UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ... · 12/9/2011 · UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ... STATEMENT OF RELATED CASES Appellant asserts that

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

____________________________________

No. 11-1400

____________________________________

WILDEARTH GUARDIANS

v.

PUBLIC SERVICE COMPANY OF COLORADO, D/B/A XCEL ENERGY

________________________________________________________________________

On appeal from the United States District Court

For the District of Colorado

The Honorable Judge Miller

Civil Action No. 09-CV-01576

________________________________________________________________________

APPELLANT WILDEARTH GUARDIANS’ OPENING BRIEF

________________________________________________________________________

December 9, 2011 Respectfully Submitted,

Kevin Lynch

Michael Ray Harris

Casey Giltner, Student Attorney

Maclain Joyce, Student Attorney

Environmental Law Clinic

University of Denver

Sturm College of Law

2255 E. Evans Ave.

Denver, Colorado 80208

303-871-7870

Attorney for Appellant

WildEarth Guardians

*Oral Argument is Requested.

Appellate Case: 11-1400 Document: 01018759841 Date Filed: 12/09/2011 Page: 1

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ............................................................................ iii

GLOSSARY………………………………………………………………… . vi

STATEMENT OF RELATED CASES ............................................................ vii

STATEMENT OF JURISDICTION................................................................. 1

STATEMENT OF ISSUES .............................................................................. 1

STATEMENT OF THE CASE ......................................................................... 2

STATEMENT OF FACTS ............................................................................... 4

A. Regulation of Hazardous Air Pollutants…………………………... 4

1. Section 112(g) of the Clean Air Act……………………………4

2. A Section 112(g) Determination Is Wholly Distinct

from Any Other Federal or State Permitting

Requirement for Major Sources ................................................... 6

B. Regulation of EGUs Under the Clean Air Act ................................. 7

1. HAPs Emitted by Coal-Fired Power Plants Pose Serious

Risks to Public Health and the Environment.....………………. . 7

2. In 2000 EPA Determined That It Was Necessary and

Appropriate to List EGUs for Regulation Under Section 112 ..... 9

3. In 2005 EPA Illegally Attempted to “Delist” EGUs as

a Source Category for Regulation Under Section 112………….10

4. The D.C. Circuit Invalidated EPA’s Actions

in New Jersey v. EPA…………………………………………...10

5. EPA and the State of Colorado Clarified Application

of Section 112(g) in the Wake of the New Jersey Decision ........ 11

6. The Decisions in the Lamar, Sandy Creek, and Southern

Alliance Cases Consistently Required EGUs to comply

with Section 112(g) ...................................................................... 12

C. The Comanche Unit 3 EGU .............................................................. 14


ii

SUMMARY OF THE ARGUMENT ............................................................... 16

STANDARD OF REVIEW .............................................................................. 18

ARGUMENT .................................................................................................... 19

I. THE DISTRICT COURT ERRED IN FINDING THAT

XCEL COULD NOT BE HELD LIABLE FOR ITS

FAILURE TO OBTAIN A MACT DETERMINATION

BEFORE FEBRUARY 22, 2010, AS SECTION 112(G)

OF THE CLEAN AIR ACT REQUIRES……………………… 19

II. ALTHOUGH INAPPLICABLE TO THIS CASE,

THE CHEVRON TEST WEIGHS HEAVILY IN

GUARDIANS’ FAVOR………………………………………. 21

A. The first factor of the Chevron test, application

of “new” law, weighs heavily in Guardians’ favor…………. 27

B. Retroactive application of New Jersey would

further the application and intent of Section

112(g) of the Clean Air Act………………………………… 31

C. Retroactive application of New Jersey is fair

and equitable in this case…………………………………….32

CONCLUSION ................................................................................................. 35

REQUEST FOR ORAL ARGUMENT ............................................................ 36

CERTIFICATE OF COMPLIANCE ................................................................ 37

CERTIFICATE OF DIGITAL SUBMISSION ................................................ 38

CERTIFICATE OF SERVICE ......................................................................... 39


iii

TABLE OF AUTHORITIES

CASES

Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210 (10th

Cir. 2007)……………… 26

Broyles v. Fort Lyon Canal Co., 695 P.2d 1136 (Colo. 1985)……………….. 28

Caballery v. U.S. Parole Comm’n, 673 F.2d 43 (2d Cir. 1982)……………… 28

Chevron Oil Co v. Huson, 404 U.S. 97 (1971)………………………..28, 31, 32

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837 (1984)…………………………………………………………..19

Clark v. State Farm Mutual Auto. Ins. Co.,

319 F.3d 1234 (10th Cir. 2003)………………………………………............. 18

Fitzgerald v. Larson, 769 F.2d 160 (3d Cir. 1985)………………………….... 29

Grayned v. City of Rockford, 408 U.S. 104 (1972) …………………………. 32

Hanover Shoes, Inc. v. United Shoe Mach. Corp., 88 S. Ct. 2224 (1968) ....... 29

Kerber v. Qwest Grp. Life Ins. Plan, 647 F.3d 950 (10th Cir. 2011) ............... 18

Miller v. Glanz, 948 F.2d 1562 (10th Cir. 1997) .............................................. 26

Mitchell v. City of Sapulpa, 857 F.2d 713 (10th Cir. 1988)…………………. 28

New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008)………………10, 11, 19, 30

Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484 (10th Cir. 1991) …………..27

Pound v. Airosol Company, Inc., 498 F.3d 1089 (10th

Cir. 2007 ..................... 24

Sierra Club v. Sandy Creek Energy Assocs.,

627 F.3d 134 (5th Cir. 2010)……………………………………….3, 13, 14, 20

S. Alliance for Clean Energy v. Duke Energy Carolinas, No. 1:08CV318,

2008 WL 5110894 (W.D.N.C. Dec. 2, 2008)……………………………..12, 13

Westinghouse Elec. Corp. by Levit v. Franklin,

993 F.2d 349 (3d Cir. 1993) ……………………………………………….. .. 29

WildEarth Guardians v. Lamar Util. Bd., 09-CV-02974-DME-BNB,

2010 WL 3239242 (D. Colo. Aug. 13, 2010)…………………………..3, 13, 20


iv

STATUTES

28 U.S.C. § 1291 .............................................................................................. 1

28 U.S.C. § 1331 .............................................................................................. 1

42 U.S.C. § 7401(b) ......................................................................................... 31

42 U.S.C. § 7412 ………………………………………………………...passim

42 U.S.C. § 7413(e)…………………………………………………...24, 25, 27

42 U.S.C. §§ 7470-7515 ................................................................................... 6

42 U.S.C. § 7604 …………………………………………………………...1, 3

42 U.S.C. §§ 7661-7661f .................................................................................. 6

RULES AND REGULATIONS

40 C.F.R. § 63.43(b) ......................................................................................... 6

40 C.F.R. § 63.43(c) .......................................................................................... 6

40 C.F.R. § 63.43(c)(2)(i) ................................................................................. 6

40 C.F.R. § 63.43(d)(1) ..................................................................................... 5

Regulatory Finding on the Emissions of Hazardous Air

Pollutants from Electric Utility Steam Generating Units,

65 Fed. Reg. 79,825 (Dec. 20, 2000)…………………………………...9, 29, 31

Revision of December 2000 Regulatory Finding,

70 Fed. Reg. 15,994 (Mar. 29, 2005) ................................................................ 10

OTHER MATERIALS

EPA Civil Penalty Policy (1991) available at

http://www.epa.gov/compliance/resources/policies/

civil/caa/stationary/penpol.pdf .......................................................................... 24

U.S. Government Accountability Office, Clean Air Act:

Mercury Control Technologies at Coal-Fired Power Plants

Have Achieved Substantial Emissions Reductions (Oct. 2009),

available at http://www.gao.gov/new.items/d1047.pdf ................................... 7


v

U.S. EPA, Mercury Study Report to Congress (1997), ES-3, available at

http://www.epa.gov/ttn/oarpg/t3/reports/volume1.pdf. .................................... 29


vi

GLOSSARY

CAMR – Clean Air Mercury Rule

CDPHE – Colorado Department of Public Health and Environment

EGU – Electric generating unit

EPA – Environmental Protection Agency

HAPs – Hazardous air pollutants

HCl – Hydrochloric acid

HF – Hydrofluoric acid

MACT – Maximum achievable control technology


vii

STATEMENT OF RELATED CASES

Appellant asserts that there are no related cases.


1

JURISDICTIONAL STATEMENT

The District Court exercised subject matter jurisdiction over this Clean Air

Act citizen suit pursuant to 42 U.S.C. § 7604(a) and 28 U.S.C. § 1331 (federal

question jurisdiction).

The Tenth Circuit Court of Appeals has jurisdiction over this appeal because

it is taken as of right, pursuant to 28 U.S.C. § 1291 (appeals from final district

court decisions), from an Order of the District Court that determined, with finality,

all claims relevant to this action by dismissing them with prejudice. The Order

below was issued on August 1, 2011, and Final Judgment was entered on August 3,

2011. Notice of Appeal was timely filed in the District Court on August 31, 2011.

STATEMENT OF ISSUES

(1) Did the District Court err in finding that Xcel could not be held liable for its

failure to obtain a MACT determination before February 22, 2010, when, as

the Fifth Circuit has acknowledged, Section 112(g)(2)(B) of the Clean Air

Act applies throughout the construction process, and thus, the question of

whether there can be retroactive application of the annulment of the delisting

rule in New Jersey is neither relevant nor determinative?

(2) Even if the question of retroactivity was relevant or determinative, did the

District Court abuse its discretion in finding that it would be inequitable to

hold Xcel liable for its continued construction of Comanche Unit 3 in the

absence of a MACT determination, where Xcel continued construction for

over 2 years post-New Jersey, did not seek the required MACT

determination from the State of Colorado until after the commencement of

this action, and began burning coal and emitting hazardous air pollutants

without a valid permit to do so in violation of Section 112(g) of the Clean

Air Act?


2

STATEMENT OF THE CASE

Factually, this case involves the regulation of hazardous air pollutants

(“HAPs”) under Section 112 of the federal Clean Air Act from the new 750 mega-

watt coal-fired power plant, Comanche Unit 3, located in Pueblo, Colorado that is

operated by Appellee Public Service Company of Colorado d/b/a Xcel Energy

(“Xcel”). 42 U.S.C. § 7412. In enacting Section 112, Congress expressly chose to

require that new sources of HAPs, like Comanche unit 3, commit—by obtaining

the necessary state or federal approval—to the use of the maximum achievable

control technology (“MACT”) to reduce HAPs before engaging in any

construction of the source. But here, instead of abiding by the express intent of

Congress, Xcel chose to place its own profitability over the health and safety of the

people of Colorado by constructing, and then even operating, Comanche Unit 3

without obtaining the necessary MACT approval. In treating Xcel’s failure to do

so as a mere procedural violation of the Clean Air Act, the lower Court chose to

ignore the serious (and illegal) harm from Xcel’s inaction. In reality, absent a

MACT approval, Xcel was not legally allowed to operate Comanche Unit 3; but

Xcel did operate this unit for three months, emitting mercury and other HAPs into

the Colorado environment. While during this time Xcel was legally allowed to

emit no HAPs whatsoever for the unit, by its own admission it began burning coal,

and as a result emitting HAPs, in October 2009. Aplt. App. at 196.


