UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
____________________________________
No. 11-1400
____________________________________
WILDEARTH GUARDIANS
v.
PUBLIC SERVICE COMPANY OF COLORADO, D/B/A XCEL ENERGY
________________________________________________________________________
On appeal from the United States District Court
For the District of Colorado
The Honorable Judge Miller
Civil Action No. 09-CV-01576
________________________________________________________________________
APPELLANT WILDEARTH GUARDIANS’ OPENING BRIEF
________________________________________________________________________
December 9, 2011 Respectfully Submitted,
Kevin Lynch
Michael Ray Harris
Casey Giltner, Student Attorney
Maclain Joyce, Student Attorney
Environmental Law Clinic
University of Denver
Sturm College of Law
2255 E. Evans Ave.
Denver, Colorado 80208
303-871-7870
Attorney for Appellant
WildEarth Guardians
*Oral Argument is Requested.
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ............................................................................ iii
GLOSSARY………………………………………………………………… . vi
STATEMENT OF RELATED CASES ............................................................ vii
STATEMENT OF JURISDICTION................................................................. 1
STATEMENT OF ISSUES .............................................................................. 1
STATEMENT OF THE CASE ......................................................................... 2
STATEMENT OF FACTS ............................................................................... 4
A. Regulation of Hazardous Air Pollutants…………………………... 4
1. Section 112(g) of the Clean Air Act……………………………4
2. A Section 112(g) Determination Is Wholly Distinct
from Any Other Federal or State Permitting
Requirement for Major Sources ................................................... 6
B. Regulation of EGUs Under the Clean Air Act ................................. 7
1. HAPs Emitted by Coal-Fired Power Plants Pose Serious
Risks to Public Health and the Environment.....………………. . 7
2. In 2000 EPA Determined That It Was Necessary and
Appropriate to List EGUs for Regulation Under Section 112 ..... 9
3. In 2005 EPA Illegally Attempted to “Delist” EGUs as
a Source Category for Regulation Under Section 112………….10
4. The D.C. Circuit Invalidated EPA’s Actions
in New Jersey v. EPA…………………………………………...10
5. EPA and the State of Colorado Clarified Application
of Section 112(g) in the Wake of the New Jersey Decision ........ 11
6. The Decisions in the Lamar, Sandy Creek, and Southern
Alliance Cases Consistently Required EGUs to comply
with Section 112(g) ...................................................................... 12
C. The Comanche Unit 3 EGU .............................................................. 14
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SUMMARY OF THE ARGUMENT ............................................................... 16
STANDARD OF REVIEW .............................................................................. 18
ARGUMENT .................................................................................................... 19
I. THE DISTRICT COURT ERRED IN FINDING THAT
XCEL COULD NOT BE HELD LIABLE FOR ITS
FAILURE TO OBTAIN A MACT DETERMINATION
BEFORE FEBRUARY 22, 2010, AS SECTION 112(G)
OF THE CLEAN AIR ACT REQUIRES……………………… 19
II. ALTHOUGH INAPPLICABLE TO THIS CASE,
THE CHEVRON TEST WEIGHS HEAVILY IN
GUARDIANS’ FAVOR………………………………………. 21
A. The first factor of the Chevron test, application
of “new” law, weighs heavily in Guardians’ favor…………. 27
B. Retroactive application of New Jersey would
further the application and intent of Section
112(g) of the Clean Air Act………………………………… 31
C. Retroactive application of New Jersey is fair
and equitable in this case…………………………………….32
CONCLUSION ................................................................................................. 35
REQUEST FOR ORAL ARGUMENT ............................................................ 36
CERTIFICATE OF COMPLIANCE ................................................................ 37
CERTIFICATE OF DIGITAL SUBMISSION ................................................ 38
CERTIFICATE OF SERVICE ......................................................................... 39
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TABLE OF AUTHORITIES
CASES
Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210 (10th
Cir. 2007)……………… 26
Broyles v. Fort Lyon Canal Co., 695 P.2d 1136 (Colo. 1985)……………….. 28
Caballery v. U.S. Parole Comm’n, 673 F.2d 43 (2d Cir. 1982)……………… 28
Chevron Oil Co v. Huson, 404 U.S. 97 (1971)………………………..28, 31, 32
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984)…………………………………………………………..19
Clark v. State Farm Mutual Auto. Ins. Co.,
319 F.3d 1234 (10th Cir. 2003)………………………………………............. 18
Fitzgerald v. Larson, 769 F.2d 160 (3d Cir. 1985)………………………….... 29
Grayned v. City of Rockford, 408 U.S. 104 (1972) …………………………. 32
Hanover Shoes, Inc. v. United Shoe Mach. Corp., 88 S. Ct. 2224 (1968) ....... 29
Kerber v. Qwest Grp. Life Ins. Plan, 647 F.3d 950 (10th Cir. 2011) ............... 18
Miller v. Glanz, 948 F.2d 1562 (10th Cir. 1997) .............................................. 26
Mitchell v. City of Sapulpa, 857 F.2d 713 (10th Cir. 1988)…………………. 28
New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008)………………10, 11, 19, 30
Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484 (10th Cir. 1991) …………..27
Pound v. Airosol Company, Inc., 498 F.3d 1089 (10th
Cir. 2007 ..................... 24
Sierra Club v. Sandy Creek Energy Assocs.,
627 F.3d 134 (5th Cir. 2010)……………………………………….3, 13, 14, 20
S. Alliance for Clean Energy v. Duke Energy Carolinas, No. 1:08CV318,
2008 WL 5110894 (W.D.N.C. Dec. 2, 2008)……………………………..12, 13
Westinghouse Elec. Corp. by Levit v. Franklin,
993 F.2d 349 (3d Cir. 1993) ……………………………………………….. .. 29
WildEarth Guardians v. Lamar Util. Bd., 09-CV-02974-DME-BNB,
2010 WL 3239242 (D. Colo. Aug. 13, 2010)…………………………..3, 13, 20
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STATUTES
28 U.S.C. § 1291 .............................................................................................. 1
28 U.S.C. § 1331 .............................................................................................. 1
42 U.S.C. § 7401(b) ......................................................................................... 31
42 U.S.C. § 7412 ………………………………………………………...passim
42 U.S.C. § 7413(e)…………………………………………………...24, 25, 27
42 U.S.C. §§ 7470-7515 ................................................................................... 6
42 U.S.C. § 7604 …………………………………………………………...1, 3
42 U.S.C. §§ 7661-7661f .................................................................................. 6
RULES AND REGULATIONS
40 C.F.R. § 63.43(b) ......................................................................................... 6
40 C.F.R. § 63.43(c) .......................................................................................... 6
40 C.F.R. § 63.43(c)(2)(i) ................................................................................. 6
40 C.F.R. § 63.43(d)(1) ..................................................................................... 5
Regulatory Finding on the Emissions of Hazardous Air
Pollutants from Electric Utility Steam Generating Units,
65 Fed. Reg. 79,825 (Dec. 20, 2000)…………………………………...9, 29, 31
Revision of December 2000 Regulatory Finding,
70 Fed. Reg. 15,994 (Mar. 29, 2005) ................................................................ 10
OTHER MATERIALS
EPA Civil Penalty Policy (1991) available at
http://www.epa.gov/compliance/resources/policies/
civil/caa/stationary/penpol.pdf .......................................................................... 24
U.S. Government Accountability Office, Clean Air Act:
Mercury Control Technologies at Coal-Fired Power Plants
Have Achieved Substantial Emissions Reductions (Oct. 2009),
available at http://www.gao.gov/new.items/d1047.pdf ................................... 7
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U.S. EPA, Mercury Study Report to Congress (1997), ES-3, available at
http://www.epa.gov/ttn/oarpg/t3/reports/volume1.pdf. .................................... 29
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GLOSSARY
CAMR – Clean Air Mercury Rule
CDPHE – Colorado Department of Public Health and Environment
EGU – Electric generating unit
EPA – Environmental Protection Agency
HAPs – Hazardous air pollutants
HCl – Hydrochloric acid
HF – Hydrofluoric acid
MACT – Maximum achievable control technology
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STATEMENT OF RELATED CASES
Appellant asserts that there are no related cases.
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JURISDICTIONAL STATEMENT
The District Court exercised subject matter jurisdiction over this Clean Air
Act citizen suit pursuant to 42 U.S.C. § 7604(a) and 28 U.S.C. § 1331 (federal
question jurisdiction).
The Tenth Circuit Court of Appeals has jurisdiction over this appeal because
it is taken as of right, pursuant to 28 U.S.C. § 1291 (appeals from final district
court decisions), from an Order of the District Court that determined, with finality,
all claims relevant to this action by dismissing them with prejudice. The Order
below was issued on August 1, 2011, and Final Judgment was entered on August 3,
2011. Notice of Appeal was timely filed in the District Court on August 31, 2011.
STATEMENT OF ISSUES
(1) Did the District Court err in finding that Xcel could not be held liable for its
failure to obtain a MACT determination before February 22, 2010, when, as
the Fifth Circuit has acknowledged, Section 112(g)(2)(B) of the Clean Air
Act applies throughout the construction process, and thus, the question of
whether there can be retroactive application of the annulment of the delisting
rule in New Jersey is neither relevant nor determinative?
(2) Even if the question of retroactivity was relevant or determinative, did the
District Court abuse its discretion in finding that it would be inequitable to
hold Xcel liable for its continued construction of Comanche Unit 3 in the
absence of a MACT determination, where Xcel continued construction for
over 2 years post-New Jersey, did not seek the required MACT
determination from the State of Colorado until after the commencement of
this action, and began burning coal and emitting hazardous air pollutants
without a valid permit to do so in violation of Section 112(g) of the Clean
Air Act?
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STATEMENT OF THE CASE
Factually, this case involves the regulation of hazardous air pollutants
(“HAPs”) under Section 112 of the federal Clean Air Act from the new 750 mega-
watt coal-fired power plant, Comanche Unit 3, located in Pueblo, Colorado that is
operated by Appellee Public Service Company of Colorado d/b/a Xcel Energy
(“Xcel”). 42 U.S.C. § 7412. In enacting Section 112, Congress expressly chose to
require that new sources of HAPs, like Comanche unit 3, commit—by obtaining
the necessary state or federal approval—to the use of the maximum achievable
control technology (“MACT”) to reduce HAPs before engaging in any
construction of the source. But here, instead of abiding by the express intent of
Congress, Xcel chose to place its own profitability over the health and safety of the
people of Colorado by constructing, and then even operating, Comanche Unit 3
without obtaining the necessary MACT approval. In treating Xcel’s failure to do
so as a mere procedural violation of the Clean Air Act, the lower Court chose to
ignore the serious (and illegal) harm from Xcel’s inaction. In reality, absent a
MACT approval, Xcel was not legally allowed to operate Comanche Unit 3; but
Xcel did operate this unit for three months, emitting mercury and other HAPs into
the Colorado environment. While during this time Xcel was legally allowed to
emit no HAPs whatsoever for the unit, by its own admission it began burning coal,
and as a result emitting HAPs, in October 2009. Aplt. App. at 196.
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Legally, this case is about the application of the Clean Air Act’s mandate
that “no person may construct or reconstruct any major source of hazardous air
pollutants, unless the Administrator (or the State) determines that the MACT
emission limitation under this section for new sources will be met.” 42 U.S.C. §
7412(g). Under circumstances almost identical to those presented in this case—
where the source was still under construction, but not yet operating, at the time that
application of this Section to the source became clear—other courts have
decisively concluded that there is only one possible reading of this language: that
any construction on a major source of HAPs after the applicable date, absent a
MACT approval, is flatly unlawful. See Sierra Club v. Sandy Creek Energy
Associates, 627 F.3d 134 (5th Cir. 2010); WildEarth Guardians v. Lamar Util. Bd.,
09-CV-02974-DME-BNB, 2010 WL 3239242 (D. Colo. Aug. 13, 2010). The
fundamental question before this Court is whether the District Court’s failure to
similarly follow (let alone even consider) the clear language of the Clean Air Act
requires the reversal of its dismissal of Appellant’s Complaint.
