PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellant,

ENVIRONMENTAL DEFENSE; NORTH

CAROLINA SIERRA CLUB; NORTH

CAROLINA PUBLIC INTEREST RESEARCH

GROUP CITIZEN LOBBY/EDUCATION

FUND,

Intervenors/Plaintiffs-Appellants,

v.

DUKE ENERGY CORPORATION,  No. 04-1763

Defendant-Appellee.

AMERICAN LUNG ASSOCIATION;

STATE OF NEW YORK; CONNECTICUT;

ILLINOIS; MARYLAND; NEW

HAMPSHIRE; PENNSYLVANIA;

WASHINGTON, DC; DELAWARE;

MAINE; MASSACHUSETTS; NEW

JERSEY; VERMONT,

Amici Supporting Appellant, 

Remanded, April 2, 2007
MANUFACTURERS ASSOCIATION WORK 

GROUP; JOE L. BARTON, U.S.

Representative; SOUTH DAKOTA;

STATE OF ALABAMA; STATE OF

KANSAS; STATE OF NEBRASKA;

STATE OF NORTH DAKOTA; TENNESSEE

VALLEY AUTHORITY; LAW

PROFESSORS, Jonathan Adler, Ronald

A. Cass, John C. Eastman, Ernest 

Gellhorn, James Huffman, Donald J.

Kochan, Gary Marchant, Roger

Meiners, Andrew Morriss,

Amici Supporting Appellee,

and

UTILITY AIR REGULATORY GROUP,

Movant. 

Appeal from the United States District Court

for the Middle District of North Carolina, at Durham.

Frank W. Bullock, Jr., District Judge.

(CA-00-1262-1)

Argued: February 3, 2005

Decided: June 15, 2005

Before LUTTIG and MOTZ, Circuit Judges,

and Samuel G. WILSON, United States District Judge

for the Western District of Virginia,

sitting by designation.

Affirmed by published opinion. Judge Motz wrote the opinion, in

which Judge Luttig and Judge Wilson joined. 

2 UNITED STATES v. DUKE ENERGY CORP.
COUNSEL

ARGUED: Todd Sunhwae Kim, UNITED STATES DEPARTMENT

OF JUSTICE, Environment & Natural Resources Division, Washington, D.C., for the United States. James Blanding Holman, IV,

SOUTHERN ENVIRONMENTAL LAW CENTER, Chapel Hill,

North Carolina, for Appellants Environmental Defense, North Carolina Sierra Club, and North Carolina Public Interest Research Group

Citizen Lobby/Education Fund. F. William Brownell, HUNTON &

WILLIAMS, Washington, D.C., for Appellee. ON BRIEF: Thomas

L. Sansonetti, Assistant Attorney General, Jason A. Dunn, John A.

Bryson, UNITED STATES DEPARTMENT OF JUSTICE, Environment & Natural Resources Division, Washington, D.C.; Alan Dion,

Monica Derbes Gibson, ENVIRONMENTAL PROTECTION

AGENCY, Washington, D.C., for the United States. Jeffrey M. Gleason, SOUTHERN ENVIRONMENTAL LAW CENTER, Charlottesville, Virginia, for Appellants Environmental Defense, North Carolina

Sierra Club, and North Carolina Public Interest Research Group Citizen Lobby/Education Fund. Garry S. Rice, DUKE ENERGY CORPORATION, Charlotte, North Carolina; Dean M. Moesser, DUKE

ENERGY CORPORATION, Houston, Texas; T. Thomas Cottingham, III, Nash E. Long, III, HUNTON & WILLIAMS, L.L.P.,

Charlotte, North Carolina; Mark B. Bierbower, Henry V. Nickel,

Makram B. Jaber, HUNTON & WILLIAMS, L.L.P., Washington,

D.C., for Appellee. Alan Birnbaum, CLEAN AIR TASK FORCE,

Boston, Massachusetts, for Amicus Curiae, American Lung Association, Supporting Appellant. Eliot Spitzer, Attorney General of New

York, Caitlin J. Halligan, Solicitor General, Daniel Smirlock, Deputy

Solicitor General, Peter Lehner, Assistant Attorney General, J. Jared

Snyder, Assistant Attorney General, Scott Bassinson, Assistant Attorney General, Environmental Protection Bureau, Albany, New York,

for Amicus Curiae, State of New York, Supporting Appellant. Richard Blumenthal, Attorney General of Connecticut, Hartford, Connecticut, for Amicus Curiae, Connecticut, Supporting Appellant. Lisa

Madigan, Attorney General of Illinois, Chicago, Illinois, for Amicus

Curiae, Illinois, Supporting Appellant. J. Joseph Curran, Jr., Attorney

General of Maryland, Baltimore, Maryland, for Amicus Curiae,

Maryland, Supporting Appellant. Kelly A. Ayotte, Attorney General

of New Hampshire, Concord, New Hampshire, for Amicus Curiae,

New Hampshire, Supporting Appellant. Susan Shinkman, Chief

UNITED STATES v. DUKE ENERGY CORP. 3
Counsel, Pennsylvania, Department of Environmental Protection,

