DUKE ENERGY S RESPONSE TO SELC PETITIONERS MOTION FOR LEAVE TO FILE SUPPLEMENTAL AUTHORITY

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1 STATE OF NORTH CAROLINA COUNTY OF WAKE IN THE OFFICE OF ADMINISTRATIVE HEARINGS 08 EHR 0771, 0779, 0835 & 0836 NORTH CAROLINA WASTE AWARENESS AND REDUCTION NETWORK, INC., APPALACHIAN VOICES, ENVIRONMENTAL DEFENSE FUND, NATIONAL PARKS CONSERVATION ASSOCIATION, SIERRA CLUB, SOUTHERN ALLIANCE FOR CLEAN ENERGY, CAPE FEAR RIVERKEEPER, CATAWBA RIVERKEEPER, FRENCH BROAD RIVERKEEPER, LOWER NEUSE RIVERKEEPER, NEW RIVERKEEPER, PAMLICO-TAR RIVERKEEPER, UPPER NEUSE RIVERKEEPER, WATAUGA RIVERKEEPER, WACCAMAW RIVERKEEPER and YADKIN RIVERKEEPER, Petitioners, N.C. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, DIVISION OF AIR QUALITY, Respondent, and DUKE ENERGY CAROLINAS, LLC, Intervenor-Respondent. DUKE ENERGY S RESPONSE TO SELC PETITIONERS MOTION FOR LEAVE TO FILE SUPPLEMENTAL AUTHORITY On November 14, 2008, the SELC Petitioners 1 filed a motion for leave to file as supplemental authority a recent decision issued by the Environmental Appeals Board ( EAB ) of 1 The term SELC Petitioners refers to those Petitioners represented by the Southern Environmental Law Center: Environmental Defense Fund, National Parks Conservation Association, Sierra Club, and Southern Alliance for Clean Energy.

2 the United States Environmental Protection Agency, In re: Deseret, PSD Appeal No (EAB Nov. 13, 2008) ( Deseret ). Duke Energy does not oppose SELC Petitioners motion but file this brief response to clarify the record and provide a more accurate description of the holding of Deseret than what SELC Petitioners provided. First and foremost, SELC Petitioners misread Deseret in stating that it expressly rejects Duke s rationale for moving to dismiss their CO 2 claim. SELC Motion at 2. To the contrary, the EAB declined to reach the question of whether CO 2 was subject to regulation and instead remanded the case to the permitting agency (EPA Region 8) to address the issue, perhaps through an action of nationwide scope. Deseret Order at 64. As Duke Energy noted in its motion to dismiss, however, EPA has addressed the issue on a nationwide basis at length in its recent 564-page Advanced Notice for Public Rulemaking ( ANPR ) and unequivocally concluded that greenhouse gases, including CO 2, are not currently subject to regulation under the Act, and therefore are not regulated NSR pollutants. EPA s ANPR, which was not before the EAB and therefore not addressed in Deseret, solicits pubic comment related to the potential regulation of greenhouse gas emissions under the Clean Air Act following the Supreme Court s decision in Massachusetts v. EPA. 2 That comment period is ongoing and is scheduled to close on November 28, Moreover, SELC Petitioners motion fails to mention that Deseret rejects their primary arguments in opposition to Duke Energy s motion to dismiss. First, EAB rejected the argument that subject to regulation has a plain meaning and that this meaning requires BACT for CO 2 : [We] find no evidence of a Congressional intent to compel EPA to apply BACT to pollutants that are subject only to monitoring and reporting requirements. Deseret Order at 63; see SELC 2 See Preface of Administrator at 5, available at (emphasis added) (visited November 15, 2008).

