Sand Through the Hourglass: PSD Enforcement and the Statute of Limitations

Thaddeus R. Lightfoot

Thaddeus R. Lightfoot is a founding partner and managing officer of The Environmental Law Group, Ltd., Minneapolis, Minnesota. In nearly 15 years of practicing environmental law, Mr. Lightfoot has represented the federal government, public institutions, municipal governments, large corporations, small businesses, and private individuals in matters arising under most major pollution control statutes. His experience includes the defense of prevention of significant deterioration enforcement actions against clients in the wood products industry. He is a former trial attorney with the Environmental Enforcement Section, U.S. Department of Justice, Washington, D.C., and has taught at the University of Minnesota School of Law. The author wishes to thank James A. Payne and James A. Mennell for their valuable comments. Views expressed in this Dialogue are those of the author alone, and are not necessarily shared by the Environmental Law Group, Ltd. or its clients.

[32 ELR 11342]

In 1977, the U.S. Congress amended the Clean Air Act (CAA)¹ to codify a new source review (NSR) program for major new or modified sources in areas that attain national ambient air quality standards (NAAQS). These prevention of significant deterioration (PSD) provisions require major new or modified sources² that will emit significant amounts of regulated pollutants³ to obtain a permit before commencing construction of the source or modification. To secure a permit, the source must establish that the new construction or modification will comply with the NAAQS, as well as the PSD "increments"—or fractions of the NAAQS established to preserve air quality in attainment areas—for sulfur dioxide, particulate matter, and nitrogen dioxides. In addition, the source must employ the best available control technology (BACT) for each regulated pollutant that it will emit in significant amounts. The CAA defines BACT as the "maximum degree of [emission] reduction" achievable, considering "energy, environmental, and economic" factors.⁴ BACT, therefore, is an emissions limit typically derived from the control technology for regulated pollutants in attainment areas that the U.S. Environmental Protection Agency (EPA) and state regulatory agencies mandate in preconstruction permits.

In the late 1980s and early 1990s, EPA brought a number of civil judicial enforcement actions against the wood products industry for failure to obtain preconstruction permits for new sources or source modifications under the PSD program. In the mid-1990s, EPA began an extensive investigation of suspected violations of PSD NSR provisions in the coal-fired electric utility industry. The investigation led the U.S. Department of Justice, at EPA's request, to file eight enforcement actions against coal-fired electric utilities in 1999 and 2000, and to pursue enforcement for alleged PSD violations in the refinery, wood products, mini-steel, food manufacturing, and chemical processing industries.⁵ These recent NSR enforcement actions contend that industries built or modified facilities without installing BACT emission controls and without obtaining PSD permits. EPA is seeking civil penalties and injunctive relief requiring the facilities to install emission controls that satisfy BACT. Many of the alleged violations involve facilities or modifications built as long ago as 1978.

Given the age of the facilities and modifications involved in EPA's recent PSD cases, an obvious question arises: does the CAA's statute of limitations bar the government's enforcement efforts? In 2001, three significant federal district court opinions addressed the statute-of-limitations issue. In July 2002, a fourth federal district court, relying heavily upon the three decisions in 2001, also construed the statute of limitations in a PSD enforcement action. This Dialogue discusses how those cases affect EPA's attempt to apply BACT to decades-old facility modifications, as well as the government's bid to obtain civil penalties for alleged PSD violations. The Dialogue concludes by analyzing the questions unresolved in the four opinions, and suggests how courts may apply the precedent in future PSD enforcement actions.

Background: The CAA's Five-Year Statute of Limitations

CAA §§ 160 through 169B⁶ establish the PSD preconstruction permit program. Sections 113(b) and 167 of the CAA⁷ provide that the federal government may commence an action seeking civil penalties and injunctive relief for alleged PSD violations. The Act, however, does not provide a statute of limitations for such enforcement actions. As a result, the applicable statute of limitations is 28 U.S.C. § 2462, the general federal statute of limitations for penalty cases.⁸

Section 2462 reads in relevant part:

Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall [32 ELR 11343] not be entertained unless commenced within five years from the date when the claim first accrued . . . .⁹

Section 2462 applies to actions for monetary and nonmonetary penalties only.¹⁰ Courts usually do not consider equitable claims, such as those seeking injunctive relief, to constitute an action for penalties or fines.¹¹ However, as discussed in more detail below, § 2462 may apply if the party invoking the limitations period establishes that the injunction represents a nonmonetary penalty. Under § 2462, a claim "accrues" at the moment an alleged violation first occurs, and the government must commence a civil penalty action "within five years of the date of the violation giving rise to the penalty."¹² A claim accrues "when the factual and legal prerequisites for filing a suit are in place."¹³ The factual and legal prerequisites necessary for filing a civil penalty suit for environmental violations are in place when the violation first occurs. "Because liability for the penalty attaches at the moment of the violation, one would expect this to be the time when the claim for the penalty 'first accrued' [under section 2462]."¹⁴

In 3M Co. v. Browner,¹⁵ EPA asserted that the difficulty of detecting environmental violations justified a "discovery of violation" trigger for the statute of limitations. The 3M court dismissed EPA's argument as unpersuasive. Nothing in § 2462, the court held, "even arguably makes the running of the limitations period turn on the degree of difficulty an agency experiences in detecting violations."¹⁶ An agency's "failure to detect violations, for whatever reasons, does not avoid the problems of faded memories, lost witnesses and discarded documents in penalty actions brought decades after alleged violations are finally discovered."¹⁷ Congress enacts statutes of limitations precisely to avoid such problems.¹⁸ EPA's violation discovery theory, the U.S. Court of Appeals for the D.C. Circuit held, was "outside the scope of the language" of § 2462, "inconsistent with judicial interpretations of [§] 2462," and "incompatible" with a statute of limitations in penalty cases.¹⁹

The Statute of Limitations Applied

Last year, three federal district courts addressed the statute-of-limitations issue in EPA enforcement actions seeking monetary penalties and injunctive relief for alleged violations of the PSD preconstruction permit program. More recently, another federal district court applied the three decisions in evaluating a statute-of-limitations argument in a fourth civil enforcement action for alleged PSD violations. All four cases involved claims that defendants violated the CAA's PSD provisions by modifying facilities without obtaining preconstruction permits, and by failing to install BACT. In each case, the courts found that the five-year statute of limitations barred EPA's recovery of civil penalties, but did not bar the government's claims for injunctive relief.

