Okies from Muskogee 1; Sierra Club 0. Another NSR Case Goes Down on Statute of Limitations Grounds

Posted on March 10, 2016 by Seth Jaffe

The law is full of fine distinctions.  Today’s example?  A divided 10th Circuit panel affirmed dismissal of the Sierra Club’s citizen suit claims against Oklahoma Gas and Electric concerning alleged PSD violations at OG&E’s Muskogee plant muskogeebecause the Sierra Club did not sue within five years of the commencement of construction – even though Sierra Club did sue within five years of the completion of construction.

I have not seen any other cases present this issue so squarely.  For the majority, the decision was relatively easy.  Because the CAA has no limitations provisions, the default five-year limitations period set forth at 28 USC § 2462 applies.  Section 2462 provides that suits must be brought “within five years from the date when the claim first accrued.”  That “first accrued” language was Sierra Club’s downfall.  The court decided that a claim “first accrues” when a plaintiff has a right to bring a claim.  In the PSD context, that is when a defendant commences construction or modification without a permit.  Because the Sierra Club did not file within five years after OG&E commenced construction, the complaint was late.

Not so fast, argued the dissent. As the dissent rightly noted, the CAA does not make commencing construction or modification without a required PSD permit a violation; it makes “the construction or modification of any source” without a permit a violation.  Thus, the dissent argued, OG&E was still “constructing” its project without a permit during a period less than five years before Sierra Club brought suit and was still in violation, so the suit was timely.

I should note that, whether the dissent is correct or not, it did rightly distinguish two other cases, United States v. Midwest Generation and United States v. EME Homer City Generation, which have been cited in opposition to “continuing violation” theories.  As the dissent emphasized, those cases concerned whether operation of the modified facility, after construction was complete, constituted continuing violations.  The dissent agreed that post-construction operations cannot effectively toll the statute of limitations. However, that is a different question than whether continuing construction keeps the limitations period open.  Indeed, the EME Homer City decision specifically contemplated the possibility that:

"the maximum daily fine accrues each day the owner or operator spends modifying or constructing the facility – from the beginning of construction to the end of construction."

That sounds like a basis for new claims accruing each day, thus triggering a new limitations period.  I think that this case is a close question. However, as interested as the Supreme Court seems to be in the CAA these days, I don’t see it taking this case, and certainly not before there is a circuit split on the issue.

What is impossible to determine is what caused the Sierra Club to wait.  Why take the chance?  It does seem a self-inflicted wound either way.

(Very quickly, I’ll note that the majority also dismissed Sierra Club’s injunctive relief claims under the concurrent remedies doctrine.  That’s an important issue, but not a difficult or interesting one, at least where the government is not a party.)

Oklahoma Federal Court Says It Lacks Jurisdiction to Award Declaratory Relief to EPA in Clean Air Act Case

Posted on March 23, 2015 by Donald Shandy

On January 15, 2015, Oklahoma Western District Judge Timothy DeGiusti dismissed a declaratory judgment action brought by the United States Environmental Protection Agency (EPA) against Oklahoma Gas and Electric Company (OG&E) under the Clean Air Act.  In United States v. Okla. Gas & Elec. Co. , the Court found that it lacked subject matter jurisdiction over EPA’s claims.

The litigation involved certain modifications made by OG&E at its Muskogee and Sooner plants.  These modifications occurred more than five (5) years prior to EPA’s suit.  Before commencing each of the projects, OG&E submitted “Project Notifications” to the Oklahoma Department of Environmental Quality (DEQ) that: (1) stated that each of the modifications would not result in a significant emissions increase; and (2) committed to submitting annual reports supporting this conclusion.  OG&E did not submit detailed emissions calculations.  However, five years of data subsequent to the modifications confirmed that significant emissions increases did not occur. 

Although the underlying dispute revolves around whether OG&E was required to obtain a Prevention of Significant Deterioration (PSD) permit before commencing each of the modifications, EPA did not allege that the projects were “major modifications” or that the projects resulted in “significant emissions increases” from the Sooner or Muskogee plants.  Nor did the government seek penalties for violations of the PSD permit requirements or injunctive relief requiring OG&E to obtain permits, likely seeking to avoid the application of the five year general statute of limitations applicable to government claims for fines, 28 U.S.C. § 2462. Instead, the government only sought a declaration that OG&E did not properly project whether the modifications to the Sooner and Muskogee plants would result in a significant increase in emissions.

Given that the government did not allege a “major modification” or a “significant emissions increase” for any of the projects, the Court found that the government had not presented an actual case or controversy sufficient for the Court's exercise of jurisdiction. 

