Epa’s New Regulatory Policy: Two Steps Back

• Publication year: 2003

Yekaterina Korostash⁰

As many as 600 operating power plants in the United States are between thirty and fifty years old and are up to ten times dirtier than new power plants built today.¹ Many of the technologies that remove pollution and increase operating efficiencies have been available for decades, but power plants have been slow to adapt.² The New Source Review ("NSR") provisions of the Clean Air Act ("CAA") lie at the heart of the continued existence of these grandfathered plants.³ While the main goal of Congress in promulgating the CAA was to improve air quality, it also sought to avoid imposing the heavy burden polluters would face if they were forced to immediately install new equipment. Consequently, the NSR program requires owners and operators of plants to install emission controls only when the source undergoes a "modification," a physical change accompanied by an emissions increase.⁴ As all plants eventually updated their facilities or shut down, Congress felt confident that this regime would assure "attainment of pollution control by a fixed date."⁵

In August 2003, the administration adopted changes to these regulations that will affect more than 17,000 coal-fired power plants in the United States.⁶ The new rule will exempt grandfathered power plants from this core requirement of the CAA. Under the new rule, if the cost of a modification to a plant is below twenty percent of the unit's value, the plant will be exempt from installing the requisite pollution control technology. According to administration officials, the new rule will allow plants to modernize more easily and lead to greater efficiency without increasing pollution.⁷ Mr. Jeffrey Holmstead, the administrator of the Office of Air and Radiation in the Environmental Protection Agency ("EPA"), testified to the Senate that the changes are environmentally neutral and would not adversely affect public health.⁸ Many environmentalists and state officials, however, are outraged at what they perceive to be a gutting of the CAA.⁹ Twelve states, led by New York Attorney Gen. Eliot Spitzer, are challenging the new regulations in court.¹⁰ On December 25, 2003, the U.S. Court of Appeals for the District of Columbia granted an emergency motion for stay that barred the new rules from taking effect pending the outcome of litigation.¹¹

This comment argues that the new rule undermines the regulatory scheme envisioned by Congress in promulgating the CAA and should be invalidated by the D.C. Circuit under the Supreme Court's decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.¹² The EPA will likely lose under the Chevron "Step One" analysis because congressional intent is clear from the plain language of the CAA; Congress defined "modification" to mean "any physical change." Even under Chevron "Step Two" analysis, the new rule is unreasonable because it conflicts with both the broader goals of the CAA and the specific objectives of the NSR provisions. Finally, if Chevron does not clearly lead the D.C. Circuit to invalidate the new rules, the case of MCI Telecommunications Corp. v. AT&T¹³ clearly points to the conclusion that the EPA exceeded its authority in promulgating this radical redirection of the statutory NSR program.

Part I of this paper outlines some of the dangers of unregulated power plant emissions, focusing in particular on health and environmental effects. Part II is a brief summary of the NSR program prior to amendment. Part III summarizes the changes to the NSR and analyzes their purported benefits. Finally, Part IV argues that the court in New York v. EPA¹⁴ should find that the EPA exceeded its statutory authority in abandoning its longstanding interpretation of the CAA.

I. The Threat Met by the Clean Air Act

Today, fifty-four percent of the electricity in the United States is provided by coal-fired power stations.¹⁵ These plants are the primary stationary sources of emissions, contributing to respiratory disease and such major environmental problems as smog, acid rain, and global warming.¹⁶ They are responsible for ninety-six percent of sulfur dioxide emissions, ninety-three percent of nitrogen oxide emissions, eighty-eight percent of carbon dioxide emissions, and ninety-nine percent of mercury emissions.¹⁷

It is important to note that emissions of particulate matter, sulfur dioxide, and carbon monoxide have actually decreased in the last twenty years.¹⁸ At the same time, emissions of nitrogen oxides have increased.¹⁹ Recent scientific evidence, however, revealed that particulates and nitrogen oxides are more dangerous to public health than previously thought.²⁰ On July 19, 1997, the EPA issued updated air quality standards for particulate matter and ground ozone.²¹ The new standards reflect the mounting evidence that the regulations set in the 1970s were not protective enough and that many Americans faced health risks because of the inadequacy of these out-dated controls.²²

