p.1 

OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

230)11-1-10 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:02 AM Sheet 230 of 276 
P.2 

, * • 

MNS:CDG 

DJ # 90-5-2-3-1743 

U.S. Department ol Justice 

II-I-10 

Washington. D.C. 20530 

March 2, 1990 

Mr. Thomas F. Strubbe 

Clerk of the Court 

United States Court of Appeals 

for the 7th Circuit 

219 South Dearborn Street 

Chicago, Illinois 60604 

I 

i*!!r" ' 

.^. 01 nm 

r*'Vi\ 

EPAAjftJE^---

Re: Wisconsin Electric Power Company v. Reilly, 

Nos. 88-3264, 88-1339 

Dear Mr. Strubbe: 

Please find enclosed for filing on behalf of Respondents, 

EPA, e£ ai., in the above-referenced case, the original and 

twenty-six copies of Respondents' Opposition To Petitioner's 

Petition for Rehearing and Suggestion for Rehearing In Banc. 

Also-included is the original and four copies of 

Respondents' Motion for an Extension of Time to File a Petition 

for Rehearing with supporting affidavit. 

In addition, please send one stamped copy back to me, in the 

envelopes provided, of each of the above-mentioned documents for 

my files. 

Sincerely, 

Richard B. Stewart 

Assistant Attorney General 

Land £ Natural Resource Division 

By: 

Craig D. Galli , Attorney 

U.S. Department of Justic e 

Land and Natural Resources Division 

Environmental Defense Section 

10th & Pennsylvania Ave., N.W. 

Washington, D.C. 20530 

(202) 633-2285 
P.3 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

Nos. 88-3264 and 89-1339 

WISCONSIN ELECTRIC POWER COMPANY, 

Petitioner, 

v. 

WILLIAM K. REILLY, Administrator; 

United States Environmental 

Protection Agency, et al.. 

Respondents. 

RESPONDENTS' OPPOSITION TO PETITIONER'S PETITION 

FOR REHEARING AND SUGGESTION FOR REHEARING IN BANC 

OF COUNSEL: 

E. DONALD ELLIOTT 

General Counsel 

ALAN W. ECKERT 

Associate General Counsel 

MICHAEL S. WINER 

Assistant General Counsel 

U.S. Environmental Protection 

Agency 

401 M Street, S.W. 

Washington, D.C. 20460 

RICHARD B. STEWART 

Assistant Attorney General 

Land and Natural Resources Division 

CRAIG D. GALLI, Attorney 

Environmental Defense Section 

U.S. Department of Justice 

10th & Constitution Avenue, N.W. 

Washington, D.C. 20530 

GREGORY B. FOOTE 

U.S. Environmental Protection 

Agency 

Office of General Counsel 

Air and Radiation Division 

(LE-132A) 

401 M Street, S.W. 

Washington, D.C. 20460 

ROBERT J. MARTINEAU,JR 

U.S. Environmental Protection 

Agency 

Office of General Counsel 

Air and Radiation Division 

(LE-132A) 

401 M Street, S.W. 

Washington, D.C. 20460 
P.4 

- 1 -

TABLE OF CONTENTS 

Eaa£ 

INTRODUCTION 1 

ARGUMENT 5 

I . THE COURT CORRECTLY CONSTRUED THE STATUTORY 

AND REGULATORY DEFINITION OF THE TERM 

•"MODIFICATION*" 5 

A. The Court Properly Concluded That EPA's 

Interpretation Of The Statutory Term 

'Modification4' Was Reasonable And 

Properly Rejected WEPCO's 

Interpretation 5 

B. WEPCO's Statutory Construction Argument 

Constitutes A Disagreement With EPA's 

*\ "Modification" Regulation 8 

C. The Court's Decision Does Not Improperly 

Allow EPA To Expand The Coverage of NSPS 

Without Rulemaking 10 

II. THE COURT'S AFFIRMANCE OF EPA'S DECISION TO 

DENY WEPCO CREDIT FOR ITS SWITCH TO LOW 

SULFUR FUELS WAS REASONABLE AND CONSISTENT 

WITH CONGRESSIONAL INTENT 12 

CONCLUSION 15 
- ii -

TABLE OF AUTHORITIES 

Pagg 

CASES: 

Chevron U.S.A. Inc. v. NRDC. 

