New Source Review

The New Source Review, (NSR) is a permitting process created by the US Congress in 1977 as part of a series of amendments to the Clean Air Act. The NSR process requires industry to undergo an Environmental Protection Agency pre-construction review for environmental controls if they propose either building new facilities or any modifications to existing facilities that would create a "significant increase" of a regulated pollutant. The legislation allowed "routine scheduled maintenance" to not be covered in the NSR process. Since the terms "significant increase" and "routine scheduled maintenance" were never precisely defined in legislation, they have become a source of contention in many lawsuits filed by the EPA, public interest groups, and utilities.

In 1988 the Wisconsin Energy Corporation (WEPCo) submitted an NSR inquiry to the EPA for improvements at its Port Washington plant. The improvements included the replacement and repair of aging equipment including steam turbine generators, major boiler components and significant amounts of asbestos remediation. WEPCo initially believed that the plant, built in 1932, would not be subject to the NSR requirements and would instead fall under "routine maintenance, repair, and replacement". The EPA, however, ruled that the improvements would extend the life of the plant, and constitute a long term and significant increase in the facilities emissions, prompting WEPCo to sue the EPA in federal court.

In 1991 the Seventh Circuit Court of Appeals found that the EPA had improperly interpreted the NSR and ruled that work that "does not 'change or alter' the design or nature of the facility", would render the facility exempt from the NSR rules. Rather, it merely allows the facility to operate again as it had before the specific equipment deteriorated." The appeals court also ruled that WEPCo would not emit any more pollutants after the improvements, and agreed with WEPCo that its emissions would actually decrease and that the EPA had miscalculated its estimation of the plants emissions. However the court did agree with the EPA that the repairs and modifications to the plant did not constitute "routine maintenance" After the WEPCo ruling, the EPA continued to take a case by case approach to NSR's at facilities built before 1977, viewing the court's ruling as applying to the power sector specifically and not to all similar NSR applications in general.

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