United States v. American Electrical Power Service Corp.

In United States v. American Electrical Power Service Corp. (AEPSC),²⁰ the federal government brought its enforcement action against six companies that owned or operated five coal-fired electric-generating plants in Indiana, Ohio, and West Virginia. The complaint, filed on November 3, 1999, alleged PSD violations arising from modifications made at the plants since September 1978. After EPA filed the complaint, eight states intervened in the action. The states sought injunctive relief and civil penalties against the six companies for the same violations in the EPA complaint. On November 18, 1999, 11 nonprofit organizations filed a CAA citizen suit seeking civil penalties and injunctive relief against the same defendants for the same PSD violations as EPA and the states alleged. The court consolidated the cases. Defendants then filed a motion to dismiss, arguing that the statute of limitations barred claims for modifications "initiated prior to November 1994."²¹

In response to the defendants' motion, EPA conceded that 28 U.S.C. § 2462 barred its claims for civil penalties accruing more than five years before it filed the complaint. Accordingly, EPA stated that it would not seek civil penalties for days of violation prior to November 3, 1994.²² The court agreed with EPA's interpretation of § 2462 and held that the statute of limitations also barred the penalty claims of the intervening states. To illustrate the point, the court offered a hypothetical that assumed one of the defendant companies modified an electric-generating unit after September 1978, but did not operate the unit after December 31, 1989. Under such circumstances, the court explained, § 2462 would bar "any claim for a civil penalty in this case for that last or any prior day of operation, even if such operations were in violation of the CAA."²³

With respect to injunctive relief, the AEPSC court observed that the language of § 2462 applies only to enforcement actions seeking civil penalties. Section 2462 "does not mention injunctions or equitable relief of any kind."²⁴ Statutes of limitation, the court noted, do not generally circumscribe injunctions or other types of equitable remedies.²⁵ Similarly, the court found that the common-law doctrine of laches, which bars a claim based upon a party's unreasonable delay in asserting that claim, does not apply to government actions brought to protect a public interest.²⁶ The court also declared that the concurrent remedy rule, which forbids equitable relief when the applicable statute of limitations prohibits a legal remedy, is inapplicable when the United [32 ELR 11344] States acts in its governmental capacity.²⁷ Section 2462, therefore, did not bar EPA's claims for injunctive relief, even if the defendants completed the allegedly unlawful modifications more than five years before EPA filed its enforcement action.²⁸

United States v. Westvaco Corp.

The second of the three cases decided in 2001, United States v. Westvaco Corp.,²⁹ also applied § 2462 to bar civil penalties for a defendant's failure to obtain PSD permits for projects undertaken more than five years before EPA brought its CAA claims. Westvaco involved a kraft pulp and paper mill where the defendant instituted a series of projects beginning in 1981. On August 28, 2000, EPA filed a complaint alleging that the projects were subject to preconstruction review, and that the defendant violated the CAA by failing to obtain permits before undertaking construction.³⁰ The defendant argued that § 2462 barred the government's claims for civil penalties relating to any project commenced more than five years before EPA filed the complaint. EPA countered that all of the alleged violations were within the five-year statute of limitations, because each day of operation at the defendant's facility constituted a continuing violation of the Act's preconstruction permit requirements.³¹ The court disagreed, and dismissed EPA's claims for civil penalties that related to projects commenced before August 28, 1995.

In rejecting the government's "continuing violation" argument, the court found a claim "first accrues" under § 2462 "on the date that a violation first occurs."³² Applying 3M and several relevant district court opinions, the Westvaco court appears to have held that a PSD violation occurs when construction or modification of an emissions source commences.³³ As discussed below, language elsewhere in the opinion raises questions as to whether construction must be complete before the statute of limitations begins to run. There is no doubt, however, that Westvaco discounts EPA's continuing violation theory because the theory does not distinguish between the failure to obtain a PSD preconstruction permit and the failure to obtain an operating permit. Citing §§ 165 and 167 of the CAA,³⁴ Westvaco held that the PSD program applies only to the construction of stationary sources, not to the operation of such sources.³⁵ As a result, the court dismissed EPA's claims for civil penalties related to projects commenced in 1981 and 1986.³⁶

The Westvaco court, however, held that § 2462 did not bar EPA's claims for injunctive relief. EPA could proceed with its injunctive relief claims because "the five-year statute of limitations applies to claims for civil penalties only."³⁷ Nevertheless, the court quoted United States v. Campbell Soup Co.³⁸ for the proposition that "if the [sources subject to a PSD permit] are now properly operated, under a valid [PSD] permit and in compliance with the SIP [state implementation plan], it is unlikely that any injunctive relief would issue because some seven years ago the [sources] were constructed without a permit."³⁹

United States v. Murphy Oil USA, Inc.

