US v. Louisiana-Pacific Corp.

• Decision Date: 22 March 1988
• Docket Number: Civ. A. No. 86-A-1880.
• Citation: 682 F. Supp. 1141
• Parties: UNITED STATES of America, Plaintiff, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Colorado

682 F. Supp. 1141

UNITED STATES of America, Plaintiff, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation, Defendant.

Civ. A. No. 86-A-1880.

United States District Court, D. Colorado.

March 22, 1988.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Daniel S. Maus, Asst. U.S. Atty., Teresa N. Lukas, Asst. Regional Counsel, U.S.E. P.A., Denver, Colo., Cyrus S. Picken, Jr., Environmental Enforcement Section, Land and Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

William A. Hillhouse, II, Zach C. Miller, Felicity Hannay, Davis, Graham & Stubbs, Denver, Colo., for Louisiana-Pacific Corp.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

ARRAJ, District Judge.

This is a civil enforcement action brought by the United States of America, as plaintiff, on behalf of the U.S. Environmental Protection Agency ("EPA") for violations of the Clean Air Act, 42 U.S.C. § 7401, et seq., and the regulations promulgated thereunder concerning the prevention of significant deterioration ("PSD")¹ of air quality by the defendant, Louisiana-Pacific Corporation ("LPC"). Plaintiff seeks to enjoin defendant from further alleged violations of the PSD regulations, which are set forth at 40 C.F.R. § 52.21. Additionally, plaintiff seeks the assessment of civil penalties against LPC for alleged violations of these regulations.

The case was tried to the court on January 19 through 22, and January 25 and 26, 1988. Written closing arguments were submitted by the parties, and oral closing argument was heard on February 17, 1988. Having heard the testimony and arguments, and having reviewed the voluminous transcripts and exhibits, I find that the matter is ripe for disposition. The following shall constitute the court's findings of fact and conclusions of law in conformance with Fed.R.Civ.P. 52(a).

I. BACKGROUND: THE PSD PROGRAM

The Clean Air Act establishes minimum air quality standards to be achieved in all regions of the country. In 1977, Congress amended the Act to establish a program for the "prevention of significant deterioration ("PSD") of air quality." The PSD statutes and regulations are designed to protect areas of the country where the air is relatively clean. The goal of the program is to prevent the air quality in areas where it exceeds the statutory minimum from degenerating to that level.

To achieve this result, areas of the country where the air is cleaner than required by the National Ambient Air Quality Standards are identified by the states and designated as "attainment areas." 42 U.S.C. §§ 7407, 7471 (1983). The attainment areas are further divided into three classes: Class I for areas that have very clean air (such as national parks) where little or no deterioration is permitted; Class II for areas where moderate deterioration of air quality may occur; and Class III for areas where more economic growth and resulting air quality deterioration is allowed. Id. §§ 7472, 7474. The thrust of the PSD program is that new "major emitting facilities" may not be constructed within these areas before certain permits have been obtained. Id. § 7475. The permits, in turn, allow the new facility to contribute to air pollution only up to specified incremental amounts. Id. § 7473(b). Of central importance to this case is the fact that LPC's Kremmling and Olathe facilities are located within attainment areas.

The Clean Air Act provides that "no major emitting facility ... may be constructed in any attainment area unless a permit has been issued for such proposed facility in accordance with this part setting forth emission limitations for such facility...." 42 U.S.C. § 7475(a)(1) (emphasis added). The Act further provides that the term "major emitting facility" includes any source with the potential to emit 250 tons per year (TPY) or more of any air pollutant. Id. § 7479(1).

The PSD regulations go into more detail and establish the rule that no "major stationary source" or "major modification" of a major stationary source "shall begin actual construction without a permit" which states that the source or modification will meet the emission requirements set forth in the regulations. 40 C.F.R. § 52.21(i) (1983). The term "major stationary source" is defined to include any facility which emits, or has the potential to emit, 250 TPY of any air pollutant. Id. § 52.21(b)(1)(i)(b). A "major modification" is defined as any physical change or change in operation that would result in a significant increase in the emission of any one of several pollutants. Id. §§ 52.21(b)(2)(i), 52.21(b)(23). With regard to the pollutants that are relevant in the present case, a net emissions increase of 100 TPY of carbon monoxide (CO) or 40 TPY of volatile organic compounds (VOCs) would be significant, and thereby constitute a major modification. Id.

