Environmental Defense v. Duke Energy Corp.

PETITIONER: Environmental Defense et al.
RESPONDENT: Duke Energy Corporation
LOCATION: United States Court of Appeals for the Ninth Circuit

DOCKET NO.: 05-848
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 549 US 561 (2007)
GRANTED: May 15, 2006
ARGUED: Nov 01, 2006
DECIDED: Apr 02, 2007

Carter G. Phillips - argued the cause for Respondent Duke Energy Corporation
Sean H. Donahue - argued the cause for Petitioners
Thomas G. Hungar - argued the cause for Respondent United States in support of petitioners

Facts of the case

A 1977 amendment to the Clean Air Act created the Prevention of Significant Deterioration program (PSD), which requires power companies that want to make emissions-increasing modifications to their facilities to first apply for permits. Between 1988 and 2000, Duke Energy Corporation (Duke) made twenty-nine extensive improvements to its power plants without obtaining PSD permits. When the government, along with Environmental Defense and several other environmental groups, sued Duke, the company pointed to a PSD regulation explicitly defining "modification" for purposes of PSD as any change that increases the hourly rate of emissions from a facility. Duke's improvements increased the number of hours the plants remained open, and therefore also increased the total annual emissions from the plants. But since the improvements left the hourly rate of emissions unchanged, Duke argued that it did not have to obtain PSD permits. The government countered by citing the Environmental Protection Agency's current interpretation of the PSD regulations, which holds that a power company making improvements that increase the hours of operation of its plants does need to obtain a permit in all cases where construction is involved.

The District Court ruled in favor of Duke. The judge refused to rely on the EPA's current interpretation, ruling that it was inconsistent with the wording of the PSD regulations. Environmental Defense appealed to the Fourth Circuit Court of Appeals, and the Circuit Court affirmed the District Court's decision. The Fourth Circuit pointed out that the 1977 PSD amendment had taken its definition of "modification" directly from a 1975 Clean Air Act amendment concerning the New Source Performance Standards program (NSPS). In the 1975 amendment, the term "modification" explicitly excluded improvements that merely increase the hours of operation of a facility. Therefore, the Fourth Circuit held, the EPA did not have statutory authority to interpret "modification" differently for the PSD program. Environmental Defense appealed to the Supreme Court, with the added argument that the Fourth Circuit never should have heard the case, because challenges to Clean Air Act regulations can only be brought in the D.C. Cricuit.


1) Did the Fourth Circuit's decision violate the section of the Clean Air Act that provides that national Clean Air Act regulations are subject to challenge only in the D.C. Circuit?

2) Does the Clean Air Act require the EPA to interpret the term "modification" consistently in its Prevention of Significant Deterioration (PSD) provisions and New Source Performance Standards (NSPS) regulations?

Media for Environmental Defense v. Duke Energy Corp.

Audio Transcription for Oral Argument - November 01, 2006 in Environmental Defense v. Duke Energy Corp.

Audio Transcription for Opinion Announcement - April 02, 2007 in Environmental Defense v. Duke Energy Corp.

John G. Roberts, Jr.:

Justice Souter has the opinion today in case 05-848, Environmental Defense versus Duke Energy he has asked me to read the announcement for him.

This case comes to us on a Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit.

In the 1970s Congress added two air pollution controls schemes to the Clean Air Act.

New Source Performance Standards (NSPS) and Prevention of Significant Deterioration (PSD) each statutory scheme covers modified as well as new stationary sources of air pollution.

The NSPS provisions go on to define what modification means but the PSD provisions which were enacted seven years later simply used that word “as defined in” NSPS.

Over the years the environmental protection agency promulgated regulations to implement the two programs.

Those regulations implemented the common statutory definition of modification, one way for NSPS and another way for PSD.

Now this case arises from an enforcement action brought by the Federal Government against respondent Duke Energy Corporation.

Duke runs coal fired electric generating plants in North and South Carolina and the government alleged the boilers in those plants had been modified without a PSD permit.

In response Duke argued that various replacements and redesigns in its plants were not modifications for PSD purposes because they did not qualify as modifications under the NSPS regulations.

Now, with NSPS there could not be a modification requirement of permit unless the modification increases the hourly rate at which pollution could be emitted.

The government responded that PSD need not be identical to NSPS and that PSD required Duke to obtain a permit whenever a physical change enables a plant to operate longer hours and produce more pollutants.

The Court of Appeals agreed with Duke, it reasoned that NSPS regulations require an increase in the hourly emission rate before a modification can occur and that the common statutory definition of modification requires EPA to implement that term in the same way under both the NSPS and PSD regulations.

The Court of Appeals then read the PSD regulations as providing what the NSPS regulations provided.

In the supplemental appellate brief the government argued that the Court of Appeals was effectively invalidating the PSD regulations as written a form of judicial review that must generally sought in the Court of Appeals for the District of Columbia after the regulations are promulgated prepares noting that the PSD regulations at issue here were promulgated by EPA in 1980, a quarter century before the decision of the Court of Appeals in this case.

The Court of Appeals here however did not believe that the validity of the PSD regulations was at issue.

It said it was simply giving those regulations a permissible construction to align them with the NSPS counterpart.

In an opinion filed today with the clerk of the court we vacate and remand.

As an initial matter we do not view the common definition of modification in statutory NSPS and PSD provisions as a rigid mandate that EPA give that term an identical regulatory clause under both schemes nor do we think that the text of the 1980 PSD regulations can be construed inline with the NSPS counterparts.

The PSD regulations plainly do not require an increase in the hourly rate of emissions before a modification can occur.

For example the physical change that increases the plant’s annual emissions by permitting the plant to operate and thus to emit over longer daily hours can count as a modification too.

By giving the PSD regulations an impermissible construction the Court of Appeals implicitly invalidated them and this, the court could not do without first complying with the limitations that the Clean Air Act places on judicial review for validity because the Court of Appeals did not believe that invalidated the PSD regulations it did not consider the applicability or effective of those statutory limitations and we have no occasion at this point to consider this issue ourselves nor do we consider Duke’s claim that EPA’s position in this enforcement proceedings is inconsistent with the agency’s prior practice.

Neither the District Court nor the Court of Appeals in this case tackles that argument and if it is not procedural foreclosed Duke may press it on remand.

Justice Thomas has filed an opinion concurring in part.