U.S. v. Alabama Power Co.

• Decision Date: 03 June 2005
• Docket Number: No. CIV.A.-01-152-VEH.,CIV.A.-01-152-VEH.
• Parties: UNITED STATES of America, Plaintiff, Alabama Environmental Council, Plaintiff-Intervenor v. ALABAMA POWER COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Alabama

372 F.Supp.2d 1283

UNITED STATES of America, Plaintiff, Alabama Environmental Council, Plaintiff-Intervenor v. ALABAMA POWER COMPANY, Defendant.

No. CIV.A.-01-152-VEH.

United States District Court, N.D. Alabama, Southern Division.

June 3, 2005.

Alice H. Martin, US Attorney, John C. Bell, Lloyd C. Peeples, III, US Attorney's Office, Birmingham, AL, Lois J. Schiffer, Richard Mark Gladstein, David Rosskam, Deborah N. Behles, James R. MacAyeal, Katherine Erin Konschnik, Thomas L. Sansonetti, US Department of Justice, Washington, DC, for Plaintiff.

M. James Grode, Gilbert B. Rogers, Mary MacLean Asbill, Southern Environmental Law Center, Atlanta, GA, Jeffrey M. Gleason, Southern Environmental Law Center, Charlottesville, VA, for Plaintiff-Intervenor.

P. S. Gidiere, III, Spencer M. Taylor, Lyle D. Larson, Michael D. Freeman, R. Bruce Barze, Jr., Steven F. Casey, Steven G. McKinney, Balch & Bingham LLP, Minda Riley Campbell, Constangy Brooks & Smith, Birmingham, AL, Steven J. Hewitson, Daniel S. Reinhardt, Margaret Claiborne Campbell, Marshall B. Barton, Troutman Sanders LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION ON CORRECT LEGAL TESTS

HOPKINS, District Judge.

I. Introduction and Procedural Background

On January 12, 2001¹, the Attorney General of the United States, acting at the request of the Administrator of the United States Environmental Protection Agency ("EPA") and through the United States Attorney for the Northern District of Alabama, filed this action against Defendant Alabama Power Corporation ("APC"). Doc. # 1. The EPA alleges that APC constructed new, or made modifications to existing, electrical power generating plants APC operates in Alabama (variously referred to herein as "plant", "plants", "unit", "units", "facility", "facilities") and that those actions were in violation of the Clean Air Act (the "CAA" or "Act"), 42 U.S.C. § 7401 et seq. EPA alleges APC failed to obtain New Source Review ("NSR") permits in violation of the Prevention of Significant Deterioration ("PSD") provisions of the Act, 42 U.S.C. §§ 7470-92, and APC violated Alabama's State Implementation Plans ("SIP") approved by EPA under the Act for the State of Alabama. On April 26, 2001, the Alabama Environmental Council (sometimes referred to "AEC" or "Intervenor-Plaintiffs") moved to intervene as plaintiffs. Doc. # 6. On May 21, 2001, EPA, APC, and AEC filed a Joint Stipulation permitting AEC to intervene under the same terms as had been set by the Northern District of Georgia when this action was pending there.² Doc. # 12. On May 29, 2001, the court granted the Joint Stipulation on intervention, and denied as moot the AEC intervention motion. Doc. # 13.

This CAA enforcement action is similar, if not identical, to a number of other November, 1999, CAA enforcement actions brought by EPA against other regional utilities (e.g. Ohio Edison, Southern Indiana Gas and Electric, and Duke Energy) in the midwestern and southeastern United States. As discussed in detail later, the legal issues here are sufficiently similar to the other enforcement actions that have been litigated that much of the court's work here involves reference to and analysis of the other enforcement actions. Many, if not all, of the parties' arguments and authorities set out in their briefs and responses have been raised in the other enforcement actions.

One difference here is noted: this case involves one facility, the "Miller" plant, that the parties agree is different and is not addressed in this Memorandum. The court expresses no opinion on whether and, if so, how much of this Opinion will apply to the Miller plant because of the parties' agreement the Miller plant should be treated differently where applicable in this action. In other words, the Miller plant portion of this litigation was not considered, and left for subsequent decision is whether the Miller plant issues will be affected by this Opinion.

II. The Issues Involved In This Memorandum

This matter comes before the court for ruling on the parties' response to item 3 of the Scheduling Order entered on August 5, 2004. Doc. # 68 In their response, the parties identified two issues they agreed were ripe for adjudication, Doc. # 75, and the court ordered briefing on those issues as suggested by the parties. Doc. # 77. The two issues for decision are:

1) the correct legal test for determining a physical change, including the correct legal test for determining routine maintenance, repair, and replacement; and

2) the correct legal test for determining a significant net emissions increase.

