In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-1224

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

and

STATE OF NEW YORK, et al.,

Plaintiffs-Intervenors/Appellees,

v.

CINERGY CORPORATION, et al.,

Defendants-Appellants.

____________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:99-CV-01693—Larry J. McKinney, Chief Judge.

____________

ARGUED JUNE 2, 2006—DECIDED AUGUST 17, 2006

____________

Before POSNER, EASTERBROOK, andROVNER, Circuit Judges.

POSNER, Circuit Judge. 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
2 No. 06-1224

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.”
No. 06-1224 3

§ 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). “Actual emissions as of a particular

date shall equal the average rate, in tons per year, at which

the unit actually emitted the pollutant during a two-year

period.... Actual admissions shall be calculated using the

unit’s actual operating hours, production rates, and types of

materials processed, stored, or combusted during the

selected time period.” § (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
4 No. 06-1224

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
No. 06-1224 5

one. The Clean Air Act treats old plants more leniently than

new ones because of the expense of retrofitting pollutioncontrol equipment. Wisconsin Electric Power Co. v. Reilly,

supra, 893 F.2d at 909-10. But there is an expectation that old

plants will wear out and be replaced by new ones that will

be subject to the more stringent pollution controls that the

Clean Air Act imposes on new plants. One thing that

stimulates replacement of an old plant is that aging produces more frequent breakdowns and so reduces a plant’s

hours of operation and hence its output. Cinergy’s interpretation would give the company an artificial incentive to

renovate a plant and by so doing increase the plant’s hours

of operation, rather than to replace the plant. For by going

the first route it could increase the plant’s output without

having to invest in preventing the enhanced output from

generating increased pollution.

The fact that the EPA’s interpretation avoids some bad

consequences doesn’t prove that it’s correct. But it does

scotch the argument that the interpretation produces

such outlandish consequences that it must be incorrect—

which is not to say that Cinergy’s interpretation must be

incorrect because it would produce outlandish results. It

would not, as suggested by the EPA’s having put out

for comment a proposal to change the regulation to the

hourly-emissions standard favored by Cinergy. See Prevention of New Source Deterioration, Nonattainment New Source

Review, and New Source Performance Standards: Emissions

Test for Electric Generating Units, 70 Fed. Reg. 61081 (Oct. 20,

2005). Under the existing regulation as interpreted by the

EPA, Cinergy, rather than having to choose between repair and replacement to enhance output, might decide

to buy electricity from other electric utilities, and their

plants might pollute more than Cinergy’s do. And while

Cinergy can determine a plant’s hourly rate of emissions
6 No. 06-1224

easily enough just by observing the plant in operation, it

cannot predict the plant’s annual emissions rate because

that depends on the number of hours of operation; and who

knows in advance how many hours a plant will operate? Of

course the company can always curtail those hours if it sees

itself approaching the ceiling. But that might complicate its

customer relations, as well as sacrificing significant revenue.

What is required for determining whether a construction

permit must be sought for a planned physical change in the

plant is not prescience, but merely a reasonable estimate of

the amount of additional emissions that the change will

cause; yet it may be a very difficult estimate to make.

Cinergy’s principal argument, however, has nothing to do

with the consequences of the alternative interpretations; it

is that Congress required that the regulation define “modification” as a change in the hourly emissions rate. Since the

regulation does not define it so, this seems an attack on the

validity of the regulation rather than an argument about its

meaning, and issues of validity, we pointed out, are beyond

the jurisdiction of a regional circuit to resolve. In any event,

the argument is unconvincing.

The Clean Air Act, as amended in 1970, required the EPA

to devise “New Source Performance Standards” (NSPS),

including standards for “modifications,” defined as physical

changes, or changes in operating methods, that increased

the amount of pollutants emitted. 42 U.S.C. § 7411(a)(4).

One of the standards that the agency adopted placed hourly

limits on emissions from coal-fired electric power plants.

After further amending the Act in 1977 to require the EPA

to take steps to prevent significant deterioration (PSD) in air

quality—it is pursuant to these amendments that the

regulation at issue in this case was promulgated, see 42

U.S.C. § 7477—Congress amended the amendments to
No. 06-1224 7

provide that “modifications” would bear the same meaning

in the PSD provisions as the word bore in the NSPS provisions. § 7479(2)(C); Wisconsin Electric Power Co. v. Reilly,

supra, 893 F.2d at 905; New York v. EPA, supra, 413 F.3d at 13.

