A federal court in Colorado has determined that a coal-fired power plant violated Clean Air Act (CAA) requirements when the U.S. Environmental Protection Agency’s (EPA’s) regulatory regime changed as a result of challenges to EPA regulations. WildEarth Guardians v. Lamar Utils. Bd., No. 09-2974 (D. Colo. 9/28/12).

The case involved efforts by the defendants, utilities that own and operate the generator, to comply with changing mercury emission regulations. EPA had issued rules under the CAA’s hazardous air pollutants (HAPs) provisions requiring a so-called “Maximum Achievable Control Technology” (MACT) determination for mercury at new projects or facilities at which modifications had the potential to emit major amounts of HAPs.

Then in 2005, EPA changed course, delisting mercury to eliminate the MACT requirement and instead issuing regulations controlling mercury emissions under the CAA’s new source performance standards (NSPS) provisions. The defendants obtained a plant reconstruction permit from the Colorado Air Pollution Control Division in 2004, when the applicable regulations did not require a MACT determination. The permit was issued February 3, 2006, and construction proceeded. In 2008, the D.C. Circuit Court of Appeals overturned the delisting rule and vacated the NSPS mercury regulations, thus eliminating control of mercury under NSPS and requiring a MACT determination for plants like the one at issue.

Rather than attempt to identify and implement a mercury MACT standard for the plant, which had completed reconstruction and was operating, the owner sought and obtained limits in a revised state operating permit to keep its potential to emit HAPs below the major source level. In other words, the plant sought through the CAA Title 5 operating permit program to make itself a “synthetic minor” for purposes of the mercury MACT. The triggering pollutant in this case was hydrochloric acid (HCl), and the major source limit is 10 tons per year of each such HAP (25 tons of aggregated HAPs). Colorado issued a revised operating permit reducing the HCl emission limit from 10.5 to eight tons per year for the plant on July 12, 2012. The state, EPA and the plant all argued that the plant’s emissions were legal and no mercury MACT determination was needed.

Environmental group WildEarth Guardians sued the plant owner and operator, asserting that the plant should have identified and implemented MACT for its mercury emissions. The utility argued that, by obtaining its synthetic minor permit, the plant should be treated as always having been non-major for HAPs. The utility proffered evidence that its HCl emissions never actually exceeded 10 tons per year before the permit modification. The court disagreed, noting that the plant’s potential emissions, as defined by the applicable regulations, exceeded the regulatory trigger levels until the synthetic minor permit issued.

Plaintiff contended that because the plant’s proposed permit for initial construction, issued when no mercury MACT standard applied, made the plant a major HAP source and that no subsequent permit changes could undo that major status. The court disagreed with this argument as well, holding that once the synthetic minor permit issued, the plant became non-major for HAPs and no longer required a mercury MACT determination. The court noted that although EPA generally follows a “once in, always in” policy for HAP sources, which would prevent a plant from becoming a synthetic minor once it has been identified as a major HAP source, EPA had determined in this case that the policy should not apply in light of the unique circumstances.

But the court held that once the D.C. Circuit overturned the non-HAP treatment of mercury emissions, the plant was in violation of the MACT requirement “from that point forward,” until it became a synthetic minor. Defendants argued that even if they were in violation of the MACT requirement, mootness should apply to prevent application of any penalties. The court held that the defendants could not demonstrate that the conduct in question could never recur and refused to apply the mootness doctrine. Accordingly, the case will be set for a trial on issues relating to the penalty to be applied, if any.