3

Legally, this case is about the application of the Clean Air Act’s mandate

that “no person may construct or reconstruct any major source of hazardous air

pollutants, unless the Administrator (or the State) determines that the MACT

emission limitation under this section for new sources will be met.” 42 U.S.C. §

7412(g). Under circumstances almost identical to those presented in this case—

where the source was still under construction, but not yet operating, at the time that

application of this Section to the source became clear—other courts have

decisively concluded that there is only one possible reading of this language: that

any construction on a major source of HAPs after the applicable date, absent a

MACT approval, is flatly unlawful. See Sierra Club v. Sandy Creek Energy

Associates, 627 F.3d 134 (5th Cir. 2010); WildEarth Guardians v. Lamar Util. Bd.,

09-CV-02974-DME-BNB, 2010 WL 3239242 (D. Colo. Aug. 13, 2010). The

fundamental question before this Court is whether the District Court’s failure to

similarly follow (let alone even consider) the clear language of the Clean Air Act

requires the reversal of its dismissal of Appellant’s Complaint.

Appellant, WildEarth Guardians (“Guardians”) filed this action on July 2,

2009 in the District Court seeking both civil penalties and injunctive relief for

Xcel’s violation of Section 112 of the Clean Air Act, pursuant to the Act’s citizen

suit provision, 42 U.S.C. §7604. Aplt. App. at 16. On August 17, 2009, Xcel filed

a Motion to Dismiss for lack of subject matter jurisdiction and failure to state a


4

claim. Aplt. App. at 24. On March 9, 2010, the District Court denied the Motion

to Dismiss in part, holding that subject matter jurisdiction was proper and that

Xcel’s retroactivity claim was dismissed without prejudice. Aplt. App. at 128.

The Court did ask the parties to provide additional briefing regarding the proper

penalties to be assessed against Xcel and any issues of mootness, and the parties

complied. Aplt. App. at 13-14. On May 11, 2009, Petitioner filed a Motion for

Partial Summary Judgment. Aplt. App. at 231. On May 16, 2009, Xcel moved to

strike the Motion for Partial Summary Judgment on the grounds that the Judge had

not yet issued any order regarding the supplemental briefing. Aplt. App. at 8. On

August 1, 2011, the Honorable Judge Walker D. Miller issued an Order dismissing

Guardians’ action. Aplt. App. at 255. In so doing, Judge Miller sua sponte

renewed Xcel’s previously denied Motion to Dismiss.

STATEMENT OF THE FACTS

A. Regulation of Hazardous Air Pollutants

1. Section 112(g) of the Clean Air Act

The emission of HAPs from major and minor sources are regulated under

Section 112 of the Clean Air Act. 42 U.S.C. § 7412. HAPs are defined as “any air

pollutant listed pursuant to subsection (b) of this section.” 42 U.S.C. § 7412(a)(6).

The list includes numerous distinct air pollutants emitted by power plants,


5

including mercury compounds, hydrochloric acid (“HCl”), and hydrofluoric acid

(“HF”). 42 U.S.C. § 7412(b)(1). A major source is defined as:

[A]ny stationary source or group of stationary sources located

within a contiguous area and under common control that emits or

has the potential to emit 10 tons per year or more of any hazardous

air pollutant or 25 tons per year or more of any combination of

hazardous air pollutants.

42 U.S.C. § 7412(a)(1).

EPA also maintains a list of categories of major sources of HAPs which are

subject to the requirements of Section 112. 42 U.S.C. § 7412(c). Once listed, EPA

is then obligated to promulgate a MACT emission limitation standard for each

source category under Section 112(d). 42 U.S.C. § 7412(d). Regarding the

construction of a new major source of HAPs (as applicable in the case at bar),

Section 112(g)(2)(B) provides that “no person may construct or reconstruct any

major source of hazardous air pollutants, unless the Administrator (or the State)

determines that the maximum achievable control technology emission limitation

under this section for new sources will be met.” 42 U.S.C. § 7412(g)(2)(B). This

MACT determination for a new source must be “made on a case-by-case basis”

where EPA has not yet established a MACT standard for the source’s category. Id.

This case-by-case determination “shall not be less stringent than the emission

control which is achieved in practice by the best controlled similar source.” 40

C.F.R. § 63.43(d)(1).


6

2. A Section 112(g) Determination Is Wholly Distinct from Any Other

Federal or State Permitting Requirement for Major Sources.

The requirement to obtain a MACT determination under Section 112(g) is a

wholly separate and distinct obligation from any federal or state law requiring

major sources to obtain construction or operating permits related to air pollution.1

Section 112(g)(2)(B) requires a source to obtain a “determination,” not a permit,

from EPA or the State regarding compliance with case-by-case MACT. 42 U.S.C.

§ 7412(g)(2)(B). EPA’s regulations are equally clear: “[w]hen a case-by-case

determination of MACT is required . . . the owner and operator shall obtain from

the permitting authority an approved MACT determination according to the

review options contained in paragraph (c) of this section.” 40 C.F.R. § 63.43(b)

(emphasis added). Notably, in paragraph (c) the review options authorize the state

to incorporate the MACT determination process into any separate permitting

processes that may be occurring, but do not require them to be integrated. See

id. at § 63.43(c). Instead, the state may authorize a party to “apply for and obtain a

Notice of MACT Approval” as a separate regulatory proceeding. Id. at

§ 63.43(c)(2)(i).

//

1 For example, Title V of the Clean Air Act requires that major sources also obtain

a facility operating permit, and the New Source Review provisions of Title I

require major sources to obtain construction permits that address emission

standards for non-hazardous pollutants. 42 U.S.C. §§ 7661-7661f; 42 U.S.C. §§

7470-7515.


7

B. Regulation of EGUs Under the Clean Air Act

1. HAPs Emitted by Coal-Fired Power Plants Pose Serious Risks to

Public Health and the Environment.

EPA has found that coal-fired electric generating units (“EGUs”) emit 67 of

the 188 individual HAPs Congress listed for regulation under the 1990 Clean Air

Act Amendments. Aplt. App. at 17-18. These include mercury, selenium, dioxins,

arsenic, acid gases, and other heavy metals. Id. EGUs are the largest

anthropogenic source of mercury in the United States, emitting a total of 48 tons of

mercury annually. U.S. Government Accountability Office, Clean Air Act:

Mercury Control Technologies at Coal-Fired Power Plants Have Achieved

Substantial Emissions Reductions (Oct. 2009), available at

http://www.gao.gov/new.items/d1047.pdf. Mercury and its interaction with the

environment provide a stark example of why HAPs emitted by coal-fired power

plants pose serious health risks to the people of Colorado. Aplt. App. at 15. Once

mercury is deposited in Colorado’s waters, the formation of highly toxic

methylmercury occurs. Id. Subsequently, methylmercury accumulates in fish

tissue and threatens human health if consumed. Id. Nearly twenty percent of the

state’s fish species have high mercury concentrations, and many Coloradoans

routinely consume these locally caught fish. Id.

An EPA study reveals that,


8

“Neurotoxicity is the health effect of greatest concern with

methylmercury exposure. . . Dietary methylmercury is

almost completely absorbed into the blood and distributed to

all tissues including the brain; it also readily passes through

the placenta to the fetus and fetal brain. The developing

fetus is considered most sensitive to the effects from

methylmercury. . . .”

Id. When fetuses, breast-fed infants, or their mothers are exposed to

methylmercury-contaminated fish, they are at particular risk for developing

permanent neurological disorders. These include mental retardation, vision loss,

hearing loss, delayed developmental milestones, attention deficits, memory

problems, auditory processing problems, language difficulties, ataxia, and, in

extreme cases, seizures. Id. at 15-16.

Other HAPs emitted by EGUs include arsenic, dioxins, acid gases, selenium,

lead, and other heavy metals, which have been shown to cause serious adverse

health effects including cancer, heart disease, stroke, and neurological impairment.

Id. at 16. One of those pollutants, dioxin, is among the most potent carcinogens on

the planet. Id. The emission of these HAPs, in violation of the clear directives of

the Clean Air Act, has the potential to cause substantial harm to the health of

Colorado’s people and the surrounding environment. Id.

//

//

//


9

2. In 2000 EPA Determined That It Was Necessary and Appropriate to

List EGUs for Regulation Under Section 112.

Pursuant to Section 112(n) of the Clean Air Act, Congress directed EPA to

conduct a study of the public health hazards of EGU HAP emissions before listing

EGUs under Section 112(c). 42 U.S.C. § 7412(n)(1)(A). EPA was only required

to regulate EGUs under Section 112 if it found, after considering the results of the

study, that such regulation was “appropriate and necessary” to protect public health

and welfare. Id.

On December 20, 2000, EPA placed EGUs on the list of source categories of

HAPs maintained pursuant to Section 112(c). EPA made the decision to regulate

coal-fired EGUs under Section 112 because “mercury emissions from EGUs,

which are the largest domestic source of mercury emissions, present significant

hazards to public health and the environment.” Regulatory Finding on the

Emissions of Hazardous Air Pollutants from Electric Utility Steam Generating

Units, 65 Fed. Reg. 79,825 (Dec. 20, 2000). EPA listed the source category as coal

and oil-fired EGUs, defined by the Clean Air Act as “any fossil fuel fired

combustion unit of more than 25 megawatts that serves a generator that produces

electricity for sale.” 42 U.S.C. § 7412(a)(8).

//

//


10

3. In 2005 EPA Illegally Attempted to “Delist” EGUs as a Source

Category for Regulation Under Section 112.

In 2005, EPA purported to remove EGUs from the list of sources subject to

regulation pursuant to Section 112 of the Clean Air Act. Revision of December

2000 Regulatory Finding, 70 Fed. Reg.15, 994 (Mar. 29, 2005). However, once a

source is listed, the source may only be deleted from the source category list

pursuant to Section 112(c)(9) of the Clean Air Act. However, EPA did not purport

to delist EGUs pursuant to section 112(c)(9) of the Clean Air Act and instead

attempted to undo the previous regulatory finding that listing of the source

category was “necessary and appropriate.” As a result, EPA instead chose to

regulate EGUs by promulgating the Clean Air Mercury Rule (“CAMR”) under

Section 111 of the Clean Air Act. While CAMR regulated mercury emissions

from EGUs, it did not address the other 67 HAPs emitted by the source category

that would be subject to regulation under Section 112.

4. The D.C. Circuit Invalidated EPA’s Actions in New Jersey v. EPA.

EPA’s decision to delist EGUs was challenged in the D.C. Circuit Court of

Appeals by numerous state attorneys general and environmental groups. New

Jersey v. EPA, 517 F.3d 574, 578 (D.C. Cir. 2008). The Petitioners in that case

argued that the Clean Air Act provides that once a source is listed, the source may

only be deleted from the source category pursuant to Section 112(c)(9) of the Act.


11

Id. at 579-80. Under 112(c)(9), a source category may not be removed unless it

finds that “no single unit’s emissions in the category exceed a level adequate to

protect public health with an ample margin of safety, and that no adverse

environmental effect will result from removal.” 42 U.S.C. § 7412(c)(9). EPA did

not make this finding, however, when it sought to change course regarding

regulation of mercury emissions from EGUs. New Jersey, 517 F.3d at 578.

In 2008, the D.C. Circuit agreed with these arguments and vacated as

unlawful EPA’s attempt to remove EGUs from the list of sources regulated under

Section 112 of the Clean Air Act. Id. The court criticized the action taken by

EPA, disparagingly stating that it had “deployed the logic of the Queen of Hearts”

by substituting its own desires for the plain text of the statute. Id. at 582. The

court restored the status quo and held that EGUs “remain listed” as major sources

of HAPs under Section 112. Id. at 583.

5. EPA and the State of Colorado Clarified Application of Section

112(g) in the Wake of the New Jersey Decision.

In response to the New Jersey decision, EPA directed all new major-source

EGUs to obtain MACT determinations, including EGUs that began construction

during the failed “delisting” period. Aplt. App. at 62-63. EPA also requested that

state permitting authorities provide notice to EGUs that case-by-case MACT

determinations be obtained “without delay,” or face federal enforcement actions.

Aplt. App. at 66-67.