Although federal air pollution law began with the Clean Air Act of 1963,²³ the major features of the modern CAA originated in the 1970 Amendments.²⁴ Congress passed these amendments primarily in response to deteriorating air quality in the country's major urban areas.²⁵ The stated purpose of the 1963 Act is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population."²⁶ In 1977, Congress, frustrated with the failure of the CAA to meet its clean air goals, enacted new amendments. The most important contribution of the 1977 Amendments was the establishment of the NSR programs which subjected new or modified stationary sources to more stringent preconstruction permitting requirements than those imposed by the earlier New Source Performance Standards.²⁷ The CAA controls six "criteria" pollutants: sulfur dioxide,²⁸ nitrogen dioxide,²⁹ particulate matter,³⁰ carbon monoxide, photochemical oxidants and hydrocarbons.³¹ In controlling these pollutants, the CAA provides for two types of regulations—state implementation plans and new source review.

II. The Regulatory Scheme

A. State Implementation Plans

The CAA requires the EPA to establish National Ambient Air Quality Standards ("NAAQS") for all criteria pollutants.³² "Primary" NAAQS are set for each criteria pollutant to protect public health with an adequate margin of safety.³³ These air quality standards must reflect the latest scientific knowledge relating to the effects of criteria pollutants on public health and must be revised every five years. ³⁴ "Secondary" NAAQS protect the public welfare "from any known or anticipated adverse effects associated with the presence of such air pollutant in the ambient air."³⁵ These adverse effects include a pollutant's impact on soils, water, vegetation, wildlife, and climate.³⁶

The states have the primary responsibility to ensure that their air quality meets the NAAQS.³⁷ Section 110 of the CAA requires each state to develop and submit for approval a state implementation plan ("SIP").³⁸ These plans must provide for "implementation, maintenance, and enforcement" of standards by the state.³⁹ Each state government decides how the sources within its jurisdiction ought to be controlled in order to meet NAAQS.⁴⁰ If the SIP fails to comply with statutory and regulatory requirements, the EPA's Administrator may reject the SIP and impose penalties on the state.⁴¹ Furthermore, the Administrator may take the power of regulation away from the state by promulgating a federal implementation plan within two years of a state's failure to comply.⁴²

B. New Source Review

1. New Source Performance Standards

Under the 1970 and 1977 Amendments, the construction or modification of a stationary source emitting criteria pollutants must meet New Source Performance Standards set by the EPA.⁴³ These standards are applicable to stationary sources which are built or modified after the publication of the regulations.⁴⁴ Plants built before 1971 are exempt from these requirements unless they are modified or reconstructed.⁴⁵

2. New Source Review-Attainment and Nonattainment Areas

The New Source Review program requires an owner or operator who either (1) builds a major stationary source of criteria pollutants or (2) makes major modifications to such a source to apply for a preconstruction air emissions permit and submit to a preconstruction review. NSR draws a major distinction between those areas of the country that meet or exceed the NAAQS (attainment areas) and those areas that do not meet the NAAQS (nonattainment areas).⁴⁶ In order to address this distinction, NSR envisions separate programs for non-attainment and attainment areas, each with its own set of requirements for new or modified major sources.⁴⁷ These requirements deal mostly with requisite air-pollution control technology.⁴⁸

In attainment areas, the Prevention of Significant Deterioration ("PSD") aims to prevent especially clean areas from becoming any more polluted. In these regions, the best available control technology ("BACT") is required for major sources.⁴⁹ BACT determinations must be made on a case-by-case basis, and additional requirements apply if a source is located in a particularly pristine area, such as a park or a wildlife reserve.⁵⁰ Furthermore, no individual source is allowed to degrade more than a certain percentage of existing clean air.⁵¹

In nonattainment areas, more stringent standards apply. In these "dirty air" areas, NSR requires a source to employ technology that guarantees lowest achievable emission rate ("LAER"). LAER is defined as the most stringent SIP emission limitation or "the most stringent emission limitation which is achieved in practice" by such a source, whichever is more stringent.⁵² Furthermore, the owners or operators of affected sources must guarantee that any new emissions from new or modified sources will be offset by equivalent or greater reductions in emissions from some other...