New York v. EPA

This month we thought we could take a look at a recent court decision addressing the Clean Air Act, which also serves to demonstrate the checks and balances of our federal government. On March 17, the United States Court of Appeals for the District of Columbia Circuit handed down a decision in New York v. EPA, No. 03-1380 (.pdf file), overturning a 2003 Environmental Protection Agency rulemaking that weakened Clean Air Act protections. The 2003 rulemaking represented one of the most recent chapters in the ongoing fight over the Clean Air Act's New Source Review (NSR) program. Environmental groups, local government entities and fourteen states challenged the rulemaking, known as the Equipment Replacement Provision.

What is New Source Review ("NSR")?

The NSR is a permitting process that requires stringent pollution controls on new or modified sources of air pollution. For existing sources of air pollution, the NSR program represents a compromise between environmental interest in clean air and public health and economic interest in continuing capital improvements. It allows continued operation of older facilities without updated controls until such time as the facility is "modified."

Section 111 of the Clean Air Act defines "modification" 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." EPA has always allowed "routine maintenance, repair and replacement" to occur without triggering NSR but the Equipment Replacement Provision drastically expanded the scope of the exclusion. At its most basic level, the 2003 Rule allowed for a certain amount of equipment replacement without triggering NSR regardless of whether or not an increase in emissions occurred. The primary intent of this rulemaking appears to have been to allow aging power plants to conduct major equipment overhauls without triggering NSR permitting and technology requirements.

The D.C. Circuit Court Decision

In a unanimous decision, the Circuit Court held that the Equipment Replacement Rule was contrary to the plain language of the Clear Air Act and overturned the EPA rule. When reviewing a case challenging an executive agency's interpretation of a law passed by Congress, a court applies a test established in the Supreme Court's 1984 Chevron decision (467 U.S. 837):

If "Congress has directly spoken to the precise question at issue . . . that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43. Only if the statute is silent or ambiguous do we defer to the agency's interpretation, asking "whether [it] is based on a permissible construction of the statute." Id. at 843. "If 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.

The Circuit Court held that the phrase "any physical change" was unambiguous. The expansive scope of the phrase meant that EPA could not ignore the Congressional command and only require NSR review of physical changes that were "costly or major." The Court stated, "EPA's approach would ostensibly require that the definition of "modification" include a phrase such as "regardless of size, cost, frequency, effect," or other distinguishing characteristic. Only in a Humpty Dumpty world would Congress be required to use superfluous words while an agency could ignore an expansive word that Congress did use. We decline to adopt such a world-view." Beyond that problem, the Equipment Replacement Rule allowed non-de minimis emission increases to avoid NSR review, even though Congress specifically defined "modification" in terms of emission increases. For these reasons, the rule violated the Clean Air Act and the Court struck it down.

EPA and the industry intervenors have filed a petition for reconsideration by the Circuit Court panel or the entire Circuit Court, and have indicated that they are likely to appeal to the Supreme Court if that petition is denied.

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