467 U.S. 837 (1984) 3, 7 

Eaale-Piche r Industries. Inc . v . EPA. 759 F.2d 905 

(D.C. Cir . 1985) 3 

EPA v. National Crushed Stone Ass'n. 449 U.S. 64 

(1980) 3 

Pepco v. EPA. 650 F.2d 509 (4th Cir. 1981), 

cert, denied. 455 U.S. 1016 (1982) 11 

Sierra Club v. Costle. 657 F.2d 298 

(D.C. Cir. 1981) 11 

Train v. NRDC. 421 U.S. 60 (1975) 3 

Udall v. Tallman. 380 U.S. 1 (1965) 3 

STATUTE: 

Clean Air Act: 

Section 111, 42 U.S.C. § 7411 2, 3, 13, 15 

Section 111(a), 42 U.S.C. § 7411(a) 5, 13 

Section 111(a)(1)(A)(ii), 42 U.S.C. § 

7411(a)(1)(A)(ii) 13 

Section 111(a)(2), 42 U.S.C. § 7411(a)(2) 2, 13 

Section 111(a)(4), 42 U.S.C. § 7411(a)(4) 2, 5, 14 

Section 307(b)(1), 42 U.S.C. § 7607(b)(1) 9, 11 

REGULATIONS: 

40 C.F.R. § 60.5 12 

40 C.F.R. § 60.14 2, 8 

40 C.F.R. § 60.14(e)(1) 10 

40 C.F.R. § 60.40 14 
P.6 

- iii -

FEDERAL RECTBTTffi« 

39 Fed. Reg. 36,946 (1974) a 

39 Fed. Reg. 36,948 (1974) .'.'.'.'.'.*.'.' | 

RULE: 

7th Cir. Ct. R. 40(C) 
P.7 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

NOS. 88-3264 

89-1339 

WISCONSIN ELECTRIC POWER COMPANY, 

Petitioner, 

v. 

WILLIAM K. REILLY, Administrator, 

United States Environmental 

Protection Agency, et al.. 

Respondents. 

ON PETITIONS TO REVIEW FINAL ACTION 

OF THE UNITED STATES ENVIRONMENTAL 

PROTECTION AGENCY 

RESPONDENTS' OPPOSITION TO PETITIONER'S 

PETITION FOR REHEARING AND 

SUGGESTION FOR REHEARING IN BANC 

INTRODUCTION 

Petitioner, Wisconsin Electric Power Company ("WEPCO*), has 

filed a petition for rehearing and suggestion for rehearing in 

banc in connection with this Court's decision in Wisconsin 

Electric Power Co. v. Reillv. Nos. 88-3264 & 89-1339 (7th Cir. 

Jan. 19, 1990), to be published at 893 F.2d 901. That decision 

involved WEPCO's proposed renovations to extend the life of its 

Port Washington electric power plant located near Milwaukee, 

Wisconsin. Respondents, William K. Reilly and the Environmental 

Protection Agency (-"EPA") , hereby submit this response pursuant 

to the Court's order of February 6, 1990. 
P.8 

- 2 -

WEPCO raises two principal issues in its petition for 

rehearing. The first is whether a massive renovation of several 

utility steam boilers can trigger the application of New Source 

Performance Standards ("NSPS") under section 111 of the Clean Air 

Act ("CAA"), 42 U.S.C. § 7411, where it is conceded that emission 

levels following the renovation will exceed levels prior to the 

renovation. An existing emissions source becomes subject to NSPS 

when it undertakes, inter alia, a "modification" of its facility 

within the meaning of CAA § 111(a)(2). A "modification" occurs 

when "any physical change in .. . a stationary source . . . 

increases the amount of any air pollutant. ... " 42 U.S.C. § 

7411(a)(4). EPA has promulgated regulations which essentially 

restate the statutory definition but also narrow the scope of 

coverage somewhat by exempting certain activities from the 

general definition. 40 C.F.R. § 60.14. 

The second issue is whether EPA properly construed the 

statute as prohibiting an emissions source undertaking a 

modification from exempting itself from compliance with NSPS by 

switching to cleaner fuel rather than taking other pollution 

reduction measures. Although the statute does not explicitly 

address the point, this Court concluded that its legislative 

history indicates that Congress decided fossil fuel-fired sources 

could not rely solely on cleaner fuels to comply with NSPS. Slip 

op. at 32-33. 

