Sierra Club v. Otter Tail Corp., CIV 08-1012.

• Decision Date: 06 April 2009
• Docket Number: No. CIV 08-1012.,CIV 08-1012.
• Citation: 2009 DSD 2,608 F.Supp.2d 1120
• Parties: SIERRA CLUB, Plaintiff, v. OTTER TAIL CORPORATION, d.b.a. Otter Tail Power Company, MDU Resources Group, Inc., and Northwestern Corporation, d.b.a. Northwestern Energy, Defendants.
• Court: U.S. District Court — District of South Dakota

608 F.Supp.2d 1120

2009 DSD 2

SIERRA CLUB, Plaintiff, v. OTTER TAIL CORPORATION, d.b.a. Otter Tail Power Company, MDU Resources Group, Inc., and Northwestern Corporation, d.b.a. Northwestern Energy, Defendants.

No. CIV 08-1012.

United States District Court, D. South Dakota, Northern Division.

April 6, 2009.

Aaron John Emerson, Myers & Billion, LLP, Sioux Falls, SD, George E. Hays, San Francisco, CA, William J. Moore, III, Law Office of William J. Moore, III, P.A., Jacksonville, FL, for Plaintiff.

Makram B. Jaber, Hunton And Williams, LLP, Washington, DC, Nash E. Long, III, Hunton and Williams, LLP, Charlotte, NC, Thomas John Welk, Boyce Greenfield Pashby & Welk, Sioux Falls, SD, for Defendants.

AMENDED MEMORANDUM OPINION AND ORDER

KORNMANN, District Judge.

[¶ 1] Plaintiff filed a complaint for declaratory and injunctive relief, civil penalties, and costs and fees for alleged violations of the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act ("CAA"), 42 U.S.C. §§ 7470-7492, the South Dakota State Implementation Plan (the "South Dakota SIP"), and the New Source Performance Standards ("NSPS") of the CAA, 42 U.S.C. § 7411, all such violations allegedly occurring at the Big Stone Generating Station near Big Stone, Grant County, South Dakota ("Big Stone"). Defendants filed a motion to dismiss on the basis that some claims were not asserted within the statute of limitations, are barred by the concurrent remedy doctrine, or are an impermissible collateral attack on a valid Clean Air Act permit issued by the State of South Dakota.

CLEAN AIR ACT BACKGROUND

[¶ 2] The United State Court of Appeals for the Eighth Circuit has set forth the background of the Clean Air Act:

The Clean Air Act "establishes a partnership between EPA and the states for the attainment and maintenance of national air quality goals." Title I of the CAA allocates regulatory responsibilities between EPA and the respective states. For pollutants meeting certain criteria, EPA is responsible for promulgating national ambient air quality standards (NAAQS), pursuant to Section 109 of the Act . . . Under the CAA, states must then adopt and develop state plans to ensure that state air quality meets the NAAQS. Thus, each state must submit a state implementation plan (SIP)¹ for each NAAQS promulgated by EPA.

Sierra Club v. E.P.A., 252 F.3d 943, 944-45 (8th Cir.2001) (internal citations omitted).

[¶ 3] In addition to promulgating NAAQS and requiring states to develop SIP's, the CAA directed the EPA to establish new source performance standards ("NSPS") for each source of pollution. 42 U.S.C. § 7411(b). New sources of pollution, including existing sources that undergo modifications resulting in a new source or increase in pollution, are prohibited from operating in violation of the performance standards. 42 U.S.C. § 7411(e). New (or modified) sources are required to undergo a new source review permitting process and to conform to technology-based performance standards.

[¶ 4] The pollutants regulated and at issue here include sulfur oxides ("SO₂"), carbon monoxide ("CO"), particulate matter ("PM"), and nitrogen oxides ("NO_x")². 40 C.F.R. §§ 50.1 et seq. South Dakota's SIP is administered by the Department of Environment and Natural Resources ("DENR")³. SDCL 34A-1-5, SDCL 1-40-22, 59 Fed. Reg. 47,260 (September 16, 1994).

[¶ 5] The CAA regulates both new and significant modifications to existing major stationary sources of air pollution. As applicable in this case, the CAA requires that when a new source of pollution is built or an existing source undergoes a "major modification," the source (in this case, Big Stone) must obtain a PSD permit. 42 U.S.C. § 7475(a), 40 C.F.R. §§ 52.21(a)(2)(iii) 52.21.2178, ARSD § 74:36:09:01.01. As part of the permitting process, the facility must demonstrate that the proposed modification is subject to the best available control technology ("BACT") for each regulated pollutant emitted from the facility. 42 U.S.C. § 7475(a)(4), 40 C.F.R. § 52.21(j)(3), ARSD § 74:36:09:02 (incorporating by reference the provisions of 40 C.F.R. § 52.21).

