Analysis: EPA's Petition for Reconsideration in Ameren Missouri

In this installment, we examine the United States v. Ameren Missouri litigation over whether Ameren’s installation of replacement preheaters at its Rush Island power station Units 1 and 2 constituted a “major modification” requiring PSD review. It is unusual for PSD cases to go to trial or appeal. The petition for rehearing of the panel decision thus provides an opportunity to evaluate both Ameren’s and the government’s position on several PSD issues. This installment will evaluate EPA’s issues, which was whether the Eighth Circuit panel decision had “overlooked and misapprehended points of law and fact when it vacated the district court’s mitigation order” against the Labadie plant.

The Eighth Circuit panel decision.

The Eighth Circuit panel upheld the merits decision of the Eastern District of Missouri, which had held that Ameren violated the Clean Air Act in installing new preheaters at the Rush Island Units without obtaining a PSD permit or obtaining a permit. The panel decision also upheld the injunctive relief ordered against the Rush Island plant, which required installation of scrubbers and obtaining a PSD permit. But the panel balked at the district court’s order requiring the Labadie power plant, another facility owned and operated by Ameren in the near vicinity, to install dry scrubbing to further reduce emissions. It noted that CAA section 113 grants the court “the authority to order [a defendant] to take appropriate actions that remedy, mitigate and offset harms to the public and the environment caused by the [defendant’s] proven violations of the CAA.” Slip op at 32. The panel then reasoned that “because Ameren committed no violation of the CAA at its Labadie plant, the district court lacked authority to authorize injunctive relief as to it.” Slip op. at 33 (citing United States v. Cinergy Corp., 618 F. Supp. 2d, 942,967 (S.C. Ind. 2009) and United States v. Westvaco Corp., 2015 WL 10323214 (D. Md. Feb. 26, 2015)). The Eighth Circuit panel thus reversed the district court’s order requiring Ameren to install additional controls at Labadie.

United States’ Petition for Reconsideration

The government began succinctly:

The panel’s conclusion regarding the relief at Labadie misapprehends two key sets of facts, both of which the district court found and Ameren did not contest on appeal. First, the mitigation relief at Labadie offsets the harm from Ameren’s violations. Second, the mitigation relief the district court ordered at Labadie is entirely different from the relief the court would have awarded at Labadie had the government pleaded and proven a PSD violation there.

The government then recounted the district court’s finding that Rush Island had released 275,000 excess tons of SO2, that “ton for ton, SO2 emissions from Ameren’s Labadie plant affect the same downwind populations and to the same degree,” and “by reducing future SO2 emissions from its Labadie plant, Ameren can, ton for ton, remedy the harm Ameren caused by failing to install pollution-control technology at Rush Island when Ameren should have.” United States petition at 11-12. The government noted that the relief ordered at Labadie was “much cheaper, less-effective dry sorbent injection (DSI) pollution control that Ameren can turn off once it has offset its excess pollution.” Id. slip op. at 13.

The government next argued that under the Clean Air Act is is entitled to “any other appropriate relief, citing 42 USC 7413(b), and that such relief can be obtained against “any person,” and that the relief is “without regard to where that person’s violation occurred.” The government argued that there is no prerequisite to finding the places where relief is ordered to have violated the law. The government also argued that it is entitled to “complete relief” in light of statutory purposes and that the public interest required such relief – noting that without the Labadie order, “the public will have suffered 275,000 tons of excess SO2 pollution without an offsetting reduction in pollution.” The government concluded its argument that the panel misapprehended the statute in looking to whether the Labadie plant, as opposed to Ameren, had violated the statute, contending “that framing is inconsistent with the statute.” Government brief at 16.

Turning to the panel’s case law, the government argued that the Fifth Circuit had already upheld broad relief in Louisiana Generating v. Illinois Union Ins, 831 F.3d 618. This case involved remedies for CAA violations at the Big Cajun II power plant. The underlying violations were at units 1 and 2 but the district court and Fifth Circuit held that actions requiring reductions at Unit 3 were appropriate. The government distinguished Westvaco on the grounds that the owner at the time of violation had sold to an innocent new owner in the interim. The government also claimed that Cinergy supported its position but relief was denied because of the “mismatch” between the government’s proposed mitigation and the actual harms caused.

NSR Law Blog Commentary

The government has the better of this argument on the law. The Clean Air Act allows relief against the “person,” which is the owner or operator of the plant, not the plant itself. Because Ameren owned and operated both Rush Island and Labadie, theoretically all Ameren assets, including Labadie, are equally liable for mitigation orders as Rush Island. On its face, the Eastern District of Missouri and government provided an appropriate mitigation order, requiring a ton-for-ton reduction from Labadie for the overage at Rush Island. If the law is so clear, how could the Eighth Circuit, first as a panel and then as the full court, have denied the petition?

The answer is that injunctive relief is equitable in nature and equity depends upon how the last court views the equities, not what the government believes is appropriate. In some ways, the government’s case is powerful: it showed that Ameren had knowledge of the requirements and disregarded that knowledge, did not conduct the required “preconstruction” permitting reviews, and that significant amounts of pollutant were emitted. But other features undermined its case: the government gave up its penalty rights in favor of expedited resolution and construed its enforcement authorities and entitlements broadly in a way that would seem to sweep aside all other considerations.

The panel and Eighth Circuit both upheld the violation and the injunctive relief against the Rush Island plant. Why did they withhold mitigation relief against the Labadie plant? Possibly on the basis that Labadie’s management, employees and those dependent upon the Labadie plant had done no wrong to warrant the extent of “mitigation” that the district court imposed upon them and not upon Ameren the entity. The mismatch of who bears the consequence of the relief versus their role in the violation is a common theme in equitable cases where the government fails to obtain the relief that it seeks.