Parent Company Liability Under the Clean Air Act: Federal District Court Applies Bestfoods and Imposes $100 Million Penalty and $20 Million in Mitigation
In a February 17, 2026 decision with significant implications for corporate parents, the U.S. District Court for the Eastern District of Michigan held in United States v. EES Coke Battery, LLC that parent company DTE Energy Company and two affiliates were liable as “operators” under the Clean Air Act (CAA) for New Source Review (NSR) violations at a subsidiary’s coke battery facility. In a case of first impression, the court applied the standard for direct parent company liability established in United States v. Bestfoods to a source under the CAA. Moreover, the ruling includes a $100 million civil penalty, one of the largest CAA penalties issued by a court to a stationary source. The court ordered an additional $20 million in community mitigation, and also ordered EES Coke to obtain an NSR permit that may require the source to install costly new pollution controls.
U.S. EPA Proposes Revisions to Project Emissions Accounting Under New Source Review
The U.S. Environmental Protection Agency (EPA) is proposing revisions to the New Source Review (NSR) permitting program that would make it more difficult to net out of NSR requirements by changing how to calculate the net emissions resulting from a facility modification. EPA also proposes to define the term “project” more narrowly to prevent sources from aggregating changes to net out of major NSR requirements. The proposal would revise reforms adopted only four years earlier during the Trump administration that had provided additional flexibility to sources making changes to their operations.
