Supreme Court Denies Hearing Air Equipment Replacement Case

Apr 30: The U.S. Supreme Court has refused to hear an Administration appeal of the March 17, 2006, decision of the U.S. Court of Appeals, D.C. Circuit in State of New York v. U.S. EPA [See WIMS 3/17/06]. The case, EPA v. State of New York, et al (06-736) addressed the Equipment Replacement Provision (ERP), which amends the Routine Maintenance, Repair, and Replacement Exclusion (RMRR) from the Clean Air Act New Source Review requirements. Under the Clean Air Act, sources that undergo “any physical change” that increases emissions are required to undergo the NSR permitting process. The exclusion has historically provided that routine maintenance, repair, and replacement do not constitute changes triggering NSR. The ERP both defined and expanded that exclusion. EPA explained: "[The] rule states categorically that the replacement of components with identical or functionally equivalent components that do not exceed 20% of the replacement value of the process unit and does not change its basic design parameters is not a change and is within the RMRR exclusion."

Equipment Replacement Provision of the Routine Maintenance, Repair and Replacement Exclusion, 68 Fed. Reg. 61,248, 61,270 (Oct. 27, 2003) (Final Rule); see also 70 Fed. Reg. 33,838 (June 10, 2005)(Reconsideration). Hence, the ERP would allow sources to avoid NSR when replacing equipment under the twenty-percent cap notwithstanding a resulting increase in emissions. The court stayed the effective date of the ERP on December 24, 2003. The Appeals Court vacated the ERP saying that "it is contrary to the plain language of section 111(a)(4) of the Act."

The Appeals Court further explained that it vacated the ERP because it violated section 111(a)(4) in two respects: "First, Congress’s use of the word 'any' in defining a 'modification' means that all types of 'physical changes' are covered. Although the phrase 'physical change' is susceptible to multiple meanings, the word 'any' makes clear that activities within each of the common meanings of the phrase are subject to NSR when the activity results in an emission increase. As Congress limited the broad meaning of 'any physical change,' directing that only changes that increase emissions will trigger NSR, no other limitation (other than to avoid absurd results) can be implied. The definition of 'modification,' therefore, does not include only physical changes that are costly or major. Second, Congress defined 'modification' in terms of emission increases, but the ERP would allow equipment replacements resulting in non-de minimis emission increases to avoid NSR."

A release from Natural Resources Defense Council (NRDC) indicated that the loophole argued in the case would have allowed "more than 20,000 power plants, refineries and other industrial facilities to replace equipment with 'functionally equivalent' equipment without first undergoing the required clean air reviews. The exemption would have applied even if a facility's air pollution increased by thousands -- or tens of thousands -- of tons as a result of the new equipment."

The plaintiffs winning the case included Alabama Environmental Council, American Lung Association, Clean Air Council, Communities for a Better Environment, Delaware Nature Society, Environmental Defense, Group Against Smog and Pollution, Michigan Environmental Council, Natural Resources Defense Council (NRDC), Ohio Environmental Council, Scenic Hudson, Sierra Club, Southern Alliance for Clean Energy, and U.S. PIRG. The groups were represented by Earthjustice, the Clean Air Task Force and NRDC. A group of 15 state attorneys general, led by the State of New York, was also part of the successful lawsuit.

Access the Supreme Court denial order (click here, See page 8 of 10). Access the Supreme Court docket for case 06-736 (click here). Access the complete D.C. Circuit March 17, 2006 opinion (click here). Access a release from NRDC (click here). Access a release from Earthjustice (click here). [*Air]