Appellant, WildEarth Guardians (“Guardians”) filed this action on July 2,
2009 in the District Court seeking both civil penalties and injunctive relief for
Xcel’s violation of Section 112 of the Clean Air Act, pursuant to the Act’s citizen
suit provision, 42 U.S.C. §7604. Aplt. App. at 16. On August 17, 2009, Xcel filed
a Motion to Dismiss for lack of subject matter jurisdiction and failure to state a
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claim. Aplt. App. at 24. On March 9, 2010, the District Court denied the Motion
to Dismiss in part, holding that subject matter jurisdiction was proper and that
Xcel’s retroactivity claim was dismissed without prejudice. Aplt. App. at 128.
The Court did ask the parties to provide additional briefing regarding the proper
penalties to be assessed against Xcel and any issues of mootness, and the parties
complied. Aplt. App. at 13-14. On May 11, 2009, Petitioner filed a Motion for
Partial Summary Judgment. Aplt. App. at 231. On May 16, 2009, Xcel moved to
strike the Motion for Partial Summary Judgment on the grounds that the Judge had
not yet issued any order regarding the supplemental briefing. Aplt. App. at 8. On
August 1, 2011, the Honorable Judge Walker D. Miller issued an Order dismissing
Guardians’ action. Aplt. App. at 255. In so doing, Judge Miller sua sponte
renewed Xcel’s previously denied Motion to Dismiss.
STATEMENT OF THE FACTS
A. Regulation of Hazardous Air Pollutants
1. Section 112(g) of the Clean Air Act
The emission of HAPs from major and minor sources are regulated under
Section 112 of the Clean Air Act. 42 U.S.C. § 7412. HAPs are defined as “any air
pollutant listed pursuant to subsection (b) of this section.” 42 U.S.C. § 7412(a)(6).
The list includes numerous distinct air pollutants emitted by power plants,
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including mercury compounds, hydrochloric acid (“HCl”), and hydrofluoric acid
(“HF”). 42 U.S.C. § 7412(b)(1). A major source is defined as:
[A]ny stationary source or group of stationary sources located
within a contiguous area and under common control that emits or
has the potential to emit 10 tons per year or more of any hazardous
air pollutant or 25 tons per year or more of any combination of
hazardous air pollutants.
42 U.S.C. § 7412(a)(1).
EPA also maintains a list of categories of major sources of HAPs which are
subject to the requirements of Section 112. 42 U.S.C. § 7412(c). Once listed, EPA
is then obligated to promulgate a MACT emission limitation standard for each
source category under Section 112(d). 42 U.S.C. § 7412(d). Regarding the
construction of a new major source of HAPs (as applicable in the case at bar),
Section 112(g)(2)(B) provides that “no person may construct or reconstruct any
major source of hazardous air pollutants, unless the Administrator (or the State)
determines that the maximum achievable control technology emission limitation
under this section for new sources will be met.” 42 U.S.C. § 7412(g)(2)(B). This
MACT determination for a new source must be “made on a case-by-case basis”
where EPA has not yet established a MACT standard for the source’s category. Id.
This case-by-case determination “shall not be less stringent than the emission
control which is achieved in practice by the best controlled similar source.” 40
C.F.R. § 63.43(d)(1).
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2. A Section 112(g) Determination Is Wholly Distinct from Any Other
Federal or State Permitting Requirement for Major Sources.
The requirement to obtain a MACT determination under Section 112(g) is a
wholly separate and distinct obligation from any federal or state law requiring
major sources to obtain construction or operating permits related to air pollution.1
Section 112(g)(2)(B) requires a source to obtain a “determination,” not a permit,
from EPA or the State regarding compliance with case-by-case MACT. 42 U.S.C.
§ 7412(g)(2)(B). EPA’s regulations are equally clear: “[w]hen a case-by-case
determination of MACT is required . . . the owner and operator shall obtain from
the permitting authority an approved MACT determination according to the
review options contained in paragraph (c) of this section.” 40 C.F.R. § 63.43(b)
(emphasis added). Notably, in paragraph (c) the review options authorize the state
to incorporate the MACT determination process into any separate permitting
processes that may be occurring, but do not require them to be integrated. See
id. at § 63.43(c). Instead, the state may authorize a party to “apply for and obtain a
Notice of MACT Approval” as a separate regulatory proceeding. Id. at
§ 63.43(c)(2)(i).
//
1 For example, Title V of the Clean Air Act requires that major sources also obtain
a facility operating permit, and the New Source Review provisions of Title I
require major sources to obtain construction permits that address emission
standards for non-hazardous pollutants. 42 U.S.C. §§ 7661-7661f; 42 U.S.C. §§
7470-7515.
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B. Regulation of EGUs Under the Clean Air Act
1. HAPs Emitted by Coal-Fired Power Plants Pose Serious Risks to
Public Health and the Environment.
EPA has found that coal-fired electric generating units (“EGUs”) emit 67 of
the 188 individual HAPs Congress listed for regulation under the 1990 Clean Air
Act Amendments. Aplt. App. at 17-18. These include mercury, selenium, dioxins,
arsenic, acid gases, and other heavy metals. Id. EGUs are the largest
anthropogenic source of mercury in the United States, emitting a total of 48 tons of
mercury annually. U.S. Government Accountability Office, Clean Air Act:
Mercury Control Technologies at Coal-Fired Power Plants Have Achieved
Substantial Emissions Reductions (Oct. 2009), available at
http://www.gao.gov/new.items/d1047.pdf. Mercury and its interaction with the
environment provide a stark example of why HAPs emitted by coal-fired power
plants pose serious health risks to the people of Colorado. Aplt. App. at 15. Once
mercury is deposited in Colorado’s waters, the formation of highly toxic
methylmercury occurs. Id. Subsequently, methylmercury accumulates in fish
tissue and threatens human health if consumed. Id. Nearly twenty percent of the
state’s fish species have high mercury concentrations, and many Coloradoans
routinely consume these locally caught fish. Id.
An EPA study reveals that,
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“Neurotoxicity is the health effect of greatest concern with
methylmercury exposure. . . Dietary methylmercury is
almost completely absorbed into the blood and distributed to
all tissues including the brain; it also readily passes through
the placenta to the fetus and fetal brain. The developing
fetus is considered most sensitive to the effects from
methylmercury. . . .”
Id. When fetuses, breast-fed infants, or their mothers are exposed to
methylmercury-contaminated fish, they are at particular risk for developing
permanent neurological disorders. These include mental retardation, vision loss,
hearing loss, delayed developmental milestones, attention deficits, memory
problems, auditory processing problems, language difficulties, ataxia, and, in
extreme cases, seizures. Id. at 15-16.
Other HAPs emitted by EGUs include arsenic, dioxins, acid gases, selenium,
lead, and other heavy metals, which have been shown to cause serious adverse
health effects including cancer, heart disease, stroke, and neurological impairment.
Id. at 16. One of those pollutants, dioxin, is among the most potent carcinogens on
the planet. Id. The emission of these HAPs, in violation of the clear directives of
the Clean Air Act, has the potential to cause substantial harm to the health of
Colorado’s people and the surrounding environment. Id.
//
//
//
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2. In 2000 EPA Determined That It Was Necessary and Appropriate to
List EGUs for Regulation Under Section 112.
Pursuant to Section 112(n) of the Clean Air Act, Congress directed EPA to
conduct a study of the public health hazards of EGU HAP emissions before listing
EGUs under Section 112(c). 42 U.S.C. § 7412(n)(1)(A). EPA was only required
to regulate EGUs under Section 112 if it found, after considering the results of the
study, that such regulation was “appropriate and necessary” to protect public health
and welfare. Id.
On December 20, 2000, EPA placed EGUs on the list of source categories of
HAPs maintained pursuant to Section 112(c). EPA made the decision to regulate
coal-fired EGUs under Section 112 because “mercury emissions from EGUs,
which are the largest domestic source of mercury emissions, present significant
hazards to public health and the environment.” Regulatory Finding on the
Emissions of Hazardous Air Pollutants from Electric Utility Steam Generating
Units, 65 Fed. Reg. 79,825 (Dec. 20, 2000). EPA listed the source category as coal
and oil-fired EGUs, defined by the Clean Air Act as “any fossil fuel fired
combustion unit of more than 25 megawatts that serves a generator that produces
electricity for sale.” 42 U.S.C. § 7412(a)(8).
//
//
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3. In 2005 EPA Illegally Attempted to “Delist” EGUs as a Source
Category for Regulation Under Section 112.
In 2005, EPA purported to remove EGUs from the list of sources subject to
regulation pursuant to Section 112 of the Clean Air Act. Revision of December
2000 Regulatory Finding, 70 Fed. Reg.15, 994 (Mar. 29, 2005). However, once a
source is listed, the source may only be deleted from the source category list
pursuant to Section 112(c)(9) of the Clean Air Act. However, EPA did not purport
to delist EGUs pursuant to section 112(c)(9) of the Clean Air Act and instead
attempted to undo the previous regulatory finding that listing of the source
category was “necessary and appropriate.” As a result, EPA instead chose to
regulate EGUs by promulgating the Clean Air Mercury Rule (“CAMR”) under
Section 111 of the Clean Air Act. While CAMR regulated mercury emissions
from EGUs, it did not address the other 67 HAPs emitted by the source category
that would be subject to regulation under Section 112.
4. The D.C. Circuit Invalidated EPA’s Actions in New Jersey v. EPA.
EPA’s decision to delist EGUs was challenged in the D.C. Circuit Court of
Appeals by numerous state attorneys general and environmental groups. New
Jersey v. EPA, 517 F.3d 574, 578 (D.C. Cir. 2008). The Petitioners in that case
argued that the Clean Air Act provides that once a source is listed, the source may
only be deleted from the source category pursuant to Section 112(c)(9) of the Act.
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Id. at 579-80. Under 112(c)(9), a source category may not be removed unless it
finds that “no single unit’s emissions in the category exceed a level adequate to
protect public health with an ample margin of safety, and that no adverse
environmental effect will result from removal.” 42 U.S.C. § 7412(c)(9). EPA did
not make this finding, however, when it sought to change course regarding
regulation of mercury emissions from EGUs. New Jersey, 517 F.3d at 578.
In 2008, the D.C. Circuit agreed with these arguments and vacated as
unlawful EPA’s attempt to remove EGUs from the list of sources regulated under
Section 112 of the Clean Air Act. Id. The court criticized the action taken by
EPA, disparagingly stating that it had “deployed the logic of the Queen of Hearts”
by substituting its own desires for the plain text of the statute. Id. at 582. The
court restored the status quo and held that EGUs “remain listed” as major sources
of HAPs under Section 112. Id. at 583.
5. EPA and the State of Colorado Clarified Application of Section
112(g) in the Wake of the New Jersey Decision.
In response to the New Jersey decision, EPA directed all new major-source
EGUs to obtain MACT determinations, including EGUs that began construction
during the failed “delisting” period. Aplt. App. at 62-63. EPA also requested that
state permitting authorities provide notice to EGUs that case-by-case MACT
determinations be obtained “without delay,” or face federal enforcement actions.
Aplt. App. at 66-67.
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On January 7, 2009, EPA sent a memo to Regional Administrators stating
that all EGUs that received permits during the period between March 19, 2005 and
March 14, 2008 were presently legally obligated to comply with Section 112(g) of
the Clean Air Act. Aplt. App. at 62-63. In response to EPA’s memorandum, on
March 13, 2009, the Colorado Department of Public Health and Environment
(“CDPHE”) sent a letter to Xcel indicating that EPA had requested sources under
Section 112(g) to obtain a MACT determination. Aplt. App. at 64-65. Subsequent
to these notices, on July 17, 2009, EPA sent a letter directly to Xcel that threatened
enforcement action for failure to obtain a MACT determination. Aplt. App. at 66.