Like AEPSC and Westvaco, United States v. Murphy Oil USA, Inc.⁴⁰ holds that § 2462 bars civil penalties for PSD violations arising from projects commenced more than five years before an enforcement action. Murphy Oil involved a Wisconsin refinery that allegedly modified emissions units without securing a PSD permit or installing BACT. Relying on § 2462, the defendant argued that the five-year statute of limitations barred EPA's claims with respect to modifications that occurred in 1988 and 1992, because the government filed the enforcement action on June 29, 2000.⁴¹ EPA asserted that each day the defendant operated a modified emission unit without a PSD preconstruction permit or without employing BACT constituted a continuing violation.⁴² The court disagreed, observing that the CAA distinguished between construction and operating permits, and that EPA's enforcement action focused on the alleged deficiencies in the PSD preconstruction and permitting process.⁴³ Murphy Oil concluded that commencement of construction triggers the statute of limitations for an alleged PSD violation, and that the violation does not continue through the operational life of the modified source.⁴⁴

In addition to the "continuing violation" argument, the court rejected two other theories—the "discovery rule" and "fraudulent concealment"—that EPA offered to escape the five-year limitation period. The government argued that the court should apply a "discovery rule" and toll the statute of limitations until EPA discovered the alleged PSD violations.⁴⁵ The Murphy Oil court dismissed the argument, noting that even though a variety of logistical and financial reasons may make environmental violations difficult to detect, "nothing in the language of § 2462 even arguably makes the running of the limitations period turn on the degree of difficulty an agency experiences in detecting violations."⁴⁶ EPA could rely upon the discovery rule only if the government demonstrated at trial that the defendant made affirmative efforts to prevent EPA from obtaining information "necessary to discover defendant's alleged violations of the permit requirements under the [CAA]."⁴⁷

[32 ELR 11345]

EPA also contended that the doctrines of fraudulent concealment and equitable tolling should allow its enforcement action to go forward despite § 2462. Fraudulent concealment applied, EPA argued, because the defendant allegedly withheld information regarding its compliance status.⁴⁸ The principle of fraudulent concealment, however, presumes that a plaintiff discovers a defendant's alleged wrongdoing, and then the defendant acts to prevent the plaintiff from suing in time. Because the defendant did not undertake steps to dissuade EPA after the government learned of the defendant's alleged violations, the doctrine of fraudulent concealment did not apply.⁴⁹

In addition, EPA contended that the defendant's failure to disclose information should toll the statute of limitations under the doctrine of equitable tolling, which permits a plaintiff to avoid a statute of limitations if the plaintiff is unable to obtain vital information regarding a claim. Equitable tolling does not require a wrongful effort by a defendant to prevent a plaintiff from bringing an action; it simply requires that a plaintiff knew of an injury but could not obtain the information necessary to bring an action.⁵⁰ Because EPA alleged wrongful conduct by the defendant and did not prove that the government was unable to obtain the information necessary to bring a timely action, the equitable tolling doctrine did not apply. Rather, given that EPA argued the defendant's failure to provide information prevented discovery of the violation within the limitations period, the court found that the argument simply reiterated EPA's desire to apply a discovery rule.⁵¹

On the issue of injunctive relief, Murphy Oil held that EPA may seek an equitable remedy even though § 2462 bars the government's civil penalty claims. Citing Westvaco and Campbell Soup, the court found that "the five year statute of limitations applies to claims for civil penalties only," and that EPA could pursue its claims for injunctive relief "even if § 2462 precludes it from recovering damages."⁵² Like AEPSC, the Murphy Oil court concluded that the concurrent remedy rule did not bar EPA's ability to seek injunctive relief under the CAA, because the rule does not apply when the government seeks equitable relief in its official enforcement capacity.⁵³

United States v. Southern Indiana Gas & Electric Co.

Relying upon Murphy Oil and Westvaco, the court in United States v. Southern Indiana Gas & Electric Co. (SIGECO)⁵⁴ held that EPA could not recover civil penalties for construction projects completed in 1991 and 1992. In SIGECO, EPA alleged that a utility company violated the PSD program and the Indiana SIP by failing to obtain preconstruction permits for projects completed in 1997, 1994, 1992, and 1991.⁵⁵ The parties agreed that EPA commenced its civil enforcement action more than five years after the defendant completed the 1991 and 1992 projects.⁵⁶ As in AEPSC, Westvaco, and Murphy Oil, the defendant argued that § 2462 barred EPA's claims regarding the 1991 and 1992 activities, but did not foreclose the government's request for injunctive relief.⁵⁷ EPA countered that each day of operation without a PSD preconstruction permit constituted a continuing violation, so the statute of limitations did not preclude claims for the projects completed in 1991 and 1992.⁵⁸

The SIGECO court agreed with the defendant, and found EPA's continuing violation argument unpersuasive. Citing Murphy Oil and the statutory framework of the CAA, the court held that operating permits are distinct from construction permits. Commencing construction without a preconstruction permit violates PSD requirements, but "operating the unpermitted facility following construction" does not.⁵⁹ As in Murphy Oil, the SIGECO opinion clearly states that a PSD violation "accrues" under § 2462 "when construction is commenced."⁶⁰ Similar to Westvaco, however, SIGECO suggested that the PSD violation may continue through the construction of a source or major modification.⁶¹ Because the defendant completed construction of the 1991 and 1992 projects more than five years before EPA commenced its enforcement action, the statute of limitations barred EPA's civil penalty claims as a matter of law and the court granted the defendant's motion for partial summary judgment.⁶² Although the SIGECO court's contention that a PSD violation continues through construction is subject to question,⁶³ the court's conclusion that EPA's civil penalty claim accrues when a party commences construction is unassailable.

Thought-Provoking Issues: Civil Penalty Triggers, Continuing Violations, and Punitive Injunctive Relief

With the advent of AEPSC, Westvaco, Murphy Oil, and SIGECO certain issues regarding the statute of limitations in PSD enforcement actions are clear. Section 2462 prevents EPA from recovering civil penalties for PSD violations that occurred more than five years before the government files an enforcement action. In addition, § 2462 is inapplicable to claims for injunctive relief designed to remedy the damage caused by past unlawful conduct. The cases, however, raise three intriguing questions regarding the application of § 2462 to PSD enforcement. Those questions, discussed in detail below, are: (1) must construction or modification of a source be complete to trigger the statute of limitations; [32 ELR 11346] (2) how do operating permit violations factor into the analysis; and (3) what constitutes "punitive" injunctive relief?

