U.S. v. Pac. Gas & Electric

• Decision Date: 03 March 2011
• Docket Number: No. C 09–4503 SI.,C 09–4503 SI.
• Citation: 776 F.Supp.2d 1007
• Court: U.S. District Court — Northern District of California
• Parties: UNITED STATES of America, Plaintiff,andCommunities for A Better Environment, Intervenor–Plaintiff,v.PACIFIC GAS & ELECTRIC, Defendant.

776 F.Supp.2d 1007

UNITED STATES of America, Plaintiff,andCommunities for A Better Environment, Intervenor–Plaintiff,

v.PACIFIC GAS & ELECTRIC, Defendant.

No. C 09–4503 SI.

United States District Court, N.D. California.

March 3, 2011.

Angela Mo, U.S. Department of Justice, Washington, DC, Bradley Robert O'Brien, U.S. Department of Justice, Brent Plater, San Francisco, CA, for Plaintiff.Helen Kang, Environmental Law and Justice Clinic, Golden Gate University School of Law, Lucas Clayton Williams, Envtl. Law & Justice Clinic, San Francisco, CA, Adrienne L. Bloch, Shana D.G. Lazerow, Communities for a Better Environment, Oakland, CA, for Intervenor–Plaintiff.David R. Farabee, Gerald F. George, Pillsbury Winthrop Shaw Pittman LLP, Matthew A. Fogelson, Pacific Gas and Electric Company, San Francisco, CA, for Defendant.

ORDER DENYING WILD EQUITY INSTITUTE'S MOTION TO INTERVENE AND GRANTING PLAINTIFF'S MOTION TO ENTER THE PROPOSED SECOND AMENDED CONSENT DECREE

SUSAN ILLSTON, District Judge.

On February 25, 2011, the Court held a hearing on Wild Equity Institute's motion to intervene and plaintiff's motion to enter the proposed second amended consent decree. For the reasons set forth below, the Court DENIES Wild Equity Institute's motion to intervene and GRANTS plaintiff's motion to enter the consent decree.

BACKGROUND

This case concerns the Gateway Generating Station, a power plant located near Antioch, California. In September 2009, the United States Environmental Protection Agency (“EPA”) filed a complaint against defendant PG & E, alleging that PG & E constructed the Gateway Station and operated it in violation of the New Source Review program of the Clean Air Act. The EPA alleges that a 2001 New Source Review permit authorizing construction of the Gateway Station expired before PG & E constructed the plant and began operating it.

The EPA and PG & E entered into settlement negotiations, and now request that the Court approve and enter a proposed second amended consent decree. Intervenor Communities for a Better Environment (“CBE”) opposes the proposed consent decree, and has filed objections thereto. Wild Equity Institute (“WEI”), a non-profit environmental group, seeks to intervene in order to allege claims under the Endangered Species Act against the EPA. WEI claims that the proposed second amended consent decree is a federal agency action that requires the EPA to consult with the United States Fish and Wildlife Service regarding the possible effect of the consent decree on an endangered species located near the Gateway Station, the Lange Metalmark butterfly, prior to entry of the consent decree. Now before the Court are the United States' motion for approval and entry of the proposed second amended consent decree and WEI's motion to intervene.

I. Statutory background

The New Source Review program of the Clean Air Act is designed to ensure that air quality in the United States attains and maintains National Ambient Air Quality Standards (“NAAQS”), which are health-based standards for the amount of air pollutant in the ambient air. The Clean Air Act's New Source Review program divides the nation into two areas—attainment areas, which are those that have attained NAAQS, and non-attainment areas, which are those that have not attained the standards. 42 U.S.C. §§ 7470–7515. Areas designated as either non-attainment or unclassifiable are subject to requirements to bring them into attainment, including the non-attainment New Source Review (“NSR”) permitting provisions. Id. §§ 7501–7515. Attainment areas are subject to the Prevention of Significant Deterioration (“PSD”) permitting provisions. See Alaska Dep't of Envtl. Conservation v. Envtl. Prot. Agency, 540 U.S. 461, 469–75, 124 S.Ct. 983, 157 L.Ed.2d 967 (2004) (general explanation of PSD program). New sources of air pollution that are above certain thresholds will trigger one or both of these New Source Review programs, depending on whether they are located in a non-attainment area or an attainment area. There are different NAAQS for different pollutants, and thus it is possible that a given area can be non-attainment of the NAAQS for certain pollutants and attainment for other pollutants.