6. The Decisions in the Lamar, Sandy Creek and Southern Alliance
Cases Consistently Required EGUs to Comply with Section 112(g).
In response to New Jersey and the subsequent EPA notices, at least three
federal courts have considered whether EGUs that commenced construction during
the “delisting” period, but remained under construction at the time New Jersey was
decided, must comply with Section 112(g). In each case, the answer was yes.
The first of these cases to be decided was S. Alliance for Clean Energy v.
Duke Energy Carolinas, No. 1:08CV318, 2008 WL 5110894 (W.D.N.C. Dec. 2,
2008). There, the District Court took the most stringent view of EPA’s attempt to
delist EGUs in 2005, holding that because the purported delisting was illegal at the
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time, new EGUs remained subject to 112(g) even during the delisting period. S.
Alliance for Clean Energy, 2008 WL 5110894 at *10.
In the second case, which was decided in the District of Colorado by the
Honorable Judge Ebel, the court took a more narrow view of retroactivity, finding
that the obligation to comply with Section 112(g) simply arose anew after New
Jersey was decided. Lamar, 2010 WL 3239242 at *6. The court made this
determination by focusing on the plain language of the Clean Air Act, holding that
an owner or operator is not relieved of its responsibility to comply with Section
112 after it has begun construction. Id. By interpreting the plain language of
Section 112, Judge Ebel stated that “‘[C]onstruct or reconstruct’ are active verbs
that have force after the permit is issued and after construction or reconstruction
has begun.” Id. at 5. Based on this reading of the statute, Judge Ebel determined
that sources that did not obtain a MACT determination, in reliance upon the
overturned delisting rule, are not relieved of their responsibility to now comply.
Id.
Finally, the Fifth Circuit addressed the issue in a similar case. Sandy Creek
627 F.3d at 140-44. There the court reached the same conclusion as did Judge
Ebel (in fact it cited him in support). Id. at 141. The court stated: “[S]ection
112(g) says nothing about a preconstruction permitting process. It simply prohibits
the act of constructing a major source for which no MACT determination has been
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made.” Id. at 141 n.9. Additionally, the court held that “[t]he day [the power
plant] actually commenced construction is, therefore, irrelevant to §112(g)(2)(B)’s
current application to [the plant’s] concurrent and ongoing construction, since §
112(g)(2)(B) prohibits the act of construction itself––and not the commencement
thereof.” Id. (emphasis in original).
C. The Comanche Unit 3 EGU.
Comanche Unit 3 is a 750 mega-watt coal-fired power plant, owned and
operated by Xcel. It is the largest coal-fired EGU ever built in Colorado. Aplt.
App. at 255.
Xcel completed an initial application for a permit to construct Comanche
Unit 3 in August 2004. Aplt. App. at 38. On July 5, 2005, Xcel obtained a
preconstruction permit from CDPHE. Aplt. App. at 41. Comanche Unit 3 is a
major source of HAPs under Section 112 of the Clean Air Act because it has the
potential to emit over 25 tons of HAPs per year including specifically HCl and HF.
Aplt. App. at 20. The 2005 permit allows Comanche Unit 3 to emit 20.79 tons per
year of HCl, and 15.89 tons per year of HF. Aplt. App. at 241.
Despite Comanche Unit 3’s categorization as a major source of HAPs, the
2005 permit lacked a determination of HAPs emissions control that satisfies the
MACT requirement of Section 112(g). Aplt. App. at 41. Instead of including the
MACT determination required by Section 112(g), Xcel’s permit complied with
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CAMR, which regulated only mercury emissions under Section 111 instead of
Section 112. Id. CAMR did provide for limits on mercury emissions to a certain
extent, but did not address the other major HAPs emitted from Comanche Unit 3
such as HCl and HF.
On April 23, 2009, Guardians provided Xcel with a sixty-day notice letter
stating Guardians’ intent to sue based on Xcel’s failure to comply with Section
112(g) of the Clean Air Act. Aplt. App. at 16. In July 2009, Xcel was expressly
warned by EPA to comply with Section 112(g), and EPA threatened an
enforcement action for noncompliance. Aplt. App. at 66. Guardians filed suit
against Xcel to enforce compliance with Section 112(g) on July 2, 2009. Aplt.
App. at 14.
It was not until July 24, 2009, more than four months after CDPHE notified
Xcel of its obligation to comply with Section 112(g) of the Clean Air Act, that
Xcel initiated the process for obtaining a case-by-case MACT determination. Aplt.
App. at 43. Xcel began operation of Comanche Unit 3 for the first time in October
2009. Aplt. App. at 196. Xcel did not obtain a final MACT determination until
February 22, 2010, more than four years after the commencement of construction,
almost two years after New Jersey, more than a year after the EPA memo, and
more than three months after coal-burning operations began. Id.
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Thus, Xcel commenced construction of Comanche Unit 3 in December
2006, continued construction through 2009, and began coal-burning operations in
October 2009, all without obtaining a MACT determination until February 22,
2010.
SUMMARY OF THE ARGUMENT
The District Court’s dismissal of Guardians’ claims must be set aside for
two reasons. First, the District Court erred in finding that Xcel could not be held
liable for its failure to obtain a MACT determination before February 22, 2010.
The plain language of Section 112(g) makes clear that Xcel was required to obtain
a MACT determination after New Jersey because it was continuing to “construct”
Comanche Unit 3 without a valid MACT determination. In deciding that the
application of Section 112(g) would be an unfair retroactive application of a legal
standard, the District Court simply failed to address the plain language of the
statute or the holdings in Lamar and Sandy Creek. As those courts found, the
question of whether there can be retroactive application of Section 112(g) is not
relevant for the period of time after the New Jersey decision.
Second, even if the question of retroactivity was relevant, it is not outcome
determinative in the way the District Court found. As an initial matter, the Court
misconstrued the purpose of the Chevron retroactivity test. Chevron is a means for
a court to determine whether a party has a legal duty to alter past conduct to abide
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by a new legal requirement. Here, the District Court did not use Chevron in this
manner. Indeed, it never concluded that Section 112(g), post-New Jersey, did not
apply retroactively to EGUs like Comanche Unit 3. Instead, the District Court
improperly used Chevron to determine that even if it did, penalizing Xcel under the
circumstances would not be fair. In making this determination at the Motion to
Dismiss stage, the District Court not only ignored the equitable factors that
Congress intended to be used for setting penalties (and set forth in Section 113 of
the Clean Air Act), but it did not give Guardians an opportunity to contest through
the adversarial process—discovery, witness examination, cross-examination,
etc.—the "facts" the District Court relied upon in making its "equity"
determination.
And applying the Chevron test as it was intended to be used, all three
factors favor finding that Xcel violated Section 112(g). Under the first factor, a
threshold test, New Jersey did not create a new principle of law because a judicial
decision vacating an administrative action cannot form the basis of a retroactivity
argument, particularly when, as here, the vacated rule does not constitute clear past
precedent. Under the second factor, retroactive application would further the intent
and purpose of Section 112(g) which intended for immediate regulation of EGUs
in order to protect the public health from the dangers posed by HAPs. Under the
third Chevron factor, whether or not it would be equitable to apply the law
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retroactively, requiring Xcel to comply with Section 112(g) does not contravene
equity concerns because Xcel had fair warning of its obligation to comply with
Section 112(g) on numerous occasions. In addition, Xcel continued construction
for over two years post-New Jersey, did not seek the required MACT
determination from the State of Colorado until after the commencement of this
action, and began burning coal without a valid permit to do so in violation of
Section 112(g) of the Clean Air Act.
STANDARD OF REVIEW
An appellate court reviews de novo a district court's dismissal of a complaint
under Fed. R. Civ. P. 12(b)(6), applying the same legal standard as the district
court. Kerber v. Qwest Grp. Life Ins. Plan, 647 F.3d 950 (10th Cir. 2011). The
appellate court must accept as true all well-pleaded factual allegations in a
complaint and view these allegations in the light most favorable to the plaintiff. Id.
In order to survive a motion to dismiss, the complaint must allege sufficient facts
to make the claim plausible on its face. Id. In addition to the allegations contained
in the complaint, the court may consider attached exhibits and documents
incorporated into the complaint, so long as the parties do not dispute the
documents' authenticity. Id. The Tenth Circuit has reviewed Chevron retroactivity
cases under this standard. Clark v. State Farm Mutual Auto. Ins. Co., 319 F.3d
1234, 1240 (10th Cir. 2003).
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ARGUMENT
I. THE DISTRICT COURT ERRED IN FINDING THAT XCEL COULD
NOT BE HELD LIABLE FOR ITS FAILURE TO OBTAIN A MACT
DETERMINATION BEFORE FEBRUARY 22, 2010, AS SECTION
112(G) OF THE CLEAN AIR ACT REQUIRES
In addressing the question of retroactive application of the law, the District
Court failed to address the plain language of Section 112(g), which reads: “no
person may construct, reconstruct or modify a major source of hazardous air
pollutants without a MACT determination.” 42 U.S.C. § 7412(g). Xcel has argued
that this language merely creates a preconstruction requirement, and that once a
facility is under construction the obligation to obtain a MACT determination
disappears. Aplt. App. at 52-55. But this language is unambiguous; there is only
one possible plain language reading of Section 112(g)–– construction of any type,
and not just commencement, is prohibited absent compliance.2
2 This is yet another example of Congress’ use of unambiguous language in
Section 112 being twisted in order to attempt to allow EGUs to escape regulation.
Thus, in New Jersey the court stated that EPA could not prevail in its attempt to
use agency deference because “Congress has directly spoken to the …issue.” New
Jersey, 517 F.3d at 581(citing to Chevron, U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984)). As New Jersey found, "EPA's
purported removal of EGUs from the Section 112(c)(1) list therefore violated the
CAA's plain text and must be rejected . . ." New Jersey, 517 F.3d at 582. Congress
was so explicit in its requirement that EGUs be listed that EPA had no discretion in
listing or delisting them under Section 112. "For EPA to avoid a literal
interpretation at Chevron step one, it must show either that, as a matter of historical
fact, Congress did not mean what is appears to have said, or that, as a matter of
logic and statutory structure, it almost surely could not have meant it." Id.
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The District of Colorado and the Fifth Circuit agree, having unequivocally
decided the ultimate issue of this case, concluding that a MACT determination was
required for EGUs that began construction during the delisting. In Lamar, Judge
Ebel found that an owner or operator of an EGU is not relieved of its responsibility
to comply with Section 112(g) after the initiation of construction. Lamar, 2010
WL 3239242 at *5. Judge Ebel interpreted the plain language of Section 112(g),
stating “construct is an active verb that has force after the permit is issued.” Id.
Plainly stated, sources that relied on the delisting rule and did not obtain a MACT
determination before initiating construction are not relieved of their responsibility
to do so after New Jersey.
The Fifth Circuit adopted Judge Ebel’s analysis in Sandy Creek, concluding
that any EGU that began construction during the delisting period was required to
comply with Section 112(g). Sandy Creek, 627 F.3d at 141. In Sandy Creek, the
defendant began construction of an EGU without a MACT determination, relying
on the same delisting rule that Xcel points to. The Fifth Circuit found that the
defendant violated the plain language of Section 112(g) because it had continued
construction without a MACT determination after the delisting rule was vacated in
New Jersey. Sandy Creek, 627 F.3d at 141.