Harrisburg, Pennsylvania, for Amicus Curiae, Pennsylvania, Supporting Appellant. Robert J. Spagnoletti, Attorney General of District of

Columbia, Washington, D.C., for Amicus Curiae, Washington, D.C.,

Supporting Appellant. M. Jane Brady, Attorney General of Delaware,

Dover, Delaware, for Amicus Curiae, Delaware, Supporting Appellant. G. Steven Rowe, Attorney General of Maine, Augusta, Maine,

for Amicus Curiae, Maine, Supporting Appellant. Thomas F. Reilly,

Attorney General of Massachusetts, Boston, Massachusetts, for

Amicus Curiae, Massachusetts, Supporting Appellant. Peter C. Harvey, Attorney General of New Jersey, Trenton, New Jersey, for

Amicus Curiae, New Jersey, Supporting Appellant. William H. Sorrell, Attorney General of Vermont, Montpelier, Vermont, for Amicus

Curiae, Vermont, Supporting Appellant. Charles H. Knauss, Robert

V. Zener, SWIDLER, BERLIN, SHEREFF, FRIEDMAN, L.L.P.,

Washington, D.C., for Amicus Curiae, Manufacturers Association

Work Group, Supporting Appellee. C. Boyden Gray, WILMER,

CUTLER, PICKERING, HALE AND DORR, L.L.P., Washington,

D.C., for Amicus Curiae, U.S. Representative Joe L. Barton, Supporting Appellee. Lawrence E. Long, Attorney General of the State of

South Dakota, Roxanne Giedd, Deputy Attorney General, Pierre,

South Dakota, for Amicus Curiae, South Dakota, Supporting Appellee. Troy King, Attorney General of the State of Alabama, Montgomery, Alabama, for Amicus Curiae, State of Alabama, Supporting

Appellee. Phill Kline, Attorney General of the State of Kansas, David

W. Davies, Deputy Attorney General, Topeka, Kansas, for Amicus

Curiae, State of Kansas, Supporting Appellee. Joe Bruning, Attorney

General of the State of Nebraska, Jodi M. Fenner, Assistant Attorney

General, Lincoln, Nebraska, for Amicus Curiae, State of Nebraska,

Supporting Appellee. Wayne Stenehjem, Attorney General of the

State of North Dakota, Charles M. Carvell, Assistant Attorney General, Lyle G. Witham, Assistant Attorney General, Dean J. Haas,

Assistant Attorney General, Bismarck, North Dakota, for Amicus

Curiae, State of North Dakota, Supporting Appellee. Maureen H.

Dunn, General Counsel, Harriet A. Cooper, Assistant General Counsel, Gregory R. Signer, Senior Environmental Counsel, Frank H. Lancaster, TENNESSEE VALLEY AUTHORITY, Office of the General

Counsel, Knoxville, Tennessee, for Amicus Curiae, Tennessee Valley

Authority, Supporting Appellee. David B. Rivkin, Jr., Lee A. Casey,

4 UNITED STATES v. DUKE ENERGY CORP.
Darin R. Bartram, BAKER & HOSTETLER, L.L.P., Washington,

D.C., for Amici Curiae, Law Professors, Jonathan Adler, Ronald A.

Cass, John C. Eastman, Ernest Gellhorn, James Huffman, Donald J.

Kochan, Gary Marchant, Roger Meiners, Andrew Morriss, Supporting Appellee. 

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

The United States brought this enforcement action against Duke

Energy Corporation, which provides North Carolina and South Carolina with electricity generated from eight plants located throughout

the two states. The United States maintains that Duke Energy on

numerous occasions modified these plants without first obtaining

appropriate permits in violation of the Clean Air Act. 42 U.S.C.

§§ 7401 et seq. (2000). The district court granted summary judgment

to Duke Energy. See United States v. Duke Energy Corp., 278 F.

Supp. 2d 619 (M.D.N.C. 2003). We affirm, albeit for somewhat different reasons than those relied on by the district court. 

I.

The Clean Air Act is a complex statute supported by an elaborate

regulatory scheme; both have a complicated history. This case

involves two different, but complementary provisions of the Act: the

New Source Performance Standards ("NSPS") provisions, 42 U.S.C.

§ 7411, and the Prevention of Significant Deterioration ("PSD") provisions, 42 U.S.C. §§ 7470-92. 

In order to "protect and enhance the quality of the Nation’s air

resources" and "promote the public health and welfare," 42 U.S.C.

