Catch me if you can - the misapplication of the federal statute of limitations to Clean Air Act PSD permit program violations.

• Author: Lieben, Ivan
• Position: Prevention of significant deterioration

1. INTRODUCTION II. THE PSD PROGRAM III. COOPERATIVE FEDERALISM UNDER THE CAA IV. VARIOUS MECHANISMS FOR IMPLEMENTATION OF THE PSD PROGRAM V. PSD PERMITTING VIOLATIONS A. Nature of PSD Violations B. Enforcement Against PSD Violators C. Assessment of Penalties D. Catching Violators E. Statute of Limitations Defense Against Penalties 1. Cases Finding the Statute of Limitations Bars Penalties a. Second Circuit b. Third Circuit c. Fourth Circuit d. Seventh Circuit e. Ninth Circuit f. Tenth Circuit g. Eleventh Circuit 2. Cases Finding Penalties Are Still Actionable a. Fourth Circuit b. Fifth Circuit c. Sixth Circuit d. Ninth Circuit VI. THE MISAPPLICATION OF THE STATUTE OF LIMITATIONS TO PSD PERMITTING PENALTY CASES A. The Ability to Collect Penalties Is Critical to Ensuring Widespread Compliance with PSD Permitting Requirements B. The Clear Language of the CAA Evidences the Operational Nature of the PSD Requirements C. Legislative Intent that the PSD Requirements Include Operational Requirements D. EPA Regulations and Guidance Support the Proposition that PSD Violations are Continuous and Ongoing E. Courts Have Confused the Title V Operating Program with the Operating Requirements Contained in the PSI) Program F. Comes Should Construe Similar SIP-Approved PSI) Provisions More Uniformly VII. CONCLUSION I. INTRODUCTION

   The federal Clean Air Act (CAA), (1) with its stated goal "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population," (2) is one of the most sweeping environmental regulatory statutes ever enacted by Congress. The statute came into existence through a cascade of legislation starting with the enactment of the first CAA in 1955. A key component of the CAA is its prevention of significant deterioration (PSD) program, a subprogram of its new source review (NSR) regulatory program. Title I of the CAA mandates that states divide areas under their jurisdiction into distinct airsheds, or regions, (3) and that air quality in each airshed be measured and compared with the national ambient air quality standards (NAAQS). (4) The NAAQS are established by the United States Environmental Protection Agency (EPA) and govern the discharge of "criteria" air pollutants. (5)

   The PSD program, which applies in regions where ambient levels of pollutants meet the NAAQS, requires permits and stringent emissions controls for new or modified "major stationary sources" emitting significant amount of air pollutants. (6) Major stationary sources are some of the largest contributors of air pollution in the United States for pollutants such as nitrogen oxides. (7) Notwithstanding the PSD requirements, many sources in attainment areas fail to obtain the necessary permits prior to their construction or modification. (8) Indeed, this failure by major stationary sources to obtain PSD permits and install proper emissions controls serves to undercut one of the most effective and important air quality programs of the CAA.

   The CAA empowers regulatory agencies to initiate enforcement actions against those who fail to obtain PSD permits, (9) and this enforcement authority is extended to citizens through citizen suit provisions. (10) The enforcement provisions provide for both injunctive relief, which typically means that sources violating PSD requirements are required to obtain permits and install appropriate controls, as well as the assessment of penalties. (11) The importance of penalties cannot be overstated, as they ensure that the economic benefit of a violation is recaptured, the violator is properly punished, and future violations are deterred.

   A number of recent district court opinions and an Eleventh Circuit Court of Appeals opinion--National Parks Conservation Ass'n, Inc. v. Tennessee Valley Authority (NPCA v. TVA I) (12)--found that penalties for PSD violations are barred by the federal statute of limitations when the construction activity occurred more than five years before the lawsuit was filed. (13) The basic premise of these opinions is that the PSD requirement for a "preconstruction" permit is a one-time obligation that arises prior to a source commencing construction, and the statute of limitations begins to run from that point onwards. (14) While these cases still recognize the availability of injunctive relief, (15) the application of the federal statute of limitations to PSD violations against major sources--many who are large and sophisticated corporations--delivers a blow to one of the key enforcement tools of the CAA: the ability to collect penalties. Moreover, through these rulings, judges are sending the wrong message to violators that they can get a "free pass" on penalties if they can escape detection for long enough.

