RODNEY W. SIPPEL, UNITED STATES DISTRICT JUDGE.
I. Summary...736
II. Case History...737
III. Liability Phase Findings of Fact and Conclusions of Law...738
FINDINGS OF FACT...742
I. BACKGROUND: RUSH ISLAND'S MAJOR MODIFICATIONS...742
H. RUSH ISLAND'S VIOLATIONS HAVE LED TO MORE THAN 162,000 TONS OF EXCESS SULFUR DIOXIDE POLLUTION...751
III. CURRENT BACT ANALYSIS...768
IV. RUSH ISLAND'S EXCESS EMISSIONS CAUSED IRREPARABLE INJURY, INCLUDING INCREASED RISK OF PREMATURE MORTALITY...771
V. RUSH ISLAND'S EXCESS POLLUTION IS BEST REMEDIATED BY DECREASING EMISSIONS AT THE NEARBY LABADIE ENERGY CENTER...789
VI. ADDITIONAL EQUITABLE FACTORS SUPPORT THE REQUESTED REMEDIES...794
I. THE CLEAN AIR ACT REQUIRES THE BEST AVAILABLE CONTROL TECHNOLOGY FOR MODIFIED POWER PLANTS IN PSD AREAS...804
II. THE EBAY STANDARD GOVERNS INJUNCTIVE RELIEF...805
III. AMEREN MUST MAKE RUSH ISLAND COMPLIANT BY OBTAINING A PSD PERMIT WITH EMISSIONS LIMITATIONS BASED ON WET FGD...806
IV. LABADIE MUST REDUCE EMISSIONS COMMENSURATE WITH THE EXCESS EMISSIONS RELEASED BY RUSH ISLAND...819
V. AMEREN'S FAIR NOTICE ARGUMENT FAILS...822
In 1970, Congress enacted the modern Clean Air Act to protect the nation's air resources and "promote the public health and welfare and the productive capacity" of the people. 42 U.S.C. § 7401(b)(1). Not satisfied with the results achieved under the 1970 statute, Congress amended the Clean Air Act in 1977 to add protections for areas meeting existing federal air quality standards. The 1977 amendments require newly-constructed power plants to install pollution controls. These pollution controls decreased the pollution coming from new plants. Acknowledging the cost
Ameren Missouri's (Ameren) Rush Island Energy Center (Rush Island) started operating in 1976, one year before the Clean Air Act Amendments. In the mid-2000's, as Rush Island was reaching the end of its natural lifespan, Ameren decided to conduct the most significant outage in Rush Island history to redesign and rebuild essential parts of Rush Island's boilers. To increase Rush Island's capacity and lengthen its life, Ameren reconstructed Rush Island's Unit 1 in 2007 and Unit 2 in 2010. Collectively, these construction outages lasted about 200 days and required more than 1,360 workers and almost 800,000 hours of labor. Rush Island's generating capacity and pollution emissions both increased as a result of these major modifications.
Before making these major modifications, Ameren should have obtained a Clean Air Act permit and installed the best pollution controls available, which were required after 1977 for all new and rebuilt power plants. Ameren did not apply for a permit. Forty-three years after it first came on-line, Rush Island is still operating without any pollution controls. It is now the tenth-highest source of sulfur dioxide pollution in the United States. More than two and a half years ago, I determined that Ameren had violated the Clean Air Act. During the last two and a half years, the parties have prepared and presented evidence to determine how to bring Ameren into compliance with the 1977 Clean Air Act. I held a trial in April 2019 on this issue.
In this memorandum order and opinion, I provide my findings of fact and conclusions of law from that trial. As a remedy, I will order Rush Island to come into compliance with the Clean Air Act by obtaining a permit under the Prevention of Significant Deterioration (PSD) program. I will also order Ameren to remedy Rush Island's excess pollution with ton-for-ton reductions at its nearby Labadie Energy Center. This remedy will satisfy the purpose of the Clean Air Act to "promote the public health and welfare and the productive capacity" of the people, and it is narrowly tailored to address the harms created by Ameren's violations.
In this Clean Air Act case, Plaintiff United States of America claims that Defendant Ameren increased the risk of negative health impacts and premature deaths by releasing excess pollution from Rush Island. Plaintiff is acting at the request of the United States Environmental Protection Agency (EPA). According to the EPA, Rush Island has released more than 162,000 excess tons of sulfur dioxide into the air because Ameren failed to apply for a permit that would require it to install pollution control technology when it redesigned and rebuilt its boilers at Rush Island. That sulfur dioxide transformed into fine particulate matter (PM
I separated the liability and remedies phases of this case to more orderly conduct discovery and presentation of arguments. In August and September 2016, the liability phase concluded with a 12-day bench trial. On January 23, 2017, I issued my memorandum opinion and order on the liability phase. I found that Ameren violated the Clean Air Act, 42 U.S.C. § 7470
In April 2019, I held a six-day bench trial to determine the appropriate remedy in this case. In this memorandum order and opinion, I set forth findings of fact and conclusions of law from the remedies phase trial. These findings and conclusions depend in significant part on the evidence presented and conclusions made during the liability phase. Accordingly, I will summarize aspects of the liability phase trial as follows.
Rush Island is a pulverized coal-fired power plant in Jefferson County, Missouri, directly adjacent to the Mississippi River. Rush Island's two units went into service in 1976 and 1977, immediately before the 1977 Clean Air Act Amendments. Because of this timing, Rush Island is one of many power plants that were grandfathered into the Clean Air Act's permitting scheme. The Rush Island plant currently emits about 18,000 tons of SO
Under the Clean Air Act, every new or modified major pollution source must obtain one of two permits: a Non-Attainment Area permit when they are built in areas more polluted than the National Ambient Air Quality Standards (NAAQS), or a Prevention of Significant Deterioration (PSD) permit when they are built in attainment areas, which are less polluted than the NAAQS. 42 U.S.C. § 7470
Congress has made some exceptions to blunt the impact of the Clean Air Act. Specifically, the Act does not require existing facilities to immediately install pollution controls. Instead, the Act allows these facilities to continue operating through their normal lifespans. This grandfathering only lasts until these plants cease operating or undergo major modifications. Any plant that is retired but reactivated loses its grandfathered status and must obtain a permit. A plant that is rebuilt in any significant way must obtain a permit as well.
Accordingly, the Clean Air Act represents a compromise: by limiting the duration of grandfathering to facilities' natural
Major modifications occur when there is a "physical change" or change in the method of operation of a major stationary source that would significantly increase net emissions.
Under the Clean Air Act, if a grandfathered polluter ever modifies its facilities, it must do four things: (1) calculate the impact of those modifications, (2) report the planned modifications to the EPA, (3) obtain the requisite permits, and (4) install the required pollution control technologies at that time. This process ensures that any "major modifications" are identified, reported, and permitted. Ameren made major modifications to Rush Island without reporting those modifications and obtaining a permit.
The natural life of many of Rush Island's component parts is 30 to 40 years. Consistent with those lifespans, by 2005, major boiler components at Rush Island were experiencing performance problems including leaks, slagging, fouling, plugging, gas flow resistance, erosion, and mechanical failure. These problems forced Ameren to take the units offline with increasing frequency so that they could be unplugged, repaired, and otherwise serviced. These aging problems also reduced the capacity of the Rush Island boilers by slowing gas flow and reducing the gas volume moving through each boiler.
Ameren sought to increase its plant capacity by redesigning and replacing essential components of both boilers, specifically the economizer, reheater, air preheater, and the "lower slope" panels surrounding the boiler. Ameren overhauled Unit 1 and Unit 2 in this manner in 2007 and 2010, respectively. After Ameren replaced these components at each unit, that unit's electric generating capacity increased immediately to levels that had not been seen in years. To achieve this improved capacity, Ameren employed more than 1,000 workers over several years. For example, "[t]he 2010 major boiler outage at Rush Island Unit 2 lasted approximately 100 days and required more than 350,000 hours of labor, of which 290,953 hours were performed by contractors. An average of 360 contractor staff worked two 10-hour shifts six days a week during the outage."
Additional evidence presented at trial established that Ameren's work at both units did not constitute "routine maintenance." The new components in each boiler were designed, engineered, and constructed by outside contractors, and the complexity
Ameren's own internal metrics demonstrated an actual increase in emissions at Rush Island. Specifically, Ameren recorded outages and "derate" events, where Rush Island's maximum output was reduced. Ameren recorded these events contemporaneously in its Generating Availability Data System (GADS), and based staff bonuses in part on availability data.
Courts recognize these availability improvements as leading to emissions increases. "A significant decrease in outages results in a significant increase in both production and emissions."
With the facts presented at trial, the preponderance of evidence demonstrated that (1) Ameren conducted a "major modification" when it used more than 1,000 workers to design and replace essential components of Rush Islands boiler units in 2007 and 2010; (2) Ameren should have expected those modifications to increase emissions by more than forty tons of sulfur dioxide per year; (3) those modifications actually increased emissions by reducing future stoppages, increasing plant capacity, and extending the life of the plant; and (4) those modifications were, in Ameren's expert's words, not de minimis or routine modifications, nor did emissions increase because of demand alone.
Ameren should have obtained a Clean Air Act permit before beginning its major boiler modification. Ameren did not seek that permit. As a part of the permitting process, major pollution sources like Rush Island are required to have the Best Available Control Technology (BACT) when they undergo major modifications. Rush Island did not have any pollution control technology. Twelve and nine years since Ameren overhauled Unit 1 and Unit 2, respectively, Rush Island still does not have any pollution control technology. Through the end of 2016, Rush Island emitted 162,000 tons of sulfur dioxide more than it would have had Ameren complied with its obligations under the Clean Air Act.
I denied the parties' other motions for summary judgment. Neither the EPA nor Ameren demonstrated that there was no dispute of material fact concerning the appropriate remedy. I must evaluate injunctive relief relying on the "well-established principles of equity" the Supreme Court articulated in
In April 2019, the EPA and Ameren presented their arguments concerning remedies over six days of trial. The EPA requests an order requiring Ameren to obtain a PSD permit for Rush Island, (2) propose Flue Gas Desulfurization (FGD) scrubbers as the appropriate permit technology, (3) meet an emissions limitation based on FGD scrubbers, and (4) address ton-for-ton excess emissions from Rush Island by installing pollution control technology on Ameren's Labadie Energy Center. Based on the extensive testimony provided by its experts, the EPA argues that the
Ameren argues that it did not have fair notice of the EPA's legal interpretations, that there is no evidence of harm created by its SO
In addressing these arguments, I note that by making major modifications without satisfying the requirements of the Clean Air Act, Ameren reaped significant financial benefits. According to Ameren's 2011 estimates, installing wet FGDs at Rush Island would cost between $650 million and $960 million. September 19, 2011 Project Plan (Pl. Ex. 1102), at AM-REM-00294509. Ameren deferred these costs for more than ten years at the expense of downwind communities that it will never have to fully repay. Instead, I may only order remediation enough to account for the total amount of excess emission released by Ameren, a remedy that is more than a decade late, but which is closely tailored to the harm suffered by these communities.
Accordingly, and based on the evidence presented at trial, I conclude that the following injunctive relief is necessary to remedy the harm created by the more than 162,000 tons of excess pollution Ameren released from Rush Island: Ameren must (1) apply for and obtain the applicable Clean Air Act permit from the Missouri Department of Natural Resources (MDNR) for its Rush Island Plant, (2) propose wet flue gas desulfurization (FGD)
This remedy results from the following findings of fact and conclusions of law. In summary, I find that the EPA's experts convincingly and credibly testified that wet FGD is the most effective control technology that could be used at Rush Island. Additionally, when considering the energy, environmental, and economic impacts, wet FGD is achievable at Rush Island. As a result, wet FGD is the Best Available Control Technology (BACT) for Rush Island. The EPA's experts also convincingly and credibly testified that Ameren's failure to install BACT at Rush Island has led to more than 162,000 tons of excess SO
1. Rush Island Units 1 and 2 began operating in 1976 and 1977. They were originally grandfathered into compliance with the Clean Air Act without needing to install BACT emission limitations imposed by the Prevention of Significant Deterioration (PSD) program.
2. Neither Rush Island Unit 1 nor Rush Island Unit 2 has installed any air pollution control devices for SO
3. Rush Island Units 1 and 2 were originally designed to have an approximately 30-year life, with components typically lasting 30 to 40 years.
4. The 2007 and 2010 modifications ended Rush Island's grandfathered status under the PSD program. The modifications were made during the most significant outage in Rush Island plant history and were justified based on increasing plant operations and revenue.
5. At trial, Ameren argued that it had reduced both its fleetwide SO
7. Ameren has not submitted evidence demonstrating that Rush Island's emissions have decreased or stayed the same after its major modifications. At the remedies phase trial, and in its proposed findings of fact, Ameren did not present any data demonstrating Rush Island's emission rate before 2007. Without that information, Ameren cannot demonstrate that its emissions decreased or stayed the same after its major modifications.
8. After the liability trial, I found that Ameren's modifications at Rush Island had increased emissions from Unit 1 by about 665 tons per year and from Unit 2 by about 2,171 tons per year.
9. There are two ways to reduce the amount of SO
10. FGD scrubbers have been widely used to reduce SO
11. Scrubbers can either be "wet" or "dry," depending on the amount of moisture introduced into the gas stream. Wet FGD systems introduce more moisture, reducing the temperature of the gas stream and keeping some water in the form of droplets, rather than vapor. Water droplets create a more reactive environment, increasing the amount of SO
12. Dry FGD systems cool the gas stream less than wet FGD systems do. They use hydrated lime as a reagent, remove less SO
13. Wet FGD scrubbers are the most effective SO
14. As illustrated by Figure 1, scrubbers have been used at pulverized coal-fired power plants dating back to the early 1970s. As of 2016, most of the coal-fired generating capacity operating in the United States was produced by power plants with scrubbers. Specifically, 200,000 megawatts of capacity was available at scrubbed coal-fired units out of 250,000 megawatts of capacity at all coal-fired electric generating units. Staudt Test., Tr. Vol. 1-B, 15:2-25; Black & Veatch Rush Island FGD Technology Selection Report (Pl. Ex. 1029), at AM-02638262.
15. Of that 200,000 megawatts, wet scrubbers account for about 170,000 megawatts, while dry scrubbers account for the other 30,000 megawatts. Staudt Test., Tr. Vol. 1-B, 15:2-25, 19:9-21:15;
16. Scrubbers are currently installed on hundreds of coal-fired electric generating units, including approximately 84% of coal-fired power plants in the United States, weighted by generating capacity. Knodel Test., Tr. Vol. 1-A, 77:6-9; Staudt Test., Tr. Vol. 1-B, 15:17-16:10;
17. The vast majority of wet scrubbers operating at power plants today were installed on existing plants, as illustrated by Figure 2. About 120,000 megawatts of the total 170,000 megawatts of wet scrubber capacity operating in 2015 was installed on existing plants. Most of that scrubbed capacity was installed between 2005 and 2015. Staudt Test., Tr. Vol. 1-B, 65:13-66:16.
18. Rush Island's continued operation without pollution controls has made it one of the largest sources of SO
19. Unlike FGD control technology, dry sorbent injection does not require a reaction vessel or added moisture. Instead DSI involves blowing reagent directly into the duct work downstream of the coal-fired boiler. A fabric filter or baghouse (hereinafter referred to as DSI-FF) can be added to remove particulate matter and increase overall removal efficiency of sulfate and other pollutants. Without a baghouse, an ordinary DSI system can remove 50% of SO
20. There are only a handful of units the size of Rush Island that currently use DSI for SO
21. Ameren's expert Colin Campbell admitted that Rush Island would be the first power plant to have BACT determined based on the use of DSI, Test., Tr. Vol. 4-A, 98:3-7.
22. Although Ameren did not install control technology at Rush Island, Ameren spent about $8 million between 2008 and 2011 evaluating what control technology it should install. Staudt Test., Tr. Vol. 1-B, 17:23-19:7; Campbell Test., Tr. Vol. 4-A, 93:12-17; September 19, 2011 Project Plan (Pl. Ex. 1102), at AM-REM-00294508.
23. Ameren completed two phases of its evaluation. "[T]he first phase evaluated the various ... technologies and the second
24. The consulting firms Black & Veatch and Shaw prepared independent feasibility studies during these phases. Staudt Test., Tr. Vol. 1-B, 17:23-20:22; AmerenUE Rush Island Power Plant Technology Selection Report (Pl. Ex. 1029); Shaw Technology Evaluation (Pl. Ex. 1069); Ameren Rule 30(b)(6) Dep., Nov. 7, 2017, Tr. 134:13-135:2, 135:22-136:11, 138:16-138:20, 138:25-139:6 (identifying Pl. Exs. 1029 and 1069 as the final Phase 1 reports, which were the best estimates available at the time concerning the feasibility of using wet scrubbers at Rush Island); Callahan Dep., Nov. 8, 2017, Tr. 119:17-120:9 (supervisor of the Phase 1 and 2 studies testifying Ameren hired multiple independent engineering firms to get a "better handle on potential cost as well as schedule").
25. Ameren's internal presentations indicate that these studies were designed to evaluate business planning and compliance options for a number of regulations, including the Cross-State Air Pollution Rule, rules for Hazardous Air Pollutants, and the New Source Review Program, the regulatory program at issue in this case.
26. In Phase 1, Shaw solicited bids from six vendors with extensive experience installing FGDs. Shaw Technology Evaluation (Pl. Ex. 1069), at AM-REM-00191161; Ameren Rule 30(b)(6) Dep., Nov. 7, 2017, Tr. 138:25-139:12. After reviewing this and other information, Shaw recommended wet FGD for further review and eventual installation at Rush Island. This decision was "[b]ased on the overall evaluation of experience, performance, arrangement, operating flexibility, constructability, modularization, site impacts, capital costs, operating costs, maintenance and repair costs, and other attributes such as permitting, social-economic costs and public relations." Shaw Technology Evaluation (Pl. Ex. 1069), at AM-REM-00191196; Staudt Test., Tr. Vol. 1-B, 20:9-22:9.