§ 7401(b)(1), the Clean Air Amendments of 1970 directed the Environmental Protection Agency ("EPA") to devise National Ambient

Air Quality Standards establishing the maximum concentrations of

certain air pollutants allowable in each region of the United States. 42

U.S.C. § 7409. The Act then directed each State to design a State

Implementation Plan to effect compliance with its air quality standards. 42 U.S.C. § 7410. 

UNITED STATES v. DUKE ENERGY CORP. 5
To help attain and thereafter maintain these air quality standards,

the 1970 amendments enacted the NSPS provisions, which required

the EPA to promulgate standards regulating emissions from both

newly constructed and modified sources of pollution at power plants.

42 U.S.C. § 7411. Congress defined "modification" in the NSPS provisions as "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). 

Since 1971, the EPA has promulgated NSPS regulations that define

"modification" in virtually the same words as the statute. See, e.g., 36

Fed. Reg. 24,876, 24,877 (Dec. 23, 1971); 40 C.F.R. § 60.2 (1976);

40 C.F.R. § 60.2 (2004). In 1975, the EPA added a regulation elaborating on this definition and further defining "modification" by reference to an increase in the hourly emission rate: a modification

includes "any physical or operational change to an existing facility

which results in an increase in the emission rate to the atmosphere of

any [regulated] pollutant," measured not in tons per year, but in kilograms per hour. 40 Fed. Reg. 58,416, 58,419 (Dec. 16, 1975) (codified at 40 C.F.R. § 60.14(a) & (b)). Modified equipment becomes

subject to the NSPS’s "technology-based" standards, Alabama Power

Co. v. Costle, 636 F.2d 323, 346 (D.C. Cir. 1980), which mandate the

installation of the "best demonstrated pollution control technology."

Potomac Elec. Power Co. v. EPA, 650 F.2d 509, 518 (4th Cir. 1981)

[hereinafter PEPCo]. 

The NSPS program was not entirely successful. See Wisconsin

Elec. Power Co. v. Reilly, 893 F.2d 901, 904 (7th Cir. 1990). In 1972,

the United States District Court for the District of Columbia issued

a preliminary injunction directing the EPA to promulgate regulations

to supplement the NSPS program and protect air quality from deterioration in areas that had met or exceeded the relevant ambient standards. See Sierra Club v. Ruckleshaus, 344 F. Supp. 253 (D.D.C.

1972), aff’d 4 E.R.C. 1815 (D.C. Cir. 1972), aff’d by an equally

divided court sub nom. Fri v. Sierra Club, 412 U.S. 541 (1973). The

EPA duly disseminated the first PSD regulations in 1974. See 39 Fed.

Reg. 42,510 (Dec. 5, 1974). Congress thereafter enacted a PSD program in the Clean Air Act Amendments of 1977. See 42 U.S.C.

§ 7470(1). 

6 UNITED STATES v. DUKE ENERGY CORP.
As originally enacted, the PSD permit provisions in the Clean Air

Act applied only to the "construction" of major emitting facilities. See

Clean Air Act Amendments of 1977, Pub. L. No. 95-95, 91 Stat. 685,

735 (1977) ("No major emitting facility on which construction is

commenced after the date of the enactment of this part, may be constructed in any area to which this part applies unless . . . a permit has

been issued . . . ."). However, in November 1977, a few months after

the original enactment became effective, Congress passed the "Clean

Air Act Technical and Conforming Amendments." Pub. L. No. 95-

190, 91 Stat. 1393, 1399 (1977). These amendments added to the

"Definitions" section of the PSD provisions in 42 U.S.C. § 7479 a

subparagraph that provides: "The term ‘construction’ when used in

connection with any source or facility, includes the modification (as

defined in [section 7411(a)]) of any source or facility." Id. at 1402.

This amendment thus incorporated the NSPS statutory definition of

"modification," § 7411(a)(4), into § 7479 of the PSD statute. 

The PSD program imposes, inter alia, preconstruction review and

permit requirements on new or modified sources in areas that have

attained or exceeded their air quality standards. 42 U.S.C. § 7475.

Unlike the NSPS program, the PSD program does not focus primarily

on technology-based controls, but on the "net emissions from an

entire plant resulting from construction or modification of one or

more emitting sources within the plant." PEPCo, 650 F.2d at 518

(emphasis omitted). And so, while NSPS centers on technological

controls at an individual pollution-emitting apparatus, PSD fixes on

the actual emissions from a site. See N. Plains Res. Council v. EPA,

645 F.2d 1349, 1356 (9th Cir. 1981) ("The NSPS program is . . .

equipment oriented. On the other hand, the PSD program . . . is . . .

site oriented."). 

The EPA promulgated regulations under the PSD provisions of the

statute in 1978, see 43 Fed. Reg. 26,380 (June 19, 1978), and

amended them in 1980, see 45 Fed. Reg. 52,676 (Aug. 7, 1980).

