Appeals court rejects rehearing of ComEd coal-fired plant decision

The full U.S. Seventh Circuit Court of Appeals on Sept. 20 in a brief decision declined to take up an appeal by the federal government of a decision by a three-judge panel in a coal-fired, clean-air case.

“Plaintiff-appellant, United States of America, filed a petition for rehearing and rehearing en banc on September 3, 2013, which was adopted by plaintiff appellant, State of Illinois,” said the decision. “No judge in regular active service has requested a vote on the petition for rehearing en banc, and all of the judges on the panel have voted to deny rehearing. The petition for rehearing is therefore DENIED.”

The Justice Dept. said in the Sept. 3 petition for rehearing that a new review was needed to correct the three-judge panel’s “flawed interpretation” of the Clean Air Act’s Prevention of Significant Deterioration program. That program ensures that areas that meet clean air standards stay that way by, among other things, requiring newly constructed or modified facilities to meet the best available control (BACT) technology emission limitation. But the panel concluded on July 8 that the BACT obligation functions only as a building code, governing construction, Justice said. According to the panel, the BACT obligation does nothing to actually reduce pollution.

“The panel decision is wrong because the Act defines BACT as an ‘emission limitation,’ which is then defined as a limitation that applies on a ‘continuous basis,’” said Justice. “The BACT obligation thus governs the operation of a plant. The panel, however, completely ignored these statutory definitions, construing what BACT requires without even considering how Congress defined BACT in the Act. The panel then made the same error with respect to the permit required by Section 7475(a)(1), concluding that it is just a construction permit without acknowledging that the permit must ‘set[ ] forth emission limitations.’”

The case concerns six coal-fired power plants in and around Chicago, Ill. Between 1994 and 1999, the then-owner of the plants, Commonwealth Edison (ComEd), modified each of them in ways that increased pollution and thus triggered the Clean Air Act’s Prevention of Significant Deterioration requirements, Justice said. ComEd did not, however, obtain the required permits for the modified plants or do anything to meet BACT limitations, it added.

In 1999, ComEd sold the plants to Edison Mission Energy, which immediately transferred ownership to Midwest Generation, its wholly-owned subsidiary. Midwest Gen soon modified one of the six plants (the Will County plant) in a way that triggered Prevention of Significant Deterioration requirements, without obtaining a Section 7475(a)(1) permit or complying with the Section 7475(a)(4) BACT emission-limitation obligation, Justice said.

The United States and the state of Illinois filed suit against Midwest Gen in 2009. They alleged that Midwest Gen was violating the Clean Air Act by operating all six plants without Prevention of Significant Deterioration permits and without complying with the BACT emission-limitation obligation. EPA separately alleged that Midwest Gen had violated Title V of the Clean Air Act and provisions of Illinois’ State Implementation Plan that govern visible emissions, called “opacity.”

On March 2010, the district court issued an opinion dismissing nine of the ten Prevention of Significant Deterioration claims, all but the one relating to Midwest Gen’s modification of the Will County plant. The court concluded that the statute prohibits the construction or modification of a facility without a permit but does not prohibit operation of a modified facility without complying with the BACT or permit obligations. Thus, according to the district court, Midwest Gen did not violate the statute when it operated the modified plants.

EPA then amended its complaint to include ComEd as a defendant and asked the district court to enter an injunction requiring ComEd to correct its alleged violations. EPA also alleged that Midwest Gen and Edison Mission Energy had expressly assumed ComEd’s liability as its successors under the terms of the Asset Sale Agreement. That agreement provided that Edison Mission Energy assumed liability for environmental claims that arose during ComEd’s ownership. Finally, EPA clarified that Midwest Gen had itself ostensibly violated an Illinois State Implementation Plan provision that imposes liability on “persons” who “operate” sources modified in violation of Prevention of Significant Deterioration requirements.

The district court dismissed the new claims, holding that EPA could not state a claim for injunctive relief against ComEd because ComEd no longer owned the six power plants and that ordering ComEd to purchase and retire emission allowances would amount to “penalty” that was time-barred by statute, which provides a five-year statute of limitations for enforcement actions for a “civil fine, penalty, or forfeiture.” The court rejected EPA’s claims that Midwest Gen and Edison Mission Energy were liable as ComEd’s successors-in-interest and the claims under the Illinois State Implementation Plan. The appeals court panel affirmed that rejection, which was the decision that the full appeals court decided on Sept. 20 that it wouldn’t rehear.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.