12

On January 7, 2009, EPA sent a memo to Regional Administrators stating

that all EGUs that received permits during the period between March 19, 2005 and

March 14, 2008 were presently legally obligated to comply with Section 112(g) of

the Clean Air Act. Aplt. App. at 62-63. In response to EPA’s memorandum, on

March 13, 2009, the Colorado Department of Public Health and Environment

(“CDPHE”) sent a letter to Xcel indicating that EPA had requested sources under

Section 112(g) to obtain a MACT determination. Aplt. App. at 64-65. Subsequent

to these notices, on July 17, 2009, EPA sent a letter directly to Xcel that threatened

enforcement action for failure to obtain a MACT determination. Aplt. App. at 66.

6. The Decisions in the Lamar, Sandy Creek and Southern Alliance

Cases Consistently Required EGUs to Comply with Section 112(g).

In response to New Jersey and the subsequent EPA notices, at least three

federal courts have considered whether EGUs that commenced construction during

the “delisting” period, but remained under construction at the time New Jersey was

decided, must comply with Section 112(g). In each case, the answer was yes.

The first of these cases to be decided was S. Alliance for Clean Energy v.

Duke Energy Carolinas, No. 1:08CV318, 2008 WL 5110894 (W.D.N.C. Dec. 2,

2008). There, the District Court took the most stringent view of EPA’s attempt to

delist EGUs in 2005, holding that because the purported delisting was illegal at the


13

time, new EGUs remained subject to 112(g) even during the delisting period. S.

Alliance for Clean Energy, 2008 WL 5110894 at *10.

In the second case, which was decided in the District of Colorado by the

Honorable Judge Ebel, the court took a more narrow view of retroactivity, finding

that the obligation to comply with Section 112(g) simply arose anew after New

Jersey was decided. Lamar, 2010 WL 3239242 at *6. The court made this

determination by focusing on the plain language of the Clean Air Act, holding that

an owner or operator is not relieved of its responsibility to comply with Section

112 after it has begun construction. Id. By interpreting the plain language of

Section 112, Judge Ebel stated that “‘[C]onstruct or reconstruct’ are active verbs

that have force after the permit is issued and after construction or reconstruction

has begun.” Id. at 5. Based on this reading of the statute, Judge Ebel determined

that sources that did not obtain a MACT determination, in reliance upon the

overturned delisting rule, are not relieved of their responsibility to now comply.

Id.

Finally, the Fifth Circuit addressed the issue in a similar case. Sandy Creek

627 F.3d at 140-44. There the court reached the same conclusion as did Judge

Ebel (in fact it cited him in support). Id. at 141. The court stated: “[S]ection

112(g) says nothing about a preconstruction permitting process. It simply prohibits

the act of constructing a major source for which no MACT determination has been


14

made.” Id. at 141 n.9. Additionally, the court held that “[t]he day [the power

plant] actually commenced construction is, therefore, irrelevant to §112(g)(2)(B)’s

current application to [the plant’s] concurrent and ongoing construction, since §

112(g)(2)(B) prohibits the act of construction itself––and not the commencement

thereof.” Id. (emphasis in original).

C. The Comanche Unit 3 EGU.

Comanche Unit 3 is a 750 mega-watt coal-fired power plant, owned and

operated by Xcel. It is the largest coal-fired EGU ever built in Colorado. Aplt.

App. at 255.

Xcel completed an initial application for a permit to construct Comanche

Unit 3 in August 2004. Aplt. App. at 38. On July 5, 2005, Xcel obtained a

preconstruction permit from CDPHE. Aplt. App. at 41. Comanche Unit 3 is a

major source of HAPs under Section 112 of the Clean Air Act because it has the

potential to emit over 25 tons of HAPs per year including specifically HCl and HF.

Aplt. App. at 20. The 2005 permit allows Comanche Unit 3 to emit 20.79 tons per

year of HCl, and 15.89 tons per year of HF. Aplt. App. at 241.

Despite Comanche Unit 3’s categorization as a major source of HAPs, the

2005 permit lacked a determination of HAPs emissions control that satisfies the

MACT requirement of Section 112(g). Aplt. App. at 41. Instead of including the

MACT determination required by Section 112(g), Xcel’s permit complied with


15

CAMR, which regulated only mercury emissions under Section 111 instead of

Section 112. Id. CAMR did provide for limits on mercury emissions to a certain

extent, but did not address the other major HAPs emitted from Comanche Unit 3

such as HCl and HF.

On April 23, 2009, Guardians provided Xcel with a sixty-day notice letter

stating Guardians’ intent to sue based on Xcel’s failure to comply with Section

112(g) of the Clean Air Act. Aplt. App. at 16. In July 2009, Xcel was expressly

warned by EPA to comply with Section 112(g), and EPA threatened an

enforcement action for noncompliance. Aplt. App. at 66. Guardians filed suit

against Xcel to enforce compliance with Section 112(g) on July 2, 2009. Aplt.

App. at 14.

It was not until July 24, 2009, more than four months after CDPHE notified

Xcel of its obligation to comply with Section 112(g) of the Clean Air Act, that

Xcel initiated the process for obtaining a case-by-case MACT determination. Aplt.

App. at 43. Xcel began operation of Comanche Unit 3 for the first time in October

2009. Aplt. App. at 196. Xcel did not obtain a final MACT determination until

February 22, 2010, more than four years after the commencement of construction,

almost two years after New Jersey, more than a year after the EPA memo, and

more than three months after coal-burning operations began. Id.


16

Thus, Xcel commenced construction of Comanche Unit 3 in December

2006, continued construction through 2009, and began coal-burning operations in

October 2009, all without obtaining a MACT determination until February 22,

2010.

SUMMARY OF THE ARGUMENT

The District Court’s dismissal of Guardians’ claims must be set aside for

two reasons. First, the District Court erred in finding that Xcel could not be held

liable for its failure to obtain a MACT determination before February 22, 2010.

The plain language of Section 112(g) makes clear that Xcel was required to obtain

a MACT determination after New Jersey because it was continuing to “construct”

Comanche Unit 3 without a valid MACT determination. In deciding that the

application of Section 112(g) would be an unfair retroactive application of a legal

standard, the District Court simply failed to address the plain language of the

statute or the holdings in Lamar and Sandy Creek. As those courts found, the

question of whether there can be retroactive application of Section 112(g) is not

relevant for the period of time after the New Jersey decision.

Second, even if the question of retroactivity was relevant, it is not outcome

determinative in the way the District Court found. As an initial matter, the Court

misconstrued the purpose of the Chevron retroactivity test. Chevron is a means for

a court to determine whether a party has a legal duty to alter past conduct to abide


17

by a new legal requirement. Here, the District Court did not use Chevron in this

manner. Indeed, it never concluded that Section 112(g), post-New Jersey, did not

apply retroactively to EGUs like Comanche Unit 3. Instead, the District Court

improperly used Chevron to determine that even if it did, penalizing Xcel under the

circumstances would not be fair. In making this determination at the Motion to

Dismiss stage, the District Court not only ignored the equitable factors that

Congress intended to be used for setting penalties (and set forth in Section 113 of

the Clean Air Act), but it did not give Guardians an opportunity to contest through

the adversarial process—discovery, witness examination, cross-examination,

etc.—the "facts" the District Court relied upon in making its "equity"

determination.

And applying the Chevron test as it was intended to be used, all three

factors favor finding that Xcel violated Section 112(g). Under the first factor, a

threshold test, New Jersey did not create a new principle of law because a judicial

decision vacating an administrative action cannot form the basis of a retroactivity

argument, particularly when, as here, the vacated rule does not constitute clear past

precedent. Under the second factor, retroactive application would further the intent

and purpose of Section 112(g) which intended for immediate regulation of EGUs

in order to protect the public health from the dangers posed by HAPs. Under the

third Chevron factor, whether or not it would be equitable to apply the law


18

retroactively, requiring Xcel to comply with Section 112(g) does not contravene

equity concerns because Xcel had fair warning of its obligation to comply with

Section 112(g) on numerous occasions. In addition, Xcel continued construction

for over two years post-New Jersey, did not seek the required MACT

determination from the State of Colorado until after the commencement of this

action, and began burning coal without a valid permit to do so in violation of

Section 112(g) of the Clean Air Act.

STANDARD OF REVIEW

An appellate court reviews de novo a district court's dismissal of a complaint

under Fed. R. Civ. P. 12(b)(6), applying the same legal standard as the district

court. Kerber v. Qwest Grp. Life Ins. Plan, 647 F.3d 950 (10th Cir. 2011). The

appellate court must accept as true all well-pleaded factual allegations in a

complaint and view these allegations in the light most favorable to the plaintiff. Id.

In order to survive a motion to dismiss, the complaint must allege sufficient facts

to make the claim plausible on its face. Id. In addition to the allegations contained

in the complaint, the court may consider attached exhibits and documents

incorporated into the complaint, so long as the parties do not dispute the

documents' authenticity. Id. The Tenth Circuit has reviewed Chevron retroactivity

cases under this standard. Clark v. State Farm Mutual Auto. Ins. Co., 319 F.3d

1234, 1240 (10th Cir. 2003).


19

ARGUMENT

I. THE DISTRICT COURT ERRED IN FINDING THAT XCEL COULD

NOT BE HELD LIABLE FOR ITS FAILURE TO OBTAIN A MACT

DETERMINATION BEFORE FEBRUARY 22, 2010, AS SECTION

112(G) OF THE CLEAN AIR ACT REQUIRES

In addressing the question of retroactive application of the law, the District

Court failed to address the plain language of Section 112(g), which reads: “no

person may construct, reconstruct or modify a major source of hazardous air

pollutants without a MACT determination.” 42 U.S.C. § 7412(g). Xcel has argued

that this language merely creates a preconstruction requirement, and that once a

facility is under construction the obligation to obtain a MACT determination

disappears. Aplt. App. at 52-55. But this language is unambiguous; there is only

one possible plain language reading of Section 112(g)–– construction of any type,

and not just commencement, is prohibited absent compliance.2

2 This is yet another example of Congress’ use of unambiguous language in

Section 112 being twisted in order to attempt to allow EGUs to escape regulation.

Thus, in New Jersey the court stated that EPA could not prevail in its attempt to

use agency deference because “Congress has directly spoken to the …issue.” New

Jersey, 517 F.3d at 581(citing to Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984)). As New Jersey found, "EPA's

purported removal of EGUs from the Section 112(c)(1) list therefore violated the

CAA's plain text and must be rejected . . ." New Jersey, 517 F.3d at 582. Congress

was so explicit in its requirement that EGUs be listed that EPA had no discretion in

listing or delisting them under Section 112. "For EPA to avoid a literal

interpretation at Chevron step one, it must show either that, as a matter of historical

fact, Congress did not mean what is appears to have said, or that, as a matter of

logic and statutory structure, it almost surely could not have meant it." Id.


20

The District of Colorado and the Fifth Circuit agree, having unequivocally

decided the ultimate issue of this case, concluding that a MACT determination was

required for EGUs that began construction during the delisting. In Lamar, Judge

Ebel found that an owner or operator of an EGU is not relieved of its responsibility

to comply with Section 112(g) after the initiation of construction. Lamar, 2010

WL 3239242 at *5. Judge Ebel interpreted the plain language of Section 112(g),

stating “construct is an active verb that has force after the permit is issued.” Id.

Plainly stated, sources that relied on the delisting rule and did not obtain a MACT

determination before initiating construction are not relieved of their responsibility

to do so after New Jersey.

The Fifth Circuit adopted Judge Ebel’s analysis in Sandy Creek, concluding

that any EGU that began construction during the delisting period was required to

comply with Section 112(g). Sandy Creek, 627 F.3d at 141. In Sandy Creek, the

defendant began construction of an EGU without a MACT determination, relying

on the same delisting rule that Xcel points to. The Fifth Circuit found that the

defendant violated the plain language of Section 112(g) because it had continued

construction without a MACT determination after the delisting rule was vacated in

New Jersey. Sandy Creek, 627 F.3d at 141.

