EPA’s NSR Reforms: The Final Nail in the Coffin?

There was a time when EPA was almost uniformly successful in defending its regulations in the courts. EPA would note the deference provided to agency decision-making under Chevron U.S.A. v. NRDC, remind the court of its expertise in interpreting some very complicated statutes, and the case would essentially be over. Not any more.

In recent years, as the Bush administration has embarked on some quite ambitious regulatory reform efforts, EPA’s record has slipped considerably. The most famous case at this point is Massachusetts v. EPA, in which the Supreme Court rejected EPA’s efforts to avoid regulation of greenhouse gases under the Clean Air Act. However, EPA has had a number of other significant failures in court. Of these, the continued rejection of EPA’s efforts to reform the New Source Review, or NSR, rules is perhaps most notable. In decisions in 2005 and 2006, the Court of Appeals for the District of Columbia threw out two critical pieces of EPA’s NSR reform effort.

Now, in the latest setback for EPA, the Court of Appeals for the 11th Circuit has vacated another piece of EPA’s NSR reform agenda. The rule at issue in the latest case would have precluded state and local regulatory authorities from imposing monitoring requirements beyond those required by EPA. While noting that its review was governed by Chevron, the Court concluded that the Clean Air Act “unambiguously precludes EPA’s interpretation.”

Given the change in administration that will occur next year, it is difficult to imagine EPA pursuing its NSR reform agenda for much longer. The more significant question is whether EPA’s efforts at NSR reform have done long-term damage to its ability to defend its regulatory choices in court.

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