Commencement of Construction, Completion of Construction, and the Trigger for the Five-Year Statute of Limitations

Section 165 of the CAA,⁶⁴ which creates the PSD program, expressly provides that a major new or modified source emitting significant amounts of regulated pollutants in an attainment area must obtain a permit before "construction is commenced." The Act, therefore, suggests that a PSD violation accrues when a source commences construction of a project without first obtaining the requisite preconstruction permit. As a result, the five-year statute of limitations should begin to run when the source commences construction, because the claim "accrues" on that date under § 2462. Nevertheless, the government might argue that the statute of limitations should not begin to run until construction is complete. Because the wrongful conduct—construction without a permit—continues until work on the new or modified source comes to an end, EPA could assert that only completion of construction should trigger the statute of limitations. As discussed below, this argument ignores that the PSD program requires preconstruction permits, and that the factual prerequisite for a PSD violation is in place when construction commences without the required permit.

Although AEPSC involved modifications dating back to September 1978, the court did not discuss when the five-year statute of limitations begins to run in PSD enforcement cases. Rather, the court noted that EPA conceded § 2462 barred claims for civil penalties accruing more than five years before the government filed the complaint, or prior to November 3, 1994.⁶⁵ The court stated that § 2462 would bar a claim if, for example, a defendant modified a source after September 1978, but did not operate the modified source after December 31, 1989.⁶⁶ But the example was purely hypothetical, and the court did not analyze when such a claim might "accrue."

Westvaco includes confusing language regarding the statute of limitations trigger. The court recognized that § 165(a) of the CAA⁶⁷ "specifically indicates that violations of [the preconstruction permit requirement] occur at the time construction is commenced, and not some later point in time."⁶⁸ Similarly, Westvaco declares that the five-year statute of limitations bars claims for civil penalties regarding projects "commenced . . . in 1981 and 1986 respectively—more than fourteen years before the Government filed the present lawsuit," and opines that preconstruction permit violations "accrue at the time of construction (or modification)."⁶⁹ This language suggests that commencement of construction triggers the five-year limitations period. However, Westvaco also appears to declare that construction must be complete before the statute of limitations begins to run. For example, the court finds that "a violation for failure to obtain a construction permit does not continue once the unpermitted construction is completed."⁷⁰ Indeed, Westvaco "holds that the statute of limitations bars the Government from bringing claims based on preconstruction permit violations where the construction was completed more than five years prior to the commencement of the lawsuit."⁷¹

Murphy Oil appears to clarify that the limitations period for PSD enforcement actions begins to run when a source commences construction without a permit, rather than when construction is complete. According to the court, the statute of limitations for a violation of the PSD preconstruction permit requirements "begins to run at the time of construction."⁷² For support, Murphy Oil relies upon several district court decisions under the CAA.⁷³

Like Murphy Oil, SIGECO concludes that a claim for alleged PSD violations accrues when a party commences construction on a source or major modification.⁷⁴ However, the SIGECO court, relying upon Westvaco, opined that the violation continues during the construction period. As the court stated, "violations of the prerequisites for obtaining a [PSD preconstruction] permit under 42 U.S.C. § 7475 and 40 C.F.R. § 52.21 accrue at the time of the modification," but "such violations do not continue past the completion of construction."⁷⁵

The five-year statute of limitations for PSD violations should begin to run when a party commences the construction of a source or modification without obtaining the required preconstruction permit. A claim typically accrues when the factual and legal prerequisites for filing an action are in place.⁷⁶ 3M concluded that since the 1830s, "the term 'accrued' in § 2462 has been taken to mean that the running of the limitations period in penalty actions is measured from the date of the violation."⁷⁷ The 3M court's holding is faithful to the legislative intent of § 2462.⁷⁸ CAA § 165 is entitled "preconstruction requirements," and expressly mandates that a party obtain a permit before "construction is commenced."

As the court found in Murphy Oil, the "date of the violation" under the PSD program is the day that construction [32 ELR 11347] commences without the required permit. A PSD preconstruction permit violation occurs only once, when a party commences construction of a source or modification without obtaining a PSD permit.⁷⁹ Section 165 of the CAA does not render failure to obtain a PSD preconstruction permit a "continuing violation," and a court should not engraft a continuing offense interpretation on the CAA or § 2462 in the absence of express statutory language or explicit legislative directive.⁸⁰ Notwithstanding Westvaco and SIGECO, the date on which a party completes construction of an unpermitted source or modification is immaterial under CAA § 165 and irrelevant in applying the § 2462 limitations period.

Continuing Violations and Operating Permit Issues

EPA's recent notices of violation in NSR cases often include specific allegations of operating permit violations, so that the government may assert continuing violations. Westvaco, Murphy Oil, and SIGECO unequivocally establish that the failure to obtain a PSD permit relates only to the construction or modification of a source, not to the operation of the source. By alleging operating permit violations under Title V of the CAA §§ 501-507, EPA is attempting to distinguish Westvaco, Murphy Oil, and SIGECO. A careful parsing of PSD NSR and Title V, however, reveals that § 2462 may bar civil penalty actions even where EPA alleges ongoing operating permit violations.

Westvaco, Murphy Oil, and SIGECO explicitly rejected EPA's assertion that commencing construction without meeting PSD requirements constitutes a continuing violation. EPA contended that each day of operation at a facility without a preconstruction permit constitutes a continuing violation of NSR requirements.⁸¹ All three cases found EPA's argument unpersuasive because it fails to distinguish between preconstruction permit violations and operating permit violations.⁸² The distinction holds true even in states such as Minnesota and Wisconsin that issue combined PSD preconstruction permits and operating permits.⁸³ Westvaco does opine that operating permit violations are continuing for the purposes of the five-year statute of limitations "since every day of operation without an operating permit is another violation."⁸⁴ This statement, however, is dicta because the court evaluated PSD preconstruction permit violations, not operating permit violations.

Before Congress created the federal Title V operating permit program in the 1990 CAA Amendments,⁸⁵ EPA and the states implemented the Act through state implementation plans (SIPs). SIPs consist of emissions limits on existing sources and other measures sufficient to demonstrate that the SIP will attain and maintain NAAQS. Some states created their own operating permit programs to assist in SIP implementation. Prior to Title V, however, the only federal air permit that a major new source or major modification required was a PSD preconstruction permit.