This is the only possible reading of Section 112(g) and is directly applicable

to Xcel, which began the construction of Comanche Unit 3 during the delisting


21

period. As in Lamar and Sandy Creek, Xcel had a present duty to comply with

Section 112(g) following New Jersey.

II. ALTHOUGH INAPPLICABLE TO THIS CASE, THE CHEVRON

TEST WEIGHS HEAVILY IN GUARDIANS’ FAVOR.3

Ultimately, it is clear from the Order below that the District Court dismissed

this case because the court believed that that it would be inequitable to penalize

Xcel for its failure to comply with Section 112(g) under the facts of this case. See

Aplt. App. at 262-63. Specifically, the court focused on three perceived inequities:

that Xcel had obtained a preconstruction permit that did contain a mercury limit;

that it had relied upon statements for permitting officials before New Jersey was

decided; and that it had not emitted mercury and other pollutants above any legally

allowable limit. See Aplt. App. at 262.

There are two reasons the District Court was incorrect in its consideration of

these equitable issues. First, the court was factually incorrect. While Xcel did

obtain a preconstruction permit, that permit is not the equivalent of a MACT

determination. See supra p. 13-14. More importantly, the mercury limit issued

3 The District Court stated that Guardians agreed that Chevron was the applicable

law in this case. Aplt. App. at 260. This is unequivocally incorrect. What

Guardians made known to Judge Miller was that, after the decisions in Lamar and

Sandy Creek, a retroactive application of the New Jersey decision had no place in

this matter. Aplt. App. at 209-210. Only because Judge Miller relied so heavily on

this improper application of Chevron in his dismissal, Guardians will address the

retroactivity argument here.


22

under the illegal CAMR rule did not contain limits for other HAPs that would be

emitted from Comanche Unit 3. See supra p.10. And while it is true that Xcel

relied on pre-New Jersey statements regarding the permitting of Comanche Unit 3,

Judge Miller never explained the relevance of that given the New Jersey decision.

In fact, the District Court seemed to forget the fact that Xcel ignored the

instruction of regulatory authorities at the federal and state level to comply with

Section 112(g) in the aftermath of New Jersey. Aplt. App. at 62-67. And the

District Court missed the mark regarding harm from Xcel’s delayed compliance

and its operation of Comanche Unit 3 for three months without a valid MACT

determination in place. Inexplicably, Judge Miller discusses, and seemingly

bases his decision to dismiss on, the idea that emissions at Comanche Unit 3 never

exceeded the proposed MACT limits submitted in Xcel’s initial permit application.

The court, however, failed to recognize that there is no acceptable emissions level

whatsoever for a major source that does not have a MACT determination. 42

U.S.C. § 7412(g)(2)(B). Section 112(g) flatly prohibits any construction, and

therefore operation, of Comanche Unit 3 in the absence of a MACT determination.

Id. Indeed, this is EPA’s interpretation, expressed in its January 2009 memo.

Aplt. App. at 62-63. Without the required MACT determination in place, Xcel’s

operation of Comanche Unit 3 did result in unlawful emissions of HAPs.


23

The District Court was also legally wrong. The court misconstrued the

purpose of the Chevron retroactivity test. Chevron is a means for a court to

determine whether a party has a legal duty to alter past conduct to abide by a new

legal requirement. Here, the District Court did not use Chevron in this manner.

Indeed, it never concluded that Section 112(g), post-New Jersey, did not apply

retroactively to EGUs like Comanche Unit 3. Instead, the District Court

improperly used Chevron to determine that even if it did apply, penalizing Chevron

under the circumstances would not be fair. In making this determination at the

Motion to Dismiss stage, the District Court not only ignored the equitable factors

that Congress intended to be used for setting penalties (and set forth in Section 113

of the Clean Air Act), but it did not give Guardians an opportunity to contest

through the adversarial process—discovery, witness examination, cross-

examination, etc.—the "facts" the lower court relied upon in making its "equity"

determination.

Even assuming that it could reach the third prong of Chevron (which it

cannot for reasons discussed below), it focused on the wrong notion of “equity.”

In Chevron, the intended focus was on whether a party received “fair notice,” of

application of a “new” legal requirement. Both parties argued this application of

Chevron but the District Court never addressed it. See Aplt. App. at 55, 159, 184-

85. Instead, it focused on the substantive merits of whether it would be unfair to


24

penalize Xcel for its failure to obtain a timely MACT determination; not on

whether it had an obligation to comply with the requirement in the first instance.4

Guardians had actually agreed with the District Court that equitable

considerations might come into play in this case when assessing penalties. But,

determining whether Xcel should be subject to monetary penalties is not a legal

question, but an equitable one that should be decided after liability under Section

112(g) is determined. The typical method to determine penalties is to first

calculate the maximum penalty, and then the court must consider the eight

equitable factors set out in 42 U.S.C. § 7413(e) of the CAA to determine whether

the penalty should be lowered. Pound v. Airosol Company, Inc., 498 F.3d 1089,

1095 (10th Cir. 2007); see also EPA’s Civil Penalty Policy (1991) available at

http://www.epa.gov/compliance/resources/policies/civil/caa/stationary/ penpol.pdf.

These factors are:

(1) The size of the business;

(2) The economic impact of the penalty on the business;

(3) The violator's full compliance history and good faith efforts to

comply;

(4) The duration of the violation as established by any credible

evidence (including evidence other than the applicable test

method);

(5) Payment by the violator of penalties previously assessed for the same

violation;

4 Ironically, Xcel did obtain the MACT determination. See supra p. 15. If the

requirement post-New Jersey was truly inequitable under Chevron, Xcel

presumably would not have complied and instead argued to EPA that applying

Section 112(g) so late in construction of Comanche Unit 3 was unfair.


25

(6) The economic benefit of noncompliance;

(7) The seriousness of the violation; and

(8) And other such factors as justice may require.

EPA’s Civil Penalty Policy is based off the factors enumerated in the Clean Air

Act itself. 42 U.S.C. § 7413(e)(1). Due to the District Court’s premature dismissal

of the case, Guardians has been significantly disadvantaged because it has had no

opportunity to verify or challenge Xcel’s “assertions.” Without the fact-finding

that would be made possible by complete discovery and the questioning and cross-

examination of witnesses, there is no way to reliably ascertain Xcel’s equitable

penalties.

The District Court, in determining that equity concerns in this case

precluded Xcel from facing liability for its disregard of the plain language of

Section 112(g), stated that there was “no evidence that any emission failed to meet

the MACT standard.” Aplt. App. at 261. Disregarding the fact that the court

overlooks that any emission without a MACT determination is a violation, this is

also nothing more than a blind assertion by the court. Guardians had no

opportunity to discover and present evidence that would demonstrate precisely

how much mercury and other HAPs were emitted, illegally, during the time that

Xcel had not obtained a MACT determination. Guardians further had no

opportunity to cross-examine Mr. Magno, who provided several declarations for

Xcel in this matter that address the operation of and emissions from Comanche


26

Unit 3.

The District Court relied upon several other facts5 in dismissing this case

that Guardians should have had an opportunity to challenge. Specifically, the court

relied upon the “fact” that “Xcel commenced the permitting process assuming

regulation by MACT and then revised its submitted to regulation by CAMR upon

EPA’s adoption of the delisting rule.” Aplt. App. at 262. The court also relied

upon generic conclusions regarding the initial permitting of Comanche Unit 3 that

were not included in the Complaint. Id. at 263. And the court stated that “[w]hen

the delisting rule was annulled, Xcel again complied with directives and

established a higher standard of MACT determination, presumably in the public

interest.” Id. Guardians should have been afforded an opportunity to present

5 Judge Miller improperly relied upon facts not included in the complaint when

deciding this case at the motion to dismiss stage. “The failure to convert a 12(b)(6)

motion to one for summary judgment where a court does not exclude outside

materials is reversible error unless the dismissal can be justified without

considering the outside materials.” Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210,

1215-16 (10th

Cir. 2007). Further, courts have held that “the court’s function on

Rule 12(b)(6) motion is not to weigh potential evidence that the parties might

present at trial, but to assess whether plaintiff’s complaint alone is legally

sufficient to state a claim for which relief can be granted.” Miller v. Glanz, 948

F.2d 1562, 1565 (10th Cir. 1997). Here, Judge Miller could not have dismissed

Guardians’ claims without considering outside materials. Judge Miller conducted

an in-depth application of the Chevron test, under which large portions of his

reasoning were tied to Xcel’s actions under a settlement agreement and in response

to the delisting rule and its subsequent vacatur. Neither set of facts were applicable

to Guardians’ claims or mentioned in the complaint. Had Judge Miller limited his

decision to the pleaded complaint, this case would have survived the 12(b)(6)

stage.


27

additional evidence on each of these “facts” and to challenge Xcel’s assertions that

it essentially “did everything possible” to comply given the regulatory uncertainty.

Guardians could have sought documentation or examined witnesses to find out

why Xcel took over two years after the New Jersey decision to apply for a MACT

determination, what effect the letters from EPA and the State had on Xcel’s plans

for compliance, and what communication occurred between the State and Xcel

beyond that contained in the letters submitted in this case. Guardians could also

have introduced evidence showing what other utilities did in similar situations and

how they were able to come into compliance with Section 112(g) much more

quickly than Xcel did in this case. A more thorough evaluation of this evidence is

needed to fully assess the equitable factor of “the violator’s full compliance history

and good faith efforts to comply.” 42 U.S.C. § 7413(e)(1).

A. The first factor of the Chevron test, application of a “new” law,

weighs heavily in Guardians’ favor

A Chevron analysis “must be made on the basis of the facts of each case.”

Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484, 1495 (10th Cir. 1991).

Application of the factors in this case weighs heavily in Guardians’ favor.

“First, the decision to be applied non-retroactively must

establish a new principal of law, either by overruling clear past

precedent on which litigants may have relied… or by deciding

an issue of first impression whose resolution was not clearly

foreshadowed… Second, it has been stressed that ‘we

must…weight the merits and demerits in each case by looking

to the prior history of the rule in question, its purpose and


28

effect, and whether retrospective operation will further or retard

its operation.’… Finally, we have weighed the inequity

imposed by retroactive application, for (w)here a decision of

this Court could produce substantial inequitable results if

applied retroactively, there is ample basis in our cases for

avoiding the ‘injustice or hardship’ by a holding of non-

retroactivity.”

Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971).

Courts applying Chevron will first determine if the decision to be applied is

a new principle of law, either because it overruled clear past precedent on which

litigants may have relied, or because it is deciding an issue of first impression

whose resolution was not clearly foreshadowed. Chevron, 404 U.S. at 106-07. As

such, the first factor of Chevron is a threshold test. Mitchell v. City of Sapulpa,

857 F.2d 713, 716 (10th Cir. 1988) ("a court should look to the second and third

prongs of the Chevron Oil analysis only “[o]nce it has been determined that a

decision has ‘establish[ed] a new principle of law.’”). There is no need to consider

the remaining factors if the decision to be applied does not establish a new rule of

law. Id.

Here, there is no reason to look past this threshold factor. A judicial

decision vacating an agency action, exactly as New Jersey vacated the EPA

delisting, cannot form the basis of a retroactivity claim. Caballery v. U.S. Parole

Comm’n, 673 F.2d 43, 47 (2d Cir. 1982); see also Broyles v. Fort Lyon Canal Co.,

695 P.2d 1136, 1144 (Colo. 1985) (interpreting a statute enacted prior to an agency


29

decision does not establish a new principle of law). By the very nature of the

action at issue, New Jersey does not qualify as a new principle of law, because it is

setting aside a regulatory, not judicial, decision. Chevron looked to a previous

Supreme Court decision to define what “clear past precedent” required. See

Hanover Shoe, Inc. v. United Shoe Machi. Corp., 88 S. Ct. 2224, 2233 (1968)

(defining ‘clear past precedent’ as “a situation in which there was a clearly

declared judicial doctrine upon which [the party] relied and under which its

conduct was lawful.”) (emphasis added).

