Alliance for Clean Coal v. Bayh

Decision Date27 March 1995
Docket NumberNo. IP94-0890-C-T/G.,IP94-0890-C-T/G.
Citation888 F. Supp. 924
PartiesALLIANCE FOR CLEAN COAL, Plaintiff, v. The Honorable Evan BAYH, et al., Defendants. International Union, United Mine Workers of America, and PSI Energy, Inc., Intervenor Defendants.
CourtU.S. District Court — Southern District of Indiana


Robert W. Geddes, Hume Smith Geddes & Green, Indianapolis, IN, R.R. McMahan, Lord Bissell & Brook, Chicago, IL, for plaintiff.

Virgil Beeler, Baker & Daniels, Peggy A. Hillman, Indiana Civil Liberties Union, Indianapolis, IN, Edgar N. James, Guerrieri Edmond & James, Washington, DC, G. Daniel Kelley Jr., Ice Miller Donadio & Ryan, Myra P. Spicker, Deputy Atty. Gen., Edward P. Steegmann, Ice Miller Donadio & Ryan, Indianapolis, IN, for defendants.

Memorandum Entry Regarding Defendants' Motion to Dismiss, Defendants' Motion to Abstain and the Parties' Cross-Motions for Summary Judgment

TINDER, District Judge.

This matter comes before the court on multiple motions. First, Defendants move to dismiss Plaintiff's case for lack of jurisdiction over the subject matter under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Second, Defendants move the court to abstain from proceeding further in this case under the doctrine set forth in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), or the doctrine stated in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Finally, the parties filed cross-motions for summary judgment under Federal Rule of Civil Procedure 56. The court, having considered the motions and the submission of the parties, finds that Defendants' motions to dismiss for lack of subject matter jurisdiction should be DENIED; that Defendants' motion for the court to abstain from proceeding further in this case should be DENIED; and that Plaintiff's motion for summary judgment should be GRANTED and Defendants' cross-motion for summary judgment should be DENIED.

I. Factual Background and Procedural History

Coal is produced in over half the states and is sold in a highly competitive interstate market. Most of the coal produced is used by electric utilities, accounting, for example, for 56 percent of all electricity generated in 1992. Nevertheless, all coal is not alike. Coal mined in the western states ("western coal") generally has a lower sulfur content than coal mined in the central and eastern portions of the United States. Most coal mined in Indiana has a relatively high sulfur content. When coal is burned, sulfur dioxide ("SO2") is emitted in direct proportion to its sulfur content. In light of increasing air pollution problems, reducing SO2 emissions has become a national priority. One way for coal-burning facilities to reduce SO2 emissions is simply to burn lower sulfur coal. See generally BRUCE A. ACKERMAN & WILLIAM T. HASSLER, CLEAN COAL/DIRTY AIR (1981).

In 1970, Congress responded to the problem of atmospheric emissions by amending the Clean Air Act ("1970 CAAA"), authorizing the United States Environmental Protection Agency ("EPA") to set new source performance standards to regulate various emissions, including SO2. 42 U.S.C. § 7411 (1970). In promulgating emissions standards for new sources, the EPA approved two methods for controlling SO2 emissions: (1) the use of low sulfur coal; and (2) the use of pollution control devices ("scrubbers") to reduce emissions before they could reach the atmosphere.

In 1977, Congress again amended the Clean Air Act ("1977 CAAA") by requiring new or modified sources to use the "best technological system ... adequately demonstrated" to reduce SO2 emissions. 42 U.S.C. § 7411(a)(1) (1977). Under the 1977 CAAA, the EPA set standards requiring percentage decreases of SO2 emissions. See Sierra Club v. Costle, 657 F.2d 298, 312 (D.C.Cir.1981) (upholding the EPA's promulgation of percentage reduction standards under the 1977 CAAA). Whereas under the 1970 CAAA, coal-burning electric plants could choose the most cost-effective means of compliance, under the 1977 CAAA, new facilities effectively were required to build scrubbers regardless of the sulfur content of the coal they burned and regardless of the cost.

