UNITED STATES OF AMERICA v. EME HOMER CITY GENERATION L.P. et al
Filing
111
MEMORANDUM OPINION and ORDER granting 85 Defendant EME Homer City Generation L.P.'s Motion to Dismiss; granting 87 Defendants Homer City Owner-Lessors' Motion to Dismiss; granting 88 Defendant New York State Electric & Gas Corporation's Motion to Dismiss; granting 91 Defendant Pennsylvania Electric Compnay's Motion to Dismiss. The Complaints are dismissed with prejudice and the clerk shall docket this case closed. Signed by Judge Terrence F. McVerry on 10/12/2011.
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
EME HOMER CITY GENERATION L.P.,
HOMER CITY OL1 LLC, HOMER CITY OL2
LLC, HOMER CITY OL3 OLC, HOMER CITY
OL4 LLC, HOMER CITY OL5 LLC, HOMER
CITY OL6 LLC, HOMER CITY OL7, HOMER
CITY OL8, NEW YORK STATE ELECTRIC
AND GAS CORPORATION and
PENNSYLVANIA ELECTRIC COMPANY,
Defendants.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF ENVIRONMENTAL
PROTECTION and STATE OF NEW YORK,
Intervenor-Plaintiffs,
v.
EME HOMER CITY GENERATION L.P., et al.
Defendants.
STATE OF NEW JERSEY,
Intervenor-Plaintiff,
v.
EME HOMER CITY GENERATION L.P., et al.
Defendants.
1
)
)
)
) 2:11-cv-19
)
) MEMORANDUM OPINION
) AND ORDER OF COURT
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
MEMORANDUM OPINION AND ORDER OF COURT
Pending before the Court are the following motions to dismiss: EME HOMER CITY
GENERATION L.P.’S MOTION TO DISMISS (Doc. No. 85); DEFENDANTS HOMER CITY
OWNER-LESSORS’ MOTION TO DISMISS (Doc. No. 87); NEW YORK STATE ELECTRIC
& GAS CORPORATION’S MOTION TO DISMISS (Doc. No. 88); and PENNSYLVANIA
ELECTRIC COMPANY’S MOTION TO DISMISS (Doc. No. 91), each with a brief in support.
Plaintiff United States of America and three intervenor Plaintiffs, Commonwealth of
Pennsylvania Department of Environmental Protection (“PADEP”), State of New York and State
of New Jersey (collectively the “Intervenors”), filed briefs in opposition. All Defendants filed
reply briefs. The issues have been fully briefed and are ripe for disposition.
Factual Background
This case involves alleged violations of the federal Clean Air Act, 42 U.S.C. § 7470 et
seq., at the Homer City coal-fired power plant in Indiana County, Pennsylvania (the “Plant”).
Although the legal issues raised in this case are complex, the facts pled in the three separate
Complaints filed by the United States and the Intervenor state Plaintiffs are relatively straightforward.
Defendant New York State Electric and Gas Corporation (“NYSEC”) was an owner of
the Plant from January 1968 until June 1998. Defendant Pennsylvania Electric Company
(“PENELEC”) was an owner of the Plant from January 1968 until March 1999 and also operated
the Plant during this same timeframe.1 Defendant EME Homer City Generation, L.P. (“EME”)
owned the Plant from March 1999 until December 7, 2001 and has operated the Plant from
March 1999 through the present. In 2001, EME and the eight Homer City Owner-Lessor
1
The intervenor complaints allege that NYSEC and PENELEC began construction of the Plant in 1965.
2
Limited Liability Companies (the “OLs”) completed a sale-leaseback transaction, by which the
OLs acquired ownership of the Plant. For clarity and convenience, NYSEC and PENELEC will
be referred to as the “Former Owners” and EME and the OLs will be referred to as the “Current
Owners.”
The Plant has three coal-fired generating units. Units 1 and 2 began operating in 1969,
prior to the enactment of the provisions of the Clean Air Act at issue, and neither unit has been
retrofitted with a wet flue gas desulfurization scrubber to control SO2 emissions which adversely
impact human health and the environment, including asthma and acid rain. In 2009, Units 1 and
2 emitted approximately 96,000 tons of SO2, amongst the highest in the nation. 2 All three boiler
units are currently equipped with electro-static precipitators for particulate control and selective
catalytic reduction for control of nitrogen oxides (“NOx”).
In August 1991, the Former Owners commenced a multi-million dollar project to replace
the economizer on Unit 2, which included modification of the backpass gas ductwork and
installation of new reheat temperature control dampers and internal boiler supports and related
work. In March 1994, the Former Owners commenced a similar project to replace the
economizer on Unit 1. In 1995 and 1996, the Former Owners replaced the vertical reheater
pendants on Units 1 and 2.3 The Former Owners did not apply for or obtain a permit under the
Prevention of Significant Deterioration (“PSD”) program of the Clean Air Act before performing
any of these projects.
On August 3, 1995, PENELEC submitted an application for an operating permit for the
Plant pursuant to the requirements of Title V of the Clean Air Act. On January 30, 2004,
PADEP issued a final Title V permit for the Plant. The effective date of the permit was
2
Unit 3, which is not at issue in this case, began operation in 1977 and is equipped with a scrubber.
The Intervenors, but not the United States, contend that the vertical reheater pendant projects violated the PSD
program.
3
3
December 1, 2004. United States Complaint ¶ 61. The Intervenors allege that PADEP issued
several operating permits for the emission sources at the Plant, the most recent of which is Title
V permit No. 32-00055, issued on January 2004, with an amendment effective on December 1,
2004. PADEP/New York Complaint ¶ 23; New Jersey Complaint ¶ 22. The actual Title V
permit was not attached to the Complaints or otherwise provided to the Court. It is unclear
whether concerns regarding the projects at issue were raised during the ten year period when the
Title V permit application was under review by regulators.
For many years, environmental regulators took no action to challenge the 1991, 1994,
1995 or 1996 projects as improper. On June 12, 2008, the United States Environmental
Protection Agency (“EPA”) issued a Notice and Finding of Violation (“NOV”) to the Current
Owners. On May 6, 2010 and November 1, 2010, the EPA issued subsequent NOVs to all of the
named Defendants. Plaintiffs allege that Defendants undertook the 1991, 1994, 1995 and 1996
projects without having obtained the requisite PSD permits. In addition, Plaintiffs allege that
because the projects should have triggered a requirement to install the Best Available Control
Technology (“BACT”) to control emissions of sulfur dioxide (“SO2”) and/or particulate matter,
Defendants failed to submit a complete application for a Title V operating permit, and thus failed
to obtain a proper or valid Title V operating permit.
The United States initiated this action on January 6, 2011, with the filing of a four-count
civil complaint against all of the named Defendants. Counts 1 and 3 allege violations by all
Defendants of the PSD provisions of the Clean Air Act, 42 U.S.C. §§ 7470-7492, and the
federally-approved Pennsylvania State Implementation Plan (“SIP”), for the projects at Units 1
and 2, respectively. Counts 2 and 4 allege violations by all Defendants of the Title V provisions
of the Clean Air Act, 42 U.S.C. §§ 7661-7661(f), and the Pennsylvania Title V program, for the
4
subsequent operation of Units 1 and 2, respectively. The United States seeks injunctive relief
and the assessment of civil penalties since March 15, 2004.
On January 13, 2011, PADEP and New York intervened in the action and filed a fivecount Complaint which provides more factual details, asserts similar violations of the PSD and
Title V provisions of the federal Clean Air Act, asserts corresponding violations of the
Pennsylvania Air Pollution Control Act (“APCA”), 35 P.S. § 4001, et seq., and its implementing
regulations, and adds a common law public nuisance claim. Additionally, New Jersey filed a
separate three-count Intervenor Complaint which asserts essentially the same federal Clean Air
Act claims set forth by the United States. The Intervenors assert standing under the Clean Air
Act citizen suit provision, 42 U.S.C. § 7604(a)(1), and seek injunctive relief and civil penalties
relating back to the dates of the original projects.
Standard of Review
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiency
of a complaint. The Court must accept as true all well-pleaded facts and allegations, and must
draw all reasonable inferences therefrom in favor of the plaintiff. However, as the Supreme
Court made clear in Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007), the “factual
allegations must be enough to raise a right to relief above the speculative level.” Id. The
Supreme Court has subsequently broadened the scope of this requirement, stating that only a
complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal,
-- U.S. --, 129 S. Ct. 1937, 1950 (2009) (emphasis added). A district court must conduct a twopart analysis when presented with a motion to dismiss for failure to state a claim. First, the Court
must separate the factual and legal elements of the claim. Fowler v. UPMC Shadyside, 578 F.3d
5
203, 210 (3d Cir. 2009). Although the Court “must accept all of the complaint’s well-pleaded
facts as true, [it] may disregard any legal conclusions.” Id. at 210-211. Second, the Court “must
then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff
has a ‘plausible claim for relief.’ In other words, a complaint must do more than allege the
plaintiff’s entitlement to relief. A complaint has to ‘show’ such an entitlement with its facts.”
