Appeals Court Rejects Administration's New Source Review Changes

A federal appeals court rebuked the Bush administration for implementing a rule that critics argued would have allowed aging power plants and other industrial facilities to make major modifications to their plants without improving their pollution controls (State of New York vs. EPA, D.C. Cir., No. 031380A, March 17, 2006).

The unanimous ruling by the U.S. Court of Appeals for the D.C. Circuit was cheered by a coalition of environmental and public health groups and several states that filed suit to block the rule.

"This decision is a major victory for clean air and public health," said New York state Attorney General Eliot Spitzer. "It will encourage industry to build new and cleaner facilities, instead of prolonging the life of old dirty plants."

The case concerns an EPA rule (the Equipment Replacement Provision -- ERP) that changed the Routine Maintenance, Repair, and Replacement Exclusion (RMRR) from the Clean Air Act's New Source Review (NSR) requirements. Under section 111(a)(4) of the Clean Air Act, sources that undergo "any physical change" that increases emissions are required to undergo the NSR permitting process. The exclusion has historically provided that routine maintenance, repair and replacement do not constitute changes triggering NSR.

The ERP, issued in 2003, both defined and expanded that exclusion. EPA explained: The rule states categorically that the replacement of components with identical or functionally equivalent components that do not exceed 20 percent of the replacement value of the process unit and does not change its basic design parameters is not a change and is within the RMRR exclusion.

According to EPA, the rule would preserve public health protections while removing disincentives for owners and operators of power plants and manufacturing facilities to undertake RMRR activities that would improve safety, reliability and efficiency of their plants. The agency also stated that the rule would not allow power plants to increase their emissions past their current Clean Air Act limits and would have little or no impact on emissions.

According to the US Public Interest Research Group, the rule created a loophole that would have allowed more than 20,000 power plants, refineries and other industrial facilities to replace existing equipment with "functionally equivalent" equipment without undergoing the clean air reviews required by the new source review program if the cost of the replacement did not exceed 20 percent of that of the entire "process unit." This exemption would have applied even if a facility's air pollution increased by thousands or tens of thousands of tons as a result of the replacement.

The court, which stayed the effective date of the ERP on Dec. 24, 2003, found that the rule contradicted the purposes of the Clean Air Act. "Indeed, (the rule) would produce a "strange," if not an "indeterminate," result: a law intended to limit increases in air pollution would allow sources operating below applicable emission limits to increase significantly the pollution they emit without government review," the court stated.

"Irish eyes are surely smiling -- and we all will be breathing easier -- with this green court ruling on St. Patrick's Day," said John Walke, director of the Natural Resources Defense Council's Clean Air Program. "The court recognized the blarney in the administration's plan to gut a key part of the Clean Air Act and rejected it. Now thousands of dirty facilities will not be able to pollute more."

EPA officials said they are reviewing their options regarding the ruling.

The D.C. Circuit's opinion can be accessed at the court's Web site: http://www.cadc.uscourts.gov/internet/internet.nsf.

For more information about New Source Review regulations, go to http://www.epa.gov/nsr/actions.html.

This article originally appeared in the 03/01/2006 issue of Environmental Protection.

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