In 1990, Congress once again amended the Clean Air Act ("1990 CAAA"), adding an acid rain reduction program which mandates drastic reductions in industrial SO2 emissions. 42 U.S.C. §§ 7651 to 7661f (1990). Under Phase I of the 1990 CAAA, the 110 largest coal-burning facilities in 21 states must meet an intermediate SO2 emissions limit by 1995. 42 U.S.C. § 7651c. Under Phase II of the 1990 CAAA, all facilities will be required to meet more stringent emissions limitations starting in 2000. 42 U.S.C. § 7651d. Under the 1990 CAAA, coal burning electric plants are again free to comply with SO2 emissions standards by the most cost-effective means. The principle methods presently available for complying with the Phase II limitations are installing new scrubbers, using lower sulfur coal, switching to another fuel source (e.g., natural gas), or buying or offsetting emissions from other plants.1

In 1991, Indiana adopted the Environmental Compliance Plans Act ("ECPA") with an eye toward facilitating implementation by Indiana utilities of the changes dictated by the 1990 CAAA. IND.CODE ANN. §§ 8-1-27-1 to X-X-XX-XX (Burns 1991 and Supp.1994).2 The ECPA essentially allows a utility to seek an early prudency review of its compliance decisions by the Indiana Utility Regulatory Commission ("IURC"),3 by submitting for review its chosen method of compliance. Following the prudency review, the utility is able to include the capital costs of facilities in its rate base and to recover the costs of development and implementation. IND.CODE ANN. §§ 8-1-27-12 & 19 (Burns 1991). Failure by a utility to avail itself of the early prudency review provided by the ECPA requires that the utility wait until after it has embarked upon a course of action designed to comply with the 1990 CAAA before it may go to the IURC and seek a rate adjustment. Such adjustment will be awarded so long as the IURC finds that the compliance method chosen by the utility was the most cost-effective method available. Obviously, seeking a post-compliance rate increase carries considerably more risk than pre-approval under the ECPA because the utility runs the risk that the IURC will not approve its chosen 1990 CAAA compliance methods as most cost-effective, leaving the utility unable to fully recover expenditures already made.

On June 3, 1994, Plaintiff Alliance for Clean Coal ("Alliance") filed the instant suit challenging the constitutionality of portions of the ECPA. Defendants have filed motions challenging Plaintiff's standing and requesting that the court abstain from further proceeding in this case. On July 15, 1994, Plaintiff filed a motion for summary judgment which is fully briefed. On November 1, 1994, Intervenor Defendant PSI Energy, Inc. ("PSI") filed a cross-motion for summary judgment. With this procedural framework in mind, the court shall address each of the parties' motions in turn.

II. Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction

Defendants PSI and the State move to dismiss Plaintiff's suit on the grounds that this court does not have subject matter jurisdiction over Plaintiffs claims. Essentially, Defendants argue that Plaintiff does not have standing to challenge the constitutionality of the Indiana Coal Act.

Federal courts are courts of limited jurisdiction and are empowered to hear only those cases that are within the judicial power of the United States, as defined in the United States Constitution, or that have been entrusted to them by a jurisdictional grant by Congress. See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., ___ U.S. ___, ___, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994). The United States Supreme Court stated the standard exposition of the rule as follows:

The jurisdiction of the federal courts is carefully guarded against expansion by judicial interpretation or by prior action or consent of the parties. To permit a federal trial court to enter a judgment ... where the federal court could not have original jurisdiction ... would by the act of the parties work a wrongful extension of federal jurisdiction and give district courts power the Congress has denied them.

American Fire & Casualty Co. v. Finn, 341 U.S. 6, 17-18, 71 S.Ct. 534, 542, 95 L.Ed. 702 (1951) (superseded by statute on other grounds) (footnote omitted).

It is a well-settled rule that the party seeking to invoke the jurisdiction of a federal court must demonstrate that their case is within the competence of that court. It is presumed that a federal court lacks jurisdiction until it has been demonstrated that jurisdiction over the subject matter exists. See Oliver v. Trunkline Gas Co., 789 F.2d 341 (5th Cir.), reh'g denied, 796 F.2d 86 (1986); City of Valparaiso v. Iron Workers Local Union No. 395, 669 F.Supp. 912 (N.D.Ind. 1987). See generally 13 CHARLES A. WRIGHT, ET AL., FEDERAL PRACTICE & PROCEDURE § 3522 (2d ed. 1984 and Supp.1994).

In deciding a motion to dismiss based upon Federal Rule of Civil Procedure 12(b)(1), a court should liberally construe the complaint and is not bound to accept as true an allegation of jurisdiction where a party properly raises factual questions of subject matter jurisdiction. The court may look beyond the jurisdictional allegations to examine any evidence submitted to determine if subject matter jurisdiction in fact exists. Roman v. United States Postal Serv., 821 F.2d 382, 385 (7th Cir.1987); 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1350 at 213-17 (1990).

The Supreme Court has concisely stated the showing a party must make to establish Article III standing:

Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements: First, the

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