Tuesday, January 9, 2007

Environmental Integrity Project v. Mirant Corp. (Maryland U.S.D.C.)(not approved for publication)

Informal Memorandum Opinion and Order--January 3, 2007 by Judge J. Frederick Motz (not approved for publication)

Through an informal memo to counsel, the Court granted Defendant's motion to dismiss based on lack of subject matter jurisdiction but denied Defendant's request for attorneys fees because the Court found the instant action not "frivolous, groundless, pursued in bad faith, or maintained after its baselessness became apparent."

Plaintiffs sought to rebut the presumption of diligence by asserting that (1) the process by which the consent decree came into being suggests a lack of diligence, (2) the penalties imposed by the consent decree are trivial and actually discouraged compliance by making it cheaper to continue to violate opacity standards, (3) the consent decree does not require Defendant to switch from oil to natural gas, and (4) the terms of the consent decree do not require compliance with federal and state opacity standards.

Defendants conceded that a 60-day notice letter was "the catalyst for an accelerated evaluation of emissions from fossil-fuel fired electric generating units at power plants in Maryland and the resulting negotiations ended in a consent decree filed in P.G. County just one day before Plaintiff’s could file suit pursuant to an order entered separately by the U.S. Bankruptcy Court for the Northern District of Texas." The Court found that §7604(b)(1) recognizes that citizens’ notice may provide the catalyst for regulatory action and regulatory agencies must be given 60 days to decide whether to take action. Consequently, there must be other indicia that a consent decree was entered into collusively in order for a lack of diligence to be found on the basis of allegedly tainted process.

The Court further rationed that, economic benefit analyses aside, the fact that state proceedings result in the imposition of minimal penalties is not itself a basis for finding that the state prosecutions were not diligent, particularly where the consent decree requires the defendant to incur substantial capital costs in complying with its terms and where the state court retains jurisdiction to enforce the decree.

The Plaintiffs seemed to suggest that the "requiring compliance" element of defendants’ subject matter jurisdiction defense is separate and apart from the "diligent prosecution" element of that defense. The court found that position lacked merit based, in part, on Clean Air Council, 2003 WL 1785879, at *5-6, wherein while considering the "requiring compliance" issue, indicated that the relevant question is whether the regulatory prosecution was "totally unsatisfactory,’ not whether it required the remedy which the [plaintiffs] would have preferred." The standard of review in Clean Air Council is the proper one because the inquiry into whether a consent decree is reasonably designed to require a polluter’s compliance with applicable standards is part and parcel of the inquiry into whether state regulatory authorities have diligently prosecuted an action against the polluter. Accordingly, the views and actions of the regulatory authorities are entitled to deference.

The full opinion is available in PDF.

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