Although WEPCO casts its challenges in different terms, its 

real complaints are with the statute and the implementing 
P.9 

- 3 -

regulations and with this Court's application of the familiar 

principle that an agency's reasonable interpretations of the 

statute it administers and its own regulations are entitled to 

great deference.1 

This Court's decision thoroughly considered and rejected the 

same arguments set forth by WEPCO in its petition. In 

particular, that decision properly recognized the broad reach of 

the statutory term "modification" under section 111 of the CAA, 

42 U.S.C. § 7411, and accorded EPA's interpretation of the term 

proper deference after considering the statutory language, 

legislative history, agency regulations, and applicable case law. 

WEPCO totally fails to satisfy its heavy burden of demonstrating, 

under the applicable facts and law at issue, that this Court 

improperly followed the well-established precedent of according 

EPA's interpretations deference. 

1 When faced with questions of statutory interpretation, 

the Supreme Court has stated that "[i]t is by now a commonplace 

that . . . 'this Court shows great deference to the 

interpretation given the statute by the officers or agency 

charged with its administration.'" EPA v. National Crushed Stone 

Ass'n. 449 U.S. 64, 83 (1980) (quoting Udall v. Tallman. 380 U.S. 

1, 16 (1965)). This is particularly true where the decision on 

the meaning of a technical and complex statute involves 

"'reconciling conflicting policies'" committed to the agency's 

care and expertise. Chevron U.S.A. Inc. v. NRDC. 467 U.S. 837, 

844 (1984) (citation omitted). Moreover, if the statute is 

susceptible to more than one interpretation, the court must 

accept the interpretation chosen by the agency if it is 

reasonable. Id.; see Train v. NRDC*. 421 U.S. 60, 87 (1975); 

Eaale-Picher Industries. Inc. v. EPA. 759 F.2d 905, 920 (D.C. 

Cir. 1985). Such deference is even more appropriate when the 

agency is interpreting its own regulations. Udall v. Tallman. 

380 U.S. at 16. 
P.10 

- 4 -

Moreover, WEPCO certainly cannot justify its demand for a 

rehearing in banc. WEPCO does not, and cannot, allege that the 

Court's decision in this case conflicts with any decision of the 

Supreme Court, this Court, or any other court of appeals. See 

Local Rule 40(c). In addition, WEPCO fails to demonstrate how 

the decision is of "exceptional importance." Id« In its Rule 

40(c) statement, WEPCO suggests that EPA's interpretation of the 

relevant statutory provisions "potentially restricts the ability 

of every industrial facility in this country to repair or to 

replace deteriorated equipment. ... " WEPCO Pet. at 1. 

However, as this Court recognized, in determining whether 

proposed work at a facility is "routine" and therefore exempt 

from the definition of "modification," "EPA makes a case-by-case 

determination by weighing the nature, extent, purpose, frequency, 

and cost of the work, as well as other relevant factors, to 

arrive at a common-sense finding.'" Slip op. at 15. 

Accordingly, because of the case specific nature of EPA's 

determination, WEPCO's contentions as to the impact of this 

decision are greatly overstated. 

For the reasons set forth below, EPA respectfully requests 

the Court to deny WEPCO's petition. 
P.11 

- 5 -

KKQVKSVT 

I. THE COURT CORRECTLY CONSTRUED THE STATUTORY AND 

REGULATORY DEFINITION OF THE TERM "MODIFICATION" 

A. The Court Properly Concluded That EPA's Interpretation 

Of The Statutory Term "Modification" Was Reasonable And 

Properly Rejected WEPCO's Interpretation,, 

WEPCO first attacks the Court's construction of the 

statutory definition of "modification" under CAA § 111(a)(4), 42 

U.S.C. § 7411(a)(4).2 WEPCO castigates the Court for 

focus [ing] entirely on the words "any . . . change," 

and ignorfing] the remaining statutory language which 

modifies the word "change." Slip op. at 13. 

Under the plain meaning of [CAA § 111], only 

changes that create new emissions (i.e., that result in 

the release of pollutants in an amount that is greater 

than the amount "emitted" by the existing source in the 

past) are changes covered by the modification rule. 

WEPCO Pet. at 9. WEPCO therefore contends that the plain meaning 

of the term "modification" in CAA § 111(a) requires the Court to 

find that an increase in emissions occurs only when a source 

emits at a level higher than it has ever emitted at any time in 

the past. 

The Court's opinion directly addresses WEPCO's contentions 

and demonstrates the superficiality of WEPCO's arguments. 