Id. at 211 (citing Iqbal, 129 S. Ct. at 1949). The determination of “plausibility” will be “‘a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.’” Id. at 211 (quoting Iqbal, 129 S. Ct. at 1950).
Legislative Overview
This case primarily involves statutory interpretation of the Clean Air Act. In Alston v.
Countrywide Financial Corp., 585 F.3d 753 (3d Cir. 2009), the Court of Appeals for the Third
Circuit described the task as follows:
The role of the courts in interpreting a statute is to give effect to Congress's
intent.... Because it is presumed that Congress expresses its intent through the
ordinary meaning of its language, every exercise of statutory interpretation begins
with an examination of the plain language of the statute. When the statute's
language is plain, the sole function of the courts-at least where the disposition
required by the test is not absurd-is to enforce it according to its terms.
Id. at 759 (citations omitted). Accordingly, the Court begins with an examination of the
applicable statutory framework.
In 1970, in response to dissatisfaction with existing air pollution programs, Congress
enacted amendments to the Clean Air Act which significantly increased the federal oversight
role. The statute was intended “to guarantee the prompt attainment and maintenance of specified
air quality standards.” Alaska Dep't of Envtl. Conservation v. EPA, 540 U.S. 461, 469 (2004).
Plaintiffs contend that the decision in this case should uphold the fundamental purpose of the
6
Clean Air Act to reduce air pollution. The statute required the EPA to promulgate national
ambient air quality standards (NAAQS) for pollutants, including SO2, which may reasonably
endanger public health or welfare. 42 U.S.C. §§ 7408, 7409. Each state was required to submit
for EPA approval a State Implementation Plan (a “SIP”) to implement, maintain and enforce
NAAQS. 42 U.S.C. § 7410.4 In addition, the EPA was required to develop “technology-based
performance standards” designed to limit emissions from major sources of pollution. Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 846 (1984); 42 U.S.C. §
7411(b).
As with most legislation, the Clean Air Act amendments reflected a congressional
compromise. As explained in Chevron, 467 U.S. at 847: “the legislative struggle was basically
between interests seeking strict schemes to reduce pollution rapidly to eliminate its social costs
and interests advancing the economic concern that strict schemes would retard industrial
development with attendant social costs.” As one legislative compromise, the Clean Air Act has
less stringent regulations regarding existing power plants as compared to newly constructed
sources of electricity. In other words, existing plants were “grandfathered” in recognition of the
expense of retrofitting pollution-control equipment. Compare 42 U.S.C. §§ 7411(d) and (f). As
explained in Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901, 909 (7th Cir. 1990):
Consistent with its balanced approach, Congress chose not to subject existing
plants to the requirements of NSPS and PSD. Members of the House recognized
that “[b]uilding control technology into new plants at time of construction will
plainly be less costly then [sic] requiring retrofit when pollution control ceilings
are reached.” H.R.Rep. No. 294, 95th Cong., 1st Sess. 185, reprinted in 1977
U.S.Code Cong. & Admin.News at 1264. But Congress did not permanently
exempt existing plants from these requirements; section 7411(a)(2) provides that
4
SIP provisions must meet federal standards, are subject to review and approval by the EPA, and are federally
enforceable once approved. States have broad discretion in designing their SIPs, but the plans must include certain
federal standards and are subject to EPA review and approval. See Alaska Dep't, 540 U.S. at 470. At all times
relevant to this case, Pennsylvania had an EPA-approved SIP.
7
existing plants that have been modified are subject to the Clean Air Act programs
at issue here.
Accord United States v. Cynergy Corp., 458 F.3d 705, 709 (6th Cir. 2006) (Clean Air Act treats
old plants more leniently than new ones but there is an expectation that old plants will wear out
and be replaced by new ones which are subject to more stringent pollution controls). Utility
companies are not entitled to evade the Clean Air Act requirements by keeping the grandfathered
power plants in operation indefinitely. Alabama Power Co. v. Costle, 636 F.2d 323, 400 (D.C.
Cir. 1979) (“The statutory scheme intends to ‘grandfather’ existing industries; but the provisions
concerning modifications indicate that this is not to constitute a perpetual immunity from all
standards under the PSD program.”) Accordingly, the PSD permit requirements apply to both
newly-constructed facilities and those that have had a “major modification” that would result in a
“significant net emissions increase.” Environmental Defense v. Duke Energy Corp., 549 U.S.
561, 568-69 (2007); 42 U.S.C. § 7411(a)(2). This case involves projects at “grandfathered” units
of the Homer City Plant which Plaintiffs allege should have triggered the more rigorous Clean
Air Act emissions standards.
PSD Program
Congress amended the Clean Air Act again in 1977 to add the “Prevention of Significant
Deterioration” (PSD) program, which was intended to ensure that air quality in areas which were
already “clean” (i.e., in compliance with NAAQS) would not degrade. Alaska Dep’t, 540 U.S. at
470-71. The statutory authority for the PSD program is in Part C of Subchapter I of the Clean
Air Act, 42 U.S.C. §§ 7470-7479. Initially, the PSD program applied only to construction of
new sources of pollution. However, in November 1977, Congress passed a technical amendment
which made the PSD program applicable to projects of modifications to grandfathered plants.
8
Safe Drinking Water Amendments of 1977, Pub. L. No. 95-190, 91 Stat. 1393, 1402 (1977)
(“The term [‘construction’] when used in connection with any source or facility, includes the
modification (as defined in [42 U.S.C. § 7411(a)(4)]) of any source or facility”). See United
States v. Duke Energy Corp., 411 F.3d 539, 548 (4th Cir. 2005), rev’d on other grounds, 549 U.S.
561 (2007); Alabama Power, 636 F.2d at 401 n. 49. The implications of this “technical
amendment” were not fully appreciated at the time.
In this case, Plaintiffs allege that Defendants violated 42 U.S.C. § 7475(a), which is
entitled “Preconstruction Requirements” and provides as follows:
(a) Major emitting facilities on which construction is commenced
No major emitting facility on which construction is commenced after August 7,
1977, may be constructed in any area to which this part applies unless-(1) a permit has been issued for such proposed facility in accordance with this
part setting forth emission limitations for such facility which conform to the
requirements of this part;
(2) the proposed permit has been subject to a review in accordance with this
section, the required analysis has been conducted in accordance with regulations
promulgated by the Administrator, and a public hearing has been held with
opportunity for interested persons including representatives of the Administrator
to appear and submit written or oral presentations on the air quality impact of
such source, alternatives thereto, control technology requirements, and other
appropriate considerations;
(3) the owner or operator of such facility demonstrates, as required pursuant to
section 7410(j) of this title, that emissions from construction or operation of
such facility will not cause, or contribute to, air pollution in excess of any (A)
maximum allowable increase or maximum allowable concentration for any
pollutant in any area to which this part applies more than one time per year, (B)
national ambient air quality standard in any air quality control region, or (C) any
other applicable emission standard or standard of performance under this chapter;
(4) the proposed facility is subject to the best available control technology for
each pollutant subject to regulation under this chapter emitted from, or which
results from, such facility;
9
(5) the provisions of subsection (d) of this section with respect to protection of
class I areas have been complied with for such facility;
(6) there has been an analysis of any air quality impacts projected for the area as a
result of growth associated with such facility;
(7) the person who owns or operates, or proposes to own or operate, a major
emitting facility for which a permit is required under this part agrees to
conduct such monitoring as may be necessary to determine the effect which
emissions from any such facility may have, or is having, on air quality in any area
which may be affected by emissions from such source; and
(8) in the case of a source which proposes to construct in a class III area,
emissions from which would cause or contribute to exceeding the maximum
allowable increments applicable in a class II area and where no standard under
section 7411 of this title has been promulgated subsequent to August 7, 1977, for
such source category, the Administrator has approved the determination of best
available technology as set forth in the permit.
42 U.S.C. § 7475(a) (emphasis added).
According to the plain meaning of the language of the statute, § 7475(a) provides that
“No major emitting facility . . . may be constructed” unless each of the statutory conditions are
met. One of the preconditions to construction is the installation of Best Available Control
Technology (“BACT”). § (a)(4). BACT is not a particular type of technology. Rather, it is
defined in the Act as an “emission limitation based on the maximum degree of reduction of each
pollutant subject to regulation ... which the permitting authority, on a case-by-case basis, taking
into account energy, environmental, and economic impacts and other costs, determines is
achievable” for the facility in question. 42 U.S.C. § 7479(3). As provided in §§ 7475(a)(1) and
(a)(8), the Clean Air Act determination of emissions limitations and BACT for the facility are to
be “set forth” in the PSD permit.
The PSD requirements are forward-looking and framed in terms of that which utilities
must do before commencing construction. Accordingly, an operator’s duty is "not prescience,
but merely a reasonable estimate of the amount of additional emissions that the change will
10
cause." Cynergy, 458 F.3d at 709; United States v. Ohio Edison Co., 276 F. Supp.2d 829, 863
(S.D. Ohio 2003) (operator must perform pre-construction estimate of whether change will result
in significant net emissions increase). Thus, in this case the Former Owners were required to
have made a reasonable estimate, in advance, of whether the 1991, 1994, 1995 and 1996 projects
constituted major modifications which would result in a significant increase of SO2 emissions.
