North Carolina v. TVA

On April 14, 2011, the Tennessee Valley Authority (TVA) and North Carolina ended a longstanding dispute over TVA's compliance with air pollution laws in its coal fired power plants. The consent decree was finalized on June 30, 2011.

TVA agreed to phase out 18 units of its coal plants, adding up to 2,700 MW, and to install modern pollution controls on three dozen additional units. The phase out includes two units at the John Sevier Fossil Plant, all 10 units at the Johnsonville Fossil Plant, both in Tennessee, and six units at the Widows Creek Fossil Plant in north Alabama.

Also as part of the EPA agreement, TVA will invest an estimated $3 to $5 billion on pollution controls, invest $350 million on clean energy projects, and pay a civil penalty of $10 million.

Legal history
The North Carolina - TVA consent decree is the end of a legal saga that began in the 1990s with complaints that TVA was ignoring federal emissions control laws. TVA entered into an administrative compliance order with EPA on Nov. 3, 1999, amended April 10, 2000. Not satisfied with the electric utility's compliance, the state of North Carolina notified TVA that it would file a federal lawsuit on Nov. 10, 2004. The suit was filed on Jan. 30, 2006.

The states of Alabama, Tennessee, and Kentucky, and the National Parks Conservation Association, the Sierra Club and Our Children's Earth Foundation all joined the lawsuit at various times.

Amicus briefs on behalf of the environmental plaintiffs were filed by attorneys general of 16 other states, including New York’s Andrew Cuomo, supporting the authority of states to bring public nuisance actions to abate interstate pollution. Although the Fourth Circuit’s decision did not involve claims relating to greenhouse gas emissions, a recent petition filed in Connecticut v. AEP challenging the Second Circuit’s common law nuisance findings with respect to greenhouse gas emissions cited North Carolina v. TVA as evidence that "comprehensive regulation" under the Clean Air Act can displace federal common law nuisance claims.

Amicus briefs for TVA were filed in 2009 by the National Association of Manufacturers joined in an amicus brief supporting the TVA with the U.S. Chamber of Commerce, the American Petroleum Institute, the "Public Nuisance Fairness Coalition", the Utility Air Regulatory Group (represented by Hunton & Williams), and the American Forest & Paper Association.

North Carolina files lawsuit, 2006
The State of North Carolina filed the suit on Jan. 30, 2006 in the US District Court for the Western District of North Carolina, asking the court to compel TVA to "to address emissions of air pollution from TVA's coal-fired electric generating units installed in electric generating stations located in Tennessee, Alabama, and Kentucky" under public nuisance laws, which are an "unreasonable interference" with the public's right to property, health, safety, peace, or convenience.

North Carolina asserted that these emissions adversely affect "the health and welfare of citizens of [North Carolina], damage [the State's] natural resources and economy, and harm [the State's] finances." Id. The complaint further alleges that TVA operates its power plants in a manner that "creates a common law public nuisance in North Carolina, and in other states in the region." Id. The State seeks injunctive relief "to abate the harm caused by TVA's emissions . . . and seeks its fees and costs incurred in this action." Id.

North Carolina also contended that airborne particles from TVA’s plants entered North Carolina in unreasonable amounts, constituting a public nuisance and threatening the health of millions of people, the financial viability of the region, the functioning of natural ecosystems, and costing the state government and its citizens billions of dollars every year in health care expenses, sick days, and lost tourism revenue.

On April 3, 2006, TVA filed its motion to dismiss the suit on the grounds that Plaintiff's claims "are not justiciable under controlling authority of the [Fourth Circuit], the discretionary function doctrine, and the Supremacy Clause of the United States Constitution." The federal district court denied TVA's motion to dismiss on July 21, 2006. The court said TVA contributed to ‘‘significant hurt, inconvenience, [and] damage’’ in North Carolina.

On February 26, 2008, the federal district court decided in favor of North Carolina, saying: "The Supreme Court has long authorized lawsuits by sovereign states seeking to address the problems caused by interstate pollution" and that TVA operated the plants in a manner that created a common public nuisance.

Initial appeal decided in favor of North Carolina, 2009
On January 13, 2009, in '''North Carolina ex rel. Cooper v. Tennessee Valley Authority''' (W.D. N.C. Jan. 13, 2009), North Carolina District Judge Lacy Thornburg held that air emissions from three coal-fired plants located in eastern Tennessee and one plant located in Alabama, all operated by the Tennessee Valley Authority, are a public nuisance under state law. The court ordered that TVA proceed with plans to install enhanced pollution controls at the plants and reduce emissions of certain pollutants by specific time limits, at an estimated cost of approximately $1 billion.

Lower court decision reversed on appeal in favor of TVA, 2010
Later in January, 2009 TVA filed an appeal with the Fourth Circuit Court of Appeals in Richmond, Va.

In June 2009, the State of Alabama filed a Motion to Intervene, asking to be added as a party to the lawsuit with equal rights to TVA and the State of North Carolina, with full briefing and oral argument privileges. This was opposed by the State of North Carolina because the State of Alabama was not a party in the underlying action, and did not seek to intervene at the trial court level. Regardless, the Fourth Circuit granted the State of Alabama’s motion.

The Fourth Circuit Court of Appeals overturned the initial decision in favor of North Carolina on July 26, 2010. Appeals court Judge J. Harvie Wilkinson III wrote that allowing the ruling to stand would undermine the nation's "carefully created" Clean Air Act regulatory scheme. Bridget Lee, "Fourth Circuit Dismisses Public Nuisance Air Pollution Lawsuit, Sets Aside District Court Injunction Requiring Installation of Emissions Controls" Sive, Paget, & Risel, August 10, 2010.

