D.C. Circuit Sides with NAM, EPA on Project Emissions Accounting Rule

An EPA rule allowing air permit applicants to count emissions increases and decreases as the first stage of New Source Review is lawful, a federal appeals panel ruled this week in a case involving the NAM as intervenor-respondent (Inside EPA, subscription).

What’s going on: In a unanimous opinion on Tuesday, three judges from the U.S. Court of Appeals for the D.C. Circuit “reject[ed] the entirety of environmentalists’ challenge to the Project Emissions Accounting rule in Environmental Defense Fund (EDF), et al. v. EPA.”

• In 2018, environmental groups brought suit against the EPA, challenging project emissions accounting—a policy that originated as a guidance memorandum and was later finalized through notice-and-comment rulemaking.
• The PEA rule provides a simplified process for determining whether a stationary manufacturing source of air emissions can be modified without a permit under the NSR program, a notoriously complex and costly permitting program.
• The case remained dormant through a seven-year abeyance until last fall, when it was reactivated.

The NAM’s role: The NAM, along with more than a dozen leading business groups, intervened in 2018 to defend the EPA’s lawful ability to count both emissions increases and decreases in determining whether a proposed project triggers burdensome NSR permitting regulations.

What was said: The environmental groups “mounted a series of arguments for why the PEA regulation is both ‘contrary to law’ and ‘arbitrary and capricious.’”

• But the PEA rule “brings the two steps [of the NSR analysis] into harmony by discarding a framework that required a gross calculation at Step One and a net calculation at Step Two in favor of a framework that requires a net calculation at both steps,” Judge Karen LeCraft Henderson wrote in the opinion published on Tuesday, July 28.

Why it’s important: The ruling should make it more difficult for a future EPA to change the NSR process, giving manufacturers certainty on an important permitting program, the NAM said in a Tuesday email to its energy and sustainability policy committees.

The last word: The “decision by the D.C. Circuit to unanimously reject a challenge to the EPA’s Project Emissions Accounting rule is a win for manufacturers in America and protects the rule’s streamlined and commonsense approach to New Source Review permitting under the Clean Air Act,” the NAM wrote in a social post.