Montana Power Co. v. Environmental Protection Agcy.

• Decision Date: 28 March 1977
• Docket Number: No. CV-76-136-BLG.,CV-76-136-BLG.
• Citation: 429 F. Supp. 683
• Parties: The MONTANA POWER COMPANY, a corporation, et al., Plaintiffs, v. ENVIRONMENTAL PROTECTION AGENCY et al., Defendants, v. NORTHERN CHEYENNE TRIBE, and Northern Plains Resource Council, Intervenors.
• Court: U.S. District Court — District of Montana

429 F. Supp. 683

The MONTANA POWER COMPANY, a corporation, et al., Plaintiffs, v. ENVIRONMENTAL PROTECTION AGENCY et al., Defendants, v. NORTHERN CHEYENNE TRIBE, and Northern Plains Resource Council, Intervenors.

No. CV-76-136-BLG.

United States District Court, D. Montana, Billings Division.

January 27, 1977.

Order to Enter Final Judgment March 28, 1977.

COPYRIGHT MATERIAL OMITTED

John L. Peterson, John W. Ross, Butte, Mont., William H. Bellingham, Billings, Mont., for plaintiffs.

Thomas A. Olson, U.S. Atty., Keith L. Burrowes, Asst. U.S. Atty., Billings, Mont., for defendants.

Bruce J. Terris, Washington, D.C., for intervenors.

OPINION AND ORDER

BATTIN, District Judge.

Presently pending before the Court is the plaintiffs' complaint seeking injunctive and declaratory relief. Defendant Environmental Protection Agency (EPA) has filed a motion for summary judgment. The plaintiffs resist the motion for summary judgment, urging that it should be denied because the facts have not yet been fully developed in this case.

On October 18, 1976, this Court signed an order setting a time for hearing the request for preliminary injunctive relief. The hearing was held November 10, 1976, at which time the Court heard testimony and argument concerning the complaint on file herein. At the November 10, 1976, hearing on the motion for preliminary injunction, the Northern Cheyenne Indian Tribe and the Northern Plains Resource Council sought, and were granted, leave to intervene in this action. Following the presentation of evidence, the parties were given ten (10) days from the date each received a copy of the transcript of the hearing, within which to submit further briefs on the issues presented in this case. During this time, the parties were also instructed to delineate those parts of the record which supported the respective positions. Briefs with accompanying designations of the record have been filed. The matter is now submitted for decision. I find the plaintiffs' request for declaratory relief should be granted. The motion for a preliminary injunction is denied.

FACTS:

In 1970, the Congress passed the Clean Air Act of 1970. 42 U.S.C. § 1857c. In 1972, the United States District Court for the District of Columbia rendered a decision in the case of Sierra Club et al. v. Ruckelshaus, 344 F.Supp. 253 (D.C.D.C.1972), interpreting the 1970 Clean Air Act. In that case, the plaintiffs filed a motion for a preliminary injunction to enjoin the Administrator of the EPA from approving certain portions of state air pollution control plans. The District Court held that the Clean Air Act of 1970 involved a policy of nondegradation of existing clean air and that a regulation permitting states to submit plans which allowed pollution levels to rise to secondary standards of pollution was contrary to legislative policies of the Act. Injunctive relief was granted, requiring the Agency to promulgate regulations which would prohibit the degradation of air in certain areas where the condition of the ambient air was cleaner than national ambient air standards. Sierra Club et al. v. Ruckelshaus, supra.

Accordingly, on July 16, 1973, the Administrator of the EPA published initial notice of proposed rule-making, setting forth four alternative plans for preventing significant deterioration of air. The Administrator solicited wide-spread public involvement in all aspects of the significant deterioration issue. 39 F.Reg. 42510 (1974). On August 27, 1974, the Administrator issued a reproposal of regulations concerning the prevention of significant deterioration; the August proposals were offered to explore all aspects of the issue. 39 F.Reg. 3100 (1974).

The regulations proposed on August 27 called for the establishment of classes of different allowable incremental increases in total suspense articulates (TSP) and sulphur dioxide (SO2). By this classification scheme, areas of the country would be designated as within one of three distinct classes. Class I applied to areas in which practically any change in air quality would be considered significant. Class II applied to areas in which deterioration normally accompanying moderate, well-controlled growth would be considered insignificant. In Class III areas, it was considered that air pollution up to the national standards for ambient air would be insignificant. Initially, all areas of the country were designated Class II, with provisions for allowing the state, the Federal Government, or Indian Tribes to reclassify any area to accommodate the social, economic, and environmental needs and desires of the public within the area. The proposed location of Colstrip Units Three and Four is in a Class II area.

