US v. Louisiana-Pacific Corp.

• Decision Date: 30 October 1987
• Docket Number: Civ. A. No. 86-A-1880.
• Citation: 682 F. Supp. 1122
• Parties: UNITED STATES of America, Plaintiff, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Colorado

682 F. Supp. 1122

UNITED STATES of America, Plaintiff, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation, Defendant.

Civ. A. No. 86-A-1880.

United States District Court, D. Colorado.

October 30, 1987.

COPYRIGHT MATERIAL OMITTED

Daniel S. Maus, Asst. U.S. Atty., Teresa N. Lukas, Asst. Regional Counsel, U.S.E. P.A., Denver, Colo., Cyrus S. Picken, Jr., Environmental Enforcement Section, Land and Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

William A. Hillhouse, II, Zach C. Miller, Felicity Hannay, Davis, Graham & Stubbs, Denver, Colo., for Louisiana-Pacific Corp.

MEMORANDUM OPINION AND ORDER

ARRAJ, District Judge.

This is a civil enforcement action brought by the United States of America, as plaintiff, on behalf of the U.S. Environmental Protection Agency ("EPA") for violations of the Clean Air Act, 42 U.S.C. § 7401, et seq., and the regulations promulgated thereunder concerning the prevention of significant deterioration ("PSD")¹ of air quality by the defendant, Louisiana-Pacific Corporation ("LPC"). Plaintiff seeks to enjoin defendant from further alleged violations of the PSD regulations, which are set forth at 40 C.F.R. § 52.21. Additionally, plaintiff seeks the assessment of civil penalties against LPC for alleged violations of these regulations.

The matter is now before the court on cross-motions for summary judgment. The parties have submitted briefs, affidavits, and other documentation in support of their respective positions, and oral argument was heard on October 21, 1987.

BACKGROUND

Defendant LPC came to Colorado in 1983, with the encouragement of the state government, to establish the industry of waferwood manufacturing.² Since that time, LPC has built two waferwood plants in Colorado, the first in Kremmling, and the other near the town of Olathe. The air pollution emissions from these two plants, and the alleged failure by LPC to obtain certain related permits from the EPA, form the basis of the present litigation.

In June of 1983, LPC applied to the Colorado Air Pollution Control Division (APCD) to obtain air emission permits for the Kremmling plant. LPC then commenced construction of this facility in July of 1983. In response to LPC's application, the APCD conducted a "preliminary analysis" of projected air emissions and estimated that the total emissions from the five emission sources³ at the facility would be 78 tons per year (TPY) for carbon monoxide (CO) and 101.5 TPY for volatile organic compounds (VOCs). After a notice and public comment period, the APCD issued five air emission permits for the Kremmling plant on January 3, 1984.⁴ Under these permits, total emissions from all sources at the Kremmling plant were limited to 78 TPY of CO and 101.5 TPY of VOCs.

LPC subsequently applied to the Colorado APCD in October of 1983 to obtain similar permits for its proposed Olathe plant. Then, in November of 1983, LPC commenced on-site construction of this second facility. After the preliminary analysis and the required notice and comment period, the APCD issued permits for the Olathe facility in September of 1984. The conditions of these permits limited total emissions to 78 TPY of CO and 101.5 TPY of VOCs. The APCD amended the Olathe facility permits in May of 1985. The conditions of the new permits allowed for total CO and VOC emissions of up to 112.32 and 116.12 TPY, respectively.

LPC obtained the real property for its Kremmling facility in 1982. A "wigwam burner"⁵ and a sawmill were already in existence at the site when the area was purchased by LPC. A permit which allowed emissions of 500 TPY of CO from the wigwam burner was transferred to LPC in August of 1983.⁶

Although LPC maintains that the wigwam burner was not intended to be a part of or operated in conjunction with the new waferboard plant, the former plant manager of the Kremmling facility admitted that waste from the waferwood operation was burned in the wigwam burner. In December of 1984, Mr. Steven Frey of the EPA informed LPC that the pre-existing sawmill and burner constituted a "major stationary source" of air pollutants and that, depending on the outcome of the stack tests, the waferboard facility could be considered a "major modification" of the major stationary source. As a result, LPC quickly ceased operation of the wigwam burner and claims that, by June 4, 1985, it had completely removed that facility.