If this Court decides to not follow Caballery, New Jersey still does not

establish a new principle of law because the prior precedent “must be ‘sufficiently

clear that a plaintiff could have reasonably relied upon…a criteria that [is] not met

where the law was erratic and inconsistent.’” Westinghouse Elec. Corp. by Levit v.

Franklin, 993 F.2d 349, 354-55 (3d Cir. 1993); see also Fitzgerald v. Larson, 769

F.2d 160 (3d Cir. 1985). Here, the delisting was not sufficiently clear for Xcel to

have relied upon because EPA had been erratic and inconsistent in its actions under

Section 112.

EPA first found in 2000 that it was “necessary and proper” to regulate

EGUs under Section 112. See Regulatory Finding on the Emissions of Hazardous

Air Pollutants from Electric Utility Steam Generating Units, 65 Fed. Reg. 79,825

(Dec. 20, 2000); U.S. EPA, Mercury Study Report to Congress (1997), ES-3,


30

available at http://www.epa.gov/ttn/oarpg/t3/reports/volume1.pdf. While it never

withdrew that finding, EPA began to regulate mercury emissions from EGUs under

Section 111 instead, though this decision was quickly challenged in the D.C.

Circuit Court. New Jersey, 517 F.3d at 578. This type of inconsistency and

changing agency action could not create a past precedent that Xcel could have

reasonably relied upon.

In the present case, EPA’s decision to delist EGUs from Section 112 was not

a “clearly declared judicial doctrine” upon which New Jersey could have

established a new principle of law. Rather it was an agency action subject to

judicial review, and indeed, one which was immediately called into question.6

New Jersey, 517 F.3d 574. It would be disingenuous for Xcel to claim reliance on

this interpretation when it was so quickly and vehemently challenged by a number

of states and environmental groups, as contrary to the plain language of the Clean

Air Act. The D.C. Circuit Court derisively overturned this agency action, holding

that EPA had failed to follow the Clean Air Act and instead “employed the logic of

the Queen of Hearts” by replacing Congressional intent with that of the agency. Id

at 582.

//

//

6 Delisting occurred on March 29, 2005. New Jersey was filed on August 4, 2005.


31

B. Retroactive application of New Jersey would further the

application and intent of Section 112(g) of the Clean Air

Act.

The second Chevron factor is to consider the effect that retroactive

application would have and whether applying the “new” law to prior cases would

“further or retard” the intent of the statute in question. Chevron, 404 U.S. at 107.

Oddly, while the District Court found that Xcel’s actions had not harmed the

environment, it somewhat inconsistently found that this factor weighs in

Guardians’ favor. And for good reason. Congress implemented Section 112(g),

and EPA listed EGUs under that section, as a rigorous public health mandate. See

42 U.S.C. § 7401(b). Indeed, EPA found it “necessary and appropriate” to regulate

EGUs under Section 112(g) because EGUs emit a variety of HAPs, including

mercury, that cause permanent harm to humans and the environment. See

Regulatory Finding on the Emissions of Hazardous Air Pollutants from Electric

Utility Steam Generating Units, 65 Fed. Reg. 79,825.

More importantly, Section 112(g)(2)(A) exists to ensure that, regardless of

EPA’s action or inaction in promulgating specific standards for MACT emission

limitations, EGUs would still be regulated under MACT standards based on a case-

by-case determination. Congress’ intent to provide emission limitation standards

for the present situation is clear. EPA was required to promulgate the MACT


32

standard under Section 112(d) by 2002; however, almost a decade later, EPA has

still yet to promulgate a national MACT standard.

With the implementation of Section 112(g), Congress believed that MACT

determinations were important because it required new facilities to presently obtain

a MACT determination, rather than wait to apply MACT determinations until

some point after EPA had promulgated a set of standards. It is in this regard that

Comanche Unit 3, based on the intent of Section 112(g), was required to obtain a

MACT determination immediately; not at some to-be-determined point in the

future. Allowing Xcel to operate and emit HAPs with no regulation or oversight

would completely overlook the Congressional and EPA intent of Section 112(g).

C. Retroactive application of New Jersey is fair and equitable in this

case.

The final factor of the Chevron test is whether the retroactive application of

the “new” law would create an equitable or inequitable result. Only where

application would be unfair, due to lack of notice or some other equitable

consideration, should courts refuse to apply the law retroactively. Chevron, 404

U.S. at 107.

Fair notice is given when a “person of reasonable intelligence [has] a

reasonable opportunity to know what is prohibited so that he may act accordingly.”

Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). Xcel claims that it was not

provided “fair warning” to comply with Section 112(g), and therefore, its Due


33

Process rights would be violated by application of Section 112(g). Aplt. App. at

57. Yet, Xcel’s position is contradicted by a host of events that, in fact, provided

more than adequate notice of its obligation to obtain a MACT determination as

required by Section 112(g).

Xcel was provided notice in five instances. First, EGU operators were put

on notice of their obligation to comply with Section 112(g) in 2008 by the New

Jersey decision. Xcel should have known, from at least this time, that it was not in

compliance with Section 112(g), and would need to obtain a MACT determination

before continuing with construction or operation of Comanche Unit 3. The

January 2009 EPA memo, putting under-construction EGUs on notice of Section

112(g)’s applicability, again provided notice. In March 2009, Xcel was expressly

notified by the State of Colorado, in the letter from CDPHE, requiring Xcel to

participate in the MACT process. Aplt. App. at 64. In July 2009, Xcel was

expressly warned by EPA to comply with Section 112(g) and threatened with an

enforcement action for noncompliance. Finally, Xcel was given notice when

Guardians filed this case to enforce compliance on July 2, 2009.

Xcel had more than fair notice of its obligation to comply with Section

112(g), but instead chose to forego its obligation to obtain a MACT determination

until February 22, 2010, two years after New Jersey was decided. Those two years

of non-compliance subject Xcel to liability for its impermissible construction and


34

operation of an EGU without a MACT determination.

Important too, is Xcel’s eventual compliance with Section 112(g). Despite

its argument that compliance would be an unfair application of a retroactive law, it

chose to comply with Section 112(g) rather than stand by this argument. If it was

unfair, it remains unclear why Xcel eventually chose to comply. Xcel’s own

actions betray its vehement argument and indicate that, in fact, it was fair to hold it

accountable to Section 112(g), post–New Jersey.

Because Xcel had more than enough notice and because it eventually

complied with Section 112(g), it is fair to apply New Jersey retroactively and

penalize Xcel for its delay in obtaining the required MACT determination. The

unfairness warned of in the Chevron test is not present here, and should not stop

this Court from applying the full force of Section 112(g).

Judge Miller improperly replaced the equity and due process considerations

of Chevron with an equity discussion applicable only to the penalty phase of this

case. It is only after Xcel’s liability is established that its adherence to other

regulatory schemes would be relevant. Judge Miller ignored the ample time and

notice provided to Xcel and was instead concerned that it should not be penalized

because its conduct was good enough in his mind. The fairness of imposing

penalties is a post-liability consideration, one that requires witnesses to be heard,

cross-examination, and the ability of Guardians to offer evidence to rebut any


35

notion of inequity. Instead, Judge Miller decided unilaterally that penalties were

unfair. Because this case was improperly dismissed at such an early stage, much

of the relevant information has yet to be brought to light.

In sum, Xcel cannot meet the threshold test for establishing New Jersey as a

new principle of law, and the second and third factors weigh in Guardians’ favor.

This Court should overturn Judge Miller’s Chevron-based dismissal of this case.

CONCLUSION

For the reasons set forth above, Guardians requests that the Court reverse the

District Court’s August 1, 2011 Order dismissing Guardians’ claims that

Defendant Xcel Energy violated Section 112(g) of the Clean Air Act in its failure

to obtain a case-by-case MACT determination.


36

REQUEST FOR ORAL ARGUMENT

Pursuant to 10th Cir. R. 28.2(C)(4), Guardians has included a statement of

reasons why argument is necessary in this appeal. Guardians requests oral

argument for the following reasons:

1. There is a conflict between the Fifth Circuit and the District

Court of Colorado regarding whether or not an EGU, who began

construction during the EPA’s delisting period, should be presently

required to comply with Section 112(g) of the Clean Air Act.

2. This case involves an issue of first impression in the Tenth

Circuit Appellate Division and a split between district courts in the

District of Colorado regarding the issue of whether or not an EGU,

who began construction during the EPA’s delisting period, should be

presently required to comply with Section 112(g) of the Clean Air

Act.

3. This case involves the complex regulatory scheme of Section

112(g) of the Clean Air Act and additionally involves both a

complicated and novel historical and factual background.


37

CERTIFICATE OF COMPLIANCE

As required by Fed. R. App. P. 32(a)(7)(c), I certify that this brief is

proportionally spaced and contains 8,468 words. I relied on my word processor to

obtain the count and it is Microsoft Office 2007. I certify that the information on

this form is true and correct to the best of my knowledge and belief formed after a

reasonable inquiry.

Dated this 9th day of December, 2011.

Respectfully submitted,

s/ Kevin Lynch

Kevin Lynch

Michael Ray Harris







WildEarth Guardians


38

CERTIFICATE OF DIGITAL SUBMISSIONS

I hereby certify that a copy of the foregoing APPELLANTS OPENING

BRIEF, as submitted in Digital Form, is an exact copy of the written document

filed with the Clerk and has been scanned for viruses with Symantec Antivirus;

Version 10.11.0.5002.33; last updated on 10/11/11, and, according to the program,

is free of viruses.

Dated this 9th day of December, 2011.

Respectfully submitted,

s/ Kevin Lynch

Kevin Lynch

Michael Ray Harris







WildEarth Guardians


CERTIFICATE OF SERVICE

I hereby certify that on this 9th day of December, 2011, I electronically filed

the forgoing APPELLANT’S OPENING BRIEF with the Clerk of the Court using

the CM/ECF system, which will send notification of such filling to counsel of

record listed below. Service was also made to counsel of record by dispatching a

hard copy to a third party commercial service for copying and delivery. Counsel of

record served are:

For Appellee:

Colin C. Deihl

Direct: (303) 607- 3651

Email: [email protected]

FAEGRE & BENSON LLP

Firm: (303) 607-3500

3200 Wells Fargo Center

1700 Lincoln Street


Linda Rockwood

Direct: (303) 607- 3642


FAEGRE & BENSON LLP

Firm: (303) 607-3500


1700 Lincoln Street


Ann Elizabeth Prouty

Direct: (303) 607-3746


FAEGRE & BENSON LLP

Firm: (303) 607-3500


1700 Lincoln Street


and


William Bumpers

Direct: (202) 639-7718


BAKER BOTTS L.L.P.

Firm: (202) 639-7700

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004

Kent Mayo

Direct: (202) 639-1122


BAKER BOTTS L.L.P.

Firm: (202) 639-7700

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004

/s/ Kevin Lynch


IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADOSENIOR JUDGE WALKER D. MILLER

Civil Action No. 09-cv-1576-WDM-KLM

WILDEARTH GUARDIANS,

Plaintiff

v.

PUBLIC SERVICE COMPANY OF COLORADO, d/b/a XCEL ENERGY

Defendant.

ORDER ON MOTION TO DISMISS

Miller, J.

