD discusses annual emissions, not hourly. And the PSD also has provisions that discuss actual emission as measured over time, and this “simply cannot be squared with a regime under which ‘hourly rate of emissions’ [citation] is dispositive.”

The Court goes into this in some more depth, but it basically boils down to this - the District Court and the Fourth Circuit dropped the pooch. There is nothing which says that utilities like Duke only need permits when there’s going to be an increase to the emissions on an hourly basis. So the PSD regulations can be more expansive than the NSPS regulations, requiring permits for other modifications, such as the modification made by Duke (although whether Duke actually did, in fact, need such permits will be decided on remand, but with this ruling, their increased hours of operations mean there will be an increase in total emissions, which suggests they would have needed a permit and are, therefore, in violation of the EPA regulations).

And why didn’t Thomas sign on to that one part? Well, as he explains it:

I write separately to note my disagreement with the dicta in that portion of the opinion, which states that the statutory cross-reference does not mandate a singular regulatory construction.

He thinks that the EPA cannot have different regulatory definitions of “modification” under PSD and NSPS. He thinks that the court should be applying “our usual presumption that the same words repeated in different parts of the same statute have the same meaning,” and he doesn’t think Souter overcomes this presumption.

Thomas does not seem to explain, however, why he concurs with the ultimate judgment in light of this difference of opinion, nor does he explain why he considers Souter’s discussion to be dicta. Maybe I’m bleary-eyed and missing something, but this concurring opinion seems real half-assed to me.

| Comments (1)


Great summary of a complex and fairly boring case on statutory construction. I am preparing to write an article on it and this really helped me get a basic sense for the case.