Under the 1980 PSD regulations, a plant cannot engage in a "major

modification" of equipment without first undergoing the EPA’s permit process and acquiring a permit. 45 Fed. Reg. 52,676. The EPA’s

PSD regulations define a "major modification" 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

UNITED STATES v. DUKE ENERGY CORP. 7
pollutant subject to regulation under the Act." 40 C.F.R.

§ 51.166(b)(2)(i) (1987).1 A "net emissions increase" is "[a]ny

increase in actual emissions from a particular physical change or

change in the method of operation" of a unit. 40 C.F.R.

§ 51.166(b)(3)(i). The PSD regulations measure emissions increases

relative to a baseline calculation of "actual emissions," i.e., "the average rate, in tons per year, at which the unit actually emitted" the regulated pollutant for, usually, the two years prior to date of

measurement, "using the unit’s actual operating hours, production

rates, and types of materials processed, stored, or combusted during

the selected time period." 40 C.F.R. § 51.166(b)(21)(ii). 

II.

A.

Duke Energy’s eight plants in the Carolinas include thirty coalfired generating units that were placed in service between 1940 and

1975. Each unit contains, as one of its three major components, a

boiler, which is a large structure from six- to twenty-stories tall containing thousands of steel tubes. The tubes are arranged into sets of

tube assemblies, including economizer tubes, in which water is initially heated; furnace waterwall tubes, in which water evaporates to

steam; superheater tubes, in which the temperature of the steam is

raised before being released into a turbine; and reheater tubes, in

which steam released from the turbine is reheated and returned to the

turbine. 

Between 1988 and 2000, as part of a plant modernization program,

Duke Energy engaged in twenty-nine projects on the coal-fired generating units, most of which consisted of replacing and/or redesigning

one or more of the boiler tube assemblies. These projects would both

extend the life of the generating units and allow the units to increase

their daily hours of operation. Duke Energy did not apply for or

1The 1980 regulations, which the parties agree control the projects at

issue here, were recodified in the 1987 Code of Federal Regulations.

None of the relevant PSD or NSPS provisions were revised during the

period pertaining to this dispute. All subsequent references herein are to

the 1987 C.F.R. unless otherwise noted. 

8 UNITED STATES v. DUKE ENERGY CORP.
acquire new permits from the EPA for these projects, some of which,

according to the Government, cost "more than seven times the original cost of the unit." Brief of United States at 14. 

In December 2000, at the direction of the Administrator of the

EPA, the Attorney General brought this enforcement action against

Duke Energy, alleging that the life-extension projects violated, inter

alia, the Clean Air Act’s PSD provisions. In September 2001, the district court granted Environmental Defense, the North Carolina Sierra

Club, and the North Carolina Public Interest Research Group Citizen

Lobby/Education Fund leave to intervene as plaintiffs, and these

groups filed a complaint against Duke Energy alleging similar violations. 

The EPA and the Intervenors maintain that these life-extension

projects constitute "major modifications" of Duke Energy’s furnaces

as defined in the PSD statutory and regulatory provisions — that is,

physical changes leading to a significant net emissions increase —

and thus Duke Energy was required to obtain permits for them. The

EPA does not contend that the post-project hourly rate of emissions

increased. Rather, it argues that the PSD requires measurement of the

net emissions increase by using an "actual-to-projected-actual" test,

comparing the actual pre-project emissions from a unit to the projected post-project emissions, which takes into account a unit’s ability

to operate for more hours. Because the Duke Energy projects enable

the units to operate for more hours each day, they will lead to an

increase in actual yearly emissions. 

Duke Energy counters that its projects do not constitute modifications subject to PSD because they did not increase the units’ levels

of emissions. The company maintains that, under the PSD program,

a net emissions increase will result only if there is an increase in the

hourly rate of emissions. Because none of its projects increased a

unit’s hourly capacity to emit pollution (but increased only the number of hours the unit could operate), the projects did not increase

emissions from pre-project levels, and so, according to Duke Energy,

it did not have to obtain permits. 

UNITED STATES v. DUKE ENERGY CORP. 9
B.

The district court agreed with Duke Energy. It held that a modification subject to PSD exists only if there is a post-project increase in

the hourly rate of emissions from a unit. Duke Energy Corp., 278 F.

Supp. 2d at 640.2 In reaching this conclusion, the district court relied

on the language of the PSD regulations, "contemporaneous interpretations" of the regulations by the EPA, and "the statutory language

incorporating the NSPS concept of modification into PSD." Id.

One regulation promulgated by the EPA pursuant to the PSD statute, 40 C.F.R. § 51.166(b)(2)(i), characterizes a "major modification"

as "any physical change in or change in the method of operation

. . . that would result in a significant net emissions increase"; another,

40 C.F.R. § 51.166(b)(2)(iii)(f), excludes "[a]n increase in the hours

of operation or in the production rate" from the definition of "physical

change or change in the method of operation." Reading these two provisions in conjunction, the district court determined that an emissions

increase traceable to increased hours of operation cannot trigger the

PSD provisions because an increase in hours is not a physical change.