The purpose of Title V is to collect in a single permit all existing federal, state, and local regulations applicable to a source.⁸⁶ For example, if a source obtained a PSD permit setting BACT emission limits, the Title V operating permit would include those limits. EPA and the states, however, may not impose new substantive requirements, such as a new or changed BACT emission limit, in a Title V permit.⁸⁷

Given that a Title V operating permit cannot create new substantive requirements, EPA's allegations of continuing operating permit violations ring hollow in NSR cases. PSD NSR establishes a BACT emissions limit typically derived from the control technology for a regulated pollutant. If a new or modified source fails to obtain an applicable PSD preconstruction permit before commencing construction, the source also fails to apply a BACT limit derived from NSR. Just as the failure to obtain a preconstruction permit is a single violation of the CAA that accrues upon commencement of construction without the requisite permit, so too the failure to apply BACT is a one-time violation of the Act. Application of BACT is a distinct event triggered by a modification that increases a major source's emissions of a regulated pollutant above PSD threshold levels. In fact, once a source applies BACT after tripping the PSD threshold there is no requirement to change or update the BACT emissions limit unless the source makes another major modification that requires NSR.

There is no principled reason to differentiate the failure to obtain a PSD permit, a noncontinuing violation under Westvaco, Murphy Oil, and SIGECO,⁸⁸ from the failure to apply BACT. A BACT determination is essential to NSR, [32 ELR 11348] and BACT emissions limits constitute the most significant provision in any PSD preconstruction permit. The policy rationale for invoking the statute of limitations—to avoid "the problems of faded memories, lost witnesses and discarded documents"⁸⁹ in penalty actions brought more than five years after a violation accrues—applies equally where a source fails to secure a requisite preconstruction permit or does not institute BACT. Construing the failure to apply BACT as a one-time transgression is also consistent with the general reluctance to imply a continuing violation.⁹⁰ Accordingly, as soon as a source commences construction without a required PSD permit that mandates application of BACT, the violation is complete and the five-year limitations period begins to run.

To allege an ongoing Title V operating permit violation where a source fails to obtain a PSD permit, EPA assumes that a source should have applied a BACT limit developed in the course of PSD NSR. Failure to apply BACT to limit facility emissions from ongoing operations, EPA would argue, is a continuing violation of Title V. The argument, however, ignores that the application of BACT is a one-time event, and overlooks that EPA cannot add substantive permit requirements under Title V. In short, because the source did not determine a BACT emissions limit in the PSD permit process, the Title V permit—which simply consolidates existing requirements—cannot include the BACT limit that gives rise to the alleged continuing violation of the operating permit. Moreover, as discussed above, failure to apply BACT is a one-time event, just as failure to secure a PSD preconstruction permit is a single violation. EPA cannot add to a Title V permit a BACT limitation that the government believes should govern a source's emissions, and then claim that the failure to apply BACT constitutes an ongoing violation.

Under Westvaco, Murphy Oil, and SIGECO, failure to obtain a PSD permit and apply BACT constitutes a one-time, noncontinuing violation. On the date a source commences construction without a required PSD permit, the violation is complete, EPA's claim accrues, and the five-year limitations period in § 2462 begins to run. EPA cannot, in a feat of legerdemain, convert the failure to apply BACT into a continuing violation of Title V.⁹¹

Punitive Injunctive Relief

AEPSC, Westvaco, Murphy Oil, and SIGECO hold that § 2462 applies to civil penalty actions. EPA may attempt to characterize the cases more liberally, asserting the opinions establish that the five-year limitations period does not apply to claims for injunctive relief. A more thorough reading of AEPSC, Westvaco, Murphy Oil, SIGECO, and related precedent, however, reveals that § 2462 may bar claims seeking injunctive relief that is unrelated to or in excess of the damage resulting from a PSD violation.

Westvaco and Murphy Oil declare that the § 2462 five-year limitations period applies to claims for civil penalties only, without analyzing whether injunctive relief may constitute a civil penalty. Similarly, SIGECO did not consider the question of injunctive relief, because the defendant's motion for partial summary judgment excluded EPA's request for an injunctive remedy. The AEPSC litigation, however, evaluated whether injunctive relief might amount to a nonmonetary penalty for purposes of § 2462. As discussed above, AEPSC involved a consolidated action by EPA, 8 states, and 11 nonprofit organizations alleging similar PSD violations against 6 defendants. The AEPSC opinion analyzed above applied § 2462 to the claims brought by EPA and the eight states.

In United States v. American Electrical Power Service Corp. (AEPSC II),⁹² an opinion handed down on the same day as AEPSC, the court applied § 2462 to the citizen suit claims of the 11 nonprofit plaintiffs. The defendants argued that the nonprofit groups' demand for injunctive relief "amounts to a penalty for purposes of § 2462 and thus, must be limited."⁹³ According to the defendants, an order requiring the installation of "billions of dollars worth of controls" would be "purely punitive relief."⁹⁴ Citing United States v. Telluride Co.,⁹⁵ the AEPSC II court declined to hold that "the request for injunctive relief to remedy past conduct changes the nature of the relief" from equitable redress to nonmonetary penalty.⁹⁶ Rather the nature or extent of injunctive relief "may be dependent upon whether a particular modified source is still being operated."⁹⁷ Because such a fact-based determination was inappropriate in resolving the defendants' motion to dismiss, the AEPSC II court could not conclude "that all injunctive relief is necessarily punitive in nature."⁹⁸

Telluride provides guidance as to the type of injunctive relief that might constitute a nonmonetary penalty. According to Telluride, injunctive relief constitutes a "penalty" for purposes of § 2462 when "the sanction seeks compensation unrelated to, or in excess, of the damages caused by the defendant."⁹⁹ [32 ELR 11349] Injunctive relief "that only remedies damage caused by the defendant is not a penalty for purposes of § 2462 even though it is imposed by the government."¹⁰⁰ The injunctive relief in Telluride required the defendants to restore or replace wetlands filled in violation of the Clean Water Act. Defendants filled the wetlands more than five years before EPA brought an enforcement action.