CAA § 111(a)(4) provides: 

The term "modification" means any physical 

change in, or change in the method of 

operation of, a stationary source which 

increases the amount of any air pollutant 

emitted by such source or which results in 

the emission of any air pollutant not 

previously emitted. 

42 U.S.C. § 7411(a)(4). 
P.12 

- 6 -

Indeed, the Court went to great lengths to consider the entire 

statutory and regulatory definition of "modification" under the 

NSPS program. As the Court pointed out, it is WEPCO that has 

ignored the plain, broad language of the statute and tried to 

impose its own interpretation of what it would like the statute 

to mean. Slip op. at 10 ("What WEPCO calls 'plain' is anything 

but plain and takes the definition far beyond the words enacted 

by Congress"). 

The Court's decision with respect to the NSPS issues 

represents a well-reasoned analysis of the NSPS modification 

provisions. The Court observed that the statutory definition of 

"modification" consisted of two parts — (1) "any physical 

change" and (2) "an increase in emissions" — and that "both 

parts of this definition . . . must be satisfied before a 

replacement will be considered a 'modification.'" ____{. at 9. 

Applying the statutory definition to the facts, the Court 

concluded with little difficulty that WEPCO's "four-year program" 

of replacing steam drums and other equipment constituted a 

"'physical change.'" I__\. The Court also correctly noted that 

EPA's interpretation was consistent with the twin purposes of the 

Clean Air Act — to speed cleanup of pollution and to force 

technology. !__[. at 11-13. As such, the Court held that to adopt 

WEPCO's position would be to vitiate congressional intent in 

enacting the CAA: 

Were we to hold that the replacement of major 

generating station systems — including steam drums and 

air heaters — does not constitute a physical change 

(and is therefore not a modification), the application 
P.13 

- 7 -

of NSPS and PSD to important facilities might be 

postponed into the indefinite future. There is no 

reason to believe that such a result was intended by 

Congress. 

The development of emissions control systems is 

not furthered if operators could, without exposure to 

the standards of the 1977 Amendments, increase 

production (and pollution) through the extensive 

replacement of deteriorated generating systems. 

Id. at 11, 13. 

Next, the Court correctly held that the second statutory 

requirement, i.e.. that the physical change would result in 

increased emissions, was satisfied. The Court observed that 

"WEPCO does not dispute that its replacement program — intended 

to enable its deteriorated generators to operate at full capacity 

— will cause its emissions to increase from their current 

operating levels." Id. at 13. As such, "for purposes of the 

statutory requirement," the Court concluded that WEPCO's plant 

would "produce more emissions after the completion of the 

renovation project than the operating deteriorated plant produced 

shortly before the project was undertaken." Id,, at 14. 

WEPCO's rehearing petition demonstrates that it 

fundamentally misunderstands the basic question before the Court. 

The question was whether EPA's interpretation of the statute and 

regulations was reasonable, not whether EPA should have adopted 

WEPCO's construction of those provisions. See Chevron U.S.A. 

Inc. v. NRDC. 467 U.S. 837, 843 (1984) ("[T]he question for the 

court is whether the agency's answer is based on a permissible 

construction of the statute"); see slip op. at 7-8. The Court 
P.M 

- 8 -

properly upheld EPA's determination that WEPCO's project fell 

within "the modification provisions of the Clean Air Act 

Amendments." I£. at 14. (Indeed, it found EPA's definition more 

plausible than WEPCO's.) That WEPCO can posit another reading of 

the statute it would prefer is irrelevant. 

B. WEPCO's Statutory Construction Argument Constitutes 

A Disagreement With EPA's "Modification" Regulation. 