Even if OG & E failed as a matter of law to evaluate whether the modifications would result in a significant increase in post-modification emissions of regulated pollutants at each facility, that failure to project is not, without more, determinative of whether a PSD permit is required. Unmoored from a claim that the modifications at issue are major modifications, Plaintiffs ask this Court to make a declaration as to a collateral legal issue governing aspects of a future potential suit. EPA's attempt at piecemeal litigation, therefore, cannot withstand the Court's jurisdictional limitations.

The Court also rejected EPA’s novel claim for injunctive relief seeking to require OG&E to properly calculate whether the projects were likely to result in a significant emissions increase prior to construction.

The Court is not aware of any decision in which the injunctive relief requested by EPA has been granted, or for that matter, ever requested. As the parties concede, there is no statutory or regulatory requirement that projections be submitted to EPA or any other regulatory authority in the first instance. And, as the Sixth Circuit addressed in DTE Energy, there is no prior approval required by the agency. Thus, if the Court were to grant the injunctive relief requested by EPA it would be directing OG & E to submit projections where no statutory or regulatory authority for such action exists. The availability of relief of the nature requested by EPA is a matter to be addressed by Congress, not this Court.

This is an important decision limiting EPA’s ability to “second-guess” a facility’s pre-construction permitting calculations in the absence of data demonstrating a significant emissions increase.  

No Competitors In My Backyard?

Posted on March 2, 2015 by Seth Jaffe

In Paradise Lost, John Milton wrote that “easy is the descent into Hell, for it is paved with good intentions.”  

road to hell

A modern environmental lawyer might say that the road to waste, inefficiency, and obstruction is paved with good intentions.  Nowhere is that more apparent than with citizen suit provisions, as was demonstrated in the decision earlier this week in Nucor Steel-Arkansas v. Big River Steel.

Big River Steel obtained a permit from the Arkansas Department of Environmental Quality to construct a steel mill in Mississippi County, Arkansas.  Nucor owns an existing steel mill in – you guessed it – Mississippi County, Arkansas.  Nucor brought a host of claims in various forums (Sorry; I’m not a Latin scholar and cannot bring myself to say “fora”) in an effort to derail the Big River Steel project.  It appealed the permit in Arkansas courts.  It also petitioned EPA to object to the permit.

Finally – the subject of this case – it brought a citizens’ suit under the Clean Air Act alleging that the permit did not comport with various CAA provisions addressing permitting.  The Court rightly dismissed the complaint, basically on the ground that the suit was simply an improper collateral attack on the air permit.  The 5th and 9th Circuits have reached similar conclusions in similar circumstances.

The point here, however, is that clients don’t want to win law suits; they want to build projects.  Even unsuccessful litigation can tie projects up in knots, jeopardizing project financing or causing a project to miss a development window.

The road to hell is paved with the pleadings of bogus citizen suits.

You Can’t Estop the Government — Even When It Wants to Be Estopped

Posted on August 25, 2014 by Seth Jaffe

On August 12th, the 9th Circuit Court of Appeals issued a decision that arguably explains everything from why the Tea Party exists to why otherwise calm and sane executives suddenly lose all their hair. Perhaps most astounding, the decision is clearly correct. Perhaps the law is an ass.

In 2008, Avenal Power submitted an application to EPA for a PSD permit to construct a new 600 MW natural gas-fired power plant in Avenal, California. Although section 165(c) of the Clean Air Act requires EPA to act on such applications within one year, EPA failed to do so.

Subsequently, and before EPA ever did issue a permit, EPA revised the National Ambient Air Quality Standard for NOx. Avenal Power apparently could demonstrate that emissions from the new plant would comply with the old NAAQS, but could not demonstrate that it would not cause an exceedance of the new NAAQS. After some waffling, EPA took the position that it could grandfather the permit application and review it under the prior NAAQS. Citizen groups appealed and the Court of Appeals held that EPA had no authority to grandfather the application.

To the Court, this was a simple application of Step 1 of Chevron. The Court concluded that sections 165(a)(3) and (4) and 110(j) of the CAA unambiguously require EPA to apply the NAAQS in effect at the time a permit is issued. Thus, EPA has no discretion to grandfather permit applications, even though EPA was required by law to issue a permit decision at a time when more lenient requirements were in effect.