27. Black & Veatch also recommended wet FGD for further review in Phase 1.
28. Ameren accepted the consulting firms' recommendations, selecting wet FGD for further evaluation in Phase 2. In Phase 2, Ameren requested more detailed cost estimates, engineering designs, and project execution plans for Rush Island. The Phase 2 reports were thousands of pages long, included bid information from FGD suppliers, and laid out a detailed schedule for installing FGD at Rush Island. Staudt Test., Tr. Vol. 1-B, 33:17-36:7; Callahan Dep., Nov. 7, 2017, Tr. 165:16-166:20; May 2010 Shaw Final Report (Pl. Ex. 1071); August 2010 Black & Veatch Execution Plan and Report (Pl. Ex. 1115).
29. As part of its efforts, Ameren evaluated the technical and economic feasibility of installing FGDs at Rush Island. These evaluations were summarized in several presentations given to Ameren management. February 5, 2010 Project Review Board Presentation-Rush Island FGD (Pl. Ex. 1100), at AM-REM-00288998 to 289000; June 1, 2010 Corporate Project Oversight Committee (CPOC) Presentation, Scrubber Technology Assessment, Rush Island Plant (Pl. Ex. 1099), at AM-REM-00288981 to 288987; March 2, 2009 Economic Value Analysis for Rush Island FGD Project Plan (Pl. Ex. 1023), at AM-02634859 to 2634860.
30. Based on its evaluations, Ameren's corporate project oversight committee
31. Ameren explained in one of its management presentations that wet FGD was its "technology choice for SO
32. For coal-fired power plants, the emission limitation is typically stated in terms of pounds of pollutant per million BTU of heat input (lb/mmBTU). This unit represents the amount of pollution emitted per unit of fuel put into the boiler. Knodel Test., Tr. Vol. 1-A, 39:1-6. The emission limitation is always accompanied by an averaging time; for coal-fired power plants, typically the averaging time used is a 30-day rolling average to help address variability on a day-to-day basis. Knodel Test., Tr. Vol. 1-A, 39:7-11.
33. Ameren concluded that the wet FGD systems have the advantage of "[d]emonstrated performance" to meet an SO
34. Ameren rejected the less-effective DSI technology because it was "[n]ot commercially demonstrated" and "not proven to meet low emissions requirements." June 1, 2010 CPOC Presentation (Pl. Ex. 1099), at AM-REM-00288984.
35. Ameren concluded that wet FGD also had advantages with respect to other environmental impacts, including the removal of Hazardous Air Pollutants (HAPs). Staudt Test., Tr. Vol. 1-B, 40:12-41:7. For example, wet FGD helps remove other acid gases. June 1, 2010 CPOC Presentation, Scrubber Technology Assessment, Rush Island Plant (Pl. Ex. 1099), at AM-REM-00288985. Wet FGD also helps remove organic HAPs, in part due to lower flue gas temperatures.
36. Ameren concluded that wet FGD was an economically viable option as well. In Ameren's words "[e]conomic evaluation supported" the use of wet FGD at Rush Island. March 2, 2009 Economic Value Analysis for Rush Island FGD Project Plan (Pl. Ex. 1023), at AM-02634859; February 5, 2010 Project Review Board Presentation-Rush Island FGD (Pl. Ex. 1100), at AM-REM-00288999; June 1, 2010 CPOC Presentation: Scrubber Technology Assessment Rush Island Plant (Pl. Ex. 1099), at AM-REM-00288984 to 288986; August 20, 2010 Rush Island Progress Overview (Pl. Ex. 1101), at AM-REM-00289177; Staudt Test., Tr. Vol. 1-B, 23:2-7; Callahan Dep., Nov. 8, 2017, Tr. 186:7-10.
37. Wet FGD has a less expensive reagent than dry FGD or DSI. The wet FGD limestone reagent costs $28/ton; the dry FGD lime reagent costs $75/ton; and the DSI trona reagent costs $150/ton.
38. Ameren also determined that wet FGDs would not require the new induced draft booster fans that dry FGD would require. Instead, the existing fans would only need to be upgraded. Foregoing the new fans would reduce capital costs at Rush island by $37 to $50 million and would result in lower plant energy consumption. An additional $20 million could be saved by using limestone milling equipment at Ameren's Sioux power plant. June 1, 2010 CPOC Presentation, Scrubber Technology Assessment, Rush Island Plant (Pl. Ex. 1099), at AM-REM-00288983; Staudt Test., Tr. Vol. 1-B, 36:20-38:7, 55:5-15.
39. Wet FGD also provides greater fuel flexibility for Rush Island. Because wet FGD removes more SO
40. Ameren's final project plan estimated that the total cost of installing wet FGDs at Rush Island would range from $650 million to $960 million, based on estimates provided by multiple engineering firms. September 19, 2011 Project Plan (Pl. Ex. 1102), at AM-REM-00294509;
41. As part of its economic evaluation, Ameren also compared the estimated costs of installing wet FGDs at Rush Island to the costs incurred by other electric utilities for wet FGD installations. Ameren concluded that the costs of installing FGDs at Rush Island would be consistent with the costs borne by the rest of the industry to install scrubbers.
42. Ameren also told the Missouri Public Service Commission in a formal planning document that it planned to install scrubbers on Rush Island and Labadie. Michels Test., Tr. Vol. 5-B, 17:6-18:19.
43. Wet FGD is an economically and technically feasible control technology for Rush Island. Staudt Test., Tr. Vol. 1-B, 42:19-24, 48:22-49:11.
44. To design an FGD system cost estimate, a study must define the emission rate requirements of the proposed system. Staudt Test., Tr. Vol. 1-B, 6:19-7:12, 25:19-26:4; Callahan Dep., Nov. 8, 2017, Tr. 92:12-93:3, 129:8-130:9.
45. During the first two phases of Ameren's FGD study efforts, Ameren's engineering firms based their design work and cost estimates on an SO
46. Ameren initially transmitted this 0.06 lb/mmBTU design rate to its outside engineering firms on October 3, 2008.
47. Depending on the fuel being burned, Ameren estimated that these emission rate targets would reflect removal efficiencies of up to 99%. If Rush Island continued to burn lower sulfur PRB coal, then a design emission rate of 0.06 lb/mmBTU would reflect a 95% SO
48. As part of its FGD study efforts, Ameren also obtained FGD proposals from all of the major FGD suppliers in the United States, all of whom indicated that they could supply an FGD system capable of meeting Ameren's emission targets. Staudt Test., Tr. Vol. 1-B, 72:19-73:24.
49. For example, the company Alstom submitted a wet FGD proposal to Ameren in May 2009. May 21, 2009 Alstom WFGD Indicative Submittal (Pl. Ex. 1068). At that time, Alstom had over 50,000 MW of wet FGD systems either operating or under contract.
50. After the Phase 2 reports were finalized, Ameren began the specification development process for wet FGD at Rush Island. Aug. 5, 2010 Conference Mem. (Pl. Ex. 1088). The final specification was thousands of pages long and extremely detailed. Staudt Test., Tr. Vol. 1-B, 42:25-44:13; Construction Specification Section 1600—Design Basis (Pl. Ex. 1144).
51. As part of the specification development process, Ameren tasked a team of its engineers to confirm the emission rate targets for the FGDs and prepare the specification in coordination with Ameren's outside engineers. Stumpf Dep., Mar. 27, 2008, Tr. 63:21-64:15, 151:6-153:22, 154:11-17, 158:22-159:20.
52. As a result of the specification development process, on September 23, 2010, Ameren lowered its SO
54. Based on the coal expected to be used at Rush Island, the 0.04 lb/mmBTU emission rate reflects SO
55. Ultimately, an emission rate of 0.04 lb/mmBTU was used as the design basis in the construction specification. Staudt Test., Tr. Vol. 1-B, 42:25-44:13; Construction Specification Section 1600—Design Basis (Pl. Ex. 1144), at AM-REM-00538825;
56. The pollution control experts in this case agree that an SO
57. When Ameren suspended the Rush Island FGD project in September 2011, its engineers put into place a "reactivation plan" in case FGDs later became required. September 9, 2011 Project Plan (Pl. Ex. 1102) at AM-REM-00294510 ("The following link is to a document that outlines instructions for reactivating the project including... an estimated schedule ... [:] WFGD Specification Reactivation.");
58. Ameren's reactivation plan provided that the "Complete WFGD Specification turn-over from Shaw" should be "considered the starting point for picking up where the original [FGD] team left off." WFGD Specification Reactivation Instructions (Pl. Ex. 1141).
59. The reactivation plan also included a schedule for completing the project upon reactivation. The plan provided that, upon reactivation, engineers would need two weeks to verify the chosen SO
60. This reactivation plan allows Ameren to install FGD controls more quickly by taking advantage of all the resources already invested in engineering wet FGDs for Rush Island. Staudt Test., Tr. Vol. 1-B, 46:18-48:6. By the time the project was suspended, Ameren had invested 3 years of engineering work and approximately $8 million on the project. September 19, 2011 Project Plan (Pl. Ex. 1102), at AM-REM-00294508;
61. Company documents refer to the "[e]ngineering activities for Rush Island FGD" as "a significant risk mitigation
62. In light of the extensive amount of engineering work already completed, I find that Ameren would be able to install FGDs at Rush Island within four and one-half years from the date of the requirement to do so. September 19, 2011 Project Plan (Pl. Ex. 1102), at AM-REM-00294512, AM-REM-00294580 (May 2016 reactivation date and December 2020 online date).
63. At the time Rush Island's boilers were modified, the surrounding airshed had attained the NAAQS for fine particulate matter, a key by-product of SO
64. Missouri is the PSD permitting authority for facilities in Missouri, pursuant to an EPA-approved State Implementation Plan, and is subject to EPA oversight. Knodel Test., Tr. Vol. 1-A, 45:2-23, 79:10-17; MDNR Rule 30(b)(6) Dep., Aug, 10, 2018, Tr. 101:13-15.
65. Missouri and the EPA use the same definition of BACT, which applies to both new and modified sources. Campbell Test., Tr. Vol. 4-A, 90:24-91:6.
66. BACT is "an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation ... which the permitting authority, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such facility...." 42 U.S.C. § 7479(3); Knodel Test., Tr. Vol. 1-A, 38:11-41:13.
67. An applicant for a PSD permit bears the responsibility when submitting its application of addressing all the steps in the BACT analysis. Knodel Test., Tr. Vol. 1-A, 51:19-23.
68. The permitting authority reviews each submission and determines if the analysis is correct. If the applicant's BACT analysis is incorrect, the permitting authority modifies the analysis to arrive at the appropriate BACT emissions limitation. In this case, Ameren should have prepared the initial BACT analysis, but the final BACT determination would have been made by MDNR with EPA oversight. Knodel Test., Tr. Vol. 1-A, 44:18-45:23, 53:11-54:18; Dec. 1, 1987 Memo on Improving NSR Implementation (Pl. Ex. 1320) at Campbell_EXP_0039928.
69. Because BACT requires "the maximum degree of reduction," BACT rates tend to get more stringent over time as pollution control technologies improve. Staudt Test., Tr. Vol. 1-B, 70:10-14, 80:23-81:3.
71. The NSR Manual is the most commonly-referenced, commonly used guidance document for BACT analyses in the country. It is the most widely-distributed guidance relating to NSR that is not the regulations themselves. Campbell Test., Tr. Vol. 4-A, 90:4-10;
72. MDNR permit engineers rely on the NSR Manual in doing PSD reviews. MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 140:3-21.
73. Determining BACT involves a five-step, top-down process. Knodel Test., Tr. Vol. 1-A, 50:2-6; NSR Manual (Pl. Ex. 1190), at AM-REM-00544123-MDNR; MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 101:25-102:24, 106:4-7.
74. As part of the five-step process, the permit applicant
75. Step Four of the method gives the BACT determination a "top-down" character, because it starts with the top control option and moves in sequence to lesser options. If the energy, environmental, and economic impacts of the top option indicate that the technology is "achievable," then the analysis stops: the top control is the BACT technology. If the top control is not achievable, the next most-stringent control options are considered in sequence, until an achievable technology is settled on. Staudt Test., Tr. Vol. 1-B, 53:16-54:21; Campbell Test., Tr. Vol. 4-A, 92:20-25; NSR Manual (Pl. Ex. 1190), at AM-REM-00544119-MDNR. Again, as soon as an achievable technology is found in this sequence, the analysis stops, and that technology determines BACT.
76. The top-down approach applies regardless of whether a plant is new or is undergoing a modification. Knodel Test., Tr. Vol. 1-A, 106:20-25. Under the top-down approach, the burden of proof is on the applicant to justify why the proposed source is unable to apply the best technology
77. Almost all Clean Air Act permitting agencies, including the Missouri Department of Natural Resources (MDNR), use the top-down method that is set forth in the EPA's 1990 New Source Review Workshop Manual. Campbell Test., Tr. Vol. 4-A, 48:7-16, 90:20-23; Knodel Test., Tr. Vol. 1-A, 49:21-50:1, 79:22-80:2.
78. Cost is one of several criteria considered in Step 4 of the BACT process, where applicants determine whether each control technology is achievable. Knodel Test., Tr. Vol. 1-A, 80:8-81:3.
79. However, step four of the BACT process is not a search for the most cost-effective controls; nor is it a cost-benefit analysis.
80. Similar language is found elsewhere in the NSR Manual: "BACT is required by law. Its costs are integral to the overall cost of doing business ... Thus, where a control technology has been successfully applied to similar sources in a source category, an applicant should concentrate on documenting significant costs differences, if any, between the application of the control technology on those other sources and the particular source under review." NSR Manual (Pl. Ex. 1190) at AM-REM-00544148-MDNR.
81. MDNR specifically relies on the NSR Manual's guidance in considering the economic impacts of pollution controls under a BACT analysis. Staudt Test., Tr. Vol. 1-B, 64:7-10; Norborne PSD Permit (Pl. Ex. 1180), at AM-REM-00503313-MDNR (quoting NSR Manual);
82. As one criterion under step four of the top-down method, applicants can also prepare calculations of cost-effectiveness. Average (or total) cost-effectiveness measures the cost of a control option in annualized costs per ton of pollution that it would reduce in a year. Staudt Test., Tr. Vol. 1-B, 57:19-58:4; NSR Manual (Pl. Ex. 1190), at AM-REM-00544153-MDNR to 544154-MDNR.
83. In contrast, incremental cost-effectiveness compares how much each additional ton of reduction costs as compared to another control option. Campbell Test., Tr. Vol. 4-A, 114:19-115:7. Staudt Test., Tr. Vol. 1-B, 92:1-14; NSR Manual (Pl. Ex. 1190), at AM-REM-00544158. Incremental cost-effectiveness is useful when comparing technologies "next" to each other in the effectiveness rankings, provided those controls result in similar emission rates. Staudt Test., Tr. Vol. 1-B, 92:15-23, NSR Manual (Pl. Ex. 1190), at AM-REM-00544158-MDNR
84. The NSR Manual cautions against over-reliance on incremental cost-effectiveness in eliminating a control under Step Four of the top-down method. Pl. Ex. 1190, at AM-REM-00544163-MDNR ("[U]ndue focus on incremental cost effectiveness can give an impression that the cost of a control alternative is unreasonably high, when, in fact, the cost effectiveness, in terms of dollars per total ton removed, is well within the normal range of acceptable BACT costs.");
85. Alongside BACT requirements, all new major sources of pollution must meet "New Source Performance Standards" (NSPS). Pursuant to Section 111 of the Clean Air Act, the EPA establishes NSPS for different source categories.
86. Ameren's expert admitted that the EPA sets the NSPS at rates that can be reasonably met by all new and modified sources in a source category, even though individual sources might be capable of lower emission rates. Campbell Test., Tr. Vol. 4-A, 98:14-18.
87. An applicable NSPS serves as a "floor" for the emission limit established as BACT. The BACT limit cannot be less stringent than the NSPS. 42 U.S.C. § 7479(3);
88. As the NSR Manual explains: "[T]he only reason for comparing control options to an NSPS is to determine whether the control option would result in an emission level less stringent than the NSPS. If so, the option is unacceptable." Ex. 1190, at AM-REM-00544129-MDNR (emphasis added).
89. "Simply meeting or exceeding the NSPS does not attest to the correctness of a BACT determination."
90. The top-down method was originally developed in response to concerns that BACT analyses were inappropriately defaulting to the less-stringent and generally-applicable NSPS standards, without giving enough consideration to more stringent control options required for BACT. Knodel Test., Tr. Vol. 1-A, 47:14-48:9; June 13, 1989 Statement on Top Down BACT (Pl. Ex. 1321), at Campbell_EXP_0040089.
91. BACT for a pulverized coal-fired power plant generally requires either wet or dry FGD scrubbers. Staudt Test., Tr. Vol. 1-B, 95:1-12. This trend results from the top-down process: scrubbers are the most-effective pollution controls. As the industry has progressed, an increasing number of plants have used scrubbers, demonstrating their achievability in different circumstances.
93. The electric power utility industry recognizes that FGD constitutes BACT for coal-fired units. In March 2008, the Electric Power Research Institute published a report on the performance capability of FGD systems. Staudt Test., Tr. Vol. 1-B, 85:7-86:19;
94. Ameren itself has acknowledged that BACT may require FGD at Rush Island. Specifically, an Ameren presentation prepared in 2011 for the Missouri Public Service Commission indicates: "New Source Review lawsuit by EPA may require flue gas desulfurization (FGD) systems or scrubbers at Rush Island." April 2011 Presentation: Ameren Missouri Long Term Low Sulfur Coal Supply (Pl. Ex. 1009), at AM-02225205. It is well-understood that BACT at Rush Island would likely require installing scrubbers.