Despite WEPCO's efforts to portray the principal issue 

regarding the measurement of emissions increases as an issue of 

statutory construction, the Court correctly stated that "[t]he 

controversy involving WEPCO's alleged increase in emissions 

primarily concerns the regulations, not the statute." I&. at 

13.3 The Court squarely addressed and rejected WEPCO's assertion 

that the regulatory mechanism for determining the pre-renovation 

baseline was arbitrary and capricious. ££. at 22-25. The Court 

correctly did so because WEPCO's purported statutory construction 

argument is really a recasting of its argument that the original 

design capacity of the unit, not the current physical capacity of 

the unit, should be the baseline for the emissions increase 

determination. In its 1975 promulgation of 40 C.F.R. § 60.14, 

EPA squarely addressed and rejected "design capacity" as the 

proper baseline for determining an emissions increase. See EPA's 

Brief at 56; 39 Fed. Reg. 36,946, 36,948 (1974) ("'design 

3 In particular, EPA's regulations more precisely define 

what constitutes a "modification* for NSPS purposes. The Court 

noted that the regulations are actually narrower than the statute 

in that they exempt certain activities from the broader statutory 

definition of "modification." 13. at 14. 
P.15 

- 9 -

capacity' bears little relationship to the actual operating 

capacity of the facility"). The Court likewise acknowledged that 

design capacity "often sheds little light on the unit's actual 

current capacity to produce emissions." Slip op. at 21 (emphasis 

by the Court). 

EPA's underlying regulations were exclusively subject to, 

review in the District of Columbia circuit within 60 days of 

promulgation and are not reviewable in this Court some 15 years 

later. _____ CAA § 307(b)(1), 42 U.S.C. § 7607(b)(1). Rather, the 

question before the Court was whether EPA applied those 

regulations reasonably; the Court correctly found that EPA had 

done its job properly. Slip op. at 21. 

Moreover, where a unit is able to operate at design (or 

historical) capacity and the physical change does not increase 

that capacity, NSPS requirements are not triggered, as was the 

case with WEPCO Units 2 and 3. Thus, contrary to the impression 

WEPCO tries to create as to the alleged harsh economic 

consequences of EPA's decision, WEPCO would be able to undertake 

its planned significant renovation activity on these two units 

without any NSPS consequences. 

Further, WEPCO's contention that the Court's decision will 

cause a serious economic disruption to our nation's economy 

because no one will be able to "fix a leaky pipe" without 

triggering NSPS is nonsense. See WEPCO Pet. at 3-5. The Court 

was fully aware that the applicable regulations have always 

provided the exemption for routine maintenance and replacement 
P.16 

- 10 -

without triggering NSPS. See 40 C.F.R. § 60.14(e)(1); slip op. 

at 14-20. Massive undertakings such as those proposed by WEPCO 

are not routine, and would trigger NSPS i£ there was an increase 

in emissions. In any event, such proposed changes require a 

case-by-case analysis rather than a blanket "renovation" 

exemption as advanced by WEPCO. 

Finally, WEPCO repeatedly ignores the fact that an affected 

facility may always undertake some acceptable activity to "net 

out" of NSPS, i.e.. to avoid an increase in the hourly emissions 

rate. If WEPCO makes emissions reductions to offset the 

emissions rate increases that would otherwise result, the NSPS 

requirements will not be triggered. Thus, contrary to the 

assertions of WEPCO, not every renovation activity falling within 

the regulatory definition of "modification" will ultimately have 

to comply with the NSPS standards themselves.4 

C. The Court's Decision Does Not Improperly Allow EPA To 

Expand The Coverage of NSPS Without Rulemaking. 

WEPCO's contention that the Court's decision permits 

unauthorized expansion of the NSPS program also lacks merit. See 

WEPCO Pet. at 2, 12. First, WEPCO again ignores the fact that 

the statutory and regulatory modification provisions were in 

effect at the time the NSPS for power plants were promulgated. 

4 Indeed, for WEPCO, the only unit that clearly would 

trigger NSPS would be unit 5 because presently it is physically 

incapable of operating. For example, at WEPCO's units 1 and 4, 

renovations would increase hourly emissions by 29% and 11% 

respectively. WEPCO may avoid NSPS by otherwise reducing 

emissions at these units by corresponding amounts. Thus, WEPCO 

would not have to meet the 70% to 90% reduction requirement of 

the NSPS. EPA's Initial Brief at 29. 
P.17 

- 11 -

As the Court's decision recognized, EPA's determination as to 

whether there would be an emissions increase at each of the five 

units was well founded in the statutory and regulatory 

provisions. Slip op. at 20-25. WEPCO's contention then is that 

EPA did not properly consider how many existing units would 

trigger the modification provisions when the Agency promulgated 

the NSPS for utility boilers in 1979. Obviously, any defect in 

the analysis underlying that rule is not within the purview of 

this Court. CAA § 307(b)(1), 42 U.S.C. § 7607(b)(1); see PEPCO 

v. EEA, 650 F.2d 509, 513 (4th Cir. 1981) (review of 

applicability determinations under CAA § 111 does not allow 

collateral challenge to EPA regulations), cert, denied. 455 U.S. 

