Duquesne Light Co. v. U.S. E.P.A., 98-3071

• Decision Date: 25 January 1999
• Docket Number: No. 98-3071,98-3071
• Citation: 166 F.3d 609
• Parties: 29 Envtl. L. Rep. 20,477 DUQUESNE LIGHT CO., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, Commonwealth of Pennsylvania Department of Environmental Protection, Intervenor-Respondent. . Submitted Under Third Circuit LAR 34.1(a)
• Court: U.S. Court of Appeals — Third Circuit

Page 609

166 F.3d 609

29 Envtl. L. Rep. 20,477

DUQUESNE LIGHT CO., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent,

Commonwealth of Pennsylvania Department of Environmental

Protection, Intervenor-Respondent.

No. 98-3071.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a)

Jan. 25, 1999.

Decided Feb. 3, 1999.

John P. Proctor, Margaret A. Hill, Andrew H. Leskovsek, Washington, D.C., for Petitioner.

Lois J. Scuiffer, Assistant Attorney General, Environmental Defense Section, Stephen R. Herm, United States Department of Justice, Environmental Defense Section, Washington, D.C., for Respondent.

Paul A. Tufano, Terry R. Bossert, M. Dukes Pepper, Jr., Joyce E. Epps, Commonwealth of Pennsylvania Department of Environmental Protection, for Intervenor-Respondent.

Before: SLOVITER, McKEE and RENDELL, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Before us is a Petition for Review filed by Duquesne Light Company, a Pennsylvania investor-owned electric utility in the Greater Pittsburgh area ("Duquesne"), of a final rule of the United States Environmental Protection Agency ("EPA") approving, pursuant to section 110 of the Clean Air Act, 42 U.S.C. § 7410, a revision to the New Source Review of the State Implementation Plan of the Commonwealth of Pennsylvania. We have jurisdiction to review such final agency actions pursuant to section 307(b) of the Clean Air Act, 42 U.S.C. § 7607(b).

EPA argues first that Duquesne lacks both constitutional and prudential standing. This is an issue that we must address at the outset. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 118 S.Ct. 1003, 1012-13, 140 L.Ed.2d 210 (1998). However, to understand EPA's contention that Duquesne cannot meet the causation and redressability requirements for standing, it is necessary to understand the statutory framework.

Under the Clean Air Act, EPA has the obligation to establish national ambient air quality standards ("NAAQS") for certain pollutants. Because the Act establishes a joint federal and state program to control air pollution and to protect public health, the states are required to prepare implementation plans, or SIPs, for each designated "air quality control region" within their borders. 42 U.S.C. § 7410. The SIP must specify emission limitations and other measures necessary for that region to meet and maintain the required NAAQS. Id. § 7410(a)(2)(A)-(K). Each SIP must be submitted to EPA for its review and approval. The Act requires a public notice and comment period, and the SIP must be approved if it is found to meet the minimum requirements of the Clean Air Act. 42 U.S.C. § 7410(k)(3); see also Union Elec. Co. v. EPA, 427 U.S. 246, 265, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976). The Clean Air Act expressly provides that the states may adopt more stringent air pollution control measures than the Act requires with or without EPA approval. See 42 U.S.C. § 7410(k)(3).

In 1990, the Clean Air Act was amended to address the failure of some states to meet their required NAAQS. Pursuant to the 1990 Amendments, all SIPS must contain a New Source Review program, which establishes procedures for state regulation of proposed new sources of pollutants. Id. § 7410(a)(2)(C). Further, New Source Review programs for what the EPA characterizes as "nonattainment" regions must require that the entities seeking to construct new major sources of regulated pollutants, or to make significant modifications to such existing sources, must obtain a preconstruction permit obligating them to obtain "sufficient offsetting emissions reductions" so as to represent "reasonable further progress towards attainment." Id. § 7503(a)(1)(A).

EPA has promulgated regulations regarding minimum criteria for EPA approval of New Source Review SIPs for nonattainment areas which contain a number of definitions which must be used by the states for this purpose. However, the EPA regulations also provide that a state may deviate from those definitions "only if the state specifically demonstrates that the submitted [state] definition is more stringent, or at least as stringent, in all respects as the corresponding [federal] definition...." 40 C.F.R. § 51.165(a)(1).

Duquesne has a non-operational electric generating station currently in cold-reserve status which it hopes to use to generate Emission Reduction Credits ("ERCs"). ERCs are recognized by the regulatory agencies as reductions in pollutants. ERCs are determined as the difference between (1) emissions after an entity's action (e.g., shutting down or modernizing polluting equipment) and (2) a baseline of prior "actual emissions." Although ERCs are initially assigned to the entity responsible for the reduction they may be bought and sold. Apparently, it is Duquesne's interest in preserving ERCs from its dormant plant that is the basis for its challenge to the SIP revision.

The SIP revision to which Duquesne objects relates to the definition of "actual emissions," which, as noted, form the baseline for the determination of ERCs. EPA regulations define "actual emissions" as generally equaling the average rate at which the source "actually emitted the pollutant during a two-year period which precedes the particular date and which is representative of normal source operation." 40 C.F.R. § 51.165(a)(1)(xii)(B). They further provide that "[t]he reviewing authority shall allow the use of a different time period upon a determination that it is more representative of normal source operation." Id.

The Pennsylvania New Source Review program at issue, adopted in January 1994, effects what Duquesne terms a "de facto definition" of the term "actual emissions," and what EPA prefers to refer to as "Pennsylvania's definition." In any event, Pennsylvania provides that "actual emissions or allowable emissions, whichever is lower, shall be calculated over the 2 calendar years immediately preceding the emissions reduction which generates the ERCs," 25 Pa.Code § 127.207(4)(i)(A), thus mirroring the federal scheme. Pennsylvania further provides, however, that should the reviewing agency determine that the period immediately preceding is "not representative of the normal emission rates or characteristics of the existing facility," it may specify a different, more representative, two-year period occurring within the preceding 5 calendar years. Id. § 127.207(4)(i)(B). Unlike the federal definition, this definition limits the "look-back" period.

In February 1994, the Pennsylvania Department of Environmental Protection ("PDEP") submitted the New Source Review regulations to EPA as revisions to the Pennsylvania SIP. EPA's notice of proposed rulemaking to grant limited approval was published in May 1997. During the public comment period, Duquesne complained that what it described as Pennsylvania's "de facto definition" of actual emissions was more stringent than the federal definition. It also complained that (1) contrary to its own regulations, EPA had not required Pennsylvania to demonstrate the definition's stringency, and (2) the Pennsylvania Air Pollution Control Act prohibited PDEP from promulgating a more stringent Clean Air Act-related rule. EPA responded that applicable federal regulations permit more stringent state requirements and that, because the Pennsylvania...