The regulations provide guidance but there are no clear, bright-line rules. In Cynergy, 458 F.3d
at 709, the Court recognized that “it may be a very difficult estimate to make.” In United States
v. Ohio Edison Co., 276 F. Supp.2d 829, 832 (S.D. Ohio 2003), the Court lamented “an abysmal
breakdown in the administrative process” in which various administrations have failed to address
the fundamental issue of “at what point plants built before 1970 must comply with new air
pollution standards.”
Title V Program
The Clean Air Act was again amended in 1990 (thirteen years after the PSD program was
enacted) to provide the Title V statutory regime which governs the consideration and issuance of
operating permits at power plants. The Complaints allege that Defendants violated 42 U.S.C. §§
7661a(a), 7661b(c) and 7661c(a). Those statutory sections provide in relevant part as follows:
§ 7661a(a) Violations
After the effective date of any permit program approved or promulgated
under this subchapter, it shall be unlawful for any person to violate any
requirement of a permit issued under this subchapter, or to operate an
affected source (as provided in subchapter IV-A of this chapter), a major source,
any other source (including an area source) subject to standards or regulations
under section 7411 or 7412 of this title, any other source required to have a
permit under parts C or D of subchapter I of this chapter, or any other
stationary source in a category designated (in whole or in part) by regulations
promulgated by the Administrator (after notice and public comment) which shall
include a finding setting forth the basis for such designation, except in
11
compliance with a permit issued by a permitting authority under this
subchapter. (Nothing in this subsection shall be construed to alter the
applicable requirements of this chapter that a permit be obtained before
construction or modification.)
§ 7661b(c) Deadline
Any person required to have a permit shall, not later than 12 months after
the date on which the source becomes subject to a permit program approved or
promulgated under this subchapter, or such earlier date as the permitting
authority may establish, submit to the permitting authority a compliance plan
and an application for a permit signed by a responsible official, who shall
certify the accuracy of the information submitted. The permitting authority shall
approve or disapprove a completed application (consistent with the procedures
established under this subchapter for consideration of such applications), and shall
issue or deny the permit . . .
§ 7661c(a) Conditions
Each permit issued under this subchapter shall include enforceable
emission limitations and standards, a schedule of compliance, a requirement
that the permittee submit to the permitting authority, no less often than every 6
months, the results of any required monitoring, and such other conditions as are
necessary to assure compliance with applicable requirements of this chapter,
including the requirements of the applicable implementation plan.5
(Emphasis added).
To summarize these sections, power plant operators must submit a compliance plan and a Title V
permit application to regulators, who shall after review issue or deny the Title V operating
permit. § 7661b. Each Title V permit is required to include all emission limitations and
standards, and “such other conditions” necessary to assure a plant’s compliance with the Clean
Air Act. § 7661c. It is unlawful to violate a condition of a Title V permit or to operate a plant
other than in compliance with a Title V permit. § 7661a. Title V recognizes that sources may be
required to obtain a permit under the PSD program (part C of subchapter I) but specifically limits
a source’s compliance obligation to permits issued “under this subchapter,” i.e., Title V permits.
5
The United States Brief at 28 misquoted the statutory text by replacing the italicized phrase “applicable
implementation plan” with the phrase “applicable PSD requirements.”
12
§ 7661a. Title V does not alter the requirements of the PSD program to obtain a preconstruction
permit. § 7661a.
Structurally, it is clear that PSD and Title V are two separate programs, enacted at
different times, and specified in different subchapters of the Clean Air Act. 6 As explained in
United States v. Marine Shale Processors, 81 F.3d 1329, 1356 (5th Cir. 1996):
The Clean Air Act statutory scheme contemplates at least two different types of
air permits unhappily named “preconstruction permits” and “operating permits,”
with confusion easily resulting from the fact that preconstruction permits often
include limits upon a source's operations. Preconstruction permits result from a
review process that occurs before construction of or major modification to a
stationary source. At this stage, the permitting authority must determine whether
the proposed construction or modification would violate a state's emissions
control strategy or interfere with the attainment or maintenance of Clean Air Act
air quality standards. 40 C.F.R. § 51.160(a)(1-2). In contrast, operating permits
focus on a source's current emissions, even if the source has not recently
undergone construction or major modification. See 40 C.F.R. § 70.1(b) (“All
sources subject to these regulations shall have a permit to operate....”). The
distinction between preconstruction and operating permits is critical.
See also United States v. Illinois Power Co., 245 F. Supp.2d 951, 955 (S.D. Ill. 2003) (noting the
distinction between violations of preconstruction permit requirements and operating permit
requirements).
Title V permits do not generally impose any new emission limits, but are intended to
incorporate into a single document all of the Clean Air Act requirements applicable to a
particular facility. See Romoland Sch. Dist. v. Inland Empire Energy Ctr., LLC, 548 F.3d 738,
742 (9th Cir. 2008). Similar to other Clean Air Act programs, Title V is implemented primarily
by the states under EPA oversight. See id. In states with EPA-approved programs, Title V
6
Plaintiffs argue in response to NYSEG’s supplemental authority that the Cross-State Air Pollution Rule is separate
and distinct from the PSD program because they are authorized under different provisions of the Clean Air Act (42
U.S.C. § 7410(a)(2)(D) versus 42 U.S.C. § 7410(a)(2)(C)). Document No. 109 at 3 n.1. This argument highlights
the separateness of the PSD and Title V programs – which are based not on adjacent sub-sub-subsections of the
same provision, but in different subchapters of the statute.
13
permits are issued by the state permitting authority, subject to EPA review and veto. See id. at
742-43; 42 U.S.C. § 7661d.
Legal Analysis
A. PSD Claims
Plaintiffs allege that the Former Owners violated the PSD program by having undertaken
construction projects without having obtained the necessary PSD preconstruction permits.
Plaintiffs also allege that the Current Owners violated the PSD program by failing to implement
BACT at units that had been improperly modified because the PSD program imposes ongoing
obligations at modified facilities.
The PSD program is rather straight-forward when applied to construction of new plants
but is difficult to enforce when applied to operating, grandfathered facilities. Because
grandfathered facilities are subject to less stringent rules regarding emissions, power plant
operators have an obvious incentive to attempt to keep them in operation as long as possible to
avoid the cost of installing more advanced pollution controls. See Cynergy, 458 F.3d at 709. In
addition, there are often no clear-cut rules for specifically determining which projects will trigger
the PSD requirements. Id. Again, power plant operators have an obvious incentive to make a
“reasonable” prediction that the stricter emissions standards will not be implicated.
Nevertheless, the PSD regulations are only triggered if and when the power plant operator (the
person with an incentive to avoid the program) voluntarily “self-reports” by applying for a
preconstruction permit. There is no mechanism – other than post-hoc litigation – by which
environmental regulators are empowered to trigger the PSD and BACT requirements. In other
words, the PSD program is somewhat reliant on the proverbial fox to guard the henhouse.
14
If the operator determines (rightly or wrongly) that a pre-construction PSD permit is not
necessary for a particular modification of the plant, no specific action is required on anyone’s
part -- the operator simply continues to run the plant as usual. The statutory and regulatory
mechanisms for implementing pollution controls are not triggered. No pre-construction permit is
issued by which operating conditions may be established or later incorporated into a Title V
permit. The process to determine BACT case-by-case at the facility does not occur. As
explained in United States v. Midwest Generation, LLC, 694 F. Supp.2d 999, 1007 (N.D. Ill.
2010):
The provision regarding “best available control technology” does not stand alone,
but appears within the context of “preconstruction requirements.” It is determined
on a case-by-case basis through the permitting process itself. Tellingly, the
Plaintiffs' brief states that “[i]f a PSD permit had been issued for each of the
alleged modifications, each permit would have set forth [best available control
technology] requirements.” (Pl. Opp'n Br. 4.) This underscores the fact that the
ongoing requirements cited by Plaintiffs are tied to the application of the permit
and that it is the original failure to obtain that permit which violates these PSD
provisions. There is no obligation to apply “best available control technology” in
the abstract.
This same structural difficulty within the PSD program was also noted in Sierra Club v. Otter
Tail Power Co., 615 F.3d 1008, 1016 (8th Cir. 2010):
Where, as here, the operator never applied for any PSD permits, there is no
application and no approval with which it can comply. Thus, while Otter Tail may
have violated § 52.21(r)(1) by failing to apply for PSD permits in the first place, it
does not continue to do so by failing to comply with a hypothetical set of
operational parameters that would have been developed through the permitting
process.
Accord National Parks Conservation Ass'n, Inc. v. Tennessee Valley Authority (Nat'l Parks 11th
Cir.), 502 F.3d 1316, 1325 (11th Cir. 2007) (BACT is to be determined through the
preconstruction permitting process).
15
These structural aspects of the PSD program (vague triggering standards and reliance on
the operator to voluntarily apply for a permit and enter the program) are amplified when a
grandfathered facility changes ownership. In this case, the Former Owners apparently decided in
1991, 1994, 1995 and 1996 that permits under the PSD program were not needed for the projects
at issue. Accordingly, PSD permits were not applied for or obtained and the Plant continued
with its normal operations. In each instance, the five-year statute of limitations for recovering a
civil penalty for a PSD violation expired without any challenge from federal or state regulators.