Put another way, because increased hours are not a physical change

under the PSD regulations, calculation of post-project net emissions

cannot take into account increased hours of operation, but rather must

be based on pre-project hours of operation and rates of production.

Therefore, the court concluded, only if the hourly rate of emissions

increases can there be a net emissions increase under the PSD regulations. Duke Energy, 278 F. Supp. 2d at 640-41. 

2Duke Energy asserted in the alternative that its projects constitute

maintenance, repair and replacement that is routine in the utility industry

and, for this reason, were exempt from the permit requirements. See 40

C.F.R. 51.166(b)(2)(iii)(a). The EPA and the Intervenors disagreed, contending that this regulatory exemption only applies to repairs and

replacements routine within the life of a generating unit and, therefore,

Duke Energy’s life-enhancing projects did not qualify for this exemption.

The district court again agreed with Duke Energy’s interpretation, but

held that there was insufficient evidence to grant summary judgment to

Duke Energy on this claim. Duke Energy, 278 F. Supp. 2d at 638. Given

our resolution of this case, we need not reach this question. 

10 UNITED STATES v. DUKE ENERGY CORP.
The district court recognized that the EPA interpreted its PSD regulations differently, excluding a much smaller group of projects from

the definition of "major modification." The EPA would exclude only

those projects that increase hours of operation and involve no construction. Id. at 641. According to the interpretation pressed by the

EPA, whenever there is an increase "in utilization coupled with a

physical change, any increase in hours of operation . . . may be considered in the emissions calculus." Id. The district court concluded

that it could not defer to the EPA’s interpretation because in addition

to being, in the court’s view, belied by the plain language of the PSD

regulations, the present EPA interpretation was "clearly contrary to

earlier [EPA] interpretations" of the regulations. Id. Specifically, the

court noted that "[i]mmediately after the promulgation of the PSD

regulations in 1980, the EPA’s Director of the Division of Stationary

Source Enforcement . . . , Edward E. Reich, confirmed in two separate

applicability determinations that the requirements of PSD would be

implicated only by an increase in the hourly rate of emissions." Id.

Finally, the court determined that its interpretation of the PSD regulation was "also consistent with the NSPS [statutory] definition of

‘modification’" found in 42 U.S.C. § 7411(a), "which was incorporated by explicit reference into PSD" in 42 U.S.C. § 7479(2)(c)

(defining "construction" to include "the modification (as defined in

section 7411(a) . . . ) of any source or facility"). Id. at 642. The interpretation of PSD regulations urged by the EPA in this suit would, the

district court concluded, be "inconsistent with the congressional

design of defining PSD construction in terms of NSPS modification

and should therefore be accorded little deference." Id. at 643. 

After resolution of this legal issue, the parties stipulated that the

Duke Energy projects would not result in an increase in the hourly

rate of emissions. The court then entered summary judgment for Duke

Energy. 

III.

In cases in which an agency’s interpretation of its regulations are

at issue, a court engages in a modified Chevron analysis. See Chevron

U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984); United

States v. Deaton, 332 F.3d 698, 708-09 (4th Cir. 2003). First, as in

UNITED STATES v. DUKE ENERGY CORP. 11
the usual Chevron analysis, a court must determine "whether Congress has directly spoken to the precise question at issue." Chevron,

467 U.S. at 842. "The judiciary is the final authority on issues of statutory construction" and "[i]f a court, employing traditional tools of

statutory construction, ascertains that Congress had an intention on

the precise question at issue, that intention is the law and must be

given effect." Id. at 843 n.9. Only if the statute is silent or ambiguous

on the point is Congress deemed to have delegated authority to the

agency to clarify the point in its regulations. Id. at 843-45. Thus, only

in such cases does a court examine the regulation itself, determining

its legitimate meaning, asking whether the regulation is based on a

permissible construction of the statute, and, if so, deferring to it. See

id. at 843; Deaton, 332 F.3d at 708-09. 

The EPA and the Intervenors expressly acknowledge that these

principles govern our review in the case at hand. See Brief of United

States at 14-15; Brief of Intervenors at 7-9. They fail to understand,

however, that straightforward application of these principles can lead

to only one conclusion: affirmance of the judgment of the district

court. 

This is so because Congress has indeed "directly spoken to the precise question at issue." Chevron, 467 U.S. at 842. As the EPA itself

concedes, the critical first "question at issue" here is whether the EPA

"can interpret the statutory term ‘modification’ under PSD differently

from how EPA interpreted that term" in the NSPS. Brief of United

States at 1. As the EPA also concedes, see id. at 4, Congress expressly

defined "modification" in the NSPS provisions of the Clean Air Act,

42 U.S.C. § 7411(a), and then expressly directed that the PSD provisions of the Act employ this same definition. See 42 U.S.C.

