EnviroNotes

First-Ever Jury Verdict Handed Down in Clean Air Act New Source Review Enforcement Case

By E. Ryan Murray, Attorney, Environmental Law Department, Bingham McHale LLP

On May 22, 2008, a jury convened by the U.S. District Court for the Southern District of Indiana handed down what is believed to be the first-ever jury verdict in a Clean Air Act New Source Review (“NSR”) enforcement case. The NSR permitting program is designed to prevent significant degradation of air quality due to the construction of new or significantly modified sources of air pollution. The jury unanimously rejected 10 of 14 NSR violations alleged against Cinergy Corp. (Cinergy and Duke Energy merged in 2005) based on projects conducted at six power plants located in Ohio and Indiana.

The suit, one of many filed against power plants in 1999 and 2000 by the Clinton Justice Department, alleged that Cinergy Corp. made major modifications to six power plants that extended the life of the plants without installing pollution controls required under NSR. The case, United States of America v. Cinergy Corp., focused on whether a “reasonable operator” of the power plants at issue would have believed the projects would result in a net emission increase. Such an increase in plant emissions would subject the projects to NSR requirements including the addition of pollution controls. The jury determined that while the projects did not qualify for an exemption from the NSR requirements because they were not “routine maintenance,” the projects did not increase plant emissions in 10 of the 14 projects. Based on this, the jury determined that 10 projects at five Cinergy Corp. power plants did not violate NSR. Regarding the four projects subject to NSR requirements, the penalty phase of United States of America v. Cinergy Corp. is scheduled to begin on December 8, 2008.

The favorable result achieved by Cinergy Corp. in United States of America v. Cinergy Corp. may influence how parties facing similar NSR enforcement charges choose to resolve EPA allegations. This favorable jury decision may prompt others to consider a jury trial. Until now it has been believed that NSR issues may be too complex to present to a jury.

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