I think that the Court’s decision is clearly right on the law. The statutory language seems unambiguous.  But what did the Court have to say to those who feel that the result is inequitable, because Avenal was legally entitled to a decision in one year, and would have obtained its permit if EPA had acted timely? Pretty much, tough luck:

Finally, EPA relies heavily on the argument that the equities weigh in favor of Avenal Power. In short, we agree. Avenal Power filed its application over six years ago, and endeavored to work with EPA for years, even after filing suit, to obtain a final decision. But however regrettable EPA’s treatment of Avenal Power has been, we simply cannot disregard the plain language of the Clean Air Act, or overlook the reason why an applicant must comply with revised and newly stringent standards —that is, “to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population.” Honoring the statute’s plain language and overriding purpose, we must send EPA and Avenal Power back to the drawing board. (Emphasis added.)

In other words, EPA screwed up, and Avenal Power got screwed. Imagine having to explain that to your client.

 

law is an ass

Is the NSR Enforcement Initiative Dead Yet? Injunctive Relief Claims Dismissed Against U.S. Steel

Posted on April 29, 2014 by Seth Jaffe

On April 18, EPA lost another NSR enforcement case. Not only that, but this was a case EPA had previously won. As we noted last August, Chief Judge Philip Simon of the Northern District of Indiana, had previously ruled that the United States could pursue injunctive relief claims against United States Steel with respect to allegations by EPA that US Steel had made major modifications to its plant in Gary, Indiana, in 1990 without complying with NSR requirements.

Having reread the 7th Circuit opinion in United States v. Midwest Generation, Judge Simon has had a change of heart and now has concluded that injunctive relief claims (as well as damages) are barred by the statute of limitations, even where the same entity that allegedly caused the original violation still owns the facility. Judge Simon concluded that the Court of Appeals had spoken with sufficient clarity to bind him. The language he cited was this:

"Midwest cannot be liable when its predecessor in interest would not have been liable had it owned the plants continuously. (Italics supplied by Judge Simon.)"

Judge Simon seems to have felt more compelled than persuaded.

"Candidly, it is a little difficult to understand the basis for the statements in Midwest Generation that even claims for injunctions have to be brought within five years. But that is what Midwest Generation appears to mandate. And in a hierarchical system of courts, my job as a trial judge is to do as my superiors tell me.

So while the basis for applying a limitations period to the EPA’s injunction claim under §§ 7475 and 7503 is thinly explained in Midwest Generation, upon reconsideration I do think that’s the outcome required of me here."

One final note. In his original opinion, Judge Simon ruled against US Steel, in part, because the concurrent remedy doctrine, which US Steel argued barred injunctive relief where damages were not available, could not be applied against the United States. As Judge Simon noted, the 7th Circuit Court of Appeals did not discuss the concurrent remedy doctrine, so we don’t know the basis of its holding that a party continuously owning a facility that is alleged to have violated the NSR provisions of the CAA more than five years ago is not subject to injunctive relief. However, it is worth pointing out, as we discussed last month, that Judge James Payne, of the Eastern District of Oklahoma, dismissed injunctive relief claims brought by the Sierra Club (not the government, of course), relying on the concurrent remedy doctrine.

Something tells me that the United States isn’t quite ready to give up on these cases, notwithstanding a string of recent defeats. The NSR enforcement initiative may be in trouble, but it’s not quite dead yet.

 

The Trains Don’t Wait... GHG Permits Leaving the Station

Posted on March 24, 2014 by Catherine R. McCabe

While the world waits for the Supreme Court to decide whether EPA can regulate greenhouse gas (GHG) emissions from stationary sources under the Clean Air Act, EPA and state permitting authorities have moved ahead to issue GHG permits. Some of those permits are encountering legal challenges. The Sierra Club and citizen activists are challenging permits issued by EPA Regions as insufficiently stringent, and urging EPA to use its Prevention of Significant Deterioration (PSD) permitting authority to require greater use of solar energy and carbon capture and sequestration (CCS) at new facilities.

So far, EPA’s Environmental Appeals Board has rejected two citizen challenges to GHG PSD permits issued by EPA Regions. On March 14, 2014, the Board denied the Sierra Club’s petition for review of a GHG permit issued by Region 6 for a new natural gas-fired power plant in Harlingen, Texas. In re La Paloma Energy Center, LLC. (Those of you who follow events in Texas will recall that EPA is currently running the GHG permitting program in that state, but has proposed to approve the state’s application to assume responsibility for that program.) The Board rejected Sierra Club’s arguments that the permit’s GHG emission limits were not stringent enough to meet BACT standards and that Region 6 should have required La Paloma to consider adding a solar energy component to its power plant. The Board cautioned, however, that there is no “automatic BACT off-ramp” for solar energy alternatives, and emphasized that permitting authorities must consider suggestions for adding solar energy components at new facilities on a case-specific basis.

