On April 14, 2011, the Attorney General of North Carolina, Roy Cooper, announced that North Carolina, along with the EPA and several other states, had reached a comprehensive settlement with the Tennessee Valley Authority (TVA) which will significantly reduce air pollution in the region. Cooper hailed the settlement as a “remarkable accomplishment”. “North Carolina businesses will benefit with lower health care costs and more tourism dollars, and all of us benefit from better health,” Cooper said. “This agreement means our air will be more clear and our waters more clean.” 

 

The litigation spurring the settlement drew the involvement of a number of states on both sides of the issue. After a bench trial, a judge in the Western District of North Carolina sided with North Carolina. North Carolina ex rel. Cooper v. Tenn. Valley Auth., 593 F. Supp. 2d 812 (W.D.N.C. 2009). On appeal, the Fourth Circuit reversed the district court's ruling. North Carolina ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d 291 (4th Cir. 2010). In support of TVA’s position on appeal were the state of Alabama, as intervenor, and Kentucky, Louisiana, North Dakota, South Dakota, Utah, and Wyoming, as amici curaie. In support of North Carolina’s position were the states of California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, Rhode Island, Vermont, as amici curaie.

 

The settlement came after North Carolina filed a certiorari petition asking the Supreme Court to hear the case.

Under the settlement, TVA will clean-up all of its coal-fired power plants, which is what Cooper sought in a 2006 lawsuit against TVA and exceeds what a district court ordered in a 2009 ruling in favor of North Carolina (later reversed by the Fourth Circuit). TVA will invest $3 to $5 billion on new and upgraded state-of-the-art pollution controls and will be required to either install these pollution controls, retire, or repower to renewable biomass all of its coal-fired power plants by 2018. Once fully implemented, the pollution controls and other required actions will address 92% of TVA’s coal-fired power plant capacity, reducing emissions of nitrogen oxide by 69% and sulfur dioxide by 67% from TVA’s 2008 emissions levels. The settlement also will significantly reduce particulate matter and carbon dioxide emissions. In addition, TVA will spend $350 million on environmental mitigation projects to address the impacts of past emissions, of which North Carolina will receive $11.2 million to be used for energy efficiency and electricity demand reduction programs. Finally, TVA will pay a total of $10 million in civil penalties. As part of the settlement, North Carolina has agreed to end the litigation it brought against TVA in 2006, which is currently the subject of a certiorari petition to the Supreme Court. 

 

 

On January 30, 2006, North Carolina filed suit against TVA in the Western District of North Carolina alleging that the manner in which TVA operated its coal-fired power plants created a common law nuisance. North Carolina asserted that the air pollution emissions from TVA's coal-fired power plants adversely affected the health and welfare of millions of people in North Carolina, damaged North Carolina's natural resources and the financial viability of certain regions of the state, and cost the state billions of dollars every year in health care expenses, sick days, and lost tourism revenues. North Carolina sought injunctive relief to abate the harms caused by TVA's emissions, as well as attorneys' fees and costs. On August 14, 2009, after a twelve week bench trial, the district court issued its final judgment in favor of North Carolina. North Carolina ex rel. Cooper v. Tenn. Valley Auth., 593 F. Supp. 2d 812 (W.D.N.C. 2009). 

Although acknowledging that the principles of public nuisance “are less well-adapted than administrative relief to the task of implementing the sweeping reforms that North Carolina desires,” Judge Lacy Thornburg concluded that four TVA coal-fired power plants located in Tennessee and Alabama and within 100 miles of North Carolina significantly contributed to North Carolina's air pollution and represented a public nuisance, as defined under Tennessee and Alabama law.  Id. at 815, 825, 829-31.   The Court ordered TVA to install and continuously operate pollution control technologies at the four power plants by December 31, 2013. In addition, the Court established emissions limits, capping the emissions that each coal-fired energy-generating unit would be allowed to release. Id. at 826-27.

 

On appeal, the Fourth Circuit reversed the district court's ruling. North Carolina ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d 291 (4th Cir. 2010). According to the court, the central question in the case was “whether individual states will be allowed to supplant the cooperative federal-state framework that Congress through the EPA has refined over many years”. Id.at 298. The Court emphatically answered “no.” First, relying on International Paper v. Ouellette, 479 U.S. 481 (1987), the Fourth Circuit held that the Clean Air Act preempted North Carolina's nuisance suit. Id.at 301-03. Although the court refused to hold “that Congress had entirely preempted the field of emissions regulations,” it stated that the Ouellette Court “recognized the considerable potential mischief in those nuisance actions seeking to establish emissions standards different from federal and state regulatory law and created the strongest cautionary presumption against them.” Id.at 303. By allowing courts to use public nuisance doctrine “to overturn the carefully enacted rules governing airborne emissions, it would be increasingly difficult for anyone to determine what standards govern. Energy policy cannot be set, and the environment cannot prosper, in this way.” Id.at 298.

 

In addition, the court concluded that the district court had improperly applied North Carolina's law extraterritorially.  In 2002, North Carolina passed the Clean Smokestack Act, which requires substantial reductions in emissions from coal-fired power plants located within the state. Relying on statements made by North Carolina officials indicating that the goal of North Carolina's suit was to require TVA to reduce its emissions to Clean Smokestack Act standards as well as the fact that the district court ordered the four coal-fired power plants within 100 miles of North Carolina to reduce emissions to Clean Smokestack Act standards, the court concluded that the district court impermissibly applied North Carolina law to out-of-state polluters. North Carolina ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d at 306-08.

 

Finally, “even if it could be assumed that the North Carolina district court did apply Alabama and Tennessee law, it is 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 296. According to the court, both Tennessee and Alabama laws bar nuisance claims against validly permitted activities unless the activities are done negligently. Id.at 309-10. Furthermore, because the state law standards for public nuisance in Tennessee and Alabama are less stringent than the federally-issued permits under the Clean Air Act, “TVA's plants cannot logically be public nuisances” where “TVA is in compliance with the more demanding federal EPA requirements and state law SIPs.” Id.at 310. The Court concluded that if the district court's injunction were allowed to stand, it “would encourage courts to use vague public nuisance standards to scuttle the nation's carefully created system for accommodating the need for energy production and the need for clean air. The result would be a balkanization of clean air regulations and a confused patchwork of standards, to the detriment of industry and the environment alike.” Id.at 296. 

 

Following the Fourth Circuit's decision, North Carolina filed a petition for certiorari with the Supreme Court, which is currently pending. North Carolina will withdraw its petition for certiorari once the settlement is approved by the federal district court in the Eastern District of Tennessee.