EPA, APC, and AEC each have filed an opening and response brief.³ Docs. # 101, 99, 96, 112, 107, 106. Numerous exhibits have also been filed by the parties. The United States has stipulated that the regulations applicable to the claims in this case are the Alabama rules approved by the United States Environmental Protection Agency ("EPA") in 1981, 46 Fed.Reg. 55517 (Nov. 10, 1981) (APC Ex. 26), and currently codified at ADEM Admin. Code R. 335-3-14-.04. Doc. # 69.

III. Preliminary Discussion

1. The Clean Air Act And NSR Review Provisions

The Clean Air Act is codified at 42 U.S.C. §§ 7401-767 (2000). The implementing regulations are found at 40 C.F.R., pts. 50-99. The original Act and the amending legislation can be found, respectively, at Clean Air Act Amendment of 1970, Pub.L. No. 91-604, 84 Stat. 1676 (1970); Clean Air Act Amendments of 1977, Pub.L. 95-95, 91 Stat. 685 (1977); Clean Air Act Amendments of 1990, Pub.L. No. 101-549, 108 Stat. 2399 (1990).

"New source review" denotes a series of provisions within the federal Clean Air Act (Act). Congress enacted the Clean Air Act in 1970, with major amendments occurring in 1977 and 1990. The Act represents one of the federal government's earliest efforts to protect the environment through a comprehensive regulatory scheme.

The Clean Air Act requires the Environmental Protection Agency to establish baseline "national ambient air quality standards" (NAAQS), setting maximum permissible concentrations for "criteria" pollutants. The Act divides the United States into two types of regions: those that are currently in compliance with all of the NAAQS standards ("attainment areas"), and those that are violating some or all of these standards ("non-attainment areas"). The Act establishes different emissions requirements for facilities in each region, with stricter standards applicable to facilities in non-attainment areas.

The 1977 Amendments to the Clean Air Act incorporated the new source review provisions. These provisions were designed to ensure that large industrial sources of air pollution included modern pollution-control equipment when they altered their facilities. New source review mandated that the "best" emissions-control technology be installed whenever a "major" source were built, replaced, or modified (creating, in NSR terminology, a "new source" of air pollution). NSR provides an exception to this best-technology requirement for some "routine maintenance" to major sources.

What qualifies as the "best" technology in turn depends on the ambient air quality in the surrounding region. Facilities seeking to build or modify equipment in attainment areas are subjected to "prevention of significant deterioration" (PSD) review. To proceed with their proposed projects, facilities must determine whether new or increased emissions resulting from these projects would cause the area to exceed ambient air quality standards or to suffer a "significant" deterioration in air quality. PSD review requires that any new source adhere to the "best available control technology" (BACT) standard, governing emissions of regulated pollutants. BACT, a source-specific standard, is generally understood to require the best pollution-control technology available, after taking into account energy, economic and environmental considerations.

Facilities seeking to build or modify structures in NAAQS non-attainment areas are subject to more stringent requirements. These facilities must obtain pre-construction permits, certifying that pollution from any new source will not hinder the region's progress towards attainment of the NAAQS standards. New sources must install emissions-control equipment that meets the stringent "lowest achievable emissions rate" (LAER) standards. LAER standards are generally stricter than BACT standards, because they are set without any consideration of energy or economic factors. Facilities seeking to add sources in non-attainment areas must show, furthermore, that they plan to "offset" any projected emissions increases from these new or modified sources with emissions decreases in other areas of the same facility or from other facilities in the non-attainment area.

Martin, The Reform of New Source Review: Toward A More Balanced Approach, 23 Stan. Envtl. L.J. 351, 356-58 (2004) (citations omitted)

2. WEPCO and the CAA/NSR Framework

In the years leading up to Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901 (7th Cir.1990) ("WEPCO"), owners and operators of power plants routinely made many types of routine repairs and modifications ("RMRR") to their units without triggering the NSR regulations. A review of decisional law reveals no appellate review of how to interpret RMRR, specifically the term "modification" (narrowly or broadly), until the Seventh Circuit's decision in WEPCO. Wisconsin Electric Power Company (WEPCO) challenged EPA's determinations that WEPCO's proposed renovations to its Port Washington power plant would subject the plant to the more stringent provisions of the Act because the work, in EPA's assessment, would be a major modification. EPA further concluded that the renovation of the electric power plant would subject the plant to new source performance standards ("NSPS") and prevention of serious deterioration requirements ("PSD") of the Clean Air Act.

In WEPCO, the Seventh Circuit became the first appellate court to undertake a...