Nevertheless, Telluride holds that § 2462 does not bar EPA's claim for a "restorative injunction" seeking to restore or replace only those wetlands damaged by the acts of the defendants. Although the injunction required defendants to spend "a significant amount of money" to replace wetlands "without showing the actual amount of damages suffered," the Telluride court declined to require a "precise symmetry between the actual damages sustained . . . and the costs of mitigation."¹⁰¹ A defendant's belief that "a sanction is costly or painful does not make it punitive."¹⁰² Similarly, the imposition of equitable relief for wholly past violations, such as the defendants' unlawful destruction of wetlands more than five years before EPA's enforcement action, did not convert a restorative injunction into a nonmonetary penalty. Because "the amount 'restored' relates to the actual harm caused by the defendants' prior actions," the court held that EPA's request for injunctive relief was not a claim for a "civil penalty" barred by § 2462.¹⁰³

Read together, Telluride and AEPSC II establish that § 2462 may bar injunctive relief seeking compensation unrelated to or in excess of the damages caused by an alleged environmental violation. In the context of PSD enforcement, § 2462 could apply when there is a BACT dispute. For example, assume that in 2002 EPA brings a PSD enforcement action against a defendant wood products company for failure to apply BACT to facility modifications commenced in 1990. The modifications allegedly increased the facility's emissions of volatile organic compounds (VOCs) above the PSD significance levels. AEPSC, Westvaco, Murphy Oil, and SIGECO hold that § 2462 bars EPA's civil penalty action.

Assume further that EPA is seeking injunctive relief requiring the facility to install expensive VOC control technology common in the auto industry but unusual in the wood products industry. Other wood products facilities employ a less sophisticated and less expensive technology that does not control VOC emissions quite as well as the auto industry technology. The defendant could argue that, considering economic, energy, and environmental factors, the less expensive technology constitutes BACT. In addition, the defendant could maintain that injunctive relief requiring installation of the auto industry VOC control technology constitutes a nonmonetary penalty under § 2462. The less expensive VOC control technology is related to and consistent with the defendant's alleged PSD violation—the failure to install BACT at its wood products facility—and would constitute a "restorative" injunction. Section 2462, therefore, would not apply. Requiring the more expensive auto industry control technology, in contrast, seeks compensation in excess of the damages for which the defendant is responsible. Under Telluride and AEPSC II, applying the auto industry control technology to a wood products facility would constitute a penalty. Section 2462's five-year limitations period would bar such a punitive injunction, because the 1990 modification giving rise to the alleged PSD violation occurred 12 years before EPA brought its enforcement action in 2002.

Similarly, an injunction could be punitive if EPA attempts to apply today's BACT to yesterday's modification. Assume as above that EPA's 2002 PSD enforcement action seeks injunctive relief requiring a defendant wood products facility to apply BACT for modifications made at the facility in 1990. In addition, assume EPA insists that the defendant apply a VOC emissions control technology that is common in the wood products industry in 2002, but was unknown in the industry in 1990. The defendant could argue that the 1990 technology constitutes BACT, because that is the technology and emissions limit EPA and the state would have applied had the defendant complied with NSR.¹⁰⁴ The 1990 technology, therefore, is related to and consistent with the defendant's alleged PSD violation—the failure to install BACT at its facility in 1990—and would constitute a "restorative" injunction. Requiring the 2002 technology seeks compensation in excess of the damages for which the defendant is responsible, and is a "punitive" injunction under Telluride and AEPSC II.

Conclusion

Properly construed, AEPSC, Westvaco, Murphy Oil, and SIGECO establish that the statute of limitations in § 2462 bars civil penalty claims for PSD violations arising from the construction of a source or modification that commences more than five years before EPA brings an enforcement action. EPA's civil penalty claims for the failure to obtain a PSD preconstruction permit accrue when construction of a source or modification commences, not when construction is complete. Operating a source without obtaining a PSD permit does not constitute an ongoing violation of PSD requirements. As applied to equitable relief, § 2462 does not govern injunctions that require a source to install a pollution control technology, so long as that technology is related to and consistent with the alleged PSD violation. However, should EPA seek installation of a pollution control technology unrelated to or in excess of the damages caused by the alleged PSD violation, courts may consider the injunction a "penalty" for purposes of § 2462. Section 2462's five-year limitations period could bar such punitive injunctive relief.

1. 42 U.S.C. §§ 7401-7671q, ELR STAT. CAA §§ 101-618.

2. See 40 C.F.R. § 52.21(b)(1) (defining major stationary source) and id. § 52.21(b)(2) (defining major modification as "any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the [CAA]").

3. See id. § 52.21(b)(23) (defining significant emissions for specific pollutants).

4. 42 U.S.C. § 7479(3), ELR STAT, CAA § 169(3).

5. See OFFICE OF LEGAL POLICY, U.S. DEPARTMENT OF JUSTICE, NEW SOURCE REVIEW: AN ANALYSIS OF THE CONSISTENCY OF ENFORCEMENT ACTIONS WITH THE CLEAN AIR ACT AND IMPLEMENTING REGULATIONS (2002).

6. 42 U.S.C. §§ 7470-7492, ELR STAT. CAA §§ 160-169B.

7. Id. §§ 7413(b) and 7477, ELR STAT. CAA §§ 113(b) and 167.

8. See United States v. Telluride Co., 146 F.3d 1241, 1244, 28 ELR 21334, 21335 (10th Cir. 1998); 3M Co. v. Browner, 17 F.3d 1453, 1461, 24 ELR 20544, 20548 (D.C. Cir. 1994).

9. 28 U.S.C. § 2462.

10. See Telluride, 146 F.3d at 1245, 28 ELR at 21335; Gilbert v. City of Cambridge, 932 F.2d 51, 54 (1st Cir.), cert. denied, 502 U.S. 866 (1991).