The Former Owners did apply for a Title V permit, which was under consideration by the
reviewing agency for almost ten years. A Title V permit was eventually issued in January 2004.
When the Current Owners purchased the Plant, there was no pending alleged violation of the
PSD program that the purchasers could have discovered during their due diligence. 7 It was not
until 2008 and 2010 that NOV’s were issued to retrospectively challenge the 1991, 1994, 1995
and 1996 decisions to not obtain PSD permits. Thus, it is difficult to understand how the Current
Owners could have avoided PSD liability under Plaintiffs’ theory of the case. The Current
Owners did not own or operate the Plant at the time the projects at issue were undertaken and
there was no indication that the Former Owners had committed a PSD violation. In essence,
Plaintiffs’ theory would require the Current Owners to have filed an application for a
prophylactic PSD permit immediately upon acquisition of the Plant, just in case any work done
by the Former Owners was later determined to have triggered the PSD program requirements.
Understandable frustration with apparent efforts to evade the PSD program has led some
courts to construe § 7475(a) more broadly than others. In United States v. Am. Elec. Power Serv.
7
At this stage of the case, the Court assumes that the 1991, 1994, 1995 and 1996 Projects should have triggered the
PSD permitting requirements. However, to succeed in their claims, it is Plaintiffs' burden to prove that each of
Defendants' projects constituted a major modification that would have significantly increased SO2 emissions.
United States v. Eastern Kentucky Power Co., 498 F. Supp.2d 995 (E.D. Ky. 2007); Sierra Club v. Morgan, 2007
WL 3287850 *12 (W.D. Wis. 2007).
16
Corp., 137 F. Supp.2d 1060, 1066 (S.D. Ohio 2001), the Court commented that “it is illogical to
conclude that a defendant may only be held liable for constructing a facility, rather than
operating such facility, without complying with the permit requirements.” In New Jersey v.
Reliant Energy MidAtlantic Power Holdings, LLC, 2009 WL 3234438 (E.D. Pa. 2009), the Court
extended this reasoning to suggest that an operator may be held liable “simply because its
predecessor owner failed to secure the appropriate permit.” See also New York v. Niagara
Mohawk Power Corp., 263 F.Supp.2d 650, 663 (W.D.N.Y. 2003) (allowing operator to use its
own failure to obtain preconstruction permit as a shield “would lead to absurd and surely
unintended results”). This contention might be persuasive if the failure to obtain a PSD permit
was “cut and dry” and indisputable (as it may be when applied to new construction). However,
in the factual scenarios described in many of the reported cases which involve grandfathered
facilities, such is seldom the case. To the contrary, the power plant operators often vigorously
contest their alleged PSD liability and assert that they were not required to obtain a PSD permit
because, inter alia, the projects constituted “routine maintenance, repair and replacement” or
were forecasted to not result in significant increases in emissions. It is often unclear, even in
retrospect, whether the operators or the government regulators are correct. See Cynergy, 458
F.3d at 709. For example, in this case the Intervenors – but not the United States – contend that
the 1995 and 1996 reheater projects triggered the PSD program requirements.
Thus, there is, indeed, a principled and logical basis for distinguishing between the
original decision to not obtain a permit and subsequent operations. If the operator wrongly failed
to obtain a PSD pre-construction permit, it is that decision -- rather than post-project operations
based on the assumption that no permit was needed -- that is sensibly subject to post-hoc,
retrospective challenge. In other words, at least in the context of grandfathered, operating
17
facilities that have changed ownership, it is reasonable to construe § 7475(a) in accordance with
its plain text as being directed to the initial decision of whether or not to obtain a preconstruction
PSD permit.
With this background, the Court turns to the specific claims in this litigation.
1. Civil Penalties
The United States seeks civil penalties commencing on March 15, 2004, based upon the
default five-year federal limitations period set forth in 28 U.S.C. § 2462. The Intervenor
Complaints seek civil penalties commencing from the time of the projects in the early 1990s.
However, the Intervenors have since abandoned their claim for civil penalties and have explained
that they now seek only injunctive relief. Intervenors’ Brief at 37 n. 15.
The United States seeks civil penalties only from the Current Owners. The government
contends that the Current Owners violated an independent, continuing obligation under §
7574(a)(4) to bring the Plant into compliance with BACT and operated the Plant after the
projects contrary to the PA SIP, citing Sierra Club v. Dairyland Power Coop., 2010 WL
4294622 * 12 (W.D. Wisc. 2010). The Current Owners contend that they did not violate the
PSD program and that any claims for civil penalties are time-barred.
A PSD violation occurs, at the latest, at the time of the construction project. Midwest
Generation, 694 F.Supp.2d at 1009 (“PSD violation occurs at the time the alleged construction
or modification begins”). The applicable statutory provision, 42 U.S.C. § 7475, is entitled
“Preconstruction Requirements” and states that no major emitting facility “may be constructed”
unless it satisfies the listed prerequisites. The majority rule is that a failure to obtain a PSD
18
permit is a one-time violation and is not a continuing violation. As persuasively explained in
New York v. Niagara Mohawk, 263 F.Supp.2d at 661:
A given construction or modification project occurs only once. If a permit is not
obtained for that particular project, then the preconstruction permit requirement of
the Clean Air Act has been violated. However, the requirement to secure a
preconstruction permit applies prior to construction or modification. Once the
construction or modification is complete, the window in which to apply for and
obtain a preconstruction permit is gone. Thus, a violation of the Clean Air Act's
preconstruction permit requirement is singular in nature, and does not constitute
an ongoing violation.
See also Sierra Club v. Portland Gen. Elec. Co., 663 F.Supp.2d 983, 991-92 (D. Or. 2009)
(recognizing majority rule and collecting cases); United States v. Illinois Power Co., 245
F.Supp.2d 951, 957 (S.D. Ill. 2003) (“a violation of the Clean Air Act's preconstruction permit
requirements ... occurs at the time of the construction or modification and is not continuing in
nature”); United States v. Southern Ind. Gas & Elec. Co., 2002 WL 1760752, *4 (S.D. Ind.
2002) (“failure to obtain a preconstruction permit is a discrete violation that occurs at the time of
construction”); United States v. Westvaco, 144 F.Supp.2d 439, 443 (D. Md. 2001)
(“preconstruction permit violations occur only at the time of the construction or modification of
the emitting facility”); United States v. Murphy Oil USA, Inc., 143 F.Supp.2d 1054, 1083-84
(W.D. Wis. 2001) (“the statute of limitations for a violation of the preconstruction permit
requirements ... begins to run at the time of construction and does not continue through the
operational life of the modified source”); United States v. Brotech Corp., 2000 WL 1368023 *3
(E.D. Pa. 2000) (“[v]iolations of the various requirements to obtain construction permits or plan
approvals occur at the time of the construction, modification, or installation of the equipment or
facility”); United States v. Campbell Soup Co., 1997 WL 258894, *2 (E.D. Cal. 1997) (“the
regulation cannot reasonably be construed to mean that building or altering a machine without a
permit is a violation that continues as long as the machine still exists or is operated”). Two
19
courts of appeals have concluded that failure to obtain a PSD permit is a one-time, noncontinuing violation. See National Parks 11th Cir., 502 F.3d at 1322; Otter Tail, 615 F.3d at
1017; but see National Parks Conservation Ass'n, Inc. v. Tennessee Valley Authority (“Nat'l
Parks 6th Cir.”), 480 F.3d 410, 419 (6th Cir. 2007) (concluding that PSD violation was ongoing
based on language in Tennessee SIP). In sum, the alleged PSD violations occurred, if at all,
when the Former Owners failed to apply for a preconstruction PSD permit in 1991, 1994, 1995
and 1996. Because the Current Owners were not involved in this conduct, they cannot be held
liable under the PSD provisions of the Clean Air Act.
Dairyland Power, 2010 WL 4294622, represents a distinct minority view and did not
involve a change in ownership, as occurred in this case. In essence, the Dairyland Power Court
noted the several references to “operations” in § 7475(a) and concluded that: “although the
obligations to apply best available control technology, conduct monitoring and make air quality
demonstrations may be determined during the permitting process and included in a PSD permit,
they are obligations independent of the permit requirement” such that Plaintiffs could bring a
separate claim for the alleged failure to implement BACT. Id. at *5.8 This Court respectfully
cannot agree. Of course, if a scrubber was determined to be BACT and thus required to be
installed at the Plant as a condition of obtaining a PSD permit, that scrubber would obviously be
intended to remain in place for future operations. See 42 U.S.C. 7410(j) (As a condition for
issuance of any permit required under this subchapter (i.e., a PSD permit), the operator must
show that the “construction or modification and operation of such source will be in compliance
with all other requirements of this chapter.”) However, in this case, the Former Owners never
obtained a PSD permit and no such condition was ever established. Under the plain text of §
8
The Dairyland Power Court interpreted the Wisconsin SIP to make the PSD requirements applicable postconstruction, id. at * 14, and was concerned that the owner not be rewarded for its failure to obtain a PSD permit.
