In a recent decision, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit Court) ruled that a citizen suit alleging failure to obtain a prevention of significant deterioration (PSD) permit in 1988 is not barred by the statute of limitations (National Parks Conservation Association, Inc. et al. v. Tennessee Valley Authority, No.: 05-6329 [6th Cir. March 2, 2007]). The National Parks Conservation Association and others brought suit against the Tennessee Valley Authority (TVA) under the CAA citizen suit provisions alleging that TVA had failed to obtain a PSD permit and install best available control technology (BACT) when modifications were made to the Bull Run power plant in 1988. TVA argued that the suit was barred by the statute of limitations. However, the court ruled that the suit could proceed because failure to apply BACT and implement the emission limitations of a PSD permit are violations that recur each day the Bull Run plant operates.
TVA is a corporation created by statute, whose board of directors is appointed by the President. TVA owns and operates the Bull Run power plant in Clinton, Tennessee. In 1988, TVA performed a major overhaul of a boiler at the Bull Run plant and replaced approximately 58,000 feet of boiler tubing (about 26.5% of the total boiler tubing). TVA did not apply for, or obtain, a PSD permit for the 1988 overhaul.
In a set of enforcement actions taken November 3, 1999, EPA issued notices of violation (NOVs) to 32 "grandfathered" electric utility power plants in 10 states. The NOVs asserted that modifications were made at the power plants between 1978 and 1999 that should have undergone new source review (NSR). An administrative compliance order (ACO) was also issued to TVA alleging that it, too, had violated CAA requirements at various plants that it owns and operates. Additionally, the agency filed lawsuits in federal court against seven electric utility companies seeking injunctive relief and administrative penalties. A lawsuit was not filed against TVA at that time because EPA believed Executive Orders 12146 and 12088 precluded the agency from filing such a suit.
As part of the 1999 investigation, EPA issued an ACO concluding that the boiler overhaul at the Bull Run plant constituted a major modification, and therefore triggered PSD permitting requirements. After extensive negotiations, EPA decided to reconsider the ACO by adjudicating the issue of whether TVA had violated CAA requirements before the EPA's Environmental Appeals Board (EAB). Under 40 CFR Part 1, the EAB may ". . . serve as the final decisionmaker, as the Administrator deems appropriate . . . [1.25(e)(2)]."
In a September 15, 2000 decision (In re: Tennessee Valley Authority, Docket Number: CAA-2000-04-008), the EAB determined that the TVA changes should have been subject to the PSD preconstruction permitting requirements because they do not qualify for the routine maintenance, repair, and replacement exception. The EAB held that, even though the activities were undertaken at other coal-fired plants, they were unusual, once or twice-in-a-lifetime events with respect to the individual units, and cannot be considered routine. TVA subsequently petitioned the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit Court) for review of the EAB's decision.
The Eleventh Circuit Court ruled that TVA was free to ignore an ACO issued by EPA because the CAA provisions empowering the agency to issue such orders are unconstitutional (Tennessee Valley Authority v. EPA, No.: 00-15936, 11th Cir. June 24, 2003). According to the court, because EPA can issue an ACO without being required to prove the existence of underlying CAA violations in court, the severe civil and criminal penalties the CAA specifies for failing to comply with an ACO are unconstitutional.
The Eleventh Circuit Court's decision concluded that it lacked jurisdiction because ACOs do not constitute "final" agency action and that:
"The Clean Air Act is unconstitutional to the extent that mere noncompliance with the terms of an ACO can be the sole basis for the imposition of severe civil and criminal penalties."
According to the Eleventh Circuit Court, EPA must prove CAA violations in an enforcement action brought in U.S. district court, rather than through issuance of an ACO. To date, EPA has not pursued such an action against TVA.
Does The Statute Of Limitations Apply?
On February 13, 2001, the National Parks Conservation Association and Sierra Club filed a complaint against TVA. The complaint was amended in November 2004 to add Save Our Children's Earth Foundation as a plaintiff. The essence of the complaint was that TVA had violated CAA requirements and the Tennessee state implementation plan (SIP) by failing to obtain a PSD permit before it modified the Bull Run plant in 1988. In addition, it was argued that failing to conduct the air quality analysis required as part of PSD permitting, failing to apply BACT, and continuing to operate the plant without first obtaining a PSD permit were continuing CAA violations.
