New York v. Environmental Protection Agency

The Environmental Protection Agency (EPA) (defendant) put forth a new rule, the Equipment Replacement Provision (ERP), intended to help stationary sources of air pollution avoid triggering the Clean Air Act’s New Source Review (NSR) for routine maintenance, replacements, and repairs of existing equipment. The ERP modified the existing Routine Maintenance, Repair, and Replacement Exclusion (RMRR) and dictated that any repair or modification to existing equipment that replaced less than 20 percent of the components and did not alter the basic design was exempt from NSR permitting requirements regardless of whether emissions increased. Previously, RMRR had only applied if the emissions increase was de minimis. New York (plaintiff) challenged the ERP, arguing that it directly contradicted the plain language of the Clean Air Act, which stated that modifications, defined as “any physical change,” to stationary sources of air pollution that increased emissions were subject to NSR permitting requirements. The EPA countered, arguing (1) the “any” in “any physical change” was ambiguous and that the EPA therefore had the discretion to apply its expertise to define what counted as a physical change; and (2) equipment modifications and repairs conducted pursuant to the ERP’s 20 percent allowance could lower overall emissions through increased efficiency even if the ERP project increased the emissions at the source.