7479(2)(c) (providing that "construction" in the PSD includes "modification . . . as defined in section 7411(a)"). When Congress mandates

that two provisions of a single statutory scheme define a term identically, the agency charged with administering the statutory scheme

cannot interpret these identical definitions differently. Thus, because

Congress mandated that the PSD definition of "modification" be identical to the NSPS definition of "modification," the EPA cannot inter12 UNITED STATES v. DUKE ENERGY CORP.
pret "modification" under the PSD inconsistently with the way it

interprets that term under the NSPS.3

Common sense would seem to dictate this result. Supreme Court

precedent certainly does. See Rowan Cos. v. United States, 452 U.S.

247 (1981). In Rowan, the Court faced a situation strikingly similar

to the one at hand, and held that when Congress itself provided "substantially identical" statutory definitions of a term in different statutes,

the agency charged with enforcing the statutes could not interpret the

statutory definitions "differently." Id. at 257.4

The question presented in Rowan was whether the Commissioner

of the Internal Revenue Service could interpret the statutory term

"wages" differently for, on the one hand, the Federal Insurance Contributions Act ("FICA") and the Federal Unemployment Tax Act

("FUTA"), and, on the other, the statute governing income-tax withholding. Id. at 250. Congress had defined the term "wages" in these

statutes in substantially the same language: for both FICA and FUTA,

"wages" were defined as "all remuneration for employment, including

the cash value of all remuneration paid in any medium other than

cash"; for income tax withholding, "wages" were defined as "all

remuneration (other than fees paid to a public official) for services

performed by an employee for his employer, including the cash value

of all remuneration paid in any medium other than cash." Rowan, 452

U.S. at 249 n.4.5 The Commissioner, however, issued regulations

3Since Congress has "directly spoken to the precise question at issue

. . . , that is the end of the matter." Chevron, 467 U.S. at 842. A court

need not, indeed cannot, go further. Thus, the language and various interpretations of the PSD regulations, on which the district court partially

based its holding and which the parties exhaustively discuss, are largely

irrelevant to the proper analysis of this case. 

4Because none of the parties or the thirty amici cited Rowan in their

original briefs or reply briefs, we requested supplemental briefing

addressing the case. Predictably (but inexplicably in view of its original

failure to cite Rowan), Duke Energy asserts that Rowan strongly supports

its position. More significantly, although the United States and Intervenors attempt to counter Rowan in various ways (which we address

within), they do not contend that the Rowan analysis is no longer good

law. 

5

In 1983, Congress amended two of the statutes at issue in Rowan. See

Pub. L. No. 98-21 § 327(b)(1), 97 Stat. 65, 127 (1983) (adding to 26

UNITED STATES v. DUKE ENERGY CORP. 13
interpreting "wages" under FICA and FUTA to include the value of

meals and lodging provided to employees for the convenience of the

employer, and "wages" under the income-tax withholding statute to

exclude this value. See Rowan, 452 U.S. at 250. 

In holding the Commissioner’s interpretation impermissible, the

Court relied on the plain language of the statutes and their legislative

history. First, the Court noted that when Congress enacted the precursors to FICA and FUTA as part of the Social Security Act of 1935,

it chose "wages" as the basis for employer taxation and then statutorily defined the term. Id. at 255. Similarly, seven years later, when

Congress enacted the original income-tax withholding statute, it chose

"wages" as the basis for taxation and statutorily defined the term "in

substantially the same language that it used in FICA and FUTA." Id.

The Rowan Court held that, "[i]n view of this sequence of consistency, the plain language of the statute is strong evidence that Congress intended ‘wages’ to mean the same thing under FICA, FUTA,

and income-tax withholding." Id.6 The Court then examined the statutes’ history, finding indications that Congress intended to "coordiU.S.C. §§ 3121(a)(21) and 3306(b)(17) a paragraph stating, "Nothing in

the regulations prescribed for purposes of . . . income tax withholding

. . . which provides an exclusion from ‘wages’ as used in such chapter

shall be construed to require a similar exclusion from ‘wages’ in the regulations prescribed for purposes of this chapter"). 

6We note that the standards of judicial review followed in Rowan differ somewhat from those established three years later in Chevron. The

most significant change for the case at hand is that Chevron abolished

judicial deference to agency interpretation of a statute in step one. See

John F. Coverdale, Chevron’s Reduced Domain: Judicial Review of

Treasury Regulations and Revenue Rulings After Mead, 55 Admin. L.

