FERC owns more than one enforcement tool. Besides civil penalties, it can require compliance plans or disgorgement of unjust profits, or condition, suspend, or revoke market-based rate authority,...
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.
that increases emissions. 2 Under the NSPS program, dating from the 1970 CAA, 3 the EPA has adopted best-demonstrated technology standards for new and modified sources in various source categories, regardless of where those sources are located. 4 Under that program, EPA’s regulations defined the emissions increase required to trigger the NSPS for an existing source as an increase in maximum emissions capacity on an hourly basis. 5 Hence, changes affecting plant availability and reliability but not changing hourly capacity would not trigger the NSPS.
At issue in Duke Energy is whether EPA’s definition of “modification” for PSD purposes is different, triggering the requirement to install BACT when there is an expansion of an existing plant’s utilization over an annual period, such as by improvements in reliability and availability, or whether there also must be an expansion in the existing plant’s hourly emissions capacity, such as through a true production expansion. 6 Emissions of principal concern include nitrogen oxide, implicated in contributions to ozone smog pollution far down-wind, as well as formation of fine particulate matter, and sulfur dioxide, which raises concerns over health effects and with respect to formation of fine particulates and acid rain. 7
Facts and History
Duke Energy originated in December 2000 with an enforcement action in the United States District Court for the Middle District of North Carolina. 8 Duke had undertaken a project to refurbish equipment, enabling it to increase plant utilization and extend its hours of operation. 9 Longer running hours also increased annual emissions, though the hourly rate of emissions remained constant. 10 As a result, EPA argued that Duke had “modified” its plants, triggering PSD permitting requirements. 11 Duke claimed (among other things), that the projects—installing new but comparable equipment with identical hourly emissions rates—did not cause an increase in emissions because the regulations, based on the NSPS definition, required an increase in hourly capacity, not merely an increase in hours of operation. 12
The United States Court of Appeals for the Fourth Circuit agreed with Duke. 13 Relying substantially on a 1981 Supreme Court decision, 14 the Fourth Circuit held that, “when Congress itself [has] provided ‘substantially identical’ statutory definitions of a term in different statutes, the agency charged with enforcing the statutes [cannot] interpret the statutory definitions ‘differently.’” 15 The court reasoned that, because Congress provided that the definition of “modification” was incorporated by reference from NSPS to PSD, the regulatory interpretation of the term “increase” under PSD had to be the same as the definition EPA adopted for NSPS. 16 The court then said it had no choice but to conclude that the hourly rate of emissions, not annual emissions, must be the relevant metric under both programs. 17 Because Duke’s projects had not increased the hourly rate of emissions, the Fourth Circuit held that the district court had correctly resolved the case in Duke’s favor. 18
After the Fourth Circuit’s decision, two other U.S. courts of appeals reached conclusions that are in tension with, or which contradict, the Duke Energy decision. First,