United States v. Midwest Generation, LLC , 720 F.3d 644 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 12-1026 & 12-1051
U NITED S TATES OF A MERICA and
S TATE OF ILLINOIS,
Plaintiffs-Appellants,
v.
M IDWEST G ENERATION, LLC,
E DISON M ISSION E NERGY, and
C OMMONWEALTH E DISON C OMPANY,
Defendants-Appellees.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 C 5277—John W. Darrah, Judge.
A RGUED S EPTEMBER 20, 2012—D ECIDED JULY 8, 2013
Before E ASTERBROOK , Chief Judge, and M ANION and
T INDER, Circuit Judges.
E ASTERBROOK, Chief Judge. Any “major emitting facil-
ity” built or substantially modified after August 7, 1977,
in parts of the country subject to the rules about preven-
tion of significant deterioration (PSD), needs a permit.
2 Nos. 12-1026 & 12-1051
42 U.S.C. §7475(a). This construction permit is in addi-
tion to the operating permits that many facilities
require under the Clean Air Act and the need to comply
with state implementation plans. One condition of a
construction permit is installation of “the best available
control technology for each pollutant subject to regula-
tion under” the Act. 42 U.S.C. §7475(a).
Between 1994 and 1999 Commonwealth Edison Co.
modified five of its coal-fired power plants: Crawford
and Fisk in Chicago; Powerton in Pekin; Waukegan
Station in Waukegan; and Joliet in Joliet. All five plants
had been operating on August 7, 1977, and were grand-
fathered until the modification. We must assume, given
the posture of this litigation, that the modifications re-
quired permits under §7475(a). But Commonwealth
Edison did not obtain permits. The question “how much
repair or change requires a permit?” has been contentious
and difficult. See, e.g., Environmental Defense v. Duke
Energy Corp., 549 U.S. 561 (2007); United States v. Cinergy
Corp., 458 F.3d 705 (7th Cir. 2006); United States v. Cinergy
Corp., 623 F.3d 455 (7th Cir. 2010). Commonwealth
Edison took the position that permits were not required
and that it therefore was not obliged to install “the
best available control technology” (called BACT in the
jargon of environmental law).
This was a risky strategy because, if someone had
contested the decision within the statute of limitations
(five years; see 28 U.S.C. §2462), then Commonwealth
Edison could have needed to undertake a further round
of modifications to get the permit and might have had
Nos. 12-1026 & 12-1051 3
to pay hefty penalties for the delay. As it happened,
however, no one sued until 2009, a decade after the
last of the modifications had been completed. The district
court dismissed as untimely the claim based on §7475(a).
694 F. Supp. 2d 999 (N.D. Ill. 2010), reconsideration
denied, 781 F. Supp. 2d 677 (2011). Claims concerning
another plant remain pending, as do claims related to a
different permit requirement for these five plants and
the emissions limits for their continued operation. But
the district court entered a partial final judgment under
Fed. R. Civ. P. 54(b) so that the claim under §7475(a) could
proceed to appeal while the parties’ remaining disputes
were ongoing in the district court.
After finishing the modifications, Commonwealth
Edison sold the five plants to Midwest Generation. This
has introduced some complications. The United States
and Illinois, the two plaintiffs in this suit, contend that
Midwest is liable as Commonwealth Edison’s successor,
and it accuses the district court of allowing a corporate
restructuring to wipe out liability for ongoing pollu-
tion. Adding another twist, Midwest and its corporate
parent Edison Mission Energy filed petitions under
the Bankruptcy Code after the appeal was argued. The
parties have agreed that the law-enforcement exception
to the automatic stay in bankruptcy, 11 U.S.C. §362(b)(4),
applies to these proceedings, which therefore need not
be consigned to limbo. Nor need we worry about
whether the sale had any effect on liability, and if so who
would be responsible today. Midwest cannot be
liable when its predecessor in interest would not have
been liable had it owned the plants continuously.
4 Nos. 12-1026 & 12-1051
Commonwealth Edison needed permits before under-
taking the modifications. By the time this suit com-
menced, between 10 and 15 years had passed since the
modifications were finished, at least double the five-year
period of limitations. Plaintiffs do not contend that the
time was extended by delay in discovering the modifica-
tions and, after Gabelli v. SEC, 133 S. Ct. 1216 (2013), no
such argument would be tenable. (Gabelli holds that
the time for the United States to sue under §2462 begins
with the violation, not with a public agency’s discovery
of the violation.) Gabelli observes that “a claim accrues
when the plaintiff has a complete and present cause of
action” (133 S. Ct. at 1220, quoting from Wallace v. Kato,
549 U.S. 384, 388 (2007)) and that the statute of limita-
tions begins to run when the claim accrues. That
occurred as early as 1994 for one plant and no later
than 1999 for any of the five.
