Applying the traditional rate-base concept to the new hybrid companies is where the gap between the old and the new regulatory paradigms resembles a deep schism. The current shifts in regulation...
Supreme Court RoundUP: Pivotal Cases for the Clean Air Act
How greenhouse gases and Best Available Control Technology could shape the regulatory landscape—and the environment.
The United States Supreme Court soon will decide two Clean Air Act (CAA) cases important to electric utilities: Environmental Defense v. Duke Energy Corp . (Duke Energy) and Massachusetts v. EPA (Massachusetts). The cases concern, respectively, a long-standing controversy over traditional pollutants and the issue of climate change.
Duke Energy is an enforcement case in which the Environmental Protection Agency (EPA) claimed that Duke Energy Corp. violated “Prevention of Significant Deterioration” (PSD) regulations through refurbishment projects that allegedly increased annual utilization of the plant, which the EPA says required a permit and installation of Best Available Control Technology (BACT). The court of appeals rejected EPA’s enforcement claims, cutting through what most likely has been the most controversial and longstanding regulatory battle under the CAA. Massachusetts is a regulatory challenge to EPA’s decision not to regulate emissions of greenhouse gases (GHGs) from motor vehicles under the CAA. Regulation of GHGs has taken center stage among environmental, political and legal battles.
In addition to these substantive questions concerning EPA’s regulatory power, both cases raise critical threshold “jurisdictional” questions about the courts’ role in addressing them. Duke Energy highlights the threshold question of whether the court of appeals even had the authority in an enforcement case to consider Congress’ intent in interpreting EPA’s regulations, or whether that kind of analysis could have been addressed only in a facial challenge to EPA’s regulations before the District of Columbia Circuit Court of Appeals. In Massachusetts, the threshold question is whether the state challenging EPA’s decision could show a sufficiently definite injury resulting from the decision not to regulate greenhouse gases so as to create a “case or controversy” that could be brought to court at all. These jurisdictional questions, though legalistic, might well be the only issue the court will address in either case, and could alter the role of courts in future similar disputes.
Environmental Defense v. Duke Energy Corp.
One objective of the CAA is to ensure that, when new plants are built, they are equipped with the best current technology, so that as industrial stock turns over or is refitted, lower-emissions technology gradually replaces higher-emissions equipment, thereby improving air quality, even in areas meeting national ambient air quality standards. 1 The CAA attempts to balance this objective against economic considerations by limiting requirements to obtain a PSD permit and install BACT controls to the time that plants are constructed or modified.
The controversy is about what constitutes a “modification” of an existing facility triggering the requirements for purposes of PSD. In codifying the PSD program in the 1977 amendments to the CAA, Congress defined “modification” for PSD purposes by incorporating by reference a pre-existing definition in the New Source Performance Standards (NSPS) program, which provides that a modification is a physical change in the plant