Replacing, Not Prolonging, Old Power Plants Is Policy of Clean Air Act, 7th Circuit Rules
In an August 17 decision, the United States Court of Appeals for the Seventh Circuit ruled that Cinergy Corp. violated the Clean Air Act by upgrading coal-fired power plants in Ohio, Indiana, and Kentucky in the late 1980s and early 1990s without installing controls to capture pollution and without updating its federal air pollution permit. Judge Richard Posner’s decision perpetuates a deep split among federal appellate courts on how to interpret the New Source Review (NSR) provisions of the Clean Air Act. In particular, the Seventh Circuit's Cinergy decision conflicts with a 2005 Fourth Circuit decision that found that Duke Energy had not violated the NSR when it similarly upgraded power plants. The U.S. Supreme Court has granted certiorari in the Duke case, and is expected to issue a decision in that case in early 2007.
NSR is a federal permitting program, enacted as part of the Clean Air Act in the late 1970s. It requires power plants, factories, and other industrial facilities to obtain permits before constructing new facilities or adding on to existing ones. The program is aimed at ensuring that plant additions and expansions do not degrade local air quality. The primary issue in both the Cinergy and Duke cases involved whether particular actions by the utilities triggered the NSR requirements. Specifically, both courts were called on to interpret the meaning of the phrase "emissions increase" for purposes of the NSR program, and to determine whether the utilities' actions can be considered "routine maintenance," which is exempt from NSR, or are "major modifications," which would require new federal permits and the installation of improved air quality controls.
Duke and Cinergy both argued that NSR's pollution control requirements are triggered by increases in hourly emissions rates — which were virtually unchanged in both cases — and that the "routine maintenance" exemption refers to activities that are routine within the industry. The Environmental Protection Agency ("EPA"), on the other hand, contended that NSR requirements are triggered by increases in annual emissions, and that "routine maintenance" refers to maintenance activities that are routine for a specific generating unit. The Seventh Circuit in Cinergy sided with the EPA, reasoning that Cinergy's interpretation of the NSR provisions would give utilities an "artificial incentive" to renovate a power plant and continue using it beyond its expected lifespan, rather than replacing it with a more environmentally friendly plant. According to Judge Posner, that incentive conflicted with the intent of the Clean Air Act.
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