NSR Emissions Projections — Finally, An Area Where It is the Regulated Entity Which Is Entitled to Deference

Last spring, the 6th Circuit Court of Appeals ruled that when power plant owners compare actual emissions to projected future actual emissions for the purpose of determining whether a project is subject to the Clean Air Act’s NSR provisions, EPA may bring an enforcement action if the operator does not “make projections according to the requirements for such projections contained in the regulations.”  At the same time, however, the 6th Circuit made clear that EPA may not “second-guess” the proponent’s projections and that the regulatory scheme does not anticipate “prior approval” by EPA.

On Monday, we learned at least what the District Court on remand made of the balancing act dictated by the Court of Appeals.  In United States v. DTE Energy, Judge Friedman allowed DTE Energy’s motion for summary judgment.  To Judge Friedman, the language quoted above:

does not mean that EPA possesses unfettered authority to challenge the methodology and factual assumptions defendants’ used to predict their post-project emissions. The Sixth Circuit merely requires that, “at a basic level,” the source operator “has to make projections according to the requirements for such projections contained in the regulations…. EPA is only entitled to conduct a surface review of a source operator’s preconstruction projections to determine whether they comport with the letter of the law. Anything beyond this cursory examination would allow EPA to “second-guess” a source operator’s calculations; an avenue which the Sixth Circuit explicitly foreclosed to regulators.

Here, EPA questioned DTE Energy’s application of the demand growth exemption.  The Court concluded that this was precisely the kind of “second-guessing” not authorized by the 6th Circuit.  In short, EPA may not question operators’ substantive projections.  Instead, EPA may only review the projections to ensure that they were performed in compliance with the procedural requirements of the Act.

The Court also noted (as had the dissent in the 6th Circuit) that DTE Energy had post-completion data demonstrating that emissions did not increase.  In other words, DTE Energy made projections, EPA made different projections, and the evidence demonstrated that it was DTE Energy, not EPA, which made the accurate projections.  And EPA still wanted to take enforcement action against DTE Energy because DTE Energy’s (accurate) projections somehow violated the Act?  I’m glad I did not have to make that case.

To close on a completely self-serving note, I’ll point out that I pretty much called this one after the 6th Circuit decision was issued.  As I said then:

I don’t actually see this case as seriously jeopardizing facility operators.  They still get to make the projections.  In a case such as this one, they have no obligation to obtain regulatory approval of the projection prior to construction.  They may also demonstrate, following construction, that one year of actual data confirms the absence of a significant increase.


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