The Clean Air Act created a mechanism by which the states were encouraged to develop their own regulatory approaches for implementing the NSR and PSD programs. Section 110(a) of the Clean Air Act, 42 U.S.C. § 7410(a), sets forth the process by which the states may develop their own regulatory programs, called “State Implementation Plans” (“SIPs”), that satisfy the minimum requirements of the Clean Air Act. See generally 42 U.S.C. § 7410(a). A state's SIP “may not adopt or enforce any emission standard or limitation which is less stringent” than the Act's requirements. 42 U.S.C. § 7416. California has adopted the SIP approach in the San Francisco Bay Area with respect to the non-attainment NSR program of the Clean Air Act, but not with respect to the attainment area PSD program. For non-attainment NSR, the Bay Area Air Quality Management District (the state agency created pursuant to the California Health and Safety Code with jurisdiction in the Bay Area, see Cal. Health & Saf.Code §§ 40200–40276), has adopted regulations and has had those regulations approved by the EPA. See 64 Fed.Reg. 3850 (Jan. 26, 1999) (codified at 40 C.F.R. § 52.220(c)(199)(i)(A)(8)). These “SIP-approved” non-attainment NSR regulations are set forth in District Regulation 2, Rule 2. See District's RJN, Ex. 1. In contrast, California has not adopted its own regulatory system to implement the Clean Air Act's PSD requirements in the Bay Area. PSD permitting is governed by the federal PSD regulations which are codified at 40 C.F.R. § 52.21.

The federal PSD regulations contain a provision for EPA to delegate its authority to conduct PSD source review and issue PSD permits. See 40 C.F.R. 52.21(u) (“The Administrator shall have the authority to delegate [her] responsibility for conducting source review pursuant to this section ....”). On April 23, 1986, EPA delegated to the Air District the “authority of the administrative and enforcement elements” of the PSD program's implementing regulations, subject to the terms, conditions and reservations of authority set forth in that agreement. App. B1–1986 Delegation Agreement at 1. In part, the agreement stated that “EPA has determined that the PSD portion of the District Rule 2 of Regulation 2 [BAAQMD Regulation 2–2–101] ... generally meets the requirements of 52.21; therefore, District permits issued in accordance with Rule 2 of Regulation 2 will be deemed to meet federal PSD permit requirements pursuant to the terms of this delegation agreement.” Id.

The Air District's PSD regulations extended beyond Rule 2 of Regulation 2. Rule 1 of Regulation 2 (BAAQMD Regulation 2–1–407) also contained provisions governing the administration of permits, including the provision on permit terminations and extensions at issue in this case. Rule 1 is discussed in greater detail infra. Rule 1 was not explicitly mentioned in the 1986 delegation agreement or any subsequent delegation agreement. The EPA asserts that “[t]hus, it is less clear whether EPA also determined that the provisions of Rule 1 ‘generally met’ the requirements of § 52.21. However, since permits issued ‘in accordance with Rule 2’ also needed to be issued in accordance with Rule 1, it is at least arguable that EPA meant to endorse Rule 1 similarly.” United States' Motion at 7:22–25.

Under the PSD permitting program, new proposed major sources of pollution must undergo an extensive permitting process before construction to ensure that their construction and operation will not contribute to deterioration of air quality. See 42 U.S.C. §§ 7470–7492. Before issuing a combined PSD permit and Authority to Construct (“ATC”) ¹, the Air District must perform an air quality impact analysis to ensure that the proposed emissions will not exceed the concentration allotted for ensuring that the area will remain in attainment. See 42 U.S.C. § 7475(a)(3). In addition, to minimize pollution, the Air District must impose the Best Available Control Technology (“BACT”) to ensure that the most current and stringent pollution control technologies and emission limits are required before the source is built. See 42 U.S.C. § 7475(a)(4). The Act also requires public participation in the PSD permitting process. See 42 U.S.C. § 7470(5); 40 C.F.R. § 124.10.

Under federal regulations, PSD permits expire when 18 months elapse from the time of issuance without construction. 40 C.F.R. § 52.21(r)(2). Expiration ensures that major polluting sources use the most up-to-date pollution control technology. See Sierra Club v. Franklin County Power of Illinois, 546 F.3d 918, 934 (7th Cir.2008). The 18–month period specified in section 52.21(r)(2) may be extended “upon a satisfactory showing that an extension is justified.” 40 C.F.R. § 52.21(r)(2).

In contrast, the Air District's Rule 1 of Regulation 2 (referred to by the parties as the “Four Year Rule” or “Regulation 2–1–407”) provides, in relevant part,

Permit Expiration: An authority to construct shall expire two years after the date of issuance, unless substantial use of the authority has begun.... An authority to construct that has not expired after two years, due to substantial use or renewal, shall expire after four years.

App. B11.² The claims in this case arise out of the interplay between the federal and Air District regulations regarding expiration of PSD permits, and how this conflicting regulatory scheme was applied to PG & E and its predecessor, Mirant.II. Factual background

On July 24, 2001, the Air District issued a PSD permit to PG & E's predecessor, Mirant, to construct Contra Costa Power Plant Unit 8 (“CC8”). App. B7. The permit states, “In accordance with Regulation 2–1–407, this Authority to Construct expires two years from the date of issuance unless substantial use...