[Dave Heal's] Observations & Reports

Wachoo know about Duke Energy?

Being both a dabbler in environmental law (reading, not doing) and a massive Criterion Collection fan, I’m somewhat ashamed to admit that it took me until a few months ago to realize that the company profiled in Harlan County U.S.A., Barbara Kopple’s fantastic documentary about a protracted coal miners’ strike in rural Kentucky that turned violent, and the Duke Energy of Environmental Defense Fund v. Duke Energy, are one and the same. If you haven’t seen the movie, it’s now streaming on Netflix. Also, if you’re one of the jagweeds that subscribes to Hulu Plus, you’re about to get access to the entire Criterion Collection. Joke’s on the rest of us, I guess. Although, knowing Hulu, your “Plus” subscription will include a mandatory viewing of the entire credit sequence at 1/100 speed before the movie starts. And after it ends. And in between the lines for the production manager and the first assistant director you’ll be forced to watch the entirety of http://www.rottentomatoes.com/m/brown_bunny/”>The Brown Bunny or else your computer will melt and the melting computer will kill you.

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What’s the big deal about EDF v. Duke Energy, you say? Well, telling that story requires a bit of background on The Clean Air Act (1970), the law that heralded the beginning of America’s Golden Age of environmental regulation, which is a thing I actually didn’t make up and runs broadly from the 1970s to the late 80s/early 90s (the 1990 amendments to the CAA were the last major environmental legislation enacted in the US).

The Clean Air Act is important because it is arguably the first environmental law with the express goal of protecting human, not merely environmental, health. Its declared purpose is to “protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare […]” In 1977, Congress amended the CAA to attempt to give the EPA greater authority to maintain air quality. The amendments required newly constructed sources of pollution to obtain permits that would ensure compliance with the national air quality standards (NAAQs!) promulgated in Title I of the original Act. This New Source Review (NSR) was the subject of the case brought by the EDF, EPA and others against Duke Energy.

From the opening paragraph of the opinion by Justice Souter:

In the 1970s, Congress added two air pollution control schemes to the Clean Air Act: New Source Performance Standards (NSPS) and Prevention of Significant Deterioration (PSD), each of them covering modified, as well as new, stationary sources of air pollution. The NSPS provisions define the term “modification,” 42 U.S.C. § 7411(a)(4), while the PSD provisions use that word “as defined in” NSPS [emphasis added], § 7479(2)(C).

Wait, don’t fall asleep, this is actually kind of interesting! So the US sued Duke Energy, accusing them of, inter alia, violating the PSD scheme/provision of the CAA. Between 1988 and 2000 Duke had made 29 modifications to its coal-fired electricity-generating doohickeys in order to extend the life of the units and allow them to run longer each day. The important point being that the changes did nothing to increase the hourly rate of emissions. But because they allowed the units to run longer each day, this obviously increased the amount of pollution emitted each day, fortnight, year, etc.

But the PSD regulations issued in 1980 by the EPA said that a power company has to obtain a permit (which Duke did not do) every time it makes a physical change that leads to a significant net emissions increase. More from the Court’s opinion:

First, the regulations specified that an operational change consisting merely of “[a]n increase in the hours of operation or in the production rate” would not generally constitute a “physical change or change in the method of operation.” § 51.166(b)(2)(iii)(f). For purposes of a PSD permit, that is, such an operational change would not amount to a “modification” as the Act defines it.

Second, the PSD regulations defined a “net emissions increase” as “[a]ny increase in actual emissions from a particular physical change or change in the method of operation,” net of other contemporaneous “increases and decreases in actual emissions at the source. “Actual emissions” were defined to “equal the average rate, in tons per year, at which the unit actually emitted the pollutant during a two-year period which precedes the particular date and which is representative of normal source operation.” § 51.166(b)(21)(ii). “[A]ctual emissions” were to be “calculated using the unit’s actual operating hours [and] production rates.” Ibid.

Third, the term “significant” was defined as “a rate of emissions that would equal or exceed” one or another enumerated threshold, each expressed in “tons per year.” § 51.166(b)(23)(i).

And the Court’s summary of these three regulations:

(a) The Act defines modification of a stationary source of a pollutant as a physical change to it, or a change in the method of its operation, that increases the amount of a pollutant discharged or emits a new one.

(b) EPA’s NSPS regulations require a source to use the best available pollution-limiting technology only when a modification would increase the rate of discharge of pollutants measured in kilograms per hour.

(c) EPA’s 1980 PSD regulations require a permit for a modification (with the same statutory definition) only when it is a major one and only when it would increase the actual annual emission of a pollutant above the actual average for the two prior years.

So, to review, the NSPS definition of a “modification” requiring a permit refers to hourly emissions, which the Duke Energy upgrades did not change. The PSD definition of “modification” is defined by a cross-reference to the NSPS definition but also, as we saw above, refers to an annual “net emissions increase.” The part of the Clean Air Act at issue, 7411(a)(4), doesn’t refer to time at all. The annual v. hourly debate is/was entirely one of the EPA’s regulatory gloss. Duke Energy, it seems to me, actually had a reasonable case that this is confusing as hell. Certainly it was the kind of case that I would not have predicted would lose unanimously in the Supreme Court.

There is a cross-reference in the definition, so it doesn’t seem entirely clear to me that the EPA can change the definition of what kind of pollution increase makes something a modification without addressing the cross-referenced definition, which the EPA has explicitly said refers to hourly emissions. The Court ruled against Duke on this particular argument by noting that the different regulatory programs involved require or at least permit different interpretations of the same words. They also said that the language of the cross-reference, which says that “construction […] includes the modification (as defined in 7411(a)) of any source or facility” is inclusive and not exclusive. Essentially, it doesn’t say “shall be limited to.”

Although the Court ultimately skirted the issue of how the EPA should determine whether something is routine maintenance, it did essentially ratify the EPA’s broad power to implement and enforce the New Source Review program, which you may have never heard about but is a rather big weapon in the government’s fight against air pollution.

Now that I’ve saved you the time of having to read the opinion for yourself (unless you’re the kind of person that reads entire legal opinions), head on over to Netflix and watch the movie about Duke Energy’s more evil and cynical side. I promise you it’s more interesting than New Source Review. It’s even more interesting than the Hollywoodized trailer below.