United States v. Public Service Co. of Indiana

No. IP 76-657-C (S.D. Ind. September 30, 1977)

ELR Digest

The court rules that remanded new source performance standards (NSPS) for coal fired power plants are unenforceable against units on which construction was begun prior to the proposal to revise standards in response to the remand. In June, 1971 defendant began construction of a power plant complex designed to house four units to be placed in service in 1975, 1976, 1978, and 1979. Initial construction was limited to the first two units, but included support facilities that would serve all four. The new plant was to generate base load power, that is, it would be in operation virtually continuously. In August, 1971, the Environmental Protection Agency (EPA) proposed NSPS under § 111 of the Clean Air Act for coal fired power plants, which required such plants to emit no more than 1.2 pounds of sulfur dioxide per million British therman units of power generated. The standards did not take into account the cost of compliance, because EPA had concluded that costs would vary greatly from facility to facility, depending on whether supplies of low sulfur coal were readily available and other factors. Defendant sought bids for construction of flue gas desulfurization scrubbers for units 3 and 4, having concluded that such equipment was the only possible means of meeting the standard. Based on the bids received, the total capital costs of the scrubbers would have been over $100,000,000 and the total operating costs over twice as much, over the thirty-year life of the scrubbers. The scrubbers would have generated large volumes of environmentally harmful sludge, which could not have been disposed of safely at defendant's facility. Based on experience with similar technology at other power plants, the scrubbers could have posed serious operating problems as well. The potential disruption of operation of the base load power plant could have been a major financial drain, requiring the utility to purchase power from other utilities when units 3 and 4 were down.

The court rules that there is no valid regulation in effect to be enforced. The standards were overturned by a Court of Appeals, because EPA violated the statutory mandate to base NSPS in part on the cost of compliance. That decision allowed for the continued enforcement of the standard only for facilities that could comply by use of low sulfur coal. The plant involved in this case could not so comply; the cost of the fuel and the added transportation facilities needed to get it to the plant would exceed those of scrubbers. When EPA does promulgate valid replacement regulations, they cannot apply to plants under construction before September 1975, when EPA first proposed new standards after the remand. Construction on units 3 and 4 had already begun then.

The court also holds that EPA regulations making the "new source" an individual piece of emitting equipment instead of the entire plant are contrary to the language of § 111(c). The court also holds that, should defendant subsequently be found to have violated § 111(e), then (1) its decision that scrubbers were not environmentally sound was in good faith, (2) EPA unreasonably delayed taking final action on revised NSPS, (3) defendant should be allowed a reasonable time to comply with the final standards when promulgated, (4) operation of the plant in compliance with the national ambient air quality standards will protect the public health, (5) and defendant's proposed compliance schedule is reasonable.

The full text of this opinion is available from ELR (9 pp. $7.00, ELR Order No. C-1344).

Counsel for Plaintiff
Virginia Dill McCarty, U.S. Attorney
274 Federal Bldg., 46 E. Ohio St., Indianapolis IN 46204
(317) 331-6333

Peter J. Kelly
Environmental Protection Agency
J. C. Kluczynski Bldg., Chicago IL 60604
(312) 353-2000

Counsel for Defendant
Jerry P. Belknap
Barnes & Thornburg
1313 Merchants Bank Bldg., Indianapolis IN 46204
(317) 638-1313

Greg K. Kimberlin
Public Service Co. of Indiana
1000 E. Main St., Plainfield IN 46168
(317) 839-9611

(Holder, J.)

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]