[¶ 6] The CAA provides separate permitting programs for pre-construction permits (42 U.S.C. § 7475) and operating permits (42 U.S.C. § 7661a). Section 7475 provides, in part, that:

No major emitting facility on which construction is commenced after August 7, 1977, may be constructed in any area to which this part applies unless—

(1) a permit has been issued for such proposed facility . . . setting forth emission limitations for such facility (2) the proposed permit has been subject to a review . . . the required analysis has been conducted . . . and a public hearing has been held with opportunity for interested persons . . . to appear and submit written or oral presentations on the air quality impact of such source, alternatives thereto, control technology requirements, and other appropriate considerations;

(3) the owner or operator of such facility demonstrates . . . that emissions from construction or operation of such facility will not cause, or contribute to, air pollution in excess of any (A) maximum allowable increase . . . (B) national ambient air quality standard in any air quality control region, or (C) any other applicable emission standard . . .

(4) the proposed facility is subject to the best available control technology for each pollutant . . . emitted from, or which results from, such facility . . .

(6) there has been an analysis of any air quality impacts projected for the area as a result of growth associated with such facility;

(7) the person who owns or operates . . . a major emitting facility for which a permit is required . . . agrees to conduct such monitoring as may be necessary . . . (emphasis supplied)

[¶ 7] Title V of the CAA, 42 U.S.C. § 7661a, provides, in part,

it shall be unlawful for any person to violate any . . . permit issued under this subchapter, or to operate [a source of pollution] . . . except in compliance with a permit issued by a permitting authority under this subchapter. (Nothing in this subsection shall be construed to alter the applicable requirements of this chapter that a permit be obtained before construction or modification.)

[¶ 8] Plaintiff did not contend in its complaint that defendants had not obtained a Title V operating permit or that it was not in compliance with a Title V operating permit.

[¶ 9] At all times relevant here, South Dakota either did not have an approved SIP or the approved SIP merely incorporated the federal regulations by reference. Thus, in South Dakota, there are separate construction and operating permit programs. In some states, the SIP integrates the construction and operating permit programs.

[¶ 10] The citizen suit provision of the CAA provides, in part, that:

[Unless a person fails to give notice as required by § 7604(b)] any person may commence a civil action on his own behalf—

(1) against any person . . . who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of (A) an emission standard or limitation under this chapter or (B) an order issued by the Administrator or a State with respect to such a standard or limitation,

(2) against the Administrator where there is alleged a failure of the Administrator to perform any act or duty under this chapter which is not discretionary with the Administrator, or

(3) against any person who proposes to construct or constructs any new or modified major emitting facility without a permit required under part C of subchapter I of this chapter (relating to significant deterioration of air quality) or part D of subchapter I of this chapter (relating to nonattainment) or who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of any condition of such permit.

42 U.S.C. § 7604(a) (emphasis supplied). Section 7604(a)(1) of the citizen suit provision authorizes suit to enforce compliance with Title V permits issued under §§ 7661-7661f (operation permits). See 42 U.S.C. § 7604(f) ("the term `emission standard or limitation under the chapter' means . . . any requirement to obtain a permit as a condition of operations.") Section 7604(a)(3) authorizes, inter alia, a suit to enforce Title C permitting requirements under § 7475 (preconstruction permits).

FACTUAL BACKGROUND

[¶ 11] Otter Tail Corporation ("Otter Tail"), MDU Resources Group, Inc. ("MDU"), and Northwestern Corporation ("NorthWestern") are the owners of Big Stone, an electric generating facility operated by Otter Tail. Big Stone's first operating permit was issued on January 14, 1975, and it began commercial operation on May 1, 1975, burning lignite coal as its primary fuel. In August 1995, Big Stone began burning subbituminous coal as its primary fuel. Plaintiff contends that this conversion resulted in a significant net emissions increase in NO_x and PM emissions. Plaintiff alleges that defendants did not obtain a PSD permit before initiating the burning of subbituminous coal, did not install BACT, and did not comply with BACT-based emission limitations.

[¶ 12] Plaintiff contends that, in 1998, changes were made to the boiler at Big Stone that added surface area to the primary superheater. Plaintiff contends that such changes resulted in a significant net emissions increase in SO₂ and NO_x emissions. Plaintiff alleges that defendants did not obtain a PSD permit before making such changes, did not install BACT, and did not comply with BACT-based emission limitations.

[¶ 13] In 2001, Big Stone again made changes to its boiler, this time to allow the plant to supply steam to a co-located ethanol plant, rather than only supplying steam to produce electricity for sale. Plaintiff contends that such changes resulted in a significant net emissions increase in SO₂ and PM emissions. On August 8, 2001, DENR issued a minor permit amendment to the...