On November 3, 1999, the Justice Department filed seven lawsuits against electric utilities in the Midwest and South charging them with violations of the New Source Review (NSR) requirements of the Clean Air Act (CAA). In addition, the Environmental Protection Agency (EPA) issued an administrative order against the Tennessee Valley Authority (TVA), alleging similar violations. Enacted as part of the 1977 CAA Amendments and modestly modified in the 1990 CAA Amendments, NSR is designed to ensure that newly constructed facilities, or substantially modified existing facilities, do not result in violation of applicable air quality standards. The suits represent a continuing effort by EPA to reduce pollution from existing sources, particularly coal-fired electric generating facilities. Why EPA's Enforcement Action?

" The CAA requires a preconstruction review of, and a permit for, almost any major modification of an air polluting source or any major new source. As an enforcement tool, NSR is attractive because of the remedial actions EPA can seek the court to impose on affected utilities. However, the primary substantive difficulty with NSR has been the definition of a major modification. In 1988, the EPA ruled that a life extension project by Wisconsin Electric Power Company (WEPCO) met the trigger for NSR because of the potential for increased emissions from the facilities after the project compared with actual emissions from the facilities before the project. After considerable litigation and congressional debate, EPA modified this "actual to potential" emissions trigger with respect to electric utilities in 1992. The new "test" to determine the applicability of NSR compares a facility's actual emissions before the modification with its projected actual emissions after the modification ("actual to future actual"). In announcing the NSR suits, the EPA Administrator states that "controlling the sulfur dioxide and nitrogen oxides from these plants could lead to an 85 to 95 percent reduction respectively in these pollutants." However, the CAA is a complex piece of legislation built up over time. In the case of SO 2 any reduction achieved under NSR would interact with reduction requirements under title IV – a SO 2 reduction program designed with different premises than NSR. The confusion is exacerbated by the interaction of NSR and title IV. EPA Offers Utilities Off-Ramp From NSR ' Highway to Hell '"
By seeking to enforce NSR requirements, EPA exploits an existing authority that holds the potential for reducing emissions. EPA clearly believes that some sources have been evading statutory requirements. However, according to some, the action appears to raise the classic enforcement issue: will the outcome be reduced emissions, or just costly litigation consuming agency and utility resources that might be more effectively invested in other pollution controlling activities? Also, many alternatives for addressing NSR issues would require new legislation amending the CAA, in order to bring consistency to the NSR provisions and to update the Clean Air Act's approach to regulation of the electric utility industry's environmental effect to reflect the knowledge gained by 30 years of CAA implementation.
On November 3, 1999, the Justice Department filed seven lawsuits against electric utilities in the Midwest and South charging them with violations of the New Source Review (NSR) requirements of the Clean Air Act (CAA). In addition, the Environmental Protection Agency (EPA) issued an administrative order against the Tennessee Valley Authority (TVA), alleging similar violations. Through a "preconstruction" permitting process, NSR is designed to ensure that newly constructed facilities, or substantially modified existing facilities, do not result in violation of applicable air quality standards.
The suits represent a continuing effort by EPA to reduce pollution from existing sources, particularly coal-fired electric generating facilities. The primary pollutants of concern have been nitrogen oxides (NOx), and sulfur dioxide (SO2). The question the EPA lawsuits raise is whether the specified facilities have engaged in rehabilitation actions that represent "major modifications" of the plants, in which case the CAA would require the installation of best available pollution control equipment. The crucial definition of "major modification" derives from an EPA ruling that a life extension project by Wisconsin Electric Power Company (WEPCO) triggered NSR requirements. Since 1992, after considerable litigation and congressional debate, the "test" to determine the applicability of NSR compares whether a facility's projected actual emissions after the modification are more than its actual emissions before the modification. Utilities argue that the "modifications" that EPA cites in the suits were just routine maintenance, which do not trigger NSR.
NSR is an attractive enforcement tool because EPA can ask the court to impose substantial monetary penalties, and to require a violating source to install best available control technology. Thus EPA states that these facilities could be required to reduce their emissions of sulfur dioxide and nitrogen oxides by 85 to 95%.
Because the CAA is a complex piece of legislation built up over time, however, the reductions that might result from successful prosecution of the NSR suits may not be completely realized. In the case of SO2, any reduction achieved under NSR would interact with a cap on emissions set under title IV of the CAA; because of the system of tradable allowances established under title IV, reductions from NSR compliance might be shifted to unaffected facilities. The situation with respect to NOx is also confused, largely because of inconsistencies in EPA's new and existing source NOx regulations as a result of a partial remand of regulations by a court.
By seeking to enforce NSR requirements, EPA exploits an existing authority that holds the potential for reducing emissions. EPA clearly believes that some sources have been evading NSR requirements. However, the action appears to raise the classic enforcement issue: will the outcome be reduced emissions, or just costly litigation? The suits expose the complex interactions of NSR with other provisions of the CAA – complexities that might compromise air pollution reductions sought through the NSR suits. Knowledge gained through 30 years of CAA implementation suggests options for updating the Act's approach to regulating the utility industry's emissions; however, many of these require Congressional action to amend the Act.