CHAPTER 9 REGULATORY AND LITIGATION UPDATES CLEAN AIR ACT AND NATIONAL ENVIRONMENTAL POLICY ACT
| Jurisdiction | United States |
(Nov 2007)
REGULATORY AND LITIGATION UPDATES CLEAN AIR ACT AND NATIONAL ENVIRONMENTAL POLICY ACT
Hogan & Hartson LLP
Denver, Colorado
Jennifer L. Biever
Hogan & Hartson LLP
Denver, Colorado
Heather Stroud
Hogan & Hartson LLP
Denver, Colorado
I. CLEAN AIR ACT ("CAA")
A. LITIGATION
1. Supreme Court
a. Environmental Defense, et. al. v. Duke Energy Corp., 549 U.S. ___, 127 S.Ct. 1423, 167 L.Ed.2d 295 (2007)
In a PSD enforcement action against Duke Energy Corporation, the District Court entered summary judgment for Duke Energy, dismissing EPA's claims. On appeal, the Court of Appeals affirmed, albeit on a different basis. The Supreme Court granted certiorari primarily to address the questions of whether the CAA requires EPA to conform its PSD regulations on modification to the NSPS regulations and whether EPA's 1980 PSD regulations can be read to conform to the NSPS regulations. Id. at 1428. After review, the Court vacated and remanded the Court of Appeals decision. Id. at 1437. The Court held that EPA does not need to conform the PSD regulations on modification to the NSPS regulations as long as its construction falls within reasonable limits. Id. at 1434. The Court further held that the 1980 PSD regulations on modification cannot be taken to track the agency's regulatory definition under the NSPS. Id. at 1434. Because the Court of Appeals and the District Court did not analyze whether a federal court can review the validity of a regulation during an enforcement proceeding or whether EPA's current definition of modification is inconsistent with decades of accepted practice, the Court did not address these issues. Id. at 1436-7.
b. Massachusetts et. al v. Environmental Protection Agency, 549 U.S. ___, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007)
A group of private organizations petitioned EPA to regulate the emissions of gases, including carbon dioxide, from new motor vehicles. Id. at 1446. EPA denied the petition, "reasoning that (1) the Act does not authorize it to issue mandatory regulations to address global climate change, and (2) even if it had the authority to set greenhouse gas emission standard, it would have been unwise to do so at that time because a casual link between greenhouse gases and the increase in global surface air temperatures was not unequivocally established." Id. at 1441. In denying the petition, EPA also relied upon claims that EPA regulation of motor-vehicle emissions would be a piecemeal approach to climate change that would conflict with the President's comprehensive approach in addressing climate change both national and internationally. Id.
The petitioners, joined by intervener Massachusetts and other state and local governments, sought review of EPA's petition denial in the D.C. Circuit. The D.C. Circuit denied review and the Supreme Court granted certiorari. The Supreme Court held that the petitioners have standing
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to challenge EPA's denial of their rulemaking petition. Id. at 1454-1458. On the merits, the Court held that "[b]ecause greenhouse gases fit well within the Act's capacious definition of `air pollutant,' EPA has statutory authority to regulate emission of such gases from new motor vehicles. Id. at 1462; see Coke Oven Envtl. Taskforce v. EPA, No. 06-1131 (D.C.Cir. filed Apr. 7, 2006)(concerning whether the CAA gives EPA authority to regulate greenhouse gases from stationary sources). In addition, the Court addressed EPA's alternative basis for denying the petition holding that EPA cannot "avoid its statutory obligation by noting the uncertainty surrounding various features of climate change and concluding that it would therefore be better not to regulate it at this time." Id. at 1444. Based on these findings, the Court reversed the judgment of the Court of Appeals and remanded for further proceedings consistent with its opinion.
2. D.C. Circuit Court of Appeals
a. New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006).
State governments and environmental groups challenged the equipment replacement provision of EPA's rules on new source review ("NSR"), which amended the routine maintenance, repair, and replacement exclusion ("RMRR"). Id. at 883. The challenged provision expanded the exclusion for RMRR from the NSR requirements to include "the replacement of components with identical or functionally equivalent components that do not exceed 20% of the replacement value of the process unit." Id. The court vacated this provision, holding that it is contrary to the plain language of section 111(a)(4) of the CAA. Id. Section 111(a)(4) states that a stationary source is "modified" when there is "any physical change" in the method of operation which increases the amount of air pollutant emitted. Id. The court found that this provision unambiguously defines "modification" as "any physical change" increasing emissions, "necessarily including the emission-increasing equipment replacements excused from NSR by the rule." Id. at 884. The court reasoned that "[t]he definition of `modification,' therefore, does not include only physical changes that are costly or major," and vacated the equipment replacement provision. Id. at 890.
b. Environmental Defense v. EPA, Slip Opinion, No. 05-1446 (D.C. Cir. Jun. 19, 2007).