Plaintiffs concede all of this but reply that failure to
obtain a construction permit is a continuing violation. The
phrase “continuing violation” is ambiguous. It may
mean any of at least three things: (1) ongoing discrete
violations; (2) acts that add up to one violation only
when repeated; and (3) lingering injury from a com-
pleted violation. Analysis will be easier if we call the
first situation a continuing violation, the second a cum-
ulative violation, and the third a continuing-injury situa-
tion. See Turley v. Rednour, No. 11-1491 (7th Cir. July 3,
2013) (concurring opinion). Plaintiffs make arguments
of both the continuing-violation and continuing-injury
stripes.
Nos. 12-1026 & 12-1051 5
The continuing-violation argument is that every day a
plant operates without a §7475 permit is a fresh violation
of the Clean Air Act. Congress sometimes writes regula-
tory statutes that way, but §7475 is not among them.
Section 7475 bears the caption “Preconstruction require-
ments” and begins this way: “No major emitting facility
on which construction is commenced after August 7,
1977, may be constructed in any area to which this part
applies unless—”. The rest of §7475(a) spells out the
conditions that must be met before the permit will issue.
See also 40 C.F.R. §52.21(r)(1). The text bears out the
caption: it specifies a step the operator must take
before constructing or modifying a “major emitting
facility”. The violation is complete when construction
commences without a permit in hand. Nothing in the
text of §7475 even hints at the possibility that a fresh
violation occurs every day until the end of the universe
if an owner that lacks a construction permit operates a
completed facility. Gabelli tells us not to read statutes in
a way that would abolish effective time constraints on
litigation.
Two other courts of appeals have considered whether
operating a new or modified plant, despite failure to
obtain a construction permit, is a new violation of
§7475(a). Both have held that it is not. Sierra Club v. Otter
Tail Power Co., 615 F.3d 1008 (8th Cir. 2010); National
Parks and Conservation Association Inc. v. Tennessee Valley
Authority, 502 F.3d 1316 (11th Cir. 2007). We agree with
those decisions. Although plaintiffs insist that the con-
struction permit has “an operational component,” they
6 Nos. 12-1026 & 12-1051
mean only that under §7475(a)(4) the operator must
install the best available control technology. Section
7475(a)(4) specifies what must be built, not how the
source operates after construction. If the owners ripped
out or deactivated the best available control technology
after finishing construction that would not violate
§7475—though it might well violate some other statute,
regulation, or implementation plan prescribing how
polluters run their facilities.
Plaintiffs stress that §7475(a)(4) says that newly built
or modified sources are “subject to” the need for the
best available control technology. That obligation,
they insist, continues after the construction work is done,
which leads them to say that National Parks and Conserva-
tion Association Inc. v. Tennessee Valley Authority, 480 F.3d
410 (6th Cir. 2007), disagrees with the eighth and
eleventh circuits. Yet the sixth circuit’s decision rests on
Tennessee statutes and implementation plans that
require certain sources to use the best available control
technology, while §7475 deals only with conditions prec-
edent to construction or modification. Perhaps an Illinois
statute, regulation, or implementation plan provides
that any plant “subject to” BACT by virtue of §7475(a)(4)
must use it in operation, but any claim of that sort
remains pending in the district court. What BACT entails
is plant-specific. 40 C.F.R. §52.21(b)(12). All we have
for decision is a claim directly under §7475.
Plaintiffs maintain that 415 ILCS 5/9.1(d)(2) works the
same way as the Tennessee requirements that the sixth
circuit considered. To the extent that this contention is
Nos. 12-1026 & 12-1051 7
independent of §7475, we leave it to the district judge
in the first instance. To the extent that plaintiffs maintain
that Commonwealth Edison has violated §5/9.1(d)(2)
because it earlier violated §7475, the argument is wrong.
Section 5/9.1(d)(2) provides that no one shall “modify or
operate” a point source “except in compliance with the
requirements of such Sections [of the Clean Air Act] and
federal regulations adopted pursuant thereto”. Plaintiffs
point to “or operate”, which is missing from §7475(a).
This gets us nowhere, however; no one can operate a
plant except in compliance with federal law with or
without §5/9.1(d)(2). We have already concluded that
§7475 deals with getting permission for construction, not
with a plant’s operations; it follows that Commonwealth
Edison’s violations of §7475 during the 1990s do not
make its current operations a violation of federal law,
so they do not derivatively violate §5/9.1(d)(2).
Plaintiffs’ contention that a continuing injury from
failure to get a preconstruction permit (really, from failure
to use BACT) makes this suit timely is unavailing. What
these plants emit today is subject to ongoing regulation
under rules other than §7475. Today’s emissions cannot
be called unlawful just because of acts that occurred
more than five years before the suit began. Once the
statute of limitations expired, Commonwealth Edison
was entitled to proceed as if it possessed all required
construction permits. That’s the point of decisions such
as United Air Lines, Inc. v. McMann, 434 U.S. 192 (1977),
and Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618(2007), which hold that enduring consequences of acts
8 Nos. 12-1026 & 12-1051
that precede the statute of limitations are not independ-
ently wrongful.
A FFIRMED
7-8-13