Tuesday, July 9, 2013

U.S. v. Midwest Generation LLC

Jul 8: In the U.S. Court of Appeals, Seventh Circuit, Case No. 12-1026 & 12-1051. Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. The Appeals Court explains that any "major emitting facility" built or substantially modified after August 7, 1977, in parts of the country subject to the rules about prevention of significant deterioration (PSD), needs a permit. The PSD construction permit is in addition to the operating permits that many facilities require under the Clean Air Act and the need to comply with state implementation plans. One condition of a construction permit is installation of "the best available control technology for each pollutant subject to regulation under" the Act.
    Between 1994 and 1999 Commonwealth Edison Co. modified five of its coal-fired power plants; all five plants had been operating on August 7, 1977, and were grandfathered until the modification. Commonwealth Edison did not obtain permits. The question "how much repair or change requires a permit?"has been contentious and difficult. [A number of cases are cited]. Commonwealth Edison took the position that permits were not required and that it therefore was not obliged to install "the best available control technology" (BACT). However, no one sued until 2009, a decade after the last of the modifications had been completed. The district court dismissed as untimely the claim. After finishing the modifications, Commonwealth Edison sold the five plants to Midwest Generation.
    The United States and Illinois, the two plaintiffs in this suit, contend that Midwest is liable as Commonwealth Edison's successor, and it accuses the district court of allowing a corporate restructuring to wipe out liability for ongoing pollution. Adding another twist, Midwest and its corporate parent Edison Mission Energy filed petitions under the Bankruptcy Code after the appeal was argued. The Appeals Court indicates, "Midwest cannot be liable when its predecessor in interest would not have been liable had it owned the plants continuously." Citing Gabelli v. SEC, 133 S. Ct. 1216 (2013), the Appeals Court indicates that "Gabelli holds that the time for the United States to sue under §2462 begins with the violation, not with a public agency's discovery of the violation.
    The Appeals Court indicates that, "Plaintiffs concede all of this but reply that failure to obtain a construction permit is a continuing violation. The phrase 'continuing violation' is ambiguous. . . Two other courts of appeals have considered whether operating a new or modified plant, despite failure to obtain a construction permit, is a new violation of
§7475(a). Both have held that it is not. Sierra Club v. Otter Tail Power Co., 615 F.3d 1008 (8th Cir. 2010); National Parks and Conservation Association Inc. v. Tennessee Valley Authority, 502 F.3d 1316 (11th Cir. 2007). We agree with those decisions."
    Further, the Appeals Court indicates, "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." The district court decision was affirmed.
    Access the complete opinion (click here). [#Air, #CA7]
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