In the case, the U.S. District Court for the Eastern District of Tennessee dismissed the complaint against TVA because, in the district court's view, there was not a continuing violation of the CAA and the statute of limitations had run. The district court's decision on the statute of limitations was then appealed to the Sixth Circuit Court.
Sixth Circuit Holds Violations Are A Continuing Series
The CAA provides for civil penalties of up to $25,000 per day per violation. The penalties have been raised to $27,500 per day for violations that occurred between January 30, 1997 and March 15, 2004. For violations occurring after March 15, 2004, penalties of up to $32,500 per day may be sought. However, a five-year statute of limitations applies to any action for enforcement of any civil fine, penalty, or forfeiture [28 U.S.C. 2462].
For the suit against TVA to be timely, the plaintiffs must identify a wrongful act that took place within five years of their filing this suit. TVA argued, and the district court agreed, that the CAA and Tennessee SIP only prohibit construction without a permit. Therefore, because construction took place in 1988, the statute of limitations for any violation associated with that construction ran in 1993.
The plaintiffs in the case argued that TVA's failure to: 1) obtain a PSD permit containing emission limitations, and 2) apply BACT are continuing violations. Continuing violations are not subject to a five-year statute of limitations.
The continuing-violation doctrine allows courts to consider as timely all relevant violations "including those that would otherwise be time[-]barred." However, "[c]ourts have been extremely reluctant to apply this doctrine outside the context of Title VII." In this case, the Sixth Circuit Court decided not to determine whether the continuing-violation doctrine applies in environmental suits. Instead, the court concluded that TVA's failure to apply BACT and meet emission limitations in a PSD permit were repetitive, discrete violations. According to the court, each day the Bull Run plant is operated without BACT limits on emissions is a new violation.
The Sixth Circuit Court also held that regulations in the Tennessee SIP establish an ongoing duty to obtain a construction permit that establishes appropriate emission limitations, even if a permit was not obtained before construction. TVA never received a permit containing emission limitations for the 1988 changes to the Bull Run plant. Thus, the court reasoned that each day the plant is operated constitutes a new violation of the requirement to obtain a permit.
In summary, the Sixth Circuit Court reversed the district court's ruling on the statute of limitations. The case was remanded to the lower court for further proceedings.
In a dissenting opinion, Circuit Judge Batchelder disagreed that there was a continuing series of discrete violations. In her opinion, the case represented, at most, a single violation that occurred in 1988 and that the statute of limitations for that violation expired five years later. Under Tennessee law (i.e., the SIP), TVA was required to obtain both a construction permit and an operating permit. TVA has an operating permit for the Bull Run plant. In her opinion, what the case represented was a continuing series of discrete harms, rather than discrete violations.
To illustrate her point, the judge provided the following example:
"By way of example, suppose I contracted with a carpenter to repair the roof of my home. If he failed to do so, then he would have breached the contract - a single violation. Under this scenario, I suffer a new harm every time it rains, i.e., every time water comes into my living room through the faulty roof. The carpenter does not, however, breach the contract anew every time it rains; that is, the carpenter does not commit a new and discrete violation."
"Returning to the present case, let us assume, arguendo, that the TVA was in fact required to obtain a construction permit before beginning its modification of the Bull Run plant in 1988. By failing to do so, it committed a violation. Under this scenario, the plaintiffs may have suffered a new harm every time thereafter that the plant was in operation (i.e., emitting pollutants above the BACT levels), but just as with the carpenter, the TVA did not violate the construction permit requirement anew every time the plant was operating. That is, the TVA did not commit a new and discrete violation of the construction permit requirement every time it operated the plant, particularly if the TVA was in compliance with its operating permit. To complete this reasoning: if a violation (rather than merely a harm) occurs each time the plant operates, then the corollary is that the plant must operate in order for a violation to occur, and under such a theory, there would be no violation for failing to obtain a construction permit until after the TVA had operated the plant at least one time. While that is an apt description of an operating permit, it is an inapt description of a construction permit."
"Because I find this 'discrete violations' approach unsupported by law or reason, I must respectfully dissent. This seems to me to be the plaintiffs' strained attempt to circumvent their failure to act within the statute of limitations. If they have a claim that the TVA is violating its operating permit by emitting pollutants in excess of BACT levels, then they should file that claim. The present claim, however, expired in 1993." [Emphasis in original.]
Reprinted from the Environmental Compliance Portfolio online research resource and the Air Pollution Consultant, Wolters Kluwer Law & Business. For additional information, please see http://hr.cch.com, or call 1-800-344-3734.