When it Comes to the Clean Air Act’s Routine Maintenance, Repair, and Replacement Exception, Everyone’s a Loser

In late September, the Middle District of Louisiana added to the growing number of district court cases weighing in on the Clean Air Act’s Routine Maintenance, Repair, and Replacement (RMRR) exception.[1] At least two commentators have called Louisiana Generating a clear “win” for EPA,[2] but this conclusion greatly oversimplifies the issue. When it comes to the current state of the RMRR exception, everyone is losing.

The RMRR exception is a long-standing regulatory exemption from the requirement that major stationary sources[3] planning to undergo modification[4] seek a permit under the New Source Review program of the Clean Air Act.[5] Major stationary sources have a strong incentive to fight to have any work performed on facility equipment classified as “routine” in order to avoid the strict pollution control technology requirements that accompany such permits.[6]

EPA left the RMRR exception somewhat amorphously defined until 1990, when the Seventh Circuit had occasion to consider the issue.[7] In Wisconsin Electric Power Co. (WEPCO) v. Reilly, the court deferred to a four-factor test from an EPA guidance memorandum, which stated that whether the maintenance performed qualifies as “routine” depends on: (1) the nature and extent of the work, (2) the work’s purpose, (3) the frequency of such work, and (4) the cost of the work.[8]

Years later,[9] the dispute became a question of whether the work had to be “routine” as to the individual facility, or “routine” within the context of the entire industry.[10] EPA argues that the work must be routine as to the facility because this would significantly narrow the exception; industry, on the other hand, argues that the work must only be routine with regard to the broader industry as a whole, which would make the exception have broader applicability.[11] It is this second dispute upon which the Middle District of Louisiana’s recent opinion was based.[12] The court concluded that although repair trends within the broader “industrial category” are relevant, the agency would be acting reasonably in assigning more weight to the relative frequency of the work at the specific unit in question.[13]  Victory for EPA, or is it?

There is a most disturbing sentence in this opinion: “[a]s for the issue of what will be considered the ‘relevant industrial category,’ the Court will make that determination based on the evidence presented.”[14] I focus on this sentence to illustrate a much broader point: EPA has allowed the first fundamental tenet of administrative law—deference to agency expertise—to be completely turned on its head by refusing to issue more concrete RMRR regulations. Out of necessity, courts have had to “defer” to an oversimplified four-factor test a court could have easily come up with all on its own. Through this, the courts have in fact ceased to defer to the agency at all, and the judiciary is now left defining not only the applicability but also the scope and boundaries of what should be a highly technical regulatory exception.

Not only is EPA exposing itself to guaranteed future litigation and inconsistent rulings across the country, facilities are encouraged to undergo borderline maintenance without seeking a permit in the hopes of flying under the enforcement radar altogether, or in the alternative winning a defense case under the WEPCO factors later. This kind of post hoc scrutiny is inconsistent with New Source Review—a permitting program designed to take care of these questions before new pollution is added to an area.

Industry is losing because the cost of maintenance is driven up as it must account for the risk inherent in this uncertainty created by EPA; a facility can hardly plan its repair budget if it must constantly keep funds in litigation reserve. Additionally, a second fundamental tenet of administrative law—public participation—has been left by the wayside. Under the current situation, the regulated community has no meaningful opportunity until it is already in the courtroom to make its argument as to what repairs are routine and how industries should be categorized in making that determination. Only notice-and-comment rulemaking can ensure that the regulated community can be heard in a meaningful way.

And finally, environmental NGOs are losing because without regulations, they are unable to accurately decide whether a citizen suit should be brought against a facility for its failure to obtain a New Source Review permit after undergoing repairs. This impairs environmental groups’ critical function as “private attorneys general”[15] and weakens the Clean Air Act.

Until EPA chooses to issue more concrete, industry-category specific RMRR exception regulations, everyone’s a loser.

— Allison Holden, Associate 

[1] United States v. Louisiana Generating, LLC, 2012 U.S. Dist. LEXIS 134195 (Sept. 19, 2012).

[2] See Seth Jaffe, EPA Wins an NSR Case: “Routine” Pretty Much Means Routine for the Unit, Foley Hoag (Sept. 24, 2012), http://www.lawandenvironment.com/2012/09/articles/air/epa-wins-an-nsr-case-routine-pretty-much-means-routine-for-the-unit/; Nash E. Long III and Raymond B. Wuslich, Louisiana Court Hands EPA a Victory in CAA Enforcement Case, Winston & Strawn, LLP (Sept. 24, 2012), http://www.winston.com/sitefiles/blog/Louisiana%20Court%20Hand%20EPA%20a%20Victory%20in%20CAA%20Enforcement%20Case.pdf.

[3] “Except as otherwise expressly provided, the terms ‘major stationary source’ and ‘major emitting facility’ mean any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant . . . .” 42 U.S.C. § 7602(j) (2006).

[4] “The term ‘modification’ means any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.” 42 U.S.C. § 7411(a)(4) (2006).

[5] 40 C.F.R. § 51.166(b)(2)(iii)(a) (2012).

[6] 42 U.S.C. § 7475 (2006) (New Source Review in PSD areas); 42 U.S.C. § 7503 (2006) (New Source Review in non-attainment areas).

[7] Wisconsin Electric Power Co. (WEPCO) v. Reilly, 893 F.2d 901 (7th Cir. 1990).

[8] Id. at 910.

[9] In 2003 there was a brief moment in which the RMRR was defined by a bright-line rule, in which the maintenance qualified as routine if it did not alter the basic design parameters and did not cost more than twenty percent of the replacement value of the unit. 40 C.F.R. § 51.166(y) (2012). Although it still remains on the books, this deregulatory measure implemented during the Bush Administration was invalidated as an unreasonable interpretation inconsistent with the Clean Air Act and has been stayed indefinitely. New York v. Envtl. Prot. Agency (New York II), 443 F.3d 880 (D.C. Cir. 2006).

[10] See generally Graham Zorn, Prevention of Significant Deterioration and its Routine Maintenance Exception: The Definition of Routine, Past, Present, and Future, 33 Vt. L. Rev. 783, 789–94 (2009).

[11] Id. (citing United States v. E. Ky. Power Coop., Inc., 498 F. Supp. 2d 976, 982–84 (E.D. Ky. 2007)).

[12] 2012 U.S. Dist. LEXIS 134195, at *7–8 (“Although this overly simplifies the debate, it is fair to say Plaintiffs argue that a ‘routine at the unit approach’ is appropriate, while LaGen urges a broader ‘routine in the industry standard.’”).

[13]  Id. at *15 (“This is not to say that whether the overall number of reheater replacements is not informative, only that it is less so than the frequency at particular units.”).

[14] Id. at *16 (emphasis added).

[15] See 42 U.S.C. § 7604 (2006).

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