EPA v. ENGENERATION OPERATING SERVICES (BNK)

Case summary

Engeneration Operating Services (Engeneration) operated the Elizabethtown Power and Lumberton Power electric generating facilities in Elizabethtown, North Carolina and Lumberton, North Carolina, under a contract with North Carolina Power Holdings (NCPH), the owner of the two power plants. NCPH is owned by Vulcan Power Group, which in turn is owned by Vulcan Capital Management, and TDF & Coal, LLC. Under the acid rain provisions of Title IV of the Clean Air Act (CAA), electric generating units of 25 MW or greater, including the Elizabethtown and Lumberton power plants, are subject to the provisions of the acid rain program. Under the acid rain program, such facilities must maintain sufficient acid rain credits (allowances) to offset their emissions of sulfur dioxide (SO2) on an annual basis. By March 1 of the each year the facilities must have sufficient credits to cover their SO2 emissions for the prior calendar year. By March 1, 2005, Lumberton Power and Elizabethtown Power’s allowances were deficient for calendar year 2004. Specifically, SO2 emissions from the Lumberton power plant were 290 tons greater than the number of allowances held by its authorized representative, Engeneration, and SO2 emissions from the Elizabethtown power plant were 173 tons greater than the number of allowances held by Engeneration. As a result of Engeneration’s failure to hold sufficient credits to offset the SO2 emissions from the two power plants, EPA determined that Engeneration violated section 411 of the CAA and was liable for the mandatory excess emissions penalty required by section 411, as implemented by regulations at 40 C.F.R. Part 77. In June 2006, EPA referred the matter to the Department of Justice for the collection of an excess emissions penalty from Engeneration in the amount of $1,468,050. In March 2008, Engeneration, Vulcan Power Group and Vulcan Management filed involuntary bankruptcy petitions against NCPH and the two power plants seeking relief under Chapter 11 of the Bankruptcy Code to protect the petitioners’ interests in the financial assets of the debtors, against the interests of lenders who had loaned the debtors money and had initiated foreclosure actions against them. EPA has requested the Department of Justice to file a proof of claim in the bankruptcy cases to protect the government’s interests in recovering the excess emissions penalty assessed against Engeneration.

Defendants (7)

• ENGENERATION OPERATING SERVICESNamed in complaint
• TDR & COAL LLC
• VULCAN MANAGEMENT
• VULCAN POWER GROUP
• ELIZABETHTOWN POWER
• LUMBERTON POWER
• NORTH CAROLINA POWER HOLDINGS

Facilities (3)

• NORTH CAROLINA RENEWABLE POWER - LUMBERTON, L ** INACTIVE **

  1866 HESTERTOWN RD, LUMBERTON, NC, 28358

  Registry ID: 110070835016

• NORTH CAROLINA RENEWABLE POWER - ELIZABETHTOW ** INACTIVE **

  3100 WEST BROAD STREET, ELIZABETHTOWN, NC, 283371899

  Registry ID: 110000349882

• NORTH CAROLINA RENEWABLE POWER - ELIZABETHTOW ** INACTIVE **

  3100 WEST BROAD STREET, ELIZABETHTOWN, NC, 283371899

  Registry ID: 110000349882

Statutes cited

• CAA 412 — Acid Rain Requirements

Timeline (4 milestones)

• 2008-08-29Referred To Dept Of Justice
• 2008-09-10Complaint Filed With Court
• 2008-09-15Enforcement Action Data Entered
• 2014-03-24Enforcement Action Closed