   Countering this trend, other district court opinions and a Sixth Circuit Court of Appeals opinion--also titled National Parks Conservation Ass'n, Inc. v. Tennessee Valley Authority (NPCA v. TVA II) (16)--have found that a violation of the CAA's preconstruction permitting program constitutes a continuing violation, and therefore penalties can still be collected even if the initial violation occurred more than five years before the complaint was filed. (17) The basis for these rulings is that certain PSD requirements, such as the control technology requirements, are ongoing and operational in nature, and therefore the violations are continuous until the source obtains proper permits and complies with the PSD requirements. (18) These courts relied, in part, upon the broad air quality goals of the CAA as a basis for their rulings. (19) This Article takes the position that these rulings were correctly decided, and provides statutory, legislative history, judicial, and policy arguments supporting these rulings.

2. THE PSD PROGRAM

   The PSD program generally requires that an owner or operator of a proposed major source obtain a permit that contains emissions limitations meeting the best available control technology (BACT), (20) calculate and model air quality impacts from projected emissions, and conduct whatever monitoring may be necessary to determine the level of emissions (21) for each regulated pollutant prior to commencing construction. "Construction" under PSD also includes the modification of a source or facility, (22) and "modification" is defined as "any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted." (23)

   The basic test for being a "major source" is bifurcated between "designated sources" (24) and all other sources. (25) Designated stationary sources with the potential to emit (26) greater than 100 tons per year (tpy) of any regulated NSR pollutant are categorized as a major source. (27) All other types of stationary sources with the potential to emit greater than 250 tpy of any regulated NSR pollutant are also a major source. (28) The reasoning behind the use of potential emissions is that the actual emissions of a source are unknown prior to their construction, so PSD applicability should be based on the highest predicted emissions to ensure that all major sources are subject to the requirements. (29) For a major modification, the test requires a determination as to whether there will be a "physical" or "operational" change at an existing major source.(30)

   Once it is determined that a proposed source will be a major source or a modification will occur at an existing major source, PSD applies to all pollutants subject to regulation under the CAA which will be emitted in "significant" amounts from the source. (31) EPA has set these significance thresholds through the regulatory process. (32) Generally speaking, for new construction or new emissions units, the determination as to whether there will be significant emissions increases is based upon the future potential emissions from the new source or emissions unit. (33) For a modification of an existing emissions refit, however, PSD requires that the source compare the premodification actual emissions to the postmodification projected actual emissions to determine whether there will be a significant emissions increase, a test commonly referred to as the "actual-to-future projected actual" test. (34)

   The PSD program also allows for source-wide netting, such that there must be a "net" emissions increase to trigger the PSD requirements. (35) Under a netting analysis, significant net emissions increases for a given pollutant from a particular emissions unit at a modifying source can be offset by considering reductions of emissions of the same pollutant elsewhere at the facility within the five year "contemporaneous" period prior to the commencement of construction. (36) As long as those reductions are federally enforceable, a source can credit them against the expected emissions increases from a newly Constructed or modified unit in order to stay below the PSD threshold for a pollutant. (37)

3. COOPERATIVE FEDERALISM UNDER THE CAA

   The CAA creates a partnership between the federal and state governments to achieve most of its programmatic goals. Certain CAA programs are implemented only through the federal CAA statutory provisions and regulations promulgated by EPA, such as the hazardous air pollutant program (38) and the new source performance standards, (39) while other programs, such as attainment and maintenance of the NAAQS, the NSR permitting program, and the Title V operating permits program, contemplate implementation through state or local laws approved by EPA. (40) In regard to programs concerning the NAAQS, section ll0(a)(1) requires states to create state implementation plans (SIPs) which provide for the "implementation, maintenance, and enforcement of such primary standard in each air quality control region ... within such State." (41) Indeed, SIPs...