In 2012 the Board rejected similar arguments by citizen activists who urged Region 9 to use its PSD permitting authority to require a new hybrid (gas-solar) power plant in California to reduce GHG emissions by increasing its planned solar generation capacity. In re City of Palmdale. The proposed plant was to be fueled primarily by natural gas, with a modest (10%) solar power component to satisfy California renewable energy requirements. The decisions in both City of Palmdale and La Paloma relied heavily on the Regions’ findings that there was insufficient space at the project sites to accommodate the solar power generation capacity that the petitioners were advocating. 

The Palmdale decision also upheld Region 9’s rejection of CCS as a BACT requirement for that facility based on cost considerations. The estimated annual cost of CCS would have been twice the project cost (annualized over 20 years) in that case. Sierra Club has renewed the debate over the affordability of CCS in a new PSD permit appeal that is currently pending before the Board. In re ExxonMobil Chemical Company Baytown Olefins Plant. Region 6 rejected the CCS option in this case based on a finding that the cost would be disproportionately high. Stay tuned for a Board decision in the next few months . . . 

*Any views expressed herein are the views of the author and do not necessarily reflect the views of the U.S. Environmental Protection Agency or the United States.

More on Daubert: The 11th Circuit Allows EPA’s Experts to Testify on NSR Violations

Posted on September 27, 2013 by Seth Jaffe

Last spring, my colleague Robby Sanoff complained on our firm’s blog about the problem resulting from appellate courts’ refusal to give appropriate discretion to district judges in performing their gatekeeping function under Daubert.  As Robby put it:

"The difference between “shaky but admissible” and unreliable and inadmissible evidence would seem to be entirely in the eye of the beholder."

Robby will not be pleased by last’s week’s decision by the 11th Circuit Court of Appeals in United States v. Alabama Power, reversing a district court order excluding EPA’s expert testimony in support of its NSR enforcement action against Alabama Power.  The Court majority performed an extensive review of the testimony provided in the Daubert hearing below, and concluded that the district court’s decision was clearly erroneous.  (For those of you concerned with the merits of these cases, the question was whether EPA’s model, which clearly applied to determinations of emissions increases for baseload plants, could be applied as well to cycling plants generally and the plants at issue in the case in particular.)

The case is particularly interesting because Judge Hodges, taking Robby’s view, dissented.  As Judge Hodges noted, prior to the Supreme Court decision in General Electric v. Joiner, appellate courts did not grant significant discretion to district courts in exclusion rulings.  However, Joiner made clear that the abuse of discretion standard applies even in outcome-determinative exclusion rulings.

Next, Judge Hodges noted that, in Daubert rulings, there should be a “heavy thumb – really a thumb and a finger or two – that is put on the district court’s side of the scale.”  He then rehearsed the actual statistics on Daubert reversals in the 11th Circuit:  3 reversals out of 54 cases.

Finally, Judge Hodges conducted a brief review of evidence tending to support the district court’s conclusion and determined that its decision was not “a clear error in judgment.”  Concluding that a different result might be appropriate if review were de novo, Judge Hodges quoted Daubert itself:

"We recognize that, in practice, a gatekeeping role for the judge, no matter how flexible, inevitably on occasion will prevent the jury from learning of authentic insights and innovations. That, nevertheless, is the balance that is struck by Rules of Evidence designed not for the exhaustive search for cosmic understanding but for the particularized resolution of legal disputes."

Decisions such as this have to be discouraging to district court judges, as Robby noted.  It’s worth pointing at that Judge Hodges is actually a district court judge, sitting on the court of appeals by designation.  It seems fitting that the district judge on the panel would be the judge vainly trying to protect the discretion of district judges in Daubert matters.

Another Blow to EPA’s NSR/PSD Enforcement Initiative

Posted on August 27, 2013 by Mary Ellen Ternes

Followers of this Blog will not be at all surprised with the Third Circuit’s August 22, 2013 ruling denying EPA’s requested CAA New Source Review enforcement relief against former and current owners of the grandfathered and allegedly subsequently modified power plant that has been called “one of the largest air pollution sources in the nation.”   Former and current owners of such aging power plants caught in EPA’s NSR national enforcement initiative are reassured with the Third Circuit’s finding that text of the Clean Air Act does not authorize injunctive relief for wholly past PSD violations, even if that violation causes ongoing harm.

Having lost its battle for the Cross-State Air Pollution Rule (CSAPR, or the Transport Rule) in August 2012, EPA was dealt another blow with United States v. EME Homer City Generation, in which the Third Circuit upheld the District Court’s 2011 dismissal of the government’s claims.

