April 25, 2014

Third Circuit Prevention of Significant Deterioration (PSD) Decision is a Loss for EPA, But Also Contains Warnings for Power Plant Owners

The federal Environmental Protection Agency (EPA) suffered an important loss on August 21 when the U.S. Court of Appeals for the Third Circuit affirmed the dismissal EPA’s prevention of significant deterioration (PSD) enforcement action against the current and former owners of Pennsylvania’s coal-fired Homer City Generating Station.

In United States v. EME Homer City Generation, L.P., No. 11-4408 (3d Cir. Aug. 21, 2013), the Third Circuit held that although the Clean Air Act’s PSD provisions prohibit plant owners from modifying their facilities without getting a PSD permit and implementing the best available control technology (BACT), those provisions do not prohibit operating modified facilities without those items.  That means that owners who acquire a plant after it has been modified may be shielded from PSD liability for those modifications and may be able to avoid having to install costly pollution control equipment.  The decision also contains many other important holdings and is a significant loss for EPA. 

Some commentators have suggested that the Homer City decision may spell the end of EPA’s PSD enforcement initiative against older coal-fired power plants.  But do not expect EPA (or other plaintiffs) to give up so easily.  The decision depends in part on the nuances of the Pennsylvania state implementation plan (SIP), which may differ from other SIPs, and EPA may find other ways to distinguish the decision.  EPA may also seek Supreme Court review. 

Just as important – perhaps even more important – the Homer City decision points to three things that power plant owners will want to be conscious of going forward:

First, the decision all but encourages EPA to investigate planned equipment upgrades, not just past upgrades that might have triggered PSD obligations.  The court explained:  “we see no reason why the EPA and States lack authority to require the advance reporting of some or all proposed changes to facilities, whether or not they rise to a modification.”

Second, the decision may also prompt EPA to pay greater attention to Title V permit renewal applications for power plants.  One significant feature of the decision is that it rejects, on jurisdictional grounds, EPA’s contention that the plant’s existing Title V operating permit was incomplete (because it failed to contain a requirement to use BACT). If EPA cannot complain about “incomplete” operating permits during enforcement actions, it may become more aggressive about raising PSD-related concerns during the permitting process. 

Third, the court’s discussion of civil penalties for PSD violations is eye-opening.  The court cautioned that where a plant owner modifies a plant in violation of the PSD requirements, civil penalties may not be limited to merely one day of violation.  Rather, civil penalties may be available for each day that the modification is underway.  For a modification that takes a month-long outage to implement, that could result in penalties greater than $1 million per modification.

© 2014 McDermott Will & Emery

About the Author

Jacob Hollinger, McDermott Will Emery Law Firm, Environmental Attorney

Jacob Hollinger is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s New York office.  His practice focuses on the environmental, regulatory and litigation needs of energy and manufacturing sector entities.

Prior to joining McDermott, Jacob spent nearly ten years as a government enforcement attorney, first with the New York State Attorney General’s Office and later with the U.S. Environmental Protection Agency.  As an Assistant Attorney General for New York State, Jacob was New York’s lead litigation counsel in several...


Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.