Permits may be issued only to sources that satisfy two principal requirements. First, the source must demonstrate that emissions from the construction or operation of the facility will not violate any applicable emission standard of the act. 42 U.S.C. § 7475(a)(3). Second, the proposed source must be subject to the best available pollution control technology. Id. § 7475(a)(4). To facilitate its review, the EPA requires that new sources submit air monitoring information necessary to determine the impact on air quality of the proposed source. 40 C.F.R. § 52.21(m). Generally, such monitoring must be gathered one year in advance of submission of the PSD application. The EPA then has up to one year to review and grant or deny the application. 42 U.S.C. § 7475(c). As a result, it may take up to two years before the source is allowed to commence actual construction of the new facility.

Where the EPA determines that the provisions of the Clean Air Act and its implementing regulations have not been complied with, it may issue a notice of violation ("NOV") to the alleged offender. 42 U.S. C. § 7413(a)(1). If the alleged violation continues for more than 30 days after the issuance of the NOV, the EPA is then empowered to bring a civil enforcement action. Id. § 7413(b)(2). If a violation is established, the Act authorizes the court to issue a temporary or permanent injunction, or to assess a civil penalty of up to $25,000 per day of violation, or both. Id.

II. FINDINGS OF FACT

Defendant LPC came to Colorado in 1983, with the encouragement of the state government, to establish the industry of waferwood manufacturing.² Since that time, LPC has built two waferwood plants in Colorado, the first in Kremmling, and the other near the town of Olathe. The air pollution emissions from these two plants, and the failure by LPC to obtain PSD permits from the EPA, form the basis of the present litigation.

A. "Waferwood"

In order to fully appreciate the issues before the court in this case, it is necessary to have some familiarity with the process by which LPC's Kremmling and Olathe facilities turn aspen and pine logs into "waferboard." First, when the logs are ready to be processed, they are cut by a saw into lengths of about eight feet. Once cut, the logs are moved into pools of heated water, called "hot ponds," to condition the bark for removal.³ From the hot ponds, the logs go to the "debarker" which, not surprisingly, is a machine that removes the bark. After the bark is removed, the logs move on to the "slasher," which cuts the logs into three-foot pieces, and then to the "waferizer," which chops these pieces into one-and-a-half to three-inch chips, or "wafers." The wafers then go to storage bins.

From the storage bins, the wafers go to the "wafer dryer," which is a machine that combusts wood and sawdust to produce a heated "exhaust gas." The hot exhaust gas is brought into direct contact with the wood chips and thereby dries them. The chips are blown by the exhaust gas into a cyclone which, using principles of centrifugal force, separates the dried wood chips from the exhaust gas. The dried wafers then move on to a "screening" process where they are separated into two different sizes and stored.

Once the chips have been screened, they move from the storage bins to a "blender," where they are mixed with adhesives and waxes for the forming process. The chips are then laid on a mat, with larger chips on the top and bottom and smaller chips in between. The material on the mat is split by a "cross-cut saw" into sections measuring eight feet by sixteen feet. These sections are then loaded into the "press," which heats and compresses the material into "waferboard." From the press, the sections of waferboard are trimmed and cut into sheets measuring four feet by eight feet by the "trim saw." These fourby-eight sheets of waferboard are the final product.

The process just described creates air emissions in a number of ways. First, wet bark and sawdust from the slasher and debarker are combusted in a device known as a "Konus" thermal oil heater to generate much of the heat required by the plant. The main purpose of the Konus is to provide heat to the presses by means of a hot oil system, which is similar to a boiler system. The heat from the Konus is used to heat oil which, in turn, transfers that heat to the presses. A secondary purpose of the Konus is to supply heat to the hot ponds. Finally, heat from the Konus is also used to heat the building itself in the wintertime. The emissions generated by the Konus include carbon monoxide ("CO") and volatile organic compounds ("VOCs"), as well as particulates, from the complete and incomplete combustion of the wet bark and wood that is used as fuel for the device.

Particulate emissions from the Konus combustion process are removed from the exhaust gas in two ways. First, the gas is blown into a "cyclone," which is a cylindrical device that causes the exhaust to rotate around in it. As a result of the rotation, solid material in the gas stream is thrown to the side of the device and is collected. Second, the gas exiting the cyclone is blown into a "baghouse."...