In 2011, the District Court for the Western District of Pennsylvania agreed with the current and former owners of the power plant that EPA had no authority to hold either party liable for alleged PSD violations arising from purported modifications to their grandfathered power plant.  In reaching defendants’ bases for dismissal, the District Court reviewed the permit actions approved by air permitting authorities in 1991, 1994, 1995 and 1996, which EPA alleged with Notices of Violation in 2008 (against the current owner) and 2010  (against current and former owners), to have triggered PSD, and which caused the current Title V permit to be incomplete.   The Court’s holding that the PSD violations constituted singular, separate failures by the former owner rather than ongoing failures meant that EPA was outside the five year statute of limitations, allowing no civil penalties against the former and current owners.  Moreover, the District Court held EPA was left with no injunctive relief against the current owner because they were in no position to apply for a PSD permit prior to their acquisition of the plant in 1998, and thus could not have violated PSD.

The District Court separately addressed EPA’s claims of injunctive relief against the former owner, recognizing the ongoing higher SO2 emissions that occurred without the benefit of an historic PSD permit.  The District Court was unwilling to reach a broad conclusion regarding its authority to award injunctive relief under the PSD program, but given that the former owners no longer owned or operated the plant, and therefore no longer violate PSD, held that there was no plausible basis for granting the rare and extraordinary remedy of injunctive relief, despite the higher emissions occurring the absence of BACT, which the court characterized as a present consequence of a one-time violation.

Upon review, the Third Circuit rejected EPA’s arguments that the current owners violated PSD by operating the plant without BACT with a simple, “no,” pursuant to the plain text of 42 USC 7475(a) which references merely “construction” and “modification,” not “operation, ” relying on U.S. v. Midwest Generation and Sierra Club v. Otter Tail Power Co.,  adopting the positions of the Seventh and Eighth Circuits that “even though the preconstruction permitting process may establish obligations which continue to govern a facility’s operation after construction, that does not necessarily mean that such parameters are enforceable independent of the permitting process,” and thoroughly refuting EPA’s arguments that PSD could somehow result in ongoing operational requirements outside the PSD permitting process.  

Likewise, the Third Circuit rejected EPA’s proposed injunctive relief, which would have required the former owners to install BACT or purchase emission credits and retire them, affirming the District Court’s decision on narrower grounds.  Specifically, the Third Circuit held that the text of the Clean Air Act does not authorize an injunction against former owners and operators for a wholly past PSD violation, even if that violation causes ongoing harm. 

Hopefully, this Third Circuit decision, along with the Seventh and Eighth Circuit decisions relied upon therein, will signal a substantive end to EPA’s NSR/PSD Enforcement Initiative for similarly situated historic grandfathered power plants and their former and current owners.  But, we may have to wait out EPA’s hard headed circuit by circuit enforcement approach.  See e.g., EPA’s December 21, 2013 enforcement memorandum, “Applicability of the Summit Decision to EPA Title V and NSR Source Determinations,” following the Sixth Circuit’s Summit Petroleum Corp. v. EPA et al.

Arkansas Legislature Takes Pre-Emptive Strike At New NAAQS Implementation

Posted on July 10, 2013 by Charles Nestrud

In April of 2013 the Arkansas legislature put an end to the ad hoc policy of implementing the NAAQS through stationary source permitting based upon source specific NAAQS modeling.  The Arkansas legislature did not need a crystal ball to predict the chaos that was about to occur when the new NAAQS (PM2.5, one hour SO2 and one hour NO2) were swept into the existing Arkansas regulatory program.  Arkansas’ environmental agency, the Arkansas Department of Environmental Quality (ADEQ) has relied upon its stationary source permitting program to implement the NAAQS for years, as opposed to relying upon state implementation plan (SIP) development.  ADEQ has required every permit applicant to submit air dispersion modeling, and thereby demonstrate that the source will not cause a NAAQS violation.  By comparison, EPA generally requires only PSD permit applicants to submit NAAQS dispersion modeling, and requires the states to otherwise address NAAQS compliance through their SIPs.

When Arkansas’ SIP permit procedures were last updated in 2000, minor (non-Title V) sources, and “minor modifications” at major sources were not required to undertake NAAQS modeling.  Arkansas’ policies regarding NAAQS modeling were generally in sync with the Clean Air Act and most other states.  Over the ensuing years regulatory creep expanded Arkansas’ NAAQS modeling program to the point that nearly every stationary source permit application was involved.  ADEQ permit engineers required NAAQS dispersion modeling for minor sources, for minor mods at major sources, and then for any permit renewal—even no change renewals, “just to make sure that the source is still OK.”  For example, a facility that had operated in full permit compliance for decades, without any modifications, could face permit renewal problems for no reason other than background conditions or recent meteorological data changed the NAAQS modeling results.  Suffice to say this development was unpopular, making permitting expensive, time consuming, and uncertain.   