The court upheld a 2005 EPA rule preserving the existing system for setting limits for nitrogen oxide pollution in Class I areas (national parks and wilderness areas). Id. at 22. EPA promulgated this rule in response to the D.C. Circuit's 1990 decision in Environmental Defense Fund invalidating EPA's 1988 nitrous oxide rule because it failed to comply with the CAA's incremental approach, and because EPA erroneously based the increment only on the NAAQS. Id. at 2, 5-6. In the current decision, the court found that "EPA scrupulously followed the court's instructions in Environmental Defense Fund." Id. at 15. In so doing, the court agreed with EPA that the PSD program is not intended to maintain or improve air quality, but to allow a measure of deterioration as new pollution sources are built or expanded. Id. at 18.
3. Other Circuits and District Courts
a. Sierra Club v. EPA, Slip Opinion, No. 06-3907 (7th Cir. Aug. 24, 2007).
Environmental groups challenged a CAA permit issued to the Prairie State Generating Company to build a 1,500-megawatt coal-fired power plant in southern Illinois. Id. at 1-2. Their claim was that EPA violated two provisions of the CAA in issuing the permit: the "best available
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control technology" (BACT) standards (42 U.S.C. § 7475(a)(4)), and the NAAQS standard for ozone (§ 7475(a)(3)). Id. at 2. The crux of the BACT claim is that the "mine-mouth" plant will burn high-sulfur local coal, which is not the best available technology because of the availability of lower-sulfur coal from other parts of the country. Id. Essentially, the petitioners argued that if a plant is capable (with some redesign) of burning a clean fuel, then it must undergo a BACT analysis. See id. at 6.
EPA argued that BACT "does not include redesigning the plant proposed by the permit applicant," and that to require the plant to burn low-sulfur coal would be to do just that, as to convert the design from that of a mine-mouth plant to one that burned coal obtained from far away would require significant modifications. Id. at 3-4. Instead of a half-mile long conveyer belt and its interface with the plant, a rail spur and facilities for unloading coal from rail cars would be needed. Id. at 4.
The court agreed with EPA, showing considerable deference to EPA's line-drawing between BACT and a redesign of the proposed facility, noting that "it makes sense to let EPA, the author of the underlying distinction, draw it, within reason." Id. at 5. Hence, the court upheld EPA's permit issuance. Id. at 8. The court also rejected the petitioners' claim about the ozone NAAQS, holding that EPA's analysis on that issue was credible and adequate. Id. at 10.
b. United States v. Cinergy Corp., No. 99-1693 (So. D. Ind. Jun. 18, 2007).
The court granted summary judgment to the federal government, stating that Cinergy Corp. should have known it was required to get a PSD permit under the new source review requirements and install emissions controls when it modified its power plants, and that these projects were not routine maintenance exempted from the requirement. This lawsuit involves several projects at power plants in the 1980s.
Cinergy argued that it lacked "fair notice" of EPA's interpretation of its modification projects, but the court rejected this argument, finding that the evidence revealed that Cinergy had knowledge of the routine maintenance, repair, and replacement emissions standards prior to 1988, and noting further that Cinergy never sought a determination from EPA on its interpretation of routine maintenance. The court also upheld EPA's narrow definition of routine maintenance projects that are exempted from new source review. EPA's definition requires that a project be routine within an individual plant, and not routine within the industry as a whole, in order to qualify for the exemption. The court reasoned that the fact that Cinergy only made this type of modification one time shows that it was not routine maintenance, as does the cost and nature of the plant modifications.
c. Sierra Club v. Tennessee Valley Auth., Memo. Opinion, No. 3:02-cv-2279-VEH (D.N. Ala. Aug. 27, 2007).
The Sierra Club brought an action against TVA, claiming that TVA's power plant in Colbert County, Alabama, repeatedly violated Alabama's State Implementation Plan by violating the SIP's 20% opacity limitation. Id. at 2. The court granted summary judgment in favor of the Sierra Club and against TVA, finding that TVA committed 3,389 separate six-minute violations. Id. at 42. In so doing, the court followed...
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