1016 (1982) . The NSPS for utility boilers were reviewed and 

upheld by the D.C. circuit upon promulgation. See Sierra Club v. 

Costle. 657 F.2d 298, 410 (1981). 

What WEPCO is really saying is that, as described in EPA's 

original brief, new conditions have arisen over the years in the 

utility industry such that it has become more economical to 

renovate old facilities to extend their useful life than it is to 

build an entirely new facility. See EPA's Brief at 17-19. When 

such a "life-extension" takes place, however, it will trigger 

NSPS requirements to the same extent as any other project 

involving a physical or operational change which increases 

emissions. This was true in 1979 and remains true today. There 

is nothing unique about life-extensions which requires or 

justifies separate treatment under NSPS. The test is the same 
P.18 

- 12 -

whether the physical change is a life-extension or any other type 

of physical change. 

Likewise, there is nothing in the CAA or its implementing 

regulations which requires EPA to conduct rulemaking under 

section 111 before applying the modification provisions to WEPCO. 

Rather, the NSPS regulations specifically contemplate case-bycase determinations as to whether specific activities at an 

existing facility would trigger the NSPS requirements. See 40 

C.F.R. § 60.5. That a particular activity is different than 

other physical changes or that a particular source category did 

not as a matter of historical practice undertake such renovations 

is not cause for new rulemaking. EPA simply is not required to 

engage in rulemaking to apply the general modification provisions 

to every new fact pattern that may be presented to it in the 

context of an NSPS applicability determination. Further, as was 

the case here, the source has an opportunity to seek judicial 

review of whether the application of the regulations to the facts 

of a specific case was reasonable. While WEPCO may disagree that 

the decision was reasonable, it is specious to argue that the 

applicability determination required a separate rulemaking 

proceeding. 

II. THE COURT'S AFFIRMANCE OF EPA'S DECISION TO DENY WEPCO 

CREDIT FOR ITS SWITCH TO LOW SULFUR FUELS WAS REASONABLE 

AND CONSISTENT WITH CONGRESSIONAL INTENT 

WEPCO also argues that it should be able to avoid complying 

with the NSPS requirements merely by switching to cleaner fuels. 

Specifically, WEPCO challenges EPA's refusal to permit WEPCO to 
P.19 

- 13 -

utilize lower sulfur coal in lieu of employing pollution control 

equipment and technology to prevent an increase in emissions. 

See WEPCO Pet. at 12-15. 

WEPCO's arguments concern an amendment to section 111(a) of 

the CAA which required that NSPS achieve a percentage reduction 

in emissions from certain fossil fuel-fired stationary sources. 

See CAA § 111(a)(1)(A)(ii), 42 U.S.C. § 7411(a)(1)(A)(ii). WEPCO 

contends that the Court incorrectly concluded that the political 

compromise struck by Congress requiring percentage reductions to 

be included in the NSPS for new fossil fuel-fired sources should 

apply with equal force to any existing plants that undertake 

repair or replacement work. WEPCO Pet. at 14. It further 

contends that the Court failed to address the fact that Congress 

did not change the statutory modification provision in 1977, a 

fact which WEPCO suggests supports its position on the fuel 

switching question. .Id. Thus, WEPCO comes to the illogical 

conclusion that the Court improperly allowed EPA to expand the 

scope of the 1977 amendments by not allowing fuel switching here. 

As the Court's decision makes clear in its discussion of the 

statutory provisions, section 111 defines "new source" as any 

stationary source, the construction or, modification of which is 

commenced after the publication of proposed standards of 

performance for that source category. See CAA § 111(a)(2), 42 

U.S.C. § 7411(a)(2); see slip op. at 2. As noted above, Congress 

then defined "modification" as any physical change in, or change 

in method of, operation which increases the amount of any air 
P.20 

- 14 -

pollutant emitted. Sejg CAA § 111(a)(4), 42 U.S.C. § 7411(a)(4). 

Thus, contrary to WEPCO's contention, it was clear from the 

outset that any standard of performance for "new sources" will 

affect existing facilities if they undergo a modification. 