This is the only possible reading of Section 112(g) and is directly applicable
to Xcel, which began the construction of Comanche Unit 3 during the delisting
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period. As in Lamar and Sandy Creek, Xcel had a present duty to comply with
Section 112(g) following New Jersey.
II. ALTHOUGH INAPPLICABLE TO THIS CASE, THE CHEVRON
TEST WEIGHS HEAVILY IN GUARDIANS’ FAVOR.3
Ultimately, it is clear from the Order below that the District Court dismissed
this case because the court believed that that it would be inequitable to penalize
Xcel for its failure to comply with Section 112(g) under the facts of this case. See
Aplt. App. at 262-63. Specifically, the court focused on three perceived inequities:
that Xcel had obtained a preconstruction permit that did contain a mercury limit;
that it had relied upon statements for permitting officials before New Jersey was
decided; and that it had not emitted mercury and other pollutants above any legally
allowable limit. See Aplt. App. at 262.
There are two reasons the District Court was incorrect in its consideration of
these equitable issues. First, the court was factually incorrect. While Xcel did
obtain a preconstruction permit, that permit is not the equivalent of a MACT
determination. See supra p. 13-14. More importantly, the mercury limit issued
3 The District Court stated that Guardians agreed that Chevron was the applicable
law in this case. Aplt. App. at 260. This is unequivocally incorrect. What
Guardians made known to Judge Miller was that, after the decisions in Lamar and
Sandy Creek, a retroactive application of the New Jersey decision had no place in
this matter. Aplt. App. at 209-210. Only because Judge Miller relied so heavily on
this improper application of Chevron in his dismissal, Guardians will address the
retroactivity argument here.
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under the illegal CAMR rule did not contain limits for other HAPs that would be
emitted from Comanche Unit 3. See supra p.10. And while it is true that Xcel
relied on pre-New Jersey statements regarding the permitting of Comanche Unit 3,
Judge Miller never explained the relevance of that given the New Jersey decision.
In fact, the District Court seemed to forget the fact that Xcel ignored the
instruction of regulatory authorities at the federal and state level to comply with
Section 112(g) in the aftermath of New Jersey. Aplt. App. at 62-67. And the
District Court missed the mark regarding harm from Xcel’s delayed compliance
and its operation of Comanche Unit 3 for three months without a valid MACT
determination in place. Inexplicably, Judge Miller discusses, and seemingly
bases his decision to dismiss on, the idea that emissions at Comanche Unit 3 never
exceeded the proposed MACT limits submitted in Xcel’s initial permit application.
The court, however, failed to recognize that there is no acceptable emissions level
whatsoever for a major source that does not have a MACT determination. 42
U.S.C. § 7412(g)(2)(B). Section 112(g) flatly prohibits any construction, and
therefore operation, of Comanche Unit 3 in the absence of a MACT determination.
Id. Indeed, this is EPA’s interpretation, expressed in its January 2009 memo.
Aplt. App. at 62-63. Without the required MACT determination in place, Xcel’s
operation of Comanche Unit 3 did result in unlawful emissions of HAPs.
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The District Court was also legally wrong. The court misconstrued the
purpose of the Chevron retroactivity test. Chevron is a means for a court to
determine whether a party has a legal duty to alter past conduct to abide by a new
legal requirement. Here, the District Court did not use Chevron in this manner.
Indeed, it never concluded that Section 112(g), post-New Jersey, did not apply
retroactively to EGUs like Comanche Unit 3. Instead, the District Court
improperly used Chevron to determine that even if it did apply, penalizing Chevron
under the circumstances would not be fair. In making this determination at the
Motion to Dismiss stage, the District Court not only ignored the equitable factors
that Congress intended to be used for setting penalties (and set forth in Section 113
of the Clean Air Act), but it did not give Guardians an opportunity to contest
through the adversarial process—discovery, witness examination, cross-
examination, etc.—the "facts" the lower court relied upon in making its "equity"
determination.
Even assuming that it could reach the third prong of Chevron (which it
cannot for reasons discussed below), it focused on the wrong notion of “equity.”
In Chevron, the intended focus was on whether a party received “fair notice,” of
application of a “new” legal requirement. Both parties argued this application of
Chevron but the District Court never addressed it. See Aplt. App. at 55, 159, 184-
85. Instead, it focused on the substantive merits of whether it would be unfair to
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penalize Xcel for its failure to obtain a timely MACT determination; not on
whether it had an obligation to comply with the requirement in the first instance.4
Guardians had actually agreed with the District Court that equitable
considerations might come into play in this case when assessing penalties. But,
determining whether Xcel should be subject to monetary penalties is not a legal
question, but an equitable one that should be decided after liability under Section
112(g) is determined. The typical method to determine penalties is to first
calculate the maximum penalty, and then the court must consider the eight
equitable factors set out in 42 U.S.C. § 7413(e) of the CAA to determine whether
the penalty should be lowered. Pound v. Airosol Company, Inc., 498 F.3d 1089,
1095 (10th Cir. 2007); see also EPA’s Civil Penalty Policy (1991) available at
http://www.epa.gov/compliance/resources/policies/civil/caa/stationary/ penpol.pdf.
These factors are:
(1) The size of the business;
(2) The economic impact of the penalty on the business;
(3) The violator's full compliance history and good faith efforts to
comply;
(4) The duration of the violation as established by any credible
evidence (including evidence other than the applicable test
method);
(5) Payment by the violator of penalties previously assessed for the same
violation;
4 Ironically, Xcel did obtain the MACT determination. See supra p. 15. If the
requirement post-New Jersey was truly inequitable under Chevron, Xcel
presumably would not have complied and instead argued to EPA that applying
Section 112(g) so late in construction of Comanche Unit 3 was unfair.
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(6) The economic benefit of noncompliance;
(7) The seriousness of the violation; and
(8) And other such factors as justice may require.
EPA’s Civil Penalty Policy is based off the factors enumerated in the Clean Air
Act itself. 42 U.S.C. § 7413(e)(1). Due to the District Court’s premature dismissal
of the case, Guardians has been significantly disadvantaged because it has had no
opportunity to verify or challenge Xcel’s “assertions.” Without the fact-finding
that would be made possible by complete discovery and the questioning and cross-
examination of witnesses, there is no way to reliably ascertain Xcel’s equitable
penalties.
The District Court, in determining that equity concerns in this case
precluded Xcel from facing liability for its disregard of the plain language of
Section 112(g), stated that there was “no evidence that any emission failed to meet
the MACT standard.” Aplt. App. at 261. Disregarding the fact that the court
overlooks that any emission without a MACT determination is a violation, this is
also nothing more than a blind assertion by the court. Guardians had no
opportunity to discover and present evidence that would demonstrate precisely
how much mercury and other HAPs were emitted, illegally, during the time that
Xcel had not obtained a MACT determination. Guardians further had no
opportunity to cross-examine Mr. Magno, who provided several declarations for
Xcel in this matter that address the operation of and emissions from Comanche
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Unit 3.
The District Court relied upon several other facts5 in dismissing this case
that Guardians should have had an opportunity to challenge. Specifically, the court
relied upon the “fact” that “Xcel commenced the permitting process assuming
regulation by MACT and then revised its submitted to regulation by CAMR upon
EPA’s adoption of the delisting rule.” Aplt. App. at 262. The court also relied
upon generic conclusions regarding the initial permitting of Comanche Unit 3 that
were not included in the Complaint. Id. at 263. And the court stated that “[w]hen
the delisting rule was annulled, Xcel again complied with directives and
established a higher standard of MACT determination, presumably in the public
interest.” Id. Guardians should have been afforded an opportunity to present
5 Judge Miller improperly relied upon facts not included in the complaint when
deciding this case at the motion to dismiss stage. “The failure to convert a 12(b)(6)
motion to one for summary judgment where a court does not exclude outside
materials is reversible error unless the dismissal can be justified without
considering the outside materials.” Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210,
1215-16 (10th
Cir. 2007). Further, courts have held that “the court’s function on
Rule 12(b)(6) motion is not to weigh potential evidence that the parties might
present at trial, but to assess whether plaintiff’s complaint alone is legally
sufficient to state a claim for which relief can be granted.” Miller v. Glanz, 948
F.2d 1562, 1565 (10th Cir. 1997). Here, Judge Miller could not have dismissed
Guardians’ claims without considering outside materials. Judge Miller conducted
an in-depth application of the Chevron test, under which large portions of his
reasoning were tied to Xcel’s actions under a settlement agreement and in response
to the delisting rule and its subsequent vacatur. Neither set of facts were applicable
to Guardians’ claims or mentioned in the complaint. Had Judge Miller limited his
decision to the pleaded complaint, this case would have survived the 12(b)(6)
stage.
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additional evidence on each of these “facts” and to challenge Xcel’s assertions that
it essentially “did everything possible” to comply given the regulatory uncertainty.
Guardians could have sought documentation or examined witnesses to find out
why Xcel took over two years after the New Jersey decision to apply for a MACT
determination, what effect the letters from EPA and the State had on Xcel’s plans
for compliance, and what communication occurred between the State and Xcel
beyond that contained in the letters submitted in this case. Guardians could also
have introduced evidence showing what other utilities did in similar situations and
how they were able to come into compliance with Section 112(g) much more
quickly than Xcel did in this case. A more thorough evaluation of this evidence is
needed to fully assess the equitable factor of “the violator’s full compliance history
and good faith efforts to comply.” 42 U.S.C. § 7413(e)(1).
A. The first factor of the Chevron test, application of a “new” law,
weighs heavily in Guardians’ favor
A Chevron analysis “must be made on the basis of the facts of each case.”
Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484, 1495 (10th Cir. 1991).
Application of the factors in this case weighs heavily in Guardians’ favor.
“First, the decision to be applied non-retroactively must
establish a new principal of law, either by overruling clear past
precedent on which litigants may have relied… or by deciding
an issue of first impression whose resolution was not clearly
foreshadowed… Second, it has been stressed that ‘we
must…weight the merits and demerits in each case by looking
to the prior history of the rule in question, its purpose and
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effect, and whether retrospective operation will further or retard
its operation.’… Finally, we have weighed the inequity
imposed by retroactive application, for (w)here a decision of
this Court could produce substantial inequitable results if
applied retroactively, there is ample basis in our cases for
avoiding the ‘injustice or hardship’ by a holding of non-
retroactivity.”
Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971).
Courts applying Chevron will first determine if the decision to be applied is
a new principle of law, either because it overruled clear past precedent on which
litigants may have relied, or because it is deciding an issue of first impression
whose resolution was not clearly foreshadowed. Chevron, 404 U.S. at 106-07. As
such, the first factor of Chevron is a threshold test. Mitchell v. City of Sapulpa,
857 F.2d 713, 716 (10th Cir. 1988) ("a court should look to the second and third
prongs of the Chevron Oil analysis only “[o]nce it has been determined that a
decision has ‘establish[ed] a new principle of law.’”). There is no need to consider
the remaining factors if the decision to be applied does not establish a new rule of
law. Id.
Here, there is no reason to look past this threshold factor. A judicial
decision vacating an agency action, exactly as New Jersey vacated the EPA
delisting, cannot form the basis of a retroactivity claim. Caballery v. U.S. Parole
Comm’n, 673 F.2d 43, 47 (2d Cir. 1982); see also Broyles v. Fort Lyon Canal Co.,
695 P.2d 1136, 1144 (Colo. 1985) (interpreting a statute enacted prior to an agency
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decision does not establish a new principle of law). By the very nature of the
action at issue, New Jersey does not qualify as a new principle of law, because it is
setting aside a regulatory, not judicial, decision. Chevron looked to a previous
Supreme Court decision to define what “clear past precedent” required. See
Hanover Shoe, Inc. v. United Shoe Machi. Corp., 88 S. Ct. 2224, 2233 (1968)
(defining ‘clear past precedent’ as “a situation in which there was a clearly
declared judicial doctrine upon which [the party] relied and under which its
conduct was lawful.”) (emphasis added).