Id. at *15.
20
7475(a), the references to operations occur only within the conditions listed in subsections (1) –
(8), after the “unless” clause. The only actual, actionable prohibition in § 7475(a) is that “No
major emitting facility . . . may be constructed.” In short, BACT is a prerequisite condition to
obtaining a PSD permit -- not an independent, freestanding obligation. Congress could have
provided that it is an independent PSD violation to operate a plant without BACT, but it did not
do so. See Sierra Club v. Duke Energy Indiana, Inc., 2010 WL 3667002 * 7 (S.D. Ind. 2010).
In summary, the Court concludes that the alleged PSD violations constitute singular,
separate failures by the Former Owners to obtain pre-construction permits, rather than ongoing
failures to comply with whatever hypothetical conditions might have been imposed during the
PSD permitting process.9 Thus, the United States was required to file suit to recover civil
penalties for an alleged PSD program violation within five years of the construction project, as
provided in the default federal statute of limitations, 28 U.S.C. § 2462.10 Because the projects at
issue in this case occurred 15-20 years ago and no enforcement action was taken until 2008, the
limitations period has long since expired. Accordingly, no civil penalties are recoverable for the
alleged PSD violations.
2.
Injunctive Relief
Plaintiffs contend that even if they are unable to recover civil penalties for the alleged
PSD program violations, they are entitled to obtain injunctive relief against all Defendants.
Specifically, Plaintiffs ask the Court to enjoin the Current Owners from operating the Plant
9
The United States’ brief at p. 10 misleadingly quoted § 7413(b). The actual text of § 7613(b) states, in relevant
part, that the Administrator may commence a civil action “(1) Whenever such person has violated, or is in violation
of, any requirement or prohibition of an applicable implementation plan or permit.” The United States replaced the
highlighted text with a generic reference to “[the Act.]” Contrary to the United States’ suggestion, the Administrator
is not empowered by this section to litigate a free-standing violation of “the Act,” but instead, must point to a
violation “of an applicable implementation plan or permit.” The fundamental problem in this case is that the Former
Owners never obtained a PSD permit that would have imposed the applicable requirements.
10
Plaintiffs have not attempted to plead a basis for equitable tolling of the limitations period.
21
except in accordance with the PSD permit regulations and to order all Defendants to remedy past
violations by cooperating to install BACT at the Plant. Plaintiffs emphasize the breadth and
flexibility of the court’s equitable powers and contend that the relief sought is not impossible to
implement.
The Current Owners contend that they cannot be held liable for injunctive relief because
they did not violate the PSD program. The Court agrees. As explained above, the statutory
prohibition in the PSD program, § 7475(a), is having commenced construction or modification
without a permit. This alleged violation involved the Former Owners exclusively. As the Court
explained in Niagara Mohawk, 263 F.Supp.2d at 668-69:
By its plain terms, 42 U.S.C. § 7475(a) does not impose liability on any person
other than the one who fails to comply with its requirements. Preconstruction
obligations are imposed only upon the person who actually seeks to construct or
modify a facility within the meaning of the Act. . . . Here, there is no dispute that
the NRG Defendants neither owned nor operated the Facilities at the time the
modifications allegedly occurred. (Amended Complaint, ¶ 13.) The NRG
Defendants are after-the-fact, third-party purchasers. Hence, the NRG Defendants
had neither the obligation nor the ability to comply with the mandates of 42
U.S.C. § 7475(a). Even assuming the truth of the allegations contained in the
Amended Complaint, that is, that the Facilities were modified without fulfillment
of the preconstruction requirements, 42 U.S.C. § 7475(a) does not give rise to a
cause of action against the NRG Defendants.
The same analysis applies to the Current Owners in this case. They could not possibly have
applied for a PSD pre-construction permit for the 1991, 1994, 1995 or 1996 modification
projects because they had no connection to the Plant or the Former Owners at that time. It is
axiomatic that in order to obtain injunctive relief, a Plaintiff must first establish a successful
claim on the merits. See, e.g., Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., Inc., 747 F.2d
844, 850 (3d Cir. 1984) (before issuing permanent injunction, “the court must determine if the
plaintiff has actually succeeded on the merits”). Plaintiffs cannot succeed on a PSD claim
22
against the Current Owners, as a matter of law. Accordingly, the PSD claims against the Current
Owners, including the request for injunctive relief, will be dismissed with prejudice.
The more difficult question is whether this Court may award injunctive relief under the
PSD program against the Former Owners. It is certainly clear from the statutory text of 28
U.S.C. § 2462 that the five-year limitations period applicable to civil penalties does not place a
time limit on Plaintiffs’ ability to obtain injunctive relief. The Court recognizes that SO2
emissions have been ongoing, and likely would have been dramatically reduced had the Former
Owners applied for a PSD permit. The Former Owners contend that the Court lacks the
authority to award injunctive relief for numerous reasons: (1) § 7413(b) authorizes only forwardlooking relief, as opposed to remedies of past violations; (2) the lack of precedential authority;
(3) requiring the Former Owners to pay money for installation of a scrubber would constitute a
remedy at law, penalty or forfeiture, see Reliant Energy, 2009 WL 3234438 at * 17 (rejecting
analogous effort to require a former owner to pay for the installation of BACT to remedy the
alleged failure to obtain a PSD permit); (4) the requested injunction is impossible to implement
because they no longer possess the Plant, see Midwest Generation, 2011 WL 1003916
(dismissing PSD claims for injunctive relief against former owner); and (5) the concurrent
remedy doctrine. The Former Owners also contend that Plaintiffs have failed to demonstrate an
entitlement to injunctive relief, that an emergency exists, the lack of alternative remedies,11 or
that regulators acted diligently to enforce the PSD provisions, see United States v. Cinergy
Corp., 582 F. Supp.2d 1055, 1066 (S.D. Ind. 2008) (“a significant delay between a violation and
11
Defendants suggest that the regulators could have: (1) challenged the failure to get a PSD permit within five years
of the projects; and (2) challenged issuance of the Title V permit; and may now (3) revise the SIP, 42 U.S.C. §
7410(k); (4) file a petition regarding upwind/downwind states, 42 U.S.C. § 7426; (5) assert emergency authority, 42
U.S.C. § 7603; and (6) address the alleged harms via the recently promulgated Cross State Air Pollution Rule. The
Court expresses no opinion as to the viability of any of these options.
23
the USA's filing suit may be relevant in determining whether to grant injunctive or other
equitable relief at all”).
The Court is reluctant to conclude, as a broad principle, that it lacks authority to award
injunctive relief under the PSD program, see id., and it need not do so to resolve this case.
Plaintiffs must demonstrate not only that injunctive relief is within the Court’s power in theory,
but also that there is a plausible basis for granting such relief in this case. As explained by the
United States Supreme Court, “[t]he grant of jurisdiction to ensure compliance with a statute
hardly suggests an absolute duty to do so under any and all circumstances, and a federal judge
sitting as chancellor is not mechanically obligated to grant an injunction for every violation of
law.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 313 (1982); Accord Natural Resources
Defense Council v. Texaco Refining and Mkt., Inc., 906 F.2d 934 (3d Cir. 1990). For example, in
United States v. Price, 688 F.2d 204 (3d Cir. 1982) (involving emergency powers under the Safe
Drinking Water Act), which was cited by both sides, the Court of Appeals noted the broad and
flexible equitable powers available to the courts, but nevertheless affirmed the district court’s
denial of injunctive relief that would have required current and former owners of a waste site to
fund a public health study.
In this case, the facts alleged in the Complaints fall far short of those necessary to render
a claim for injunctive relief plausible. Injunctive relief is a rare and extraordinary remedy which
should be granted in only limited circumstances. See, e.g., Frank’s GMC, 847 F.2d at 102. The
relief sought in this case against former owners is even more novel, and was rejected at the Rule
12(b)(6) stage in the Midwest Generation and Reliant Energy cases.
In particular, the purpose of an injunction is to prevent future violations. United States v.
W.T. Grant Co., 345 U.S. 629, 633 (1953). As a result, before an injunction may properly issue,
24
the court must find that there exists some cognizable danger of recurrent violation. The moving
party bears the burden of satisfying the court that such danger exists and that injunctive relief is
necessary. Id. As the Court of Appeals for the Third Circuit recently explained:
While “the court's power to grant injunctive relief survives discontinuance of the
illegal conduct, the purpose of an injunction is to prevent future violations.”
United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303
(1953). Where the illegal conduct has ceased, the party seeking the injunction
bears the burden of proving “that there exists some cognizable danger of recurrent
violation, something more than the mere possibility which serves to keep the case
alive.” Id.
Primepoint, L.L.C. v. PrimePay, Inc., 401 Fed. Appx. 663, 664 (3d Cir. 2010) (unpublished);
accord United States v. SCM Corp., 667 F.Supp. 1110, 1128 (D. Md. 1987) (denying request for
injunctive relief under Clean Air Act because there was no danger of recurrent violations). For
the reasons set forth above, the Court has determined that the Former Owners’ alleged PSD
violations constituted wholly-past failures to obtain pre-construction permits that did not
constitute continuing violations.
