Appeals Court Reverses NSR Violation Verdict for Duke Energy Indiana Units

A federal appeals court on Tuesday reversed a May 2008 jury verdict finding that Cinergy Corp.—which merged with Duke Energy in 2006—violated New Source Review provisions of the Clean Air Act when it performed certain work on its coal-fired boiler units at several of its Indiana facilities without first obtaining a permit. The ruling allows Duke Energy to restart three Indiana coal-fired units that it had been ordered to shut down.

In 2009, after year-long deliberations, the U.S. District Court for the Southern District of Indiana, which oversaw that jury trial, ordered Duke Energy to retire Units 2, 3, and 5 of the 677-MW Wabash Station by September 2009. The plant, located in Vigo County, Ind., near the city of Terre Haute, has five coal-fired boiler generating units. Units 2, 3, and 4—each 90 MW—went online in 1953, 1954, and 1955, respectively. The 103-MW Unit 5 and 342-MW Unit 6 went online in 1968.

Duke Energy spokesman Tim Pettit told POWERnews that the company plans to put the units back into service as soon as possible.

The suit, which pitted Cinergy against the states of New York, New Jersey, and Connecticut plus environmental groups from Indiana and Ohio, claimed that the company’s modifications were “major” and would produce increases in nitrogen oxide and sulfur dioxide.

Cinergy argued that the regulation did not require a permit for modifications unless they increased the hourly rate at which a plant can emit pollutants, even if they increased the plant’s annual emissions by enabling the plant to be operated for more hours during the year. The district court rejected Cinergy’s interpretation, ruling that without the required permit, the company could be ordered to shut down the plants as well as incur $25,000 in civil penalties for each day it violated the permit requirement.

But in a ruling on Tuesday, a three-judge panel of the U.S. Court of Appeals in Chicago said that the renovations complied with Indiana’s plan—approved by the U.S. Environmental Protection Agency (EPA) in 1982—for implementing the Clean Air Act, and that the state plan was in effect when Cinergy began work on the plants in 1989.

“The Clean Air Act does not authorize the imposition of sanctions for conduct that complies with a State Implementation Plan that the EPA has approved,” wrote Circuit Judge Richard Posner wrote for the panel.

Sources: POWERnews, Duke Energy