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United States v. Duke Energy Corp.

Citation: 32 ELR 20741
No. No. 1:00CV1262, 208 F.R.D. 553/(M.D.N.C., 06/07/2002)

The court holds that an electric utility need not reveal to the federal government calculations and analyses of the utility's emissions that its scientist and attorneys prepared in response to a U.S. Environmental Protection Agency suit filed against it for allegedly violating the Clean Air Act's (CAA's) new source review (NSR) requirements, but that the utility must reveal calculations performed in the ordinary course of business and the nature of all defenses it will offer to the government's suit. The utility spent more than $ 300 million to rebuild eight plants, but it did not seek an NSR permit or comply with the NSR requirements. The government brought suit claiming that the utility's actions constituted a major modification that triggered NSR requirements, but the utility argued it was exempt from the NSR requirements because the projects did not increase power generation or emissions. During discovery, the government sought the utility's interpretation of its emissions calculations, analyses, witness testimony, and documents relating to the calculation of utility emissions; the criteria used to determine if the utility's rebuilding activities resulted in net emissions increases; and the methods used to calculate utility emissions. The utility refused to disclose the information and sought a protective order.

The court first holds that the attorney-client privilege clearly encompasses the utility's communication to the attorney for the purpose of obtaining legal advice, and thus covers the communications that the utility's scientist had with utility attorneys. Similarly, the court holds that the work product exception applies to the calculations and analyses prepared to evaluate the utility's possible defenses to the government's suit. Moreover, the court holds that the requested documents are not discoverable under the work product hardship exception because the exception only applies to facts, and the documents at issue contain opinions or theories generated from emissions calculations. Nevertheless, the court holds that as part of its case management powers, the court can order the disclosure of strategic decisions. No discovery rule allows a party to withhold preparation and selection of defenses because the defenses may have arisen from attorney-client communications or work product documents. Here, the utility must provide to the government the basis for its defense by selecting a corporate designee to give a deposition on and produce documents supporting the utility's interpretation of its emissions calculations and analyses. Further, the designee must provide witness testimony and documents relating to the calculation of utility emissions, the criteria used to determine if the utility's rebuilding activities resulted in net emissions increases, and the methods used to calculate utility emissions. The corporate designee need not be the utility's scientist and the designee need not reveal past confidential communications or documents, but the designee must be fully prepared to reveal the utility's defenses. In addition, the utility cannot withhold revelation of its defenses until the time for expert reports and depositions.

[Counsel not available at this printing.]