VIRGINIA EMERSON HOPKINS, District Judge.
This case is presently before the Court on Defendant Alabama Power Company's ("Alabama Power") Motion in Limine to Exclude on Daubert Grounds (doc. 292). Plaintiffs filed a response (doc. 319) to which Alabama Power replied (doc. 349). On December 29, 2010, the Court granted Plaintiffs until January 11, 2011, to set out their position on whether or not Gorgas Unit 10 is a baseload unit as delineated in United States v. Cinergy Corp., 623 F.3d 455 (7th Cir.2010). (Doc. 351). Plaintiffs filed a response to this Order (doc. 360) and a statement of additional evidence (doc. 366) to which Alabama Power replied (doc. 367). A hearing was held on this motion on February 18, 2011. At this time, the Court will only address Alabama Power's Motion insofar as it relates to Mr. Robert H. Koppe ("Koppe") and Dr. Ranajit Sahu ("Sahu"). For the reasons explained below, Alabama Power's Motion in Limine relating to Koppe and Sahu is due to be granted.
While Federal Rules of Evidence 401 and 402 provide for the liberal admission of relevant evidence, Rules 403, 702, and 703 mitigate against this general policy by giving trial courts the discretion to exclude expert testimony that is either unreliable or irrelevant. See Allison v. McGhan Med. Corp., 184 F.3d 1300, 1310 (11th Cir. 1999). The Eleventh Circuit has held that scientific expert testimony is admissible when:
Cook v. Sheriff of Monroe Cnty., 402 F.3d 1092, 1107 (11th Cir.2005) (quoting United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir.2004)). The proponent of the expert testimony bears the burden of laying the proper foundation for the admission of the expert testimony, and admissibility must be shown by a preponderance of the evidence. Id.
A Daubert inquiry focuses on the principles and methodology underlying expert opinion testimony, not on the conclusions they generate. Id. (citing Daubert, 509 U.S. at 595, 113 S.Ct. 2786). However, testimony based solely on the experience of the expert is not admissible. Rider v. Sandoz Pharm. Corp., 295 F.3d 1194, 1197 (11th Cir.2002). The court must be sure that the expert "employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Id. (quoting Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 157, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999)). Accordingly, the proponent of the testimony does not have the burden of proving that the testimony is scientifically correct, but that it is reliable. Allison, 184 F.3d at 1312. However, the conclusions reached and the methodology used to reach them are not "entirely distinct from one another." General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). Often, experts will extrapolate from already existing data. Id. "But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence which is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered." Id. This scientifically valid connection between the opinion and the facts also has been called "analytical fit." Rider, 295 F.3d at 1197.
On August 7, 1980, the Environmental Protection Agency ("EPA") issued regulations implementing the New Source Review ("NSR") provisions of the Clean Air Act. 45 Fed.Reg. 52675 (1980). Under those regulations, existing sources of air pollution were not required to install the state-of-the-art pollution controls mandated of new sources. Ala. Power Co. v. Costle, 636 F.2d 323, 400 (D.C.Cir.1979). The grandfathering of existing sources was not a perpetual immunity from the NSR requirements; existing plants are required to install modern pollution controls if they undergo any physical or operational change that would result in a significant net emissions increase. 42 U.S.C. § 7475(a); Ala. Admin. Code r. 335-3-14.04(1)(a).
The Attorney General of the United States, acting at the request of the Administrator of the EPA and through the United States Attorney for the Northern District of Alabama, filed this action against Alabama Power, a wholly owned subsidiary of The Southern Company ("Southern").
The EPA alleged that Alabama Power constructed new, or made modifications to, existing, coal-fired, steam driven electrical power generating plants Alabama Power operates in Alabama in violation of the Clean Air Act. (Doc. 127 at ¶ 1). The EPA alleged that Alabama Power commenced maintenance, repair, and replacement activities between 1985 and 1997 that were not "routine," but were "major modifications" of those plants. Id. at ¶¶ 64-67; see Ala. Admin. Code r. 335-3-14-.04(2)(b). The EPA alleged that Alabama Power failed to obtain NSR permits in violation of the Prevention of Significant Deterioration ("PSD") provisions of the Act, 42 U.S.C. §§ 7470-92, and that Alabama Power violated Alabama's State Implementation Plan ("SIP"). (Doc. 127 at ¶¶ 70-83). The EPA asserted that, as a result of Alabama Power's operation of the power plants following this construction and modification without the proper permits, massive amounts of sulfur dioxide ("S0
Southern Company consists of five system utilities: Alabama Power, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Southern Power Company. (Doc. 370, Tr. 128). Southern Company Services, owned by Southern Company, manages the generating fleet of those five utilities. Id. at 128-29. The intercompany interchange contract, an operating agreement which is approved and accepted by the Federal Energy Regulatory Commission, binds the five utilities together to operate as a single electric utility. Id. at 129.
