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April 10, 2013
EPA's NSR enforcement upheld

In an opinion that could cause owners and operators of power plants and other large facilities to think twice about construction projects, the U.S. Court of Appeals for the 6th Circuit ruled that the EPA has the authority under the CAA to take enforcement actions when it determines that a source has failed to meet CAA requirements about projecting emissions increases that will occur after the project is completed.  In a 2 to 1 opinion, the 6th Circuit reversed a district court ruling that found that the EPA may take an enforcement action pertaining to emissions projections only after the postconstruction emissions occur and the projections are proven incorrect.  

The case involves Detroit Edison’s Monroe Power Plant in Monroe, Michigan.  In March 2010, the company began a project on one of the facility’s units.  Changes included replacing approximately 2,000 square feet of tubing, the economizer, and large sections of reheater piping; installing a new nine-ton exciter, a device that provides voltage that creates the electromagnetic field needed for the rotor to produce electricity; and refurbishing boiler feedwater pumps. The project required approximately 83 days, 600 construction workers, and $65 million.

Demand growth exclusion

As required by the Clean Air Act, DTE estimated post-construction emission increases of 3,700 tons per year (tpy) of SO2 and 4,100 tpy of NOx.  These estimates far exceed the increases that would require the company to obtain a new source review (NSR) pre-construction permit.  However, DTE also determined that the increases would result not from the modifications themselves, but from the increased demand for electricity.  The project would therefore be excluded from the NSR permitting requirement under the EPA’s allowable demand growth exclusion.  The Michigan Department of Environmental Quality raised no objection to this information as it was contained in a Detroit Edison notice.

But 2 months after construction began the EPA served Detroit Edison with a notice of violation.  According to the Agency, the construction project constituted a major modification, and an NSR permit was therefore required before work commenced.  Detroit Edison appealed to the district court, asserting that the EPA may undertake an NSR enforcement action only after post-construction emissions monitoring show a need to do so.  The lower court ruled for the company, and the EPA appealed to the 6th Circuit.

Specific instructions

The 6th Circuit focuses on one issue – whether the EPA can challenge an emission projection before there is post-construction data to prove or disprove it.  According to the court, the essence of NSR is that it is a pre-construction program and that includes giving the Agency the authority to determine if emission projections are conducted according the “specific instructions.”  The court states:

“The operator has to make projections according to the requirements for such projections contained in the regulations.  If the operator does not do so and proceeds to construction, it is subject to an enforcement proceeding.  The district court in this case appears to have ruled, to the contrary, that no such proceeding is permitted until there is post-construction data.  That is not correct.”

The court goes on to state that the EPA’s enforcement powers “must also extend to ensuring that operators follow the requirements in making those projections.  EPA must be able to prevent construction if an operator, for example, uses an improper baseline period or uses the wrong number to determine whether a projected emissions increase is significant.”

The court did not address the issue of whether DTE actually did comply with regulations governing how projections must be made.

The case was remanded to the district court for reconsideration. 

Click here for the 6th Circuit’s opinion in DTE v. EPA..

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