If this Court decides to not follow Caballery, New Jersey still does not
establish a new principle of law because the prior precedent “must be ‘sufficiently
clear that a plaintiff could have reasonably relied upon…a criteria that [is] not met
where the law was erratic and inconsistent.’” Westinghouse Elec. Corp. by Levit v.
Franklin, 993 F.2d 349, 354-55 (3d Cir. 1993); see also Fitzgerald v. Larson, 769
F.2d 160 (3d Cir. 1985). Here, the delisting was not sufficiently clear for Xcel to
have relied upon because EPA had been erratic and inconsistent in its actions under
Section 112.
EPA first found in 2000 that it was “necessary and proper” to regulate
EGUs under Section 112. See Regulatory Finding on the Emissions of Hazardous
Air Pollutants from Electric Utility Steam Generating Units, 65 Fed. Reg. 79,825
(Dec. 20, 2000); U.S. EPA, Mercury Study Report to Congress (1997), ES-3,
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available at http://www.epa.gov/ttn/oarpg/t3/reports/volume1.pdf. While it never
withdrew that finding, EPA began to regulate mercury emissions from EGUs under
Section 111 instead, though this decision was quickly challenged in the D.C.
Circuit Court. New Jersey, 517 F.3d at 578. This type of inconsistency and
changing agency action could not create a past precedent that Xcel could have
reasonably relied upon.
In the present case, EPA’s decision to delist EGUs from Section 112 was not
a “clearly declared judicial doctrine” upon which New Jersey could have
established a new principle of law. Rather it was an agency action subject to
judicial review, and indeed, one which was immediately called into question.6
New Jersey, 517 F.3d 574. It would be disingenuous for Xcel to claim reliance on
this interpretation when it was so quickly and vehemently challenged by a number
of states and environmental groups, as contrary to the plain language of the Clean
Air Act. The D.C. Circuit Court derisively overturned this agency action, holding
that EPA had failed to follow the Clean Air Act and instead “employed the logic of
the Queen of Hearts” by replacing Congressional intent with that of the agency. Id
at 582.
//
//
6 Delisting occurred on March 29, 2005. New Jersey was filed on August 4, 2005.
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B. Retroactive application of New Jersey would further the
application and intent of Section 112(g) of the Clean Air
Act.
The second Chevron factor is to consider the effect that retroactive
application would have and whether applying the “new” law to prior cases would
“further or retard” the intent of the statute in question. Chevron, 404 U.S. at 107.
Oddly, while the District Court found that Xcel’s actions had not harmed the
environment, it somewhat inconsistently found that this factor weighs in
Guardians’ favor. And for good reason. Congress implemented Section 112(g),
and EPA listed EGUs under that section, as a rigorous public health mandate. See
42 U.S.C. § 7401(b). Indeed, EPA found it “necessary and appropriate” to regulate
EGUs under Section 112(g) because EGUs emit a variety of HAPs, including
mercury, that cause permanent harm to humans and the environment. See
Regulatory Finding on the Emissions of Hazardous Air Pollutants from Electric
Utility Steam Generating Units, 65 Fed. Reg. 79,825.
More importantly, Section 112(g)(2)(A) exists to ensure that, regardless of
EPA’s action or inaction in promulgating specific standards for MACT emission
limitations, EGUs would still be regulated under MACT standards based on a case-
by-case determination. Congress’ intent to provide emission limitation standards
for the present situation is clear. EPA was required to promulgate the MACT
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standard under Section 112(d) by 2002; however, almost a decade later, EPA has
still yet to promulgate a national MACT standard.
With the implementation of Section 112(g), Congress believed that MACT
determinations were important because it required new facilities to presently obtain
a MACT determination, rather than wait to apply MACT determinations until
some point after EPA had promulgated a set of standards. It is in this regard that
Comanche Unit 3, based on the intent of Section 112(g), was required to obtain a
MACT determination immediately; not at some to-be-determined point in the
future. Allowing Xcel to operate and emit HAPs with no regulation or oversight
would completely overlook the Congressional and EPA intent of Section 112(g).
C. Retroactive application of New Jersey is fair and equitable in this
case.
The final factor of the Chevron test is whether the retroactive application of
the “new” law would create an equitable or inequitable result. Only where
application would be unfair, due to lack of notice or some other equitable
consideration, should courts refuse to apply the law retroactively. Chevron, 404
U.S. at 107.
Fair notice is given when a “person of reasonable intelligence [has] a
reasonable opportunity to know what is prohibited so that he may act accordingly.”
Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). Xcel claims that it was not
provided “fair warning” to comply with Section 112(g), and therefore, its Due
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Process rights would be violated by application of Section 112(g). Aplt. App. at
57. Yet, Xcel’s position is contradicted by a host of events that, in fact, provided
more than adequate notice of its obligation to obtain a MACT determination as
required by Section 112(g).
Xcel was provided notice in five instances. First, EGU operators were put
on notice of their obligation to comply with Section 112(g) in 2008 by the New
Jersey decision. Xcel should have known, from at least this time, that it was not in
compliance with Section 112(g), and would need to obtain a MACT determination
before continuing with construction or operation of Comanche Unit 3. The
January 2009 EPA memo, putting under-construction EGUs on notice of Section
112(g)’s applicability, again provided notice. In March 2009, Xcel was expressly
notified by the State of Colorado, in the letter from CDPHE, requiring Xcel to
participate in the MACT process. Aplt. App. at 64. In July 2009, Xcel was
expressly warned by EPA to comply with Section 112(g) and threatened with an
enforcement action for noncompliance. Finally, Xcel was given notice when
Guardians filed this case to enforce compliance on July 2, 2009.
Xcel had more than fair notice of its obligation to comply with Section
112(g), but instead chose to forego its obligation to obtain a MACT determination
until February 22, 2010, two years after New Jersey was decided. Those two years
of non-compliance subject Xcel to liability for its impermissible construction and
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34
operation of an EGU without a MACT determination.
Important too, is Xcel’s eventual compliance with Section 112(g). Despite
its argument that compliance would be an unfair application of a retroactive law, it
chose to comply with Section 112(g) rather than stand by this argument. If it was
unfair, it remains unclear why Xcel eventually chose to comply. Xcel’s own
actions betray its vehement argument and indicate that, in fact, it was fair to hold it
accountable to Section 112(g), post–New Jersey.
Because Xcel had more than enough notice and because it eventually
complied with Section 112(g), it is fair to apply New Jersey retroactively and
penalize Xcel for its delay in obtaining the required MACT determination. The
unfairness warned of in the Chevron test is not present here, and should not stop
this Court from applying the full force of Section 112(g).
Judge Miller improperly replaced the equity and due process considerations
of Chevron with an equity discussion applicable only to the penalty phase of this
case. It is only after Xcel’s liability is established that its adherence to other
regulatory schemes would be relevant. Judge Miller ignored the ample time and
notice provided to Xcel and was instead concerned that it should not be penalized
because its conduct was good enough in his mind. The fairness of imposing
penalties is a post-liability consideration, one that requires witnesses to be heard,
cross-examination, and the ability of Guardians to offer evidence to rebut any
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35
notion of inequity. Instead, Judge Miller decided unilaterally that penalties were
unfair. Because this case was improperly dismissed at such an early stage, much
of the relevant information has yet to be brought to light.
In sum, Xcel cannot meet the threshold test for establishing New Jersey as a
new principle of law, and the second and third factors weigh in Guardians’ favor.
This Court should overturn Judge Miller’s Chevron-based dismissal of this case.
CONCLUSION
For the reasons set forth above, Guardians requests that the Court reverse the
District Court’s August 1, 2011 Order dismissing Guardians’ claims that
Defendant Xcel Energy violated Section 112(g) of the Clean Air Act in its failure
to obtain a case-by-case MACT determination.
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REQUEST FOR ORAL ARGUMENT
Pursuant to 10th Cir. R. 28.2(C)(4), Guardians has included a statement of
reasons why argument is necessary in this appeal. Guardians requests oral
argument for the following reasons:
1. There is a conflict between the Fifth Circuit and the District
Court of Colorado regarding whether or not an EGU, who began
construction during the EPA’s delisting period, should be presently
required to comply with Section 112(g) of the Clean Air Act.
2. This case involves an issue of first impression in the Tenth
Circuit Appellate Division and a split between district courts in the
District of Colorado regarding the issue of whether or not an EGU,
who began construction during the EPA’s delisting period, should be
presently required to comply with Section 112(g) of the Clean Air
Act.
3. This case involves the complex regulatory scheme of Section
112(g) of the Clean Air Act and additionally involves both a
complicated and novel historical and factual background.
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CERTIFICATE OF COMPLIANCE
As required by Fed. R. App. P. 32(a)(7)(c), I certify that this brief is
proportionally spaced and contains 8,468 words. I relied on my word processor to
obtain the count and it is Microsoft Office 2007. I certify that the information on
this form is true and correct to the best of my knowledge and belief formed after a
reasonable inquiry.
Dated this 9th day of December, 2011.
Respectfully submitted,
s/ Kevin Lynch
Kevin Lynch
Michael Ray Harris
Casey Giltner, Student Attorney
Maclain Joyce, Student Attorney
Environmental Law Clinic
University of Denver
Sturm College of Law
Attorney for Appellant
WildEarth Guardians
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38
CERTIFICATE OF DIGITAL SUBMISSIONS
I hereby certify that a copy of the foregoing APPELLANTS OPENING
BRIEF, as submitted in Digital Form, is an exact copy of the written document
filed with the Clerk and has been scanned for viruses with Symantec Antivirus;
Version 10.11.0.5002.33; last updated on 10/11/11, and, according to the program,
is free of viruses.
Dated this 9th day of December, 2011.
Respectfully submitted,
s/ Kevin Lynch
Kevin Lynch
Michael Ray Harris
Casey Giltner, Student Attorney
Maclain Joyce, Student Attorney
Environmental Law Clinic
University of Denver
Sturm College of Law
Attorney for Appellant
WildEarth Guardians
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CERTIFICATE OF SERVICE
I hereby certify that on this 9th day of December, 2011, I electronically filed
the forgoing APPELLANT’S OPENING BRIEF with the Clerk of the Court using
the CM/ECF system, which will send notification of such filling to counsel of
record listed below. Service was also made to counsel of record by dispatching a
hard copy to a third party commercial service for copying and delivery. Counsel of
record served are:
For Appellee:
Colin C. Deihl
Direct: (303) 607- 3651
Email: [email protected]
FAEGRE & BENSON LLP
Firm: (303) 607-3500
3200 Wells Fargo Center
1700 Lincoln Street
Denver, Colorado 80203
Linda Rockwood
Direct: (303) 607- 3642
Email: [email protected]
FAEGRE & BENSON LLP
Firm: (303) 607-3500
3200 Wells Fargo Center
1700 Lincoln Street
Denver, Colorado 80203
Ann Elizabeth Prouty
Direct: (303) 607-3746
Email: [email protected]
FAEGRE & BENSON LLP
Firm: (303) 607-3500
3200 Wells Fargo Center
1700 Lincoln Street
Denver, Colorado 80203
and
Appellate Case: 11-1400 Document: 01018759841 Date Filed: 12/09/2011 Page: 47
William Bumpers
Direct: (202) 639-7718
Email: [email protected]
BAKER BOTTS L.L.P.
Firm: (202) 639-7700
1299 Pennsylvania Ave., N.W.
Washington, D.C. 20004
Kent Mayo
Direct: (202) 639-1122
Email: [email protected]
BAKER BOTTS L.L.P.
Firm: (202) 639-7700
1299 Pennsylvania Ave., N.W.
Washington, D.C. 20004
/s/ Kevin Lynch
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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADOSENIOR JUDGE WALKER D. MILLER
Civil Action No. 09-cv-1576-WDM-KLM
WILDEARTH GUARDIANS,
Plaintiff
v.
