JUSTICE SCALIA: It is a little of an exaggeration, though, to say that EPA has since the issuance of the regulations always interpreted them the way that you prefer. In fact, the director of the PSD program gave two opinions in which he took precisely the interpretation that opposing counsel took.

MR. DONAHUE: Yes, Justice Scalia. Respondent has relied heavily on two early applicability determinations.

Now Ms Powell is correct that Mr. Donohue argued that Reich and Duke were inconsistent (as I noted expressly in the original post), but he did so only after his concession, in response to the Scalia question that raised the temporal issue.

Ms. Powell’s second complaint is a result of imprecision on my part. In stating that both sides conceded that EPA had discretion to measure emissions increases by either hourly rate or annual emissions, I was referrring to Duke and EPA, not necessarily the environmental petitioners.

-Paul Gutermann

It is also simply wrong to suggest that Mr. Donahue “conceded that, given the statutory language, EPA had sufficient discretion to measure emissions increases by hourly rate or annual rate.” He conceded no such thing, and Environmental Defense’s opening and reply briefs say precisely the opposite: because the statutory PSD program uses annual pollution thresholds throughout title I of the Clean Air Act, EPA may not measure emissions increases for PSD purposes using hourly rates instead of annual rates. (Petr. Br. 15-16, 40; Reply Br. 18).

Finally, it is important to correct several important mischaracterizations by Mr. Phillips. In an exchange with Justice Breyer, Mr. Phillips attempted to distinguish the Puerto Rican Cement decision by suggesting that the units at issue in the case would have increased hourly emissions rates, thereby triggering the NSPS modification test anyway. To the contrary, then-Judge Breyer’s opinion makes clear that EPA and the court viewed the matter as a kiln modification project in which post-change emissions rates were lower than before the modification. 889 F.2d at 293. So, EPA did not find the project to have triggered NSPS.

Mr. Phillips also mischaracterized the Seventh’s Circuit WEPCO decision in attempting to distinguish the case in an exchange with Justice Ginsburg. Mr. Phillips claimed that “WEPCO was a situation where every one of the changes was a modification within the meaning of NSPS.” This is false. Of the 5 units at issue in the WEPCO case, EPA and the court found that two of the units did not involve NSPS modifications: “The agency concluded that because there would be no increase in production or emissions, NSPS would not apply to [units 2 and 3] following the renovation project.” 893 F.2d at 913. EPA did find that all 5 units involved PSD modifications. The Seventh Circuit’s decision continues to stand for the proposition that the NSPS and PSD programs measure emissions increases in a “fundamentally distinct manner” — hourly rates under NSPS versus actual annual emissions under PSD. Id. at 913.

For example, since this commentary highlights Duke Energy’s central reliance on 40 C.F.R. section 52.01(d) (not 52.01(b)) to try to import the NSPS hourly test into the PSD regulations, it’s illuminating to read what this Hunton & Williams attorney wrote in a 1988 memo: “In adding the more specific ‘major modification’ definition to section 52.21, EPA made clear that it, and not the general definition in 40 C.F.R. section 52.01(d), applies to the PSD program.” See http://www.nrdc.org/media/docs/061102a.pdf (p.3,n.77). This probably explains why Duke Energy did not even see to raise this argument in the district court or 4th Circuit — recall that this is one of the arguments Judge Posner called “makeweight” — but it does not explain Mr. Phillips’ argument to the Justices.

Much else in these materials is very revealing, but one last thing is worth mentioning since the argument touched on applicability determinations and fair notice and what’s a company to do? Following the 1988 WEPCO applicability determination, the “Edison Electric Institute Plant Life Extension Task Force” provided recommendations to its members companies. Their top recommendation is quite revealing: that “litigation not be pursued on a generic basis, because an adverse decision would be binding on all litigants and would eliminate the ability of utilities to reach flexible agreements with their respective EPA regions.”