United States v. Duke Energy Group 411 F.3d 539 (4th Cir. 2005)
As part of the Clean Air Act, (the New Source
Performance Standards (NSPS)) EPA mandates a New Source Review (NSR)
whenever a new facility is built that intends to release pollutants.
An NSR will usually result in the new facility being
required to install expensive anti-pollution technologies.
An NSR is also triggered when an existing facility
undergoes a substantial modification, and that modification results in
higher emissions than the original design.
According to the original definition, "a source
undertakes a modification when any physical change...or change in the
method of operation...increases the amount of any air pollutant emitted
by such source."
"Routine maintenance, repair and replacement"
does not trigger an NSR. Because of this, most factories argue that
whatever work they are doing is just routine and does not rise to the
level of a 'modification.'
There was some debate on how to calculate emissions.
EPA sued ten utilities companies (including Duke), claiming
that they had in fact invested in major life-extending capital
improvements to their power plants without going through NSR.
The utilities argued that they had just performed routine
maintenance and were not required to perform a NSR.
Second, they argued that EPA had changed the standard, so
even if what they were doing was a major modification according to the
new standard, it was unfair for EPA to begin enforcing the new standard
with no notice.
Third, they argued that the word 'routine' should be interpreted
more broadly. Instead of looking at what would be routine for a specific
facility, EPA should be looking at what was the routine for the entire
Fourth, they argued that an NSR should only be triggered
when the hourly emissions rate goes up. For most of these
modifications, the amount of pollutants per hour remained the same, but
the equipment was operated more hours per day, which only increased the yearly
Older plants were shut down a lot because of maintenance
problems. When they were retrofitted with new equipment, they were able
to stay online for many more hours per year than they were able to
The Trial Court found for Duke. EPA appealed.
The Trial Court found that Duke's arguments about what
was routine in the industry was the correct standard.
The Trial Court found that NSRs should only be required
when the hourly emissions rate increases.
The Appellate Court affirmed.
The Appellate Court pointed out that the costs of going
through a NSR were estimated to be seven times the original cost to build
Duke's coal plants.
The Appellate Court looked at how EPA had interpreted the
term 'modifications' in their Prevention of Serious Deterioration Program
(PSD), and decided that in the PSD, EPA had used as per hour standard for
determining whether or not the emissions rate increased. Therefore, EPA
is bound to use that same standard in how they interpret all their
regulations, regardless of whether the regulations have anything to do
with one another!
PSD and NSPS are totally separate programs with totally
separate goals, but for some reason, the Appellate Court found that they
must both interpret the word 'modifications' the same way.
Basically, according to the Appellate Court, once EPA had
interpreted one provision of the Clean Air Act to use a per hour
standard, they could not interpret another provision of the same Act to
use a per year standard.
In 2002, EPA changed the rule, and now allows a facility
to use the highest 24-month average emission level over the previous 10
years to establish the baseline for whether or not an NSR is required.
This case was recently heard by the US Supreme Court in Environmental
Defense v. Duke Energy Group (127 S. Ct. 1423 (2007))
The US Supreme Court overturned the Appellate Court.
The US Supreme Court found that the Appellate Court
erred when it decided that the presumption that the same term has the
same meaning when referred to in two places within the same Statute is
It is presumed that they mean the same thing, but you
might be able to make an effective argument as to why they don't.
Therefore, since there is no iron rule against
regulating PSD and NSPS differently, EPA is free to interpret them
differently, so long as their construction falls within the limits of what