In United States v. DTE Energy Company, Docket No. 10-13101 (E.D. MI, Aug. 23, 2011), Judge Bernard Friedman recently found for the defendant, DTE Energy Company (DTE) in a New Source Review (NSR) permit dispute.  In the complaint, the United States alleged that DTE violated the Clean Air Act (CAA) and the State of Michigan’s approved State Implementation Plan (SIP).

The primary issue was whether DTE violated the CAA by renovating electric utility steam generating units (units) without first obtaining a NSR permit from the Michigan Department of Environmental Quality (MDEQ). The United States contended that a permit was required because the renovations constituted a "major modification" of the units. DTE contended that no permit was required because it abided by all statutory and regulatory obligations.

A major modification is defined as a physical change at a major stationary source or a change in the method of operation that results in a significant net emissions increase. The 2002 NSR rules, as adopted by the U.S. Environmental Protection Agency (EPA) in 2002, and which were incorporated into the Michigan SIP, regulate that a project is a major modification for a regulated pollutant if it causes both a significant emissions increase and a significant net emissions increase. 40 C.F.R. § 52.21(a)(2)(iv).

A project "is not a major modification if it does not cause a significant emissions increase." Under the 2002 NSR rules, if a source operator determines that its project does not constitute a major modification, it may commence its project without an NSR permit subject to certain post-project emissions monitoring requirements. 

In this case DTE mailed a pre-project Notice Letter to the MDEQ, informing the agency of the projects at issue. The Notice Letter predicted an annual post-project emissions increase, but asserted that the emissions increase was unrelated to the projects. According to the Court, the MDEQ did not question DTE’s notification.

DTE did not obtain a pre-construction permit.  It argued that it was not required to do so because the requirements were satisfied by projecting post-construction emissions, determining that those projections did not indicate a major modification, and then reporting the projections to the MDEQ in a notice letter. DTE argued "that so long as certain pre-project requirements are met, NSR is triggered only if the project in question causes an emissions increase, which then demonstrates that the project is per se a ‘major modification.’" "That determination, however, cannot be made until the completion of the first year for which such measurements are required."

The District Court agreed with DTE, and granted summary judgment.