PUBLIC SERVICE COMPANY OF COLORADO, d/b/a XCEL ENERGY
Defendant.
ORDER ON MOTION TO DISMISS
Miller, J.
This case is before me on the Motion to Dismiss (Doc. No. 7) filed by Defendant
Public Service Company of Colorado d/b/a Xcel Energy (“Xcel”). Plaintiff WildEarth
Guardians (“WildEarth”) opposes the motion. For the reasons that follow the motion is
granted in part and denied in part.
BACKGROUND
This is a case arising under the Clean Air Act section 112(g) (42 U.S.C. §
7412(g)). Xcel contends that this Court should dismiss WildEarth’s claims for lack of
subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) as an impermissible
collateral attack on existing state proceedings. Alternatively, Xcel contends that this
Court should abstain from exercising jurisdiction under the Burford doctrine and dismiss
the case under Fed. R. Civ. P. 12(b)(6). Finally, Xcel asserts that reinstituting of federal
mercury regulations may not be applied retroactively to render Xcel’s actions unlawful.
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Plaintiff WildEarth is a non-profit corporation with approximately 4,000 members
throughout the United States, including Colorado. Compl. ¶ 10. Its mission is “to bring
people, science, and the law together in defense of the American West’s rivers, forests,
deserts, grasslands, and the delicate web of life to which we are inextricably linked.” Id.
In 2005, the Colorado Public Utilities Commission (“PUC”) granted Xcel a permit
to build a 750 megawatt coal-fired electric generating plant at the Comanche Station,
known as Comanche Unit 3 (“Comanche 3"). By this action, WildEarth seeks a
declaratory judgment that the construction is illegal and to enjoin its construction and
operation, claiming that Xcel unlawfully failed to obtain a MACT emission limitation
determination for mercury emissions, pursuant to Section 112(g) of the CAA, 42 U.S.C.
7412(g), prior to beginning construction. WildEarth also asks that Xcel be assessed
penalties and ordered to pay WildEarth’s costs and attorneys’ fees. WildEarth’s Motion
for Temporary Restraining Order was denied.
History of MACT Requirement for Mercury Emissions
Under the CAA, the EPA is required to list categories of sources that emit
hazardous air pollutants (“HAPs”). See 42 U.S.C. § 7412(c). One such category is
“major sources” of HAPS, defined as “any stationary source or group of stationary
sources located within a contiguous area and under common control that emits or has
the potential to emit considering controls, in the aggregate, 10 tons per year or more of
any [HAP] or 25 tons per year or more of any combination of [HAPs].” Id. at
§ 7412(a)(1).
In 2000, the EPA Administrator determined that regulation of electric utility steam
generating units (“EGUs”) was appropriate under Section 112 of the CAA because
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EGUs emit HAPs, including mercury, which “is a public health concern and a concern in
the environment.” 65 Fed. Reg. at 79,830. In 2002, EGUs were added to the list of
source categories of HAPs under Section 112 of the CAA. National Emission
Standards for Hazardous Air Pollutants: Revision of Source Category List Under
Section 112 of the Clean Air Act, 67 Fed. Reg. 6521, 6522, 6524 (Feb. 12, 2002).
In 2005, the EPA published a rule removing EGUs from regulation under section
112 (“Delisting Rule”), Revision of December 2000 Regulatory Finding on the Emissions
of Hazardous Air Pollutants from Electric Utility Steam Generating Units and the
Removal of Coal- and Oil-Fired Electric Utility Steam Generating Units from the Section
112(c) List; Final Rule, 70 Fed. Reg. 15,994, 16,002-08, 16,032 (March 29, 2005)
(codified at 40 C.F.R. pt. 63), and published the Clean Air Mercury Rule (“CAMR”),
which regulated HAPs from EGUs under section 111 of the CAA rather than section
112. Standards of Performance for New and Existing Stationary Sources: Electric
Utility Steam Generating Units; Final Rule, 70 Fed. Reg. 28,606, 28,608, 28624-32
(May 18, 2005) (codified at 40 C.F.R. pts. 60, 72, and 75).
On February 8, 2008, the United States Court of Appeals for the District of
Columbia Circuit determined that the EPA’s 2005 decision to remove EGUs from
regulation under Section 112 was inappropriate because the EPA failed to follow the
specific delisting process set forth in the Section 112(c)(9) and struck down CAMR and
held that the EPA delisting of mercury had never occurred. New Jersey v. EPA, 517
F.3d 574, 581-83 (D.C. Cir. 2008).
The EPA has accepted the result of the New Jersey case and considered the
Delisting Rule to have been vacated effective March 14, 2008, the date the Court of
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Appeals issued its mandate.
On January 7, 2009 the EPA sent a letter to its Regional Administrators stating
that the Agency believed that EGUs that were under construction or reconstruction
between March 29, 2005, the delisting date, and March 14, 2008, the mandate date,
“are legally obligated to come into compliance with the requirements of Section 112(g).”
January 7, 2009 letter from EPA Office of Air and Radiation to Regional Administrators
attached as Ex. L to Brief in Support of Motion to Dismiss (Doc. No. 8-13) (hereinafter
“Brief”). The EPA requested that “the appropriate State or local permitting authority
commence a process under Section 112(g) to make a new-source MACT determination
in each of these cases.” Id. In the letter, the EPA recognized that the application of
MACT standards to a project, which had already begun construction, might present
challenges and that consideration of MACT requirements that may have been
foreclosed by construction should be given for construction activities that took place
prior to February 8, 2008. See id. (“[I]t is reasonable for the permitting authority—under
these unique and compelling circumstances, and within the bounds of its discretion
under . . . Section 112(g) regulations—to give consideration to the effect of prior
construction, undertaken in reasonable reliance on now-vacated rules in making the
case-by-case determination of applicable MACT requirements.” Id. at 2).
History of Xcel’s Application for Comanche Unit No. 3 Permit
Xcel initially sought permission to construct Comanche 3 from the Colorado
Public Utilities Commission (“PUC”). A coalition of conservation groups and civic
organizations resisted Xcel’s application.
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In August, 2004, while PUC approval was pending, Xcel made its initial
application for a permit to construct Comanche 3 from the Colorado Department of
Public Health and Environment (“CDPHE”), Air Pollution Control Division (”APCD”)
pursuant to Colorado law and the CAA. Since it antedated the Delisting Rule, this
application included a case-by-case MACT determination at 20 x 10-6 lbs/MWhr on a
twelve-month rolling average.
Thereafter, in December of 2004, Xcel made a settlement with the objecting
parties before the PUC, which obligated Xcel to minimally meet the above MACT
emissions limit for not only the proposed Comanche 3 but also the two other existing
Comanche units which previously had no such limitations. (“Settlement”) Brief, Ex. D at
5-7. Thereafter, the PUC approved Xcel’s revised plan in 2005.
On January 18, 2005, Xcel amended its application pending before the APCD to
include the terms of the Settlement. Brief, Ex. E.
On March 2, 2005, APCD released an initial draft of permit analysis for
Comanche 3 which included APCD’s specific determination that Xcel’s proposed
mercury limitations constituted a case-by-case MACT. Brief, Ex. B at 16-18.
Before the permit issued, however, the EPA adopted the Delisting Rule as noted
above, applying CAMR in lieu of the MACT.
In June 2005, APCD held public hearings and received comments. WildEarth did
not participate or make any comments.
APCD revised its initial approval and issued a final permit for Comanche 3 on
July 5, 2005. The permit acknowledged that Xcel’s applications had included the case-
by-case MACT analysis but that it was removed because of the EPA Delisting Rule.
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APCD Revised Approval at 24. Instead, the final permit required compliance with
CAMR. Final Permit at 8. Nevertheless, limitations on mercury emission limits
determined to be MACT remained in the final permit as required by the Settlement.
After the issuance of the permit a citizen’s group, not including WildEarth, filed
suit against APCD in District Court for Pueblo County, Colorado for having issued the
permit, making various claims unrelated to MACT. The District Court rejected the
challenges and was affirmed by the Colorado Court of Appeals. A request for certiorari
was denied. Citizens for Clean Air & Water in Pueblo & S. Colo. v. Colo. Dep’t of Pub.
Health & Env’t, Air Pollution Control Div., 183 P.3d 393 (Colo. App. 2008), cert. denied
2008 WL2581591 (Colo. 2008).
In accordance with the APCD permit, construction of Comanche 3 commenced in
October 2005, and has continued without interruption. It is undisputed that the unit
nears completion.
On January 7, 2009, consistent with the New Jersey decision, EPA concluded
that electric utilities which were permitted during the delisting period between March 19,
2005, and the New Jersey vacation of the rule, are now obligated to comply with
Section 112(g). See Brief, Ex. L. January 7, 2009 EPA letter to Regional
Administrators. As a consequence, on March 13, 2009, CDPHE sent a letter to Xcel
noting that it had been requested to make a MACT determination. Specifically, CDPHE
stated: “Since a complete 112(g) determination was submitted with the Comanche Unit
3 permit application in August, 2004, the Division is requesting that you supplement and
revise your initial 112(g) determination, if necessary, to include any available
information regarding control technologies and emission rates since the submittal of
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your initial determination.” Brief, Ex. M.
In April, 2009, WildEarth sent Xcel Plaintiff’s sixty-day notice of intent to sue
because of noncompliance with Section 112(g).
On July 2, 2009, WildEarth filed its complaint.
On July 17, 2009, the EPA also notified Xcel that it considered Section 112(g)
applicable, stating: “You must contact the appropriate permitting authority as
expeditiously as possible to obtain a new source maximum achievable control
technology (MACT) determination and a schedule for coming into compliance with the
requirements of Section 112(g).” Brief, Ex. N.
I note that neither the EPA nor APCD, both aware of Xcel’s on-going
construction, ordered Xcel to stop construction pending the MACT analysis and
determination.
On July 24, 2009, Xcel submitted its MACT update with a twelve-month moving
average of 15 x 10-6 lbs/MWhr.
It is undisputed that Xcel began burning coal in the Comanche 3 boilers in the fall
of 2009.
In December 2009, the APCD published a revised permit with MACT at that
level. Following the period for public comment, the final revised permit was issued on
February 22, 2010, with the MACT formula of 14.7 x 10-6 lbs/MWhr. Ex. A to
Defendant’s Unopposed Motion to Supplement Record (Doc. No. 60). There is no
indication that ongoing construction of Comanche 3 is not in accordance with the APCD
approved MACT determination.
In sum, this chronology demonstrates that, had the EPA not delisted the electric
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utilities from Section 112(g), the original permit would quite likely have a MACT limit of
20 x 10-6 lbs/MWhr as a twelve-month average, as well as the other obligations
undertaken in keeping with the PUC Settlement applicable to all of its Comanche
generating units. Once the delisting was annulled, Xcel presented a revised case-by-
case MACT determination constituting an approximate 25% reduction in permitted
emissions of mercury. As a consequence, the final permit has a greater limitation on
mercury emissions than Xcel’s original permit would have allowed had the Delisting
Rule never been adopted.
STANDARD OF REVIEW
Xcel seeks dismissal pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) for failure
to state a claim upon which relief can be granted because the complaint does not plead
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1960 (2007). Factual allegations “must
be enough to raise a right to relief above the speculative level.” Id. The court must
accept as true all well-pleaded facts and construe all reasonable allegations in the light
most favorable to the plaintiff. United States v. Colo. Supreme Court, 87 F.3d 1161,
1164 (10th Cir. 1996).
“[A] court is required to convert a Rule 12(b)(1) motion to dismiss into a Rule
12(b)(6) motion or a Rule 56 summary judgment motion when resolution of the
jurisdictional question is intertwined with the merits of the case,” which occurs when
“subject matter jurisdiction is dependent on the same statute which provides the
substantive claim in the case.” Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.