LPC conducted "stack tests" at the Kremmling waferwood facility in March of 1985. Based upon the results of these tests, the EPA determined that the Kremmling facility was subject to the PSD program and issued a Notice of Violation (NOV) on June 5, 1985. This notice alleged that the Kremmling waferwood facility was a "major modification" (as that term is defined in the PSD regulations) of the wigwam burner. Subsequently, the EPA concluded that the Kremmling waferwood facility itself qualified as a "major stationary source" and issued a NOV to that effect on February 3, 1987.

As with the Kremmling facility, LPC conducted stack tests at the Olathe plant in March of 1985. Based upon these tests, the EPA concluded that the Olathe facility was a "major stationary source" within the meaning of the PSD regulations, and issued a NOV on June 5, 1985. After no PSD permit application for the Olathe plant was received, the EPA issued an administrative order directing submission of a PSD permit application for that facility.

The administrative order was issued on September 27, 1985. It directed LPC to submit a PSD permit application for its Olathe waferboard facility within 60 days of the effective date of the order. The order was to become effective fifteen days after its issuance. However, due to some oversight, the order was neither dated nor signed when it was issued. The order offered LPC the opportunity for a conference to discuss the violation which was the subject of the NOV. LPC requested such a conference, and it was held on October 23, 1985, at EPA's regional office in Denver. EPA has offered evidence that no one present at this conference mentioned the fact that the administrative order had not been signed or dated.

Several months later, in January of 1986, LPC drafted a PSD permit application. Contrary to the directions in the order, however, LPC submitted the application to the State of Colorado. Later, in August of 1986, LPC submitted a second PSD permit application for the Olathe waferboard facility to the EPA.

DISCUSSION

The Clean Air Act establishes minimum air quality standards to be achieved in all regions of the country. In 1977, Congress amended the Act to establish a program for the "prevention of significant deterioration" ("PSD") of air quality. The PSD statutes and regulations are designed to protect areas of the country where the air is relatively clean. The goal of the program is to prevent the air quality in areas where it exceeds the statutory minimum from degenerating to that level.

To achieve this result, areas of the country where the air is cleaner than required by the National Ambient Air Quality Standards are identified by the states and designated as "attainment areas." 42 U.S.C. §§ 7407, 7471. The attainment areas are further divided into three classes: Class I for areas that have very clean air (such as national parks) where little or no deterioration is permitted; Class II for areas where moderate deterioration of air quality may occur; and Class III for areas where more economic growth and resulting air quality deterioration is allowed. Id., §§ 7472, 7474. The thrust of the PSD program is that new "major emitting facilities" may not be constructed within these areas before certain permits have been obtained. Id., § 7475. The permits, in turn, allow the new facility to contribute to air pollution only up to specified incremental amounts. Id., § 7473(b). Of central importance to this case is the fact that LPC's Kremmling and Olathe facilities are located within attainment areas.

The Clean Air Act provides that "no major emitting facility ... may be constructed in any attainment area unless a permit has been issued for such proposed facility in accordance with this part setting forth emission limitations for such facility...." 42 U.S.C. 7475(a)(1) (emphasis added). The act further provides that the term "major emitting facility" includes any source with the potential to emit two hundred and fifty tons per year (TPY) or more of any air pollutant. Id., § 7479(1).

The PSD regulations go into a lot more detail and establish the rule that no "major stationary source" or "major modification" of a major stationary source "shall begin actual construction without a permit" which states that the source or modification will meet the emission requirements set forth in the regulations. 40 C.F.R. § 52.21(i). The term "major stationary source" is defined to include any facility which emits, or has the potential to emit, two hundred and fifty TPY or more of any air pollutant. Id., § 52.21(b)(1)(i)(b). A "major modification" is defined as any physical change or change in operation that would result in a significant increase in the emission of any one of several pollutants. Id., §§ 52.21(b)(2)(i), 52.21(b)(23). With regard to the pollutants that are relevant in the present case, a net emissions increase of 100 TPY of carbon monoxide (CO) or 40 TPY of volatile organic compounds (VOCs) would be significant, and thereby constitute a major modification. Id.

Permits may be issued only to sources that satisfy two principal requirements. First, the source must demonstrate that emissions from the construction or operation of the facility will not violate any applicable emission standard of the act. 42 U.S.C. § 7475(a)(3). Second, the proposed source must be subject to the best available pollution control technology. Id., § 7475(a)(4). To facilitate its review, the EPA requires that new sources submit air monitoring information necessary to determine the impact on air...