NSR Reform — EPA's ACE Proposal
Time 4 Minute Read
Categories: Air, Coal, EPA, Policy

Our regulatory state is founded on the principle that regulated parties must have notice of their compliance obligations. Laws or regulations that fail to give fair notice violate due process and cannot give rise to liability. See, e.g., Gen. Elec. Co. v. EPA, 53 F.3d 1324 (D.C. Cir. 1995).

A notoriously unclear regulatory program addresses circumstances under which an existing facility triggers the Clean Air Act’s (CAA) “new source review” (NSR) program and its associated control technology and air quality review requirements. Over the past two decades, courts have concluded that the same words in the regulations have diametrically opposed meanings. Compare Nat’l Parks Conservation Ass’n, Inc. v. TVA, No. 3:01-CV-71, 2010 WL 1291335 (E.D. Tenn.Mar. 31, 2010) (boiler tube replacement is “routine” repair and replacement) with United States v. Ohio Edison Co., 276 F. Supp. 2d 829 (S.D. Ohio 2003) (boiler tube replacement is not “routine” repair and replacement). Indeed, after addressing the application of NSR to an industrial facility on two occasions, one three-judge panel in the Sixth Circuit produced five different opinions advancing three different interpretations of key provisions of the rules. See United States v. DTE Energy Co., 711 F.3d 643 (6th Cir. 2013); United States v. DTE Energy Co., 845 F.3d 735 (6th Cir. 2017). Disagreement among judges over the meaning of a regulation is objective evidence of a rule’s failure to provide fair notice of its compliance obligations.

Outside of the enforcement context, EPA has recognized as much. EPA initially attempted to provide regulatory clarity during the Bush administration in its 2002 NSR reform rules, which were upheld in part and vacated in part by the DC Circuit. New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005). Now, EPA has initiated a further rulemaking to provide needed clarity, at least for electric generating units, in its proposed “Affordable Clean Energy” rule. 83 Fed. Reg. 44,746 (Aug. 31, 2018).

Building on an effort begun over 10 years ago in the George W. Bush administration, EPA proposes to clarify that a source must be “modified” as defined under the CAA’s new source performance standards (NSPS) program (that is, the source must undertake a project that causes an increase in its hourly emissions rate) before examining whether that modification is also a “major” one that triggers NSR. This clarification is not a huge leap, as the Act defines “modification” for the NSR program by reference to the NSPS definition of the term.

As the DC Circuit said in reviewing EPA’s earlier NSR reform rule, “Congress did not specify how to calculate ‘increases’ in emissions” in the CAA, leaving EPA “‘to fill in that gap.’” New York, 413 F.3d at 27. And, as the Supreme Court observed in Environmental Defense v. Duke Energy Corp., 549 U.S. 561 (2007), while EPA’s 1980 NSR regulations did not define the term “major modification” in the same manner as a “modification” for the NSPS program, id. at 576, “the possibility that the two regulatory programs could be read together as set and subset, such that an NSPS-type modification was a prerequisite to an NSR-type modification”—which is essentially what EPA proposes to do here—“sounds right.” Id. at 581 n.8.

In a sense, then, all EPA’s latest notice does is to propose what “sounds right” to the Supreme Court. And because the CAA defines NSR “modification” by reference to the NSPS definition of the term, this clarification is only a small step to reconcile these programs in a manner that is consistent with the plain language of the statute.

Nevertheless, ENGOs argue that EPA lacks statutory authority for this clarification and have threatened suit. As a result, the courts may once again be asked to weigh in on this nationally significant program—hopefully in a manner that will promote clarity and bring to an end the long-running debate over the meaning of the NSR modification rule.

  • Special Counsel

    Described as “absolutely one of the leaders in the field,” by Chambers USA, 2016, Bill Brownell is highly sought for his consummate understanding of environmental law. Bill has been lead counsel for some of the most important and ...


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