95. The prevalence of FGD at other plants is demonstrated by databases maintained by EPA Headquarters and Region 7. EPA Headquarters maintains a RACT BACT LAER Clearinghouse (RBLC) with a searchable database of BACT permit decisions made throughout the United States. The RBLC catalogues permitted technology and emissions limitations for individual facilities. Knodel Test., Tr. Vol. 1-A, 52:5-53:7.
96. From about 2002 until about 2015, EPA Region 7 also maintained a New Source Review Electricity Generating Unit Coal-Fired Spreadsheet on its website. The spreadsheet was designed to include every NSR application that had been submitted across the United States. It included information such as unit size, type of controls, and BACT limits. Knodel Test., Tr. Vol. 1-A, 34:20-35:8, 52:24-53:10.
97. Every BACT determination for SO
98. During this period, MDNR determined that BACT at a coal-fired power plant in Southwest Missouri requires the use of FGD controls for SO
99. EPA expert Jon Knodel is an environmental engineer with EPA Region VII who reviews permits for coal-fired power plants in Missouri.
100. In 1999, MDNR issued a PSD permit to Kansas City Power and Light's Hawthorn plant with a 30-day SO
101. In 2004, MDNR issued a PSD permit for City Utilities' proposed Southwest power plant with a 30-day SO
102. In 2006, MDNR issued a permit for Kansas City Power and Light's Iatan power plant with 30-day SO
103. In 2008, MDNR issued a PSD permit to Associated Electric Cooperative, Inc. (AECI) for the proposed Norborne plant with 30-day SO
104. These Missouri permit limits are consistent with those issued by other permitting authorities for coal-fired power plants during the same period, all of which also required the use of wet or dry FGD. Staudt Test., Tr. Vol. 1-B, 77:20-78:2.
105. For example, Ameren's expert Colin Campbell testified about a PSD permit issued for the following non-Missouri plants: (1) In 2005, Newmont's TS power plant was permitted for an SO
106. During trial, the parties each presented expert testimony concerning what BACT would have been at the time that Ameren modified Rush Island. Based on what BACT would have been, I can determine how much SO
108. Dr. Staudt conducted two BACT analyses using the five-step process: one to determine historic BACT and a second to determine current BACT. Staudt Test., Tr. Vol. 1-B, 49:12-50:1.
109. In conducting his historic BACT analysis, Dr. Staudt considered (1) the engineering analyses and cost estimates prepared for Ameren's Rush Island FGD studies discussed above in Section I.d, (2) vendor proposals, (3) relevant BACT determinations reported in the EPA Clearinghouse, (4) contemporaneous Missouri permits for coal-fired power plants, (5) industry performance data for scrubbers, and the (6) 0.04 lb/mmBTU SO
110. To challenge Dr. Staudt's testimony, Ameren presented the expert testimony of Colin Campbell. Campbell is a permit engineer with a bachelor's degree in mechanical engineering and economics from North Carolina State University. Campbell Test., Tr. Vol. 4-A, 39:12-16. Campbell teaches courses for agency employees and permit engineers on NSR issues, including a course on how to do a BACT analysis. Campbell Test., Tr. Vol. 4-A, 40:9-13, 40:24-41:25, 88:17-89:19.
111. Campbell performed an analysis of what BACT would be for Rush Island today. He did not conduct a historic BACT analysis. Instead, he assumed that historic BACT would have been the same as current day BACT. Campbell Test., Tr. Vol. 4-A, 94:12-95:5.
112. For both historic and current BACT, Campbell testified that Ameren could satisfy the law by installing DSI. According to Campbell, if Rush Island were permitted today, MDNR would set an emission rate of 0.275 lb/mmBTU, based on a DSI system with 50% SO
113. Campbell reached this determination by 1) ranking wet FGD, dry FGD, DSI with a fabric filter, and DSI without a fabric filter, in that order, 2) eliminating dry FGD and DSI with a fabric filter because they were too expensive, 3) calculating the incremental cost effectiveness between wet FGD with DSI without a fabric filter, 4) rejecting wet FGD because MDNR would find its incremental cost effectiveness too expensive, and 5) selecting the remaining option: DSI without a fabric filter.
114. I carefully observed and reviewed Campbell's and Dr. Staudt's conflicting testimony to determine their credibility. Based in part on the following credibility findings, I make factual findings concerning BACT for Rush Island in Section III.
115. Ameren primarily relies on Colin Campbell's expert testimony to argue that
116. Before trial, the EPA made a
117. Having now heard Campbell's testimony during trial, I will give little weight to his testimony because of flaws in his economic analysis, inconsistencies in his statements at trial, and his mischaracterization of how NSPS factors into the BACT process.
118. Campbell's BACT determination hinges upon on his incremental cost effectiveness analysis. Campbell rejected wet FGD because it purportedly had an incremental cost effectiveness of $9,500/ton, well above the $6,800/ton limit he inferred from reviewing PSD permits issued by MDNR. Campbell Test., Tr. Vol. 4-A, 84:9-25.
119. Campbell did not reach any conclusions in this case about whether the average cost-effectiveness of wet FGD at Rush Island would represent unreasonable economic impacts for Ameren.
120. As a general matter, Campbell's heavy reliance on incremental cost-effectiveness, without consideration of average cost-effectiveness, is inconsistent with BACT permitting practices. The NSR manual explains that "undue focus on incremental cost effectiveness can give an impression that the cost of a control alternative is unreasonably high, when, in fact, the cost effectiveness, in terms of dollars per total ton removed, is well within the normal range of acceptable BACT costs." NSR Manual (Pl. Ex. 1190), at AM-REM-00544163-MDNR.
122. Each of these flaws was necessary to Campbell's decision to reject wet FGD. Together they demonstrate that Campbell's cost analysis of wet FGD is not credible. Accordingly, I give little weight to Campbell's testimony rejecting wet FGD.
123. To calculate incremental cost-effectiveness, Campbell relied on wet FGD cost estimates provided by Kenneth Snell, Ameren's control costs expert. Snell estimated that installing wet FGD at Rush Island would cost $896 million in 2016 dollars or $1 billion in 2025 dollars. Snell Test., Tr. Vol. 4-B, 28:1-9, 28:24-29:10.
124. In contrast, the EPA's expert Dr. Staudt estimated that installing wet FGDs at Rush Island would cost $582 million in 2016 dollars. Dr. Staudt based his estimate on costs included in Ameren's engineering studies, but he subtracted a set of variable costs normally excluded from comparative cost estimates. Under this "overnight" cost methodology, Dr. Staudt excluded the Allowance for Funds Used During Construction (or AFUDC), an inflation-like metric called escalation, overhead, and property taxes. Staudt Test., Tr. Vol. 1-B, 59:24-61:5; Tr. Vol. 2-A, 25:25-26:6, 28:18-30:18.
125. Snell's cost estimate differs from Dr. Staudt's estimate because Snell included $150 million for financing,
126. Traditionally, these costs are excluded from cost comparisons across power plant and control technologies because they are extrinsic to the technologies themselves and vary dramatically. For example, different companies have different cost recovery rates and execute projects on different timelines. Excluding extrinsic costs allows for a more consistent way to compare costs across the industry. Staudt Test., Tr. Vol. 1-B, 24:7-24; Vol. 2-A, 30:1-18.
127. When Ameren conducted its own economic analysis comparing the costs of wet FGDs at Rush Island to others in the industry, it did not include AFUDC in its estimates.
128. Dr. Staudt's decision to remove the extrinsic expenses for the purpose of comparing project costs was not refuted by Snell or any of Ameren's other witnesses. Snell testified that he was "not offering an opinion as to whether or not it's appropriate to include [AFUDC or escalation] costs for the purposes of a BACT analysis." Snell Test., Tr. Vol. 4-B, 50:4-6. "[His] opinion is ... the real costs that Ameren would incur if they were to install these technologies."
130. In contrast, Snell used the total project costs, including the expenses Dr. Staudt excluded, to compare the cost of installing FGD at Rush Island to the costs at facilities featured in other permit determinations made by MDNR. In making this comparison, Snell should have instead relied on the cost calculating conventions normally used in BACT determinations.
131. When calculating incremental and average cost effectiveness between the various pollution control options for Rush Island, Campbell also should have excluded these variable costs.
132. Campbell did not ask Snell whether Snell's total cost estimates would be appropriate to use in conducting a BACT analysis. Snell Test., Tr. Vol. 4-B, 49:13-25.
133. I find that it was inappropriate for Campbell to rely on Snell's total cost estimates for purposes of doing a BACT analysis for Rush Island.
134. To determine the incremental cost effectiveness at Rush Island, Campbell compared the per-ton cost of FGD with the per-ton cost of DSI.
135. Incremental cost effectiveness is appropriate for BACT determinations when the two compared technologies rank directly adjacent to each other in their effectiveness.
136. Additionally, the two compared technologies should have similar levels of effectiveness. Staudt Test, Tr. Vol. 1-B, 92:25-93:15. By following these rules, permit applicants can identify technologies that are unnecessarily expensive relative to similarly or equally effective technologies. Technologies with very different effectiveness should not be used for incremental cost effectiveness; the more effective technology is better.
137. Campbell ignored both of these conventions. First, he compared the most effective technology, wet FGD, with the least effective technology, DSI. The two are not ranked adjacent to each other. Second, wet FGD and DSI have do not have similar levels of effectiveness; the two have dramatically different levels of effectiveness. Staudt Test., Tr. Vol. 1-B, 92:25-93:15. Specifically, Campbell compared a wet FGD capable of achieving SO
138. Campbell's comparison of wet FGD and DSI is inconsistent with his own guidelines used outside of litigation and the guidelines used by other practitioners.
140. Nonetheless, I find Campbell's testimony on the incremental cost comparison between wet FGD and DSI to be not credible, as it is inconsistent with established standards in the field and even his own past work.
141. Campbell ultimately rejected wet FGD as BACT because its incremental cost effectiveness exceeded a threshold he inferred from MDNR and other permitting authorities' determinations. Campbell Test., Tr. Vol. 4-A, 119:19-120:3. Campbell's testimony on this point was inconsistent, unsupported, and not credible.
142. Specifically, Campbell testified that permitting authorities across the country, and MDNR specifically, apply a "de facto line at $5,000" per ton for incremental cost-effectiveness. Campbell Test., Tr. Vol. 4-A, 61:8-9, 62:19-22, 67:4-12, 119:9-120:3, 121:14-17. Campbell testified on direct that permitting authorities will reject control technologies above this threshold.
143. On cross-examination, however, Campbell admitted that permitting authorities have accepted technologies with incremental cost-effectiveness values of $10,000/ton.
144. Campbell also admitted he was only speculating when he said MDNR had a threshold at $5,000. He later testified that the limit in Missouri was actually $6,800/ton.
145. According to Campbell, four Missouri permits supported his purported $6,800/ton threshold: Continental, Noranda, Norborne, and Southwest. Nothing in these permits actually establishes this limit. Staudt Test., Tr. Vol. 1-B, 93:16-22.
146. Two of these permits (Continental and Noranda) relate to, respectively, a cement plant and an aluminum smelter. Permits in these source categories are minimally relevant to a BACT determination at a pulverized coal-fired power plant. Campbell Test., Tr. Vol. 4-A, 111:5-113:9; Staudt Test., Tr. Vol. 1-B, 91:9-25; MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 137:24-142:3. Unlike power plants, it is "very unusual" for cement plants to use FGDs. Cement plants have "a great deal of intrinsic SO
147. Additionally, the Noranda permit did not discuss incremental cost-effectiveness in its BACT analysis. Campbell admitted this fact on cross examination. Campbell Test., Tr. Vol. 4-A, 121:23-122:12. Therefore, the Noranda permit does not support Campbell's purported $6,800 threshold.
148. For the remaining two permits (Norborne and Southwest), Campbell admitted on cross-examination that the incremental cost-effectiveness values presented in those decisions "didn't much factor into the analysis." Campbell Test., Tr. Vol. 4-A, 122:14-123:12.
149. For the Norborne permit, Campbell admitted that MDNR's decision to select dry FGD over wet FGD was based largely on environmental and energy impacts and not costs. Campbell Test., Tr. Vol. 4-A, 123:25-125:20.
150. Even if the Norborne decision had been based on costs, it would not support a finding of a $6,800/ton threshold. The incremental cost effectiveness at Norborne was $20,218/ton, based on a 95% removal wet FGD with a 93% removal dry FGD. On cross-examination, Campbell admitted
151. For the Southwest City Utilities permit, MDNR did not consider costs in its determination. MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 142:6-143:15, 144:18-24; Missouri Air Conservation 11/28/05 Decision (Pl. Ex. 1007) at AM-00151141 ("However, Hale agreed that dry FGD was BACT for this particular pulverized coal-fired boiler based on his review of the energy and environmental impacts of dry versus wet FGD.... Hale did not consider economic impacts of costs as part of his analysis of BACT for SO
152. Additionally, the applicant calculated an incremental cost-effectiveness of over $10,000/ton when comparing wet and dry FGD, two adjacent technologies in the "top down" analysis. Staudt Test., Tr. Vol. 2-A, 7:1-9, 24:4-16. The Southwest City Utilities permit does not support the purported $6,800 threshold as Campbell applied it in this case.
153. Campbell pointed to only these four Missouri permits to support the purported $6,800/ton threshold. None of those permits actually support that threshold. I find that Campbell's testimony on this issue is not based on established criteria to evaluate cost-effectiveness and is not credible.
154. Ameren presents no credible evidence that MDNR or any permitting authority will reject technologies with incremental cost effectiveness above $6,800/ton.
155. Campbell also undermines his credibility by contradicting the NSR's source category "cost presumption." This principal of NSR permitting holds that "in the absence of unusual circumstance, the presumption is that sources within the same category are similar in nature, and that cost and other impacts that have been borne by one source of a given source category may be borne by another source of the same source category." NSR Manual (Pl. Ex. 1190), at AM-REM-00544146-MDNR.
156. MDNR included the same language in a PSD permit for the Norborne coal-fired power plant. In that permit, MDNR rejected an applicant's attempt to rely on incremental cost-effectiveness over the same source category cost presumption. MDNR stated the following:
Norborne PSD Permit (Pl. Ex. 1180), at AM-REM-00503313-MDNR (quoting NSR Manual);
157. Campbell claimed during his direct examination that "there is no such presumption" in the "real world." Campbell Test., Tr. Vol. 4-A, 58:8-59:4. But this testimony was not supported by any evidence.
158. Campbell's statement—that the same source category cost presumption does not apply in the real world—undermines his credibility.
159. Campbell testified that SO
160. Campbell's decision to disregard new plants subject to NSPS is inconsistent with the design and function of NSPS and is unsupported by the evidence presented in this case.
161. Despite these features, Campbell testified that sources subject to NSPS should not be compared to Rush Island, because the NSPS fundamentally altered the range of options available in a BACT determination. Campbell Test., Tr. Vol. 4-A, 75:20-22, 100:5-102:11.
162. There is no difference between the emissions rates that can be achieved through use of FGDs at NSPS-subject new units and existing units. Campbell Test., Tr. Vol. 4-A, 105:9-13.
163. Instead of relying on recent BACT determinations, Campbell based his testimony on BACT determinations made in the late 1970s and early 1980s. He also considered a 1990 BACT determination for a CFB boiler in Hawaii to be relevant. Campbell Test., Tr. Vol. 4-A, 102:12-104:3.
164. Campbell's testimony on this point is inconsistent with the permit application he helped electric utility DTE prepare for its Monroe power plant. Campbell Test., Tr. Vol. 4-A, 104:4-19.
165. In addition to the flaws in Campbell's testimony, the following facts contradict Campbell's claims that DSI is BACT for Rush Island.
166. In 2008, MDNR rejected DSI for a coal-fired power plant because it did not "represent the upper level of SO
167. No permitting authority anywhere in the country has ever determined SO
168. Under a top-down BACT analysis, to arrive at his BACT determination, Campbell would have had to evaluate and then eliminate wet FGD, dry FGD, and DSI-FF in that order, before settling on the least effective control technology available for Rush Island. FOF ¶¶ 75, 113.
169. Campbell admitted he "gave dry FGD relatively little consideration in [his] analysis [and] didn't assess its impacts in any quantitative way in Step 4." Campbell Test., Tr. Vol. 4-A, 85:1-4. Similarly, he did
170. Campbell then compared the very effective, more capital-intensive wet FGD with the least effective and least expensive option—DSI without a fabric filter.
171. The flaws in Campbell's analysis affect the core of his testimony that DSI constitutes BACT at Rush Island. Campbell rejected wet FGD specifically because his calculated incremental cost effectiveness was higher than a threshold he allegedly derived from BACT permits. In doing so, Campbell (1) overly relied on incremental cost effectiveness, (2) considered extrinsic expenses not normally included in BACT cost comparisons, (3) inappropriately compared the most- and least-effective technology, (4) derived a cost threshold that is not supported by the evidence, and (5) disregarded consistency among pulverized coal-fired power plants installing FGD. Campbell also inappropriately disregarded BACT permits for power plants subject to NSPS. I reject Campbell's testimony that DSI is BACT for Rush island.
172. In contrast to Campbell, Dr. Staudt conducted the well-established five-step BACT determination as outlined in the NSR manual and as practiced by MDNR and other permitting authorities.
173. Specifically, Dr. Staudt started step four by analyzing the most effective control technology, wet FGD. Dr. Staudt evaluated the energy, environmental, and economic costs of wet FGD and concluded that wet FGD was achievable.
