In 1977, the U.S. Congress amended the Clean Air Act (CAA)¹ to codify a new source review (NSR) program for major new or modified sources in areas that attain national ambient air quality standards (NAAQS). These prevention of significant deterioration (PSD) provisions require major new or modified sources² that will emit significant amounts of regulated pollutants³ to obtain a permit before commencing construction of the source or modification. To secure a permit, the source must establish that the new construction or modification will comply with the NAAQS, as well as the PSD "increments"—or fractions of the NAAQS established to preserve air quality in attainment areas—for sulfur dioxide, particulate matter, and nitrogen dioxides. In addition, the source must employ the best available control technology (BACT) for each regulated pollutant that it will emit in significant amounts. The CAA defines BACT as the "maximum degree of [emission] reduction" achievable, considering "energy, environmental, and economic" factors.⁴ BACT, therefore, is an emissions limit typically derived from the control technology for regulated pollutants in attainment areas that the U.S. Environmental Protection Agency (EPA) and state regulatory agencies mandate in preconstruction permits.

In the late 1980s and early 1990s, EPA brought a number of civil judicial enforcement actions against the wood products industry for failure to obtain preconstruction permits for new sources or source modifications under the PSD program. In the mid-1990s, EPA began an extensive investigation of suspected violations of PSD NSR provisions in the coal-fired electric utility industry. The investigation led the U.S. Department of Justice, at EPA's request, to file eight enforcement actions against coal-fired electric utilities in 1999 and 2000, and to pursue enforcement for alleged PSD violations in the refinery, wood products, mini-steel, food manufacturing, and chemical processing industries.⁵ These recent NSR enforcement actions contend that industries built or modified facilities without installing BACT emission controls and without obtaining PSD permits. EPA is seeking civil penalties and injunctive relief requiring the facilities to install emission controls that satisfy BACT. Many of the alleged violations involve facilities or modifications built as long ago as 1978.