3 Petitioners Opp n to Mot. to Dismiss at 6-9. Instead, EAB found that the statute by its terms does not foreclose EPA s interpretation that subject to regulation describes pollutants that are presently subject to a statutory or regulatory provision that requires actual control of emissions of that pollutant. Deseret Order at 2, 33. Second, EAB rejected the argument that Section 821 and its implementing regulations require BACT for CO 2 : We reject Sierra Club s contention[] that Section 821 negates the Agency s authority to interpret subject to regulation for purposes of the PSD program and compels an interpretation of the statute that necessarily requires that the Permit contain a CO 2 BACT limit. Deseret Order at 26; see Petitioners Opp n to Mot. to Dismiss at 9-13, Deseret also undermines SELC Petitioners heavy reliance on Friends of the Chattahoochee v. Longleaf, Case. No. 2008CV (Ga. Super. Court June 30, 2008) (holding that CO 2 is subject to regulation under Section 821), a decision that is currently on appeal to the Georgia Court of Appeals. Petitioners Opp n to Mot. to Dismiss at In short, far from supporting SELC Petitioners opposition to Duke Energy s motion to dismiss, the Deseret decision undermines it. Further, the Deseret decision does not mean that DAQ must limit CO 2 in PSD permits issued in North Carolina and, in any event, is not binding on DAQ. Because EPA has not yet issued regulations requiring control of CO 2 emissions, DAQ reasonably concluded that CO 2 is not a regulated NSR pollutant for which a BACT analysis or emission limit is required. As noted, Deseret itself expressly acknowledged that this interpretation is not foreclose[d] by the language of the CAA. For this reason and for the reasons stated Duke s memorandum and reply in support of its motion to dismiss, SELC Petitioners cannot claim that DAQ clearly erred in concluding that no CO 2 BACT limit was required in Duke Energy s PSD permit.

4 In short, Deseret maintains the status quo: CO 2 is not yet a regulated NSR pollutant. Respectfully submitted, this the 17th day of November, Garry S. Rice (NC Bar # 13674) gsrice@duke-energy.com Associate General Counsel Duke Energy Carolinas, LLC Post Office Box 1006 Law Department EC03T Charlotte, NC /s/ Nash E. Long, III Nash E. Long, III (NC Bar # 24385) nlong@hunton.com HUNTON & WILLIAMS LLP Bank of America Plaza 101 South Tryon Street, Suite 3500 Charlotte, NC Telephone: Fax: Charles D. Case (NC Bar # 7652) Jason S. Thomas (NC Bar # 16527) ccase@hunton.com jsthomas@hunton.com HUNTON & WILLIAMS LLP Post Office Box 109 Raleigh, NC Telephone: Fax: Attorneys For Duke Energy Carolinas, Llc

5 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing DUKE ENERGY S RESPONSE TO SELC PETITIONERS MOTION FOR LEAVE TO FILE SUPPLEMENTAL AUTHORITY was served upon the persons listed below by depositing a copy of the same in an official depository of the U.S. Mail, First Class, in a postage-paid envelope and by electronic mail at the following addresses: Marc Bernstein, Esq. Special Deputy Attorney General mbernstein@ncdoj.gov James C. Holloway, Esq. Assistant Attorney General Jholloway@ncdoj.gov Elizabeth J. Weese, Esq. Assistant Attorney General jweese@ncdoj.gov N.C. Department of Justice P.O. Box 629 Raleigh, NC Tel: (919) Fax: (919) Stephen H. Novak, Esq. Senior Staff Attorney Wildlaw 46 Haywood Street, Suite 323 Asheville, NC wildlawnc@aol.com Counsel for Appalachian Voices Counsel for NC DAQ John D. Runkle, Esq. Attorney at Law P.O. Box 3793 Chapel Hill, NC jrunkle@pricecreek.com Counsel for NCWARN Scott Gollwitzer, Esq. In-house Counsel Appalachian Voices 16 Eagle Street, Suite 200 Asheville, NC scott@appvoices.org Counsel for Appalachian Voices Scott Edwards, Esq. 50 South Buckhout Street Irvington, NY sedwards@waterkeeper.org Counsel for Cape Fear Riverkeeper et al. Gudrun Thompson, Esq. John Suttles, Esq. Southern Environmental Law Center 200 W. Franklin Street, Suite 330 Chapel Hill, NC gthompson@selcnc.org jsuttles@selcnc.org Counsel for Envtl. Def. Fund et al. This the 17th day of November, /s/ Nash E. Long, III EMF_US v2