174. In coming to these conclusions, Dr. Staudt relied on standards and practices outlined in the EPA's Draft NSR Manual, the EPA's Cost Control Manual, and in permits issued by MDNR. Dr. Staudt carefully explained his methods, provided consistent testimony, and supported his testimony with credible evidence.
175. Ameren attempted to challenge Dr. Staudt's credibility by arguing that Staudt 1) overly relied on plants that had to meet the NSPS, 2) evaluated natural gas conversion as a control technology throughout the five-step process, and 3) did not evaluate the incremental cost effectiveness of wet FGD.
176. These arguments do not demonstrate that Dr. Staudt's testimony is not credible. With respect to NSPS, Dr. Staudt convincingly testified that NSPS provides a floor that does not fundamentally alter the BACT determination. Staudt Test., Tr. Vol. 1-B, 89:21-91:8; Tr. Vol. 2-A, 7:10-8:1. With respect to the natural gas conversion, Dr. Staudt eliminated the natural gas option because it was a different kind of fuel, and its inclusion did not affect how wet FGD was analyzed in step four. Tr. Vol. 2-A, 21:6-17, 22:23-23:18.
177. Dr. Staudt's economic evaluation may have been more compelling if he had discussed incremental cost effectiveness, even if BACT determinations do not specifically require it.
178. Still, I find that Dr. Staudt's testimony is credible, helpful to the trier of fact, and instrumental to determining what BACT was at the time of Rush Island's modifications. I heavily rely on Dr. Staudt's testimony when discussing facts surrounding BACT determinations in this case.
179. Staudt and Campbell—and ultimately the parties in this case—did not have any material disagreement over Steps 1 through 3 of BACT process. Campbell Test., Tr. Vol. 4-A, 97:9-20. The
180. The available SO
181. None of these control technologies can be eliminated as technically infeasible for Rush Island. Staudt Test., Tr. Vol. 1-B, 51:24-52:5; Campbell Test., Tr. Vol. 4-A, 50:16-51:13, 93:1-8; Ameren Rule 30(b)(6) Dep., Nov. 7, 2017, Tr. 59:1-12.
182. Wet FGD is the most effective control technology (about 99% removal efficiency), followed by dry FGD (about 95%), DSI with a fabric filter (about 70%), and DSI without a fabric filter (about 50%). Staudt Test., Tr. Vol. 1-B, 14:13-15:1, 52:21-53:15, 16:11-17:14; Campbell Test., Tr. Vol. 4-A, 50:16-51:13; Snell Test., Tr. Vol. 4-B, 5:19-6:3, 18:19-19:7, 50:8-22.
183. Dr. Staudt and Campbell disagreed about the results of the fourth and fifth steps.
184. Dr. Staudt concluded that wet FGD could not be eliminated because it was achievable, taking into account energy, environmental, and economic impacts and other costs. Staudt Test., Tr. Vol. 1-B, 54:22-55:4.
185. Campbell concluded that wet FGD could be eliminated because its incremental cost effectiveness was unacceptably costly when compared with DSI. As noted above, Campbell did not use the top-down method here. Instead Campbell eliminated the middle two options—because dry FGD and DSI-FF were not "dominant control options."
186. Neither Campbell nor Ameren cites to any permitting authority, permitting applicant, permitting guide, or other authority supporting Campbell's method of excluding "non-dominant" control options before conducting the step four analysis.
187. In contrast, Dr. Staudt employed the top-down method, as practiced by MDNR and other permitting authorities. Dr. Staudt evaluated the energy, environmental, economic, and other costs associated with wet FGD.
188. Based on Dr. Staudt's credible, well-supported testimony, I find that the energy, environmental and economic impacts of wet FGD do not make wet FGD unachievable. Instead, these impacts are reasonable and comparable to the impacts experienced at other permitted pulverized coal-fired power plants.
189. The evidence does not show that wet FGD's energy impacts would be unreasonable for Rush Island. Staudt Test., Tr. Vol. 1-B, 54:22-55:4. Ameren's engineering studies determined that Ameren would not have to install power-intensive fans for wet FGD, but it would have to install them for dry FGD or DSI with a fabric filter. Staudt Test., Tr. Vol. 1-B, 55:5-19. These fans would decrease the overall power output of the plant.
190. Ameren presented evidence that wet FGD would reduce power output at Rush Island, due to the energy demands of the wet FGD controls. Snell Test., Tr. Vol. 4-B, 38:6-17. Ameren did not argue that this energy demand was different from the energy demand of scrubbers at other pulverized coal-fired power plants. Additionally, Ameren did not present evidence that
191. Relatedly, the evidence does not show that wet FGD would impose unreasonable environmental impacts at Rush Island. Instead, Ameren would have the environmental benefit of producing saleable gypsum instead of landfill waste. Staudt Test., Tr. Vol. 1-B, 40:12-41:24, 55:20-56:5;
192. Ameren presented evidence at trial that wet FGD would require more wastewater treatment and new mercury controls, creating more costs for Ameren than DSI would impose. Snell Test., Tr. Vol. 4-B, 37:24-39:10. However, Ameren made no effort to explain how these environmental impacts made wet FGD unachievable. Nor did Ameren suggest that these environmental impacts are different from the kinds of impacts experienced at other pulverized coal-fired power plants.
193. Finally, wet FGD would not impose unreasonable economic impacts at Rush Island. Staudt Test., Tr. Vol. 1-B, 56:15-19.
194. Ameren openly concedes that it can afford to install scrubbers at Rush Island. Ameren's contemporaneous studies confirmed that wet FGDs would be economically feasible. The same studies show that, from a cost perspective, wet FGDs are preferable to dry FGDs at Rush Island. FOF ¶¶ 26, 31-33, 36, 38.
195. The large number of coal-fired electric generating units already equipped with wet FGDs provides strong evidence that the cost of wet FGD is achievable for a pulverized coal-fired power plant like Rush Island. Staudt Test., Tr. Vol. 1-B, at 62:8-21, 64:20-65:7, 66:17-67:2.
196. Ameren's engineering studies confirmed that the capital costs of installing wet scrubbers at Rush Island would be consistent with costs borne by other utilities. Staudt Test. Tr. Vol. 2-A, 56:20-57:6.
197. Rush Island does not have any unique characteristics that would make the typical costs of wet FGDs unreasonable in this context. Staudt Test., Tr. Vol. 1-B, 65:8-12; Snell Test., Tr. Vol. 4-B, 57:15-18. None of Ameren's experts have identified any circumstances at Rush Island that would make the costs to install wet FGDs at Rush Island unusual compared to other plants. Staudt Test., Tr. Vol. 1-B, 65:8-12; Snell Test., Tr. Vol. 4-B, 57:15-18.
198. On the contrary, Ameren's own engineers have admitted that there is nothing about Rush Island that makes it different from any of the other plants where FGDs have been installed. Mitchell Dep., May 30, 2018, Tr. 81:13-23, 192:2-10.
199. For purposes of historic BACT, Dr. Staudt calculated the average cost-effectiveness of wet FGD to be about $2800/ton for Rush Island Unit 1 and Unit 2. Staudt Test., Tr. Vol. 1-B, 57:7-58:22. Based on these figures, Dr. Staudt testified that wet FGD could not be eliminated as unachievable due to cost concerns.
201. In Step Five, the permit applicant and permitting authority determine what emissions limit can be achieved by installing the selected control technology.
202. For Rush Island Unit 1, Dr. Staudt testified that historic BACT would have been 0.08 lb/mmBTU, based on a 30-day rolling average. This corresponds to a design removal efficiency of 91.4%. Staudt Test., Tr. Vol. 1-B, 69:13-22.
203. For Rush Island Unit 2, Dr. Staudt testified that historic BACT would have been 0.06 lb/mmBTU, based on a 30-day rolling average. That would represent a 94% design removal efficiency. Staudt Test., Tr. Vol. 1-B, 69:23-70:2.
204. Dr. Staudt's historic BACT rates include a reasonable compliance margin and are consistent with the rates that Ameren's engineering studies confirmed would be achievable at Rush Island. FOF ¶ 30.
205. Dr. Staudt's historic BACT rates are consistent with permits issued by MDNR and other permitting authorities during the relevant period. Staudt Test., Tr. Vol. 1-B, 70:15-17, 79:6-18, 80:23-81:19. FOF ¶¶ 99-105.
206. Dr. Staudt's historic BACT rates are also consistent with the design specifications used for Ameren's engineering studies, and performance of FGDs at Ameren's other plants. By the time Rush Island Unit 2 was modified, Ameren already had a plant "perform[ing] at 0.06 pounds per million Btu, so [it] knew that number could be achieved." Callahan Dep., Nov. 8, 2017, Tr. 201:13-21;
207. Finally, Dr. Staudt's historic BACT rates are consistent with industry performance data. In 2008 and 2011, the years after each of the modifications at issue, the top 20% of performing scrubbers in the industry were achieving SO
208. For these reasons, I find that, at the time Ameren modified Rush Island, BACT required SO
209. Dr. Staudt calculated the excess emissions from Ameren's failure to install scrubbers in 2007 and 2010, based on Dr. Staudt's historic BACT determinations and Rush Island's actual emissions reported by Ameren to the EPA's Air Market Program. Staudt Test., Tr. Vol. 1-B, 99:17-101:4.
210. Based on Dr. Staudt's testimony and the evidence at trial, I find that Ameren's failure to install scrubbers at Rush Island resulted in 162,000 tons of excess SO
211. If Ameren finishes installation of wet FGD scrubbers at Rush Island in
212. While the historic BACT determination was necessary to calculate Rush Island's excess emissions between 2007 and the present day, a current BACT determination helps identify the appropriate relief in this case. The EPA has asked me to (1) determine what technology constitutes BACT for Rush Island and (2) order Ameren to propose that technology in its permit application. Without this relief, the EPA is concerned that Ameren will continue to delay and oppose the installation of the appropriate pollution control technology.
213. I find that wet FGD constitutes BACT for Rush Island today. I also find that BACT for Rush Island Units 1 and 2 is a 30-day rolling average of 0.05 lb SO
214. Ameren's and the EPA's expert testimony concerning current BACT is essentially identical to their expert testimony concerning historic BACT. On behalf of Ameren, Campbell conducted one BACT analysis used for historic and current BACT. On behalf of the EPA, Dr. Staudt conducted a current BACT analysis that had the same process and result as his historic BACT analysis, save an updated emissions limitation.
215. The parties agree on the results of steps one, two, and three. Additionally, Ameren's experts admitted that the rate the EPA determined in Step Five would be achievable with wet FGD. Campbell Test., Tr. Vol. 4-A, 93:18-94:3;
216. For the same reasons as were applicable to the historic BACT analysis, I find that wet FGD cannot be eliminated at Step Four of the top-down method based on unreasonable energy, environmental or economic impacts. FOF ¶ 189-200.
217. Between 2010 and the present day, scrubber technologies, including wet FGD, have become more prevalent at pulverized coal-fired power plants. Between 2005 and 2015, wet FGD technology was installed on nearly 100,000 megawatts of pulverized coal-fired electric generating capacity in the United States. FOF ¶ 17 and Figure 1. Almost all of that scrubbed generating capacity is at existing plants that installed scrubbers. FOF ¶ 17. Today, there are very few units the size of the Rush Island that continue to operate without any type of FGD controls. FOF ¶¶ 16, 18.
218. The more widespread use of FGD scrubbers at coal-fired power plants strengthens the argument that wet FGD is achievable today at Rush Island. As quoted by MDNR in its Norborne permit, "in the absence of unusual circumstance, the presumption is that sources within the same category are similar in nature, and that cost and other impacts that have been borne by one source of a given source category may be borne by another source of the same source category." Norborne PSD Permit (Pl. Ex. 1180), at AM-REM-00503313-MDNR (quoting NSR Manual and emphasis added).
219. Ameren presented no evidence at trial to distinguish Rush Island from the other pulverized coal-fired power plants using scrubbers today. FOF ¶¶ 197-98.
220. The performance of scrubbers in the electric utility industry has continued to improve over the past decade, as illustrated in Figure 3. Figure 3 identifies the 12-month averaged emission rate for the top performing 50% of plants and the top performing 20% of plants in 2008, 2011, and 2016.
221. As shown in Figure 3, the average emission rate achieved by the top 20% of units (57 units) in 2016 was 0.024 lb/mmBTU. In 2008 and 2011, the average emission rate being achieved by the top 20% of units was 0.059 and 0.037 lb/mmBTU, more than 100% and 50% higher than in 2016, respectively. These trends demonstrate a significant and sustained improvement in performance between 2008 and 2016. Staudt Test., Tr. Vol. 1-B, 82:21-83:20.
222. In Missouri, the Iatan plant reflects the low emissions rates that FGD can achieve today. Like Rush island, Iatan burns low-sulfur coal. Using wet FGDs since 2008, Iatan now achieves emission rates as low as 0.004 to 0.006 lb/mmBTU. Although similar in size to Rush Island, Iatan's total SO
223. With respect to economic impacts, Ameren does not dispute that it can afford FGDs at Rush Island, and it presented no evidence that installing FGDs would otherwise impose an undue financial burden on the company. FOF ¶¶ 37-41, 194.
224. For his BACT analysis, Dr. Staudt estimated that the capital cost of installing wet FGDs at Rush Island would be about $582 million in 2016 dollars. This estimate was based on the costs calculated by Ameren's engineering studies, excluding AFUDC, escalation, corporate overhead, and property taxes consistent with the standard methodology for BACT cost calculations. Staudt Test., Tr. Vol. 1-B, 59:24-61:5; Tr. Vol. 2-A, 25:25-26:6, 28:18-30:18.
226. According to Ameren's engineering studies, this average cost effectiveness result is consistent with costs borne by other coal-fired power plants installing scrubbers.
227. I find that the average cost-effectiveness of wet FGD at Rush Island is reasonable for a pulverized coal-fired power plant today. I also find that the economic costs of installing wet FGD at Rush Island do not make wet FGD unachievable.
228. Additionally, I find that neither the energy nor environmental costs of installing wet FGD at Rush Island make wet FGD unachievable. Ameren presents no evidence demonstrating, and I have no reason to find, that the energy and environmental costs for a current BACT determination at Rush Island are any greater or less reasonable than the energy and environmental costs for a historic BACT determination.
229. Dr. Staudt testified that, based on a selection of wet FGD, the appropriate emissions limitation for Rush Island is 0.05 lb/mmBTU. Staudt Test., Tr. Vol. 1-B, 70:3-17.
230. In 2011, Ameren accepted its consultants' recommendation that it solicit bids for a wet FGD system designed to meet an SO
231. Ameren's expert Campbell admitted that 0.05 lb/mmBTU would be an achievable emission rate at Rush Island and a good estimate of what MDNR would set as BACT if scrubbers were required. Campbell Test., Tr. Vol. 4-A, 93:18-94:3;
232. An SO
233. I find that wet FGD constitutes BACT today for Rush Island and the appropriate operating emissions limitation for this technology would be set at 0.05 lb/mmBTU, based on a 30-day rolling average.
234. The EPA offered evidence to demonstrate that the excess SO
235. SO
236. Rush Island's annual SO
237. SO
238. On average, about five percent of the SO
239. PM
240. Because of their size, combustion-related PM
241. PM
242. Sulfate combustion particles are not pure, homogenous specimens. They chemically bind to other substances present
243. The available scientific evidence indicates that all constituents of PM
244. PM
245. To demonstrate the health effects of PM
246. Dr. Schwartz is one of the world's leading scientists on the health effects of air pollution. He has published about 790 peer-reviewed articles. Schwartz Test., Tr. Vol. 3-A, 12:8-11; Pl. 1324. His published research has been cited more than 60,000 times in the scientific literature.
247. Dr. Schwartz performs extensive research on air pollution, teaches courses on epidemiology, and serves as the director of the Harvard Center for Risk Analysis. Schwartz Test., Tr. Vol. 3-A, 5:6-8, 7:13-10:10, 13:5-15:13. Dr. Schwartz's research has been cited by the EPA in its Integrated Science Assessments and has been relied upon by the World Health Organization in setting standards for air pollution. Schwartz Test., Tr. Vol. 3-A, 15:14-16:1. Dr. Schwartz has also testified before Congress as to the health effects of air pollution, and recently provided a keynote presentation on PM
248. Dr. Schwartz has testified in federal court two times before this case. He was received as an expert in those cases.
249. Dr. Schwartz's testimony is consistent with the scientific consensus that PM
250. During his testimony and during cross-examination, Dr. Schwartz's answers were detailed, credible, and supported by an overwhelming amount of evidence. I find Dr. Schwartz's testimony concerning the health effects of PM
251. PM
252. The health effects from PM
253. The effect of PM
254. The harmful nature of PM
255. The relationship between the concentration of PM
256. The scientific consensus concerning ambient PM
257. The concentration-response relationship between PM
258. Dr. Schwartz agrees with the World Health Organization that there is "no evidence of a safe level of exposure or a threshold below which no adverse health effects occur" from exposure to PM
259. Dr. Schwartz's testimony about the scientific consensus concerning the PM
260. The evidence demonstrating that there is no safe threshold for PM
261. Interpreting more recent studies, Dr. Schwartz testified that the linear concentration-response function between PM
262. The concentration-response function cited by Dr. Schwartz is derived from substantial sets of data that have been extensively analyzed in the peer-reviewed literature. In part, Dr. Schwartz relied on a recent study published in the New England Journal of Medicine that included approximately 500,000 unique PM
263. Based on the no-threshold, linear concentration-response relationship for PM
264. Both of Ameren's toxicologists conceded that, if a substance is actually a no-threshold pollutant, any incremental increase in exposure produces an incremental increase in risk in the rate of mortality. Fraiser Test., Tr. Vol. 4-A, 28:9-15, Valberg Test., Tr. Vol. 5-A, 137:14-19.
