Type: Law Bulletins
Date: 08/10/2010

Federal Appeals Court Reverses $1 Billion Air Pollution Judgment Against TVA Coal-Fired Power Plants

The U.S. Court of Appeals for the Fourth Circuit recently reversed a controversial district court decision that allowed third parties to use the court system to establish emission standards that could conflict with the requirements of the Clean Air Act. The U.S. District Court for the Western District of North Carolina initially found that four Tennessee Valley Authority (TVA) power plants constituted a “public nuisance” in North Carolina. Consequently, the district court issued an injunction against the four plants, ordering the installation and continuous operation of costly emission control technologies by 2013, even though such controls were not required by the Clean Air Act. The upgrades required by the judgment were estimated to cost in excess of $1 billion.

In North Carolina v. TVA, 2010 WL 2891572 (4th Cir. July 26, 2010), the Fourth Circuit struck down the district court’s injunction for several reasons. First, the court found that the use of the public nuisance doctrine to supplant the extensive framework of Clean Air Act regulations would create ill defined and conflicting standards to guide emission sources. Referring to public nuisance law as the “ill-defined omnibus tort of last resort”, the court noted that this type of claim could result in contradictory standards being created among the states, possibly leading to an increase in air pollution in states subject to less stringent judicial decrees. TVA, 2010 WL 2891572 at *7.

Second, the Fourth Circuit noted that the lower court’s decision would confuse the roles of the courts and agencies. Specifically, the Fourth Circuit cautioned against the interference of courts in the highly regulated and technical world of air emissions. Congress created a system in which EPA’s expertise would control setting emissions control standards. “Regulations and permits, while hardly perfect, provide an opportunity for predictable standards that are scientifically grounded and thus give rise to reliance interests.” Id. at *10. Being able to predict the standard for lawful emissions is critical to companies whose expensive investments in emissions controls are driven by their reliance upon these very regulations and standards. The ability of a judge in a nuisance suit to alter those obligations would threaten that reliance.

Third, the district court’s decision was flawed because it applied North Carolina state law extra-territorially. The power plants at issue were located in Alabama and Tennessee. Thus, the law of the states where the emission sources are located should be applied and control in an interstate nuisance dispute.

Lastly, the Fourth Circuit reasoned that even if the proper state law was applied, it would be “difficult to understand how an activity expressly permitted and extensively regulated by both federal and state government could somehow constitute a public nuisance.” Id. at *1.
For more information about the North Carolina v. TVA ruling, please contact Scott Alexander, Jayna Cacioppo, or any member of Taft’s Environmental Practice Group.

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