Implementation of the August 27th plan was to be by preconstruction review of specified source categories to determine whether these sources would violate the area standards of classification. After some amendment, the Administrator announced that the regulations would become effective January 6, 1975, and would be applicable to sources "commencing construction" on or after June 1, 1975. The final regulations were promulgated December 5, 1974 (39 F.Reg. 42510).

In June of 1975, the regulations were amended. The Administrator found the amendments necessary and to be generally minor qualifications and corrections with the intent that the modifications of the December 5th regulations would involve only minor procedural changes and no substantive requirements. 40 F.Reg. 25001 (1975).

The Sierra Club case, supra, was appealed and affirmed. Sierra Club v. Ruckelshaus, 344 F.Supp. 253, affirmed sub nom., Fri v. Sierra Club, 412 U.S. 541, 93 S.Ct. 2770, 37 L.Ed.2d 140 (1973). In a different case, Sierra Club v. E. P. A., 176 U.S.App.D.C. 335, 540 F.2d 1114 (1976), the Circuit Court for the District of Columbia held that regulations promulgated and adopted by the EPA were valid and that it was a valid and rational policy decision that the significance of deterioration of air quality should be considered by the qualitative balancing of clean air considerations against the competing demands of economic growth, population expansion and energy development alternatives in the field. Sierra Club v. E. P. A., supra. The present case questions the way in which the prevention of significant deterioration regulations are interpreted.

The manner in which the regulations are now interpreted was brought about to a significant degree by the "Strelow Memoranda." These memoranda were from Roger Strelow, Assistant Administrator for Air and Waste Management in the EPA, to the Regional Administrator of the EPA. The first of these memoranda was promulgated December 12, 1975. It concerned "Guidance on How the Phrase `Commence', as that term is used in the Regulations to Prevent Significant Deterioration, is to be Interpreted." The second memorandum was promulgated April 21, 1976, and was a clarification of the December 18th memorandum. Two factors concerning the Strelow memoranda are significant. First, they reflect a policy shift from the way the Agency had initially interpreted the regulations. Secondly, the Strelow memoranda go beyond the plain meaning of the regulatory language and mandate criteria not manifest in the regulations themselves.

The Montana Power Company contends that construction of Colstrip Units Three and Four commenced before June 1, 1975. Thus, the Company takes the position that a continuous program of construction for Units Three and Four commenced before that date, so those units are not subject to preconstruction review because they were grandfathered under 40 C.F.R. § 52.21(d)(1).

On November 17, 1971, the Montana Power Company, in conjunction with the Puget Sound Power & Light Company, purchased a 1,369-acre site near Colstrip, Montana, as tenants in common. The site was to be used for possible construction of an approximately 3000 megawatt coal-fired electric generating plant. During the years 1973 and 1974, Montana Power Company purchased additional land near the Yellowstone River and constructed a water intake structure designed to serve the Colstrip project including Units One and Two, and Units Three and Four. Other activities and acquisitions involving construction programs for Units Three and Four were the purchase of additional land for a surge pond designed to supply water to the Colstrip project. The surge pond was constructed in 1974. The Power Company obtained right-of-way easements for additional water pipeline and obtained some right-of-way easements for the construction of a 500 kilovolt transmission line.

Further activity in the course of planning the construction of Units Three and Four involved an agreement between the Montana Power Company, the Puget Sound Power & Light Company, and Western Energy Company to dedicate 170,000,000 tons of coal for the Colstrip Units Three and Four.

Initial planning by the Montana Power Company for Units Three and Four was commenced soon after the Colstrip generating site was acquired in 1971. The Company contracted with third parties to initiate environmental studies on the site and made agreements with other western energy companies (including Puget Sound Power & Light Company, Portland General Electric Company, and Washington Water & Power Company) to undertake and incur costs for further engineering, economic and environmental studies regarding Colstrip Units Three and Four. An agreement was entered into by the Montana Power Company and meteorologists at Montana State University for the purpose of gathering data on air quality on the Colstrip generating site. In 1973 and 1974, the Company retained a private air pollution consultant to make air pollution projections and to recommend a stack height for the Colstrip Units Three and Four.

The culmination of the initial planning stage occurred sometime in 1973 with the retention of Bechtel Power Corporation to be the architect and engineer of Colstrip Units Three and Four. In 1973,...