United States v. Okla. Gas & Elec. Co.

UNITED STATES OF AMERICA, Plaintiff,andSIERRA CLUB, Intervenor-Plaintiff, v. OKLAHOMA GAS AND ELECTRIC COMPANY, Defendant.

Case No. CIV-13-690-D

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

January 15, 2015

ORDER

Before the Court are Defendant Oklahoma Gas and Electric Company's motion to dismiss Plaintiff's complaint [Doc. No. 10] and motion to dismiss Intervenor-Plaintiff's complaint [Doc. No. 18]. Plaintiff has filed its response brief in opposition [Doc. No. 31] as has Intervenor-Plaintiff [Doc. No. 30]. Defendant has filed a consolidated reply [Doc. No. 37]. In addition, with leave of court, Defendant has filed a Notice of Supplemental Authority [Doc. No. 45].

Defendant seeks dismissal of this action on jurisdictional grounds. Defendant contends there is no injury for the Court to redress. Alternatively, Defendant contends the action should be dismissed because Plaintiffs' claims are time-barred.

I. The Parties

Plaintiff, the United States of America, at the request of the Administrator of the Environmental Protection Agency (EPA), brings this action for declaratory and injunctive relief for alleged violations of the Clean Air Act.¹

Intervenor- Plaintiff, the Sierra Club (Sierra Club), brings a citizen suit under the Clean Air Act and seeks declaratory relief identical to that sought by EPA. Where appropriate, the Court refers to EPA and Sierra Club jointly as "Plaintiffs."

Defendant is the Oklahoma Gas & Electric Company (OG&E). OG&E owns and operates coal-fired electric generating units in Oklahoma and its operation of these units is subject to compliance with the Clean Air Act.

II. Overview

Under the Clean Air Act, various programs exist to protect air quality. At issue in this litigation is the Act's Prevention of Significant Deterioration (PSD) program. As the name suggests, the program is designed to prevent the deterioration of air quality in areas where National Ambient Air Quality Standards are being met.

OG&E operates coal-fired electric generating units which produce pollutants subject to these air quality standards, including sulfur dioxide and nitrogen oxides. The units at issue in this litigation are referred to as the Muskogee and Sooner plants.² The plants were constructed beforeCongress enacted the PSD program. As a result, the plants have "grandfathered status," but if they undergo modifications they may be subject to permit requirements under the PSD program.

A permit is required if the modification is deemed to be "major." The permit aims to bring these grandfathered sources of pollutants up to modern standards of environmental compliance. For example, the permit requires the implementation of Best Available Control Technology (BACT).

The PSD program requires an operator to determine, prior to commencing construction, whether the modification is subject to the permitting requirement. The operator must project whether the modification would result in an increase in emissions. If the increase exceeds a threshold amount, then the modification is deemed a "major modification" and a permit is required.

Plaintiffs seek a declaration that OG&E did not properly project whether the modifications to the Sooner and Muskogee plants would result in an increase in emissions. Plaintiffs further request the Court to order OG&E to now make projections in accordance with governing law and regulations and submit those projections to EPA for agency review.

OG&E moves for dismissal on grounds it made projections as it was required to do and those projections demonstrate that the modifications would not result in a significant net emissions increase. OG&E contends that actual post-modification emissions data now confirms there has been no increase in emissions in excess of that authorized by law. OG&E further contends that where projections have been made and post-modification actual emissions data shows no significant increase in emissions, there is no redressable injury and EPA lacks standing to pursue its claims.

III. The Statutory and Regulatory Framework

A. The Clean Air Act

Congress enacted the Clean Air Act in 1970 to protect the nation's air resources and promote public health through the prevention and control of air pollution. See 42 U.S.C. § 7401(b)-(c). The Act charges EPA with the duty to develop national standards regulating the emission of certain hazardous airborne pollutants. Id., § 7409. In addition, the Act requires EPA to create regulations to establish National Ambient Air Quality Standards (NAAQS). Id.

Each state, in turn, is charged with achieving and maintaining the NAAQS within their respective territories. 42 U.S.C. § 7407. The states must submit for approval by EPA a state implementation plan (SIP) that designates how the national standards will be achieved and maintained within their borders. Id., § 7407(a). See also id., § 7410. A state must designate the areas within its borders as "attainment, non-attainment or unclassifiable" with respect to each NAAQS. Id., § 7407(d).³

In 1977, concerned with the effects of new pollution sources on existing air quality, Congress amended the Act and created a New Source Review (NSR) program. The program imposes two types of permitting requirements depending on whether the new emissions occur in an attainment area or a non-attainment area. The parties agree that emissions from the Sooner and Muskogee plants occur in attainment areas and the Court, therefore, focuses its analysis on the requirements governing such areas.

