## Facts

- The Clean Air Act (CAA) requires major stationary sources to obtain preconstruction permits under New Source Review (NSR) when they are newly built or “modified” in a way that increases emissions.
- EPA historically determined emissions “increases” by comparing post-change emissions rates to a representative two-year period of the unit’s prior actual emissions.
- In 2002, EPA revised NSR rules, including (1) allowing selection of any consecutive 24-month baseline within the prior 10 years, and (2) adopting an “actual-to-projected-actual” test that permits accounting for certain demand growth in projecting post-change emissions.
- The 2002 revisions also created Plant-wide Applicability Limits (PALs) and included categorical exemptions for “Clean Units” and “Pollution Control Projects” (PCPs).
- Multiple states, local air agencies, and environmental organizations petitioned for direct review of the final rule in the D.C. Circuit; industry groups intervened in support of EPA.
- Petitioners alleged the revisions would allow emission increases without NSR review and would weaken monitoring and enforcement through reduced recordkeeping and reporting.

## Issues

1. Whether EPA permissibly interpreted the CAA’s “modification” and “increase” language by adopting a 10-year lookback baseline and an actual-to-projected-actual test for NSR applicability.
2. Whether the Clean Units and PCP exemptions unlawfully allow sources to avoid NSR even when projects result in emissions increases.
3. Whether EPA’s relaxed recordkeeping and reporting requirements for projects deemed non-NSR-triggering were arbitrary, capricious, or contrary to the CAA.
4. Whether challenges concerning state implementation plans (SIPs), compelled state adoption of the federal approach, and anti-backsliding limits were ripe for review.

## Decision

- The court granted the petitions in part and denied them in part.
- The court upheld EPA’s baseline and actual-to-projected-actual methodology as a permissible interpretation entitled to Chevron deference.
- The court vacated the Clean Units and PCP exemptions as inconsistent with the CAA’s statutory NSR trigger tied to emissions increases from modifications.
- The court remanded the relaxed recordkeeping and reporting provisions for further explanation because EPA did not adequately justify how reduced documentation would preserve enforceability.
- The court dismissed certain SIP and anti-backsliding challenges as unripe.

## Legal Principles

- Under Chevron, when the CAA does not specify a required methodology for calculating emissions increases, EPA may choose a reasonable method supported by a reasoned explanation.
- NSR applicability turns on whether a physical or operational change at a major source results in a net emissions increase; categorical exemptions that allow increases to escape NSR conflict with the statute.
- Agency choices that affect enforceability (such as recordkeeping and reporting requirements) must be justified with reasoned decisionmaking; inadequate explanation warrants remand.
- Ripeness limits pre-enforcement review of claims dependent on future, contingent state and agency actions, particularly in the SIP approval context.

## Conclusion

The D.C. Circuit upheld EPA’s central 2002 NSR revisions regarding baseline selection and projected-actual calculations, but struck down exemptions that could bypass NSR despite emissions increases and required EPA to better justify reduced recordkeeping that could impair enforcement, while postponing SIP-related disputes until a concrete administrative record existed.


New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005)