That Congress did not change the definition of 

"modification" in 1977 when it added the percentage reduction 

requirement for fossil fuel-fired sources only bolsters the 

Court's affirmation of EPA's decision that existing sources could 

not avoid NSPS simply by burning low sulfur fuel. It does not, 

as WEPCO suggests, undermine that position. See WEPCO Pet. at 

13-14. Thus, when EPA in 1979 engaged in rulemaking to establish 

the NSPS in response to the addition of the percentage reduction 

requirement for fossil fuel-fired sources, the statutory and 

regulatory definitions of "modification" were already in place. 

WEPCO points to nothing in the 1977 amendments which required a 

change in those provisions. Had WEPCO or any other utility felt 

that modified facilities should have been treated differently 

under the utility boiler NSPS promulgated as a result of the 

addition of the percentage reduction requirement, that could have 

been addressed in the rulemaking. It could have also been the 

subject of a rulemaking petition by WEPCO to revise 40 C.F.R. § 

60.40 (NSPS for fossil fuel-fired steam generators). 

The Court properly recognized that Congress had decided not 

to allow sources to be able to switch fuels to avoid the 

installation of pollution control technology. See slip op. at 

33. This Court also recognized that Congress did not distinguish 
- 15 -

between "new sources" which commenced construction after the 

proposal of standards of performance or "new sources" which are 

modifications under CAA § 111. That decision should remain 

intact. 

CONCLUSION 

WEPCO has presented nothing in its petition that warrants 

rehearing or rehearing in banc. For the reasons set forth above, 

the petition should be denied. 

Respectfully submitted, 

RICHARD B. STEWART 

Assistant Attorney General 

Land and Natural Resources Division 

< ^ 

CRkKyt. GALL] 

U.S. Department of Justic e 

Land and Natural Resources Division 

Environmental Defense Section 

10th & Pennsylvania Ave., N.W. 

Washington, D.C. 20530 

(202) 633-2285 

7 ^CJ^, &* 6A*3TM5 Fo0t* *** 

GREGORY B. FOOTE PoboiT 

ROBERT J. MARTINEAU, JR. flAA*^**** 

U.S. Environmental Protection 

Agency 

Office of General Counsel 

401 H. Street, S.W. 

Washington, D.C. 20460 

(202) 382-7625 
P.22 

Paul J. Lambert 

Bingham, Dana & Gould 

1550 M Street, N.W. 

Washington, D.C. 20006 

Carol L. Dalcanton 

Assistant General Counsel 

Westinghouse Electric Corporation 

11 Stanwick Street 

Pittsburgh, Pennsylvania 15222 

Craig S. Harrison 

Hunton & Williams 

2000 Pennsylvania Avenue, N.W. 

Suite 9000 

Washington, D.C. 20006 

Craig €. Galli 

U.S. Department of Justice 

Land & Natural Resources Division 

Environmental Defense Section 

10th & Pennsylvania Ave., N.W. 

Room 7214 - Main Building 

Washington, D.C. 20530 

(202) 633-2285 
P.23 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

NOS. 88-3264 

89-1339 

WISCONSIN ELECTRIC POWER COMPANY, 

Petitioner, 

v. 

WILLIAM K. REILLY, Administrator. 

United states Environmental 

Protection Agency, et ai., 

Respondents. 

ON PETITIONS TO REVIEW FINAL ACTION 

OF THE UNITED STATES ENVIRONMENTAL 

PROTECTION AGENCY 

RESPONDENTS' MOTION FOR SECOND EXTENSION 

OF TIME TO FILE PETITION FOR REHEARING 

Respondents, William K. Reilly, Administrator, United States 

Environmental Protection Agency, et ai., hereby move for an 

extension of time of ten days up to and including March 15, 1990, 

to file a Petition for Rehearing. The facts which are the basis 

of this Motion did not exist prior to this time. In support of 

this Motion, attached is a supporting affidavit as required by 

Circuit Rule 26. 
P.24 

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Respectfully submitted, 

RICHARD B. STEWART 

ssistant Attorney General 

Land and Natural Resources Division 

CRAIG D. JSALLI 

U.S. Department of Justice 

Land and Natural Resources Division 

Environmental Defense Section 

10th & Pennsylvania Ave., N.W. 

Washington, D.C. 20530 

(202) 633-2285 

GREGORY B. FOOTE 

U.S. Environmental Protection 

Agency 

Office of General Counsel 

401 M. Street, S.W. 

Washington, D.C. 20460 

(202) 382-7625 
P.25 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

Nos. 88-3264 

89-1339 

WISCONSIN ELECTRIC POWER COMPANY, 

Petitioner, 

v. 

