Seventh Circuit Deals Major Blow To EPA’s New Source Review Enforcement

On Monday, July 8, 2013, the U.S. Court of Appeals for the Seventh Circuit released its decision in United States v. Midwest Generation, LLC and held violations of the preconstruction permit requirements of the Clean Air Act's New Source Review program are subject to a five-year statute of limitations. The Court rejected U.S. EPA's argument that violations of the New Source Review preconstruction permitting requirements, specifically 42 U.S.C. §7475(a), are "continuing violations." The Seventh Circuit is the fourth Federal Appellate Court to take up this longstanding issue, and the decision bolsters arguments the regulated community has been making for years. The decision is an important win for the regulated community and may help curtail U.S. EPA's New Source Review enforcement. However, the Seventh Circuit left open alternative arguments U.S. EPA could make in some New Source Review enforcement cases, so the full impact of the decision is not yet clear.

The Seventh Circuit's Decision

When "major" emitting facilities undertake "major" modifications, they may be required to obtain a preconstruction permit and install new and expensive emission controls, termed the "best available control technology" or "BACT." What constitutes a "major" modification is a longstanding subject of dispute and requires a facility specific analysis. In United States v. Midwest Generation, LLC, ComEd modified five of its coal-fired power plants between 1994 and 1999 without obtaining preconstruction permits or installing BACT. In 2009, 10 years after ComEd completed its final modifications, U.S. EPA brought an enforcement action against ComEd for failing to obtain preconstruction permits or install BACT. ComEd argued the modifications did not trigger §7475(a) and in any case the enforcement action was untimely. United States v. Midwest Generation, LLC, No. 12-1026, 2013 WL 3379319, *1 (7th Cir. July 8, 2013). Although some additional U.S. EPA claims remained pending with the district court, the district court entered partial final judgment on the §7475(a) claim, finding the action untimely, which allowed U.S. EPA to appeal that decision to the U.S. Court of Appeals for the Seventh Circuit.

U.S. EPA's and Illinois' primary argument was that ComEd's failure to obtain permits pursuant to §7475(a) resulted in "continuing violations" and that "every day a ComEd plant operate[d] without a §7475 permit [was] a fresh violation of the CAA." Id. at *2. Although U.S. EPA...