U.S v. Southern Indiana Gas and Elec. Co.

• Decision Date: 11 April 2003
• Docket Number: No. IP 99-1692-C-M/F.,IP 99-1692-C-M/F.
• Citation: 258 F.Supp.2d 884
• Parties: UNITED STATES of America, Plaintiff, v. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

258 F.Supp.2d 884

UNITED STATES of America, Plaintiff, v. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, Defendant.

No. IP 99-1692-C-M/F.

United States District Court, S.D. Indiana, Indianapolis Division.

April 11, 2003.

Steven D. Ellis, Environmental & Natural Resources Division, Washington, DC, Thomas E. Kieper, United States Attorney's Office, Indianapolis, IN, for Plaintiff.

Kevin A. Gaynor, Vison & Elkins L.L.P., Washington, DC, John R. Maley, Barnes & Thornburg, Indianapolis, IN, Angila M. Retherford, Evansville, IN, for Defendant.

ORDER ON DEFENDANT'S MOTION FOR A PROTECTIVE ORDER AND FOR A RULING ON ADMISSIBILITY AND ON PLAINTIFF'S CROSS MOTION TO COMPEL

McKINNEY, Chief Judge.

This matter is before the Court on defendant's, Southern Indiana Gas and Electric Company ("SIGECO"), Motion for a Protective Order and Request for a Ruling on Admissibility, and on the United States' (the "Government"), Cross-Motion to Compel. The Government has brought an enforcement action against SIGECO, alleging various violations of the Clean Air Act ("CAA"). The issues currently before the Court pertain to a census (the "Census") commissioned by several utility companies (including SIGECO) and governmental entities. The Census is offered as an objective study of maintenance practices throughout the utility industry. The parties have fully briefed the matter, and the motion is now ripe for ruling.

I. FACTUAL AND PROCEDURAL BACKGROUND

The dispute before the Court deals with a variety of issues relating to a Census taken at the behest of SIGECO and other defendants in this enforcement initiative.¹ The Government alleges that SIGECO has violated and continues to violate a number of the provisions of the CAA, and Indiana's State Implementation Plan. According to the Government, SIGECO triggered CAA permitting requirements when it made "major modifications" in the 1990s at three of its coal-fired, steam electric generating units at Culley Station in Warrick County, Indiana. SIGECO, on the other hand, contends that its projects were not CAA "major modifications" because they qualified for a regulatory exemption called the routine maintenance exemption. 40 C.F.R. § 52.21(b)(2)(iii); 40 C.F.R. § 60.14(e).

The parties have disagreed over the proper definition of the routine maintenance exemption. In a prior order, this Court concluded that the EPA's current interpretation of routine maintenance is reasonable and consistent with its past formulation of the test, which was delineated by the EPA in the Clay Memo in 1988. See Doc. No. 473 (Order on Fair Notice). The EPA interprets the routine maintenance exemption in the following way:

This interpretation has three hallmarks. First, the exemption applies to a narrow range of activities, in keeping with EPA's limited authority to exempt activities from the Clean Air Act. Second, the exemption applies only to activities that are routine for a generating unit. The exemption does not turn on whether the activity is prevalent within the industry as a whole. Third, no activity is categorically exempt. EPA examines each activity on a case-by-case basis, looking at the nature and extent, purpose, frequency, and cost of the activity.

PL's Opposition to Def.'s Motion for Summary Judgment on Fair Notice at 1.

Although the routine maintenance exemption does not turn on whether a certain type of project is prevalent within industry as a whole, the frequency with which similar projects take place throughout industry informs this "common-sense" analysis. See Clay Memo. See also Wis. Elec. Power Co. v. Reilly, 893 F.2d 901, 911 (7th Cir.1990) ("WEPCO did not identify, and EPA did not find, even a single instance of renovation work at any electric utility generating station that approached the Port Washington life extension project in nature, scope or extent.") ("WEPCO"). For this reason, the Court believes that the Census, more fully described below, may indeed be relevant if no other provision of the Federal Rules of Evidence bars its admission.

A. THE CENSUS

In an effort to collect data about how often certain projects occur at electric generating units throughout the country, SIGECO hired a number of consulting/survey firms² to organize a questionnaire to be sent to companies in the utility industry. Def.'s Ex. E. The questionnaire, consisting of 32 questions, was sent to all coal-fired, steam electric generating units in the United States with a capacity of 46 megawatts or more. Def.'s Motion for Protective Order at 1. There are 964 such units in the country, owned and operated by approximately 106 companies. Id.; PL's Memo in Opposition at 4. A response was received from 449 units. Id. Of those 449, 14 contained apparent anomalies, leaving 435 useable responses. Id.

