Wednesday, April 04, 2007

EPA to Defy Supreme Court Ruling

From the Bureau of National Affairs Daily Environment Report
April 3, 2007

EPA to Proceed With Emissions Test RuleIn Face of New Source Review Decision

The Environmental Protection Agency said it is moving forward with a proposed rulemaking to narrow the definition of the emissions increases that trigger new source review emissions control requirements, despite an April 2 Supreme Court decision endorsing the agency's current broad interpretation (Environmental Defense v. Duke Energy Corp., U.S., No. 05-848, 4/2/07).

"The decision does not affect EPA's plan to proceed with the emissions test rule," EPA spokeswoman Jennifer Wood told BNA April 2.

The Supreme Court unanimously upheld EPA's current definition of the emissions increases that trigger new source review requirements for power plants and other major sources to install modern pollution controls when they make plant modifications that increase emissions.
Since 1980, EPA regulations have defined emissions increases as an increase in a plant's actual emissions measured on an annual basis.

The Supreme Court's ruling April 2 overturned a decision by the U.S. Court of Appeals for the Fourth Circuit, which had held that emissions increases must be defined narrowly as an increase in a plant's hourly emissions rate (United States v. Duke Energy Corp., 4th Cir., No. 04-1763, 6/15/05).

Under the Fourth Circuit ruling, new source review would have applied only when a modification increased a plant's production capacity. Overhauls that extended a plant's useful life would not have been subject to new source review.

The Fourth Circuit decision stopped an EPA enforcement action against Duke Energy Corp., alleging new source review violations at its power plants. A Supreme Court ruling in favor of Duke Energy would have shut down several other new source review cases filed by the federal government against power companies in 1999 and 2000.

Discretion Left to Agency

Kevin Gaynor, an attorney with Vinson & Elkins, told BNA that the Fourth Circuit decision was a "de facto invalidation of EPA regulations" that the court had no right to address. "That's why there were nine votes on the Supreme Court," he said. However, Gaynor said, the Supreme Court decision "left open agency's right to change the regulation."

Even though it was fighting the hourly emissions test in court, EPA proposed a rule in 2005 that would apply the hourly rate emissions increase test to new modifications at power plants. In addition, EPA already is applying the test in deciding whether to pursue additional new source review cases against power companies (60 DEN A-1, 3/29/07 ).

EPA said it was proposing the change in part because of the Fourth Circuit's Duke Energy decision.

Scott Segal, director of a utility group called the Electric Reliability Coordinating Council, told BNA that the Supreme Court ruling puts the emissions test proposal on firmer ground.

"Justice Souter is very clear; the Fourth Circuit erred when it asserted that the statute placed limits on the EPA's discretion in interpreting the appropriate basis for measuring emissions rate," Segal said. "This same discretion should actually place prospective interpretative rulemaking on firmer ground."

'Strong Message' to EPA

John Walke, director of clean air programs at the Natural Resources Defense Council, told BNA that while "I don't read the opinion to be dispositive in either way, I think it should send a very strong message to EPA that the [new source review] program should regulate air pollution based annual emissions and not hourly emissions."

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