265. Based on (1) the linear concentration-response function for PM
266. In contrast with Dr. Schwartz, Defendants' testifying experts Dr. Lucy Fraiser and Dr. Peter Valberg provided testimony that is inconsistent with and not supported by the scientific consensus on PM
267. Dr. Fraiser is a toxicological consultant who spends about 85% of her time on litigation support. Fraiser Test., Tr. Vol. 4-A, 23:3-7.
268. Dr. Fraiser has not written any peer-reviewed publications or performed any original research on air pollution. Fraiser Test., Tr. Vol. 4-A, 22:21-23, 23:14-16. Dr. Fraiser has written five publications concerning the effects of cancer drugs based on her dissertation work, the last of which was published almost 25 years ago in 1995.
270. The House Report concerning the NAAQS states that "[i]n the absence of evidence to the contrary, for a population of various stages and initial states of health, no threshold should be stipulated below which exposure is harmless. Instead, the response to exposure should be assumed to be directly related to successively greater or lesser concentrations of the toxic materials and the level of resistance of those exposed." H.R. Rep. 95-294 at 111.
271. In the publication of the 2013 National Ambient Air Quality Standards, the EPA stated that "there is no discernible population-level threshold below which effects would not occur, such that it is reasonable to consider that health effects may occur over the full range of concentrations observed in the epidemiological studies, including the lower concentrations in the latter years." 78 Fed. Reg. 3086, 3098, 3118-19, 3148 (Jan. 15, 2013).
272. Dr. Fraiser concedes that her opinions are contrary to the determinations of the World Health Organization, the American Heart Association, the EPA, and other mainstream scientific organizations that have concluded that PM
273. Dr. Fraiser also admits that the NAAQS do not guarantee zero risk.
274. Dr. Fraiser is not a statistician.
275. Dr. Fraiser's direct criticism of the EPA's health impacts testimony is out-side of her area of expertise. For example, Dr. Fraiser criticized the epidemiological literature on health effects of PM
276. Dr. Fraiser also testified that more recent epidemiological studies show uncertainty between PM
Fraiser Test., Tr. Vol. 4-A, 19:15-21:17 (quoting from the 2018 EPA Integrated Science Assessment for Particulate Matter (External Review Draft), Section 11.2.4, at 11-81). These contradictions make Dr. Fraiser's testimony less credible.
277. For all these reasons, I give little weight to Dr. Fraiser's testimony. Specifically, I find her testimony less credible because (1) she has no expertise in epidemiology and statistics, two areas on which she opines, (2) she has not published original research regarding the health impacts of air pollution, (3) her NAAQS opinion contradicts the scientific consensus about the lack of a human health population threshold for PM
278. Dr. Valberg's opinions also conflict with the generally held scientific consensus on PM
279. Dr. Valberg is a toxicologist at Gradient Corporation, where he has provided litigation services as an expert witness since 1990. Litigation consulting constitutes between 40% and 60% of his time. Valberg Test., Tr. Vol. 5-A, 98:20-100:15.
280. As part of litigation consulting, Dr. Valberg has provided testimony on behalf Clean Air Act Defendants in which he has unsuccessfully offered the same opinions he offered in this case. In a Clean Air Act case concerning excess SO
281. The
282. Dr. Valberg has also provided expert witness testimony in tobacco litigation. His opinions in tobacco cases have
283. In addition to litigation consulting, Dr. Valberg also provides consulting services to parties who want to comment on EPA regulatory proceedings. Valberg Test., Tr. Vol. 5-A, 119:5-8.
284. Dr. Valberg submitted comments to the EPA on behalf of the Utility Air Regulatory Group (UARG), a group of electric generating utilities, as well as other industry trade associations. In those comments, Dr. Valberg argued against lowering PM
285. The EPA specifically rejected Dr. Valberg's testimony on the following points: (1) that the causal relationship the EPA found between PM
286. Dr. Valberg also previously submitted comments criticizing the EPA's 2009 Integrated Science Assessment. Valberg Test., Tr. Vol. 5-A, 119:9-20. In those comments, Dr. Valberg argued the evidence was too weak to support the conclusion that PM
287. Based in part on Dr. Valberg's and Dr. Fraiser's flawed testimony, Ameren makes five arguments why Rush Island's Excess SO
288. Pursuant to the Clean Air Act, the EPA must set the NAAQS at levels "the
289. Based on this language, Ameren argued throughout the trial that the NAAQS are protective of human health, and that any PM
290. The structure of the Clean Air Act, the EPA's statements concerning the NAAQS, and the scientific consensus concerning PM
291. Pursuant to the Clean Air Act, pollution sources in areas with air quality meeting the NAAQS must obtain PSD permits and must install BACT. When Congress added the PSD elements of the Clean Air Act, it acknowledged that reducing pollution in non-attainment areas was insufficient to meet the lofty goals of the Clean Air Act.
292. Instead of referring to the NAAQS as a zero-risk, zero-impact threshold, the EPA has repeatedly stated that PM
293. NAAQS attainment does not negate all the other evidence demonstrating human health impacts of PM
294. For these reasons, the evidence does not demonstrate that the NAAQS establish a zero-risk, zero-impact threshold, below which no human health impacts are meaningful.
295. The scientific community has not determined whether sulfates are any less or more harmful than any other constituent of PM
296. Neither the EPA nor Congress has determined that sulfate-based particulates should be excluded from the total PM
297. The consensus scientific opinion is that all PM
298. The EPA's Federal Register Notices announcing the PM
299. The World Health Organization has singled out combustion-related PM
300. I find that sulfate PM
301. Ameren seeks to discredit Dr. Schwartz's testimony by pointing to variation in the results of epidemiological studies and meta-analyses of those studies.
302. In his testimony, Dr. Schwartz's explained that variability among different studies' statistical significance does not thwart his analyses. Dr. Schwartz included studies such as these in his meta-analyses, because the meta-analyses incorporate the findings of vast amounts of data and publications to determine the overall trend. Dr. Schwartz used his most recent, most comprehensive meta-analysis when determining the concentration-response relationship for PM
303. Schwartz also demonstrated a vast knowledge of these underlying publications, explaining the conditions and results of studies when questioned about them.
304. For these reasons, the variation in some epidemiological studies does not undermine Dr. Schwartz's testimony concerning the health impacts of PM
305. To quantify the human health impacts of Rush Island's excess emissions, the EPA presented photochemical grid modeling results. Chinkin Test., Tr. Vol. 2-B, 17:23-30:16. Photochemical grid modeling is a computer modeling technique that tracks the "fate and transport" of air pollution in the atmosphere, namely how pollutants chemically change and where those pollutants travel. Chinkin Test., Tr. Vol. 2-B, 25:15-17 (describing the "fate and transport" of pollution as an assessment of "how air pollution is formed and moves").
306. Most SO
307. The variation in this rate does not substantially change the ultimate volume of PM
308. The EPA hired expert Lyle Chinkin to conduct atmospheric fate and transport modeling based on the facts in this case. Chinkin is an expert in atmospheric air quality modeling, air pollution fate and transport analysis, and air quality measurements. Chinkin has more than 40 years of experience working with photochemical models. He has used those models to analyze air quality issues ranging from single-source impacts for private clients to regulatory analyses for state and federal agencies. Chinkin Test., Tr. Vol. 2-A, 91:16-93:1, 94:14-20; Chinkin Resume (Pl. Ex. 1322).
309. Chinkin used a photochemical model called CAMx to estimate the impact of Rush Island's excess pollution on downwind areas. CAMx is a reliable, state-of-the-science, peer-reviewed computer modeling program that is regularly used by both industry members and government regulators. Chinkin Test., Tr. Vol. 2-B, 4:12-5:20, 9:15-22.
310. Models like CAMx are used by air quality scientists, facility operators, and regulators to evaluate (1) the impact of a single source's pollution on the surrounding area, or (2) the downwind effect of an entire state's pollution portfolio. The EPA has long used air quality modeling like CAMx to assess the public health benefits associated with proposed rules and regulations. Chinkin Test., Tr. Vol. 2-B, 6:13-7:7.
311. To isolate the air quality impact from Rush Island's excess SO
312. Photochemical modeling is time-consuming and expensive. CAMx divides the continental United States into 12-kilometer-square grids and then twenty-five planes of grid squares stacked upon each other, resulting in nearly 2.5 million cubic cells. In each of these cells, the model examines the concentration and influx of atmospheric constituents, calculates chemical reactions, and quantifies the resulting matter's transport into neighboring cells. The model repeats these steps at five-minute intervals until it calculates an entire year's worth of reactions and physical transport. Because of the immense breadth of data and time-stepped calculations that are performed, modeling a year of pollution effects in CAMx can take weeks. Furthermore, developing the inputs for CAMx, including a verified and reliable emissions inventory, can take months. For these reasons, modeling more than a single
313. A modeled year of results can be useful for estimating emissions impacts for other years, provided that year's weather and temperature data are fairly representative. In 2011, the weather and temperature data were representative of the weather and temperature data for the period Chinkin studied. Specifically, 2011's weather and temperature data were close to the median for years 2007 through 2016. For this reason, Chinkin chose to run the CAMx model for the 2011 emissions and meteorological data sets. Chinkin Test., Tr. Vol. 2-B, 29:9-30:16.
314. Although it is affected by temperature and other parameters, the relationship between the SO
315. Modeling outputs will not perfectly match monitoring data. Any given monitor provides a point measurement of air quality at its location. In contrast, a photochemical grid model returns average air quality concentration values for a 12-square-kilometer area. Some of the locations within the modeled 12-kilometer grids will have higher concentrations, and others will have lower concentrations. Nevertheless, comparing base case modeling results to monitors helps gauge whether the model is accurate. Chinkin Test., Tr. Vol. 2-B, 15:3-17:7.
316. Chinkin's base case model performed "exceptionally" well when compared with national monitoring networks, with error and bias measures well within industry standards for providing reliable results. Chinkin Test., Tr. Vol. 2-B, 17:8-18.
317. The CAMx modeling Chinkin performed indicates that Rush Island's excess pollution impacts the entire Eastern United States. Chinkin Test., Tr. Vol. 2-B, 28:7-15. Ameren's own modeling expert, Ralph Morris, admitted that photochemical grid modeling showed excess pollution from Rush Island impacted PM
318. The impact of Rush Island's excess pollution depends in part on the wind and weather.
319. On some days, the pollution's largest impact on air quality occurs relatively close to the plant. For example, as shown in Figure 4, on August 18, 2011, CAMx modeling shows Rush Island's excess pollution contributed as much as 2.25 μg/m3 to ambient PM
320. On other days, excess SO
Pl. Ex. 1369 (described at Chinkin Test., Tr. Vol. 2-B, 17:23-20:2).
321. On more than 250 days in 2011 (70% of the days in the year), Rush Island's excess SO
322. During more than 90 days in 2011 (25% of the year)—and about half of summer days—Rush Island's excess pollution contributed more than 0.25 μg/m3 to downwind PM
Pl. Ex. 1372 (described at Chinkin Test., Tr. Vol. 2-B, 22:2-19).
323. Compiling daily impact results into a single map and averaging the results provides a view of the annual average impact from Rush Island's excess SO
Pl. Ex. 1364 (described at Chinkin Test., Tr. Vol. 2-B, 27:15-29:8).
324. The model predicted that at least one grid cell would have PM
325. Plaintiffs presented two independent quantification methods to measure the harm from Rush Island's excess pollution. The first method relies on the results of a peer-reviewed risk assessment of 407 power plants, including Rush Island, published by Dr. Schwartz in 2009. Schwartz Test., Tr. Vol. 3-A, 88:11-89:18. The second method relies on the CAMx air quality modeling performed specifically for this case by the EPA's expert Chinkin.
326. Both risk assessments modeled PM
327. As described below, the models differ based on how they calculate concentrations and exposure. Despite these differences, the models showed consistent, comparable results among each other.
328. Unrelated to any litigation, the EPA's expert Dr. Schwartz previously co-authored a peer-reviewed, quantitative risk assessment of emissions from coal-burning power plants, including Rush Island. That assessment, "Uncertainty and Variability in Health-Related Damages from Coal-Fired Power Plants in the United States," was published in 2009 in the scientific journal "Risk Analysis." Schwartz Test., Tr. Vol. 3-A, 87:17-91:5.
329. Dr. Schwartz's 2009 risk assessment modeled SO
330. Reduced form models are commonly used in the scientific community to perform quantitative risk assessments. For instance, the National Academy of Sciences has used the reduced form model in performing similar risk assessments, and cited Dr. Schwartz's 2009 study in doing so. Schwartz Test., Tr. Vol. 3-A, 90:11-19.
331. Dr. Schwartz's 2009 risk assessment calculated 95% confidence intervals and incorporated uncertainties both for the modeled PM
332. Dr. Schwartz also performed a second quantitative risk assessment based on the results of Chinkin's air quality modeling in this case using the CAMx model. Schwartz Test., Tr. Vol. 3-A, 95:5-95:14.
333. To evaluate impacts on premature mortality from the CAMx air quality concentrations, Dr. Schwartz relied on the most up-to-date concentration-response function for PM
334. Dr. Schwartz derived the specific concentration-response from a published, peer-reviewed meta-analysis he co-authored. The meta-analysis included all data points published by over 50 long-term epidemiological studies, with the goal of creating the best current function. Meta-analysis is "the standard approach for trying to integrate multiple studies ... and come up with ... the best estimate." Schwartz Test., Tr. Vol. 3-A, 96:2-11, 97:3-100:17.
335. Dr. Schwartz's meta-analysis included 95% confidence intervals reflecting uncertainty in the calculated PM
336. The confidence intervals for Dr. Schwartz's CAMx-based risk assessment do not include any uncertainty related to the accuracy of the modeled PM
337. Public health risk assessments demonstrate the overall effect of exposing a population to an increased risk of harm. They do not identify a specific individual who was, or will be, harmed by an exposure. Schwartz Test., Tr. Vol. 3-A, 82:14-87:2, 104:19-107:2.
338. Based on the two risk assessments described above, Dr. Schwartz calculated premature deaths expected to result from Rush Island's excess emissions. This metric represents an increased risk of harm, not any specific person's death. Table 1 shows Dr. Schwartz's calculated expected premature mortality, based on Rush Island's excess emissions. For 2007 to 2016, Dr. Schwartz calculated 637 and 879 expected premature mortality events based on the reduced form model and CAMx model, respectively. Dr. Schwartz calculated that after 2016, an average of 62 or 86 premature mortality events per year are expected, based on the reduced form and CAMx models, respectively. Schwartz Test., Tr. Vol. 3-A, 91:11-24, 95:25-96:4, 101:15-20, 104:15-18.
Table 1 Premature Mortality Reduced Form Model CAMx Model (95% confidence interval) (95% confidence interval) Per Thousand Tons 3.9 5.4 2007-2016 637 (172-1,436) 879 (738 — 1,215) 2017 and beyond 62/year 86/year
339. Dr. Schwartz's risk assessments demonstrate that Rush Island's excess emissions pose substantial risk of harm to the exposed populations. They also show that the harm will continue until Rush Island's excess emissions stop. Schwartz Test., Tr. Vol. 3-A, 82:14-83:4, 107:3-16, 109:1-13.
340. The similarity of results, 95% confidence intervals, and peer-reviewed nature of these models provide me with a high degree of confidence in my conclusion that Rush Island's excess emissions have harmed public health and welfare. Schwartz Test., Tr. Vol. 3-A, 87:17-88:8, 89:19-90:10, 91:11-24, 94:13-21, 101:1-102:25, 109:1-13.
341. Ameren makes two main criticisms of the EPA's modeling methods and results: (1) that incremental changes smaller than the EPA's Significant Impact Levels (SILs) are meaningless, and (2) that modeling performed on behalf of the EPA in this litigation is "[u]ncertain, [o]verstated, and [u]nreliable."
342. The SILs are "screening tools the EPA uses to determine whether a new source may be exempted from certain requirements under § 165 of the Act, 42 U.S.C. § 7475."
343. The EPA has not alleged, and its case does not depend on, any NAAQS or PSD increments violations in this case.
344. As a result, Ameren's SILs argument does not make the EPA's modeling methods or results less credible or convincing.
345. With respect to SILs, Ameren asserts that changes in concentrations below the EPA's established SILs do not represent a meaningful or significant threat to human health.
346. The SILs were designed for use in the PSD permitting process, to determine if, despite the installation of BACT, the creation or modification of a source would lead to NAAQS violations. Knodel Test., Tr. Vol. 1-A, 64:25-66:25, 92:23-93:25; NSR Manual (Pl. Ex. 1190), at AM-REM-00544163; MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 135:9-20, 135:25-136:4.
347. The SILs were derived from a statistical analysis of the limits of monitoring data, based on a finite network of variably-placed monitors. Morris., Tr. Vol. 5-A, 6:20-25. Recognizing that "there is an inherent variability in the air quality" "due to fluctuating meteorological conditions and changes in day-to-day operations of all air pollution sources in an area," the EPA developed the SILs using "a statistical analysis of the variability of air quality, using data from the U.S. ambient monitoring network for ozone and PM
348. The EPA has relied on modeled concentration changes below the SILs in calculating human health benefits—including changes even below 0.01 μg/m3, orders of magnitude less than the 0.2 μg/m3 SIL value Ameren's expert Ralph E. Morris used as a comparator. Morris Test., Tr. Vol. 5-A, 14:10-16:20; Schwartz Test., Tr. Vol. 3-A, 108:3-25.
349. Independently, Ameren argues that the EPA's modeling results are "[u]ncertain, [o]verstated, and [u]nreliable." Ameren makes this argument based on (1) model noise, (2) the EPA's use of 2011 meteorology data as representative of other years, (3) the EPA's use of a baseline for its Labadie model that included FGD controls on Rush Island, and (4) the difference between 12-kilometer grid cell estimates and monitors point estimates.
