On March 28, 2013, the U.S. Court of Appeals for the Sixth Circuit held that U.S.EPA has the authority to challenge pre-construction emissions projections and may bring an enforcement action against a company operating without a construction permit. Under the Clean Air Act, a proposed project that would result in a “significant emissions increase” constitutes a “major modification” and requires a pre-construction permit. In March 2010, DTE Energy Company (“DTE”) began construction on the replacement of two boiler components at its Monroe Power Plant in Monroe, Michigan after determining that the projected emissions increase was below the major modification threshold. U.S. EPA subsequently reviewed DTE’s calculations and determined that the project constituted a major modification. In June 2010, U.S. EPA issued a Notice of Violation and sued DTE seeking injunctive relief.
In U.S. v. DTE Energy, the Michigan District Court denied U.S. EPA’s request for an injunction explaining that U.S. EPA cannot bring an enforcement action without post-project emissions data demonstrating that the pre-construction emissions projections were incorrect. The Sixth Circuit reversed the District Court’s ruling and held that “while the regulations allow operators to undertake projects without having EPA second-guess their projections, EPA is not categorically prevented from challenging even blatant violations of its regulations until long after modifications are made.” It should be noted, however, that the Court recognized that the Clean Air Act does not authorize U.S. EPA to impose a prior-approval permitting scheme. The Court’s narrow interpretation of the Clean Air Act appears to limit U.S. EPA’s authority to bring an enforcement action to instances where projected emissions were not calculated in accordance with the requirements contained in the regulations.