For attainment areas, the PSD program ensures that any new emissions will not significantly degrade existing air quality. See 42 U.S.C. §§7470-7479. Under the PSD program, an operator of a pollution source must obtain a permit from the state or EPA before constructing a "major emitting facility." 42 U.S.C. § 7475 (preconstruction requirements); § 7479(2)(C) (defining "construction" to include a modification of any source or facility); and § 7411(a)(1)(4) (defining "modification" as "any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted"). If a source was built before 1977, it has "grandfathered" status and is exempt from the PSD permit requirement unless it undergoes a "major modification." See 42 U.S.C. § 7475.

B. EPA's Implementing Regulations Governing PSD Permits

Under EPA's regulations implementing the PSD program, a "major modification" includes physical or operational changes to a power plant that would result in a "significant net emissions increase" as to certain identified pollutants. See 40 C.F.R. § 52.21 (b)(2)(i) (1984).⁴ A net emissions increase for either sulfur dioxide or nitrogen oxides, two of the pollutants at issue in this case, is "significant" if it is greater than 40 tons per year. See 40 C.F.R. § 52.21(b)(23)(i). If the modification so qualifies, then EPA requires the owner or operator of the facility to obtain a preconstruction permit that includes Best Available Control Technology (BACT) regarding therelevant pollutants to be emitted. 40 C.F.R. § 52.21(b)(12). The permitting process includes incorporation of stringent pollutant emission controls at the plant and the incorporation of costly equipment and procedures. See, e.g., United States v. DTE Energy Co., 711 F.3d 643, 647 (6th Cir. 2013) (noting that "[w]hether a permit is ultimately required is a high stakes determination" and that "installing these complex technologies is very expensive for operators").

C. Oklahoma's State Implementation Plan

Oklahoma's State Implementation Plan (SIP) includes PSD requirements for attainment areas as set forth in the Oklahoma Air Pollution Control Regulations (OAPCR), § 1.4.4. See Defendant's Motion, OAPCR [Doc. No. 10-1]. EPA first approved the OAPCR in 1983. See 48 Fed. Reg. 38, 635. "Approved SIPs are enforceable as federal law[.]" US Magnesium v. U.S. E.P.A., 690 F.3d 1157, 1159 (10th Cir. 2012) (citing 42 U.S.C. §§ 7410(a)(1), 7413, 7604). The parties agree that as relevant to the claims presented, the provisions of Oklahoma's SIP, as approved in 1983, govern and that the provisions have remained unchanged for the time period applicable to the claims in this lawsuit. See EPA's Complaint, ¶ 27; Sierra Club's Complaint in Intervention, ¶ 26; OG&E's Motion at pp. 4-5.

OARC § 1.4.4(b)(2)(A) defines a "major modification" as "[a]ny physical change in or change in the method of operation of a major source that would result in a significant net emissions increase of any pollutant subject to regulation." A "net emissions increase," in turn, is defined as "[a]ny increase in actual emissions from a particular physical change or change in the method of operation at a source." OARC § 1.4.4(b)(3)(A)(i). "Actual emissions" is defined as "the average rate in tons per year at which the unit actually emitted the pollutant during a two-year period which precedes the particular date and which is representative of normal source operation." OARC§ 1.4.4(b)(20)(A). Consistent with the federal regulations, "significant" is defined as 40 tpy for, inter alia, sulfur dioxide and nitrogen oxide. OARC § 1.4.4(b)(22).

IV. Projections of Post-Construction Actual Emissions

A. Legal Requirements Governing Projections

The parties agree that before construction commences, an operator is required to make projections of post-construction emissions. See, e.g., 40 C.F.R. § 52.21(a)(2)(iv)(b) (2014). These projections allow operators to determine whether the modification may constitute a major modification that would then require a permit.

Oklahoma's SIP contains no express guidance on how those projections should be made. Over the years, the method governing how the projections should be made has undergone significant change. See, e.g., DTE Energy, 711 F.3d at 645-648 (discussing the regulatory changes). Before 1992, EPA required operators to use an ...