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1995). Under the CAA, subject matter jurisdiction is dependent on the same statute
which provides the substantive claim in the case, thereby requiring treatment of a Rule
12(b)(1) motion as a Rule 12(b)(6) motion or a Rule 56 summary judgment motion.
"[F]acts subject to judicial notice may be considered in a Rule 12(b)(6) motion without
converting the motion to dismiss into a motion for summary judgment. . . . This allows
the court to take judicial notice of its own files and records, as well as facts which are a
matter of public record. " Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006)
(citing Van Woudenberg ex rel. Foor v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000)).
The documents may only be considered to show their contents, not to prove the truth of
matters asserted therein.” Id. (quoting Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d
1182, 1188 (11th Cir. 2002)). I take judicial notice of records and facts which are a
matter of public record in considering this motion, including the February 19, 2010
CDPHE letter to WildEarth responding to the group’s comments on the new permit.
DISCUSSION
Subject Matter Jurisdiction
I begin by addressing Xcel’s argument that I lack subject matter jurisdiction over
this matter. WildEarth alleges that Xcel has violated the CAA § 112(g)(2)(B) in
constructing Comanche 3 without having first made a MACT determination (Compl.
¶¶ 31-34) or, in the alternative, has violated the CAA § 112(g)(2)(A) in modifying the
Comanche Station without first obtaining a MACT determination. Compl. ¶¶ 35-37.
Xcel contends that, because it obtained a validly issued permit from APCD in 2005,
when a MACT determination was not required under CAA § 112(g), WildEarth’s claims
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are a challenge to the 2005 permit and an impermissible collateral attack over which I
lack jurisdiction. Xcel further contends that the invalidation of the federal mercury
regulations may not be applied retroactively to require Xcel to obtain a MACT
determination under current standards.
WildEarth does not complain that the 2005 permit was invalid. WildEarth has
alleged an adequate factual basis for its claims challenging Xcel’s current compliance
with the CAA in not having obtained a MACT determination despite the 2008 vacatur of
the EPA’s delisting of mercury. WildEarth’s complaint raises federal questions under
the CAA. Whether Xcel has sufficiently met the MACT standard pursuant to § 112, is a
question of law and fact to be determined at a later time. From the non-conclusory facts
alleged, however, WildEarth’s assertions that Xcel has violated the CAA § 112 are
plausible and not speculative.
Construing all reasonable allegations in the light most favorable to the plaintiff, I
conclude that, pursuant to 28 U.S.C. § 1331, I have subject matter jurisdiction. The
principle remaining issues are abstention and retroactivity.
Abstention
As time passed and construction progressed, Xcel submitted its MACT analysis
to APCD which it determined, with some modification, to be an appropriate MACT.
WildEarth participated in the permitting process and procedures that exist for it to obtain
review; including, if appropriate, judicial relief through the state system. See Colo. Rev.
Stat. § 24-4-106; § 25-7-114 et seq.; see also, e.g., Citizens for Clean Air & Water in
Pueblo and S. Colo. v. Colo. Dep’t of Pub. Health and Env’t, Air Pollution Control Div.,
181 P.3d 393 (Colo. App. 2008) (affirming issuance by APCD of construction permits for
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Comanche 3). Indeed, at oral argument on the motion to dismiss, WildEarth’s counsel
acknowledged that its request for injunctive relief had essentially been rendered moot
by the APCD MACT determination.
In this circumstance, any further review of the permit in the future is a matter from
which this court should abstain under the Burford doctrine. “Federal courts abstain out
of deference to the paramount interests of another sovereign, and the concern is with
the principles of comity and federalism.” Burford v. Sun Oil, 319 U.S. 315, 332-33
(1943). Colorado has a comprehensive review process that allows all issues to be
properly addressed and reviewed. Sitting in equity on the facts of this case, I should
decline to interfere with the State of Colorado’s on-going administrative and potential
judicial review processes. New Orleans Pub. Serv. Inc. v. Counsel of New Orleans, 491
U.S. 350, 361 (1989). Concurrent review by an inexpert federal court could be
disruptive of Colorado’s efforts to establish a coherent policy concerning emissions of
pollutants from power plants. Accordingly, I conclude that I should abstain from any
further review of the ongoing permit process for Comanche 3.
Retroactivity
As opposed to its acquiescence that injunctive relief is no longer required,
WildEarth is adamant that Xcel’s continued construction without an approved MACT
determination after the New Jersey decision was a continuing violation under Section
112 from commencement until the MACT determination, thereby exposing Xcel to civil
penalties and liability for WildEarth’s costs and attorneys’ fees. Accordingly,
Defendant’s defense of impermissible retroactivity, a difficult issue, needs to be
addressed.
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“Courts are understood only to find the law, not to make it.” James B. Beam
Distilling Co. v. Georgia, 501 U.S. 529, 535-36 (1991); see also, Harper v. Va. Dept. of
Taxation, 509 U.S. 86, 107 (1993) (“‘[T]he province and duty of the judicial department
is to say what the law is,’ . . . not what the law shall be.” Id. (quoting Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803))). “Judicial declaration of law is
merely a statement of what the law has always been. ‘For if it be found that [a] former
decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad
law, but that it was not law.’” Cash v. Califano, 621 F.2d 626, 628 (4th Cir. 1980)
(quoting 1 Blackstone, Commentaries on the Law of England 70 (1765)). Therefore, if
nothing else, and as determined by the New Jersey court, one could conclude that Xcel
always was required to have a MACT determination regardless of the Delisting Rule.
See New Jersey at 583.
The exception to this rule under Harper v. Va. Dept. of Taxation is that a court
ruling is not applied retroactively to cases which are no longer subject to direct review,
i.e. a final judgment. Id. at 97. Given that Xcel’s original permit without a MACT
determination was subject to final review up through denial of certiorari, Xcel argues
that the New Jersey decision does not apply to its initial permit. However, Xcel did not
elect to stand on its original permit and insist on the basis of the Harper exception that it
need not do a MACT analysis. Instead, in response to a March, 2009 request from
CDPHE that a MACT determination be undertaken, Xcel complied , arguably reopening
the permit issues and making them subject to review and, therefore, to the New Jersey
rule. With this construct, Xcel’s continuing construction after CDPHE’s request was
then a violation of Section 112(g) because a MACT had not been determined.
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If one proceeds with an assumed violation of Section 112(g) because of the
reopening of the permit process, the question becomes whether Xcel should be subject
to the requested penalties and fees and cost award for WildEarth.
I note that the parties have only superficially addressed the issues of whether
review of the original permit was reopened and whether penalties and costs should be
awarded by myself sitting in equity. I will be better served by specific briefing on these
issues.
Accordingly it is ordered:
1. Xcel’s motion to dismiss (Doc. No. 7) is granted in part and denied in part;
2. This court shall abstain from any further review of the CDPHE permit for all
matters occurring subsequent to the issuance of the permit on February 22, 2010;
3. Xcel’s Motion to Dismiss on the basis of retroactivity is dismissed without
prejudice; and
4. The parties shall submit briefs on the issues of whether Xcel should be
penalized were I to conclude that it had violated Section 112(g) for its construction
activities prior to the issuance of the revised permit as follows:
a. On or before April 5, 2010, WildEarth shall file a brief, no longer than
twenty pages, addressing whether the Harper exception applies and, if
not, whether Xcel should be penalized and WildEarth awarded its costs
and attorneys’ fees;
b. Xcel shall file its response brief, no longer than twenty pages, on or
before April 26, 2010; and
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c. WildEarth may file a reply brief, not to exceed ten pages, on or before
May 6, 2010.
DATED at Denver, Colorado on March 9, 2010
BY THE COURT:
Walker D. MillerUnited States Senior District Judge
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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO
Senior Judge Walker D. Miller
Civil Action No. 09-cv-01576-WDM-KLM
WILDEARTH GUARDIANS,
Plaintiff,
v.
PUBLIC SERVICE COMPANY OF COLORADO, d/b/a XCEL ENERGY,
Defendant.
__________________________________________________________________
ORDER __________________________________________________________________
This matter is before me on Plaintiff WildEarth Guardians’s (“WildEarth”) Brief in
response to my March 9, 2010 (ECF No. 68), Defendant Public Service Company of
Colorado, d/b/a Xcel Energy’s (“Xcel”) Response to WildEarth’s Brief (ECF No. 69),
WildEarth’s related Motion for Partial Summary Judgment (ECF No. 74), and Xcel’s
Motion to Strike (ECF No. 80). Being sufficiently advised in the premises, I enter the
following order.
Background
This case concerns the permitting process before the Colorado Public Utilities
Commission (“PUC”) for Xcel’s 750 megawatt coal-fired electric generating plant, known
as Comanche Unit 3 (“Comanche 3”). Construction and operation of Comanche 3 are
subject to the revisions of the Clean Air Act (“CAA”), 42 U.S.C. 7401 et seq., which are
administered in Colorado by the Air Pollution Control Division (“APCD”) of the Colorado
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Department of Public Health and Environment (“CDPHE”). The primary issue in
contention was whether Xcel was required to obtain a Maximum Achievable Control
Technology (“MACT”) determination regarding mercury emissions pursuant to section
112(g) of the CAA, 42 U.S.C. § 7412(g), prior to beginning construction and/or
thereafter. As discussed in further detail below, when Xcel first began the permitting
processes, Electric Utility Generating Units (“EGUs”) such as Comanche 3 were initially
categorized under the CAA as a major source of hazardous air pollutants (“HAPs”),
including mercury, pursuant to 42 U.S.C. § 7412a(1) and were subject to MACT
limitations of section 312(g). Thereafter, the Environmental Protection Agency (“EPA”)
initiated and consummated a “delisting” process to remove EGUs from regulation under
section 112 and placing them under section 111 to be governed by a Clean Air Mercury
Rule (“CAMR”). Although Xcel sought its permit in accordance with section 112, it was
ultimately issued pursuant to section 111 (although it in fact still complied with section
112). In 2008, the EPA’s delisting was deemed improper in New Jersey v. Envtl. Prot.
Agency, 517 F.3d 574 (D.C. Cir. 2008) and voided.
The detailed history of Xcel’s permit application, construction, and actions after
the New Jersey decision is set forth in my March 9, 2010 Order on Motion to Dismiss
(ECF No. 64) by which I partially granted Xcel’s Motion to Dismiss and abstained from
further review of the CDPHE permit subsequent to the issuance of an amended permit
on February 22, 2010. I denied without prejudice Xcel’s Motion to Dismiss on the basis
of retroactivity. I ordered the parties to submit briefs on whether Xcel should be
penalized if I were to conclude that it violated section 112(g) of the CAA with its
construction activities prior to the issuance of its revised permit on February 22, 2010.
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1Xcel points out that this case was actually dismissed after deferring to the statepermitting process. S. Alliance for Clean Energy v. Duke Energy Carolinas, LLC, CivilNo. 1:08CV318, 2009 WL 1940048 (W.D.N.C., July 2, 2009).
3
Following the parties’ briefing, I am sufficiently advised to decide this matter without
further argument.
Discussion
The unresolved issue is whether Xcel’s ongoing construction without a prior
MACT determination until the revised permit of February 22, 2010, was a continuing
violation of section 112(g) which exposes Xcel to civil penalties and liability for
WildEarth’s costs and attorneys’ fees.
WildEarth takes the position that Xcel was required to have a MACT
determination before any construction began or, at a minimum, before any continued
construction once the New Jersey decision was issued. WildEarth first argues simply
that a MACT determination was always required under section 112(g) regardless of the
delisting rule, relying heavily on S. Alliance for Clean Energy v. Duke Energy Carolinas,
LLC, Civil No. 1:08CV318, 2008 WL 5110894 (W.D.N.C., Dec. 2, 2008).1 WildEarth
argues that EPA’s misinterpretation of what the law required does not change or nullify
the existing law. Caballery v. United States Parole Comm’n, 673 F.2d 43, 47 (2d Cir.
