                                                                                                                           Opinions of the United
1999 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-3-1999

Duquesne Light Co v. EPA
Precedential or Non-Precedential:

Docket 98-3071




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Filed February 3, 1999

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NO. 98-3071

DUQUESNE LIGHT CO.,
       Petitioner

v.

UNITED STATES ENVIRONMENTAL PROTECTION
AGENCY,
       Respondent

COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF
ENVIRONMENTAL PROTECTION,
       Intervenor-Respondent

On Petition for Review of
Environmental Protection Agency

Submitted Under Third Circuit LAR 34.1(a)
January 25, 1999

Before: SLOVITER, McKEE and RENDELL, Circuit Judges

(Filed February 3, 1999)

       John P. Proctor
       Margaret A. Hill
       Andrew H. Leskovsek
       Washington, D.C. 20005

        Attorneys 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. 20026

        Attorneys for Respondent

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

        Attorneys for Intervenor-
        Respondent

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 afinal rule of
the United States Environmental Protection Agency ("EPA")
approving, pursuant to section 110 of the Clean Air Act, 42
U.S.C. S 7410, a revision to the New Source Review of the
State Implementation Plan of the Commonwealth of
Pennsylvania. We have jurisdiction to review suchfinal
agency actions pursuant to section 307(b) of the Clean Air
Act, 42 U.S.C. S 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, 118 S. Ct. 1003, 1012-13 (1998). However, to
understand EPA's contention that Duquesne cannot meet

                               2
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.
S 7410. The SIP must specify emission limitations and other
measures necessary for that region to meet and maintain
the required NAAQS. Id. S 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. S 7410(k)(3);
see also Union Elec. Co. v. EPA, 427 U.S. 246, 265 (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. S 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. S 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. S 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

                               3
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.
S 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., shut ting down or
modernizing polluting equipment) and (2) a baselin e 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. S 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 S 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, 2-year period

                               4
occurring within the preceding 5 calendar years. Id.
S 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 Environmental Quality Board expressly
found the New Source Review rules necessary to achieve or
maintain NAAQS, state law authorized the adoption of rules
more stringent than the federal minimum.1 Duquesne
alleges in its Petition for Review that (1) EPA ac ted
arbitrarily, capriciously, and contrary to law in approving
Pennsylvania's definition of "actual emissions" without
requiring a demonstration of stringency, and (2) EPA
violated the Administrative Procedure Act in failing to
respond reasonably to Duquesne's comments regarding the
Pennsylvania definition.

With this background before us, we turn to consider
Duquesne's standing. The constitutional standing inquiry
requires a three-fold showing: the party asserting
jurisdiction must demonstrate (1) an "injury in fact,"
(2) that the injury is "fairly traceable" to the action or
actions complained of, and (3) that the injury wil l likely be
redressed by a favorable decision. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-561 (1992).
_________________________________________________________________

1. Duquesne has filed a request for administrative reconsideration of
EPA's final approval of the revised SIP. This request, which is pending,
does not affect the finality of the action for purposes of judicial
review.
See 42 U.S.C. S 7607(b).

                               5
There is no serious question with respect to Duquesne's
injury-in-fact. Duquesne has come to court complaining
that it will lose ERCs as a result of the EPAs approval of the
PDEP's action. These ERCs are of tangible value to
Duquesne; they would permit Duquesne to operate less
expensively, and they are even fungible. Hence, Duquesne
has met the first requirement for standing, inasmuch as
the loss of valuable credits constitutes an imminent
concrete injury.

Duquesne's claim to jurisdiction, however, founders on
the other two prongs of the standing test: causation and
redressability. The causation requirement is only satisfied
where the injury is "fairly traceable to the challenged action
of the defendant, and not the result of the independent
action of some third party not before the court." Bennett v.
Spear, 520 U.S. 154, 167 (1997). In this case, Duquesne's
injury is manifestly the product of the independent action
of a third party -- Pennsylvania's Department of
Environmental Protection. It is PDEP's action -- redefining
the SIP in such a way that Duquesne may not receive ERCs
for its dormant plant -- that results in the reduction of
credits below the level that Duquesne urges would be the
result if the Pennsylvania definition did not go beyond the
minimum level of stringency required by federal law.

However, the EPA, whose action in approving the plan
forms the asserted basis for federal jurisdiction here, only
has power to disallow state plans that fail to be stringent
enough -- that is, plans that fall below the level of
stringency provided by federal law. See 42 U.S.C. S 7416
("[N]othing in this chapter shall preclude or deny the right
of any State or political subdivision thereof to adopt or
enforce (1) any standard or limitation respecting emissions
of air pollutants or (2) any requirement respectin g control
or abatement of air pollution; except that if an emission
standard or limitation is in effect under an applicable
implementation plan . . . such State or political subdivision
may not adopt or enforce any emission standard or
limitation which is less stringent than the standard or
limitation under such plan or section."). EPA thus has no
power to require Pennsylvania to make its plan the same as
the federal requirement, provided Pennsylvania's is more

                               6
stringent than required by the Clean Air Act; rather, EPA by
statutory directive must approve a plan when it conforms to
the federal minimum. See 42 U.S.C. S 7410(k)(3) ("[T]he
Administrator shall approve such submittal as a whole if it
meets all of the applicable requirements of this chapter.").
Therefore, the EPA's action in approving the plan is not
"fairly traceable" to the injury of which Duquesne
complains.

For similar reasons, Duquesne's claim against the EPA
fails the redressability requirement. To be "redressable" for
standing purposes, it must "be likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision." Bennett, 117 S. Ct. at 1163. It is Duquesne's
hope that it can have this action set aside by the EPA on
the ground that its stringency -- required to be at or above
the level mandated by federal law -- was not sufficiently
addressed by the EPA. But again, as the foregoing
demonstrates, EPA may not require less stringency--
which is the outcome Duquesne hopes to achieve -- in its
review of whether the definition is adequately stringent.
And, it should be added, Duquesne does not argue that the
PDEP's definition is insufficiently stringent; in fact,
Duquesne stated in its comments on the EPA's proposed
approval of the Pennsylvania New Source Review SIP that,
"PA DEP's approach is, in effect, more stringent than EPA's
definitions." App. at 718.

Consequently, Duquesne cannot through this action
secure an order from EPA or this court requiring PDEP to
make its requirements more lax. Rather, what Duquesne
seeks is to compel EPA to engage in a formalistic exercise
by conducting a fuller demonstration of the stringency of
PDEP's definition. Such a "demonstration" would be a
technical formality as the stringency of that definition is not
only apparent on the face of the definition, but also
conceded by Duquesne. At best, if Duquesne were
successful in this court, it would get a second opportunity
to convince PDEP that its definition is too strict, an exercise
that is wholly inconsistent with the asserted ground for
maintaining that the regulation was improperly approved
by EPA. Such a speculative contingency cannot support
Article III standing.

                               7
Accordingly, we will dismiss this Petition for Review for
lack of standing.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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