New York v. United States EPA - 367 U.S. App. D.C. 3, 413 F.3d 3 (2005)

Rule:

An appellate court may set aside an Environmental Protection Agency (EPA) regulation only if it exceeds EPA's statutory jurisdiction, authority, or limitations or is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

Facts:

In 1977, Congress amended the Clean Air Act (“CAA”) to strengthen the safeguards that protect the nation's air quality. Among other things, these amendments directed that major stationary sources undertaking modifications must obtain preconstruction permits, as must major new sources, through a process known as "New Source Review" ("NSR"). According to a preexisting definition referenced in the 1977 amendments, a source would undertake a modification when "any physical change or change in the method of operation which increased the amount of any air pollutant emitted by such source” occurred. The Environmental Protection Agency ("EPA") has interpreted the definition in numerous rules, including in the presently challenged 2002 Rule. Industry petitioners argued that the 2002 rule interpreted "modification" too broadly, while government and environmental petitioners argued that the rule's interpretation was too narrow.

Issue:

Did the EPA act arbitrarily and capriciously in interpreting the CAA? 

Answer:

No, except with certain provisions.

Conclusion:

The court found that EPA permissibly interpreted the CAA and did not otherwise act arbitrarily and capriciously with respect to, among other provisions, the use of past emissions and projected future actual emissions in measuring emissions increases; the use of a ten-year lookback period in selecting the baseline period for measuring past actual emissions; the use of a five-year lookback period in certain circumstances; and the Plantwide Applicability Limitations (PAL) program. However, the EPA erred in promulgating the Clean Unit applicability test, which measured emissions increases by looking to whether "emissions limitations" had changed, and it erred in exempting certain pollution control projects that collaterally increased emissions of some pollutants. Moreover, the EPA acted arbitrarily and capriciously in determining that sources making changes need not keep records of their emissions if they see no reasonable possibility that these changes constitute modifications for NSR purposes.