Rev. 39, 77 (2003); cf. United States v. Mead Corp., 533 U.S. 218, 229

(2001); Christensen v. Harris County, 529 U.S. 576, 582-83 (2000). This

difference does not in any way lessen the precedential value of Rowan

here. Indeed, if anything, it strengthens Rowan’s support for our holding

because even though in Rowan the Court gave some deference to the

agency’s interpretation of the statutes (rather than examining the statutes

de novo as Chevron step one directs), the Court nevertheless rejected the

agency’s position that it could interpret very similar statutory language

differently. 

14 UNITED STATES v. DUKE ENERGY CORP.
nate the income-tax withholding system with FICA and FUTA . . . to

promote simplicity and ease of administration," and concluding that

"[c]ontradictory interpretations of substantially identical definitions

do not serve that interest." Id. at 257. 

The plain language of the Clean Air Act provides even stronger

evidence that Congress intended the statutory definitions of "modification" in the PSD and NSPS provisions to be interpreted identically.

While Congress used only "substantially the same language" in the

statutory definitions at issue in Rowan, id. at 255, here Congress mandated that the definition of "modification" in the PSD provisions precisely mirror the definition of "modification" in the NSPS provision.

Congress did this by directly incorporating the NSPS definition,

which it had enacted in 1970, into the PSD provisions, which it

enacted seven years later. See Pub. L. No. 95-190, 91 Stat. 1393, 1402

(1977) ("The term ‘construction’ when used in connection with any

source or facility, includes the modification (as defined in [section

7411(a)]) of any source or facility."); 42 U.S.C. § 7479(2)(C). 

Moreover, as in Rowan, the legislative history of the statutes at

issue here does not in any way suggest that Congress intended these

identical statutory definitions to receive different interpretations. Notwithstanding the EPA’s contentions to the contrary, the fact that the

PSD definition of modification became part of the statute through

"Technical and Conforming Amendments" does not change the fact

that the definition is a statutory enactment, entitled to be treated as

such. See United States v. R.L.C., 503 U.S. 291, 305 n.5 (Opinion of

Souter, J.) ("[A] statute is a statute, whatever its label," and must be

interpreted using "the usual tools of statutory construction."). Indeed,

the expressed intent in the congressional summary of the legislative

amendments to "conform" the definition of modification in the PSD

provisions "to usage in other parts of the Act," 123 Cong. Rec. 36,253

(Nov. 1, 1977), indicates congressional concern with the same sort of

simplicity and consistency that the Rowan Court discerned from the

legislative history examined there. As the Court explained in Rowan,

"[i]t would be extraordinary for a Congress pursuing this interest to

intend, without ever saying so, for identical definitions to be interpreted differently." 452 U.S. at 257.7

7Confronted with FICA and FUTA regulations that directly contradicted established rules developed under income taxation, see Rowan,

UNITED STATES v. DUKE ENERGY CORP. 15
The EPA points to Senator Muskie’s statement that it was "not the

purpose of these amendments to re-open substantive issues" in the

Act, 123 Cong. Rec. 36,252, as evidence that Congress was merely

using an expedient method to correct the inadvertent omission of the

word "modification" from the PSD provisions. To the extent that Senator Muskie’s remarks demonstrate Congress’ intent, see Runnebaum

v. NationsBank of Maryland, N.A., 123 F.3d 156, 169 n.7 (4th Cir.

1997) (en banc), they do not support the EPA’s position. The assertion that the Technical and Conforming Amendments were not "designed to resolve issues that were not resolved" in the debate and

passage of the Act, see 123 Cong. Rec. 36,252 (statement of Sen.

Muskie), says nothing about whether Congress had previously

resolved the issue of whether the interpretation of "modification" was

to be congruent under the PSD and NSPS statutory provisions. 

The EPA and Intervenors also emphasize the "vital differences"

between PSD and NSPS. Brief of United States at 22; see also id. at

452 U.S. at 258, the Court invalidated the FICA and FUTA regulations,

id. at 263. In contrast, notwithstanding the contentions of the United

States and Intervenors in their supplemental briefs, no question as to the

validity of the PSD regulations is (or could be, see 42 U.S.C. § 7607(b))

presented here. Unlike the FICA and FUTA regulations at issue in

Rowan, the PSD regulations can be interpreted consistently with preexisting principles — the NSPS regulations — as the district court demonstrated and as the EPA’s Director of the Division of Stationary Source

Enforcement twice opined shortly after promulgation of the PSD regulations. Our choice of this interpretation of the PSD regulations — as

required under the statute — over the EPA’s interpretation is not an

invalidation of those regulations. The PSD regulations remain fully intact

and enforceable and, indeed, could even be enforced as the EPA urges

provided that, as long as the PSD and NSPS statutes define "modification" identically, the NSPS regulations are similarly interpreted and

enforced. Thus, the only question that we need resolve is one properly

before us, indeed one that EPA itself poses, i.e., whether it "can interpret

the statutory term modification under PSD differently from how" it has

interpreted that term under NSPS. See Brief of United States at 1, 22-30;

Reply Brief of United States at 2. Given that the EPA expressly asks that

we resolve this question, we have difficulty understanding its suggestion

in its supplemental brief that Duke Energy "waived" resolution of this

question. 

