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 PowerÂs 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 EngenerationÂs failure to hold sufficient credits to offset the SO2 emissions from the two power plants, EPA determined that Engeneratio