On August 23, 2011, the District Court for the Eastern District of Michigan granted Detroit Edison’s motion for summary judgment in a New Source Review (“NSR”) enforcement action brought by the United States.  According to the Court, summary judgment was appropriate because the Government’s lawsuit was premature.

On March 12, 2010, Detroit Edison sent a notification letter to the Michigan Department of Environmental Quality (“DEQ”) regarding certain maintenance outage work to be conducted at one of its power plants.  In the letter, Detroit Edison predicted a post-project emissions increase but stated the emissions increase was unrelated to the projects that were to be conducted.  Detroit Edison worked on the projects from March 13, 2010 to June 20, 2010.  After the projects were completed, Detroit Edison began ongoing post-project emissions monitoring.

The United States (with the Natural Resources Defense Council and Sierra Club intervening) claimed that Detroit Edison’s projects constituted a major modification at the units at issue, necessitating a pre-construction permit.  In making this claim, the Government argued that NSR is meant to be a pre-construction review program.  The court disagreed, stating that the United States failed to recognize that the 2002 NSR Rules (adopted into Michigan’s State Implementation Plan) lessened a utility’s “pre-construction burden” for existing units so long as the utility met certain requirements.  According to the court, the revised rules gave facility operators “greater flexibility” by providing them with “a post-construction opportunity to fulfill their obligations under the Clean Air Act.”  Under the new rules, a source operator could choose to obtain a permit before commencing projects at a unit or monitor emissions after the project and risk a Government enforcement action. 

Because the United States filed its suit less than one year after the projects at issue were conducted, the Court held the Government’s suit was premature.  However, the Court stated that the United States could bring an NSR enforcement action “if and when post-construction monitoring shows a need to do so.” 

The United States also argued that Detroit Edison’s notification letter to DEQ was untimely and its contents were insufficient.  The Court rejected this argument as well.  The Court found that sending DEQ a notification letter the day before the project began was “minimally sufficient.”  Michigan rules did not state how far in advance a source operator must give notice and the Government had failed to cite any authority showing that an operator must give notice further in advance of the project’s start date.  As a result, Detroit Edison’s notice was timely. 

The United States also argued the content of Detroit Edison’s letter was insufficient as it contained “boilerplate language” from previous notifications of maintenance outages at other power plants, failed to provide any analysis that was specific to the project, and failed to provide an explanation of why emissions were excluded in Detroit Edison’s calculation.  While the Court acknowledged the letter was not very specific and no backup data was provided for the table that showed the results of Detroit Edison’s calculations, the Government had not pointed to any rules requiring more specificity than what was provided.  In addition, the Government’s Notice of Violation (“NOV”) did not allege any deficiencies in Detroit Edison’s notification letter, and the terms of the Court’s protective order barred the United States from pursuing claims that were not specified in its NOV.

For more information, please contact Katie Grgic or any member of Taft’s Environmental Practice Group.