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Potomac Elec. Power Co. v. EPA

Citation: 11 ELR 20815
No. No. 80-1255, 650 F.2d 509/16 ERC 1132/(4th Cir., 06/04/1981)

The Fourth Circuit Court of Appeals modifies and affirms the district court's decision upholding the Environmental Protection Agency's (EPA's) ruling that plaintiff had not commenced construction of its Chalk Point #4 generating station prior to August 17, 1971 and that the unit was thus required to meet new source performance standards (NSPS) under the Clean Air Act. The court approves EPA's interpretation of the term "commenced construction," as used in § 111 of the Act, as the point at which a source owner has entered into a contract to build an affected facility which is sufficiently binding that the owner would incur "significant liability" if the contract were broken. This test is based not on principles of contract law but on the congressional policy of requiring all new sources to use the best demonstrated system of pollution control except where costly retrofitting of existing facilities would be required. Moreover, EPA's conclusion thatt a power plant's boiler is the "affected facility" for purposes of the NSPS is a reasonable reading of the pertinent regulations, is consistent with the statutory definition of "stationary source," and is supported by a common sense application of the policies underlying § 111. The court, however, rejects EPA's contention that its regulatory definition of "construction" refers to the "erection" or "installation" of an "affected facility" only following its "fabrication," declaring that the term must be construed to apply also to the construction of structures and facilities essential to the eventual erection and installation of the "affected facility." Although the EPA regional administrator imporperly used the "substantial loss" instead of the "significant liability" criterion in determining whether a contractual obligation existed and wrongly deemed construction of the unit to have commenced upon the fabrication of the boiler, the decision was not an abuse of discretion since correction of these errors would not change the result.

Counsel for Petitioner
George V. Allen Jr.
Shaw, Pittman, Potts & Trowbridge
1800 M St. NW, Washington DC 20036
(202) 822-1000

Counsel for Respondents
Bingham Kennedy; Angus C. Macbeth, Acting Ass't Attorney General
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-5288

David Mayer
Office of the General Counsel
Environmental Protection Agency, Washington DC 20460
(202) 755-2771

Before WIDENER, PHILLIPS and ERVIN, Circuit Judges.