EPA Can Review Emissions Projections For New Source Permitting, Court Rules

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By Nora Macaluso  

LANSING, Mich.--The Environmental Protection Agency has authority under the Clean Air Act to review projections of future emissions resulting from a facility modification and need not wait for data from the completed project, a federal appeals court ruled March 28 (United States v. DTE Energy Co., 6th Cir., No. 11-002328, 3/28/13).

In a 2-1 decision, the U.S. Court of Appeals for the Sixth Circuit reversed a district court order and sided with EPA in a challenge to a DTE Energy Corp. facility modification. EPA was conducting a review of whether the company must obtain a permit under the new source review program before renovating electric utility steam generating units at its plant in Monroe, Mich.

The appeals court overturned a 2011 finding by the U.S. District Court for the Eastern District of Michigan that the $65 million refurbishing project did not violate the Clean Air Act (United States v. DTE Energy Co., E.D. Mich., No. 10-13101, 8/23/11; 42 ER 1969, 9/9/11).

The company argued, and the district court agreed, that a permit was not required because its projections indicated that the work did not constitute a major modification--one that would result in a significant increase in emissions--and that the company had satisfied EPA notification and recordkeeping requirements.

EPA, the district court concluded, could pursue enforcement action “if and when post-construction monitoring shows a need to do so.” EPA's determination that the project was a major modification was premature, the court said.

EPA challenged the district court finding, saying the project was more than routine maintenance and that the company was required to make emissions projections that take into account all relevant information, including emissions associated with startups and malfunctions.

District Court Ruling 'At Odds' With Air Act

“Although the district court's premises are largely correct, they do not support its sweeping conclusion,” the appeals court said. The district court's finding that EPA cannot challenge a company's emissions projections before post-construction data are available to support it “is at odds with the Clean Air Act,” wrote Judges John Rogers and Martha Craig Daughtrey in the majority opinion.

The Supreme Court ruled in 2004 that the Clean Air Act gives EPA “encompassing supervisory responsibility over the construction and modification of pollutant-emitting facilities in areas covered by the [New Source Review] program,” the court said, citing Alaska Department of Environmental Conservation v. EPA, 540 U.S. 461, 484 (2004). EPA, the opinion said, may seek relief against a facility that does not conform to requirements, including those involving projected emissions.

“Our reversal does not constitute endorsement of EPA's suggestions,” the court said. “A preconstruction projection is made pursuant to the requirements of the regulations. The district court having ruled to the contrary, we must remand. But we make no determination as to whether defendants have complied with those projection regulations.”

Dissenting Judge

Chief Judge Alice Batchelder, the other judge on the three-judge panel, dissented from the opinion, saying she was “uncomfortable with the majority's reliance on statements about the law made by counsel at oral argument.”

“Given the enormity of this decision, and the effect it may have on every stationary source operator in the Sixth Circuit if not beyond, it would be useful” to have “something more substantive” to rely on than comments made during oral arguments, she wrote in a dissenting opinion. Moreover, she continued, if the court were to rely on statements by counsel, it could have taken into account DTE counsel's arguments in support of the company's position.

“The majority ultimately holds that USEPA must be able to challenge the accuracy of the operator's scientific or technical preconstruction projections in court,” which could amount to “the exact same thing as requiring prior approval” of those projections, she wrote.

DTE officials were unavailable to comment March 28.

By Nora Macaluso  

The opinion of the U.S. Court of Appeals for the Sixth Circuit in United States v. DTE Energy Co. is available at http://www.bloomberglaw.com/public/document/USA_v_DTE_Energy_et_al_Docket_No_1102328_6th_Cir_Oct_25_2011_Cour.


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