Recipients of the Census were told that their responses to the questionnaire would remain confidential. Def.'s Ex. C. Accordingly, each unit in the population was given a unique identification code known only to the consultants who conducted the Census. Def.'s Ex. E. SIGECO plans to call one or more expert witnesses (including Dr. Dennis J.Aigner and Dr. Donald R. DeLuca) who base their opinions in whole or in part on the Census.

The consultants included a cover letter with the questionnaire to explain the reasons for the Census. The letter stated in relevant part:

I am writing to ask for your participation in an important study regarding certain power plant maintenance activities in the coal-fired, steam electric generating industry. As you may know, the U.S. Environmental Protection Agency ("EPA") has commenced what it has described as an "enforcement initiative" against the electric utility industry under the federal Clean Air Act. A major issue is this initiative is whether various companies have made "major modifications" to their power plants that potentially could have triggered certain Clean Air Act permitting obligations.

EPA's regulations provide that "routine maintenance, repair and replacement" activities undertaken at covered facilities are not "major modifications" that trigger permitting obligations under the Clean Air Act. To our knowledge, however, no comprehensive review of the industry's maintenance practices has yet been completed. To remedy this deficiency, my firm (Analysis Group/Economics) has been retained by certain of the targeted companies to develop and distribute a questionnaire, with the assistance of RMB Consulting and Pricewaterhouse Coopers LLP, that is designed to document maintenance activities in the coal-fired, steam electric generating industry.

Def.'s Ex. C.

On November 29, 2000, the week before the questionnaire materials were sent to the 964 electric generating units, the general counsels for the companies that commissioned the Census sent a letter the CEOs of all 964 generating units. The letter provided, in relevant part:

As you probably know, the U.S. Environmental Protection Agency (EPA) has commenced what it has described as an "enforcement initiative" against the electric utility industry under the federal Clean Air Act ... The United States on behalf of EPA has named six of our respective companies as defendants in civil actions filed under the Act, while numerous other electric utilities have received either formal information requests from EPA pursuant to Section 114 of the Act, 42 U.S.C. § 7414, or administrative enforcement orders pursuant to Section 113, 42 U.S.C. § 7413. All of the cases included in EPA's enforcement initiative focus on various maintenance activities undertaken at coal-fired power plants throughout the U.S. To develop a factual record as to industry maintenance practices, we have commenced ... a complete investigation, or "census," of all coal-fired boilers in the United States. A "Power Plant Maintenance Questionnaire" has been prepared expressly for this purpose. (A sample copy of the Questionnaire has been enclosed for your review.)

Every reasonable effort will be made to keep strictly confidential the identities of the respondents liked to their specific responses. .Although we do not believe that the identities of the respondents linked to their responses should be discoverable, it is possible that a court could disagree and order this. Please know that we will resist any such effort strenuously.

Our hope and experience is to have a report prepared by our expert consultants which compiles and analyzes all of the responses to the Questionnaire. In appreciation for your time in completing the questionnaire, your company will receive a copy of the final report for this study.

You will be contacted in the next few days to follow up on this letter. In the meantime, please feel free to contact any of us if you have questions or would like additional information.

Ex. B in Support of PL's Reply Memo.

B. MOTIONS BEFORE THE COURT

As stated above, unique identifying codes were used to assure confidentiality (i.e., the responses could not be linked to the actual responding units). The Government requested that SIGECO provide it with the codes so that it could depose a number of the respondents to assure the reliability of the Census data. SIGECO refused to specifically identify the respondents, and filed this Motion for a Protective Order and for a Ruling on Admissibility. Recognizing that the 435 responses are out-of-court statements offered for their truth, SIGECO submits that the Census is admissible pursuant to FED. R.EVID. 807 (the residual hearsay rule), and contends that Rule 807 only requires evidence that the Census was designed and administered according to generally accepted survey principles. Thus, SIGECO requests that the Court enter a Protective Order under Rule 26 directing that the unique, identifying information about each Census respondent need not be produced.³ In addition, SIGECO seeks a ruling that the confidentiality of the identities of the Census respondents will not bar admissibility of the Census results under ...