This case is before me on the Motion to Dismiss (Doc. No. 7) filed by Defendant

Public Service Company of Colorado d/b/a Xcel Energy (“Xcel”). Plaintiff WildEarth

Guardians (“WildEarth”) opposes the motion. For the reasons that follow the motion is

granted in part and denied in part.

BACKGROUND

This is a case arising under the Clean Air Act section 112(g) (42 U.S.C. §

7412(g)). Xcel contends that this Court should dismiss WildEarth’s claims for lack of

subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) as an impermissible

collateral attack on existing state proceedings. Alternatively, Xcel contends that this

Court should abstain from exercising jurisdiction under the Burford doctrine and dismiss

the case under Fed. R. Civ. P. 12(b)(6). Finally, Xcel asserts that reinstituting of federal

mercury regulations may not be applied retroactively to render Xcel’s actions unlawful.

Case 1:09-cv-01576-WDM-KLM Document 64 Filed 03/09/2010 USDC Colorado Page 1 of 14


2

Plaintiff WildEarth is a non-profit corporation with approximately 4,000 members

throughout the United States, including Colorado. Compl. ¶ 10. Its mission is “to bring

people, science, and the law together in defense of the American West’s rivers, forests,

deserts, grasslands, and the delicate web of life to which we are inextricably linked.” Id.

In 2005, the Colorado Public Utilities Commission (“PUC”) granted Xcel a permit

to build a 750 megawatt coal-fired electric generating plant at the Comanche Station,

known as Comanche Unit 3 (“Comanche 3"). By this action, WildEarth seeks a

declaratory judgment that the construction is illegal and to enjoin its construction and

operation, claiming that Xcel unlawfully failed to obtain a MACT emission limitation

determination for mercury emissions, pursuant to Section 112(g) of the CAA, 42 U.S.C.

7412(g), prior to beginning construction. WildEarth also asks that Xcel be assessed

penalties and ordered to pay WildEarth’s costs and attorneys’ fees. WildEarth’s Motion

for Temporary Restraining Order was denied.

History of MACT Requirement for Mercury Emissions

Under the CAA, the EPA is required to list categories of sources that emit

hazardous air pollutants (“HAPs”). See 42 U.S.C. § 7412(c). One such category is

“major sources” of HAPS, defined as “any stationary source or group of stationary

sources located within a contiguous area and under common control that emits or has

the potential to emit considering controls, in the aggregate, 10 tons per year or more of

any [HAP] or 25 tons per year or more of any combination of [HAPs].” Id. at

§ 7412(a)(1).

In 2000, the EPA Administrator determined that regulation of electric utility steam

generating units (“EGUs”) was appropriate under Section 112 of the CAA because



3

EGUs emit HAPs, including mercury, which “is a public health concern and a concern in

the environment.” 65 Fed. Reg. at 79,830. In 2002, EGUs were added to the list of

source categories of HAPs under Section 112 of the CAA. National Emission

Standards for Hazardous Air Pollutants: Revision of Source Category List Under

Section 112 of the Clean Air Act, 67 Fed. Reg. 6521, 6522, 6524 (Feb. 12, 2002).

In 2005, the EPA published a rule removing EGUs from regulation under section

112 (“Delisting Rule”), Revision of December 2000 Regulatory Finding on the Emissions

of Hazardous Air Pollutants from Electric Utility Steam Generating Units and the

Removal of Coal- and Oil-Fired Electric Utility Steam Generating Units from the Section

112(c) List; Final Rule, 70 Fed. Reg. 15,994, 16,002-08, 16,032 (March 29, 2005)

(codified at 40 C.F.R. pt. 63), and published the Clean Air Mercury Rule (“CAMR”),

which regulated HAPs from EGUs under section 111 of the CAA rather than section

112. Standards of Performance for New and Existing Stationary Sources: Electric

Utility Steam Generating Units; Final Rule, 70 Fed. Reg. 28,606, 28,608, 28624-32

(May 18, 2005) (codified at 40 C.F.R. pts. 60, 72, and 75).

On February 8, 2008, the United States Court of Appeals for the District of

Columbia Circuit determined that the EPA’s 2005 decision to remove EGUs from

regulation under Section 112 was inappropriate because the EPA failed to follow the

specific delisting process set forth in the Section 112(c)(9) and struck down CAMR and

held that the EPA delisting of mercury had never occurred. New Jersey v. EPA, 517

F.3d 574, 581-83 (D.C. Cir. 2008).

The EPA has accepted the result of the New Jersey case and considered the

Delisting Rule to have been vacated effective March 14, 2008, the date the Court of



4

Appeals issued its mandate.

On January 7, 2009 the EPA sent a letter to its Regional Administrators stating

that the Agency believed that EGUs that were under construction or reconstruction

between March 29, 2005, the delisting date, and March 14, 2008, the mandate date,

“are legally obligated to come into compliance with the requirements of Section 112(g).”

January 7, 2009 letter from EPA Office of Air and Radiation to Regional Administrators

attached as Ex. L to Brief in Support of Motion to Dismiss (Doc. No. 8-13) (hereinafter

“Brief”). The EPA requested that “the appropriate State or local permitting authority

commence a process under Section 112(g) to make a new-source MACT determination

in each of these cases.” Id. In the letter, the EPA recognized that the application of

MACT standards to a project, which had already begun construction, might present

challenges and that consideration of MACT requirements that may have been

foreclosed by construction should be given for construction activities that took place

prior to February 8, 2008. See id. (“[I]t is reasonable for the permitting authority—under

these unique and compelling circumstances, and within the bounds of its discretion

under . . . Section 112(g) regulations—to give consideration to the effect of prior

construction, undertaken in reasonable reliance on now-vacated rules in making the

case-by-case determination of applicable MACT requirements.” Id. at 2).

History of Xcel’s Application for Comanche Unit No. 3 Permit

Xcel initially sought permission to construct Comanche 3 from the Colorado

Public Utilities Commission (“PUC”). A coalition of conservation groups and civic

organizations resisted Xcel’s application.



5

In August, 2004, while PUC approval was pending, Xcel made its initial

application for a permit to construct Comanche 3 from the Colorado Department of

Public Health and Environment (“CDPHE”), Air Pollution Control Division (”APCD”)

pursuant to Colorado law and the CAA. Since it antedated the Delisting Rule, this

application included a case-by-case MACT determination at 20 x 10-6 lbs/MWhr on a

twelve-month rolling average.

Thereafter, in December of 2004, Xcel made a settlement with the objecting

parties before the PUC, which obligated Xcel to minimally meet the above MACT

emissions limit for not only the proposed Comanche 3 but also the two other existing

Comanche units which previously had no such limitations. (“Settlement”) Brief, Ex. D at

5-7. Thereafter, the PUC approved Xcel’s revised plan in 2005.

On January 18, 2005, Xcel amended its application pending before the APCD to

include the terms of the Settlement. Brief, Ex. E.

On March 2, 2005, APCD released an initial draft of permit analysis for

Comanche 3 which included APCD’s specific determination that Xcel’s proposed

mercury limitations constituted a case-by-case MACT. Brief, Ex. B at 16-18.

Before the permit issued, however, the EPA adopted the Delisting Rule as noted

above, applying CAMR in lieu of the MACT.

In June 2005, APCD held public hearings and received comments. WildEarth did

not participate or make any comments.

APCD revised its initial approval and issued a final permit for Comanche 3 on

July 5, 2005. The permit acknowledged that Xcel’s applications had included the case-

by-case MACT analysis but that it was removed because of the EPA Delisting Rule.



6

APCD Revised Approval at 24. Instead, the final permit required compliance with

CAMR. Final Permit at 8. Nevertheless, limitations on mercury emission limits

determined to be MACT remained in the final permit as required by the Settlement.

After the issuance of the permit a citizen’s group, not including WildEarth, filed

suit against APCD in District Court for Pueblo County, Colorado for having issued the

permit, making various claims unrelated to MACT. The District Court rejected the

challenges and was affirmed by the Colorado Court of Appeals. A request for certiorari

was denied. Citizens for Clean Air & Water in Pueblo & S. Colo. v. Colo. Dep’t of Pub.

Health & Env’t, Air Pollution Control Div., 183 P.3d 393 (Colo. App. 2008), cert. denied

2008 WL2581591 (Colo. 2008).

In accordance with the APCD permit, construction of Comanche 3 commenced in

October 2005, and has continued without interruption. It is undisputed that the unit

nears completion.

On January 7, 2009, consistent with the New Jersey decision, EPA concluded

that electric utilities which were permitted during the delisting period between March 19,

2005, and the New Jersey vacation of the rule, are now obligated to comply with

Section 112(g). See Brief, Ex. L. January 7, 2009 EPA letter to Regional

Administrators. As a consequence, on March 13, 2009, CDPHE sent a letter to Xcel

noting that it had been requested to make a MACT determination. Specifically, CDPHE

stated: “Since a complete 112(g) determination was submitted with the Comanche Unit

3 permit application in August, 2004, the Division is requesting that you supplement and

revise your initial 112(g) determination, if necessary, to include any available

information regarding control technologies and emission rates since the submittal of



7

your initial determination.” Brief, Ex. M.

In April, 2009, WildEarth sent Xcel Plaintiff’s sixty-day notice of intent to sue

because of noncompliance with Section 112(g).

On July 2, 2009, WildEarth filed its complaint.

On July 17, 2009, the EPA also notified Xcel that it considered Section 112(g)

applicable, stating: “You must contact the appropriate permitting authority as

expeditiously as possible to obtain a new source maximum achievable control

technology (MACT) determination and a schedule for coming into compliance with the

requirements of Section 112(g).” Brief, Ex. N.

I note that neither the EPA nor APCD, both aware of Xcel’s on-going

construction, ordered Xcel to stop construction pending the MACT analysis and

determination.

On July 24, 2009, Xcel submitted its MACT update with a twelve-month moving

average of 15 x 10-6 lbs/MWhr.

It is undisputed that Xcel began burning coal in the Comanche 3 boilers in the fall

of 2009.

In December 2009, the APCD published a revised permit with MACT at that

level. Following the period for public comment, the final revised permit was issued on

February 22, 2010, with the MACT formula of 14.7 x 10-6 lbs/MWhr. Ex. A to

Defendant’s Unopposed Motion to Supplement Record (Doc. No. 60). There is no

indication that ongoing construction of Comanche 3 is not in accordance with the APCD

approved MACT determination.

In sum, this chronology demonstrates that, had the EPA not delisted the electric



8

utilities from Section 112(g), the original permit would quite likely have a MACT limit of

20 x 10-6 lbs/MWhr as a twelve-month average, as well as the other obligations

undertaken in keeping with the PUC Settlement applicable to all of its Comanche

generating units. Once the delisting was annulled, Xcel presented a revised case-by-

case MACT determination constituting an approximate 25% reduction in permitted

emissions of mercury. As a consequence, the final permit has a greater limitation on

mercury emissions than Xcel’s original permit would have allowed had the Delisting

Rule never been adopted.

STANDARD OF REVIEW

Xcel seeks dismissal pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) for failure

to state a claim upon which relief can be granted because the complaint does not plead

“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1960 (2007). Factual allegations “must

be enough to raise a right to relief above the speculative level.” Id. The court must

accept as true all well-pleaded facts and construe all reasonable allegations in the light

most favorable to the plaintiff. United States v. Colo. Supreme Court, 87 F.3d 1161,

1164 (10th Cir. 1996).

“[A] court is required to convert a Rule 12(b)(1) motion to dismiss into a Rule

12(b)(6) motion or a Rule 56 summary judgment motion when resolution of the

jurisdictional question is intertwined with the merits of the case,” which occurs when

“subject matter jurisdiction is dependent on the same statute which provides the

substantive claim in the case.” Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.