1982) (a party does not have a vested right in misinterpretation of a law). Minimally,
WildEarth argues construction should have stopped once New Jersey was decided until
there was an actual MACT determination, generally from early 2009 until February 22,
2010. See WildEarth’s Brief in Response to Court Order of March 9, 2010 (ECF No. 68)
at p. 8.
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2Under Harper, a newly announced legal rule is applied retroactively only afterthe new rule has been “announced and applied to the parties to the controversy.” 509U.S. at 96. Moreover, a rule applied retroactively under Harper affects only cases stillopen to direct review. Id. at 97. Since Xcel’s permit is no longer open to direct review,Harper is inapplicable here.
3WildEarth also argues that obtaining the approval of its MACT determination in2010 did not render WildEarth claims moot, asserting that violations lasted somewherebetween 14 and 50 months, depending upon whether the court determines the violationto have occurred at commencement of construction or upon the decision in New Jersey.
4
WildEarth rejects any argument that retroactive application of section 112(g) is
prohibited by Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993)2. Instead,
WildEarth argues that this case is governed by the application of the factors set forth in
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), which leads to the conclusion that the
principles of New Jersey do apply retroactively.3
Xcel opposes virtually every assertion by Plaintiff, beginning by challenging
Plaintiff’s conclusion that New Jersey specifically held that electric utilities remain
subject to the MACT requirements of section 112(g). New Jersey, Xcel argues, simply
held that the “delisting” was improper because it failed to follow the statutory procedures
established in section 112(c)(9); it did not determine the applicability of section 112(g) or
apply it to the parties before it. Xcel’s Response to Plaintiff’s Brief (ECF No. 69) at 4-5.
Because of this, Xcel argues Harper does not apply and agrees that the issue of
retroactivity is resolved by applying the Chevron standards, which Xcel asserts weigh
heavily against applying section 112(g) retroactively. Id. at 6-8. Xcel also argues that
no civil penalties can be assessed because Plaintiff lacks standing, WildEarth’s claims
have become moot, and because I lack jurisdiction over wholly past violations. Id. at
12-16. Xcel argues under such circumstances that any civil penalty would be
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4A more detailed history is contained in my Order on Motion to Dismiss (ECF No.64) at pp. 2-7 with appropriate record citations.
5
inappropriate. Id. at 16-18. WildEarth’s reply expanded its arguments but raised no
new issues. See WildEarth’s Reply Brief (ECF No. 70).
WildEarth was also allowed to file a motion for partial summary judgment which
was opposed by Xcel in substance and by a motion to strike. In fact, these new rounds
of briefing just afforded both sides with an opportunity to make essentially the same
arguments with one exception. WildEarth emphasized two recent decisions as authority
for the proposition that after the New Jersey decision, utilities are obligated to obtain a
MACT determination before any additional construction can be made. Plaintiff’s Motion
for Partial Summary Judgment (ECF No. 74) at p. 13. Relying principally on Sierra
Club, Inc. v. Sandy Creek Energy Associates, L.P., 627 F.3d 134 (5th Cir. 2010) and
WildEarth Guardians v. Lamar Utilities Board, Civil Action No.
1:09-cv-02974-DME-BNB, 2010 WL 3239242 (D. Colo., Aug. 13, 2010), WildEarth
asserts that once the delisting rule was vacated by New Jersey, Xcel should have
stopped construction until it obtained a MACT determination. Id. at 14. Xcel disagrees,
arguing both Sandy Creek and Lamar are distinguishable.
This dispute is best resolved by placing it within the context of Comanche 3's
permit history.4 As noted, when Xcel began the permitting process in 2004, EGUs such
as Comanche 3 were and were subject to MACT limitations of section 312(g). In
August, 2004, Xcel followed this law and submitted its application with a MACT
determination at 20 x 10-6 lbs/MWhr on a 12-month rolling average. In that same year,
Xcel settled disputes of objectors to the Comanche 3 by agreeing to meet that MACT
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standard, not only for Comanche 3 but also for the two preexisting units which had not
met that standard. In January 2005, Xcel amended its pending application to include
the terms of the settlement and in March 2005, APCD released an initial draft of the
permit which included acceptance of Xcel’s proposed MACT limitations.
However, virtually contemporaneously with this permit activity, the EPA initiated
and consummated the “delisting” process to remove EGUs from regulation under
section 112 and placing them under section 111, to be governed by CAMR. The
“delisting” rule was published on March 29, 2005, and the CAMR rule on May 18, 2005.
After the delisting rule was adopted the APCD held public hearings and received
comments, at which WildEarth did not participate. APCD then issued the final permit for
Comanche 3 on July 5, 2005, which contained a CAMR requirement as opposed to a
MACT determination which the permit acknowledged Xcel’s application had included. In
fact, the permit placed limitations on mercury emissions with the MACT determination
because of the settlement.
A group of objectors to the permit filed suit in district court which upheld the
permit. The ruling was affirmed by a division of the Colorado Court of Appeals.
Citizens for Clean Air & Water in Pueblo & S. Colo. v. Colo. Dep’t of Pub. Health &
Env’t, Air Pollution Control Div., 181 P.3d 393 (Colo. App. 2008), cert. denied, Case No.
08SC228, 2008 WL 2581591 (Colo., June 30, 2008).
Construction of Comanche 3 commenced in October, 2005 and continued
thereafter without interruption.
After the New Jersey decision, the EPA concluded in January 2009, that EGUs
such as Comanche 3 must comply with section 112(g) even though construction
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commenced during the delisting period. On March 13, 2009, the CDPHE specifically
requested that Xcel supplement its MACT determination submitted with its original
permit application in August 2004.
On July 24, 2009, Xcel submitted its MACT update with a 12-month moving
average of 15 x 10-6 lbs/MWhr. Ultimately, following a period for public comment, the
revised final permit issued on February 22, 2010, with a MACT formula of 14.7 x 10-6
lbs/MWhr.
Construction continued uninterrupted and there is no evidence that any emission
failed to meet the MACT standard, initially submitted or that reduced standard ultimately
approved. Nevertheless, WildEarth seeks to penalize Xcel because it commenced
construction without an approved MACT determination and continued until February 22,
2010, still without that approval. The question really becomes whether a party which
met the published standard when it commenced the permit process, then meets a new
standard published while still meeting the old standard, and then thereafter meets and
exceeds the first standard by the third standard adopted by the agency should be
penalized.
With this context, the matter is most appropriately resolved applying a
retroactivity analysis under Chevron Oil Co. v. Huson, 404 U.S. 97 (1991), a case upon
which both parties rely. Chevron establishes the factors to be considered in
determining whether a new rule should be applied retroactively:
First, the decision to be applied nonretroactively mustestablish a new principle of law, either by overruling clearpast precedent on which litigants may have relied, . . . or bydeciding an issue of first impression whose resolution wasnot clearly foreshadowed . . . . Second, it has been stressed
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that ‘we must ... weigh the merits and demerits in each caseby looking to the prior history of the rule in question, itspurpose and effect, and whether retrospective operation willfurther or retard its operation.’ . . . Finally, we have weighedthe inequity imposed by retroactive application, for ‘(w)here adecision of this Court could produce substantial inequitableresults if applied retroactively, there is ample basis in ourcases for avoiding the ‘injustice or hardship’ by a holding ofnonretroactivity.
404 U.S. at 106-07 (internal citations and quotations omitted).
The first factor to consider is whether vacating the delisting rule establishes a
new principle, regulation by MACT, by overruling a clear and prior rule, regulation by
CAMR, upon which Xcel had relied. Plainly, given the fact that Xcel commenced the
permitting process assuming regulation by MACT and then revised its submittal to
regulation by CAMR upon EPA’s adoption of the delisting rule, Xcel relied upon the
“past precedent,” namely the CAMR rule. Both Xcel and the APCD relied upon that
“past precedent” in issuing the permit and continuing construction. To say that a party
subject to regulation who follows a clear rule adopted by the regulator is subject to a
penalty may well be inconsistent with due process standards. See United States v.
Hoechst Celanese Corp., 128 F.3d 216, 224 (4th Cir. 1997) (need clear notice to be
subject to penalty). In any case, this factor weighs against retroactive application of the
return to regulation by MACT.
The second factor, whether retrospective application of the precedent will further
or retard its operation, is less clear. Arguably, application of the new rule, regulation by
MACT analysis, furthers the original purpose of the statute prior to the adoption of the
delisting rule. Although this factor might weigh in favor of retrospective application, I
consider it of lesser importance in this case because Xcel has submitted acceptable
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5Moreover, as noted above, as a result of the settlement, the MACT standardalso applies to Xcel’s existing facilities, not just the new Comanche 3, another result thatfurthers the public interest by going beyond what would have been required by theapplying only the letter of section 112 to Xcel’s permit from the outset.
9
MACT determinations from the outset and remains bound to maintaining those
standards by reason of the settlement agreement.
The final consideration is whether retroactive application would be inequitable.
Under the circumstances of this case I conclude that it would. Xcel commenced the
process by complying with section 112(g) and then agreed with objectors to the
permitting process that it would apply that MACT determination, not only to the new
construction but to preexisting facilities as well. When the delisting rule was adopted,
Xcel complied yet maintained its commitment to the MACT determination because of
the settlement. When the delisting rule was annulled, Xcel again complied with
directives and established a higher standard of MACT determination, presumably in a
public interest. Rather than acknowledging that in the end Xcel’s compliance with the
directives of its regulator imposed higher standards, WildEarth seeks to impose
penalties by retroactive application of the latest determination by the regulators. In
essence, WildEarth argues that if Xcel had somehow ignored or avoided the explicit
direction from its regulators to rely on CAMR rather than a MACT determination and
proceeded with its original MACT determination, it would not be subject to its claims for
injunctive relief or penalties. Such a result would not further the objectives of the CAA
as much as Xcel’s actual course of conduct. Xcel not only met the standard of
maintaining a MACT determination, it has significantly raised the applicable standard
(and presumably benefitted the public interest 5) by complying with the directives of the
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6As noted, WildEarth has argued that two cases in particular stand for theproposition that a MACT determination applied retroactively and certainly to anyongoing construction, citing Sierra Club, Inc. v. Sandy Creek Energy Associates, L.P.,627 F.3d 134 (5th Cir. 2010) and WildEarth Guardians v. Lamar Utilities Board, CivilAction No. 1:09-cv-02974-DME-BNB, 2010 WL 3239242 (D. Colo., Aug. 13, 2010). Bothof these cases are clearly distinguishable because the defendant in each had notsought and obtained MACT determinations on even one occasion, let alone two as wasdone by Xcel in this matter.
10
authorized agencies which never instructed Xcel to halt construction pending ultimate
MACT submittals. Such retroactive application would be inequitable.
I agree with Xcel that under the circumstances of this case there is no retroactive
application of the annulment of the delisting rule, particularly given the MACT
determinations obtained both prior to commencement of construction and during
construction following the annulment of the rule.6
With this resolution, I consider Xcel’s briefing to be a renewal of its motion to
dismiss, which I grant. Accordingly, I order that the Plaintiff’s claims be dismissed with
prejudice, including any claim for penalties and attorneys’ fees and costs. WildEarth’s
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11PDF FINAL
Motion for Partial Summary Judgment (ECF No. 74) and Xcel’s Motion to Strike (ECF
No. 80) are denied as moot.
DATED at Denver, Colorado, on August 1, 2011.
BY THE COURT:
s/ Walker D. MillerUnited States Senior District Judge
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