350. I find that Ameren's arguments about these features do not render the EPA's modeling methods or results less credible or convincing.
351. First, large-scale models—including the one from the EPA's expert Chinkin —include some noise. This is because algorithms conducting millions of calculations can produce data (the noise) that are not a direct result of the variables that are the focus of the model. In this case, for example, some of the data in Chinkin's model were not tied to a hypothetical reduction in SO
352. Ameren argues that the presence of model noise near the EPA's 0.001 μg/m3 modeling threshold makes the EPA's CAMx results unreliable. Ameren specifically points to model noise found in Montana, Washington, and California as shown in Def. Figure A.
353. Model noise is both positive and negative in these areas. Ameren does not present any evidence demonstrating that
354. Second, Ameren argues that the EPA should have used year-specific meteorology data for every year since the Rush Island major modifications in 2007. I agree with Ameren that the EPA's model results would have been even more precise if they had run the voluminous and expensive CAMx model twelve or more times, for every year from 2007 through 2018. However, the EPA made a reasonable choice to run the data—, time—, and resource-intensive CAMx model four times using 2011 as a representative year (with a base and emissions-controlled case for both Rush Island and Labadie). Ameren did not present sufficient evidence to demonstrate that this approach was unreliable or unconvincing.
355. Third, Ameren argues that the EPA should have used the same baseline emissions scenario for its Rush Island and Labadie modeling. When the EPA modeled the impact of installing pollution equipment on Labadie, its base case assumed that pollution controls would also be installed on Rush Island, due to the outcome of this litigation. The point of the modeling was to determine whether emissions reductions from Labadie would affect the same population impacted by Rush Island's excess emissions. The EPA reasonably
356. Fourth, Ameren argues that differences between 12-kilometer grid-cell model results and point-measurements of the PM
357. Ameren's argument about differences between monitoring data and modeled results does not make the EPA's modeling methods or results unreliable or unconvincing. The EPA's expert Chinkin compared his model results to all the available monitoring data and found that his base case model performed "exceptionally" when compared with the actual data from national monitoring networks. FOF ¶ 316; Chinkin Test., Tr. Vol. 2-B, 17:8-18.
358. Ameren's violation of the Clean Air Act at Rush Island has resulted in more than 162,000 tons of excess SO
359. Accordingly, Plaintiffs seek an injunction requiring Ameren, over time, to reduce pollution from its nearby Labadie plant in an amount equal to Rush Island's total excess emissions. By reducing future SO
360. The Labadie plant is located near Labadie, Missouri, about 35 miles west of St. Louis. The plant consists of four units, each of which can generate about 600 megawatts of electricity, about as much as Rush Island's units can generate. Integrated Resource Plan (Pl. Ex. 1247), at USTREXR0006246 to 6247. Ameren plans to retire the four Labadie units in 2036 and 2042. Michels Test., Tr. Vol. 5-B, 18:20-23, Michels Dep., Aug. 14, 2018, Tr. 14:1-23, 109:21-110:13.
361. Dr. Staudt looked at multiple options for reducing future SO
362. All these options are technically and practically achievable at Labadie. Staudt Test., Tr. Vol. 1-B, 102:11-103:6. The capital costs range from $55 million for DSI on all four Labadie units to about $1 billion for wet FGD on all four units. Staudt Test., Tr. Vol. 1-B, 102:15-103:11. The operating costs range from $31 million/year for DSI with a fabric filter to a high but variable operating cost for a natural gas conversion.
363. The reduction capabilities of installing DSI without a fabric filter on all four units and wet FGD on two units are relatively close. It would take about the same amount of time to offset the excess pollution with these two technologies. Assuming, on the high side, annual uncontrolled emissions of about 38,000 tons per year, DSI on all four units would remove 19,000 tons per year and offset the excess within about 14 or 15 years, while wet FGD on two units would remove 17,000 tons per year and offset the excess in a little over 16 years. Staudt Test., Tr. Vol. 1-B, 106:23-107:11, 108:2-7.
364. The cost-effectiveness of the two options is also relatively similar: $4300/ton for wet FGD on two units compared to $3100/ton for DSI on four units.
365. DSI could be installed in 18 months, more quickly than wet FGD. Staudt Test., Tr. Vol. 1-B, 106:8-20, Tr. Vol. 2-A, 16-17; Snell Test., Tr. Vol. 4-B, 30:17-31:6.
366. The harm from Ameren's excess SO
367. The linear concentration-response relationship for PM
368. Reducing pollution from Labadie by an amount equal to Rush Island's excess emissions will reduce the risk of adverse health effects and premature mortality in the exposed population by an amount equal to the increased risk from Rush Island's excess emissions. Schwartz Test., Tr. Vol. 3-A, 20:23-21:8, 110:10-22.
369. The populations that will benefit from these reductions are almost identical to those who were harmed by Rush Island's excess pollution. As a result, there is a particularly tight factual nexus between remedy and harm. This tight nexus is demonstrated by Dr. Schwartz's 2009 risk assessment. For most coal-fired power plants, the assessment showed significant variability in the health impacts of emissions depending on where each ton was emitted. Schwartz Test., Tr. Vol. 3-A, 88:9-89:12. However, Ameren's Rush Island and nearby Labadie plants had nearly identical health impacts per ton of SO
370. Chinkin's CAMx modeling confirms this close nexus. Chinkin modeled the benefits of installing pollution control options at Labadie in the same way he studied the impacts of Rush Island's excess pollution. This modeling shows that the two plants have similar pollution-impact profiles, affecting the same populations and to the same extent. Chinkin Test., Tr. Vol. 2-B, 31:21-33:5, 36:16-37:22.
371. Chinkin's CAMx modeling indicated that scrubber technology operated at two of Ameren's Labadie units would reduce SO
372. Similarly, the CAMx modeling shows that DSI technology operated at all four of Ameren's Labadie units would reduce SO
373. I find that reducing emissions SO
374. Ameren did not present evidence or testimony challenging Chinkin's conclusion that the SO
375. The societal benefits associated with offsetting Ameren's excess pollution are substantial. Reducing the pollution from Labadie in an amount equal to Rush Island's excess emissions will result in an equal amount of avoided health effects, including premature mortality, in the same population. Schwartz Test., Tr. Vol. 3-A, 20:23-21:8, 110:10-22.
376. These benefits have substantial economic value. In his 2009 risk assessment, Dr. Schwartz quantified the social cost Rush Island and Labadie's pollution, as well as the pollution of 405 other coal-fired power plants. In this study, Dr. Schwartz applied standard, peer-reviewed values used by public health professionals and the EPA to estimate economic benefits of pollution reduction. Schwartz Test., Tr. Vol. 3-A, 112:10-116:22. Based that study, Dr. Schwartz estimated the social benefits from remedying Rush Island's excess emissions would far surpass the costs of any control technology used.
377. Chinkin's CAMx-derived benefits estimates are even higher than the results of the 2009 risk assessment, confirming that the benefits of remediating Rush Island's excess pollution exceed the costs.
378. Ameren offered to surrender SO
379. Under CSAPR, which went into effect in 2015, the EPA establishes an SO
380. Allowances are freely tradable among regulated units, brokers, and other parties. (Harvey Decl. at 18.) During each year of the CSAPR programs, each regulated unit must monitor and report its SO
381. Missouri is part of Group 1 of the CSAPR SO
382. The Parties stipulated that, as of the beginning of 2019, Ameren held 237,184 CSAPR SO
Def. Ex. PV, at PV_5; Michels Test., Tr. Vol. 5-B, 14:8-15:5.
In this graph, the blue line represents Ameren's emissions limit based on its annual allocation of CSPAR allowances.
384. Generally, power plant owners and operators have met the CSAPR limit by large margins. As of the end of 2016, Group 1 sources had banked 2,924,713 SO
385. The price for Group 1 SO
Ameren's Proposed Findings of Fact, ECF No. 1110 at ¶277.
387. The cited testimony does not support Ameren's assertions. Michels, Tr. Vol. 5-B, 7:14-8:4. Instead, the testimony demonstrates that Rush Island has exceeded its allowances in only one year (2017), and over the past four years, Rush Island has accumulated 9,625 net allowances. Over its entire fleet, Ameren has accumulated 237,184 net allowances during the same period. ECF No. 1077-1 at 3; Pre-Trial Hearing Tr. 31:18-32:3 (Ameren counsel agreeing to use the United States' number); Michels Test., Tr. Vol. 5-B, 14:2-5.
388. From CSAPR's effective date in 2015 through 2018, Rush Island has had the following allowances and actual emissions:
389. Ameren did not present evidence to demonstrate that CSAPR emissions limitations would become more difficult to meet. Instead, Ameren presented evidence that it would gain surplus credits for six years after the retirement of its Meramec Energy Center. Michels, Tr. Vol. 5-B, 8:16-20. These surplus credits would make CSAPR easier to meet.
390. Nor did Ameren present any evidence that, by trading allowances, it would actually decrease emissions in the same geographic area impacted by Rush Island and Labadie.
391. Ameren could trade its surplus allowances to power plants in Wisconsin, Michigan, New York, Virginia, or North Carolina. Michels Test., Tr. Vol. 5-B, 12:19-13:23.
392. The evidence does not support Ameren's assertion that surrendering its CSAPR emissions allowances would lead to actual emissions reductions remedying the harm to the populations impacted by Rush Island's excess emissions.
393. I have already concluded that a reasonable power plant operator would have known that the modifications undertaken at Rush Island Units 1 and 2 would trigger PSD requirements. I have also concluded that Ameren's failure to obtain PSD permits was not reasonable.
394. After the liability trial in this case, I found that at the time of the Rush Island modifications, "the standard for assessing PSD applicability was well-established." It was also "well-known" that the types of unpermitted projects Ameren undertook risked triggering PSD requirements.
396. Assuming they were viable, Ameren did not take any of the options identified by Campbell. Instead, Ameren proceeded with the projects without obtaining the required permits.
397. Campbell admitted that his PSD avoidance theory relies on an assumption that Ameren did not appreciate the risks of violating NSR when it undertook the largest modification in plant history. Campbell Test., Tr. Vol. 4-A., 136:5-9. Campbell did not talk to any Ameren employees about whether they ascertained the risks of violating NSR. Nor did Campbell talk to any Ameren employees about whether they would have taken or been able to take any of the avoidance options that he presented during his testimony.
398. Ameren's documents indicate that Ameren was aware of the possibility that NSR would be triggered at Rush Island. For example, on May 1, 2009, Ameren met with engineering firm Black & Veatch to review contracting strategies and to allow Black & Veatch to "understand internal AmerenUE drivers." May 13, 2009 Conference Memorandum (Pl. Ex. 1111), at AM-REM-00319195. Included among the "Questions for thought" discussed at that meeting was "What is the tolerance for risk?"
399. A June 2010 presentation to Ameren's Corporate Project Oversight Committee (CPOC) similarly identified "New Source Review" as one of several Clean Air Act "driving forces for additional control equipment" that Ameren was monitoring.
400. A February 2010 CPOC presentation identified NSR as among the relevant environmental concerns facing Rush Island. Specifically, the presentation identified NSR's "permitting and control requirements for new sources and existing sources that undergo `major modifications.'"
401. Campbell also testified that Ameren could avoid PSD by restricting operations. This opinion is similarly unsupported. To avoid PSD by restricting operations, a source can obtain a permit known as a synthetic minor permit. A synthetic minor permit limits a source to operate below significance thresholds under the PSD program.
402. Ameren did not apply for a synthetic minor permit prior to undertaking the modification of Unit 1 in 2007 nor the modification of Unit 2 in 2010. Knodel Test., Tr. Vol. 1-A, 67:15-20; MDNR Rule 30(b)(6) Dep., Aug. 10, 2018, Tr. 137:5-9.
403. Ameren's director of corporate analysis, the official in charge of resource planning, testified that he was not aware of any instance where Ameren voluntarily restricted the operations of Rush Island. Michels Test., Tr. Vol. 5-B, 4:19-20, 5:1-9; Michels Dep., Aug. 14, 2018, Tr. 156:13-17.
404. Owners of baseload plants such as Rush Island generally avoid limiting plant operations, which are designed to run as much as possible. Staudt Test., Tr. Vol. 1-B, 20:16-24, 97:13-23;
405. Dr. Staudt testified that he was not aware of any instance in which the owner of a baseload power plant like Rush Island accepted a limitation on operations in the way that Campbell suggests. Staudt Test., Tr. Vol. 2-A, 13:23-14:12. ("[T]hat doesn't happen very often, or I'm not sure if it's ever happened on a electric-generating unit.").
406. Despite its expert testimony, Ameren did not present any company witness or documents suggesting the pursuit of a synthetic minor permit was a realistic possibility, or ever considered for Rush Island.
407. While Rush Island began burning lower sulfur coal after its modifications, Ameren has not accepted a permit limit at that level. Nothing currently requires Rush Island to burn lower sulfur coal. Staudt Test., Tr. Vol. 2-A, 17:5-16; Knodel Test., Tr. Vol. 1-A, 67:25-68:19, 69:18-20.
408. Between 2007 and 2010 was a period of peak market demand for the installation of scrubbers in the electric utility industry, as illustrated by Figure 9.
Pl. Ex. 1111, at AM-REM-00319231.
409. Ameren avoided this period of peak market demand to its benefit, as discussed in internal company documents. Staudt Test., Tr. Vol. 1-B, 28:3-31:1; Ex. 1111, at AM-REM-00319199, 231; Ameren's April 2011 Presentation for MPSC, Ex. 1009, at AM-02225216 (Ameren's business strategy "[a]llows Ameren Missouri to defer capital investments on environmental retrofits" and "delay its construction needs to avoid the likely timeframe of greatest environmental retrofit construction.")
410. Ameren's internal documents also make clear that Ameren has understood for many years the possibility that scrubbers would be required as a result of NSR violations at Rush Island. Ex. 1009, at AM-02225205 ("New Source Review lawsuit by EPA may require flue gas desulfurization (FGD) systems or scrubbers at Rush Island."), and AM-02225216 (2011 fuel switch strategy "[a]llows Ameren Missouri additional time to complete its detailed engineering design should scrubbers ultimately be required.");
411. Today, the scrubber market is "slow" and there would be lots of "very eager suppliers" to get Ameren's business. That means not only that Ameren benefitted from the delay, but also that an FGD could be installed much more quickly today because the resources are more available. Staudt Test., Tr. Vol. 1-B, 32:2-33:3.
412. By delaying wet FGD scrubbers for more than ten years, Ameren also sold more power from Rush Island than it would have had it complied with the law. Operating a scrubber changes the dispatch cost of a unit (the cost that unit needs to break even in the market). Celebi Test., Tr. Vol. 5-B, 68:18-69:18. Because the unit's dispatch cost will increase, it may run less. The unit will also sell less energy to the grid because some of its energy is needed to power the scrubber itself. Celebi Test., Tr. Vol. 5-B, 68:18-70:15.
414. Ameren Missouri and Ameren Corporation are "financially strong." Kahal Test., Tr. Vol. 2-A, 53:11-19, 59:23-60:5 (discussing the strength of Ameren's financial reports). Ameren Corporation is the sole owner of Ameren Missouri. Kahal Test., Tr. Vol. 2-A, 55:3-25. Ameren has strong credit ratings, access to capital on favorable terms, and can access far more capital than it needs for its current capital spending plans. Kahal Test., Tr. Vol. 2-A, 69:25-70:5.
415. Each year, Ameren reports financial information for Ameren Corporation and Ameren Missouri to the Securities and Exchange Commission (SEC). Kahal Test., Tr. Vol. 2-A, 56:9-16. In its latest Form 10-K, Ameren submitted the financial information contained in Table 2 for the calendar year 2018.
Table 2. Ameren Corporation and Ameren Missouri 2018 Financial Information Ameren Corporation Ameren Missouri Assets $27,215,000,000 $14,291,000,000 Operating Revenue $6,291,000,000 $3,589,000,000 Net Income $815,000,000 $478,000,000 Shareholder Dividends $451,000,000 $375,000,000 Capital Spend $2,336,000,000 $914,000,000 Operating Cash Flow $2,170,000,000 $1,260,000,000
Ameren 2019 10-K (Pl. Ex. 1340), at USTREXR0003003, 3055, and 3057.
416. Ameren also reports financial information to the Federal Energy Regulatory Commission (FERC) in a document called the FERC Form 1. Ameren reported the following financial data in its FERC Form 1s for the years 2012 through 2017.
Table 3: Ameren Corporation 2012-2017 Financial Information (dollars)Net Income Capital Spending Dividends Cash Flow 2012 420,000,000 611,000,000 400,000,000 995,000,0002013 399,000,000 668,000,000 460,000,000 1,135,000,0002014 394,000,000 770,000,000 340,000,000 943,000,0002015 356,000,000 631,000,000 575,000,000 1,239,000,0002016 360,000,000 751,000,000 355,000,000 1,161,000,0002017 326,000,000 786,000,000 362,000,000 1,018,000,000Average 376,000,000 703,000,000 415,000,000 1,082,000,000
Pl. Exs. 1331-36;
417. In the SEC Form 10-K and FERC Form 1s:
Kahal Test., Tr. Vol. 2-A, 57:16-59:22, 63:10-64:12.
418. Ameren has three main options for financing capital projects. It can use revenues from its operations, obtain funds from debt markets, or issue new common stock (through the parent company). Kahal Test., Tr. Vol. 2-A, 66:21-67:24.
419. Ameren's stock has performed "extremely well" over the past five years. Kahal Test., Tr. Vol. 2-A, 60:8-17. Ameren's Form 10-K indicates that the parent company's stock price grew by more than 16% per year from 2013 to 2018. Ameren 2019 10-K (Pl. Ex. 1340), at USTREXR0003002; Kahal Test., Tr. Vol. 2-A, 60:8-61:6. This growth was considerably larger than indexes reflecting the electric utility industry or the broader stock market.