Southern Company determines eight days in advance which units to commit or have online. Id. at 131-32. When a unit comes online and is synchronized to the computerized system, it must operate at a level that is at least its minimum operating level to prevent it from becoming unstable. Id. at 134, 147. The typical standard for a unit's minimum operating level is 40 percent of its maximum capacity. Id. at 148. The coal-fired units on the Southern system were all designed to run most efficiently at or close to their maximum capacity. Id. The difference between each unit's maximum capacity and its actual generation level is termed spinning reserves. Id. at 135. Southern Company is required under Federal Energy Regulatory Commission reliability standards to carry 600 megawatts of spinning reserves at all times.
Southern Company's coal-fired units have a minimum time that they must be taken off the system before they can come back online. Id. at 151. These times range from 24 hours for the smaller coalfired units to 72 hours for the larger coalfired units. Id. at 152. Once a coal-fired unit is brought online, it must be left online for a certain number of hours before it is taken off the system in order to stabilize. Id. at 154-55. There is no maximum amount of time that a unit may be kept online. Id. at 155. When these units were designed it was part of the design feature to recognize that the units cannot be taken off the system at night and brought back online during the day.
Southern Company has six units, all nuclear, that are not operated on the automatic generation control system. Id. at 174. They are loaded to their full capacity whenever they are available and left there "24 hours a day, seven days a week," because they are the cheapest units in the Southern system. Id. at 174-75. Coalfired units are used to do load-following service because they are more expensive to operate. Id. at 175.
The Court has previously explained that Plaintiffs bear the burden of proving, to state a prima facie case, that the projects at issue were "major modifications," meaning "a physical change that resulted in a net emissions increase." (Doc. 198 at 39); see Envtl. Def. v. Duke Energy Corp., 549 U.S. 561, 569, 127 S.Ct. 1423, 167 L.Ed.2d 295 (2007). This requirement is based on the Alabama SIP rules applicable in this case, which provide that a pre-construction permit is only required for a "major modification... that would result in a significant net emissions increase." Ala. Admin. Code r. 335-3-14.04(2)(b). "Since the PSD program requires a pre-construction permit in the event of a significant net emissions increase, it is necessary for the utility [] to make a pre-project projection of what actual emissions will be before construction begins." Envt'l Def. v. Duke Energy Co., No. 1:00CV1262, 2010 WL 3023517, at *5 (M.D.N.C. July 28, 2010); (citing United States v. Ohio Edison Co., 276 F.Supp.2d 829, 865 (S.D.Ohio 2003)).
Ala. Admin. Code r. 335-3-14.04(2)(u)(1). Further, the Plaintiffs must show that the pre-project projected net emissions increase is greater than the significance threshold. The significance threshold for both NO
Koppe and Sahu collaborate to provide the heart of the Plaintiffs' case on emissions. Koppe, a power plant reliability engineer, performed the first part of the analysis, estimating how the projects would affect future generation, while Sahu, an environmental permitting engineer, performed the second part of the analysis, converting the increased generation into increased emissions.
Koppe's portion of the analysis can be broken down into two parts: (1) determining the effect of the project on the unit's availability to generate electricity, and (2) determining how much of the increased availability would result in increased generation.
With respect to Barry Unit 2 and Greene County Unit 2, Koppe analyzed historical operating data and records to determine the amount of outage hours caused by the problematic component and the condition of the rest of the unit before the project. Id. at 7-8. Based on that information, Koppe then exercised his engineering judgment as to the amount of additional hours that each unit would be available to operate in the future because of the projects. Id. at 9-10.
In the case of the Gorgas Unit 10 balanced draft conversion, there was not a single component that had deteriorated nor was there a single component that was causing a considerable amount of outage time. Id. at 36. Because of the different effect of balanced draft conversion on availability, the method that Koppe used to calculate the other projects' effects on availability would not apply. Id. Instead, Koppe looked at other Southern Company units that had been converted, calculating the average fractional reduction in the forced and scheduled outage hours per year that had occurred from pre-project to post-project at those units. Id. Koppe then applied these average fractional reductions to the pre-project outage hours at Gorgas Unit 10 during the baseline periods selected by Sahu, resulting in the total expected reduction in outage hours per year. Id.
To estimate how much of this additional availability would actually be used, Koppe calculated utilization factors, also known as the output factor, for each unit.
Sahu then converted the increased generation Koppe had calculated into increased emissions using standard emissions factors for each unit. (Sahu Deposition, Doc. 292 Ex. 15 at 25-26). Sahu concluded that the results of his calculations showed that Alabama Power reasonably should have expected emissions increases greater than the significance threshold for NSR. (Expert Report of Sahu of Dec. 14, 2009, Doc. 319 Ex. 39 at Attach. G).
In United States v. Cinergy Corporation, 623 F.3d 455 (7th Cir.2010), the Seventh Circuit, in an opinion by Judge Posner, addressed this same methodology.
Although the parties point the Court to various sources for a correct definition of the term "baseload,"
Id. at 460.
Prior to the replacement of the reheater at Barry Unit 2 in 1997, the unit averaged 36 days per year in reserve shutdown. (Doc. 319 Ex. 5 at 58). A unit is in reserve shutdown when the unit could have operated but was shutdown because it was not needed. Id. at 28. In the 24-month time period preceding the replacement, Barry Unit 2 had an actual output factor of 78.7.