The uncertainty was predicted to become chaos in September of 2012 when ADEQ proposed to drop the new NAAQS into its existing SIP. ADEQ’s “plan” was that the new NAAQS would also be implemented through stationary source permitting, including ADEQ’s expansive NAAQS modeling policies.  Of particular concern is the PM2.5 standard, which, at 12 ug/cm3, is already near or exceeded by the background levels measured at the majority of the ambient monitoring stations throughout the state—background that is rarely, if ever, the result of any stationary source activity, but more likely the result of rural road dust and other non-stationary sources.  

It became apparent to the regulated community that each permit review following adoption of the new NAAQS would generate ad hoc findings of modeled exceedances of the new NAAQS.  By implementing the NAAQS through stationary source permitting rather than SIP planning, ADEQ eliminated any evaluation of regional cause and effect, and precluded any consideration of comprehensive solutions that involve all contributing sources. Under ADEQ’s “plan,” the unwitting permit applicant is forced to stand alone and face the consequences of a failed NAAQS modeling exercise.  Concerns raised by the regulated community fell on deaf ears.

The Arkansas legislature stepped in, and in April of 2013 it enacted Act 1302, which required ADEQ to stop “protecting the NAAQS” by requiring stationary source permit applicants to undertake dispersion modeling, except in enumerated circumstances. Act 1302 prohibits ADEQ from using modeling for stationary source permit decisions or requiring retrofit pollution control technology.  With the exception of PSD and other limited situations, dispersion modeling can only be used when there is a source or pollutant-specific SIP requirement.  The Clean Air Act requires states to develop a SIP “for maintenance and protection of the NAAQS,” and Act 1302 requires ADEQ to implement the NAAQS as required by the Clean Air Act.  The legislature did not neuter the agency’s efforts to protect clean air (which was the agency’s unsuccessful lobbying position).  The legislature just said quit implementing the NAAQS through ad hoc permit decisions based on source specific air dispersion modeling.  The legislature told ADEQ to use its ambient monitoring network, area modeling, and other tools to evaluate NAAQS compliance, and where non-attainment occurs, do the comprehensive planning that is required by the Clean Air Act  to address it.  Act 1302 was carefully drafted to compliment the Clean Air Act, and serves as a good model for any state facing similar NAAQS implementation issues.    

During the two months since Act 1302 has been the law in Arkansas the agency has gone through some needed growing pains. The proposed rulemaking to enact the new NAAQS in Arkansas is being re-evaluated in light of the requirements of Act 1302.    Much of the regulatory creep that occurred over the past decade has been curtailed, such that minor sources, minor modifications and no change permit renewals are no longer being required to submit dispersion modeling or demonstrate NAAQS compliance.  

There is nothing like the heavy hand of the legislature to bring reason back into agency decision making.  It appears that ADEQ now recognizes (much like most other states) that modeling has its limitations, and these minor stationary source projects are not causing, nor are they likely to cause any NAAQS problems. There is still a lot of work to be done as the new NAAQS are adopted, and real SIP planning commences.  But sometimes it takes a pre-emptive strike to get the process started on the right track.

EPA Notches Another NSR Settlement: Is This The Most Successful Program That Shouldn’t Exist?

Posted on November 30, 2012 by Seth Jaffe

The following post is essentially a sequel to this morning’s post, which was originally intended to be posted in September.

Last week, EPA announced that it had reached yet one more – its 24th – settlement under as a result of its NSR enforcement initiative.  This time, it was Louisiana Generating’s Big Cajun II plant, in New Roads, Louisiana.  By now, the contours are familiar, including a penalty of $14 million and injunctive relief estimated to cost approximately $250 million.  Changes will include:

    - Installation of SNCR (not SCR) on all units to control NOx.
    - Installation of dry sorbent injection as a short term SO2 reduction measure
    - Retirement, refueling, repowering, or retrofitting of Unit 1 in the long-term
    - Refueling of Unit 2 to natural gas
    - Limitations on sulfur content
    - Plant-wide limits on SO2 emissions
    - Installation of electrostatic precipitators to control PM on units 1 and 3

It sure sounds great.  EPA estimates reductions of 20,000 tpy in SO2 emissions and 3,000 tpy in NOx emissions.  Still, I question the value of this settlement in the big picture.  I sense some double-counting here.  EPA is predicting significant reductions in emissions as a result of its industry-wide rules, including the transport rule (last known as CSAPR, but presumably awaiting a new acronym for its replacement) and the air toxics rule.