Plaintiffs also contend that the Court should award injunctive relief to remedy the
continuing harm caused by excess pollution, even if there was a one-time violation, citing
Cynergy, 582 F.Supp.2d at 1055. The Court is not persuaded that Plaintiff has pleaded a
plausible basis for similar relief in this case. In Cynergy, the power plant operator had been
found in violation of the Clean Air Act by a jury and was seeking to limit post-trial discovery
into the remedy. The court concluded that it had authority to “order a full and complete remedy
for harms caused by a past violation” but noted that it was premature to make any such ruling.
Id. at 1066. There had been no change in ownership, so the Cynergy court did not have to
grapple with that complication. Moreover, the court’s reference to continuing harm appears to
be inconsistent with the Supreme Court’s requirement of a continuing violation. In Steel Co. v.
25
Citizens for a Better Environment, 523 U.S. 83, 109 (1998), the Court held: “Because
respondent alleges only past infractions of EPCRA, and not a continuing violation or the
likelihood of a future violation, injunctive relief will not redress its injury.” Id. at 109 (emphasis
added). Similarly, in Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U.S.
49, 66 (1987), the Court explained that defendants are protected from Clean Water Act12 suits
“based solely on violations wholly unconnected to any present or future wrongdoing.” Id. at 6667 (citing W.T. Grant) (emphasis added); Accord Askew v. Trustees of the General Assembly of
the Church of the Lord Jesus Christ of the Apostolic Faith, Inc., 776 F.Supp.2d 25 (E.D. Pa. Mar
11, 2011) (“when seeking injunctive relief the plaintiff's burden is not satisfied by proving the
occurrence of prior illegal acts, but must include proof of continuing violations”) (citations
omitted). In Nat’l Parks 11th Cir., 502 F.3d at 1322, the Eleventh Circuit Court of Appeals
persuasively characterized continued emissions due to the alleged failure to obtain a PSD permit
as “present consequences of a one-time violation.” Thus, even if injunctive relief to remedy past
harms is within the Court’s authority, such relief is not warranted for the PSD violation alleged
in this case – a failure to obtain a preconstruction permit, followed by continued normal
operations of a grandfathered facility.
Plaintiffs have failed to plead any facts to explain the nearly two decade delay in
enforcement. Plaintiffs’ theory of harm is undercut by the lengthy review and ultimate issuance
of a Title V operating permit for the Plant, which is required to contain the “conditions as are
necessary to assure compliance” with the Clean Air Act. 42 U.S.C. § 7661c(a). Any future
“modification” project undertaken by the Current Owners will trigger a new statute of limitations
and a new opportunity for the Plaintiffs to challenge it. Most notably, there is no risk of a PSD
12
In Gwaltney, the plaintiffs alleged an ongoing violation of a permit. In this case, by contrast, because no PSD
permit was obtained, there can be no ongoing violation.
26
violation in the future because the Former Owners no longer own or operate the Plant.
Accordingly, an injunction against the Former Owners is not warranted. The Court need not
resolve the parties’ remaining contentions regarding injunctive relief. In summary, the PSD
claims will be dismissed in their entirety.
B. Title V Claims
The Intervenors do not assert Title V claims against the Former Owners. Intervenors’
Brief at 23 n.7. It is unclear whether the United States continues to assert Title V claims against
all Defendants. In any event, the Title V claims against the Former Owners are clearly without
merit for the simple reason that they never owned or operated the Plant during the relevant time
period. The Former Owners sold the Plant in 1999 and the Title V operating permit was not
issued until 2004. United States’ Complaint ¶¶ 61-62. Accordingly, the Title V claims against
the Former Owners will be dismissed with prejudice.
The Title V claims against the Current Owners require more in-depth analysis. Unlike a
PSD violation, a Title V operating permit violation would not be a discrete, one-time event. As
explained in United States v. Westvaco, 144 F.Supp.2d at 443-44:
[There is] a significant distinction between a failure to obtain preconstruction
permits and plan approvals and failure to obtain operating permits. The latter
violation would be continuing since every day of operation without an operating
permit is another violation. In contrast, a violation for failure to obtain a
construction permit does not continue once the unpermitted construction is
completed.
Accordingly, the Title V claims are not time-barred.
The gravamen of Plaintiffs’ theory is that “Defendants are illegally operating without a
Title V operating permit that imposes BACT limits on modified units.” United States Brief at
28. Plaintiffs argue that by failing to acknowledge that the 1991, 1994, 1995 and 1996 projects
27
triggered the PSD regulations, the Former Owners allegedly filed an incomplete Title V permit
application, which “led to the issuance of a deficient Title V permit that lacked necessary
pollution controls for the modified units.” United States Brief at 30. In other words, Plaintiffs
argue: (1) that Title V incorporates the PSD and BACT requirements; and (2) that Defendants do
not have a valid Title V permit. Neither argument is persuasive.
The “incorporation” argument is contrary to the statutory text. 42 U.S.C. § 7661a(a)
provides that it is unlawful “to violate any requirement of a permit issued under this subchapter,
or to operate [a plant] except in compliance with a permit issued by a permitting authority under
this subchapter.” (Emphasis added). On its face, Title V does not incorporate compliance with
the PSD program as a condition of a Title V permit.13 To the contrary, although § 7661a
recognizes that sources may be required to obtain PSD permits, the prohibited conduct is
specifically limited to violations of permits issued under “this subchapter,” i.e., Title V permits.
It would have been simple for Congress to have provided that a PSD permit violation also
constituted a violation of a plant’s Title V operating permit, but no such language exists.
Instead, the parenthetical in § 7661a(a) specifically cautions that nothing in Title V be construed
to alter the applicable PSD requirements regarding preconstruction permits. Thus, the statutory
text reflects that Congress intended the requirements of the Title V and PSD programs to be and
remain separate and distinct.
Plaintiffs’ contention that the Current Owners lack a valid Title V permit is equally
unfounded. As an initial matter, the Complaints filed by all Plaintiffs expressly acknowledge
that a Title V permit was, in fact, issued for the Plant. As pled, PADEP issued several operating
permits for the emission sources at the Plant, the most recent of which is Title V permit No. 32-
13
The PSD program provisions could not have incorporated Title V requirements because that subchapter of the
statute was not enacted until 13 years later.
28
00055, issued in January 2004, with an amendment effective on December 1, 2004.
PADEP/New York Complaint ¶ 23; New Jersey Complaint ¶ 22. Thus, any suggestion that
Defendants did not have a Title V operating permit is flatly wrong.14 Moreover, Plaintiffs have
not alleged any affirmative condition in the Title V permit which is being violated. See Reliant
Energy, 2009 WL 3234438 (rejecting Title V claims for failure to allege a violation of a
provision in the permit). Instead, they allege that a relevant condition, BACT, has been omitted
from the permit.
Plaintiffs’ more nuanced argument is that the Title V permit for the Plant is null and void
because it was based on a flawed application. According to Plaintiffs, the Former Owners failed
to disclose that they should have obtained PSD permits for the 1991, 1994, 1995 and 1996
projects, which would have resulted in installation of BACT. But this argument, too, is
unpersuasive. Because the Former Owners had not applied for a PSD permit, the BACT
standards which may have been triggered during the PSD approval process were not determined
or implemented. The Former Owners did not apply for a PSD Permit and the process by which
operating requirements such as BACT would have been established was never triggered. Put
another way, there is no way that the Current Owners could have known that the Title V
application submitted by the Former Owners was flawed, because no PSD violation was ever
established. A facially valid Title V permit was duly issued by PADEP which “incorporate[d]
into a single document all of the Clean Air Act requirements governing a facility.” Romoland
Sch. Dist., 548 F.3d at 742. The Current Owners were entitled to rely on the facial validity of the
Title V permit. See Otter Tail, 615 F.3d at 1022 (“to allow plaintiffs to raise issues resolved
during the permitting process long after that process is complete would upset the reasonable
14
Similarly, Section 7661b(c) requires power plant operators to apply for a Title V permit, and the Complaints aver
that the Former Owners filed such an application in 1995.
29
expectations of facility operators and undermine the significant investment of regulatory
resources made by state permitting agencies.”) In United States v. AM General Corp., 34 F.3d
472, 475 (7th Cir. 1994), the Court disallowed a similar collateral attack on a facially valid state
permit based on a prior modification and reasoned:
We cannot find in the text of the Clean Air Act, or elsewhere, any indication that
Congress expressly or by implication meant to authorize the EPA to mount a
collateral attack on a permit by bringing a civil penalty action as many as five
years after the permit had been granted and the modification implemented, 28
U.S.C. § 2462, by which time a defendant would have accrued a potential liability
in excess of $40 million, even though it had been operating under a permit valid
on its face and never before challenged. That would be a harsh remedy and we
cannot be confident in the absence of any clues that it was one intended to be
useable in the circumstances of this case.