Koppe states, without giving a specific figure, that Greene County Unit 2 spent "little time" in reserve shutdown during the pre-project period.
Koppe states, without giving a specific figure, that Gorgas Unit 10 spent "little time" in reserve shutdown during the preproject period.
Accordingly, for the reasons stated above, Alabama Power's Motion in Limine relating to Koppe and Sahu is due to be granted. Specifically, and consistently with the Seventh Circuit's opinion in Cinergy, the Court finds that the methodology employed by Koppe and Sahu is not valid when applied to units that are not operated as baseload units and that none of the units remaining at issue in this case were operated as baseload units during the relevant time periods. A separate order will be entered.
Federal Rule of Evidence 801(d)(2) provides that statements are not hearsay if the statement is offered against a party and is "(C) a statement by a person authorized by the party to make a statement concerning the subject, or (D) a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship[.]" Although the parties have not cited to a case from the Eleventh Circuit on the issue, the Ninth Circuit has held that an expert witness' trial testimony in an earlier bellwether trial on the same subject was an admission of a party-opponent under Rule 801(d)(2)(C). In re Hanford Nuclear Reservation Litig., 534 F.3d 986, 1016 (9th Cir.2008). With respect to Rule 801(d)(2)(D), the former Fifth Circuit has held that prior deposition testimony of an expert hired by the defendant was an admission of the defendant. Collins v. Wayne Corp., 621 F.2d 777 (5th Cir.1980); see Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc) (adopting as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981). Although the court did not cite Rule 801(d)(2)(D), it did analyze the admissibility of the testimony under agency principles as set out in the rule. Id. at 780-82. Because the expert had been hired by the defendant to investigate and analyze the bus accident at issue, the court found that the expert's report on his investigation and his deposition testimony in which he explained his analysis and investigation was an admission of the defendant. Id. at 782.
Hekking was employed to provide an expert opinion in Cinergy. The same Plaintiff employs him in this case to provide an expert opinion on the same provisions of the Clean Air Act. This Court finds the Hekking testimony in Cinergy admissible under both Sections (C) and (D) of Rule 801(d)(2).
Alternatively, the Court finds that, by declining to brief the issue, the United States has abandoned its objection to such testimony. See Flanigan's Enters., Inc. v. Fulton Cnty., 242 F.3d 976, 987 n. 16 (11th Cir.2001) (holding that a party waives an argument if the party "fail[s] to elaborate or provide any citation of authority in support" of the argument); Ordower v. Feldman, 826 F.2d 1569, 1576 (7th Cir.1987) (stating that an argument made without citation to authority is insufficient to raise an issue before the court) (cited in United States Steel Corp. v. Astrue, 495 F.3d 1272, 1287 n. 13 (11th Cir.2007)).
(Tr. 33) (emphasis added).
Koppe stated that, the difference in applying the formula to a baseload unit versus a cycling unit was that you do not have to "dig as hard" because "the fact that the unit will be used all the time when it's available is a no brainer because the unit is used all the time when it's available." Id. at 44-45. He stated that "[t]he conclusions or assumptions that go into the methodology have to be verified in different ways or more thoroughly depending on how the unit is operated. But assuming that the assumptions are facts, the methodology applies equally well to any kind of unit." Id. at 71. Koppe testified that he investigated into all three areas for each unit at issue and determined that he could apply the formula to each unit, agreeing with the Court's characterization that he had "investigated far enough to determine that an investigation was not—further investigation was not necessary." Id. at 67. Koppe admitted that he had not adequately investigated at least one of these three preliminary areas if the unit had spent a lot of time in reserve shutdown and thus was cycling and not baseload under his broader definition of the term. Id. at 67-68.
Daubert does not permit the Court to admit opinion evidence which is connected to existing data only by the ipse dixit of the expert. Joiner, 522 U.S. at 146, 118 S.Ct. 512. Here, Koppe stated that he investigated "enough" to determine that "further investigation was not necessary" in order to apply the formula to the units at issue. At the same time, he admitted that he had not investigated far enough if the units had spent a lot of time in reserve shutdown. It is unclear how far in this spectrum of investigation one must go to apply the formula. Koppe says he has gone far enough, but the Court's gatekeeping function requires more than simply "taking the expert's word for it." United States v. Frazier, 387 F.3d 1244, 1261 (quoting Fed.R.Evid. 702 advisory committee's note (2000 amends.)). Therefore, the Court finds that the formula is only applicable to the units at issue if they are operated as baseload units as defined in Cinergy. The Court notes that in their petition for a rehearing, the Cinergy plaintiffs also made the argument to the Seventh Circuit that the methodology at issue was applicable to both baseload and cycling units. (Doc. 367 Ex. 4 at 11-14). On December 29, 2010, the petition for rehearing was denied.
As the Court has previously stated, Barry Unit 2 does not meet the standard required of the broader definition of baseload as used by Koppe in his expert report. Therefore, even if the formula at issue could be applied to a cycling facility, Koppe has not done "enough" investigation to apply it to Barry Unit 2.