U.S. v. Cinergy Corp.
| Decision Date | 17 August 2006 |
| Docket Number | No. 06-1224.,06-1224. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, and State of New York, et al., Plaintiffs-Intervenors/Appellees, v. CINERGY CORPORATION, et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Robert V. Zener, Bingham McCutchen, Washington, DC, for Amicus Curiae, Indiana Manufactures Association, Inc.
Henry V. Nickel, Hunton & Williams, Washington, DC, for Amicus Curiae, Utility Air Regulatory Group.
David B. Rivkin, Baker & Hostetler, Washington, DC, for Amicus Curiae, Law Professors.
Ann Alexander, Office of the Attorney General Environmental Enforcement Division, Chicago, IL, for Amicus Curiae, State of Illinois.
Bill Lockyer, Office of the Attorney General, Sacramento, CA, for Amicus Curiae, State of California.
Carl C. Danberg, Office of the Attorney General, Wilmington, DE, for Amicus Curiae, State of Delaware.
Kelly A. Ayotte, Office of the New Hampshire Attorney General Consumer Protection Bureau, Concord, NH, for Amicus Curiae, State of New Hampshire.
G. Steven Rowe, Office of the Attorney General, August, ME, for Amicus Curiae, State of Maine.
J. Joseph Curren, Jr., Office of the Attorney General, Baltimore, MD, for Amicus Curiae, State of Maryland.
Thomas F. Reilly, Office of the Attorney General, Boston, MA, for Amicus Curiae, State of Massachusetts.
Susan Shinkman, Commonwealth of Pennsylvania, Department of Environmental Protection, Harrisburg, PA, for Amicus Curiae, State of Pennsylvania.
William H. Sorrell, Office of the Attorney General, Montpelier, VT, for Amicus Curiae, State of Vermont.
Michael A. Cardozo, Corporation Counsel of New York, Amicus Curiae, City of New York.
Richard A. Wegman, Garvey Shubert Barer, Washington, DC, for Amicus Curiae, Province of Ontario, Canada.
Melanie Shepherdson, Natural Resources Defense Council, Washington, DC, for Amicus Curiae, Natural Resources Defense Council, Inc.
Before POSNER, EASTERBROOK, and ROVNER, Circuit Judges.
The Environmental Protection Agency sued the owner of a number of coal-fired electric power plants claiming that the owner (Cinergy) had violated section 165(a) of the Clean Air Act, 42 U.S.C. § 7475(a), by physically modifying the plants without first obtaining from the EPA a permit that the agency contends is required by EPA regulation 40 C.F.R. § 52.21 for the type of modification that Cinergy made. (Other regulations are applicable to some of Cinergy's facilities but are materially identical to section 52.21, see New York v. EPA, 413 F.3d 3, 13 (D.C.Cir.2005) (per curiam), and so needn't be discussed separately.) The modifications produced increases in the nitrogen oxides and sulfur dioxide annually emitted by the plants. If the EPA prevails in the suit, Cinergy will be required to retrofit the plants with costly pollution-control equipment ("best available control technology"). § 52.21(j)(3).
Cinergy argues that the regulation does not require modifications that do not increase the hourly rate at which a plant emits pollutants, even if the modifications increase the annual rate. The EPA argues that Cinergy is misreading the regulation. The district judge agreed with the EPA but authorized Cinergy to take an interlocutory appeal from his ruling, and we have consented to take the appeal. 28 U.S.C. § 1292(b).
The validity of the regulation is not in issue, just its meaning. Only the U.S. Court of Appeals for the District of Columbia Circuit has jurisdiction to review the validity of nationally applicable regulations issued pursuant to the Clean Air Act, 42 U.S.C. § 7607(b)(1); Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901, 914 n. 6 (7th Cir.1990); Natural Resources Defense Council, Inc. v. EPA, 194 F.3d 130, 135 (D.C.Cir.1999), and 40 C.F.R. § 52.21 is such a regulation.
It requires a permit for any "major modification," defined as "any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the [Clean Air] Act." § 52.21(b)(2)(i). (All our quotations are from the regulation as it read before revisions in 2002 that are inapplicable to this proceeding and, if applicable, would not affect our analysis.) "Physical change" excludes among other things "routine maintenance, repair and replacement," which Cinergy concedes its plant modifications were not. But it also excludes "an increase in the hours of operation or in the production rate." §§ 52.21(b)(2)(iii)(a), (f). That is, merely running the plant closer to its maximum capacity is not a major modification because it does not involve either a physical change or a change in the method of operation. If, however, a physical change enables the plant to increase its output, then, according to the EPA's interpretation, the exclusion for merely operating the plant for longer hours is inapplicable.
"Net emissions increase" is defined, so far as bears on this case, as "any increase in actual emissions from a particular physical change or change in method of operation." § (b)(3)(i)(a). A "significant" net emissions increase is measured by the "rate of emissions that would equal or exceed" specified numbers of "tons per year" of the various pollutants. § (b)(23)(i). § (b)(21)(ii).
Since both the base emissions rate from which a significant increase is calculated, and the amount of the increase, are in terms of tons per year rather than per hour, the natural reading of the regulation is that any physical change or change in operating methods that increases annual emissions is covered. Cinergy argues that calculating "actual emissions . . . using . . . actual operating hours," § (b)(21)(ii), "means that an `emissions increase' is found only if the hourly rate of emissions increases as a result of physical change." But "actual operating hours" is more naturally read to mean the total number of hours that the plant is in operation. Suppose that before some physical change the plant operated an average of 18 hours a day, and the change enabled it to operate 24 hours a day. Since the regulation is concerned with the "increase in actual emissions" rather than with a potential increase in emissions, § 52.21(b)(21)(v); Wisconsin Electric Power Co. v. Reilly, supra, 893 F.2d. at 916; New York v. EPA, supra, 413 F.3d at 15, the plant could not automatically be assumed to operate 24 hours a day after the modification was made—there might not be enough demand to justify such continuous operation. But suppose a reasonable estimate was that the plant would operate an average of 20 hours a day with the modification; then, as a first approximation, a reasonable estimate of the contribution of the modification to pollution would be that the modification had increased the plant's annual emissions by about 10 percent. This estimate would determine whether the company needed a permit for the modification.
Cinergy's suggested interpretation, besides not conforming well to the language of the regulation, would if adopted give a company that had a choice between making a physical modification that increased the hourly emissions rate and one that enabled an increase in the number of hours of operation an incentive to make the latter change even if that would produce a higher annual level of emissions, because it would elude the permit requirement.
Cinergy's interpretation would also distort the choice between rebuilding an old plant and replacing it with a new one. The Clean Air Act treats old plants more leniently than new ones because of the expense of retrofitting pollution-control equipment. Wisconsin Electric Power Co. v....
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