But the statutory definition of “modifications” to which

Congress was referring says nothing about hourly versus

annual emissions. § 7411(a)(4). The hourly-emission standard under the New Source Performance Standards is a

creature of regulation, 40 C.F.R. §§ 60.14(a)-(b), and the

“same meaning” statutory amendment does not purport to

incorporate the agency’s regulatory definition of modifications under the New Source Performance Standards into the

provisions relating to the Prevention of Significant Deterioration program.

Cinergy’s argument was rejected by the D.C. Circuit in

New York v. EPA, supra, which upheld the EPA’s interpretation of the regulation. But it was accepted by the

Fourth Circuit in United States v. Duke Energy Corp., 411 F.3d

539, 546-51 (4th Cir. 2005), cert. granted, 126 S. Ct. 2019

(2006), creating a circuit conflict that the Supreme Court

presumably granted certiorari in the Duke Energy case to

resolve.

In so ruling, the Fourth Circuit stepped out of bounds,

as we have said in describing Cinergy’s argument. But in

any event the argument’s premise is incorrect. The same

word can mean different things in the same statute. See

General Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581,

595-96 (2004); Robinson v. Shell Oil Co., 519 U.S. 337, 342-44

(1997); Indianapolis Life Insurance Co. v. United States, 115

F.3d 430, 434-35 (7th Cir. 1997), and with specific reference to the Clean Air Act Potomac Electric Power Co. v.

EPA, 650 F.2d 509, 518 (4th Cir. 1981); Northern Plains

Resource Council v. EPA, 645 F.2d 1349, 1355-56 (9th Cir.
8 No. 06-1224

1981). “There is a natural presumption that identical

words used in different parts of the same act are intended to

have the same meaning. But the presumption is not rigid

and readily yields whenever there is such variation in the

connection in which the words are used as reasonably to

warrant the conclusion that they were employed in different

parts of the act with different intent.” Atlantic Cleaners &

Dyers, Inc. v. United States, 286 U.S. 427, 433 (1932).

Because many words have multiple meanings, the same

word might well be used in one sense in one part of a

statute and another sense in another. That is certainly

the case with a vague word like “modification,” and all

the more when the statutory provisions that contain the

word were enacted by different Congresses for different

purposes. United States ex rel. Long v. SCS Business & Technical Institute, Inc., 173 F.3d 870, 881 n. 15 (D.C. Cir. 1999). The

New Source Performance Standards part of the Act, the

older part, imposes specific technical requirements on

polluters, and it is natural therefore that “modification” in

that part of the Act should refer to physical changes in the

plant. The Prevention of Significant Deterioration part of the

Act leans toward the more modern approach of limiting

output (pollution) rather than inputs (technology), and so it

is equally natural to interpret “modification” in that part

more broadly in order to prevent opening a loophole that

would allow pollution to soar unregulated. See Potomac

Electric Power Co. v. EPA, supra, 650 F.2d at 518; Alabama

Power Co. v. Costle, 636 F.2d 323, 402 (D.C. Cir. 1980) (per

curiam).

Furthermore, a vague statutory term in a regulatory

statute can operate as a delegation to the regulatory agency

to supply meaning. Washington State Dept. of Social & Health

Services v. Guardianship Estate of Danny Keffeler, 537 US. 371,
No. 06-1224 9

389-90 (2003); Smiley v. Citibank (South Dakota), N.A., 517

U.S. 735, 739 (1996); Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 842-46 (1984). The New

Source Performance Standards and Prevention of Significant

Deterioration provisions of the Clean Air Act are at one in

defining a modification as a physical change in a plant that

results in an increase in emissions, but are silent on whether

the increase is in the hourly rate of emissions or in some

other rate. The task of deciding was left to the EPA. There

was nothing to require that it flesh out the vague statutory

meaning in the identical way in different parts of the Clean

Air Act adopted years apart and reflecting, to an extent

anyway, different philosophies of pollution control.

Cinergy’s other arguments are makeweights, and we

will not extend this opinion to discuss them.

AFFIRMED.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—8-17-06