Add to that the cost pressures on coal resulting from the lower natural gas prices caused by the fracking boom, and it is quite possible that Louisiana Generating would have ended up in the same place even absent a settlement.  Throw in concerns about whether individual units were in fact violating the rather ambiguous NSR provisions or were engaging in what they truly considered routine maintenance, and the obvious economic issues raised by trying to implement command and control regulations on a plant-by-plant basis pursuant to litigation, rather than through nationwide market-based caps, and I say again that, to me, the NSR program is still spinach, and I say, to heck with it.

EPA Wins an NSR Case: “Routine” Pretty Much Means Routine for the Unit

Posted on November 30, 2012 by Seth Jaffe

This past September, in United States v. Louisiana Generating, EPA won a ruling regarding what type of projects fall within the routine maintenance, repair or replacement exception from the rule that facility modifications are subject to PSD/NSR requirements.  The decision is thorough in that it carefully reviews the so-called “WEPCO Factors” – the nature, extent, purpose, frequency, and cost of the work, and applied them to the work at issue in this case, i.e., reheater replacements.

Notwithstanding the thoroughness of the court’s analysis, I don’t find it completely convincing.  As the court acknowledged, while all of the WEPCO factors are relevant, the crux of the issue is whether, in order to qualify for the exception, maintenance work must be routine for the units at issue, or only routine in the industry.  In other words, should the question be whether all similar generating units at some point in their life undergo reheater replacement, or whether each individual unit in question must undergo reheater replacement multiple times in order for such work to be considered routine. 

Personally, I think that the former is probably the better interpretation.  Of course, as the decision discussed, since the regulations are not crystal-clear, EPA has significant discretion in interpreting its own regulations, and EPA takes the position that maintenance work must be routine with respect to individual units to qualify for the exception.  End of story, no?  No.  The problem is that EPA does not have discretion to change its interpretation whenever it feels like doing so.  In 1992, EPA stated, in a preamble to NSR regulation revisions, that

EPA is today clarifying that the determination of whether the repair or replacement of a particular item of equipment is “routine” under the NSR regulations, while made on a case-by-case basis, must be based on the evaluation of whether that type of equipment has been repaired or replaced by sources within the relevant industrial category.

The court in Louisiana Generating acknowledged that this language favored Louisiana Generating’s position that one must look to whether a maintenance activity is routine in the industry, rather than routine with respect to the individual units in question.  However, the court then did not discuss this issue in evaluating the WEPCO factors, and separately found that no reasonable jury could conclude that the project was routine.

I don’t think that this issue is going to be finally resolved at least until a number of appellate courts have had an opportunity to review it and I could imagine it ultimately making its way to the Supreme Court. 

As I have previously noted, while I tend to side with the defendants in these cases, I think that the larger point is that these types of arguments are borderline silly.  More than anything else, they illustrate that the entire NSR/PSD program is fundamentally flawed.  Instead of such outdated technology-based regulation, power plant emissions should be regulated pursuant to trading programs that allow needed emissions reductions to be attained in the most cost-effective way possible.  I still dream of a grand bargain which would lower emissions limits, utilize trading to attain them, and completely eliminate the NSR/PSD program.  Where is the radical center in Congress when one needs it?

A Belated Thank You to Hunton & WIlliams from Sierra Club for PSD?

Posted on March 27, 2012 by Richard Lazarus

I attended on February 28th and 29th the oral arguments in the D.C. Circuit for what are euphemistically referred to as the “Greenhouse Gas Cases” now pending before that court. Two days of arguments, with 17 different attorneys presenting oral argument.  Perhaps not surprisingly, the judges weren’t the only ones who lost track of which issues were being addressed by different advocates.  The advocates themselves seemed to forget at times and repeatedly walked over each other’s lines.  It reminded me why the Supreme Court is so reluctant to allow for divided argument even in circumstances when the case for divided argument is otherwise quite compelling.

I will leave it to others to dwell on what the D.C. Circuit is likely to do, and instead will don my academic garb for an ironic aside on the history of the CAA’s PSD program. In watching the oral arguments, I was reminded about the extraordinary role that Hunton & Williams has played since the emergence of modern environmental law serving as environmental counsel for the powerplant industry including in this latest round.  One would be hard-pressed to identify any other law firm that has been such a constant and consistent voice on behalf of industry during the past four-plus decades of environmental litigation, especially on air pollution matters.