420. In February 2019, Ameren announced a $6.3 billion capital spending program for the next five years. Ameren Feb. 15, 2019 Press Release (Pl. Ex. 1341). This program represents an increase in spending from the recent past, when capital spending averaged about $700 million per year. Kahal Test., Tr. Vol. 2-A, 64:13-65:21; Ameren Feb. 15, 2019 Press Release (Pl. Ex. 1341).
421. Ameren's strong credit ratings allow it to access debt markets on very favorable terms. Kahal Test., Tr. Vol. 2-A, 65:22-66:20. The corporate credit ratings for both Ameren Corporation and Ameren Missouri are at the top end of the triple B range, while the secured debt for Ameren Missouri is rated medium single A. Kahal Test., Tr. Vol. 2-A, 65:22-66:20.
422. Ameren can afford to finance the pollution controls at issue in this case. Kahal Test., Tr. Vol. 2-A, 53:11-54:12. Ameren presented no evidence to the contrary. Instead, Ameren's lead counsel stated at trial that Ameren "can afford anything this Court orders." Ameren Closing Argument, Tr. Vol. 6, 34:12-13.
423. The annual capital cost of installing FGD at Rush Island is only about half as large as Ameren's average annual dividend in recent years. Installing FGD at both Rush Island units would result in about $200 million per year in capital costs over the four-year construction period plus an estimated $27 to $38 million in operating and maintenance costs once the FGD systems begin operating. Kahal Test., Tr. Vol. 2-A, 71:5-12; Callahan Dep., Nov. 8, 2017, Tr. 195:5-12. Ameren's average dividend payment to its parent company is about $415 million per year and its operating cash flow is more than $1 billion.
424. Plaintiffs also presented evidence of several pollution control options at Labadie, including FGD and DSI to offset the excess emissions from Rush Island. Dr. Staudt estimated that the capital cost of FGD at two Labadie units would be $465 million with $29 million in annual operating costs. Staudt Test., Tr. Vol. 1-B, 105:12-106:24;
425. These costs are a small fraction of Ameren's $6.3 billion capital plan for the next five years and its $1.1 billion annual operating cash flow. Kahal Test., Tr. Vol. 2-A, 64:13-65:21; Rule 1006 Summary of FERC Form 1s (Pl. Ex. 1388, summarizing Pl. Ex. 1331-1336).
426. The EPA's expert Matthew Kahal testified that Ameren could afford to implement any of the mitigation options identified by Dr. Staudt for Labadie or Rush Island. Kahal Test., Tr. Vol. 2-A, 71:23-72:1, 78:10-17. This testimony was not challenged on cross or by any Ameren witnesses.
427. As of 2016, Ameren Missouri had 1.2 million customers. Celebi Test., Tr. Vol. 5-B, 26:16-20.
428. Ameren is a regulated monopoly. Kahal Test., Tr. Vol. 2-A, 51:12-19. When Ameren incurs costs that are not being recovered by its rates, it can seek a rate increase from the Missouri Public Service Commission. Kahal Test., Tr. Vol. 2-A, 51:12-52:4. The Public Service Commission reviews the request and determines whether any rate increase is appropriate to allow Ameren to recover its costs. Kahal Test., Tr. Vol. 2-A, 51:12-52:4.
429. In the ratemaking process, Ameren receives a profit (known as the rate of return) on capital spending. Kahal Test., Tr. Vol. 2-A, 68:24-69:19; Celebi Test., Tr. Vol. 5-B, 42:24-43:8 (noting inclusion of rate of return). The rate of return is set by the Missouri Public Service Commission. Kahal Test., Tr. Vol. 2-A, 68:24-69:24. In recent years, the rate of return for Missouri utilities has been about 9.5%. Kahal Test., Tr. Vol. 2-A, 68:24-69:24.
430. Expert witnesses for both parties calculated how much installing pollution controls could affect the rates paid by Ameren customers if Ameren seeks to recover those costs from ratepayers.
431. Ameren could choose not to recover those costs from its ratepayers. The Public Service Commission could also elect not to allow full cost recovery, especially if it determines the costs are the result of Ameren's decision not to comply with the Clean Air Act. Kahal Test., Tr. Vol. 2-A, 77:7-78:6; Celebi Test., Tr. Vol. 5-B, 66:11-67:19.
432. The EPA's expert Matthew Kahal testified that wet FGD at Rush Island would result in an increase in customer rates of about 2.8% over 20 years (assuming the Missouri Public Service Commission allows full rate recovery). Kahal Test., Tr. Vol. 2-A, 74:22-75:1. Ameren's expert Dr. Metin Celebi found that FGD at Rush Island would increase customer rates by 2.4%.
434. Overall, Kahal estimated that installing FGD at both Rush Island units and DSI at all four Labadie units would increase customer rates from 2.8 to 4.8%, while Dr. Celebi estimated that those controls would increase rates by 3.8%. Kahal Test., Tr. Vol. 2-A, 80:23-82:4; Celebi Test., Tr. Vol. 5-B, 64:21-65:9.
435. Rate increases in that range are in keeping with Ameren's typical rate changes from year to year. Dr. Celebi testified that Ameren's rates increased 5.4% from 2016 to 2017, and that Ameren's 2017 Integrated Resource Plan predicted that rates would increase 2.9% per year over the period from 2018 to 2037. Celebi Test., Tr. Vol. 5-B, 65:15-66:10.
436. The rates Ameren charges its customers are well below the national average. In 2016, Ameren's rates were 14% lower than the national average. Kahal Test., Tr. Vol. 2-A, 72:4-20; Celebi Test., Tr. Vol. 5-B, 57:15-24. Even with the rate increases estimated by Kahal or Dr. Celebi, Ameren customers' rates would still be around 10% lower than the national average. Kahal Test., Tr. Vol. 2-A, 82:6-15. Ameren's rates are also at or below the median rates for utilities in both Missouri and in surrounding states. Celebi Test., Tr. Vol. 5-B, 82:2-83:14.
437. In December 2017, a change in the tax laws reduced Ameren's income tax rate, resulting in a 6.1% decrease in customer rates. Kahal Test., Tr. Vol. 2-A, 82:16-83:2, 83:15-23; Ameren Presentation, "Building a Brighter Energy Future," Feb. 14, 2019 (Pl. Ex. 1337) at USTREXR0002371; Celebi Test., Tr. Vol. 5-B, 84:2-8. The potential rate increases predicted by Dr. Celebi and Kahal are smaller than the rate decrease resulting from the tax law changes. Celebi Test., Tr. Vol. 5-B, 84:2-16.
438. At trial, and in its proposed findings of fact, Ameren asserted that the costs of installing FGD at Rush Island and DSI at Labadie would be disproportionate to the harm of its excess emissions.
439. Ameren's expert, Dr. Celebi, conducted rate impact analyses for controls that might be installed on Rush Island and Labadie. Celebi Test., Tr. 5-B 62:3-63:10. He analyzed that the annual average total cost for wet FGD at Rush Island and DSI at Labadie would be $196 million per year, for a total of $4.1 billion over the entire period. He then estimated a per customer cost of $3,422.
440. Dr. Celebi's per customer estimates are unrepresentative of the typical customer's experience, because he does not differentiate based on residential, commercial, or industrial users. A three-bedroom home does not use the same amount of electricity, nor pay the same electricity bill, as a department store or an aluminum smelter. When residential, commercial, and industrial ratepayers are lumped together, the larger sources have a disproportionate influence on the total electricity use and the average cost of electricity, per customer. Ameren could have accommodated these differences by differentiating residential,
441. Additionally, in part, Dr. Celebi presented his results as an average per-customer cost over twenty years of operation. When presenting these results, Dr. Celebi often failed to indicate whether his estimates were in 2016 dollars, 2025 dollars, or some other years' dollars.
442. I find that Ameren's average per customer rate increase estimates in dollars do not reflect the typical customer's experience.
As I noted in the introduction to this opinion, my conclusions of law from the liability phase significantly influence my findings of fact and conclusions of law in the remedies phase. In the liability phase, I found that Ameren violated the Clean Air Act by making major modifications that increased SO
While the rest of the electric industry made great strides in reducing SO
Now, in the remedies phase, the EPA seeks to bring Ameren's Rush Island facility into compliance with the law and to remediate the harm from the more than 162,000 tons—and counting—in excess SO
Once Ameren installs BACT at Rush Island, it should capture nearly 99% of SO
Ameren presents seven arguments against the relief the EPA requests at Rush Island and Labadie. First, Ameren argues that it should be allowed to obtain a minor permit, instead of the statutorily-required PSD permit. According to Ameren, if, it had known better, it would have pursued other, less expensive compliance options than PSD permitting. I need not entertain this hypothetical or speculate what might have been. Ameren made a major modification that lengthened the life of, and increased emissions at Rush Island. It cannot now undue these modifications or regain its grandfathered status. Ameren must obtain a PSD permit.
Second, Ameren argues that the Missouri Department of Natural Resources (MDNR) should determine the Best Available Control Technology for Rush Island. I have already discussed this argument in my order denying Ameren's motion for summary judgment.
Third, Ameren argues that, if I do determine BACT, I should order the installation of the least effective control technology, DSI without a fabric filter. DSI is about half as effective as scrubber technology, and it has never been accepted as BACT for a coal-fired electric generating unit. Ameren would like the BACT analysis to settle on the "least expensive option" capable only of "moderate" emissions reductions. Deciding BACT based primarily on a cost-benefit analysis would itself be in conflict with the Clean Air Act, which requires emissions limits "based on the maximum degree of reduction" available. 42 U.S.C. § 7479(3).
Fourth, Ameren argues that the
Fifth, Ameren argues that any relief ordered at Labadie would constitute a penalty waived by the EPA before the liability trial. The installation of DSI at Labadie is an equitable remedy that is narrowly tailored and does not penalize Ameren. DSI's capital costs are minimal, and when Ameren has fully accounted for Rush Island's excess emissions, it may choose to discontinue use of its DSI system. Ameren may also choose to install a more capital-intensive technology if it decides to do so, but I will not require that Ameren does so.
Sixth, Ameren argues that
Finally, Ameren argues that it should be able to surrender allowances from a distinct regulatory program that could otherwise be traded to plants in Wisconsin, Michigan, New York, Virginia, or North Carolina. Ameren presented no evidence at trial to demonstrate that surrendering allowances would actually decrease emissions and PM
Pollution from Rush Island is regulated for a reason, and Rush Island remains one of the largest sources of SO
To remedy its violations, Ameren must obtain the necessary PSD permit for the facility, implement the best available control technology, and undertake emissions reductions at its Labadie plant commensurate with Rush Island's volume of excess pollution.
The 1970 Clean Air Act (CAA) was designed in part to "speed up, expand, and intensify the war against air pollution in the United States with a view to assuring that the air we breathe throughout the Nation is wholesome once again." H.R. Rep. No. 91-1146, at 1 (1970), reprinted in 1970 U.S.C.C.A.N. 5356, 5356;
Not satisfied with the results achieved under the 1970 statute, Congress added the New Source Review program to the Act in 1977 to ensure that additional requirements were imposed on new and modified sources of air pollution.
42 U.S.C. § 7475(a);
The liability phase of this case established that Ameren violated the Clean Air Act when it modified Rush Island "without obtaining the required permits [and] installing best-available pollution control technology."
Section 113(b) of the Clean Air Act authorizes district courts to "restrain such violation[s], to require compliance, ... and to award any other appropriate relief" where a source owner or operator "has violated or is in violation of" statutory or regulatory prohibitions. 42 U.S.C. § 7413(b). Courts have jurisdiction to craft "complete relief in light of the statutory purposes;" that jurisdiction is "not to be denied or limited in the absence of a clear and valid legislative command."
When considering injunctive relief, a court evaluates whether
In addition to the
Next, "[a]n injunction must be tailored to remedy specific harm shown."
Additionally, where an injunction will remediate environmental harm, courts have considered "(1) whether the proposal `would confer maximum environmental benefit,' (2) whether it is `achievable as a practical matter,' and (3) whether it bears `an equitable relationship to the degree and kind of wrong it is intended to remedy.'"
The PSD program's BACT requirement is a "technology-forcing" standard that is meant to "stimulate the advancement of pollution control technology," a central goal of the 1977 Amendments.
As defined by Congress in the Clean Air Act, BACT is an "emissions limitation based on the maximum degree of reduction of each pollutant subject to regulation." 42 U.S.C. § 7479(3);
In practice, BACT follows a "top-down" approach used by the EPA and MDNR to ensure that the most effective technology is actually selected. FOF ¶ 77. The Supreme Court has explained the top-down process as providing:
The top-down method consists of five steps: (1) identify all applicable control technologies; (2) remove any technically infeasible controls; (3) rank feasible controls by effectiveness; (4) determine if the most effective option is achievable considering the energy, environmental and economic impacts; and (5) select a BACT emissions limitation. Pl. Ex. 1190 [NSR Manual] at AM-REM-00544123-MDNR;
The parties do not dispute the outcome of the first three steps in the BACT analysis.
FOF ¶ 113. Based on these options, the next question is whether the "top" control —wet FGD technology—should be eliminated as not "achievable" after an evaluation of its energy, environmental, or economic impacts. The great weight of evidence presented at trial shows wet FGD is achievable.
Over the last forty years, about 200,000 megawatts of coal-fired electric generating capacity have been fitted with FGD technology.
Ameren suggested at trial that FGD technology is more appropriate for new plants as opposed to existing plants. Ameren's suggestion is contradicted by the evidence. Of the more than 170,000 MW of coal-fired electric generating capacity now controlled with wet FGD, about 120,000 MW are retrofitted units.
The emissions reductions achievable by FGD do not depend on whether the technology is built with new plant or retrofitted on an existing one. FOF ¶ 162. The prevalence of FGD at both new and existing units indicates that FGD is achievable at Rush Island. As the EPA noted in the NSR Manual: "In the absence of unusual circumstance, the presumption is that sources within the same source category are similar in nature, and that cost and other impacts that have been borne by one source of a given source category may be borne by another source of the same source category." Pl. Ex. 1190 [NSR Manual] at AM-REM-00544146-MDNR; FOF ¶ 79.
Ameren has provided no evidence of an unusual circumstance at Rush Island that is relevant to the BACT determination. FOF ¶ 219. Ameren's BACT expert Colin Campbell testified that Rush Island's status as an existing plant not otherwise required to install BACT constitutes an unusual circumstance.
Based on its own studies, Ameren has no evidentiary basis to rule out FGD in Step 4. At trial, Ameren only briefly mentioned energy or environmental impacts of wet FGD. Specifically, Ameren's expert Snell discussed the auxiliary power consumed by FGD systems, which reduced power output to the grid. FOF ¶ 190. Snell also mentioned wastewater costs and mercury controls. FOF ¶ 192. However, Ameren did not explain how these energy and environmental impacts made wet FGD
Around the time Ameren was rebuilding Rush Island Unit 2, Ameren was also studying how and whether FGD might be installed at Rush Island. Ameren's engineering studies, undertaken over a period of years at a cost of about $8 million, concluded that wet FGD was both economically and technically feasible at Rush Island. The engineering studies determined that wet FGD was the best option for the plant to control SO
The economic impacts of implementing wet FGD do not render the technology unachievable. The EPA's expert Dr. James Staudt estimated, based on Ameren's engineering studies, that the direct capital costs of implementing wet FGD technology at Rush Island would be $582 million in 2016 dollars. FOF ¶ 124. That total translates to an "average" cost-effectiveness of $3,854 per ton of SO
The last step of the BACT analysis (Step 5) involves determining an achievable emission rate based on the chosen wet FGD technology. As with Steps 1 through 3, there is no material dispute about what the achievable emission rates would be for wet FGD at Rush Island. FOF ¶¶ 229-31. Wet FGD has been widely adopted over the years, and its performance continues to improve. Wet FGD's emissions rates have steadily fallen.
Based on a reasonable compliance margin, Dr. Staudt testified that BACT for the Rush Island units at the time of the illegal modification would have been 0.08 lb/mmBTU for Unit 1 and 0.06 lb/mmBTU for Unit 2, both on a 30-day rolling average. FOF ¶ 202-03. The record showed these rates were reasonable given the technological capabilities at those times and consistent with the nearly two-dozen contemporaneous BACT determinations at
Ameren presents three arguments to avoid permitting under the PSD program. First, Ameren argues it need not install BACT because it would have sought less costly ways avoid PSD permitting had it known its major modifications would trigger PSD obligations. Second, Ameren argues that I should not make any BACT determination as part of my ruling, because that decision is appropriately left to the permitting authority MDNR. Third, Ameren argues that DSI—a far less-effective (and less costly) control technology than wet FGD—should be considered BACT at Rush Island. None of these three arguments is persuasive.
Ameren argues that had it known its modifications would trigger PSD obligations, it might have sought a synthetic minor permit. With a minor permit, a source can limit its emissions below a threshold that would trigger PSD requirements. FOF ¶ 401. At trial, Ameren's expert Campbell testified in support of this theory.
This argument is not supported by law. First, it requires speculation about what actions Ameren might have taken, rather than an examination of what actions Ameren actually took. By statute and regulation, once Ameren undertook major modifications, Ameren was required to comply with BACT. Rush Island Units 1 and 2 are modified facilities; they cannot obtain "minor" permits for their "major modifications." To find otherwise would require me to ignore the statue and regulations.
NSR requirements apply to all major modifications, including those illegally constructed. The United States District Court for the District of Oregon explained:
Ameren "must suffer the consequences of the action it chose to take—even if these, or some of these, might have been avoided had it taken a different course of action."
