- The Washington Times - Thursday, January 27, 2005

On Feb. 3, the federal appellate court in Richmond will hear a case critical both to the nation’s economy and its environmental protection strategy. At stake is an obscure Clean Air Act (CAA) permitting program called “new source review” (NSR). NSR dates to the 1970s, and was designed to ensure that new industrial plants install the most up-to-date pollution-control equipment when they are built. The court’s job next Thursday will be to determine the extent to which NSR requirements can also be applied to existing facilities, and especially electric power plants, that undertake routine repair and maintenance work to keep these older plants running in a safe and efficient manner. But the broader underlying policy question is whether the government, having changed the regulatory requirements, may pretend that they have been this way all along and retroactively punish companies.

For 20 years, the Environmental Protection Agency (EPA) accepted that repair work, so long as it did not actually increase a plant’s ability to pollute beyond its original design and did not require an NSR permit. In all that time, only one enforcement action had been brought against an electric utility. Then, in the late 1990s, the Clinton administration launched a major new CAA enforcement initiative in which it announced, for the first time, that whether work was “routine” had to be judged on a plant-by-plant basis, rather than based on industry practice as a whole.

Thus, it no longer mattered that power plants routinely required a mid-life repair once or twice during their operating life. Instead NSR focused now on whether such a repair is routine when it happens only once or twice at each facility. Virtually every electric utility in the nation was suddenly thrown into noncompliance with the law by this slight of hand.

The Bush administration acknowledged this problem and moved to fix the mess in 2003. It adopted a new rule that makes clear what does and does not fall within the routine-repair exclusion, and which allows the use of more efficient replacement parts when repairs are undertaken. Unfortunately, it did not also dismiss the various enforcement actions already filed, including the one being heard in Richmond next month. Nevertheless, the trial judge in that case rejected EPA’s plant-specific interpretation, ruling that whether work falls within the routine repair and maintenance category must be assessed based on the industry-wide practice as a whole. This was, and is, the most sensible reading of the law, and the judge’s ruling should be upheld.

More broadly, the appeals court should make clear that federal agencies cannot simply reinterpret their requirements, and then announce this new rule by suing companies for already having violated it. The Administrative Procedures Act, to say nothing of the Constitution, was designed to ensure that regulated entities are given fair notice when legal requirements, including agency interpretations of existing rules, change. That, after all, is how a system of law, rather than men, is supposed to work.

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