9

1995). Under the CAA, subject matter jurisdiction is dependent on the same statute

which provides the substantive claim in the case, thereby requiring treatment of a Rule

12(b)(1) motion as a Rule 12(b)(6) motion or a Rule 56 summary judgment motion.

"[F]acts subject to judicial notice may be considered in a Rule 12(b)(6) motion without

converting the motion to dismiss into a motion for summary judgment. . . . This allows

the court to take judicial notice of its own files and records, as well as facts which are a

matter of public record. " Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006)

(citing Van Woudenberg ex rel. Foor v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000)).

The documents may only be considered to show their contents, not to prove the truth of

matters asserted therein.” Id. (quoting Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d

1182, 1188 (11th Cir. 2002)). I take judicial notice of records and facts which are a

matter of public record in considering this motion, including the February 19, 2010

CDPHE letter to WildEarth responding to the group’s comments on the new permit.

DISCUSSION

Subject Matter Jurisdiction

I begin by addressing Xcel’s argument that I lack subject matter jurisdiction over

this matter. WildEarth alleges that Xcel has violated the CAA § 112(g)(2)(B) in

constructing Comanche 3 without having first made a MACT determination (Compl.

¶¶ 31-34) or, in the alternative, has violated the CAA § 112(g)(2)(A) in modifying the

Comanche Station without first obtaining a MACT determination. Compl. ¶¶ 35-37.

Xcel contends that, because it obtained a validly issued permit from APCD in 2005,

when a MACT determination was not required under CAA § 112(g), WildEarth’s claims



10

are a challenge to the 2005 permit and an impermissible collateral attack over which I

lack jurisdiction. Xcel further contends that the invalidation of the federal mercury

regulations may not be applied retroactively to require Xcel to obtain a MACT

determination under current standards.

WildEarth does not complain that the 2005 permit was invalid. WildEarth has

alleged an adequate factual basis for its claims challenging Xcel’s current compliance

with the CAA in not having obtained a MACT determination despite the 2008 vacatur of

the EPA’s delisting of mercury. WildEarth’s complaint raises federal questions under

the CAA. Whether Xcel has sufficiently met the MACT standard pursuant to § 112, is a

question of law and fact to be determined at a later time. From the non-conclusory facts

alleged, however, WildEarth’s assertions that Xcel has violated the CAA § 112 are

plausible and not speculative.

Construing all reasonable allegations in the light most favorable to the plaintiff, I

conclude that, pursuant to 28 U.S.C. § 1331, I have subject matter jurisdiction. The

principle remaining issues are abstention and retroactivity.

Abstention

As time passed and construction progressed, Xcel submitted its MACT analysis

to APCD which it determined, with some modification, to be an appropriate MACT.

WildEarth participated in the permitting process and procedures that exist for it to obtain

review; including, if appropriate, judicial relief through the state system. See Colo. Rev.

Stat. § 24-4-106; § 25-7-114 et seq.; see also, e.g., Citizens for Clean Air & Water in

Pueblo and S. Colo. v. Colo. Dep’t of Pub. Health and Env’t, Air Pollution Control Div.,

181 P.3d 393 (Colo. App. 2008) (affirming issuance by APCD of construction permits for



11

Comanche 3). Indeed, at oral argument on the motion to dismiss, WildEarth’s counsel

acknowledged that its request for injunctive relief had essentially been rendered moot

by the APCD MACT determination.

In this circumstance, any further review of the permit in the future is a matter from

which this court should abstain under the Burford doctrine. “Federal courts abstain out

of deference to the paramount interests of another sovereign, and the concern is with

the principles of comity and federalism.” Burford v. Sun Oil, 319 U.S. 315, 332-33

(1943). Colorado has a comprehensive review process that allows all issues to be

properly addressed and reviewed. Sitting in equity on the facts of this case, I should

decline to interfere with the State of Colorado’s on-going administrative and potential

judicial review processes. New Orleans Pub. Serv. Inc. v. Counsel of New Orleans, 491

U.S. 350, 361 (1989). Concurrent review by an inexpert federal court could be

disruptive of Colorado’s efforts to establish a coherent policy concerning emissions of

pollutants from power plants. Accordingly, I conclude that I should abstain from any

further review of the ongoing permit process for Comanche 3.

Retroactivity

As opposed to its acquiescence that injunctive relief is no longer required,

WildEarth is adamant that Xcel’s continued construction without an approved MACT

determination after the New Jersey decision was a continuing violation under Section

112 from commencement until the MACT determination, thereby exposing Xcel to civil

penalties and liability for WildEarth’s costs and attorneys’ fees. Accordingly,

Defendant’s defense of impermissible retroactivity, a difficult issue, needs to be

addressed.



12

“Courts are understood only to find the law, not to make it.” James B. Beam

Distilling Co. v. Georgia, 501 U.S. 529, 535-36 (1991); see also, Harper v. Va. Dept. of

Taxation, 509 U.S. 86, 107 (1993) (“‘[T]he province and duty of the judicial department

is to say what the law is,’ . . . not what the law shall be.” Id. (quoting Marbury v.

Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803))). “Judicial declaration of law is

merely a statement of what the law has always been. ‘For if it be found that [a] former

decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad

law, but that it was not law.’” Cash v. Califano, 621 F.2d 626, 628 (4th Cir. 1980)

(quoting 1 Blackstone, Commentaries on the Law of England 70 (1765)). Therefore, if

nothing else, and as determined by the New Jersey court, one could conclude that Xcel

always was required to have a MACT determination regardless of the Delisting Rule.

See New Jersey at 583.

The exception to this rule under Harper v. Va. Dept. of Taxation is that a court

ruling is not applied retroactively to cases which are no longer subject to direct review,

i.e. a final judgment. Id. at 97. Given that Xcel’s original permit without a MACT

determination was subject to final review up through denial of certiorari, Xcel argues

that the New Jersey decision does not apply to its initial permit. However, Xcel did not

elect to stand on its original permit and insist on the basis of the Harper exception that it

need not do a MACT analysis. Instead, in response to a March, 2009 request from

CDPHE that a MACT determination be undertaken, Xcel complied , arguably reopening

the permit issues and making them subject to review and, therefore, to the New Jersey

rule. With this construct, Xcel’s continuing construction after CDPHE’s request was

then a violation of Section 112(g) because a MACT had not been determined.



13

If one proceeds with an assumed violation of Section 112(g) because of the

reopening of the permit process, the question becomes whether Xcel should be subject

to the requested penalties and fees and cost award for WildEarth.

I note that the parties have only superficially addressed the issues of whether

review of the original permit was reopened and whether penalties and costs should be

awarded by myself sitting in equity. I will be better served by specific briefing on these

issues.

Accordingly it is ordered:

1. Xcel’s motion to dismiss (Doc. No. 7) is granted in part and denied in part;

2. This court shall abstain from any further review of the CDPHE permit for all

matters occurring subsequent to the issuance of the permit on February 22, 2010;

3. Xcel’s Motion to Dismiss on the basis of retroactivity is dismissed without

prejudice; and

4. The parties shall submit briefs on the issues of whether Xcel should be

penalized were I to conclude that it had violated Section 112(g) for its construction

activities prior to the issuance of the revised permit as follows:

a. On or before April 5, 2010, WildEarth shall file a brief, no longer than

twenty pages, addressing whether the Harper exception applies and, if

not, whether Xcel should be penalized and WildEarth awarded its costs

and attorneys’ fees;

b. Xcel shall file its response brief, no longer than twenty pages, on or

before April 26, 2010; and



14

c. WildEarth may file a reply brief, not to exceed ten pages, on or before

May 6, 2010.

DATED at Denver, Colorado on March 9, 2010

BY THE COURT:

Walker D. MillerUnited States Senior District Judge



IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO

Senior Judge Walker D. Miller

Civil Action No. 09-cv-01576-WDM-KLM

WILDEARTH GUARDIANS,

Plaintiff,

v.

PUBLIC SERVICE COMPANY OF COLORADO, d/b/a XCEL ENERGY,

Defendant.

__________________________________________________________________

ORDER __________________________________________________________________

This matter is before me on Plaintiff WildEarth Guardians’s (“WildEarth”) Brief in

response to my March 9, 2010 (ECF No. 68), Defendant Public Service Company of

Colorado, d/b/a Xcel Energy’s (“Xcel”) Response to WildEarth’s Brief (ECF No. 69),

WildEarth’s related Motion for Partial Summary Judgment (ECF No. 74), and Xcel’s

Motion to Strike (ECF No. 80). Being sufficiently advised in the premises, I enter the

following order.

Background

This case concerns the permitting process before the Colorado Public Utilities

Commission (“PUC”) for Xcel’s 750 megawatt coal-fired electric generating plant, known

as Comanche Unit 3 (“Comanche 3”). Construction and operation of Comanche 3 are

subject to the revisions of the Clean Air Act (“CAA”), 42 U.S.C. 7401 et seq., which are

administered in Colorado by the Air Pollution Control Division (“APCD”) of the Colorado

Case 1:09-cv-01576-WDM -KLM Document 97 Filed 08/01/11 USDC Colorado Page 1 of 11


2

Department of Public Health and Environment (“CDPHE”). The primary issue in

contention was whether Xcel was required to obtain a Maximum Achievable Control

Technology (“MACT”) determination regarding mercury emissions pursuant to section

112(g) of the CAA, 42 U.S.C. § 7412(g), prior to beginning construction and/or

thereafter. As discussed in further detail below, when Xcel first began the permitting

processes, Electric Utility Generating Units (“EGUs”) such as Comanche 3 were initially

categorized under the CAA as a major source of hazardous air pollutants (“HAPs”),

including mercury, pursuant to 42 U.S.C. § 7412a(1) and were subject to MACT

limitations of section 312(g). Thereafter, the Environmental Protection Agency (“EPA”)

initiated and consummated a “delisting” process to remove EGUs from regulation under

section 112 and placing them under section 111 to be governed by a Clean Air Mercury

Rule (“CAMR”). Although Xcel sought its permit in accordance with section 112, it was

ultimately issued pursuant to section 111 (although it in fact still complied with section

112). In 2008, the EPA’s delisting was deemed improper in New Jersey v. Envtl. Prot.

Agency, 517 F.3d 574 (D.C. Cir. 2008) and voided.

The detailed history of Xcel’s permit application, construction, and actions after

the New Jersey decision is set forth in my March 9, 2010 Order on Motion to Dismiss

(ECF No. 64) by which I partially granted Xcel’s Motion to Dismiss and abstained from

further review of the CDPHE permit subsequent to the issuance of an amended permit

on February 22, 2010. I denied without prejudice Xcel’s Motion to Dismiss on the basis

of retroactivity. I ordered the parties to submit briefs on whether Xcel should be

penalized if I were to conclude that it violated section 112(g) of the CAA with its

construction activities prior to the issuance of its revised permit on February 22, 2010.



1Xcel points out that this case was actually dismissed after deferring to the statepermitting process. S. Alliance for Clean Energy v. Duke Energy Carolinas, LLC, CivilNo. 1:08CV318, 2009 WL 1940048 (W.D.N.C., July 2, 2009).

3

Following the parties’ briefing, I am sufficiently advised to decide this matter without

further argument.

Discussion

The unresolved issue is whether Xcel’s ongoing construction without a prior

MACT determination until the revised permit of February 22, 2010, was a continuing

violation of section 112(g) which exposes Xcel to civil penalties and liability for

WildEarth’s costs and attorneys’ fees.

WildEarth takes the position that Xcel was required to have a MACT

determination before any construction began or, at a minimum, before any continued

construction once the New Jersey decision was issued. WildEarth first argues simply

that a MACT determination was always required under section 112(g) regardless of the

delisting rule, relying heavily on S. Alliance for Clean Energy v. Duke Energy Carolinas,

LLC, Civil No. 1:08CV318, 2008 WL 5110894 (W.D.N.C., Dec. 2, 2008).1 WildEarth

argues that EPA’s misinterpretation of what the law required does not change or nullify

the existing law. Caballery v. United States Parole Comm’n, 673 F.2d 43, 47 (2d Cir.

