## Facts

- Duke Energy operated coal-fired electric generating units in North Carolina and South Carolina.
- Duke undertook life-extension and modernization projects on boiler units that enabled the units to operate more hours per year.
- The projects were alleged to increase total annual emissions of pollutants (including SO₂ and NOₓ) by increasing operating hours.
- The projects did not significantly increase the units’ hourly emissions rates.
- Duke did not obtain PSD preconstruction permits for the projects.
- The United States (with environmental groups intervening) brought an enforcement action alleging PSD violations for failure to obtain permits before undertaking “modifications.”
- The district court granted summary judgment for Duke, concluding PSD “modification” required an hourly emissions-rate increase consistent with NSPS.

## Issues

1. Whether the Clean Air Act’s PSD program, which defines “construction” to include “modification (as defined in” Clean Air Act § 111(a)(4)), requires the same hourly emissions-rate standard used in NSPS to determine a “modification.”
2. Whether EPA could apply an annual-emissions-based approach for PSD “significant net emissions increase,” and whether that interpretation was entitled to administrative deference.

## Decision

- The Fourth Circuit affirmed summary judgment for Duke.
- The court held that “modification” in the PSD program must be interpreted consistently with the § 111(a)(4) definition incorporated from the NSPS provisions.
- Because Duke’s projects did not increase hourly emissions rates, they did not constitute PSD “modifications,” even if annual emissions increased due to longer operation.
- The court declined to defer to EPA’s annual-emissions-based PSD interpretation because it viewed the statutory cross-reference as controlling.

## Legal Principles

- When Congress incorporates a statutory definition by explicit cross-reference (“as defined in”), the incorporated term must be given a consistent meaning in the adopting provision absent contrary statutory direction.
- Under the Fourth Circuit’s reading of Clean Air Act § 7479(2)(C) and § 111(a)(4), a PSD “modification” requires an increase in the emissions rate, not merely an increase in total annual emissions resulting from increased utilization.
- Agency deference does not apply where the court finds Congress has spoken clearly to the interpretive question and the agency’s position conflicts with that statutory command.

## Conclusion

The Fourth Circuit concluded that PSD permitting is triggered only by physical or operational changes that increase hourly emissions rates, not by changes that merely increase annual emissions through additional operating hours, and it therefore upheld judgment for Duke Energy.


United States v. Duke Energy Corp., 411 F.3d 539 (4th Cir. 2005)