### 1999 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

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P r e c e de n t i al or N on-P r e c e de n t i al :

D ock e t 98-3071

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. e du/thir dc ir c uit_1999/28Filed 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 PetitionerLois 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 Duquesn e Light Company, a Pennsylvania investor-owned electric uti lity 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 suchfi nal agency actions pursuant to section 307(b) of the Cl ean Air Act, 42 U.S.C. S 7607(b).

EPA argues first that Duquesne lacks both constitut ional and prudential standing. This is an issue that we m ust
address at the outset. See Steel Co. v. Citizens fo r a Better Env't, 118 S. Ct. 1003, 1012-13 (1998). However, to understand EPA's contention that Duquesne cannot me et

2the causation and redressability requirements for s tanding,

it is necessary to understand the statutory framewo rk.

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 p repare 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 a nd other measures necessary for that region to meet and main tain the required NAAQS. Id. S 7410(a)(2)(A)-(K). Each S IP must be submitted to EPA for its review and approval. Th e Act requires a public notice and comment period, and th e 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 state s 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 t he failure of some states to meet their required NAAQS

. Pursuant to the 1990 Amendments, all SIPS must cont ain a New Source Review program, which establishes procedures for state regulation of proposed new sou rces of pollutants. Id. S 7410(a)(2)(C). Further, New Sourc e Review programs for what the EPA characterizes as "nonattainment" regions must require that the entit ies seeking to construct new major sources of regulated pollutants, or to make significant modifications to such existing sources, must obtain a preconstruction per mit obligating them to obtain "sufficient offsetting em issions 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 defin itions which must be used by the states for this purpose. However, the EPA regulations also provide that a st ate may deviate from those definitions "only if the state s pecifically

3demonstrates that the submitted [state] definition is more

stringent, or at least as stringent, in all respect s 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 reduct ions in pollutants. ERCs are determined as the difference b etween (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 initial ly assigned to the entity responsible for the reductio n, 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 regulat ions define "actual emissions" as generally equaling the average rate at which the source "actually emitted the poll utant during a two-year period which precedes the particu lar date and which is representative of normal source operat ion." 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 differ ent time period upon a determination that it is more represe ntative of normal source operation." Id.

The Pennsylvania New Source Review program at issue
, adopted in January 1994, effects what Duquesne term s a de facto definition of the term "actual emissions," and what EPA prefers to refer to as "Pennsylvania's definiti on." In any event, Pennsylvania provides that "actual emissions or allowable emissions, whichever is lower, shall be c alculated over the 2 calendar years immediately preceding the emissions reduction which generates the ERCs," 25 P a. 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 immediat ely preceding is "not representative of the normal emis sion rates or characteristics of the existing facility," it may specify a different, more representative, 2-year pe riod

4occurring 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 th e Pennsylvania SIP. EPA's notice of proposed rulemaki ng to grant limited approval was published in May 1997. D uring the public comment period, Duquesne complained that what it described as Pennsylvania's "de facto" defi nition of actual emissions was more stringent than the federa l definition. It also complained that (1) contrary t o its own regulations, EPA had not required Pennsylvania to demonstrate the definition's stringency, and (2) t he Pennsylvania Air Pollution Control Act prohibited P DEP from promulgating a more stringent Clean Air Act-re lated rule. EPA responded that applicable federal regulat ions permit more stringent state requirements and that, because the Pennsylvania Environmental Quality Board expres sly found the New Source Review rules necessary to achi eve or maintain NAAQS, state law authorized the adoption o f 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 a pproving Pennsylvania's definition of "actual emissions" wit hout requiring a demonstration of stringency, and (2) E PA
violated the Administrative Procedure Act in failin g 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 in quiry requires a three-fold showing: the party asserting jurisdiction must demonstrate (1) an "injury in fa ct," (2) that the injury is "fairly traceable" to the a ction or actions complained of, and (3) that the injury wil l likely be redressed by a favorable decision. Lujan v. Defende rs 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 reque st, which is pending, does not affect the finality of the action for purp oses of judicial
review. See 42 U.S.C. S 7607(b).

5There is no serious question with respect to Duques ne's

injury-in-fact. Duquesne has come to court complain ing that it will lose ERCs as a result of the EPAs appr oval of the PDEP's action. These ERCs are of tangible value to Duquesne; they would permit Duquesne to operate les s expensively, and they are even fungible. Hence, Duq uesne has met the first requirement for standing, inasmuc h as
the loss of valuable credits constitutes an imminen t concrete injury.

Duquesne's claim to jurisdiction, however, founders on the other two prongs of the standing test: causatio n and redressability. The causation requirement is only s atisfied where the injury is "fairly traceable to the challe nged action of the defendant, and not the result of the indepen dent action of some third party not before the court." B ennett v. Spear, 520 U.S. 154, 167 (1997). In this case, Duqu esne'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 -- re defining the SIP in such a way that Duquesne may not receive ERCs for its dormant plant -- that results in the reduct ion of credits below the level that Duquesne urges would b e the result if the Pennsylvania definition did not go be yond the minimum level of stringency required by federal law

.

However, the EPA, whose action in approving the pla n forms the asserted basis for federal jurisdiction h ere, only has power to disallow state plans that fail to be s tringent 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 ad opt or enforce (1) any standard or limitation respecting e missions of air pollutants or (2) any requirement respectin g control or abatement of air pollution; except that if an em ission standard or limitation is in effect under an applic able implementation plan . . . such State or political s ubdivision may not adopt or enforce any emission standard or limitation which is less stringent than the standar d 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

6stringent than required by the Clean Air Act; rathe r, EPA by

statutory directive must approve a plan when it con forms to the federal minimum. See 42 U.S.C. S 7410(k)(3) ("[ T]he Administrator shall approve such submittal as a who le if it meets all of the applicable requirements of this ch apter."). Therefore, the EPA's action in approving the plan i s not "fairly traceable" to the injury of which Duquesne complains.

For similar reasons, Duquesne's claim against the E PA fails the redressability requirement. To be "redres sable" for standing purposes, it must "be likely, as opposed t o merely speculative, that the injury will be redressed by a favorable decision." Bennett, 117 S. Ct. at 1163. It is Duque sne'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 suffic iently addressed by the EPA. But again, as the foregoing demonstrates, EPA may not require less stringency-- which is the outcome Duquesne hopes to achieve -- i n its review of whether the definition is adequately stri ngent. And, it should be added, Duquesne does not argue th at the PDEP's definition is insufficiently stringent; in f act, Duquesne stated in its comments on the EPA's propos ed approval of the Pennsylvania New Source Review SIP that, "PA DEP's approach is, in effect, more stringent th an EPA's definitions." App. at 718.

Consequently, Duquesne cannot through this action secure an order from EPA or this court requiring PD EP to make its requirements more lax. Rather, what Duques ne seeks is to compel EPA to engage in a formalistic e xercise by conducting a fuller demonstration of the stringe ncy of
PDEP's definition. Such a "demonstration" would be a technical formality as the stringency of that defin ition is not only apparent on the face of the definition, but al so conceded by Duquesne. At best, if Duquesne were successful in this court, it would get a second opp ortunity to convince PDEP that its definition is too strict, an exercise that is wholly inconsistent with the asserted groun d for maintaining that the regulation was improperly appr oved by EPA. Such a speculative contingency cannot suppo rt Article III standing.

7Accordingly, we will dismiss this Petition for Revi ew for

lack of standing.

A True Copy:

Teste:

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

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