1982) (a party does not have a vested right in misinterpretation of a law). Minimally,

WildEarth argues construction should have stopped once New Jersey was decided until

there was an actual MACT determination, generally from early 2009 until February 22,

2010. See WildEarth’s Brief in Response to Court Order of March 9, 2010 (ECF No. 68)

at p. 8.



2Under Harper, a newly announced legal rule is applied retroactively only afterthe new rule has been “announced and applied to the parties to the controversy.” 509U.S. at 96. Moreover, a rule applied retroactively under Harper affects only cases stillopen to direct review. Id. at 97. Since Xcel’s permit is no longer open to direct review,Harper is inapplicable here.

3WildEarth also argues that obtaining the approval of its MACT determination in2010 did not render WildEarth claims moot, asserting that violations lasted somewherebetween 14 and 50 months, depending upon whether the court determines the violationto have occurred at commencement of construction or upon the decision in New Jersey.

4

WildEarth rejects any argument that retroactive application of section 112(g) is

prohibited by Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993)2. Instead,

WildEarth argues that this case is governed by the application of the factors set forth in

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), which leads to the conclusion that the

principles of New Jersey do apply retroactively.3

Xcel opposes virtually every assertion by Plaintiff, beginning by challenging

Plaintiff’s conclusion that New Jersey specifically held that electric utilities remain

subject to the MACT requirements of section 112(g). New Jersey, Xcel argues, simply

held that the “delisting” was improper because it failed to follow the statutory procedures

established in section 112(c)(9); it did not determine the applicability of section 112(g) or

apply it to the parties before it. Xcel’s Response to Plaintiff’s Brief (ECF No. 69) at 4-5.

Because of this, Xcel argues Harper does not apply and agrees that the issue of

retroactivity is resolved by applying the Chevron standards, which Xcel asserts weigh

heavily against applying section 112(g) retroactively. Id. at 6-8. Xcel also argues that

no civil penalties can be assessed because Plaintiff lacks standing, WildEarth’s claims

have become moot, and because I lack jurisdiction over wholly past violations. Id. at

12-16. Xcel argues under such circumstances that any civil penalty would be



4A more detailed history is contained in my Order on Motion to Dismiss (ECF No.64) at pp. 2-7 with appropriate record citations.

5

inappropriate. Id. at 16-18. WildEarth’s reply expanded its arguments but raised no

new issues. See WildEarth’s Reply Brief (ECF No. 70).

WildEarth was also allowed to file a motion for partial summary judgment which

was opposed by Xcel in substance and by a motion to strike. In fact, these new rounds

of briefing just afforded both sides with an opportunity to make essentially the same

arguments with one exception. WildEarth emphasized two recent decisions as authority

for the proposition that after the New Jersey decision, utilities are obligated to obtain a

MACT determination before any additional construction can be made. Plaintiff’s Motion

for Partial Summary Judgment (ECF No. 74) at p. 13. Relying principally on Sierra

Club, Inc. v. Sandy Creek Energy Associates, L.P., 627 F.3d 134 (5th Cir. 2010) and

WildEarth Guardians v. Lamar Utilities Board, Civil Action No.

1:09-cv-02974-DME-BNB, 2010 WL 3239242 (D. Colo., Aug. 13, 2010), WildEarth

asserts that once the delisting rule was vacated by New Jersey, Xcel should have

stopped construction until it obtained a MACT determination. Id. at 14. Xcel disagrees,

arguing both Sandy Creek and Lamar are distinguishable.

This dispute is best resolved by placing it within the context of Comanche 3's

permit history.4 As noted, when Xcel began the permitting process in 2004, EGUs such

as Comanche 3 were and were subject to MACT limitations of section 312(g). In

August, 2004, Xcel followed this law and submitted its application with a MACT

determination at 20 x 10-6 lbs/MWhr on a 12-month rolling average. In that same year,

Xcel settled disputes of objectors to the Comanche 3 by agreeing to meet that MACT



6

standard, not only for Comanche 3 but also for the two preexisting units which had not

met that standard. In January 2005, Xcel amended its pending application to include

the terms of the settlement and in March 2005, APCD released an initial draft of the

permit which included acceptance of Xcel’s proposed MACT limitations.

However, virtually contemporaneously with this permit activity, the EPA initiated

and consummated the “delisting” process to remove EGUs from regulation under

section 112 and placing them under section 111, to be governed by CAMR. The

“delisting” rule was published on March 29, 2005, and the CAMR rule on May 18, 2005.

After the delisting rule was adopted the APCD held public hearings and received

comments, at which WildEarth did not participate. APCD then issued the final permit for

Comanche 3 on July 5, 2005, which contained a CAMR requirement as opposed to a

MACT determination which the permit acknowledged Xcel’s application had included. In

fact, the permit placed limitations on mercury emissions with the MACT determination

because of the settlement.

A group of objectors to the permit filed suit in district court which upheld the

permit. The ruling was affirmed by a division of the Colorado Court of Appeals.

Citizens for Clean Air & Water in Pueblo & S. Colo. v. Colo. Dep’t of Pub. Health &

Env’t, Air Pollution Control Div., 181 P.3d 393 (Colo. App. 2008), cert. denied, Case No.

08SC228, 2008 WL 2581591 (Colo., June 30, 2008).

Construction of Comanche 3 commenced in October, 2005 and continued

thereafter without interruption.

After the New Jersey decision, the EPA concluded in January 2009, that EGUs

such as Comanche 3 must comply with section 112(g) even though construction



7

commenced during the delisting period. On March 13, 2009, the CDPHE specifically

requested that Xcel supplement its MACT determination submitted with its original

permit application in August 2004.

On July 24, 2009, Xcel submitted its MACT update with a 12-month moving

average of 15 x 10-6 lbs/MWhr. Ultimately, following a period for public comment, the

revised final permit issued on February 22, 2010, with a MACT formula of 14.7 x 10-6

lbs/MWhr.

Construction continued uninterrupted and there is no evidence that any emission

failed to meet the MACT standard, initially submitted or that reduced standard ultimately

approved. Nevertheless, WildEarth seeks to penalize Xcel because it commenced

construction without an approved MACT determination and continued until February 22,

2010, still without that approval. The question really becomes whether a party which

met the published standard when it commenced the permit process, then meets a new

standard published while still meeting the old standard, and then thereafter meets and

exceeds the first standard by the third standard adopted by the agency should be

penalized.

With this context, the matter is most appropriately resolved applying a

retroactivity analysis under Chevron Oil Co. v. Huson, 404 U.S. 97 (1991), a case upon

which both parties rely. Chevron establishes the factors to be considered in

determining whether a new rule should be applied retroactively:

First, the decision to be applied nonretroactively mustestablish a new principle of law, either by overruling clearpast precedent on which litigants may have relied, . . . or bydeciding an issue of first impression whose resolution wasnot clearly foreshadowed . . . . Second, it has been stressed



8

that ‘we must ... weigh the merits and demerits in each caseby looking to the prior history of the rule in question, itspurpose and effect, and whether retrospective operation willfurther or retard its operation.’ . . . Finally, we have weighedthe inequity imposed by retroactive application, for ‘(w)here adecision of this Court could produce substantial inequitableresults if applied retroactively, there is ample basis in ourcases for avoiding the ‘injustice or hardship’ by a holding ofnonretroactivity.

404 U.S. at 106-07 (internal citations and quotations omitted).

The first factor to consider is whether vacating the delisting rule establishes a

new principle, regulation by MACT, by overruling a clear and prior rule, regulation by

CAMR, upon which Xcel had relied. Plainly, given the fact that Xcel commenced the

permitting process assuming regulation by MACT and then revised its submittal to

regulation by CAMR upon EPA’s adoption of the delisting rule, Xcel relied upon the

“past precedent,” namely the CAMR rule. Both Xcel and the APCD relied upon that

“past precedent” in issuing the permit and continuing construction. To say that a party

subject to regulation who follows a clear rule adopted by the regulator is subject to a

penalty may well be inconsistent with due process standards. See United States v.

Hoechst Celanese Corp., 128 F.3d 216, 224 (4th Cir. 1997) (need clear notice to be

subject to penalty). In any case, this factor weighs against retroactive application of the

return to regulation by MACT.

The second factor, whether retrospective application of the precedent will further

or retard its operation, is less clear. Arguably, application of the new rule, regulation by

MACT analysis, furthers the original purpose of the statute prior to the adoption of the

delisting rule. Although this factor might weigh in favor of retrospective application, I

consider it of lesser importance in this case because Xcel has submitted acceptable



5Moreover, as noted above, as a result of the settlement, the MACT standardalso applies to Xcel’s existing facilities, not just the new Comanche 3, another result thatfurthers the public interest by going beyond what would have been required by theapplying only the letter of section 112 to Xcel’s permit from the outset.

9

MACT determinations from the outset and remains bound to maintaining those

standards by reason of the settlement agreement.

The final consideration is whether retroactive application would be inequitable.

Under the circumstances of this case I conclude that it would. Xcel commenced the

process by complying with section 112(g) and then agreed with objectors to the

permitting process that it would apply that MACT determination, not only to the new

construction but to preexisting facilities as well. When the delisting rule was adopted,

Xcel complied yet maintained its commitment to the MACT determination because of

the settlement. When the delisting rule was annulled, Xcel again complied with

directives and established a higher standard of MACT determination, presumably in a

public interest. Rather than acknowledging that in the end Xcel’s compliance with the

directives of its regulator imposed higher standards, WildEarth seeks to impose

penalties by retroactive application of the latest determination by the regulators. In

essence, WildEarth argues that if Xcel had somehow ignored or avoided the explicit

direction from its regulators to rely on CAMR rather than a MACT determination and

proceeded with its original MACT determination, it would not be subject to its claims for

injunctive relief or penalties. Such a result would not further the objectives of the CAA

as much as Xcel’s actual course of conduct. Xcel not only met the standard of

maintaining a MACT determination, it has significantly raised the applicable standard

(and presumably benefitted the public interest 5) by complying with the directives of the



6As noted, WildEarth has argued that two cases in particular stand for theproposition that a MACT determination applied retroactively and certainly to anyongoing construction, citing Sierra Club, Inc. v. Sandy Creek Energy Associates, L.P.,627 F.3d 134 (5th Cir. 2010) and WildEarth Guardians v. Lamar Utilities Board, CivilAction No. 1:09-cv-02974-DME-BNB, 2010 WL 3239242 (D. Colo., Aug. 13, 2010). Bothof these cases are clearly distinguishable because the defendant in each had notsought and obtained MACT determinations on even one occasion, let alone two as wasdone by Xcel in this matter.

10

authorized agencies which never instructed Xcel to halt construction pending ultimate

MACT submittals. Such retroactive application would be inequitable.

I agree with Xcel that under the circumstances of this case there is no retroactive

application of the annulment of the delisting rule, particularly given the MACT

determinations obtained both prior to commencement of construction and during

construction following the annulment of the rule.6

With this resolution, I consider Xcel’s briefing to be a renewal of its motion to

dismiss, which I grant. Accordingly, I order that the Plaintiff’s claims be dismissed with

prejudice, including any claim for penalties and attorneys’ fees and costs. WildEarth’s



11PDF FINAL

Motion for Partial Summary Judgment (ECF No. 74) and Xcel’s Motion to Strike (ECF

No. 80) are denied as moot.

DATED at Denver, Colorado, on August 1, 2011.

BY THE COURT:

s/ Walker D. MillerUnited States Senior District Judge



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UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ... · 12/9/2011 · UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ... STATEMENT OF RELATED CASES Appellant asserts that