Even if Ameren's argument that it should be allowed to apply for a minor permit had merit, it is unsupported by the evidence. The facts that run contrary to Ameren's assertion that it would have applied for a minor permit include:
Ameren did not present evidence of any baseload power plant operator restricting a facility's operations in the manner Ameren now claims in hindsight it would have. Because they are the cheapest generating sources and so reliably dispatched, utilities like Ameren hesitate to put operating or fuel limitations on their baseload plants.
In its proposed conclusions of law, Ameren renews its argument from summary judgment that I cannot and should not make a BACT determination. According to Ameren, I should leave any BACT determination to the permitting authority MDNR, respecting its notice and comment process. As I noted in my order denying summary judgment, Plaintiffs have not asked me to write and issue a permit.
I conclude that I am able to order Ameren to propose wet FGD as BACT.
Ameren argues that DSI, a technology that removes about 50% of SO
To support its position, Ameren argues that FGD technology should have been excluded at Step 4 of the BACT analysis because of its "economic impacts." The costs Ameren cites are not based on any unique physical or operational characteristics of Rush Island. Ameren was unable to identify any material feature that distinguishes Rush Island from the rest of the industry or electric market. Ameren's argument is premised entirely on its expert Campbell's economic analysis. That analysis was inconsistent with BACT permitting practices and Campbell's own past guidance, and I give Campbell's testimony little weight. FOF ¶¶ 134-40.
In BACT permitting, two cost metrics are often consulted, (1) average cost-effectiveness, and (2) incremental cost-effectiveness. FOF ¶¶ 82-83. The EPA's expert Dr. Staudt calculated average cost-effectiveness for wet FGD at Rush Island and determined the costs were achievable. FOF ¶ 199. Dr. Staudt made his calculations according to the standard overnight cost methodology. FOF ¶ 124.
In their calculations, Ameren's experts included costs that are traditionally excluded from BACT analyses for consistency and comparison's sake. Ameren's expert Snell admitted that his cost estimates were not developed for the purpose of a BACT analysis. FOF ¶ 128. Ameren's expert Campbell still included Snell's cost estimates in his incremental cost-effectiveness comparison. Incremental cost-effectiveness considers the per-ton change in cost of reducing SO
According to Campbell, the incremental cost-effectiveness of wet FGD compared to DSI exceeds a threshold used by MDNR in BACT determinations. FOF ¶ 141. This explanation misstates how incremental cost-effectiveness analysis usually operates in reality. Measuring incremental cost may be useful when evaluating control options ranked next to each other with similar control efficiencies. FOF ¶ 83. Campbell did not compare incremental technologies, he compared one of the most effective control technologies with one of the least. FGD technology can remove 95% or more of SO
"[W]here a control technology has been successfully applied to similar sources in a source category, an applicant should concentrate
Ameren's main attempt to differentiate Rush Island from other plants depends on a false distinction between new plants and existing, retrofitted plants. Specifically, Ameren points out that the New Source Performance Standards (NSPS) do not apply to existing plants such as Rush Island. However, the NSPS emission rate does not fundamentally change the BACT methods or results. FOF ¶¶ 87-89;
The parties do not dispute what control technologies are available to reduce SO
Although the specific emission rate may vary somewhat, FGDs are the best available SO
(2) At the time of the Unit 1 major modification in 2007, BACT for SO
(3) At the time of the Unit 2 major modification in 2010, BACT for SO
(4) At present, BACT for SO
The United States asks this Court to order Ameren to apply for a PSD permit
When considering injunctive relief, I evaluate whether:
Ameren concedes the first two factors of the
Environmental harm, "by its nature... is often permanent or at least of long duration, i.e., irreparable."
At trial, the EPA presented voluminous data demonstrating that Rush Island's excess emissions have increased the risk of heart attack, asthma attack, stroke, and premature death in downwind communities. FOF ¶¶ 251-53. Dr. Schwartz testified at length about the concentration-response relationship between PM
In contrast, Ameren's experts Dr. Valberg and Dr. Fraiser testified contrary to the scientific consensus on PM
Damages are inadequate to address the harm from excess emissions at Rush Island.
This opinion contains extensive discussion of the harm the downwind communities are suffering due to Ameren's decision to ignore the statutory requirement that it install pollution controls at the modified Rush Island. The Plaintiffs are suing to enforce a statute enacted to reduce the kind of harm Ameren's excess pollution has created, and they would suffer great hardship if I allow Ameren to continue to operate Rush Island without BACT. Meanwhile, an injunction ordering Ameren to comply with the Clean Air Act and install BACT imposes a relatively minor hardship on Ameren. Ameren will have to install at Rush Island the same pollution controls that power utility companies—including Ameren—must install at facilities across the country.
Ameren admits that it can "afford anything this Court orders." Def. Closing Arg., Tr. Vol. 6, 34:13. At the same time, Ameren expresses concern that its customers will bear the costs of compliance in the form of rate increases. Ameren asserts that the average customer will have to pay thousands more dollars over 20 years to reimburse Ameren for its capital expenditures.
This alleged hardship does not tip the balance in Ameren's favor. The costs of pollution controls are a cost of doing business; the Clean Air Act struck that balance when it mandated BACT measures for new and modified sources.
Even if the control costs are passed onto ratepayers in their entirety, the resulting rate increase would be within the range of recent rate increases. FOF ¶¶ 435. On this point, Ameren presented conflicting, unrepresentative, and mischaracterized cost estimates. FOF ¶¶ 439-442. For example,
In contrast, the EPA presented cost estimates on a percentage basis, and compared them with Ameren's recent cost increases. According to the EPA, the total cost of installing FGD at Rush Island and DSI at Labadie would lead to rate increases between 2.8 and 4.8%. FOF ¶ 434. Ameren also presented evidence using this methodology and calculated a similar percentage increase of 3.8%.
For context, these projected increases are less than the most recent annual increase levied by Ameren (5.4%), as well as the rate decrease that was triggered by the 2017 federal tax law (6.1%). FOF ¶¶ 435, 437. Regardless of whether Ameren is allowed by the PSC and ultimately passes on the costs of compliance to customers, Ameren can readily finance and install wet FGD at Rush Island while staying profitable.
The United States brought this civil action to enforce a public interest statute. The United States has clearly established that it is in the public interest for Ameren to comply with the Clean Air Act.
Ameren's argument to the contrary depends entirely on the costs it asserts this injunction will impose on rate-payers. As I discuss above in Section VI.c.iii, the estimated cost increases are modest. The estimated value of the benefit to the public is much larger than estimated costs to Ameren. FOF ¶¶ 375-77.
To influence the eBay analysis, Ameren argues that Rush Island's excess SO
Ameren's claim that the NAAQS render PSD requirements unnecessary is contradicted by the plain language and history of the PSD program and the NAAQS. Congress enacted the PSD program to address pollution occurring in areas already meeting the public health protections set forth in the NAAQS.
The NAAQS predate the PSD program and exist to protect public health and welfare. 42 U.S.C. § 7409(b). The process of setting the NAAQS does not require the EPA to "definitively identify pollutant levels below which risks to public health are negligible."
The EPA's years of implementing the Clean Air Act and the PSD program also contradict Ameren's argument. The EPA has emphasized ad nauseum that there is no known safe threshold below which incremental increases in PM
The EPA's scientific determinations mirror the broad consensus of the world's public health authorities. The great weight of the evidence demonstrates that PM
Ameren is not the first company to argue that the NAAQS set thresholds that shield against or limit PSD obligations. Hawaiian Electric (HECO) maintained before the Ninth Circuit that the EPA could not "impose emission restrictions that are more stringent than necessary to protect NAAQS" in a PSD permit.
Similar to its NAAQS assertions, Ameren argues that pollution impacts below the EPA's "significant impact levels" (or SILs) are harmless. Ameren points out that the EPA has established a SIL of annual PM
Clean Air Act Section 165(a)(3) requires operators looking to implement a major modification to demonstrate that the pollution from the modified facility will not cause or contribute to a downwind NAAQS exceedance. 42 U.S.C. § 7475(a)(3). The EPA established the SILs to be screening tools aimed at identifying which facilities might lead to NAAQS exceedances. Pl. Ex. 1205 [Guidance on Significant Impact Levels] at USTREXR0003853-3855. But "[t]he SIL values identified by the EPA have no practical effect unless and until permitting authorities decide to use those values in particular permitting actions."
Just as the NAAQS do not establish a "zero-risk" threshold under which pollution is safe, the SILs do not establish a level
The EPA's practice of assessing the benefits of Clean Air Act regulations further supports this legal analysis. The EPA models the effects of pollution concentration reduction by amounts well below the SILs, including the effects of changes less than 0.01 μg/m
Finally, Ameren asserts there is too much uncertainty about any harm from its excess emissions to justify the expense associated with installing scrubbers. Ameren's counsel argued in closing that "[t]here are uncertainties at every stage of the causal relationship that plaintiffs must prove." Def. Closing., Tr. Vol. 6, at 34:19-21. Ameren complains that Plaintiffs do "not identify[] or even predict[] any person's real-world death." ECF No. 1068 at 4. This argument mischaracterizes the level of scientific certainty needed and displayed in this case. There is widespread consensus among public health agencies and scientists that PM
Ameren's reliance on individualized uncertainty misconceives the case. This is not a toxic tort case. The Clean Air Act curbs harm borne by a population, not a single person. By enacting the Clean Air Act, Congress sought "to protect public health and welfare from any actual or potential adverse effects" from air pollution. 42 U.S.C. § 7470(1) (emphasis added). Public health regulation evaluates and communicates risk, not diagnoses or proximate causes of any one individual's health problems or death. Numerous epidemiological studies reviewed by the experts in this case have shown that increases to SO
Further, Ameren overstates and misconstrues the nature of uncertainties presented in the EPA's modeling. There is no question that PM
Next, Ameren insists that, though epidemiology can show correlation, it can never establish causation. Sulfate PM
Finally, the structure of the Clean Air Act itself disposes of Ameren's argument. Congress made clear in passing the Clean Air Act that when a source "increases the amount of any air pollutant," it must be subject to NSR (among other requirements).
Injunctive relief at Rush Island will bring the plant into compliance with the PSD program, ending the release of excess SO
The record establishes that in the last ten years, Rush Island's release of more than 162,000 tons of excess SO
Ameren admits there is no adequate remedy at law to address the environmental harm documented in this case. Def. Closing., Tr. Vol. 6, at 33:23-25. Because the environmental harm and health risks are spread across the population of the Eastern United States, there is no one person or discrete group of people to compensate. I find that an "economic award would not sufficiently compensate" for injuries and the increased risk of harm resulting from Ameren's failure to obtain a PSD permit at Rush Island.
The balance of hardships for equitable relief at Labadie compares well with the balance of hardships at Rush Island. On one hand, Rush Island's excess emissions have created a widespread risk of harm to public health. On the other hand, accounting for those excess emissions requires some cost on Ameren's part. The costs of pollution reductions at Labadie are well within Ameren's financial capabilities. FOF ¶¶ 440-444. Implementing DSI on the four Labadie units would cost $55 million dollars in capital investment and then $53 million a year in operating costs. FOF ¶ 362. Ameren did not present any evidence that paying these costs would cause it any hardship. On the contrary, Ameren Missouri's FERC Form 1 filings reveal it has an exceptionally strong and profitable financial standing. FOF ¶¶ 415-16. If the Missouri Public Service Commission does not allow Ameren to seek reimbursement for the cost of implementing DSI, Ameren can readily finance it with a fraction of the annual dividends it has issued in recent years.
An award of injunctive relief at Labadie to account for Ameren's excess emissions serves the public interest. This remedy protects life and health through full enforcement of the protections Congress set forth in the permitting scheme of the Clean Air Act. The cost of remediating the harm from Rush Island's excess emissions pales in comparison to the public health benefit. Using standard, peer-reviewed estimates, Dr. Schwartz estimated the monetary value of social benefits that would accrue from offsetting Rush Island's excess emissions. The benefits of emissions reductions would far surpass any financial costs Ameren will face. FOF ¶¶ 375-76. Remediating the harm from non-compliance also reduces any economic advantage Ameren gained by violating the law, placing it on more equal footing with companies that have complied with the Clean Air Act.
To remediate the harm from Rush Island's excess pollution, the EPA requests that Ameren reduce SO
Ameren argues that because Labadie is "totally innocent," and Ameren has not violated the Clean Air Act there, my order that Ameren install pollution controls at Labadie is an "extreme remedy" that constitutes a penalty. On the contrary, the remedy is based on straightforward equitable principles and the authority I have under the Clean Air Act "to restrain" violations, "to require compliance," and "to award any other appropriate relief." 42 U.S.C. § 7413(b). I have the authority to "order a full and complete remedy" for the harm caused by Ameren's violations, "and in doing so may go beyond what is necessary for compliance with the statute" at Rush Island.
This relief is narrowly tailored "to remedy specific harm shown."
This relief also respects the persuasive factors considered by other courts evaluating environmental remedies. Specifically, reducing emissions at Labadie (1) "would confer [the] maximum environmental benefit," allowed, (2) is "achievable as a practical matter," and (3) bears "an equitable relationship to the degree and kind of wrong it is intended to remedy."
First, this order achieves the maximum possible environmental benefit in this case. When Ameren reduces emissions at Labadie commensurate with the excess emissions from Rush Island, Ameren will have put the public in the place it would have been absent Ameren's Clean Air Act violation. Second, there is no dispute that commonly available pollution controls (DSI, FGD) are achievable as a practical matter. No obstacle stands in the way of DSI or FGD being installed on Labadie. FOF ¶ 362. Finally, the remedy bears an equitable relationship to Rush Island's excess emissions because of the tight geographical link between Rush Island's emissions and Labadie's emission. Ameren's ton-for-ton reductions at Labadie will lower the risks of premature mortality and disease in the same communities impacted by Ameren's Rush Island violations.
At trial, Ameren argued that any injunction against its Labadie plant would constitute a penalty, which the EPA waived when it moved to strike its jury demand. As I ruled at the time, "[w]hen relief `goes beyond remedying the damage caused to the harmed parties by the defendant's action,' [] it is properly viewed as punitive and therefore legal in nature."
To further ensure that any relief at Labadie does not surpass the damage caused by Rush Island, I will order Ameren to base its relief at Labadie on DSI control technology. The capital costs of DSI without a fabric filter are a small fraction of the capital costs of any other control technology. While FGD installation at two units may cost more than $500 million, DSI installation on Labadie's four units would cost only $55 million. FOF ¶ 424. Operating DSI without a fabric filter on all four Labadie units would cost about $53 million per year.
Ameren argues that I should not order injunctive relief at either Rush Island or Labadie because the EPA did not provide fair notice of its regulatory interpretations of the Clean Air Act. Fair notice is an administrative law concept that "preclude[s] an agency from penalizing a private party for violating a rule without first providing adequate notice of the substance of the rule."
Courts also consider "whether the regulated party received, or should have received, notice of the agency's interpretation in the most obvious way of all: by reading the regulations."
40 C.F.R. § 52.21(b)(41)(ii). The regulations also allow a "demand growth exclusion" where owners and operators
Ameren argues that the EPA failed to give notice of how it applies these two subparagraphs to the facts of any given case. Ameren also argues that "on its face" the "all relevant information" standard in 40 C.F.R. § 52.21(b)(41)(ii)(a) fails to provide "ascertainable certainty."
These arguments are unconvincing. The regulation in question is not "baffling and inconsistent" or "unclear" in the way that courts have found other regulations subjected to fair notice challenges.
Ameren also objects to the EPA's application of the demand growth exclusion. The demand growth exclusion applies when a power plant's projected emissions increases are caused by an increase in system-wide demand growth. Ameren argues that the EPA only considered plant-specific, rather than system-wide, demand growth. Ameren also objects to a "restaurant" metaphor that the EPA used to explain temporal demand for electricity generation.
In making these arguments, Ameren mischaracterizes how the EPA applied the demand growth exclusion. The EPA did not evaluate market demand at Rush Island. Instead, the EPA evaluated Rush Island's relationship to system-wide demand. Specifically, the EPA presented evidence that Rush Island is a baseload power plant that runs as frequently as possible.
Finally, Ameren argues that the EPA failed to give fair notice that it would use an actual emissions standard—as opposed to a projected emissions standard—when determining whether Ameren made a major modification at Rush Island. According to Ameren, Missouri's 2007 State Implementation Plan only referred to a pollution
In the 1977 Clean Air Act Amendments, Congress struck a balance. The Act allowed then-existing power plants to continue emitting high levels of pollution until their owners made major modifications at those plants. At that point, they would have to apply for a PSD permit and meet reduced emissions requirements. For thirty years, Ameren benefitted from this policy, operating Rush Island without the need to apply for a PSD permit. When Ameren decided to make major modifications to expand Rush Island's capacity, Ameren refused to play by the rules Congress set. It did not apply for the required PSD permit, and in so doing skirted PSD's requirement to install the best available technology to control the pollution Rush Island emits.
To remedy its violation of the Clean Air Act, Ameren must now apply for a PSD permit for Rush Island within ninety days, propose wet FGD as BACT in its permit application, and implement BACT no later than four and one-half years from this order. However, to stop there would be to abet Ameren's Clean Air Act violation and to ignore the public harm that violation has caused. Mindful of my authority to grant other appropriate injunctive relief under the Clean Air Act, I cannot ignore that harm.
In addition to the relief I order at Rush Island, I will also order Ameren to reduce its pollution at Labadie in an amount equal to Ameren's excess emissions at Rush Island. Ameren may choose whether it will achieve the reductions by installing DSI or some other more effective pollution control at Labadie. This is not a penalty for Ameren's violation of the Clean Air Act; it is an attempt to put the Plaintiffs in the place they would have been had Ameren complied with PSD program requirements from the start. The ton-for-ton reduction at Labadie directly remediates the public harm Ameren has caused and reverses the unjust gain Ameren has enjoyed from its violation of the Clean Air Act at Rush Island.
Accordingly,