Similar Title V claims were rejected in Otter Tail and Midwest Generation. In Midwest
Generation, 2011 WL 1003916 at *12, the court explained:
BACT limits are imposed through the preconstruction-permit process. In the
absence of such a permit, they do not exist. There “is no obligation to apply
[BACT] in the abstract”; it “is a specific prerequisite to obtaining a
preconstruction permit” that is “determined on a case-by-case basis through the
[PSD] permitting process itself.” Midwest Generation, 694 F.Supp.2d at 1007.
Accord Otter Tail, 615 F.3d at 1017 (BACT limits may be incorporated into a facility's
construction plans and PSD permits, but do not establish an ongoing duty to apply BACT
independent of the PSD permitting process). This Court agrees with the reasoning in those
cases.15
Moreover, this Court harbors substantial subject-matter jurisdiction concerns as to its
authority to decide Plaintiffs’ challenge to the permit application, because the Clean Air Act
15
In Commonwealth of Pennsylvania v. Allegheny Energy, Inc. 2006 WL 1520650 (W.D. Pa. 2006), this Court
adopted a Report and Recommendation from a Magistrate Judge, 2006 WL 1509061 at * 6-8, which recommended,
inter alia, that a claim based on an alleged incomplete Title V permit application not be dismissed. Subsequent
developments in the law, both procedural and substantive, convince the Court that this decision is no longer correct.
30
provides that such challenges must be presented to EPA and the Court of Appeals. See
Dairyland Power, 2010 WL at 4294622 * 17:
To the extent that plaintiff is challenging defendant's submission of allegedly
incomplete permit applications that resulted in defective Title V permits, I agree
with defendant that plaintiff was required to utilize the process set forth in §
7661d. As discussed above, under that section any person who objects to the
issuance of a permit or renewal permit may petition the EPA administrator.
Judicial review of the administrator's decision is available only through the
applicable court of appeals, not in the district court. 42 U.S.C. §§ 7661d(b)(2),
7607. Reliant Energy, 2009 WL 3234438, at *19 (dismissing plaintiff's claim
based on defective Title V permit for lack of subject matter jurisdiction); BP
Amoco Chemical Co. v. Flint Hills Resources, LLC, 615 F.Supp.2d 765, 777
(N.D. Ill. 2009) (same).
In summary, the Clean Air Act does not incorporate PSD requirements into Title V
permits, but instead carefully distinguishes violations of permits issued under the Title V
“subchapter” from violations of preconstruction permits obtained under the PSD program. A
Title V permit application was, in fact, submitted and a facially valid Title V permit was, in fact,
duly issued in 2004 for operation of the Plant. The Current Owners cannot be held liable for the
alleged deficiencies and omissions in the underlying application submitted by the Former
Owners. Accordingly, the Title V claims will be dismissed in their entirety.16
C. State Law Claims
In addition to the federal Clean Air Act claims, PADEP and New York allege violations
of the Pennsylvania Air Pollution and Control Act (“APCA”) and the Pennsylvania SIP, and
common law public nuisance. These claims were not thoroughly developed (see Intervenors’
Brief at pp. 43-44), and they essentially track the federal claims.
The APCA, 35 P.S. § 4002, declares Pennsylvania’s policy “to protect the air resources
of the Commonwealth to the degree necessary for the (i) protection of public health, safety and
16
The Court need not reach Defendants’ “permit shield” defense based on 42 U.S.C. § 7661c(f).
31
well-being of its citizens; (ii) prevention of injury to plant and animal life and to property; (iii)
protection of the comfort and convenience of the public and the protection of the recreational
resources of the Commonwealth; (iv) development, attraction and expansion of industry,
commerce and agriculture; and (v) implementation of the provisions of the Clean Air Act in the
Commonwealth.” Section 4006(c) provides that PADEP “is authorized to require that new
sources demonstrate in the plan approval application that the source will reduce or control
emissions of air pollutants, including hazardous air pollutants, by using the best available
technology.” The APCA implementing regulations, 25 Pa. Code §§ 121-141, also constitute the
PA SIP and are promulgated pursuant to both the APCA and the federal Clean Air Act. In effect,
the state and federal enforcement efforts are parallel. As explained in Commonwealth of
Pennsylvania v. Environmental Protection Agency, 500 F.2d 246, 262 (3d Cir. 1974):
In enacting the Clean Air Amendments of 1970 Congress created an interlocking
governmental structure in which the Federal Government and the states would
cooperate to reach the primary goal of the Act ... Under its provisions, state and
local governments retain responsibility for the basic design and implementation of
air pollution strategies, subject to approval and, if necessary, enforcement by the
Administrator. We believe that this approach represents a valid adapt[at]ion of
federalist principles to the need for increased federal involvement.
See also PADEP v. Pennsylvania Power Co., 416 A.2d 995, 998 (Pa. 1980) (describing adoption
of PA SIP pursuant to federal-state regulatory partnership and dismissing constitutional
challenge to SO2 standards).
The PA SIP addresses construction permits separately from operating permits. 25 Pa.
Code § 127.11 states, in relevant part, “a person may not cause or permit the construction or
modification of an air contamination source . . . unless the construction, modification,
reactivation or installation has been approved by the Department.” This is analogous to the PSD
32
pre-construction permit program.17 Indeed, Plaintiffs represent that the PA SIP is identical to the
federal PSD program in all respects. PADEP and New York Complaint ¶ 55. By contrast, 25
Pa. Code § 127.402(a), which parallels the Title V program, states, in relevant part: “A person
may not operate a stationary air contamination source unless the Department has issued to the
person a permit to operate the source under this article in response to a written application for a
permit submitted on forms and containing the information the Department may prescribe.” 25
Pa. Code § 127.443 (formerly § 127.21) explicitly addresses the incorporation of preconstruction permits into “Operating permit requirements”:
(a) A person may not cause or permit the operation of a source the construction,
modification or reactivation of which, or the installation of an air cleaning device
on which, is subject to § 127.11 (relating to plan approval requirements), unless
the Department has issued a permit to operate the source.
(b) The permit shall be issued with the condition that the source shall operate in
compliance with the plan approval, the conditions of the plan approval and the
conditions of the operating permit. The Department may issue the permit with
additional appropriate conditions.
(c) The Department will not issue an operating permit unless the source was
constructed in accordance with the plan approval and the conditions of the plan
approval.
Plaintiffs argue that this provision required the Former Owners to obtain an operating permit
after the projects at issue. The fundamental flaw in this argument, however, is that the Former
Owners did apply for, and PADEP did issue, an operating permit for the Plant.18 Where the preconstruction permitting process is never triggered, the plan approval and conditions that
17
Pennsylvania did not promulgate its own PSD regulations. Instead, the federal regulations at 40 C.F.R. Chapter
52 have been adopted in their entirety and incorporated into the Pennsylvania SIP. 25 Pa. Code § 127.83.
18
Under Plaintiffs’ theory, it appears that PADEP wrongfully issued the Title V permit in violation of § 127.443(c).
33
hypothetically might have been created during that process never materialize, and therefore, are
not incorporated into the operating permit.19
Plaintiffs also point to 25 Pa. Code § 127.445, which provides that an operating permit
may be issued to an existing and operating source that is out of compliance. However, this
provision does not create a viable avenue for this post-hoc challenge to projects from the early
1990s because the predicate assumption – that the operating source is out of compliance – has
never been proven. To the contrary, the Current Owners have possessed a facially valid
operating permit since 2004 and were not on notice that the Former Owners had allegedly failed
to obtain a preconstruction PSD permit.
Plaintiffs contend that the Pennsylvania SIP imposed ongoing PSD emissions limitations
on the Plant. Three cases have concluded that the relevant state implementation plan contained
language stating that the PSD requirements were ongoing. See Nat'l Parks 6th Cir., 480 F.3d at
419 (under Tennessee SIP, obligation to obtain construction permit is ongoing, even postconstruction). The Tennessee SIP provides, in relevant part: “In the case where a source or
modification was constructed without first obtaining a construction permit, a construction permit
may be issued to the source or modification to establish as conditions of the permit, the
necessary emissions limits and requirements to assure that these regulatory requirements are
met.” Tenn. Comp. R. & Regs. § 1200-3-9-.01(1)(e). See also Sierra Club v. Portland General
Electric Co., 663 F.Supp.2d 983, 992–94 (D. Or. 2009) (Oregon SIP provides that no source may
construct or operate without an ACDP, the Oregon equivalent of a PSD permit); United States v.
19
Plaintiffs also point to 35 P.S. § 4009.3, which states: “Each day of continued violation and each violation of any
provision of this act, any rule or regulation adopted under this act or any order of the department or any condition or
term of any plan approval or permit issued pursuant to this act shall constitute a separate offense and violation.”
There is no parallel “continuing violation” provision in the federal Clean Air Act. This provision is not implicated
because there is no underlying violation of the APCA or PA SIP. To the extent Plaintiffs contend that § 4009.3
provides an independent cause of action, the Court declines to exercise supplemental jurisdiction. The Court has
concluded that all federal claims must be dismissed, and this would present a novel and complex issue of state law.
28 U.S.C. § 1367(c).
34
Duke Energy Corp., 278 F.Supp.2d 619, 652 (M.D.N.C. 2003), vacated in part 2010 WL
3023517 (M.D.N.C. 2010) (North Carolina and South Carolina SIPS required integrated
construction and operating permits).
