The 4th Circuit Court of Appeals, based in Virginia, struck a very serious blow to Southeast air quality last week when it overturned an interstate nuisance ruling in the case of Tennessee Valley Authority vs. North Carolina. The appeals court ruled that the state of North Carolina could not claim a public nuisance against a polluter whose emissions travel across state lines. The court’s reasoning was that TVA’s coal-fired power plant emissions are already governed under the Clean Air Act.
In the original NC vs. TVA lawsuit, North Carolina argued that TVA operated its coal plants unreasonably, releasing vast amounts of sulfur dioxide (SO2) and nitrogen oxides (NOx), and thereby causing general public harm to the people of North Carolina through air pollution. In 2009, a trial court (The United States District Court for the Western District of North Carolina) heard North Carolina’s arguments and agreed. The trial court ruled that TVA’s operations were a nuisance and ordered TVA to take specific steps to improve air quality in North Carolina by cleaning up their coal-fired power plants. In particular, the trial court cited four of TVA’s easternmost plants; Bull Run, Kingston and John Sevier in Tennessee and Widows Creek in Alabama. They ordered TVA to install new pollution control technology on its John Sevier and Widows Creek plants and to operate the existing control technology on Bull Run and Kingston more frequently.The 2009 ruling was a great victory. The pressure generated by the ruling arguably caused TVA to consider the age and efficiency of its old coal fleet, and in some cases, begin planning for both technological improvements and retirements. For instance, the Kingston and Bull Run plants have both already installed, or are in the process of installing, modern emissions controls by adding selective catalytic reduction (SCR) systems to reduce NOx and scrubbers to reduce SO2. On the other hand, no new technologies are currently planned for John Sevier, but a new natural gas plant is in the works in the coal plant’s shadow, indicating that TVA will likely retire the old facility. Widows Creek also currently operates without added emissions controls on six of its eight boilers, and no upgrades are planned for those six, again suggesting a possible partial retirement.
While the 2009 trial court ruling helped set all of these improvements in motion, last Monday’s appeals court ruling completely undermined the advances that TVA was making by removing the legal backstop. Last week’s new ruling not only removes incentives for TVA to keep moving in the right direction, it also takes away a valuable and longstanding tool (a nuisance claim) for states to protect their citizens from out-of-state air pollution. This new ruling sets an unfortunate precedent that puts future state nuisance suits in jeopardy, including those suits that target other emissions, such as carbon dioxide, the pollutant largely responsible for global climate change.
Interestingly, this problematic court ruling comes on the heels of a recent EPA proposal in July to regulate SO2 and NOx. The EPA Interstate Transport Rule was discussed recently in another posting on this blog. Generally, the rule is designed to limit pollution emitted in an upwind state from blowing across state lines and contaminating the air in downwind states. To accomplish this goal, EPA is establishing emission budgets for individual states and individual pollutants. These budgets are then broken down into pollution allowances, which are distributed to individual generating units. The units may trade their allowances, but EPA will probably only permit trading within an individual state.
The SO2 budget set for Tennessee is limited to 100,007 tons per year starting in 2012. This amount will be a decrease of 115,799 tons, or 54%, from Tennessee’s average SO2 emissions over the past five years. Tennessee’s NOx budget will be limited to 28,362 tons per year also starting in 2012, causing a decrease to 56,157 tons per year, or 66% from the five year average.
The John Sevier plant emitted 20, 316 tons of SO2 in 2009 (the most recent fully reported year) and 5,573 tons of NOx. Both of these figures are just a fraction of the total necessary reductions and they demonstrate that even though TVA could trade emissions across its Tennessee or its Alabama plants, they will still have a big task in reaching the needed reductions. Alabama will need to reduce SO2 by 237,734 tons (60%) and NOx by 39,080 tons (36%). Widows Creek units 1-6, those potentially exposed to retirement by the 2009 trial court decision, emit a collective total of 5,555 tons of SO2 in 2009 and and 2,120 of NOx, showing that Alabama has as far to go as Tennessee.
These are impressive reductions – if they happen – but the EPA’s Transport Rule is not guaranteed yet. First, the rule is only proposed and not yet officially law. Promulgation is expected in spring of 2011, but the final rule may not look exactly like the present proposal. Second, the Transport Rule is based on an emissions trading scheme. Trading does lead to statewide reductions, but it gives North Carolina nowhere near the certainty it had under the court ruling. While the WNC District court decision put specific pressures on already vulnerable plants, the Transport Rule allows TVA to spread the impact thinly across a state, potentially protecting plants like John Sevier and Widows Creek.
Nonetheless, while new and planned upgrades will get TVA part of the way to the Transport Rule goals, the new limits it sets will create a real challenge for TVA to meet. TVA should not only stick with their potential retirements, but ought to also target their older, inefficient, and most costly plants, such as the Johnsonville facility in Middle Tennessee or the Colbert plant in northwest Alabama.
The 4th Circuit Court of Appeals decision undermines TVA’s plans and North Carolina’s certainty for clean air, as it throws a wrench in region-wide energy planning. The ruling also jeopardizes a number of other nuisance-based lawsuits currently underway. But coal operators in the Southeast, and especially TVA, should not forget that the new EPA Transport Rule sets a high standard for clean air and interstate pollution, and that TVA in particular might well be advised to continue down the path set by the North Carolina v. TVA trial court in 2009.