The States Lose Another NSR (and NSPS) Enforcement Case: I Think I Detect A Trend

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As I have previously noted, the government’s record in NSR enforcement cases has been going downhill, particularly with important defeats before the 3rd and 7th Circuits’ Courts of Appeals.  The latest governmental defeat came late last week, in Pennsylvania v. Allegheny Energy, when Chief Judge Conti granted judgment for the defendants on claims alleging both NSR and NSPS violations.

At some level, the decision is not a big surprise, since the court had previously ruled in Allegheny’s favor on the critical legal issue, concluding that whether projects constitute “routine maintenance, repair, and replacement”, or RMRR, must be based on whether the project is routine in the industry, not routine for the particular facility that is the subject of the enforcement action.  The Court was also bound by the prior 3rd Circuit ruling in Homer City that was favorable to Allegheny Energy on the statute of limitations issue, making clear that PSD review is a one-time preconstruction requirement, rather than an ongoing violation.

Nonetheless, the decision remains significant, for a number of reasons.  Perhaps most importantly, just the fact that the government has lost again contributes to a sense that the enforcement initiative has lost significant momentum.  If NSR violations are one-time events, and if RMRR is defined by the industry rather than the facility, and if, when facilities have been sold, new owners aren’t liable because they did not violate the Clean Air Act and prior owners aren’t subject to injunctive relief because they don’t own the facility, then what’s left?

The case is also useful, because the decision provides a clear roadmap for facility owners on how to defend these cases.  Kudos to defense counsel, who put together a very strong case regarding just how routine these projects were, and also developed the cost information demonstrating that two largest projects, both of which were more than $50 million boiler replacements, still did not constitute substantial reconstruction of the facilities that would have subjected them to NSPS.

Is the NSR enforcement initiative over?  Perhaps not, but it certainly is on shaky ground.