A Louisiana federal court has decided that an electricity generating station’s replacement of two primary reheaters could not reasonably be exempted from New Source Review (NSR) under the Clean Air Act (CAA) as routine maintenance, repair or replacement (RMRR). United States v. La. Generating, L.L.C., No. 9-100 (M.D. La. 9/19/2012).

Under the CAA, any change at a facility that increases potential emissions by a significant amount constitutes a modification requiring compliance with NSR provisions and would also result in changes to a plant’s Title 5 operating permit. Making such a modification without complying with NSR provisions would, as well, violate the applicable State Implementation Plan (SIP). The RMRR rule is an exception to the definition of a modification under the rules and exempts from NSR compliance work that constitutes RMRR.

A previous facility owner had replaced the heaters at a cost of about $4.5 million because the old units caused frequent shutdowns, reducing the plant’s ability to produce electricity. To determine whether the new reheaters constituted RMRR, the court applied the WEPCO test, based on EPA guidance and caselaw involving the Wisconsin Electric Power Co. (WEPCO). According to a 1988 memorandum, which has become the touchstone of EPA’s RMRR analysis, “[i]n determining whether proposed work at an existing facility is ‘routine,’ EPA makes a case-by-case determination by weighing the nature, extent, purpose, frequency, and cost of the work, as well as other relevant factors, to arrive at a common-sense finding.”

Considering cross-motions for partial summary judgment, the court held that the plant owner had the burden of proving that the work fell within the RMRR exception and that EPA’s interpretation of its own rule creating the exception is entitled to significant deference, although only to the extent that the current interpretation is consistent with past interpretations. The court described EPA’s interpretation as focusing on whether the work is routine at the facility and characterized the plant owner’s position as focusing on whether the work is routine in the industry. The court found that frequency of similar work in the industry was instructive but not dispositive. Ultimately, the court held that the replacement was not routine because it represented the largest amount ever spent on the unit and the intent was to increase future generation by decreasing forced outages.