Citizen Suit Allowed to Proceed Thirteen Years After Air Permit IssuedBy Dustin Till
The Sixth Circuit recently adopted a novel theory to allow a citizen group to proceed with a Clean Air Act challenge to a power plant construction project that Tennessee Valley Authority (TVA) conducted thirteen years ago. While rejecting the argument that the alleged on-going violations of the Clean Air Act’s New Source Review (NSR) provisions were a “continuing violation,” the Court found that a series of repetitive discrete violations could constitute independently actionable causes of action. Drawing analogies to labor cases holding that each paycheck that does not compensate a laborer for overtime constitutes a new violation of the Fair Labor Standards Act, and civil rights cases holding that plaintiffs may recover for all discrete acts of discrimination that occur within the statute of limitations, the Sixth Circuit concluded that TVA may have violated the Clean Air Act each day it operated a coal-fired power plant without a Prevention of Significant Deterioration (PSD) permit, and that Plaintiffs’ could potentially recover for each discrete daily violation that occurred within the five-year statute of limitations. The Court concluded that Plaintiffs could proceed with, and TVA could be subject to, an action seeking daily civil penalties for alleged violations of the NSR standards that took place within the 5 years preceding the Plaintiffs’ complaint.
The Clean Air Act, New Source Review, and Tennessee’s Air Regulations
The Clean Air Act establishes a cooperative framework under which the EPA and the states regulate air quality. At the federal level, EPA has developed limits (known as National Ambient Air Quality Standards, or NAAQS) on the maximum concentrations of air pollutants allowable in various parts of the country. States may be delegated the authority to develop plans (known as State Implementation Plans, or SIPs) for implementing, maintaining, and enhancing NAAQS.
In 1977, Congress amended the Clean Air Act to include, among other changes, the New Source Review program, which includes measures for protecting air quality in regions attaining EPA’s standards. Under these measures, known as Prevention of Significant Deterioration (PSD), operators of major emission sources in attainment areas are required to obtain a permit before constructing or modifying facilities. PSD permits must contain emission limitations and the facility must use the best available control technology (BACT) to minimize emissions. Facilities subject to a PSD permit must also monitor emissions to demonstrate that air quality is not being significantly degraded.
Tennessee’s air quality regulations establish separate permits for constructing and operating air pollution sources. Construction permits are required for “major modifications” of emission sources that would produce “significant net emission increase[s].” Such modifications must comply with the emission limitations stated in the construction permit application. The emission limitations expressed in the construction permit application are carried over to the operating permits, which contain no independent emission limitations.
The TVA Bull Run Facility
TVA’s Bull Run coal-fired power plant is located near Great Smokey Mountain National Park.  In 1988, TVA overhauled the plant and replaced 58,000 feet of tubing inside the boiler. TVA never applied for, nor received, a PSD construction permit for this work. In 1999, EPA issued an order concluding that TVA’s boiler overhaul constituted a “major modification” requiring a PSD permit under the Tennessee regulations. Believing that it could not sue TVA in federal court, EPA adjudicated its order in the EPA’s Environmental Appeals Board. The Board substantially affirmed EPA’s order. The Eleventh Circuit Court of Appeals subsequently concluded that it had no jurisdiction over the dispute because EPA’s order violated due process and did not constitute a final agency action. The Eleventh Circuit held that EPA must prove Clean Air Act violations in an enforcement action before a United States district court. Since that time, EPA has not filed a follow-up action in district court against TVA.
In February 2001, a coalition of conservationist groups filed a citizens suit action in the Eastern District of Tennessee alleging that TVA violated the Clean Air Act and Tennessee’s implementing regulations when it failed to obtain a PSD construction permit before modifying the Bull Run facility 1988, and for subsequently operating the plant without a permit, without performing emissions monitoring, and without applying BACT to minimize emissions. Although TVA modified the facility in 1988 – 13 years before the citizen suit was filed – Plaintiffs argued that their claims fell within the Clean Air Act’s five-year statute of limitations because TVA’s alleged failure to comply with the Clean Air Act and Tennessee’s implementing regulations constituted a continuing violation. The district court rejected Plaintiffs’ continuing violation arguments and held that the cause of action accrued in 1988, when TVA failed to obtain a construction permit. Accordingly, the district court ruled that Plaintiffs’ complaint was time barred.
On appeal, the Sixth Circuit similarly rejected Plaintiffs’ continuing violation theory, noting that “the term ‘continuing violation’ suggests the original violation … is somehow the source of [Plaintiffs’] present ability to recover . . . [and] also implies that there is but one incessant violation.” The Sixth Circuit, however, ultimately concluded that some of Plaintiffs’ claims were not time barred and that the district court erred in dismissing them.
Rather than viewing TVA’s failure to obtain a permit as the action that triggered continuing Clean Air Act violations, the Sixth Circuit determined that Plaintiffs’ alleged a series of repetitive discrete violations, which constitute independently actionable individual causes of action. Assuming, but not deciding, that the project constituted a “major modification,” the Court held that the Act and Tennessee’s SIP regulations establish an “ongoing obligation” for source modifications to apply best available control technologies. Thus, Plaintiffs’ claims regarding the TVA’s alleged failure to apply that technology “manifests its self anew each day a plant operates without BACT limits on emissions.” The Sixth Circuit concluded that Plaintiffs’ daily penalty claims for TVA’s alleged violations occurring more than five years before the complaint was filed (i.e. claims for violations prior to February 13, 1996) were time-barred, but that Plaintiffs’ claims for later violations fell within the statute of limitations.
Next, and again assuming that TVA’s project constituted a major modification, the Court concluded that TVA violated the Clean Air Act each day it operated without a PSD construction permit because PSD permits contain emission limits for post-construction operations. “Like the alleged failure to apply BACT, this alleged violation manifests itself each day the [plant] operates.” The Court accordingly held that “the violations predating February 13, 1996 are time-barred, while the remaining violations are not.” The Court of Appeals remanded the matter to the district court for consideration on the merits.
The Sixth Circuit's conclusion that a portion of the civil penalties claims are timely has, at least for the time being, breathed new life into Plaintiffs' lawsuit. Still, Plaintiffs face significant hurdles on remand. For example, the government-owned TVA will likely raise a sovereign immunity defense and Plaintiffs’ will need to establish that TVA’s project constituted a “major modification” triggering the PSD permit requirements. Nonetheless, this ruling is significant in that it provides citizen groups with a new theory under which to seek civil penalties for alleged violations at the estimated 17,000 facilities subject to NSR rules.
In the meantime, TVA continues to upgrade the Bull Run plant with technology designed to reduce nitrogen oxides (NOx) and sulfur dioxide (SOx) emissions. Additionally, a decision from the Supreme Court in Environmental Defense v. Duke Energy is expected this summer and should shed light on the standards for determining when a power plant must install BACT to control emissions under NSR rules.
For more information on this or other Clean Air Act issues, contact Dustin Till.
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