(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
Duke-ing It Out at the High Court: The End of New Source Review?
To what extent can the EPA force utilities to update aging fleets with expensive pollution-control technology?
of the most well-respected appellate court judges in the country—authored a recent opinion expressly disagreeing with the 4th Circuit’s decision in Duke Energy. 10 According to Vickie Patton, a senior attorney for Environmental Defense and a former attorney in the General Counsel’s office at EPA, “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 … these very questions.” 11 Judge Posner’s decision, which involved Duke subsidiary Cinergy, expressly refuted the 4th Circuit’s analysis, arguing that “the 4th Circuit stepped out of bounds” in deciding the issue. 12
Bush Administration Flip-Flopping?
In the Duke Energy case, EPA continually has flip-flopped its position on the emissions-increase issue. EPA began the case as a plaintiff, suing Duke for modifying its facility and increasing its annual emissions without adding pollution-control technology. After losing in the appellate court, though, EPA abandoned its position and now is proposing to change its nationwide rule to an hourly test. 14 Environmentalists are arguing that this is unacceptable and unquestionably will lead to a significant increase in nationwide pollution. Electric industry officials, on the other hand, posit that EPA’s new tradable emissions rules have eliminated the need for the New Source Review modification rule because these trading programs cap total nationwide emissions. In an even stranger move, EPA now is back to its original position on the emissions-increase rule in front of the Supreme Court—arguing for the annual test even though it simultaneously is proposing a nationwide hourly rule change.
The High Court Dukes It Out: The Oral Arguments
Surprisingly, Duke’s attorneys won the oral argument bout. Before the arguments, most legal scholars believed that the court would not side with Duke. After the arguments, however, the consensus changed. There is now a strong possibility that the Supreme Court will uphold the 4th Circuit’s decision.
The Supreme Court arguments were much livelier than many expected, with Chief Justice John Roberts delivering an unusually sharp jab to Donahue, the counsel for environmental petitioners. When Donahue explained in passing that the regulations at issue were “clear on their face,” Roberts couldn’t let it go. “That’s an audacious statement,” he opined. After much courtroom laughter, Justice Antonin Scalia, who seemed to side with Duke, stated that the justices had “wrestled with that for several days,” referring to the meaning of the regulations. Justice Samuel Alito then came in for the finishing below on this issue, pointing out that experts have interpreted it differently: “Doesn’t that show that they’re not clear on their face?” he asked.
Of course, there also was the “whipsaw” argument, which now has snowballed into a highly contentious issue—in fact, the argument still has environmental groups fuming. 15 Duke’s attorney, Carter Phillips, who also is managing partner of Sidley