Under the Pennsylvania SIP, there is no such integration of construction and operating
permits. In that regard, the Pennsylvania SIP is more similar to the state SIPs in which courts
have held that no incorporation was intended. See Nat'l Parks 11th Cir., 502 F.3d at 1325
(distinguishing Tennessee SIP and finding no ongoing duty to apply BACT where Alabama SIP
“did not provide a way for a party who had undertaken a modification to obtain ... a
determination [of BACT] outside the preconstruction permitting process”); Otter Tail, 615 F.3d
at 1017 (South Dakota SIP imposed no ongoing duty to apply BACT and was distinguishable
from Tennessee SIP); Midwest Generation, 2011 WL 1003916 at * 4-5 (Illinois SIP does not bar
operation of plant without construction permit) (emphasis in original). In summary, the Court
concludes that the claims under the ACPA and Pennsylvania SIP are duplicative of the federal
Clean Air Act claims and must be dismissed.
The public nuisance claim is also without merit. Pennsylvania has enacted a “public
nuisance” statute, 35 P.S. § 4013, which states:
A violation of this act or of any rule or regulation promulgated under this act or
any order, plan approval or permit issued by the department under this act shall
constitute a public nuisance. The department shall have the authority to order any
person causing a public nuisance to abate the public nuisance. In addition, the
department or any Commonwealth agency which undertakes to abate a public
nuisance may recover the expenses of abatement following the process for
assessment and collection of a civil penalty contained in section 9.1. Whenever
the nuisance is maintained or continued contrary to this act or any rule or
regulation promulgated under this act or any order, plan approval or permit, the
nuisance may be abatable in the manner provided by this act. Any person who
causes the public nuisance shall be liable for the cost of abatement.
35
In American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (June 20, 2011), the
United States Supreme Court held that the Clean Air Act preempted federal common law
nuisance claims as a means to curb emissions from power plants, but did not rule on the
availability of a state law nuisance claim. The Supreme Court noted that the issue would turn
“on the preemptive effect of the federal Act.” Id. at 2540.
In North Carolina, ex rel. Cooper v. Tennessee Valley Authority, 615 F.3d 291, 303 (4th
Cir. 2010), the Court of Appeals for the Fourth Circuit rejected a very similar state law public
nuisance claim against power plants. The Court held that public nuisance claims are preempted
because they threaten to scuttle the comprehensive regulatory and permitting regime that has
developed over several decades. The Court reasoned, in pertinent part:
A field of state law, here public nuisance law, would be preempted if “a scheme
of federal regulation ... [is] so pervasive as to make reasonable the inference that
Congress left no room for the States to supplement it.” Here, of course, the role
envisioned for the states has been made clear. Where Congress has chosen to
grant states an extensive role in the Clean Air Act's regulatory regime through the
SIP and permitting process, field and conflict preemption principles caution at a
minimum against according states a wholly different role and allowing state
nuisance law to contradict joint federal-state rules so meticulously drafted.
Id. at 303 (citations omitted).20 Accord United States v. Questar Gas Mgt. Co., 2010 WL
5279832 (D. Utah 2010).
In this case, it is clear that both the federal Clean Air Act and the Pennsylvania Air
Pollution Control Act represent comprehensive statutory and regulatory schemes that establish
the standards by which grandfathered power plants must reduce their emissions of air pollutants.
Pennsylvania has a statutorily defined role through the SIP and permitting process. Accordingly,
common law public nuisance claims are preempted and will be dismissed.
20
The Court noted, but found unpersuasive, the Clean Air Act's savings clause, which states that “[n]othing in this
section shall restrict any right which any person (or class of persons) may have under any statute or common law to
seek enforcement of any emission standard or limitation or to seek any other relief.” 42 U.S.C. § 7604(e).
36
D. Leave to Amend
If a civil rights complaint is subject to Rule 12(b)(6) dismissal, a district court must
permit a curative amendment unless such an amendment would be inequitable or futile. Alston v.
Parker, 363 F.3d 229, 235 (3d Cir. 2004); accord Grayson v. Mayview State Hosp., 293 F.3d 103
(3d Cir. 2002). A district court must provide the plaintiff with this opportunity even if the
plaintiff does not seek leave to amend. Id. In non-civil rights cases, however, a plaintiff must
seek leave to amend and submit a draft amended complaint. Fletcher-Harlee Corp. v. Pote
Concrete Contractors, Inc., 482 F.3d 247, 252-53 (3d Cir. 2007). Plaintiffs have not sought
leave to amend in this case and it appears to the Court that such an effort would be futile.
Conclusion
For the reasons set forth above, the motions to dismiss will be GRANTED. The Court
appreciates Plaintiffs’ frustration that the expectations of the PSD program have not been
achieved as to the Homer City plant and that society at large continues to bear the brunt of
significant SO2 emissions from that grandfathered facility. Nevertheless, the Court must adhere
to the plain text of the Clean Air Act. An appropriate Order follows.
McVerry, J.
37
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
EME HOMER CITY GENERATION L.P.,
HOMER CITY OL1 LLC, HOMER CITY OL2
LLC, HOMER CITY OL3 OLC, HOMER CITY
OL4 LLC, HOMER CITY OL5 LLC, HOMER
CITY OL6 LLC, HOMER CITY OL7, HOMER
CITY OL8, NEW YORK STATE ELECTRIC
AND GAS CORPORATION and
PENNSYLVANIA ELECTRIC COMPANY,
Defendants.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF ENVIRONMENTAL
PROTECTION and STATE OF NEW YORK,
Plaintiffs-Intervenors,
v.
EME HOMER CITY GENERATION L.P., et al.
Defendants.
STATE OF NEW JERSEY,
Plaintiff-Intervenor,
v.
EME HOMER CITY GENERATION L.P., et al.
Defendants.
38
)
)
)
) 2:11-cv-19
)
) ORDER OF COURT
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
ORDER OF COURT
AND NOW, this 12th day of October, 2011, in accordance with the reasoning in the
foregoing Memorandum Opinion, it is hereby ORDERED, ADJUDGED and DECREED that
EME HOMER CITY GENERATION L.P.’S MOTION TO DISMISS (Doc. No. 85);
DEFENDANTS HOMER CITY OWNER-LESSORS’ MOTION TO DISMISS (Doc. No. 87);
NEW YORK STATE ELECTRIC & GAS CORPORATION’S MOTION TO DISMISS (Doc.
No. 88); and PENNSYLVANIA ELECTRIC COMPANY’S MOTION TO DISMISS (Doc. No.
91) are GRANTED. The Complaints are DISMISSED with prejudice and the clerk shall docket
this case closed.
BY THE COURT:
s/Terrence F. McVerry
United States District Judge
cc:
Paul E. Skirtich, Esquire
Email: paul.skirtich@usdoj.gov
Katherine L. Vanderhook, Esquire
Email: katherine.vanderhook@usdoj.gov
Cara M. Mroczek, Esquire
Email: cara.mroczek@usdoj.gov
John W. Sither, Esquire
Email: John.Sither@usdoj.gov
Michael J. Heilman, Esquire
Email: mheilman@state.pa.us
Michael J. Myers, Esquire
Email: michael.myers@ag.ny.gov
Susan C. Von Reusner, Esquire
Email: susan.vonreusner@ag.ny.gov
39
Jon C. Martin, Esquire
Email: jon.martin@dol.lps.state.nj.us
Jung W. Kim, Esquire
Email: jung.kim@dol.lps.state.nj.us
Lisa J. Morelli, Esquire
Email: lisa.morelli@dol.lps.state.nj.us
James M. Jones, Esquire
Email: jmjones@jonesday.com
Andrew N. Sawula, Esquire
Email: asawula@schiffhardin.com
Kevin P. Holewinski, Esquire
Email: kpholewinski@jonesday.com
Rebekah B. Kcehowski, Esquire
Email: rbkcehowski@jonesday.com
Daniel E. Reidy, Esquire
Email: dereidy@jonesday.com
Brian J. Murray, Esquire
Email: bjmurray@jonesday.com
Stephen J. Bonebrake, Esquire
Email: sbonebrake@schiffhardin.com
Chet Thompson, Esquire
Email: CThompson@crowell.com
Jeffrey Poston, Esquire
Email: JPoston@crowell.com
Peter T. Stinson, Esquire
Email: pstinson@dmclaw.com
W. Alan Torrance , Jr., Esquire
Email: atorrance@dmclaw.com
Kevin P. Lucas, Esquire
Email: klucas@mmlpc.com
Benjamin S. Lippard, Esquire
Email: blippard@velaw.com
George C. Hopkins, Esquire
Email: ghopkins@velaw.com
Kevin A. Gaynor, Esquire
Email: kgaynor@velaw.com
Stefanie A. Lepore, Esquire
Email: slepore@velaw.com
David H. Quigley, Esquire
Email: dquigley@akingump.com
40
Nash E Long , III, Esquire
Email: nlong@winston.com
Paul E. Gutermann, Esquire
Email: pgutermann@akingump.com
T. Thomas Cottingham , III, Esquire
Email: tcottingham@winston.com
41
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?