Last week, in United States v. Midwest Generation, the 7th Circuit Court of Appeals affirmed dismissal of EPA’s NSR enforcement action against Commonwealth Edison. Commonwealth Edison was the prior owner of the plants at issue and modified them at various times from 1994-1999 without obtaining PSD/NSR approvals before doing so. Midwest Generation purchased the plants and continued to operate them. In 2009, the United States sued both Commonwealth Edison and Midwest Generation. In 2010, the District Court ruled that the government was not entitled to relief. The government appealed, but in the meantime, Midwest Generation filed for bankruptcy protection and claims against it were stayed. The appeal decision thus addressed only the claims against Commonwealth Edison – though the reasoning certainly would apply to claims against later owners as well.
Judge Easterbrook carefully, but simply, deconstructed the plaintiff’s argument that a violation of the requirement for a PSD/NSR permit is a continuing violation. First, he distinguished between allegations of ongoing discrete violations and lingering injury from a completed violation. As to the first, the Court noted that:
The violation is complete when construction commences without a permit in hand. Nothing in the text of §7475 even hints at the possibility that a fresh violation occurs every day until the end of the universe if an owner that lacks a construction permit operates a completed facility.
Although plaintiffs insist that the construction permit has “an operational component,” they mean only that under §7475(a)(4) the operator must install the best available control technology. Section 7475(a)(4) specifies what must be built, not how the source operates after construction. If the owners ripped out or deactivated the best available control technology after finishing construction that would not violate §7475—though it might well violate some other statute, regulation, or implementation plan prescribing how polluters run their facilities.
As to what are effectively continuing injury claims, the United State’s allegations were similarly unavailing:
What these plants emit today is subject to ongoing regulation under rules other than §7475. Today’s emissions cannot be called unlawful just because of acts that occurred more than five years before the suit began. Once the statute of limitations expired, Commonwealth Edison was entitled to proceed as if it possessed all required construction permits…. enduring consequences of acts that precede the statute of limitations are not independently wrongful.
It is hard to overstate the importance of this decision for PSD/NSR enforcement. It’s not just about penalties. It’s about injunctive relief. If it stands, and I think it will, NSR cases have to be brought within five years of the alleged violation. After that, no relief. No penalties. No injunction. Nada.
For now, it’s only the law in the 7th Circuit, but given the number of large coal plants in the 7th Circuit, that’s pretty significant in its own right. Moreover, EPA and DOJ are going to be taking a big risk if they ask the Supreme Court for certiorari here. As we noted at the time of the District Court decision, the Supreme Court likes plain readings. I wouldn’t bet the farm that the Supreme Court would overturn this decision.