With the benefit of hindsight, however, those industrial clients might have fared a bit better had Hunton & Williams made one discrete exception to the consistency of its record.  The PSD program today finds its origins in the Supreme Court’s 1973 affirmance by an equally divided Court in Fri v. Sierra Club of a district court ruling that embraced the Sierra Club’s claim that the Clean Air Act, as drafted in 1970, required EPA to prevent “significant deterioration” of areas of the nation that were at the time cleaner than national ambient air quality standards.   The papers of Justice Harry Blackmun, which can be found in the Library of Congress, reveal, however, that Sierra Club achieved that affirmance after Hunton & Williams filed an amicus brief in the case in support of Edison Electric’s contention that the Clean Air Act did not require such a program. That filing apparently prompted Justice Lewis Powell – a former Hunton & Williams partner – to recuse himself from the case (after sitting at oral argument), resulting in the 4/4 split.  There is little doubt, based on his other pro-business votes in environmental pollution cases how Justice Powell would have voted had he not recused himself. The most certain upshot would have been an EPA victory and therefore the Agency never would have had to promulgate PSD regulations in compliance with the High Court’s ruling. And the absence of those initial PSD regulations would have dramatically shifted the political dynamic when Congress was amending the statute in 1977.

What I have always found especially odd about the firm’s amicus filing in the PSD case is that this was not the first time Justice Powell had recused himself in light of Hunton & William’s participation in a case before the Court, including on behalf of the powerplant industry as amicus curiae.  The Justice had done so consistently since joining the Court, which makes one wonder what the firm was thinking when it filed the amicus brief in Fri v. Sierra Club.  Interestingly, Justice Powell ended that recusal practice soon afterwards.  Perhaps the Justice received a very unhappy communication from either Henry Nickel or his close friend at the firm, George Freeman, regarding the necessity of a recusal in those circumstances?  Of course, I have no knowledge whether such a communication ever in fact occurred, but it does not take a lot of imagination to speculate that some folks at Hunton were likely exceedingly unhappy about the Justice’s recusal in light of the Court’s 4/4 affirmance. 

In all events, and regardless of the outcome of the recent greenhouse gas cases before the D.C. Circuit, the Sierra Club’s thank-you note to Hunton & Williams would seem long overdue. 

Climate Change Work Group Phase Two - EPA Searches for Energy Efficiency and Innovation Using an Unlikely Tool

Posted on May 5, 2010 by Robert Wyman

EPA is stuck between a rock and a hard place in using the Clean Air Act to regulate greenhouse gas emissions. Having made an endangerment finding and issued final motor vehicle regulations, EPA soon (commencing January 2, 2011) must implement its Prevention of Significant Deterioration (PSD) preconstruction review program for stationary sources as one or more greenhouse gases become “regulated pollutants” under the statute. But the PSD program is hardly an ideal tool for the job, and may indeed be one of the worst.

 

Recognizing the difficulty of its task, in late 2009 EPA commissioned a Climate Change Work Group to advise it regarding how best to implement the PSD permit program and how to define Best Available Control Technology (BACT) for sources of greenhouse gas emissions. This January the Work Group issued a Phase One report that contained some important but relatively basic recommendations.
 

Now the Agency has launched Phase Two of the Work Group effort. In an April 9 letter to Work Group Co-Chairs, EPA Assistant Administrator Gina McCarthy asked the Work Group to focus on two of the most important strategies for reducing greenhouse gas emissions – energy efficiency and innovation.

 

Most seasoned observers recognize that the PSD process currently discourages energy efficiency investments. That is because PSD rules assume that more efficient units will be used more and that such projects could cause net emission increases that trigger PSD review and require the installation of BACT. The PSD process thus significantly delays and adds cost to many energy efficiency projects. As a result, many efficiency upgrades are foregone for fear that they will trigger the PSD process. This is tragic because efficiency upgrades offer the greatest potential for near-term and cost-effective greenhouse gas reductions. See, e.g., Unlocking Energy Efficiency in the U.S. Economy (July 2009).

 

The Work Group’s task of encouragingenergy efficiency by using the instrument most responsible for chilling such investments is the policy equivalent of placing a square peg into a round hole. If the Work Group recommends expediting or exempting from PSD review appropriate efficiency projects, then there is some hope that EPA can use the program to capture as-yet-untapped efficiency and innovation opportunities that currently exist. If, on the other hand, the Work Group, and ultimately EPA, remain unwilling to clear the regulatory costs and hurdles that PSD customarily imposes, then the opportunity will be lost.

 

EPA has asked the Work Group to provide its recommendations by no later than mid July. So stay tuned.

EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest

Posted on February 13, 2010 by Seth Jaffe

While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.

When Do EPA BACT Requirements "Redesign the Source"? Not When EPA Says They Don't

Posted on January 7, 2010 by Seth Jaffe

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

When Do EPA BACT Requirements "Redesign the Source"? Not When EPA Says They Don't

Posted on January 7, 2010 by Seth Jaffe

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest

Posted on February 13, 2009 by Seth Jaffe

While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.