Environmental Defense v. Duke Energy Corp. Oral Arguments

Nov 1: The United States Supreme Court heard oral arguments in a case that could force many aging industrial polluters to install up-to-date air pollution controls under the Clean Air Act's "New Source Review" provisions. The case -- Environmental Defense v. Duke Energy Corp. (Case No. 05-848) -- involves U.S. EPA lawsuit brought against Duke Energy Corp. for failing to upgrade pollution controls when undertaking major renovations at eight coal-fired power plants. Throughout the oral arguments the Justices intervened extensively with questions and comments of the attorneys.

The questions presented in the case are: (1.) Whether the Fourth Circuit's decision [U.S. v. Duke Energy Corp, June 15, 2005, Case No. 04-1763, See WIMS 6/16/05] violated Section 307(b) of the Act, which provides that national Clean Air Act regulations are subject to challenge "only" in the D.C. Circuit by petition for review filed within 60 days of their promulgation, and "shall not be subject to judicial review" in enforcement proceedings, 42 U .S.C. 7607(b); and, (2. ) Whether the Act's definition of "modification," which turns on whether there is an "increase" in emissions and which applies to both the NSPS and PSD programs, rendered unlawful EPA's longstanding regulatory test defining PSD "increases" by reference to actual, annual emissions.

The Fourth Circuit Appeals Court affirmed the district court judgment; however it said for "somewhat different reasons than those relied on by the district court." In further explanation the Appeals Court said, "This case involves two different, but complementary provisions of the Act: the New Source Performance Standards ("NSPS") provisions, 42 U.S.C. § 7411, and the Prevention of Significant Deterioration ("PSD") provisions, 42 U.S.C. §§ 7470-92... NSPS centers on technological controls at an individual pollution-emitting apparatus, PSD fixes on the actual emissions from a site." [PSD exists primarily to prevent significant deterioration of ambient air quality in areas meeting clean air standards, while NSPS requires new sources to implement particular technologies to limit their own emissions.]

The Fourth Circuit concluded, "Congress mandated that the PSD statute incorporate the NSPS statutory definition of 'modification.' No one disputes that prior to enactment of the PSD statute, the EPA promulgated NSPS regulations that define the term "modification" so that only a project that increases a plant’s hourly rate of emissions constitutes a 'modification.' The EPA must, therefore, interpret its PSD regulations defining "modification" congruently... EPA retains its authority to amend and revise this and other regulations... As long as Congress mandates that 'modification' be defined identically in the NSPS and PSD statutes, however, EPA must interpret that term in a consistent manner in the NSPS and PSD regulations."

Environmental Defense, in its oral argument to the Supreme Court said, "The Clean Air Act requires that the owner of a major emitting facility obtain a prevention of significant deterioration permit before engaging in a modification, which is defined to include any physical change that increases the amount of any pollutant emitted by such source. Since 1980, EPA's PSD regulations have measured such increases in terms of actual emissions in tons per year."

U.S. EPA, in its oral argument said, "The court of appeals exceeded its jurisdiction and misconstrued the Clean Air Act in holding that EPA was required to define the determine 'modification' identically for the separate NSPS and PSD programs, and on the jurisdictional point I'd like to address the whipsaw question, because in fact it's quite clear that there's no whipsaw issue here for a number of reasons..."

Duke Energy, in its oral argument said, "...it seems to me it is very clear that the understanding of everyone in the industry, outside the industry, from 1980, candidly well beyond 1988 all the way up to 1999, was that these regulations didn't apply under any circumstances in the absence of an increase in the capacity. And you had to demonstrate that there would be an increase in the hourly rate of the emissions... To confirm precisely that interpretation. That's exactly why GE went to Mr. Reich and asked for a determination of applicability, and was told categorically PSD applicability is determined by evaluating any change in emissions rates caused by the conversion."

Amici Supporting Petitioners (Environmental Defense) include: State and Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air Pollution Control Officials (ALAPCO); The states of NY, CA, CT, DL, IL, IA, ME, MD, MS, MN, NH, NM, OR, RI, VT and PA; Additional states of NJ, AZ, KY, MI, WA, and DC.; various law professors; and the National Parks Conservation Association and Our Children's Earth Foundation. Amici Supporting Respondent (Duke Energy) include: American Electric Power Company, Inc., Edison Electric Institute, Southern Company, and Utility Air Regulatory Group; the Manufacturers Association Work Group including -- Alliance of Automobile Manufacturers; American Chemistry Council; American Forest & Paper Association; American Gas Association; American Petroleum Institute; Council of Industrial Boiler Owners; Interstate Natural Gas Association of America; National Association of Manufacturers; Chamber of Commerce of the United States of America; National Petrochemical & Refiners Association; National Oilseed Processors Association; Corn Refiners Association; and the National Cotton Council of America; and the Washington Legal Foundation.

Access the WIMS-EcoBizPort Special Report on Duke Energy Supreme Court & Related Activities for links to the Supreme Court docket; transcript of the oral arguments; petioners, respondent, amici briefs; the Fourth Circuit opinion; and related WIMS articles (click here). [*Air]