The Fourth Circuit rejected the use of “vague public nuisance standards” to address activities that are "expressly permitted and extensively regulated under the Clean Air Act." The Court argued the claim had the "potential for chaos" among states from a "patchwork of nuisance injunctions" and for "disruption of expectations and reliance interests" of utilities that have complied with the Act’s requirements. However, the Court refrained from completely preempting the field of air emissions regulation, noting that the Clean Air Act’s savings clause may allow for certain common law nuisance claims.

Citing principles of federalism, the Fourth Circuit also criticized the district court’s decision for its application of North Carolina law extra-territorially to TVA plants located in Alabama and Tennessee by crafting an injunction that relied on the emissions standards of a North Carolina state law. The three-judge panel highlighted the "remedies" that remain available to North Carolina under statutory law, including the Clean Air Act’s Section 126 petition process, the comment period for State Implementation Plans, judicial review of EPA actions, as well as citizen suit remedies under the Clean Air Act.

Supreme Court appeal, February 2011
On February 6, 2011, North Carolina Attorney General Roy Cooper appealed the 4th Circuit Court's decision to the US Supreme Court, saying that the question “is of exceptional importance,” in part because of health risks to North Carolina citizens due to pollution from TVA’s Tennessee and Alabama power plants. “At issue is whether people in North Carolina will continue to die as a result of TVA’s excess emissions — even though these deaths could be readily averted by installing and operating modern pollution control equipment,” Cooper wrote.

Consent Decree, April 2011
The consent decree announced April 14 made the Supreme Court review moot, and averted a judicial showdown over the power of states as opposed to the power of the Environmental Protection Agency to enforce the Clean Air Act.

The consent decree was also part of a larger settlement with the U.S. Environmental Protection Agency over TVA violations of the clean air act at 11 of its coal-fired plants in Alabama, Kentucky and Tennessee.

Consent Decree settlement terms for coal plants
The consent decree entered June 30 by the US District Court for the Eastern District of Tennessee required TVA to invest an estimated $3 billion to $5 billion in pollution controls at 11 coal-fired plants.

TVA will also close two units at its John Sevier plant, six units at the Widows Creek plant, and the 10 units at its Johnsonville plant by 2017. Remaining coal-fired units will require pollution control upgrades by 2020. TVA is also required to invest $290 million for its own clean energy and efficiency projects and to pay $60 million to the states of North Carolina, Alabama, Kentucky and Tennessee for similar projects.

Notes: B - Renewable biomass conversion is an option for some plants.*

FGD - Flue gas desulphurization (controls sulfur dioxide - SO2 )

SCR - Selective Catalytic Reduction (controls nitrogen oxides - NOx )

R - Retire or remove from service

WFDG - Wet Flue Gas Desulphurization (controls sulfur dioxide - SO2 )


 * Biomass -- The consent decree is very specific about the kinds of renewable biomass that can be used and the use of coal in a converted biomass plant. For example, creosote-treated railroad ties are not to be used, and the biomass cannot be used in combination with coal except in very small amounts in order to maintain temperatures for varying amounts of moisture in biomass.

Overall expected emissions reductions
Overall systemwide reductions in nitrogen oxides (NOx) and sulfur dioxide (SO2) are as follows:

NOx Emission Reductions and controls 2011 -- 100,600 tons per year (current) By 2016 -- 70,700 tons per year By 2018 -- 52,000 tons per year

SO2 emissions reductions 2011 -- 285,000 tons per year (current) By 2016 -- 175,600 By 2018 -- 121,700 By 2019 -- 110,000

The total cost of systemwide reductions in NOx and SO2 through SCR and FGD technologies is expected to be between $3 and 5$ billion.

Environmental mitigation
As part of the consent decree, TVA will invest $350 million in clean energy projects, preferable in its service district in Alabama, Tennessee and Kentucky.

The projects are to include: solar photovoltaic, solar thermal systems or wind energy projects; reduction of vehicle idling time; energy conservation in new and existing buildings;  geothermal projects; industrial or institutional cogeneration projects; regional planning to reduce vehicle miles; landfill gas to electricity projects; agriculture or forestry projects for renewable energy and carbon sequestration (anaerobic methane from poultry, swine or dairy farms; wind and solar projects on farms; biodiesel from oil crops; urban farms; forestry or agricultural waste for biofuel production; biofuel co-product and byproduct development; and other educational and training projects).

Projects will also include: creation of a sustainable revolving loan program for homeowners to purchase energy efficiency and conservation improvements; establishment of a tourist shuttle service for the Great Smoky Mountain National Park using shuttles powered by electricity, fuel cells or natural gas; and a wood and/or coal burning appliance exchange and retrofit to EPA-certified heat pumps or cleaner wood or wood pellet appliances.

Civil penalties
Also as part of the EPA agreement, TVA will pay $8 million in civil penalties to EPA, along with $2,000,000 in civil penalties to the states of Alabama, Kentucky, and Tennessee.

External Resources
An anaylsis of the lawsuit can be found here: http://www.mcguirewoods.com/news-resources/item.asp?item=3802

Related Sourcewatch resources

 * Alabama and coal
 * Clean Air Act
 * Coal plant litigation
 * Connecticut v. AEP
 * EPA Deseret ruling
 * Existing Coal Plant Litigation and Controversy
 * Massachusetts v. Environmental Protection Agency
 * North Carolina and coal
 * Tennessee Valley Authority