540 U.S. 461 (2004) (U.S. Supreme Court)
Alaska Department of Environmental Conservation v. EPA is a cornerstone environmental and administrative law decision defining the balance of power in the Clean Air Act's cooperative federalism framework.
Does the Clean Air Act authorize the EPA to block construction authorized by a state-issued PSD permit by second-guessing the state's BACT determination when the agency finds that the determination is not supported by a reasoned analysis consistent with the Act?
Under the Clean Air Act's PSD program, a state permitting authority must determine and impose BACT—"an emission limitation based on the maximum degree of reduction" achievable on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs. 42 U.S.C. § 7479(3). Although states have primary responsibility to make BACT determinations, EPA retains oversight and enforcement authority, including the power under 42 U.S.C. §§ 113(a)(5) and 167 to prevent construction of a major emitting facility that does not conform to PSD requirements. EPA may intervene when a state's BACT determination is not in accordance with the Act—i.e., when it is inadequately reasoned, insufficiently supported by the record, or otherwise unreasonable—subject to arbitrary-and-capricious review under the APA. EPA is not authorized to substitute its policy preferences for a state's reasoned choice among adequately supported BACT options, but it may disapprove a state's BACT determination that fails to reflect the statute's requirement of the maximum achievable reduction consistent with the specified factors.
Yes. The Clean Air Act authorizes EPA to prevent construction authorized by a state PSD permit where the state's BACT determination is not in accordance with the Act. EPA permissibly concluded that ADEC's rejection of SCR and selection of less effective controls as BACT was inadequately reasoned and unsupported by the record, and EPA's orders were not arbitrary or capricious. The judgment upholding EPA's action was affirmed.
The decision clarifies the balance between state discretion and federal oversight in the PSD program. For students, it is a prime example of Chevron deference applied to EPA's interpretation of its supervisory powers, the use of arbitrary-and-capricious review to assess agency action, and the operation of cooperative federalism in environmental law. Substantively, it heightens the rigor expected of state BACT analyses: states must build a coherent, evidence-based record showing why their chosen control represents the maximum achievable reduction considering statutory factors. The case also signals that EPA's backstop authority extends beyond policing total failures—it can correct unreasonable or inadequately supported BACT determinations.