WILLIAM K. REILLY, Administrator 

United States Environmental 

Protection Agency, ___: ai., 

Respondents. 

ON PETITIONS TO REVIEW FINAL ACTION 

OF THE UNITED STATES ENVIRONMENTAL 

PROTECTION AGENCY 

AFFIDAVIT IN SUPPORT OF RESPONDENTS' 

MOTION FOR SECOND EXTENSION OF TIME 

AFFIDAVIT OF GREGORY B. FOOTE 

1. My name is Gregory B. Foote. I am a staff attorney in 

the Office of General Counsel at the U.S. Environmental 

Protection Agency ("EPA") in Washington, D.C. I have held this 

position since 1985. In this capacity I have primary 

responsibility within the Office of General Counsel for advising 

and representing EPA in matters involving the prevention of 

significant deterioration ("PSD") provisions of the Clean Air 

Act, 42 U.S.C. §§ 7470-7479. 

2. This affidavit is filed in support of Respondents' 

Motion For Second Extension of Time. 

_J 
P.26 

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3. I am assigned primary responsibility in the above 

captioned case. 

4. EPA and the United States Department of Justice are 

presently considering whether to file a Petition for Rehearing in 

connection with the decision issued by this Court on January 19, 

1990. 

5. The matter under review is so complex that an adequate 

brief in support of the Petition for Rehearing cannot reasonably 

be submitted by March 5, 1990 for the following reasons: 

(a) As explained in the affidavit of Gregory B. Foote dated 

January 26, 1990, the Court's decision of January 19, 1990 

largely upheld EPA's applicability determinations ruling that an 

extensive renovation project at the Port Washington power plant 

owned and operated by petitioner Wisconsin Electric Co. ("WEPCO") 

would be subject to new source requirements under the Clean Air 

Act, 42 U.S.C. § 7401, et seq. However, the court vacated EPA's 

determination that the calculation of future increases in "actual 

emissions" for purposes of determining applicability of the PSD 

provisions of the Act should be made using the "potential to 

emit" concept in 40 C.F.R. § 52.21(b)(21)(iv). Slip op. at 28-

31. The Court remanded the PSD applicability determination to 

EPA for further proceedings not inconsistent with its opinion. 

Id. at 33. 

(b) On February 1, 1990, the Court granted EPA's first 

Motion for Extension of Time, allowing EPA until March 5 to file 

a petition for rehearing. EPA explained in its supporting 
P.27 

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affidavit that it intended to ask the Court to reinstate EPA's 

PSD applicability determination, and that it needed additional 

time to determine the meaning and impact of the Court's January 

19, 1990 decision on the PSD program, so that in the alternative 

EPA could seek clarification of the Court's decision. 

(c) Within the last several days the parties have been 

discussing the possibility of resolving this litigation without 

the necessity of EPA filing a petition for rehearing. On 

February 26, 1990, the petitioner sent additional correspondence 

to EPA addressing the PSD issues. 

(d) Based on its analysis of the meaning and impact of the 

Court's January 19, 1990 decision on the PSD emissions increase 

issue, including the new information recently submitted by WEPCO, 

EPA is actively considering whether to accept some interpretation 

of that decision or petition the Court for rehearing. However, 

EPA has been unable to reach a final decision on this matter. Key 

EPA officials responsible for the decision have been unavailable 

to consult with counsel due to their need to be out of the office 

much of the time in recent weeks conferring with members of 

Congress and White House officials regarding pending legislation 

to amend the Clean Air Act. In particular, during this past week 

those officials were engaged in the time-consuming process of 

negotiating a compromise Senate bill amending the statute. The 

fact that key EPA officials would be unavailable during this time 

was not known earlier. 
P.28 

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(e) I anticipate that a final decision on whether to seek 

rehearing will be made during the next week, after which EPA will 

either file a petition for rehearing or notify the Court that no 

petition will be forthcoming. Should EPA decide not to file a 

petition for rehearing, it will conserve judicial resources as 

well as the resources of the parties. Consequently, EPA believes 

that a ten-day extension of the March 5, 1990 deadline, until 

March 15, 1990, is appropriate. 

6. Counsel for WEPCO has been contacted regarding this 

motion. 

Pursuant to 28 U.S.C. § 1746, I declare under penalty of 

perjury that the foregoing is true and correct to the best of my 

knowledge and belief. 

Executed this 2nd day of March 1990 at Washington, D.C.