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Industry Position on Routine Maintenance, Repair and Replacement Adopted in NSR Enforcement Case

08.01.2008

By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

In a decision announced July 24, 2008, the U.S. District Court for the Northern District of Alabama adopted an interpretation of the routine maintenance, repair and replacement (“RMRR”) exception to the Prevention of Significant Deterioration (“PSD”) rules’ applicability to source modifications that is favorable to industry. In United States v. Alabama Power Company, _____ F. Supp. 2d ____, 2008 U.S. Lexis 58866, the Court held that potential applicability of the RMRR exception to a particular project is based on activities that are considered routine in the industry of which the source is a part, rather than on activities that are routine at the specific emission unit at which the project occurred. The Court further qualified the determination on applicability of the RMRR exception by stating that “RMRR will not be analyzed solely by reference to the industry, but judged under the multi-factor WEPCO test, and the analysis shall be ‘with reference to the industry as a whole, not just the particular unit at issue.’”

The decision was issued in response to a summary judgment motion filed by the utility in a New Source Review (“NSR”) enforcement case brought by the EPA for several projects at the utility’s power plants conducted between 1985 and 1993 that EPA alleged to not be routine but rather major modifications requiring PSD permits. Background for the decision involves a regulatory exception to EPA’s rules interpreting, for purposes of PSD and New Source Performance Standards applicability, the Clean Air Act’s definition of modification. Specifically, the case focuses on the EPA’s PSD regulations as originally promulgated in 1980. The definition of major modification at 40 CFR § 52.21(b)(2) provides an exception in paragraph (iii)(a) for activities that are “routine maintenance, repair and replacement.”

The Alabama Power Company decision adds to a continuing interpretative dichotomy in the federal courts concerning the proper test for applying the RMRR exception. The Alabama Power Company decision aligns with the decision in United States v. East Kentucky Power Co-op, Inc., 498 F. Supp. 2d 976 (E.D. Ky. 2007) and is contrary to other decisions such as U.S. v. Cinergy Corp., 495 F. Supp. 2d 909 (S.D. Ind. 2007) andUnited States v. Ohio Edison, 276 F. Supp. 2d 829 (S.D. Ohio 2003), both of which held that “routine” must be determined by reference to the individual emission unit and not the industrial category as a whole. The Alabama Power Company decision provides a good summary of the RMRR issue.

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