US court allows EPA air pollution case against Cinergy to proceed

Washington (Platts)--29Aug2005

A federal court in Indiana on Monday ruled that Cinergy Corp may have
violated the Clean Air Act by not installing new air pollution controls for
power plant upgrades. The decision is a victory for the US Environmental
Protection Agency, which alleges in a suit brought against Cinergy that the
the Cincinnati-based utility should have obtained New Source Review permits
for power plant projects that would have increased annual emissions. 
     The ruling rejects an appeal by Cinergy to dismiss the suit, which is
scheduled to proceed to trial in February 2006. The decision by the US
District Court for the Southern District of Indiana is also a rejection of a
related NSR ruling by the US Court of Appeals for the Fourth Circuit, which
ruled in June that EPA must judge emissions increases by an hourly emissions
rate test that is more favorable to industry.
     "The court disagrees with both Cinergy and the Duke Energy court that the
EPA's definition of 'actual emissions' means that 'a net emissions increase
can only result from an increase in the hourly rate of emissions," the ruling
said. 
     Environmental groups including the Natural Resources Defense Council
hailed the ruling and circulated the decision to reporters. NRDC Clean Air
Programs Director John Walke called Monday's decision "an important ruling"
that sides with the position "of EPA enforcement attorneys." 
     Cinergy officials did not return calls seeking comment. The company's
legal options include seeking a rehearing of the case by the district court or
taking up the matter with the US Court of Appeals for the Seventh Circuit. 
     The Cinergy case was part of a major Clinton administration enforcement
initiative against large utilities. Although the Bush administration decided
to proceed with the NSR cases, Cinergy backed away from initial plans to
settle its NSR case largely because EPA under President Bush eased NSR rules
for power plants. 
     Cinergy and other utilities fighting NSR lawsuits, including American
Electric Power and Southern Company, have argued that EPA's NSR reforms show
that the government has not had a consistent or fair policy for power plant
upgrades.

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