11. See Telluride, 146 F.3d at 1245, 28 ELR at 21335 (citing Holmberg v. Armbrecht, 327 U.S. 392, 396 (1946)).

12. 3M, 17 F.3d at 1462, 24 at 20550 (emphasis added).

13. Id. at 1460, 24 ELR at 20548 (citing United States v. Lindsay, 346 U.S. 568, 569 (1954)).

14. Id. at 1461, 24 ELR at 20548.

15. 17 F.3d 1453, 24 ELR 20544 (D.C. Cir. 1994).

16. Id. at 1461, 24 ELR at 20548.

17. Id.

18. See Wilson v. Garcia, 471 U.S. 261, 271 (1985); Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 314 (1945).

19. 3M, 17 F.3d at 1462-63, 24 ELR 20544, 20550

20. 136 F. Supp. 2d 808 (S.D. Ohio 2001).

21. Id. at 809-10.

22. See id. at 811.

23. Id.

24. Id.

25. See id. (quoting Holmberg v. Armbrecht, 327 U.S. 392 (1946)).

26. See id. at 811 (citing Nevada v. United States, 463 U.S. 110, 13 ELR 20704 (1983)).

27. See id. (citing United States v. Telluride Co., 146 F.3d 1241, 1248, 28 ELR 21334, 21337 (10th Cir. 1998) and United States v. Banks, 115 F.3d 916, 919 n.6, 28 ELR 20060, 20062 n.6 (11th Cir. 1997)).

28. See id.

29. 144 F. Supp. 2d 439 (D. Md. 2001).

30. See id. at 441, 445.

31. See id. at 442, 444.

32. Id. (citing 3M Co. v. Browner, 17 F.3d 1453, 1462, 24 ELR 20544, 20549 (D.C. Cir. 1994)).

33. See id. at 443.

34. 42 U.S.C. §§ 7475 and 7477, ELR STAT. CAA §§ 165 and 167.

35. See Westvaco, 144 F. Supp. 2d at 444-45.

36. See id. at 445.

37. Id. at 443 n.2 (citing United States v. American Elec. Power Serv. Corp. 136 F. Supp. 2d 808, 813-14 (S.D. Ohio 2001).

n38 No. CIV-S-95-1854DFL, 1997 WL 258894, at *3 (E.D. Cal. Mar. 11, 1997).

39. Westvaco, 144 F. Supp. 2d at 443 n.2.

40. 143 F. Supp. 2d 1054 (W.D. Wis. 2001).

41. See id. at 1080-81.

42. See id. at 1081.

43. See id.

44. See id. at 1082-84.

45. See id. at 1084.

46. Id. at 1085 (quoting 3M Co. v. Browner, 17 F.3d 1453, 1461, 24 ELR 20544, 20549 (D.C. Cir. 1994)).

47. Id.

48. See id. at 1085-86.

49. See id.

50. See id. at 1086.

51. See id.

52. Id. at 1087.

53. See id. (citing United States v. Banks, 115 F.3d 916, 919, 28 ELR 20060, 20062 (11th Cir. 1997), and United States v. Telluride Co., 146 F.3d 1241, 1248, 28 ELR 21334, 21337 (10th Cir. 1998)).

54. No. IP99-1692CMF, 2002 WL 1760752 (S.D. Ind. July 26, 2002).

n55 See id. at *1. The parties disagreed regarding the legal significance of the projects. EPA argued that the projects constituted "major modifications" that triggered NSR requirements under the CAA and the Indiana SIP. SIGECO contended that the projects were "routine maintenance, repair, and replacement" activities or pollution control projects that did not constitute "modifications" and did not require preconstruction permits. See id. at *1 n.1. Because it found that the statute of limitations barred EPA's claims involving projects completed in 1991 and 1992, the court did not resolve the legal dispute regarding the nature of the activities.

n56 See id. at *3.

n57 See id. at *3 n.2.

n58 See id. at *3.

n59 Id. at *4-5.

n60 Id. at *5.

61. See id.

n62 See id. at *8.

63. See infra section entitled Thought-Provoking Issues: Civil Penalty Triggers, Continuing Violations, and Punitive Injunctive Relief.

64. 42 U.S.C. § 7479, ELR STAT. CAA § 165.

65. See AEPSC, 136 F. Supp. 2d at 811.

66. See id.

67. 42 U.S.C. § 7475(a), ELR STAT. CAA § 165(a).

68. Westvaco, 144 F. Supp. 2d at 444 (emphasis added).

69. Id. at 445 and n.3 (emphasis added).

70. Id. at 444 (emphasis added).

71. Id. (emphasis added).

72. Murphy Oil, 143 F. Supp. 2d at 1083-84.

73. See id. at 1082-83 (citing United States v. Brotech Corp., No. CIV.A. 00-2428, 2000 WL 1368023 (E.D. Pa. Sept. 19, 2000) ("violations of the various [PSD] requirements to obtain construction permits or plan approvals occur at the time of the construction, modification, or installation of the equipment or facility"); Ogden Projects, Inc. v. New Morgan Landfill Co., 911 F. Supp. 863, 876, 26 ELR 20843, 20850 (E.D. Pa. 1996) ("a violation of the [ [ permitting requirement occurs at the time of construction as the statute requires a preconstruction permit"); and United States v. Louisiana Pac. Corp., 682 F. Supp. 1122, 1130, 18 ELR 20350, 20353 (D. Colo. 1987) ("the [PSD] violation occurs when the actual construction is commenced, and not at some later point in time")).

n74 See SIGECO, 2002 WL 1760752 at *5.

75. Id.

76. See 3M Co. v. Browner, 17 F.3d 1453, 1460, 24 ELR 20544, 20548 (D.C. Cir. 1994) (citing United States v. Lindsay, 346 U.S. 568, 569 (1954)).

77. Id. at 1462.

78. See H.R. REP. NO. 99-180, at 64 (1985), reprinted in 1985 U.S.C.C.A.N. 108, 126 ("under § 2462 the government must bring its administrative case within 5 years from the date the violation occurred") (emphasis added); S. REP. NO. 89-363, at 7 (1965), reprinted in 1965 U.S.C.C.A.N. 1826, 1832 (under 28 U.S.C. § 2462 "the time is reckoned from the commission of the act giving rise to liability") (emphasis added).

