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PPL Generation, LLC v. Commonwealth

December 23, 2009

PPL GENERATION, LLC, PPL MONTOUR, LLC AND PPL BRUNNER ISLAND, LLC, APPELLEES
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL PROTECTION AND COMMONWEALTH OF PENNSYLVANIA, ENVIRONMENTAL QUALITY BOARD, APPELLANTS



Appeal from the Order and Memorandum Opinion of the Commonwealth Court dated January 30, 2009, 446 MD 2008, granting Appellees' motion for summary relief.

The opinion of the court was delivered by: Mr. Chief Justice Castille

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

SUBMITTED: June 11, 2009

OPINION

This matter is before us on direct appeal from the order of the Commonwealth Court declaring 25 Pa. Code §§ 123.201 - 123.215 (the "PA Mercury Rule") invalid. For the reasons that follow, we affirm.

PPL Generation, LLC, PPL Montour, LLC and PPL Brunner Island, LLC ("appellees") are owner-operators of coal-fired electric generating units ("EGUs") located in the Commonwealth. On September 15, 2008, appellees filed a Petition for Review in the Commonwealth Court's original jurisdiction, seeking declaratory and injunctive relief.

Appellees named the Department of Environmental Protection ("Department") and the Environmental Quality Board ("Board") as respondents (collectively, "the Commonwealth").

Appellees challenge the validity of certain regulations limiting and controlling mercury emissions emanating from coal-fired EGUs. See 25 Pa. Code §§ 123.201 -123.215.*fn1 The PA Mercury Rule's limits on mercury emissions will become effective January 1, 2010.

The genesis of the PA Mercury Rule was a petition for rulemaking filed on August 9, 2004 by several political action groups. This petition for rulemaking requested that regulations to reduce mercury emissions from coal-fired EGUs be adopted. At the time the petition for rulemaking was presented, oil- and coal-fired EGUs were listed as a mercury pollution source under Section 112 of the federal Clean Air Act. 42 U.S.C. § 7412. Per the Pennsylvania Air Pollution Control Act ("PA Air Pollution Act"), 35 P.S. §§ 4001-4015, the Board may promulgate regulations regarding mercury pollution sources that are not included on the federal Section 112 list. 35 P.S. § 4006.6(a).*fn2 The Board generally, however, cannot establish independent emission and performance standards for pollutants listed under Section 112.*fn3 Thus, at the time the petition for rulemaking was filed, the Board's rulemaking options regarding mercury emitted by oil- and coal-fired EGUs were limited by the federal regulations. See 35 P.S. § 4006.6(a).

Shortly after the petition for rulemaking was presented, however, the U.S. Environmental Protection Agency ("EPA") promulgated a final rule, commonly referred to as the "Delisting Rule." That rule removed oil- and coal-fired EGUs from Section 112's list of mercury pollution sources. 70 Fed.Reg. 15994-01 (03/29/2005). However, the EPA did not abolish regulation of mercury emissions from oil- and coal-fired EGUs. Rather, it shifted the responsibility for the mechanics of the regulation to the states. To accomplish this shifting to the states, the EPA promulgated the Clean Air Mercury Rule ("CAMR"). 70 Fed.Reg. 28606 (5/18/2005). CAMR was predicated on the Delisting Rule and it established a mercury emission budget for each state and required each state to develop a program to regulate the mercury emissions emanating from oil- and coal-fired EGUs. For Pennsylvania, the EPA allocated a mercury emission budget of 1.78 tons per year for the years 2010 to 2017. Starting in 2018, Pennsylvania's mercury emission budget would fall to 0.702 tons per year.

CAMR gave the states two options to adopt in order to be in compliance with their mercury emission budgets. One option was to participate in a cap-and-trade system, which allowed for the states participating in that system to trade mercury emission allowances with other states. The other option was to forego participating in the cap-and-trade program, and instead to establish a state program to control mercury emissions so that the emissions did not exceed the cap set for that state by CAMR.

The Commonwealth elected not to participate in the cap-and-trade program, and opted to develop a mercury regulation program that would keep emissions within the mercury budget set by the EPA. The PA Mercury Rule was developed as our Commonwealth's response to CAMR. Pertinent to this appeal, the PA Mercury Rule required, inter alia, that by January 1, 2010, appellees reduce mercury emissions at their coal-fired EGUs by 80%.

The Delisting Rule and CAMR sparked federal litigation. Various environmental groups and several state governmental entities, including our Commonwealth's Department, filed petitions for review in the United States Court of Appeals for the District of Columbia ("DC Circuit Court"), challenging the Delisting Rule and CAMR. See New Jersey v. Environmental Protection Agency, 517 F.3d 574 (D.C. Cir. 2008).*fn4 The petitions for review asserted that the Delisting Rule did not follow the procedures set forth in Section 112(c)(9) of the Clean Air Act for removing a pollution source from Section 112, i.e., oil- and coal-fired EGUs.

The DC Circuit Court agreed, finding that the plain language of Section 112 required that the EPA satisfy Section 112(c)(9)'s requirements prior to removing a pollution source from Section 112. The court further observed that the EPA conceded that it had never made the findings that Section 112(c)(9) would require in order to delist oil- and coal-fired EGUs. Thus, the court determined that the Delisting Rule was unlawful and vacated it, the effect of which was that EGUs remain listed under Section 112. Significantly, the court also found that once the Delisting Rule was declared invalid, CAMR no longer had a legal basis and it vacated CAMR as well.

After the DC Circuit Court issued its decision in New Jersey, appellees commenced the instant litigation. Appellees argued that since the Delisting Rule and CAMR had been declared invalid by the DC Circuit Court, the PA Mercury Rule must fail for the reason that it was predicated on those now-invalid federal regulations. The Commonwealth filed preliminary objections. Appellees filed a motion for summary relief; the Commonwealth responded with a cross-motion for summary relief.

On January 30, 2009, the Commonwealth Court, via a memorandum, single-judge decision authored by the Honorable Dan Pellegrini, denied the Commonwealth's cross-application for summary relief and its preliminary objections, and granted appellees' motion for summary relief. At the outset of his analysis, Judge Pellegrini rejected the Commonwealth's argument that appellees' claim was not yet ripe as the PA Mercury Rule were not effective until January 1, 2010. Judge Pellegrini observed that this Court has expressly authorized pre-enforcement challenges to ...


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