Judge rejects most claims in federal NSR lawsuit against Luminant

A federal judge on Aug. 21 dismissed most of the claims of the U.S. Environmental Protection Agency in a Clean Air Act case against Luminant Generation Co. over coal-fired emissions, but left two of the claims in place for further review.

EPA filed this case in 2013 at the U.S. District Court for the Northern District of Texas. Judge Ed Kinkeade on Aug. 21 granted a Luminant motion as to claims 1-3 and 5-8, therefore, these claims were dismissed with prejudice. The court denied the Luminant motion as to claims 4 and 9, which remain before the court.

Luminant is the present operator of the Big Brown Power Plant in Freestone County, Texas. Some of the work at issue in this case was conducted by Luminant’s predecessor, TXU Generation Co. LP.

Big Brown is owned by defendant Big Brown Power Co. Luminant is also the owner and operator of the Martin Lake Power Plant in Rusk County, Texas. Big Brown has two generating units, and Martin Lake has three generating units.

According to EPA, between 2005 and 2009, defendants Luminant and Big Brown Power modified and operated Martin Lake Units 1, 2 and 3 and Big Brown Unit 2 in violation of the Clean Air Act. The New Source Review provisions, added to the Clean Air Act in 1977, require new and modified sources to install and operate modern controls for pollutants.

Big Brown and Martin Lake were initially grandfathered under the New Source Review, but EPA asserts that when defendants modified four electric generating units between 2005 and 2009, their grandfathered status ended and defendants were required to comply with New Source Review.

EPA argued that defendants continue to violate the Clean Air Act by operating the units without the required permits and pollution controls. EPA alleged six counts of prevention of significant deterioration violations, two counts of Title V violations, and one count of violation of Section 114 of the Clean Air Act.

TXU, Luminant’s predecessor, began responding to inquiries from the EPA regarding its plants in 2000. In June 2008, the EPA issued its first formal request for information to Luminant. On July 13, 2012, the EPA issued a notice of violation related to Luminant and its parent company, Energy Future Holdings Corp. The EPA did not sue on the 2012 notice of violation.

Luminant and Energy Future Holdings subsequently filed a petition for review of the 2012 notice of violation, challenging the sufficiency of the notice, with the U.S. Fifth Circuit Court of Appeals. In July 2013, after Luminant’s brief was filed at the Fifth Circuit, the EPA issued an amended and superseding notice of violation.

Defendants filed a second petition for review with the Fifth Circuit, which was consolidated with the first petition. EPA then filed this lawsuit in August 2013. In January 2014, this court stayed the proceedings in this case pending the resolution of the related cases before the Fifth Circuit.

In July 2014, the Fifth Circuit issued its decision, holding that notice of violations were not “final agency action” and are not reviewable in the court of appeals. The District Court then lifted the stay, and defendants filed this a motion to dismiss, leading to the Aug. 21 ruling.

In claims 1-3, 5, and 6, EPA alleges that defendants failed to obtain the Prevention of Significant Deterioration permit required under the Clean Air Act prior to modification of their facilities and violated the best available control technology (BACT) emission limits. Defendants assert these claims are time-barred by the statute of limitations. Defendants argued that EPA had a complete cause of action when the allegedly unlawful modification began and that the five-year statute of limitations started running at that time. Defendants state that the time elapsed between the commencement of the work and the filing of the complaint exceeds five years on claims 1-3, 5, and 6, and those claims should be dismissed. Defendants argue that under both the federal and Texas Prevention of Significant Deterioration programs, there is no continuing violation for operating a source without a Prevention of Significant Deterioration permit and BACT.

The Aug. 21 ruling noted: “The Court finds that claims 7 and 8 should be dismissed for failure to state a claim. Plaintiff asserts that it is ‘undisputed that Luminant is operating the Martin Lake and Big Brown plants under Title V permits that do not include any [Prevention of Significant Deterioration] requirements.’ Plaintiff concedes that Defendants have obtained a Title V permit for operation, but challenges the validity of the Title V permit because it fails to include any Prevention of Significant Deterioration requirements and Defendants have failed to amend it. Failure to amend a Title V permit or the submission of an incomplete permit application is not actionable in an enforcement suit under the Clean Air Act.”

The judge dismissed claims 1-3, 5, and 6 as being barred by the statute of limitations and ruled that claims 7 and 8 fail to state a claim. Claims 4 and 9 remain before the court.

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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.

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