Alert

Alert: EPA Files a Request for Rehearing of the Air Regulation Exclusion Decision

May 10, 2006

On May 1, 2006, the U.S. Environmental Protection Agency (EPA) filed a Petition requesting a rehearing on the D.C. Circuit Court of Appeals March 17, 2006 decision, which vacated the EPA’s 2003 Equipment Replacement Rule (ERP). This rule broadly defines what would be considered “routine” maintenance, repair and replacement of equipment and provides that such “routine” activities are exempt from New Source Review (NSR) under the federal Clean Air Act. The Appellate Court vacated the ERP after it determined that the ERP rule would allow increases in emissions that were not de minimis. Under Section 111(a)(4) of the Clean Air Act, NSR is triggered when any physical change at a facility occurs that increases emissions. The Appellate Court, giving a board interpretation to the word “any,” concluded that the EPA was not entitled to re-write Congress’ definition of “modification” by limiting it to only those physical changes that are “costly or major.” See, In State of New York, et al v. EPA (No. 03-1380).

In its Petition for Rehearing, the EPA argues that the Appellate Court’s broad interpretation of “any physical change” is inconsistent with the statutory language and the legislative and regulatory history of NSR. The EPA further postulates that the Appellate Court’s interpretation would have a negative impact on other EPA programs intended to improve the air quality, such as the Clean Air Interstate Rule and the Clean Air Mercury Rule, and would act as an “economic disincentive” for industry to replace obsolete or worn-out equipment with modern equipment that is more efficient. Lastly, the EPA claims that the Appellate Court failed to consider the Agency’s regulatory interpretations of the term “modification” to a facility that existed at the time the NSR program was adopted by Congress.