16 UNITED STATES v. DUKE ENERGY CORP.
4-6; Brief of Intervenors at 13-21. We do not ignore or minimize

those differences. Although both statutes are part of the Clean Air Act

and designed to serve its purpose "to protect and enhance the quality

of the Nation’s air resources so as to promote the public health and

welfare and the productive capacity of its population," 42 U.S.C.

§ 7401(b)(1), they address somewhat different problems. PSD exists

primarily to prevent significant deterioration of ambient air quality in

areas meeting clean air standards, see 42 U.S.C. § 7470(1), while

NSPS requires new sources to implement particular technologies to

limit their own emissions. Id. § 7411. These differences have led us

and other courts to approve different regulatory definitions for an

identical statutory term in the two statutes. In PEPCo, for example,

we held that "significant difference[s] between the PSD and NSPS

programs" justified a different interpretation of the statutory term

"stationary source." 650 F.2d at 518. But in PEPCo, although Congress had defined the term "stationary source" in the NSPS provisions, see 42 U.S.C. § 7411(a)(3), it had not defined that term in the

PSD provisions. Thus, while in PEPCo both statutes contained the

same term, the statutes did not define that term in the same manner;

nor was the use of the term in the PSD provisions linked to the statutory definition of the term in the NSPS provisions. Similarly, in

Northern Plains Resource Council, the Ninth Circuit allowed the EPA

to interpret the statutory term "commenced" differently in the NSPS

and PSD regulations. 645 F.2d at 1357. But again, although one statute — there the PSD provisions — defined the term, see 42 U.S.C.

§ 7479(2)(A), the other — the NSPS provisions — did not. And, Congress had not linked the PSD definition of the term to its use in the

NSPS provisions of the statute. 

PEPCo and Northern Plains Resource Council illustrate the principle that the same word or phrase will generally be presumed to have

the same meaning when used in different parts of the statute, but this

"presumption of the uniform usage . . . relents" when there is "a 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." Gen. Dynamics Land Sys., Inc. v. Cline,

124 S. Ct. 1236, 1245 (2004) (internal quotation marks and citation

omitted). Thus, in PEPCo and Northern Plains Resource Council, the

difference in purpose between the NSPS and PSD programs justified

the conclusion that the same words had different meanings in the two

UNITED STATES v. DUKE ENERGY CORP. 17
sections of the statute. See N. Plains Res. Council, 645 F.2d at 1355-

56. 

In the case before us, however, the presumption of uniform usage

has become effectively irrebutable because Congress’ decision to

create identical statutory definitions of the term "modification" has

affirmatively mandated that this term be interpreted identically in the

two programs. The different purposes of the NSPS and PSD programs

cannot override that mandate. Neither the United States nor the Intervenors have cited a single case in which any court has held that identical statutory definitions can be interpreted differently by the agency

charged with enforcement of the statute. Moreover, in Rowan the

Supreme Court expressly rejected the argument, which was successful

in the Fifth Circuit, that the different purposes of FICA/FUTA and

income-tax withholding justified the different regulatory interpretations of the same statutory definition. See Rowan, 452 U.S. at 250,

257-58. The Rowan Court concluded that to permit the Commissioner

to interpret the same statutory terms differently would "fail to implement the congressional mandate in a consistent and reasonable manner." Id. at 253. 

So it is here. Congress mandated that the PSD statute incorporate

the NSPS statutory definition of "modification." No one disputes that

prior to enactment of the PSD statute, the EPA promulgated NSPS

regulations that define the term "modification" so that only a project

that increases a plant’s hourly rate of emissions constitutes a "modification." The EPA must, therefore, interpret its PSD regulations defining "modification" congruently. Of course, this does not mean that

this regulatory interpretation must be retained indefinitely. The EPA

retains its authority to amend and revise this and other regulations

"through exercise of appropriate rulemaking powers." Helvering v.

Wilshire Oil Co., 308 U.S. 90, 100-01 (1939) (noting that "[t]he contrary conclusion would . . . drastically curtail the scope and materially

impair the flexibility of administrative action"); McCoy v. United

States, 802 F.2d 762, 766 (4th Cir. 1986). Indeed, the parties point out

that the EPA has already amended some of the regulations at issue

here. See Brief of Duke Energy at 62-63; Reply Brief of United States

at 17-18. As long as Congress mandates that "modification" be

defined identically in the NSPS and PSD statutes, however, EPA must

18 UNITED STATES v. DUKE ENERGY CORP.
interpret that term in a consistent manner in the NSPS and PSD regulations. 

IV.

For the foregoing reasons, the judgment of the district court is

AFFIRMED.

UNITED STATES v. DUKE ENERGY CORP. 19