79. Indeed, if a party applied for a PSD permit after commencing construction, but during the construction process, EPA would undoubtedly argue that the party violated CAA § 165.

80. See infra footnote 90 and accompanying text (discussing the general reluctance to assume continuing violations).

81. In AEPSC, EPA conceded that § 2462 barred claims for civil penalties accruing more than five years before the government files an enforcement action. As a result, the court did not consider whether commencing the construction of a source without a PSD permit constituted a continuing violation.

n82 See United States v. Southern Indiana Gas & Elec., No. IP99-1692CMF, 2002 WL 1760752, *4-5 (S.D. Ind. July 26, 2002); United States v. Murphy Oil USA, Inc. 143 F. Supp. 2d 1054, 1081-82 (W.D. Wis. 2001); United States v. Westvaco Corp. 144 F. Supp. 2d 439, 444-45 (D. Md. 2001). See also United States v. Brotech Corp., No. C.IV.A. 00-2428, 2000 WL 1368023, *3 (E.D. Pa. Sept. 19, 2000) (rejecting EPA's claims that operating equipment without a preconstruction permit constitutes a continuing violation of preconstruction permit requirements); United States v. Campbell Soup Co., No. CIV-S-95-1854DFL, 1997 WL 258894, *2 (E.D. Cal. Mar. 11, 1997) (PSD requirements "cannot reasonably be construed to mean that building or altering a machine without a [PSD] permit is a violation that continues as long as the machine still exists or is operated").

83. See Murphy Oil, 143 F. Supp. 2d at 1081 (observing that Wisconsin's integrated PSD permit and operating permit "does not change the accrual date" of the defendant's alleged PSD violations).

84. Westvaco, 144 F. Supp. 2d at 444.

85. CAA (as amended), Pub. L. No. 101-549, 104 Stat. 2399 (1990).

86. See S. REP. NO. 101-228, at 347-49 (1989); 56 Fed. Reg. 32250, 32251 (June 8, 1992). The Title V operating permit program also is intended to enhance compliance through monitoring, record-keeping, and reporting requirements. See 42 U.S.C. § 7661, ELR STAT. CAA § 501 (setting forth Title V permit requirements and conditions, including inspection, entry, monitoring, certification, and reporting provisions); 40 C.F.R. § 70.6 (outlining Title V permit standard provisions, monitoring and reporting requirements, and compliance prerequisites).

87. See 42 U.S.C. § 7661c(a), ELR STAT. CAA § 504(a) (stating that Title V permits must contain "such . . . conditions as are necessary to assure compliance with applicable requirements"); 40 C.F.R. § 70.1(b) (declaring that "Title V does not impose substantive new requirements").

88. Although Westvaco and SIGECO suggest that the violation accrues when construction commences and continues during construction, both courts found that the violation does not continue past the date when construction is complete. See supra notes 70 & 75 and accompanying text.

89. 3M Co. v. Browner, 17 F.3d 1453, 1461, 24 ELR 20544, 20546 (D.C. Cir. 1994).

90. See, e.g., Toussie v. United States, 397 U.S. 112, 115 (1970) (continuing offense doctrine applicable in "only limited circumstances" in which "the explicit language of a substantive criminal statute compels such a conclusion"); United States v. Payne, 978 F.2d 1177, 1180 (10th Cir. 1992), cert. denied, 113 S. Ct. 2441 (1993); Richard v. McDonnell Douglas Corp., 469 F.2d 1249, 1252 (8th Cir. 1972) ("loosely" construing the continuing violation theory would "undermine the aim of the statute of limitations"). Cf. United States v. Telluride Co., 884 F. Supp. 404, 408, 25 ELR 21578, 21581 (D. Colo. 1995), rev'd on other grounds, 146 F.3d 1241, 28 ELR 21334 (10th Cir. 1998) (discharge of dredge and fill materials into a wetland does not constitute a "continuing violation" under the Clean Water Act).

91. Even though an operating permit violation may be continuing for statute-of-limitations purposes, issues still arise regarding the duration of the violation. For alleged violations of operating permit requirements such as those under Title V of the CAA, 42 U.S.C. §§ 7661-7671, ELR STAT. CAA §§ 501-507, EPA should calculate civil penalties from the date a facility commenced operation without a permit through the date that a facility submits a complete permit application. See, e.g., United States v. Sytrotech, Inc., No. 4-92-912, slip op. at 22 (D. Minn. Feb. 25, 1994) (holding that duration of violation for failure to obtain a CAA operating permit runs from the date a facility commenced operation without a permit to the date that the state of Minnesota received sufficient information to issue a draft operating permit). Under Title V, a permitting authority has 60 days to determine whether an application is complete. If the permitting authority fails to request additional information within the 60-day period, the permit application is considered complete. 40 C.F.R. § 70.7(a)(4).

92. 137 F. Supp. 2d 1060 (S.D. Ohio 2001).

93. Id. at 1068.

94. Id.

95. 146 F.3d 1241, 28 ELR 21334 (10th Cir. 1998).

96. AEPSC II, 137 F. Supp. 2d at 1068 (emphasis added).

97. Id.

98. Id.

99. Telluride, 146 F.3d at 1246, 28 ELR at 21336.

100. Id. (citations omitted).

101. Id. at 1247, 28 ELR at 21336.

102. Id.

103. See id. at 1247-48, 28 ELR at 21337.

104. Indeed, had the defendant obtained a PSD preconstruction permit, applied BACT to the 1990 modification, and operated the modified facility unchanged through 2002, the 1990 BACT emissions limit would still be in place. As discussed above, only construction or modification of a major source that will result in significant emissions triggers PSD review. See 40 C.F.R. § 52.21(b)(1) (defining "major stationary source"); id. § 52.21(b)(2) (defining major modification); id. § 52.21(b)(23) (defining significant emissions for specific pollutants).