United States v. Southern Indiana Gas & Electric Co.

No. IP 99-1692-C-M/S (UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA July 18, 2002)

The court holds that a gas and electric company violated the Clean Air Act (CAA) by failing to obtain a preconstruction permit before making modifications to its facility even though there were no actual increases in emissions of pollutants after the changes were made. Based on the CAA and its implementing regulations, owners and operators are required—before commencing construction—to project or predict the post-project emissions rate to determine whether a permit is required. In addition, the U.S. Environmental Protection Agency is authorized under the CAA to take such measures as necessary to prevent the construction or modification of a nonconforming facility. In its motion for partial summary judgment, the company argued that it was exempt from the preconstruction permitting requirement because there was no post-project increase in actual emissions at its facility. The court first holds that because the Act specifically contemplates that an enforcement action to prevent construction may be brought before the modification of a facility is complete, Congress must have intended the determination in such an action to be based on projections of emissions increases. Any other construction of the CAA and its regulations would turn the preconstruction permitting program on its head and would allow sources to begin construction without a permit while they wait to see if emissions would actually increase. Thus, whether the company's project required a preconstruction permit must be determined by reviewing evidence of the projected post-project emissions increases, not by reviewing evidence of the actual post-project emissions data. The company's motion for summary judgment was therefore denied.

Counsel for Plaintiff
Steven D. Ellis
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Thomas E. Kieper
U.S. Attorney's Office
10 W. Market St., Ste. 2100, Indianapolis IN 46201
(317) 226-6333

McKinney, J.

[32 ELR 20821]

McKinney, J.:

Order on Motion for Partial Summary Judgment

This matter is before the Court on Defendant Southern Indiana Gas and Electric Company's ("SIGECO") Motion for Partial Summary Judgment on the United States' ("the Government") claims that it violated the Clean Air Act ("the Act"), 42 U.S.C. § 7401, et seq. The narrow issue presented in SIGECO's motion is whether or not certain construction projects it undertook constituted major modifications that required it to get permits before making the changes. SIGECO contends that because there was no actual increase in emissions of various pollutants after the changes to its facilities were made, those changes were not major modifications and no permits were required. For the following reasons, the Court denies SIGECO's Motion for Partial Summary Judgment.

I. Brief Factual Synopsis

The parties do not contest the material facts with respect to SIGECO's motion. SIGECO operates an electric utility steam-generating facility known as "Culley Station" in Warrick County, Indiana. The facility consists of three electric generating units: Units 1, 2, and 3. Statement of Material Facts ("SMF") P1. The Government has alleged that SIGECO violated the Prevention of Significant Deterioration ("PSD") requirements of the Act for various pollutants, including sulfur dioxide (SO₂) and nitrogen oxides (NO_x), when it performed work on the boiler tubes of two electrical generating units in 1991 and 1992. SIGECO completed both of these projects without first obtaining construction permits, which the Government contends violated the Act. The Court will now consider the merits of SIGECO's motion.

II. Summary Judgment Standards

As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990), cert. denied, 111 S. Ct. 1317 (1991). Motions for summary judgment are governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials which "set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Logan v. Caterpillar, Inc., 246 F.3d 912, 923 (7th Cir. 2001). It is not the duty of the court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying the evidence upon which he relies. Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party has met the standard of Rule 56, summary judgment is mandatory. Celotex, 477 U.S. at 322-23; Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).

In evaluating a motion for summary judgment, a court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). "If the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial, summary judgment must be granted to the moving party." Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996), cert. denied, 519 U.S. 1115 (1997).

III. Discussion

The very narrow issue presented in SIGECO's motion is at what point an owner or operator determines whether a preconstruction permit is required under the Act. Is it before actual construction¹ has begun, or is it after construction has been completed? The parties agree that the PSD regulations require an owner or operator to obtain a permit for any major modification, which is defined as ". . . any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the Act." 40 C.F.R. § 52.21(2)(i). SIGECO contends that it is entitled to summary judgment because there is no evidence that, following completion of its projects, there was an actual increase in emissions. Because its projects had no "net emissions increase," SIGECO contends that they did not meet the definition of "major modification" and did not require permits. The Government, on the other hand, contends that SIGECO's "wait and see" approach to the permitting requirement runs afoul of the purpose of the Act. According to the Government, owners and operators are required—before commencing construction—to project or predict the [32 ELR 20822] post-project emissions rate to determine whether a permit is required. Based upon the language of the Act and its implementing regulations, the Court agrees with the Government.

The Government cites to an opinion of the Environmental Appeals Board ("the Board") that considered this very issue. In re Tennessee Valley Authority, No. CAA-2000-04-008, 2000 WL 1358648 (EAB September 15, 2000).² The Tennessee Valley Authority ("TVA"), like SIGECO does in this case, argued that it was inappropriate in its case, which arose several years after it had completed the changes to its facilities, to calculate post-change emissions based upon a hypothetical projection of emissions when it had data that showed the actual post-change emissions. The Board disagreed with the TVA, and while its opinion may not be binding, the Court finds its reasoning persuasive.

The Board first noted that the enforcement provision of the Act authorizes the Administrator to take such measures as necessary "to prevent construction or modification" of a nonconforming facility. 42 U.S.C. § 7477. The Board reasoned that because the Act specifically contemplates that an enforcement action to prevent construction may be brought before modification of a facility is complete, Congress must have intended the determination in such an action to be based upon projections of emissions increases.

The Act states that "no major facility . . . may be constructed unless a permit has been issued for such proposed facility." 42 U.S.C. § 7475.³ The Board relied upon this and other sections of the Act that clearly contemplate that the projections of the impact of a change in emissions must be made before construction. For example, before a permit is issued, an owner or operator must, using projections of post-change emissions, demonstrate that emissions from the modified source will not violate air quality requirements. In particular, the owner or operator must demonstrate that "emissions from construction or operation of such facility will not cause, or contribute to, air pollution in excess of" various levels. 42 U.S.C. § 7475(a)(3). Moreover, a permit may not be issued unless "there has been an analysis of any air quality impacts projected for the area as a result of growth associated with such facility." 42 U.S.C. § 7475(a)(6).

The Board concluded that the only way an owner or operator could know whether a permit is required for any particular project is to make a prediction as to whether the emissions will increase. The Court agrees that any other construction of the Act and its regulations would "turn the preconstruction permitting program on its head and would allow sources to construct without a permit while they wait to see if it would be proven that emissions would increase. Clearly, Congress did not intend such an outcome, which would eviscerate the preconstruction dimension of the program." In re Tennessee Valley Authority. Thus, the Court concludes that the issue of whether SIGECO's projects required a preconstruction permit must be determined by reviewing evidence of the projected post-project emissions increases, and not by reviewing evidence of the actual post-project emissions data.

IV. Conclusion

In sum, the fact that there was no post-project increase in actual emissions at SIGECO's facility does not, as a matter of law, exempt SIGECO from the Act's preconstruction permit requirement. As a result, summary judgment on that basis is DENIED.

1. The PSD regulations define "construction" to include any modification of an emissions unit which would result in a change in actual emissions. 40 C.F.R. § 52.21(b)(8).

2. Because the Westlaw version of this opinion does not contain page numbers, the Court will not cite to specific pages of the opinion when discussing the Board's reasoning.

3. This particular section of the Act is entitled "Preconstruction requirements." (emphasis added).