Michigan District Court Limits the U.S. Environmental Protection Agency (EPA) New Source Review Enforcement Action
As reported in many previous issues of the Greenebaum Air Quality Letter, for over a decade now, EPA has pursued a focused enforcement initiative regarding the utility sector’s compliance with Clean Air Act new source review (NSR) requirements. Over the years, these lawsuits have met mixed results, with utilities scoring significant victories including those in noted recent court decisions. (See NSR enforcement decisions summarized in the second quarter 2010 and first quarter 2011 Greenebaum Air Quality Letter.)
On August 23, 2011, a Michigan federal court issued a ruling that addresses two issues of potential significance to NSR enforcement. In U.S. v. Detroit Edison (DTE) Energy Company, et al, Civil Action 10-13101, EPA alleged that defendants violated the Clean Air Act by renovating electric utility steam generating units at a Michigan power plant without first obtaining a NSR permit. As required by Michigan regulations, DTE had submitted a letter to the state agency regarding the intended project and documenting the company’s analysis that a projected increase in future, post-project actual emissions were unrelated to the project and thus did not trigger NSR review. (See 401 KAR 51:017 Section 16(5) for Kentucky requirements for documentation of this analysis.)
Among other claims, EPA alleged that DTE’s analysis regarding whether the renovation would trigger NSR was incorrect and thus, by commencing construction without undergoing pre-construction NSR, DTE violated the Clean Air Act. In response, DTE argued that as long as pre-project requirements were met (i.e., an emissions analysis was performed in accordance with regulatory requirements), an NSR violation could be found only if the project actually causes an emissions increase and that such a determination could not be made until after the first year of post-construction monitoring. The court agreed with DTE, holding that NSR rules “provide source operators with greater flexibility by giving them a post-construction opportunity to fulfill their obligations under the Clean Air Act. They allow source operators to pursue necessary maintenance work without the expensive, burdensome and potentially unnecessary permitting requirements, while ensuring that Plaintiff will maintain its opportunity to pursue an enforcement action if post-construction monitoring detects an increase in emissions of regulated pollutants that are a result of such projects.”
Further, EPA alleged that DTE’s analysis regarding whether NSR was triggered was deficient. The court rejected this claim as well, holding that while DTE’s explanation of the emissions exclusion was “not very specific” and the accompanying table did not provide backup for the calculation results, Michigan regulations did not require further specificity. In 2010, EPA Region III widely circulated a letter conversely stating detailed documentation requirements for sources using the projected actual emissions test.
EPA appealed the decision to the Sixth Circuit Court of Appeals on October 20, 2011.
To view a complete PDF of the Third Quarter 2011 issue of the Air Quality Letter, click HERE.