7th Circuit Says 4th Circuit Is "Out Of Bounds" On Air Act Ruling

Aug 17: In the U.S. Court of Appeals, Seventh Circuit, USA v. Cinergy Corp., Case No. 06-1224. U.S. EPA sued the owner of a number of coal-fired electric power plants claiming that the owner (Cinergy) had violated section 165(a) of the Clean Air Act, 42 U.S.C. § 7475(a), by physically modifying the plants without first obtaining from EPA a permit that the Agency contends is required by EPA regulation 40 C.F.R. § 52.21 for the type of modification that Cinergy made. The modifications produced increases in the nitrogen oxides and sulfur dioxide annually emitted by the plants. The Appeals Court notes, "If the EPA prevails in the suit, Cinergy will be required to retrofit the plants with costly pollution-control equipment (best available control technology). Cinergy argues that the regulation does not require modifications that do not increase the hourly rate at which a plant emits pollutants, even if the modifications increase the annual rate. The EPA argues that Cinergy is misreading the regulation. The district judge agreed with the EPA but authorized Cinergy to take an interlocutory appeal from his ruling, and the Seventh Circuit consented to take the appeal.

The Seventh Circuit said, "Cinergy’s suggested interpretation, besides not conforming well to the language of the regulation, would if adopted give a company that had a choice between making a physical modification that increased the hourly emissions rate and one that enabled an increase in the number of hours of operation an incentive to make the latter change even if that would produce a higher annual level of emissions, because it would elude the permit requirement. Cinergy’s interpretation would also distort the choice between rebuilding an old plant and replacing it with a new one."

The Appeals Court indicates that Cinergy’s argument was rejected by the D.C. Circuit in New York v. EPA, which upheld the EPA’s interpretation of the regulation. But it was accepted by the Fourth Circuit in United States v. Duke Energy Corp., 411 F.3d 539, 546-51 (4th Cir. 2005), cert. granted, 126 S. Ct. 2019 (2006), creating a circuit conflict which the Appeals Court says is the reason "the Supreme Court presumably granted certiorari in the Duke Energy case to resolve."

In its brief 9-page opinion, the Seventh Circuit says in affirming the district courts agreement with EPA's interpretation, "In so ruling, the Fourth Circuit stepped out of bounds, as we have said in describing Cinergy’s argument. But in any event the argument’s premise is incorrect... The New Source Performance Standards and Prevention of Significant Deterioration provisions of the Clean Air Act are at one in defining a modification as a physical change in a plant that results in an increase in emissions, but 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 extent anyway, different philosophies of pollution control. Cinergy’s other arguments are makeweights, and we will not extend this opinion to discuss them."

Environmental Defense issued a release hailing the decision and said, "The ruling in the government’s 'new source review' enforcement case against Cinergy firmly and explicitly rejects the flawed Fourth Circuit opinion now pending appeal in the U.S. Supreme Court’s review of the case, Environmental Defense, et al. v. Duke Energy Corporation (No. 05-848). The case is being briefed this summer and the High Court just established November 1st as the oral argument date in the Duke case. A corporate merger of Duke and Cinergy was approved in April. This pivotal decision by one of the most influential federal court of appeals in the nation sends a powerful signal that it is time to address the serious human health and environmental impacts of coal-fired power plants. The court's strong, clear decision also puts its considerable weight behind a protective interpretation of the Clean Air Act's clean up requirements for coal plants at the same time that the Supreme Court is considering a major case presenting these very questions.”

Access the complete opinion (click here). Access a release from Environmental Defense (click here). Access discussion on the SCOTUSblog (click here). Access links from the Indiana Law blog including background and the 8/29/05 district court decision (click here) the [*Air]