By Andrew H. Perellis and Jeryl L. Olson

How much change can occur without a permit is a contentious and difficult question.

A Clean Air Act major source undergoing construction or modification needs to obtain a construction permit under 42 U.S.C. §7475(a) that would then obligate it to install best available control technology (BACT). However, mere repairs to an existing facility do not trigger the need for a permit and the accompanying obligation to install BACT.

Commonwealth Edison made changes to five coal-fired plants between 1994 and 1994 based on its position that permits were not required. EPA brought suit more than five years later claiming that a construction permit was needed and that the failure to obtain it — and the failure to install BACT — were continuing violations. Midwest Generation which had purchased the plants, claimed that the need to obtain a permit and install BACT was a one-time violation and as such that suit was time-barred under the applicable five-year statute of limitations. See 28 U.S.C. §2462. The Seventh Circuit agreed, USA v. Midwest Generation, LLC, et al., No 12-1026 (7th Cir. July 8, 2013), upholding the district court’s opinions.  694 F. Supp. 2d 999 (N.D. Ill. 2010).

The Court cited the recent Supreme Court decision in Gabelli v. Securities Exchange Commission, ___ US ___, No. 11-1274 (February 27, 2013) (see our recent Client Alert on this decision), to reiterate that the discovery rule has no application, and that the statute of limitations begins when the  violation occurs. The holding of the Seventh Circuit is in accord with rulings by the Eighth and Eleventh Circuits, as noted in the opinion. Sierra Club v. Otter Tail Power Co., 615 F.3d 1008 (8th Cir. 2010); and National Parks and Conservation Association Inc. v. Tennessee Valley Authority, 502 F.3d 1316 (11th Cir. 2007).

The Court distinguished the decision of the Sixth Circuit, National Parks and Conservation Association Inc. v. Tennessee Valley Authority, 480 F.3d 410, (6th Cir. 2007), where certain state statutes that are part of that State’s State Implementation Plan require a source to use BACT. Even so, the Court rejected the contention that Section 9.1(d)(2) of the Illinois Environmental Protection Act created such an obligation.

This case is significant to any source that has made repairs and that is potentially subject to an assertion by EPA that the change triggered BACT requirements. Once the statute of limitations expires, and absent a specific state statute obligating the use of BACT, a source is free to proceed as if it possessed all required construction permits. ‘[E]nduring consequences of acts that precede the statute of limitations are not independently wrongful.”  Opinion at -7-8.