United States: EPA Wins Another Round In PSD Litigation: More Evidence That The Program Is Flawed.

Last Updated: February 9 2017
Article by Seth D. Jaffe

Last Monday, in a comprehensive, 189-page opinion, Judge Rodney Sippel ruled that Ameren Missouri had violated EPA's PSD regulations by failing to get permits for upgrades in 2007 and 2010 at its Rush Island facility. As I noted when Judge Sippel denied cross-motions for summary judgment, the result is not really a surprise.

Moreover, Judge Sippel's decision is not based on any extreme reading of the law. For example, on the critical issue of the applicability of the routine maintenance defense, Judge Sippel found that the projects at Rush Island were not routine, even at the industry level, let alone the project level. The Court's bottom line?

Based on the evidence presented at trial, I conclude that the projects cannot be considered routine maintenance under the law. The Rush Island boiler refurbishments at issue were the most expensive boiler projects ever performed on an Ameren boiler. They involved the redesign and replacement of major boiler components that were intended to improve the performance of the units and enable them to burn coal they were not originally intended to burn. They were the first such replacements in the history of each unit, are rarely done at any unit in the industry, and the combination of boiler replacements has rarely, if ever, been done in the industry. Under the appropriate legal standards, every factor of the routine maintenance test weighs heavily against classifying the work as routine maintenance, repair, and replacement.

Ouch. These are the types of factual conclusions – particularly when made at the end of a painstaking and detailed review of the evidence – that are granted significant deference by appellate courts. I might also note that, even though these projects began after DOJ's PSD/NSR enforcement initiative, Ameren Missouri referred to the projects internally as "major modifications." Oops.

Thus, notwithstanding speculation in the trade press about how this decision will fare under the Trump administration, I just can't see this case being reversed, and the Sierra Club has already vowed to step in, should DOJ somehow change course.

I'm still not a fan of the PSD program or DOJ's enforcement efforts, however. It remains one of Congress's worst compromises and a prime example of how not to regulate. Put simply, why would we decide to regulate existing facilities only when they make significant upgrades that make them more efficient? Wouldn't it make more sense to regulate the existing facilities that remain inefficient?

In a sane world, we would have fixed this long ago.

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