As part of the Clean Air Act, (the New Source
Performance Standards (NSPS)) EPA mandates a New Source Review (NSR)
whenever a new facility is built that intends to release pollutants.
An NSR will usually result in the new facility being
required to install expensive anti-pollution technologies.
An NSR is also triggered when an existing facility
undergoes a substantial modification, and that modification results in
higher emissions than the original design.
According to the original definition, "a source
undertakes a modification when any physical change...or change in the
method of operation...increases the amount of any air pollutant emitted
by such source."
"Routine maintenance, repair and replacement"
does not trigger an NSR. Because of this, most factories argue that
whatever work they are doing is just routine and does not rise to the
level of a 'modification.'
In 2002, EPA made a change to the rules for how they
The 2002 rule said that once emissions are determined,
they are to be compared to the actual emissions that the facility
projects will be actually emitted from the facility after the change.
(aka the actual-to-projected-actual test).
The original 1978 rule had defined a modification as a
"physical change in the method of operation of, or addition to a
stationary source which increases the potential emission rate of any air
pollutant regulated under the act." (aka the actual-to-potential
So basically the big change was that the new rule forced
industry to actually project how much pollutants they would emit,
while the old rule focused on what they could potentially emit.
Industry sued because they felt the new ruling interpreted
the term 'modification' too broadly.
Industry felt that EPA needed to be consistent with it's
definition of the word 'modification', and since the NSPS had interpreted
the word one way since 1977, EPA should be barred from changing how they
interpret that word in the 2002 NSR regulations.
Industry also argued that the NSPS calculated emissions
on a per hour basis, while the 2002 NSR calculated on a per year basis.
They felt this was inconsistent.
This was being litigated in a concurrent case, United
States v. Duke Energy Group (411 F.3d 539 (4th Cir.
Environmental groups sued because they felt that the new
ruling interpreted the term 'modification' too narrowly.
The Appellate Court rejected all challenges to the 2002
The Appellate Court found that an EPA decision could only
be overturned if it was arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law.
The Appellate Court was not convinced by industry's
argument about per hour vs. per year differences.
The Appellate Court found that elsewhere in the 2002
regulations, Congress had incorporated regulatory provisions explicitly
by reference. Since they didn't do so with regards to the definition of
'modification', they must not have had a regulatory intent to use the
In addition, the Court looked to how Congress had
defined the word 'modification' and found that they had used different
definitions in different amendments to the Clean Air Act.
Therefore, the Court did not accept industry's argument that there could
only be one possible definition for the word 'modifications'.
After this case was decided, the US Supreme Court upheld
the idea that EPA is free to modify their standards as they see fit in Environmental
Defense v. Duke Energy Group (127 S. Ct. 1423 (2007)).