EPA squares off against DTE Electric at federal appeals court over coal emissions

The U.S. Environmental Protection Agency, in an April 6 brief filed at the U.S. Sixth Circuit Court of Appeals, countered arguments from DTE Electric in a legal battle over air emissions from a unit of the coal-fired Monroe power plant in Michigan after a major overhaul.

EPA said that this court previously held that EPA could bring an enforcement action to “ensure” that a source’s preconstruction projection “is made pursuant to the requirements of the [New Source Review] regulations.” EPA said it has brought such an action here.

“Our opening brief explained that DTE failed to comply with the regulations before performing the 2010 Monroe 2 overhaul,” EPA added. “The company relied on computer modeling it characterized as its ‘best estimate’ of future operations. While the company’s modeling showed a huge pollution increase related to the Monroe 2 work, DTE nonetheless excluded that increase based on a ‘belief’ that the project could not affect emissions. That belief is untenable as a matter of law. By following that unsupported belief, DTE violated the regulatory requirements that it develop a projection based on all relevant information, and that it exclude from its projected increase only emissions unrelated to the project. Both of those requirements are explicitly noted in the Court’s prior opinion as part of the regulations sources must follow.

“DTE does not – and cannot – dispute that its own modeling shows the company’s projected increase was related to the Monroe 2 overhaul. Instead, DTE offers two arguments that would make its preconstruction analysis effectively unreviewable. First, it asserts that only post-project data can prove a major modification. Second, DTE argues that if EPA can enforce at all, it can only enforce the most elementary requirements of the rules, such as whether the source used the correct significance threshold. Neither argument withstands scrutiny. Courts have uniformly agreed that major modification status must initially be determined before construction and that EPA can bring an enforcement case where a source unreasonably concluded that [New Source Review] did not apply.

“The Clean Air Act requires operators to take preconstruction steps for major modifications; applicability cannot wait for post-construction data. This Court has already confirmed that EPA may enforce to ensure that operators’ preconstruction analyses comply with the rules – including the demand growth exclusion at issue here. Ultimately, DTE’s arguments are inconsistent with the statute, the regulations, and common sense. Dismissing the United States’ action here at the summary judgment stage – as the district court did – would allow a source to bypass preconstruction permitting merely by asserting it complied with the regulations. As this Court warned, ‘if EPA were barred from challenging preconstruction projections that fail to follow regulations, New Source Review would cease to be a preconstruction review program.'”

The foundation of DTE’s argument on appeal is that post-project data dictate whether a project is a major modification, EPA added. “That proposition is inconsistent with this Court’s prior opinion, the Act, and the regulations.”

The Monroe 2 dispute got pulled into a larger dispute about coal emissions

Said DTE Electric parent DTE Energy (NYSE: DTE) about this case in its Feb. 13 annual Form 10-K report: “In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 [Notice of Violation/Finding of Violation] and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require DTE Electric to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from DTE Electric’s fleet of coal-fired power plants until the new control equipment is operating.”

The Form 10-K added: “In August 2011, the U.S. District Court judge granted DTE Energy’s motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. In October 2011, the EPA caused to be filed a Notice of Appeal to the U.S. Court of Appeals for the Sixth Circuit. In March 2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. In September 2013, the EPA caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River power plants as well as additional claims related to work performed at the Monroe Power Plant. In addition, the Sierra Club caused to be filed a motion to add a claim regarding the River Rouge Power Plant.

“In March 2014, the U.S. District Court judge granted again DTE Energy’s motion for summary judgment dismissing the civil case related to Monroe Unit 2. In April 2014, the U.S. District Court judge granted motions filed by the EPA and the Sierra Club to amend their New Source Review complaint adding additional claims for Monroe Units 1, 2 and 3, Belle River Units 1 and 2, Trenton Channel Unit 9 and denied the claims related to River Rouge that were brought by the Sierra Club. In June 2014, the EPA filed a motion requesting certification for appeal of the March 2014 summary judgment decision. In October 2014, the EPA and the U.S. Department of Justice filed the anticipated notice of appeal of the U.S. District Court judge’s dismissal of the Monroe Unit 2 case. This will officially start the appellate process. The amended New Source Review claims are all stayed until the appeal is resolved by the U.S. Court of Appeals for the Sixth Circuit.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.